One of the features of law firms that make strategic planning such a challenge is that some of the basics one might expect to find in any rational business enterprise are not present in many law firms.

Take, for example, the reason why a law firm is in business.  Now, I’m not talking mission statements here – just a simple rationale as to why partners come to work every day.  In public companies this is a pretty easy question to answer.  It’s almost a mantra that is drummed into students’ heads in business schools – the purpose of a business is “to enhance shareholder value.”  But, in law firms, where the shareholders ride the same elevator to work every day, we can identify at least four very divergent motivations for being in business.

1.  Profit.  Certainly there are partners for whom it is all about money.  They want as much money as they can conceivably get, as quickly as possible.  Profit partners are easy to recognize; they’re the ones who are willing to forsake their family, personal life, avocations, everything – in return for greater firm profitability and higher remuneration for themselves.   I recently met a partner in a large law firm who bragged to me that he had four grown children and he had never in their lives attended one of their birthday parties or teacher conferences.

2.  Lifestyle.  On the exact other end of the spectrum are lawyers who work to live.  That is, their primary motivation is not money but lifestyle.  Whether it is time with their children, windsurfing, golf or stamp collecting, their objective in working is to earn enough money to support their lifestyle and interests.  It just so happens that, of the things they are equipped to do, the practice of law provides them with the greatest income for the minimum time investment.

Lifestyle attorneys can’t understand money motivated lawyers. Profit motivated lawyers think that lifestyle lawyers are lazy.  But for some other attorneys the practice of law is a motivation unto itself.

3.  Professional Fulfillment.  There are individuals who like being a lawyer.  They love going to court or drafting documents or helping clients or whatever their particular practice involves.  In fact, they enjoy practicing law so much that if no one was willing to pay them, they would probably do it for free.  Lawyers who are motivated by professional fulfillment are often willing to work as hard as money motivated lawyers, but hate all the tackiness of keeping time and sending out bills.

4.  Societal Champions.  Finally, there are some partners in law firms, particularly old-line large law firms, who believe that lawyers are the last line of defense between society and the mongrel hordes.  They take great pride in being a lawyer and the fact that everything good in society is the result of the efforts of lawyers.  In almost all societies, lawyers populate government legislatures.  Civic and charitable boards are heavily manned by lawyers.  Theaters and art museums are run and financially supported by lawyers and law firms.  For these societal activists, their primary reason for being a lawyer is to gain the recognition that allows them to serve and support the best interests of society.  They note with joy that the line “The first thing we do, let’s kill all the lawyers.” from Henry VI was Shakespeare’s prescription for anarchy.

Recognizing that each one of these motivations is an extreme pole and that most attorneys operate on a combination of motivations, it is possible to visualize a law firm as a square with these four rationales as one of the corners and the exact center of the square representing an even balance among all four motivations.  If we were to ask each partner in a law firm to plot themselves within this square we would be surprised to see how disparate the responses would be.  There would probably be people clustered near each of the corners with the remainder sprinkled somewhere closer to the center.

Here’s the problem.  It is tough to do any meaningful strategic planning in a law firm that has difficulty coming to grips with the most basic of business issues.  As a result, many firm’s strategic plans are, out of compromise by the four motivational factions, extremely internal.  They talk about better technology, fairer compensation, higher quality recruits and the need for knowledge management.  Unfortunately, none of these are the core strategic issues that drive the business and result in new and expanded revenues.

There are, I believe, four important conclusions to be drawn from an understanding of why law firms are in business.  First, in a graph created by plotting the respective purpose for practicing law for each partner, the tighter the “shot pattern” that results, the more successful the law firm is.  This is common sense.  The closer the partners are to having a shared motivation (or, if you’ll excuse the term, shared vision), the greater the likelihood they will focus on and execute key strategies.

Second, a common response by law firms to the recognition of the diversity of their partners’ objectives is that “we are a big tent that can include many different interests through our compensation system.”  That’s hogwash.  Assuming for a moment that law firms have the capability to devise a system with sufficiently accurate and accepted metrics to measure and reward the comparative value of partners with varying motivations, there isn’t enough cash available for distribution to provide a living wage for the least valuable partners while appropriately recognizing the most valuable (please note that I make no attempt to define what constitutes valuable partners).

Third, absent a vocal constituency for another objective, the partners most motivated by profit will make the most noise and thereby dominate the conversation.  It is, therefore, easy for law firm leaders to believe that there is a consensus for radical profitability reforms in their partnerships and create strategic directions that only a few of the partners are really prepared to accept and execute.  As one managing partner put it, “The unaware are leading the unwilling to do the unacceptable.”

Finally, laterals have less impact on this whole conundrum then they are given credit for.  I often hear law firms blame lateral entry partners for every bad thing that has happened since the Chicago Fire.  In truth, the divergence in business motivation is as great in firms made up almost entirely of “lifers” as in firms largely created through laterals.  However, laterals tend to be recruited and screened by committees who are centrists by design or probability, and they tend to recruit in their same image.

The Tipping Point
Actually, the problem that law firms with diverse business objectives have with strategies may, in fact, be the strategies they choose for themselves.  Firms that focus on internal issues because they feel stymied by the conflicting objectives of their partners often feed those differences.  For example, the most common strategy we see in law firms’ plans is the demand for partners to work harder – “We will increase the average partner annual billable hours to 1700.”  This is typically followed by a strategy designed to swage the interests of some other motivation – “We will increase the firm’s diversity by making available appropriate opportunities supporting a variety of lifestyles.”  (By the way, the above two strategies are quoted from a real live law firm’s strategic plan.)  What we have done is create two completely non-executable strategies which are hardwired to provide something to aggrieve just about everyone.

On the other hand, strategies that are externally focused – “We will establish a dominant position in markets involving M&A and financing of commercial television stations.” – have a stronger potential for meeting the business objectives of a broader group of partners without going out of the way to actively abuse their particular motivation.

And, not surprisingly, those are the strategies that get implemented and generate new revenues.