Ideas and resources to help lawyers enhance their business sense, with the goal of improving their management, marketing and finance skills and beyond.
Are doctors more businesslike than lawyers? A December 2009 Wall Street Journal article in the paper's â€śEducation for Executivesâ€ť column suggests that might be the case. The article discussed the fact that an increasing number of doctors are attending business school to learn the skills they need to run their medical practicesâ€”and that prestigious institutions such as Harvard Business School and the Wharton School of Business are offering courses and programs to help them do just that.
As a lawyer and professional services coach who holds an M.B.A. (as well as having owned and operated several manufacturing companies), I have always felt that business training gives me an edge. It helps not only in running my own company but also because the lawyers I coach see the degree as a notable validation of my credentials. Business knowledge is, after all, integral to what I do, and integral to helping lawyer clients who have little feel for the business side of their profession.
Generally, the dearth of lawyers' business competency is a consequence of their education. Most lawyers still enter law school with an undergraduate degree in the liberal arts, and law school curricula have little business focus. In fact, in conversations I've had with educators, their view of the law as a profession means that any business training is trade-oriented and therefore inappropriate for law schools. This unofficial â€śconspiracyâ€ť against business competency continues once lawyers pass the bar and pursue their mandatory continuing legal education. Few bar associations at present give MCLE credit for any courses that hint of finance or marketingâ€”too â€śunprofessional.â€ť
The Fundamental Issue of Business Sense
The rub, of course, is that lawyers definitely need better business sense. In many law firms, individual partners have the ability to direct discretionary resource consumption, from purchasing new office furniture to charging the firm with personal meals and travel. Left to their own devices, these lawyers would begin to realize that their firm is in business trouble only after the money is no longer available. The issue is one of business competency. The lawyer who has it understands the operation of the firm as a business, the firm's billing structure, how each attorney determines firm profitability, and the importance of clients and their own businesses.
Poor cash management has killed many law firms, large and small. Managing the flow of money is the number one consideration for a firm's survivalâ€”and clients care whether lawyers are good at such management because they don't want to be left high and dry by their law firm's financial failure. A good example came in mid-2009, as a major law firm publicly announced that its profits for the year would be down, but less than the decline estimated for other large firms. This usually private news followed the announcement of a round of layoffs by the firm. It is likely that the firm wanted to suggest that it was dealing well with economic realities and that the remaining members of the firm would be in good financial shape.
Giving some reassurance is very appropriate since people usually fear the unknown more than the known, no matter how bad it may be. And in this case, the bad news was made to seem less bad. But the audience here was not shareholders or investorsâ€”it was the firm's clients. Another audience was the partners, potential laterals and current equity partners alike, to whom the announcement was evidence that the return to equity partners would remain viable. This simple announcement may have been unique. By demonstrating a firm grasp of the business of law practice, however, it potentially achieved much goodwill for the firm.
As mentioned earlier, in many states, the practical skills that lawyers most need to run a practice either are not covered or are actively eliminated as legitimate MCLE credits. They also happen to be skills that few law school faculty offer either. Many lawyers, and not just young ones, feel they have neither an efficient nor an effective way to learn how to build a better practice that better serves clients. But whatever makes a better lawyer benefits both the firm and its clients, whether it falls under a traditional CLE banner or not.
Already there are specialized certifications that state bar associations increasingly offer in certain practice specialties. Specialists and their clients do benefit in some way from the more intensive training, but this really is just a matter of degree from the typical CLE requirements. The specialist designation just takes the principle further. So, what if bar associations took the principle further by offering to lawyers specialist certifications in such skills as trust fund accounting or client satisfaction surveys? How is this different from the specialized training that many lawyers have received by earning their CPA designation or an MBA degree?
Even if such training does not materialize, lawyers who want to strengthen their practices by improving their business competency have a variety of paths to pursue on their own. These are just some of the sources that a lawyer can turn to for personal business education.
- The Internet. Online resources include the many programs, publications and materials of the American Bar Association (www.abanet.org) and the comprehensive online education programs found at the West Legal Education Center (www.westlegaledcenter.com), which compiles business and legal education programs of the Practicing Law Institute, the National Bar Association and many others. General business programs and materials are available through the American Management Association (www.amanet.org), the Conference Board (www.conference-board.org) and the Professional Services Management Association.
- Business schools. In a reflection of the medical education programs mentioned previously, there are university programs that target lawyers for â€śexecutive MBAâ€ť-style courses. Both Northwestern University's Kellogg School of Management and the Wharton School of the University of Pennsylvania have developed business curriculums in the past, in several instances for large firms in their home cities. Business schools around the country would likely be able to customize similar corporate executive programs for law firm use.
- Leadership books. Creative approaches to businesslike thinking can be found in these books, which are recognized as classics on the kind of innovative conceptualizing any professional can do to make an organization more successful:
- Harry Beckwith's Selling the Invisible (provides basic, practical strategies to improve the bottom line in any business by perceiving and fulfilling a client's every need).
- David H. Maister's Managing the Professional Service Firm (offers the classic exposition of how skilled managers combine true professionalism and bottom-line thinking).
- Jim Collins's Good to Great (uses rigorous research and invigorating teaching to show how even the dullest of organizations can excel).
- Jack Canfield's Power of Focus (gives you the success principles necessary to hit your business, financial and personal targets).
- Alan Weiss's Million Dollar Consultant (shows how consultants can raise capital, reel in new clients, set fees, accelerate growth and achieve $1 million in annual revenue).
- Blaine McCormick's Ben Franklin: America's Original Entrepreneur (applies the bottom-line thinking of Franklin's Autobiography for modern times).
Changing the Dynamic
Taking advantage of resources like the foregoing ones can change the dynamic of any lawyer's practice. Lawyers who understand business competency can better assess the value they provide, and better reflect it in their bills. They begin to think in terms of anticipated travel, staffing plans, strategies for effective structuring of discovery and more. They develop an appreciation of those areas where costs can be controlled and where costs are inherent. In short, they become cost-effective contributors to their firms and value-added resources to their clients. The firms whose lawyers understand such issues in the context of business literacy will ensure their long-term future and success.