I admit it. I follow NASCAR. Add your redneck jokes to the comments below. Now that my confession is over, I want to share with you some wisdom shared by the driver of the 88 car (for those who don’t follow NASCAR, that is Dale Earnhardt, Jr.) and his crew chief (think of him as your firm’s managing partner), Steve Letarte.
Dale took the checkered flag at Pocono Speedway this past August. As he climbed out of his car, a mic was shoved into his face and the reporter said something like, “I bet you had hoped to finish at the front.” Dale replied, “Hope is not a strategy.” I had heard this mantra before, but I was surprised that he said it spontaneously. He is right: hope is not a strategy. Hope is a feeling, an emotion, a desire. Hope cannot propel you to success.
Obviously, Dale had heard this mantra more than once. After the race, the media buzzed about the “hope” comment. Steve said this: “Hope is not a strategy; it doesn’t get you there. Dreaming is not a strategy; it doesn’t get you there. I try not to let anything like that distract us. Hard work is a strategy and that’s what we try to do…My dad, the best advice he ever gave me—I was reading the sports page one day and I was reading the front and he told me to flip to the back because all the small print in the back, that’s the facts. That’s really what happened. Everything else is just a story and those were the results.” Wow. Many law firms find themselves “featured” in press releases touting the firm’s “Best Lawyers” or hosting traditional client events that haven’t had meaning in years in an attempt to stay on the front page. The reality is that many of these firms are not well managed, lack strategy, have flat or declining profitability, high turnover and have already cut their operational costs so deep that the bone is showing. The facts are rarely discussed openly in many firms so that hope can thrive.
So, why do law firms continue to rely on hope? Because hope makes reality feel so much better. Let’s face it: if we rely on hope, we can stick with the “front page” news versus the facts. But here are a few things that hope can’t overcome:
1. Hope can’t outrun poor realization.
If your billings are up but your realizations are down because you are not screening or culling clients who can’t afford to pay their bills, you’re offering discounts that result in low or no profits, or if your firm fails to stress the importance of collections to your lawyers—then go ahead and rely on hope. If you opt not to communicate collection expectations to clients—in writing—before the matter begins, or you choose to “write off” dollars at the end of the year because you don’t want to upset the clients (who owe you money), then hope is your only option.
2. Hope cannot correct your leverage issues.
If your firm continues to retain unprofitable non-equity partners, add laterals that “promise” they can bring over their entire book (reality is that it will be about 60% at best), retain equity partners that are no longer productive—then hope for the best; and if your firm decreased its hiring of associates and/or let associates who “weren’t busy” go so that non-equity partners and new laterals would have hours to bill, then by all means rely on hope.
3. Hope cannot overcome poor leadership.
Lawyers should expect the following from its leaders: communication, business acumen, honesty, transparency, respect, and the ability to build teams. Leaders should be self-aware; be able to take and give criticism; understand the role of planning, preparation, and flexibility; and have the guts to hold everyone accountable. Leaders should set the highest standards for ethics and character. Leaders lead and set the example (good or bad) for everyone else in the firm. If your law firm leaders are lacking essential leadership skills, then keep your fingers crossed and hope!
Law firms are not much different from NASCAR teams. Just as a law firm might, Dale admitted the following: “There are some areas that we need to get better as a team and as a company and we are working there in those areas and trying to understand where that magic is at for those particular events. So we’ll just keep working really hard. Even though the rules are changing, we’re understanding what we’re seeing, what we’re needing, and that’s one of the great things about it. As the rules and stuff have changed from year to year, we have been able to adapt really well and we have came out of the gate…strong each season.”
Where does your firm need to improve? How hard is your firm willing to work to find the “magic”? In the ever-changing environment facing law firms, is your firm keeping pace and feeling confident about upcoming challenges? Is your firm adapting, or is it just hoping to have a great 2017? What is your strategy for 2018? There is no time like the present to turn hope into action.
Thank you for reading this post. If you would like to discuss your firm’s strategy for the rest of this year or for 2018, please e-mail me at firstname.lastname@example.org.