My mirror is broken. I just took a glance in the mirror this morning and oddly, the young, athletic, attractive woman that I know to be me has been altered. What the heck? I feel like Snow White’s step-mother! Betrayed by the truth!
Evidently, I am not alone in my self-delusion. MSNBC and Elle magazine collaborated on a survey in 2010 and asked both men and women how, on a scale of 1 – 10 (with 10 being very attractin people were asked if they considered themselves smarter than average. A whopping 55% said yes, they were smarter than average. Why? In 1999, a study done at Cornell by social psychologists (now known as the Dunning–Kruger effect) found that the reason for overinflated self-image was ignorance, not arrogance.[i] In other words, “You don’t want to know the truth!”
Many law firms are like me: they see themselves one way, but their reality is much different. Reality (a/k/a year-end) is approaching faster than a speeding bullet. If your firm will not meet revenue expectations, then it might be time to take a good look in the mirror in preparation for 2018. Some areas that are critical to examine include:
1. Which practice areas are currently profitable?
Remarkably, many firms have no idea what practice areas are profitable, or why. Such firms believe that there is no “reliable” formula for law firm profitability. This is an excuse, not a reason. Although there is no “perfect” formula, every firm can and should understand where they are making money and where they are losing money. From there, you can grow your firm in areas where you are profitable and work to justify or minimize areas where you are margin neutral or negative. There are lots of great articles on this subject. If you would like additional resources to help you, feel free to e-mail me at teahoffmann@lawstrategycorp.com.
2. Which industries or clients should your firm be exploiting?
A client analysis combined with an industry overlay is a powerful tool. Understanding industry niches where you can gain additional traction due to your existing expertise or gain client penetration will prove much easier than going out and trying to convince new clients to use your firm. Most firms never take the time to maximize the opportunities they already have. Don’t make that mistake.
3. What are your firm’s strengths and weaknesses?
Have you asked your key stakeholders how they honestly believe firm leadership is performing? If not, why not? Yes, it is scary, and sometimes the results can be harsh. I’ve been there. But, I also know that you can’t change what you don’t know. Like the participants in the studies referenced above, many firms are “ignorant” when it comes to their internal flaws. Don’t be one of those. At least annually, ask your lawyers, staff, clients, and others what they think of your firm. Encourage honesty and assure everyone that their comments will be kept anonymous. Gather the results (you don’t have to be exhaustive with this process), and then act on them. If you fail to act on your findings, it would have been better to have remained in the dark.
There are many other areas where law firms need to become more “self-aware.” Law Strategy Corp uses a checklist to help firms in this process. We would be happy to share this with you. Your firm either will choose to look in the mirror and make necessary changes or will continue to operate without the facts that can lead to a more successful 2018. Some firms will be arrogant enough to believe that they don’t need to change even after they look in the mirror. Other firms have chosen to constantly look for ways to improve and have an understanding of their reality. Where does your firm fit? Here’s hoping that your firm will be “the fairest of them all” in 2018.
Dunning, David; Kerri Johnson, Joyce Ehrlinger and Justin Kruger (2003). “Why people fail to recognize their own incompetence” (PDF). Current Directions in Psychological Science 12 (3): 83–87. doi:10.1111/1467-8721.01235. Retrieved 30 October 2014
