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At its most basic, a business plan may just consist of a list of clients and likely billings, and this may well be enough for some firms, but most firms demand a more detailed document which will map out the business case and help them to reinforce what is, after all, a major investment on their part.
Partners who come to us with 'no following' need to ask themselves one, often stark, question: why?
That is precisely the question the law firms we are approaching on behalf of our candidates will be asking us. What has a partner without following been doing for the last x years?
Looking at it from the law firm's point of view, why would an organisation take on someone who is, from Day One, only going to be a cost item for the business, whom they are going to have to feed with existing work? There are two main reasons which this might be the case: skillset (ie skills that the law firm does not currently have and which it can afford to buy in) or succession (ie retiring partners who will potentially leave clients unserviced). Either forms the basis for a suitable business case to be argued primarily from inside the firm and may circumvent the issue of following.
It is worth noting that even in these circumstances, faced with the choice of a partner with following and one without, the firm will almost invariably, all things being equal, go for the former.
In essence, whatever your proposition, a robust business plan is key.
That is why it is vital to get yourself into a positive, confident mindset before you begin the process.
Although it may be that there are good reasons for why a partner may not have readily portable business (such as working exclusively for heavily institutionalised clients who only instruct law firms on a restricted panel or working exclusively in a support role for major clients eg tax or pensions), the assertion that a partner has 'no following' often breaks down under examination.
Often, partners are unwilling to even think about following, conscious not to oversell or to promise something they cannot deliver.
In some cases, you may be thinking that you do not wish to 'take' clients away from your current partners, hence depriving them of business; you may feel that your clients will not take kindly to a move and, in essence, you might feel afraid of even approaching them with the idea. Both feelings are misguided. We are talking about a simple business transaction based on personal relationships. Clients will go where they will, instruct who they ultimately feel comfortable with. If you wish to achieve the best possible result for yourself, be confident about the relationships you have with your clients. Don't overpromise but don't be afraid of relying on your own reputation and abilities.
Don't, either, be afraid to turn those relationships into numbers. If your business plan is well constructed, with due care to reflect trends in the marketplace, likely obstacles to achieving your goals and full of achievable objectives, there is no reason why it should not succeed.
The good business plan should be a confident statement of intent, not a set of gallows you will be swinging on if the figures don't outturn in the way you expect.
A very detailed business plan may also look at which clients are the most profitable, but this is probably beyond the scope of most law firms' information-gathering capability.
The analysis of your current business - and which elements are potentially portable from your existing home to a new home - will form the core of the business plan and will be the area which comes under most examination from a new firm.
What should also be fixed by you at the outset is the scope of the plan. Allow yourself six months lead-in to begin with and project little or no revenue for that time. Try to work to months 7-18 for a true Year One picture. Try to look to Year Three if you are able in terms of increased fee income and staffing.
Set yourself targets which are realistic and achievable. Your tendency will be to underplay, because everyone likes to overperform on targets. This is a mistake. It will not gain you anything in the long run and may seriously compromise your attractiveness from the outset. In any case, if you are budgeting nothing or next to it for the first six months, you have already given yourself some grace.
Be realistic, positive and confident in your plan. Law firms like entrepreneurial characters who give out positive energy. They want someone who is going to come in, get business and provide more business for the rest of the practice.
The executive summary should also contain a salient figure relating to your personal portable business. This is the figure referred to as your 'following' - your recruitment consultant will use this figure to open doors for you. It must be robust and defensible. Failing on either of these criteria will only lead to embarrassment all round as your following collapses under scrutiny.
You can of course give yourself a 'spread' ie a lower, concrete 'guaranteed' figure and an upside, 'wind assisted' figure. One client may or may not have a particular need for your services in a year's time. How do you know what is going to happen...?
In order to give an indication of whether fees are likely to follow, many law firms like to see a 'hot', 'warm' or 'cold' rating beside each client name. Somewhat obviously, 'hot' clients are those which are pretty much guaranteed to follow; 'warm' clients present a reasonable likelihood, a grey area if you like. 'Warm' clients are likely to be swayed by your personal relationship with them, resources at the target firm and what is left at your firm once you are gone. Go for best case scenario with 'warm' clients. 'Cold' clients refer to those where there is an outside chance of generating revenue. They may be clients where you are not the main client partner, where you have not done a lot of work lately or where the relationship is spread heavily across the firm and where there is decent backup if you are not there. Again, go for best case scenario, but don't oversell here. Make sure you are able to articulate cogent reasons why you might be able to gain work from that client.
If you are going into exhaustive amounts of detail about things, you may want to put things into an appendix. Lists of target clients (if there are a lot) may be appropriate for this, or large numbers of smaller clients which you can aggregate in your earlier client analysis. You can also put your cv in as an appendix. Full case lists and deal lists are also helpful here, to show breadth and depth without boring the reader by being in the main body of the plan.
Make sure you work on making your side of the plan as good as it can be without thinking too much about what might be at a particular target firm. You can by all means make reference to particular clients you know they act for or particular practice areas relevant to yours where they are well-regarded, but avoid going into too much detail as you do not want to give the impression that your plan is in any way dependent on what is currently in place at a particular firm or indeed that you have any 'territorial' aims as regards incumbent partners (who may feel slightly threatened by your presence on the field in the first place).
Business plan best practice
There is no 'must do' for a law firm partner business plan. In fact, there are as many business plans as there are law firm partners. Each plan relates to an individual's business which by its very definition is going to be a unique combination of clients, types of work and fees generated.At its most basic, a business plan may just consist of a list of clients and likely billings, and this may well be enough for some firms, but most firms demand a more detailed document which will map out the business case and help them to reinforce what is, after all, a major investment on their part.
Why the business plan?
It is vital that any modern law firm partner is able to demonstrate - and to back up at interview - that there is a viable business case for bringing them into a new partnership.Partners who come to us with 'no following' need to ask themselves one, often stark, question: why?
That is precisely the question the law firms we are approaching on behalf of our candidates will be asking us. What has a partner without following been doing for the last x years?
Looking at it from the law firm's point of view, why would an organisation take on someone who is, from Day One, only going to be a cost item for the business, whom they are going to have to feed with existing work? There are two main reasons which this might be the case: skillset (ie skills that the law firm does not currently have and which it can afford to buy in) or succession (ie retiring partners who will potentially leave clients unserviced). Either forms the basis for a suitable business case to be argued primarily from inside the firm and may circumvent the issue of following.
It is worth noting that even in these circumstances, faced with the choice of a partner with following and one without, the firm will almost invariably, all things being equal, go for the former.
In essence, whatever your proposition, a robust business plan is key.
Getting the mindset right
It is very important to remember what you are trying to achieve in creating a business plan. This is not some abstract exercise. This is about taking your career to the next step, whether that be the borders of partnership, a mid-career step-up to a new firm or the last furlong of a successful career with a quiet retirement at its end.That is why it is vital to get yourself into a positive, confident mindset before you begin the process.
Although it may be that there are good reasons for why a partner may not have readily portable business (such as working exclusively for heavily institutionalised clients who only instruct law firms on a restricted panel or working exclusively in a support role for major clients eg tax or pensions), the assertion that a partner has 'no following' often breaks down under examination.
Often, partners are unwilling to even think about following, conscious not to oversell or to promise something they cannot deliver.
In some cases, you may be thinking that you do not wish to 'take' clients away from your current partners, hence depriving them of business; you may feel that your clients will not take kindly to a move and, in essence, you might feel afraid of even approaching them with the idea. Both feelings are misguided. We are talking about a simple business transaction based on personal relationships. Clients will go where they will, instruct who they ultimately feel comfortable with. If you wish to achieve the best possible result for yourself, be confident about the relationships you have with your clients. Don't overpromise but don't be afraid of relying on your own reputation and abilities.
Don't, either, be afraid to turn those relationships into numbers. If your business plan is well constructed, with due care to reflect trends in the marketplace, likely obstacles to achieving your goals and full of achievable objectives, there is no reason why it should not succeed.
The good business plan should be a confident statement of intent, not a set of gallows you will be swinging on if the figures don't outturn in the way you expect.
First steps: analyse your business
The first step is to take a long, hard look at what your personal business is all about. Look at all your clients, get billing figures for at least the last three years (unless they are quite new clients). Ask yourself the following questions:- What is my business proposition? Can it be summed up in a sentence?
- What is my client market? Do my current clients back up my business proposition?
- How diverse is my client base? To what extent is my client base dependent on one or two key clients? What percentage of my annual fee income do these key clients represent?
- What new clients have I brought on in the last year/two years/three years? To what extent going forward should my activity be focused on getting new clients?
- Are there any patterns to my activity which I can build on for a new firm?
- What fees have my clients generated for other departments over the past few years?
- What do I charge my clients? Are these rates palatable to the new firm? How might new rates affect my ability to retain and attract clients?
- What are my collection rates and debtor days?
- At what level are my contacts within these clients? (eg chief executive, finance director, head of legal, line manager)
- Am I comfortable naming these individual contacts in the plan?
A very detailed business plan may also look at which clients are the most profitable, but this is probably beyond the scope of most law firms' information-gathering capability.
The analysis of your current business - and which elements are potentially portable from your existing home to a new home - will form the core of the business plan and will be the area which comes under most examination from a new firm.
Setting the parameters for the plan
A good executive summary to a business plan, written after the fact, will include everything the casual reader needs to know about the plan. Facts, figures and projections should all be included.What should also be fixed by you at the outset is the scope of the plan. Allow yourself six months lead-in to begin with and project little or no revenue for that time. Try to work to months 7-18 for a true Year One picture. Try to look to Year Three if you are able in terms of increased fee income and staffing.
Set yourself targets which are realistic and achievable. Your tendency will be to underplay, because everyone likes to overperform on targets. This is a mistake. It will not gain you anything in the long run and may seriously compromise your attractiveness from the outset. In any case, if you are budgeting nothing or next to it for the first six months, you have already given yourself some grace.
Be realistic, positive and confident in your plan. Law firms like entrepreneurial characters who give out positive energy. They want someone who is going to come in, get business and provide more business for the rest of the practice.
The executive summary should also contain a salient figure relating to your personal portable business. This is the figure referred to as your 'following' - your recruitment consultant will use this figure to open doors for you. It must be robust and defensible. Failing on either of these criteria will only lead to embarrassment all round as your following collapses under scrutiny.
You can of course give yourself a 'spread' ie a lower, concrete 'guaranteed' figure and an upside, 'wind assisted' figure. One client may or may not have a particular need for your services in a year's time. How do you know what is going to happen...?
Client following: what will follow you?
Remember, clients are not required to follow you from one firm to another. Nor, despite what many firms may try to enforce, are they required to stay with your current firm. Your firm may, if things go sour, try to enforce restrictive covenants on clients following, but legal opinion is divided as to whether they are enforceable. Clients do not generally take kindly in any event to being told which law firms they can or cannot instruct, and your knowledge of your firm and your clients will be of vital importance here. It may be that you have non-solicitation clauses, which are generally fairly specific and can be actionable. If in doubt, take legal advice on these.In order to give an indication of whether fees are likely to follow, many law firms like to see a 'hot', 'warm' or 'cold' rating beside each client name. Somewhat obviously, 'hot' clients are those which are pretty much guaranteed to follow; 'warm' clients present a reasonable likelihood, a grey area if you like. 'Warm' clients are likely to be swayed by your personal relationship with them, resources at the target firm and what is left at your firm once you are gone. Go for best case scenario with 'warm' clients. 'Cold' clients refer to those where there is an outside chance of generating revenue. They may be clients where you are not the main client partner, where you have not done a lot of work lately or where the relationship is spread heavily across the firm and where there is decent backup if you are not there. Again, go for best case scenario, but don't oversell here. Make sure you are able to articulate cogent reasons why you might be able to gain work from that client.
Structure of the business plan
The structure should flow naturally from what you are having to say, but a typical basic skeleton structure could be:- Introduction/executive summary - setting out the proposition and headlining the main points from the rest of the plan; should also include some form of the proposition.
- Market overview - your personal view of your personal marketplace. Anything which supports your view of the market, such as quotes from studies or articles in the press, is useful here, so do some research and background reading if necessary.
- Business analysis - the meat of the plan. Here you will talk about your personal practice. Give billings for the last three years by client, perhaps in a table, resulting in a salient figure for each year which shows the development of your practice through the three years and which you can use in the executive summary. Be sure to draw a distinction between your Matter Partner Billings (which you are responsible for) and your Client Partner Billings (work your clients will bring to the firm as a whole). Client Partner Billings are every bit as attractive to a new firm as Matter Partner Billings.
- Client analysis - go through your clients one by one, giving a description of the client, your contact, some detail on your relationship with them and (it does no harm) repeat the billings figures for the last three years (where possible). Tag each client 'hot', 'warm' or 'cold' and give an estimated figure for a first full year's revenue from that client (months 7-18, as stated above). That will in turn lead to a first full year's target for you. You can also work backwards from that point - if, for instance, you feel you need to generate £600,000 in fees in order to justify your £200,000 package, you need to figure out how you're going to get there...BUT remember that is HAS to be defensible and ultimately achieveable.
- Business development. What does your business require in order to grow? What kind of support from the law firm's existing resource? What kind of marketing support? This is time to think about conferences you might need to go on or other marketing events appropriate to your business. Remember the classic 80/20 rule. 80% of your marketing resource should be spent on existing clients, 20% on getting new clients.
- Future business. This is where you can do some blue-skying. Make any developments in the plan realistic and achievable. In order to grow revenue significantly you are probably going to have to take someone on. Think about what level of assistant would be ideal to support your business. If necessary, make provision for another partner in year three (or even two). The sky really is the limit here, as long as everything in the plan is realistic and achievable. It is helpful here to note likely obstacles to achieving the plan. Traditional business plans rely on a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), which you may choose to use. It is quite a crude but effective and well-understood methodology. Think about how your clients are likely to develop. What happens if your key clients are taken over? How might you replace the work if it went elsewhere?
If you are going into exhaustive amounts of detail about things, you may want to put things into an appendix. Lists of target clients (if there are a lot) may be appropriate for this, or large numbers of smaller clients which you can aggregate in your earlier client analysis. You can also put your cv in as an appendix. Full case lists and deal lists are also helpful here, to show breadth and depth without boring the reader by being in the main body of the plan.
Tailoring the plan to the target
Inevitably, your business plan is only one side of the story. The target firm will also have resources to bring to bear, issues, obstacles etc which will be relevant. There is only so much you can guess at. Most firms will, these days, work with you if they are sufficiently interested, in order to make sure that the business case stacks up to their partners. But they will want to see the colour of your money before they do that.Make sure you work on making your side of the plan as good as it can be without thinking too much about what might be at a particular target firm. You can by all means make reference to particular clients you know they act for or particular practice areas relevant to yours where they are well-regarded, but avoid going into too much detail as you do not want to give the impression that your plan is in any way dependent on what is currently in place at a particular firm or indeed that you have any 'territorial' aims as regards incumbent partners (who may feel slightly threatened by your presence on the field in the first place).