What are the Managing Partner, Practice Group Leader and COO Thinking? (Live from P3)
This is a live post from P3, the Practice Innovation Conference. This session is What are the Managing Partner, Practice Group Leader and COO Thinking?. I have appended the session description and speaker bio at the end of this post. [I post this as a session ends so please forgive any typos or my misunderstandings of what speakers said.]
Dentons. Pricing and LPM are continuing to evolve. We now legal is behind other professional service firms. The group here is on the leading edge. It’s important to think about management supports you.
Akin Gump. Law firms are slow to change – that’s no secret. Management has to figure out how to facilitate the changes. Staffing model has to change. We hear a lot about secretarial is the tip of iceberg. What’s happening behind the scenes is more interesting. With flat demand, firms have to manage costs. Firms are keeping an eye on occupancy (space) and ratio of staff to lawyers. Pricing and LPM are, of course, on the radar.
Baker & McKenzie. When a 30-year growth cycle is interrupted, reacting is hard. We are changing how lawyers behave and how they deliver legal services. At the center is client. We have many unanswered questions because there is no precedent in legal for pricing or project management [until the last few years].
Q: People in emerging roles of pricing and project management need a broad set of skills. From your perspetives, what are the most important ones and why?
Akin Gump. Communication is key, whether with a partner or a client. Flexibility in that communication is essential. And establishing credibility eary in the tenure. This requires a firm grasp on the underlying subject matter. You have to know the numbers and the case. The lawyers will depose you, whether a deal or litigation. Need high level of trust and gravitas. Need good skills to get yes. Start with low hanging fruit and move out from there.
Dentons. Remember that lawyer clients are two standard deviations away from population. For example, they are not comfortable with numbers. We go in and say we have all this experience – and then say we have no idea how much it costs? That creates tension. So we have to unlock the analytics, dive into the data. Access the intelligence that exists in our systems but needs bringing together. On top, you need acumen to interpret. You need to understand the firm, the partners, and the clients. Be able to say no in a loving and gentle way. Be able to get to yes with a client, with a partner at your side. Be able to listen, understand client’s real expectations, and then craft a solution.
Baker & McKenzie. You need to be able to engage with clients – lawyers, procurement, and finance – and the partners. Need to speak the language of finance. Be able to talk intelligently about risk allocation. Talk to data analytics with peers who talk this language every day [finance] and with lawyers who are less fluent. So communication is key. Remember, a lot of what you do is new; so don’t underestimate importance of intellectual curiosity: can we do the work better?
Toby sums up: communication, understand data, intellectual curiosity
Q: Where does pricing fit in the organization – marketing, KM, finance, other? Is it a good fit or what are the pros and cons of where it sits.
Baker & McKenzie. Organization varies by region. Right now, a lot of it is in marketing. We want it at front-end and early in engagement. But a lot of overlap with finance. I am more skeptical about centralizing it; I’m thinking it needs to be pushed down to practice. This is partly because of big differences between liitgation and transactions. We need some firm guidelines, but decentralize will prove more valuable.
Dentons. Teams. Report to CFO. Work with practice support. Partner involved in pricing. Finance crunches data. Practice support contributes to solutions. The structural approaches will continue to evolve. And it likely will not align on a single structure across firms. We need partnership thinking to evolve (eg, don’t flip out that procurement pros also buy toilet paper). Wherever the pricing and LPM folks sit, they need to be able to access leadership.
Akin Gump. My Chief Practice Officer (Toby) reported to me. With Toby’s departure, I need to look at the structure. But even without departures, still need to re-visit organization over time as the market and firms change. The two directors who reported to Toby now report to me in interim. Management is thinking about next steps; I’ve been looking at what other firms are doing. Pricing could be under finance, but the skills only overlap somewhat. The focus is different. There is also overlap with Marketing, but the focus is not the same. Sally and Toby called on a client recently – the client lawyers said it was great to see law firm management because law firm management understands the business of law departments better than most partners. Marrying pricing and practice management makes sense because of overlap and delivery. Will help staff appropriately at right staffing level.
Toby sums up: marketing, finance, and practice management are the key functions.
Q: How do you interact with new roles. Do you expect them to lead and set strategy or execute?
Akin Gump. Set strategy. Adapt solutions to circumstances. Person has to understand the firm, had to have walked the floor talking to partners. I had a scheduled weekly call with Toby to cover key strategic issues. But we talked more often. Person has to work across law firm departments
Baker & McKenzie. I interact all the time with finance, pricing, down to analysts on specific projects. Most business people are astounded that law firms do not know costs. The strategy versus execution dichotomy seems false to me. They need to work hand-in-hand. Pricing / LPM is a key part of the the overall team with attorneys and other staff.
Dentons. Lawyer leadership is important, from MP to PGL to partners. Pricing has to educate and work closely with them. Setting strategy is key but, and irrespective of structure, need to execute as well.
Audience Q: Do pricing professionals work directly with clients?
Akin Gump. Yes, but pricing person must have confidence of both partners and client. This works best in slow build when some partners come back with wins / war stories of how pricing pro helped win the business. But it can also happen in background.
Dentons. Yes, but mix differs. Why would you want lawyers to do pricing – they are not trained for it. That’s why you need pricing pros with demonstrated successes, to work lawyers. Especially with clients driven more and more by data, pricing professionals will need to be in front with clients. We have to demonstrate our sophistication with data and analytics. Great lawyers are no longer enough.
Baker & McKenzie. Yes. You can’t force partners to do pricing. You have to show them the way. Requires educating partners about margins. This will demonstrate your value. Clients are looking for a discussion about overall relationship spanning multiple matters and issues. Price is part of the discussion.
Q: What about profitability?
Dentons. We have not really talked about profit yet. Historically, firms and partners were focused only on revenue. We have to change the conversation with partners – shift from revenue to profit. Once you focus on profit, you can be more creative about pricing. Clients want firms to make a fair profit.
Akin Gump. Having a strategy and a plan means changing the conversation to be about profit. Our firm has been on a journey. Now talking about including practice profitability more clearly in compensation. It’s beginning to count. Partners are beginning to ask about profitability and how they fit with firm norms. Spent a lot of time on profitability at recent partner retreat.
Baker & McKenzie. Profitability is a key part of the conversation. Some partners do understand the profit drivers. Clients expect us to make a profit. A focus internally on profit is key. It is not the only thing – strategy, investments – but profit is important part of the conversation.
Audience Q: With all the changes occurring, where are the friction points within the firm on profits.
Baker & McKenzie. As a PGL, it’s my job to reduce frictions. I have to convey to partners in my group the firm goal and strategy and make sure they align on profits. I have to drive tactics that supports the strategy. Some conversations are difficult. Other businesses have a chain of command – as law firms, we really don’t. That gives rise to frictions.
Akin Gump. As profitability becomes a central metric, friction arises between PGLs with very different levels of profit. So there is a danger of focusing on profit if you don’t educate the partnerships. Staffing, write-offs, and requests for bespoke pricing (eg, discounts) are points of friction. “Every lawyer knows they can do my job and they know they can do your job – and better and faster”. That is a friction point to manage.
Dentons. Partner complaints usually come directly to me. Need to balance practices with different profits because lower profit ones sometimes drive business for higher profit ones.
[Remaining Q&A not captured.]
What are the Managing Partner, Practice Group Leader and COO Thinking?
Speakers: Sally King, Chief Operating Officer, Akin Gump; Mike McNamara, Managing Partner, Dentons; and, Peter Tomczak, Steering Committee, Baker & McKenzie’s North America Litigation and Government Enforcement Practice Group
This is a live post from P3, the Practice Innovation Conference. This session is
Moving the Needle with 3 More Ps, presented by Jeff Carr. I have appended the session description and speaker bio at the end of this post. [I post this as a session ends so please forgive any typos or of my misunderstandings of what speakers said.]
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