Using Strategic Consultants More Strategically
Recent media exposés have examined the role of elite management consulting firms, most notably McKinsey & Co., in promoting ethically dubious, if extremely profitable, corporate behavior. From privatizing public assets to marketing addictive products, the bottom-line-driven strategies for which the high-end consulting industry has long been known are now being viewed through the wider lens of corporate citizenship and ESG commitments. With this in mind, many C-suite leaders are revisiting their relationships with consultants, either building an in-house strategy function designed to keep future projects more closely aligned with corporate values or structuring new engagements to include more nuanced metrics for success.
Law firms, which until recently were largely reluctant to follow big corporations’ lead in business practices, have not traditionally used management consultants to guide their strategies. Today, though, as firms have grown and the legal industry has gradually become more open to bringing in non-lawyer expertise to run the business side of firms, a cottage industry of law firm-focused strategy consultants has established itself and is growing in size and influence.
With legal industry management consulting on the rise, even as other industries look to reign in the influence of outside consultants, managing partners are asking themselves, “What’s the smartest way to engage outside expertise?”
While corporate America has been doing business with management consultants, and their “efficiency expert” predecessors, for generations now, law firms are relatively new entrants to this elite and highly specialized sector of the professional services marketplace. Instead of being naïve buyers, though, law firm leaders have an opportunity to learn from some of the mistakes and excesses in other businesses’ use of consultants — and to engage more strategically with the strategic consultants seeking to help them run their firms.
First and foremost, leaders in the public and private sectors are coming to realize than an overreliance on short-term quantitative analysis, untempered by considerations of the human needs of the workforce or long-term social and environmental impacts, leads to poor decision-making. In the rush to be “data driven,” businesses have chased results in increased sales and productivity while failing to forecast the future costs of their decisions in the form of increased employee burnout and turnover, regulatory action and consumer boycotts.
Second, a lack of transparency in how consultants are engaged and retained has led to a significant accountability gap: With few exceptions, consultants are paid irrespective of the results they achieve (or don’t achieve), while executives’ performance is subject to review and evaluation by their boards. So consultants can move from client to client, even if their ideas aren’t translating into success, while the executives implementing those ideas are left with the consequences.
Here are some guidelines for being more strategic in your relationship with strategic consultants:
Do the Hard Work on Your Own First
For many firms, their relationship with a consultant begins with a request from the partnership: “We need a strategy.”
If a strategy is a roadmap, it’s only valuable if you’ve identified a destination. Processing the question of “What does success look like for our firm?” is hard work. Not everyone is going to agree and, ultimately, there will be both winners and losers in the decision-making process along the way. Still, this is the work that firm leadership must do before launching a significant engagement with outside help.
Internal agreement, however hard-fought it has to be, on your firm’s values, strengths and priorities is essential — the compass in the map-making exercise. Coming to this agreement requires asking fundamental questions: Do we want to grow larger? Does the current partnership want the firm to last beyond its own tenure? Are we serving all of our clients as well as we could?
Ask for Representative Matters
Having put significant time and energy into thinking about your firm’s goals, you are now in a strong position to evaluate potential consulting partners in terms of how well their expertise lines up with your priorities.
If, for example, you especially value the deep relationships and niche expertise your firm has developed as a boutique, be cautious about engaging a consultant with a long track record of shepherding small and midsize firms through mergers and acquisitions with larger ones.
Remember to focus on outcomes: Has the consultant helped other firms become more successful in the specific ways that matter most to you?
Make Your Agreement Time-Bound
Once you’ve selected a consultant who seems well-suited to getting you closer to your vision of success, agree on a timeline for your initial engagement.
With strategy projects, results might take months or even years to be fully realized, but your initial contract should set a specific endpoint by which you should be able to see measurable progress toward achieving your vision.
Establish KPIs Specific to Your Firm
Engaging a consultant allows law firm leaders the rare experience of feeling what it’s like to be a client. One key learning from this experience is that, as a client, it’s important to have a way to give feedback and to assess whether the engagement is moving you closer to success — as you define it.
Certainly a consultant’s performance should be measured in hard numbers: Has implementing their guidance boosted profits?
But firms should also set metrics for other areas of performance that they want to positively influence (or at least not harm), such as attorney and staff retention rates, client satisfaction scores and inclusive representation in promotions.
Build in an Exit Clause
As in any contract, consulting agreements work best when each party has a way to end the relationship if it’s not working well.