At Aquis Search, we regularly advise UK and US law firms across Asia on partner hiring in all practice areas. Our approach to partner search focuses on specific criteria: technical expertise, the candidate's current law firm, and the 'portable following' they can contribute.
Often, the decision to proceed hinges on this 'portable following'. If there's a lack of compatibility here, it usually means there's no point in continuing discussions.
We also work with partners and those aiming to become partners. These individuals are eager to understand the market better and seek a platform that elevates their career. When we find a law firm that aligns well with a partner’s skills and potential, we help them articulate their portable business, This involves creating a strong and convincing business plan.
Such a business plan needs to be meticulously crafted and fact-checked. It should effectively showcase a list of clients, along with past and forecasted billings. The plan's goal is to clearly demonstrate how this business can integrate into and enhance the business model of a prospective law firm.
In this article, we look into why business plans are necessary for those looking to become partners, and how to craft the winning one for career success.
Why do you need to draft a business plan for a law firm?
When the market is booming with high revenue growth, law firms show more flexibility in hiring. They are open to taking risks on lawyers who, despite lacking a business following, have strong technical skills, fit well culturally, and possess robust business development skills.
In more challenging times, a different picture emerges. The approach to partner hiring becomes highly cautious. In tougher times, most law firms are reluctant to consider such hires unless they come with a substantial book of business.
There are, however, rare exceptions. In cases where a partner has retired, a new partner without a business following might be considered if they can effectively service an existing client base. Similarly, a partner offering niche technical expertise, which is missing in the law firm and can significantly benefit a practice area, might also be considered. Yet, we’ve seen that these scenarios are more the exception than the norm.
This makes sense, as law firms operate in a competitive market with immense pressure to service clients more efficiently and increase revenue and profit per partner. Commerciality becomes paramount and conducting due diligence is now essential when reviewing a potential partner’s business following.
A substantial book of business not only influences a partner’s integration into the law firm but also plays a key role in determining their compensation levels if appointed.
So, what does a successful book of business look like?
What constitutes a Book of Business?
A partner's book of business essentially represents the client work they can potentially bring to a new law firm. This estimation focuses on the clients they have strong relationships with in their current law firm, clients who are highly likely to continue their association in the new setting.
This book often includes clients served in the partner's current practice area, as well as those they have introduced to different practice areas. In today’s legal market, where cross-selling is increasingly important, this ability to contribute to multiple areas is particularly valuable. It's especially relevant if it aligns with the enhancement of a practice area within the prospective law firm.
Also considered part of the book of business is referral work directed to other firms, often due to conflicts of interest. Such referrals underscore the partner’s network and influence, which are critical assets in the legal profession.
Key factors in business plan development for law firm partners
When developing a business plan for a law firm partnership, several critical factors must be navigated to ensure its effectiveness and accuracy.
Challenges in Defining a Book of Business:
A pivotal component of your business plan is the definition of your book of business.
This process is complex due to the variable nature of the legal market. It's important to thoroughly evaluate the strength and portability of your client relationships, as well as how these align with the prospective law firm's client base. Remember, accuracy in detailing these relationships is vital, as they are subject to scrutiny by law firms.
Assessing Sufficient Following:
Understanding the concept of a sufficient following is key to projecting financials in your business plan.
Generally, it’s expected that a partner should generate revenue at least three times their proposed compensation. This benchmark, however, may vary based on the practice area and seniority. Including this assessment will provide a realistic foundation for your plan, especially in areas like litigation or corporate practices where expectations might differ.
Addressing Restrictive Covenants and Charge Out Rates:
Your business plan should also consider any restrictive covenants from your current law firm and how they might influence your ability to bring clients along. Additionally, the alignment of charge out rates between your current and potential law firms is crucial, as it can significantly impact client retention and overall profitability. A well-thought-out strategy to navigate these factors is essential for a seamless transition of your book of business.
By carefully considering these aspects, you can create a business plan that not only demonstrates your value to a potential law firm but also strategically addresses the nuances and challenges unique to the legal industry.
This leads us to the next section.
Steps to Create a Comprehensive Business Plan for Partners in Law Firms
Creating a detailed and effective business plan is crucial for law firm partners. The plan should not only showcase your potential value to the law firm but also align with the firm's strategic goals. Here’s a structured approach to drafting your business plan:
1. Executive Summary
Start with a concise executive summary. This should capture the core of your commercial proposition, summarising the key points of your plan.
2. Personal Portable Business
Provide a clear overview of your personal portable business. This includes an overall figure representing the clients and cases you expect to bring to the law firm.
3. Cultural Fit
Emphasise how you will synergize culturally with the law firm. A good cultural fit is crucial for long-term success in any business relationship.
4. Customisation for Each Law Firm
Tailor your business plan for each law firm you are considering. Highlight how your skills and client base align with their practice areas and strategic goals.
5. Market and Practice Area Context
Contextualise your plan with current market conditions and developments in your practice area. Include data and trends that support your projections and strategies.
6. Scope and Revenue Projections
Outline the scope of your plan, including how you'll transition existing matters to the new law firm. Project revenue for the initial phase, typically suggesting minimal revenue in the first six months and a realistic estimate for the following year.
7. Detailed Client Analysis
Go through your client list, detailing each client's contact information, the extent of the relationship, and billing figures for the past three years. Also, include anticipated billing figures for the next three years.
8. Portability and Client Prognosis
Identify which parts of your business are portable. For each client, assess the likelihood of them following you to the new law firm. Categorise clients as 'warm' or 'cold', with variations in between.
9. Time Allocation
Explain how you plan to allocate your time between nurturing existing business and developing new opportunities.
10. Business Development Strategy
Detail your strategies for business development, including the financial and marketing support you’ll need to grow your practice.
11. Hiring Plans
If significant business growth is expected, mention your plans to hire an assistant or additional staff. Provide a timeline and budget for these hires.
12. Client Profitability and Sustainability
Analyse the profitability and sustainability of each client, especially in the context of market volatility and corporate restructuring.
13. Addressing Potential Challenges
Highlight any potential obstacles and your proactive solutions to these challenges.
14. Alignment with Law Firm’s Business Model
Ensure that every aspect of your plan aligns with the business model and strategic objectives of the potential law firm.
Additional Tips:
Use Clear and Concise Language: Avoid legal jargon where possible to make the plan accessible to all stakeholders.
Incorporate Feedback: Seek feedback from mentors or peers and revise your plan accordingly.
Update Regularly: Keep your plan dynamic by updating it as market conditions and your circumstances change.
By following these steps, you can create a business plan that not only showcases your value but also aligns seamlessly with the strategic direction of the law firm you aim to join.
How can Aquis Search help?
We can provide a necessary sounding board throughout the process. Once you have completed the painstaking task of assessing your following and quantifying the same in a detailed plan, it is useful to seek out guidance.
Lawyers are well-versed in legal opinion but they often do not have experience in drafting a successful business plan. It is at this juncture that we can offer our specialised expertise and insight.
If you need help with crafting your business plan, we can give you tailored advice. Please email me at [scottharrison@aquissearch.com] for a confidential chat.