There is one cost, above all others, that can threaten the existence of a law firm. One cost that can stunt the growth of a firm for years, one cost that can cause irreputable damage to a firm’s reputation, to client retention, and to a firm’s culture.

That is the cost of mistakes.

• Lateral hires
  • There is a plethora of never-ending unwanted costs caused by either guaranteed compensation or the lack of due diligence into lateral’s clients or just hires that do not fit in the firm’s culture.
• Lack of a robust conflicts and new client intake system
  • It only takes one oversight to cause or exacerbate a professional liability claim against the firm. Worst yet, maybe the system is in place, but a large book of business lures a firm to look the other way (please refer to lateral hiring mistakes above).
• A compensation system that does not reward good behavior in work on behalf of the firms’ clients, in working with colleagues, and in advancing the best interests of the firm (as your culture should dictate).
  • The damage starts with losing young talent, often related to retaining overpaid under-achievers, usually entitled senior partners. An unfair compensation system can negatively impact every aspect of firm growth.
• Lack of attention to leadership succession
  • No firm can withstand poor leadership over an extended period. And no firm will thrive long-term without a succession plan that has the widespread support and confidence of the partners.

These mistakes can cause reputational, cultural, and financial harm for years. A firm with strong leadership, robust internal systems, and a culture and compensation system that rewards a “firm first” mindset will have an advantage when facing the difficult choices to compete, to grow, and to be the best firm it can be.

Avoid the mistakes.

Contact

The Professional Services Practice at Aon values your feedback. If you would like to discuss any of the topics raised in this article, please contact George J Wolf, Jr.

George J Wolf, Jr
Managing Director
New York