Wednesday, 4 November 2009

When is a Law Firm like a Football Club?

Any regular readers will know that I am passionate about moving law firms (well actually any firm) away from too much short term thinking.

Listening to the news today, it occurred to me that managing a law firm must be a little like managing a football club. Only a very few football managers are given much time to produce results and almost every manager is judged over an incredibly short period. This morning's news item was in connection with Liverpool FC who, apparently, have lost 6 of their last 7 games. They play again this evening and the report stated that a poor result might cost the manager his job. Notwithstanding the media's need for catastrophe, it does underline the "results now" nature of football management.  The six matches from 29th August were all won and included a 6-1 win against Hull. The one win in the last 7 matches was against Manchester United. So is this really the sort of performance that should require the termination of the manager's contract?

This sort of attitude reminds me of law firms. Performance is (rightly) reported monthly to the partners - but this can mean that time frame for decisions is much much shorter than it should be. One month of bad results, and partners can be demanding that "something must be done" and ordering management to turn around the firm's performance.

Both types of organisation would do better to expand their view so that they can properly analyse short term performance in a longer context. I remember talking with a law partner who spent the first 10 minutes telling me how worried he was that the recently released figures for the preceding month were poor. He was very concerned and had asked the Managing Partner what new cost-cutting measures could be implemented. I asked what the results were for that month in the previous years, and he did not know. I called him the day after our meeting, however, and he had found out that the month in question was a bad month every year - and in fact that this year had been less bad than usual. He had to admit, however, that he had not gone back to the Managing Partner to say that further cost cuts were not necessary...

One other similarity between law firms and football clubs struck me. Both are organisations built around highly trained specialists. Both have a fair number of prima-donnas. And in case of poor performance it is often the second-string team, management, and support team who suffer the consequences. Have you ever heard of a football club sacking first team players because of a string of 6 losses - I certainly never have.

My point? Short term results must be viewed in context. Medium and longer term results are usually better indications of the true performance of the organisation. Make sure that you performance manage everyone - "stars" included. Poor results are as likely to be the result of poor performance as they are poor management.


  1. You would hope (and I appreciate that it may be little more than a vain hope in some cases!) that the monthly figures would include perfomance against budget, cashflow forecasts etc. which would give a more realistic performance of where the firm is up to as against its targets.

    Without this it is very difficult to undertand monthly management figures in any kind of context - especially as in your example if the historic position isn't really known and understood.

    I suspect that firms are being forced to become more effective at this as lenders become more resistant to increasing the overdraft to cover short term cashflow requiremements, but I'm sure there is a long way to go!

  2. I certainly agree that this would be the ideal - sadly it is often ignored, or the budgeting process is so flawed that it becomes meaningless. I know of one law firm who decided to reduce budgeted revenue by 25% for this year and who are now celebrating being so far ahead of budget.

    There are, I should like to add, many firms who are better run and who are taking the steps to provide meaningful information to legal and support staff - and who are taking the time to explain what the data means!