What Makes a Good CEO: A Guide Towards Your Law Firm’s Success

Although being a great lawyer is essential to the success of your law firm, it is simply not enough if you want to grow your law firm into a profitable and large business. 

Law firms are commercial entities that thrive when there is a leader in charge who understands the nature of business. Without someone acting as the law firm CEO, the firm risks remaining stagnant.

However, a good chief executive officer lawyer is not always easy to come by. In addition to being a great lawyer, a law firm CEO must also be a great business leader. Although many lawyers know much about business, they may not understand what it takes to lead a law firm to financial prosperity and growth. 

Fortunately, the skills needed to take on this role are accessible and learnable. With the right direction and CEO tips, most lawyers can learn how to become an effective law firm CEO.

What Is a Law Firm CEO?

A law firm CEO is the highest-ranking executive of a law firm. Their job is to lead the law firm to profitability and sustainable growth. 

Accomplishing these goals requires a law firm CEO to have or adopt the mindset of a leader who cares not only about the law firm's profitability but also knows or can learn the steps necessary to achieve these goals. 

In contrast with a non-law-firm CEO, a law firm CEO is not only an executive but also a lawyer. As such, the CEO of a law firm can make major decisions in both the financial and legal arenas.

What a Law Firm CEO Does 

As the leading executive in a law firm, the law firm CEO's job is to run point for their law firm and navigate the many situations and challenges that arise. 

The CEO of a law firm is the decision maker who must take action when others are seeking guidance. They must make difficult choices that directly affect the firm's welfare, and they are constantly reevaluating the direction their firm is taking, adjusting the course whenever necessary. 

Additionally, the law firm CEO is the face of the company and thus handles much of the media and publicity for the firm.

Focus on the Big Picture

As the leader of your firm, you should have a clear vision for the future, which requires that you be able to focus on the big picture. You should also know about all of the many details that are relevant to your firm. However, you should not become bogged down by these details. Your job is to stay true to the vision your firm is trying to attain.

Strategizing is of utmost importance for keeping you focused on the big picture. Proper planning that breeds detailed strategies will be essential to your goal-setting efforts. The details you flesh out while developing your plans will work as guideposts and milestones on your firm's journey.

As the law firm's CEO, it is essential to always know the destinations and goals of your law firm. Without knowing where the firm should be headed and what smaller goals it should be accomplishing along the way, the business will eventually suffer and stagnate. 

In some cases, it may even regress, which is common when a firm's leader has provided no clear direction for the firm. With a clear law firm growth strategy and proper planning, a good CEO of a law firm will be better able to execute plans and take effective action for the benefit of the firm.

Understand the Four Financial Statements

A law firm CEO's job is to make sure the law firm is financially healthy. This requires them to know and fully understand the four financial statements, each of which encapsulates a key aspect of a law firm's financial performance.

Profit and Loss: Profit and loss statements are like conclusions. The numbers on these statements tell you whether your firm is running in the red or the black and where.

Balance Sheet: As the CEO of a law firm, you should regularly study your firm's balance sheet. There, you will find a listing of all of the firm's assets and liabilities, as well as built-up equity. Like most law firms, the bulk of your assets is likely mostly cash. And your list of liabilities probably includes:

• Accrued payroll
• Payroll taxes
• Revolving debt
• Loans

Constant monitoring of your balance sheet will help you plan for the future and keep liabilities in check.

Statement of Cash Flow: Cash flow shows the path of all the monies that your firm takes in. When your firm receives payment for services or other reasons, the cash must go somewhere. As the law firm's CEO, checking the cash flow statements regularly will keep you abreast of when money comes into your firm and where it goes.

The cash flow statement differs from the profit-loss statement in a few key aspects. Check out this Harvard Business Review article for more information on the differences between the two.

Accounts Receivable Aging Statement: The information found in this statement is vital to any law firm CEO interested in assessing their firm's economic strength. 

The statement contains information regarding payments you are owed, including how much and who owes them. It also tells you when the payments became due and other pertinent information.

The beauty of these types of statements is their ability to demonstrate where payment problems lie. Sometimes, a payment issue may be caused by a particular client with solvency issues, or the problem may be due to the relaxing of standards regarding payment deadlines.

Building the Best Team

A good leader has an even better team around them. As a law firm CEO, you must think and behave like a coach building a championship team. A good coach recruits the best and trains and prepares them. A CEO of a law firm should do the same when looking for attorneys and other legal staff.

Coaches spend a lot of time and energy recruiting top candidates, and you should, too. Make sure to have a comprehensive recruitment program that covers all the main bases, and you will likely have a much broader and more qualified worker pool to choose from.

No matter who you recruit, it is important to remember that your likability is not a prerequisite to being a good CEO. In fact, if you invest too much time in trying to get your team to like you, you will invariably end up failing as a law firm CEO and potentially cause damage to the firm.

The team you build should be composed of competent professionals who can handle conflict when it comes their way. Without a team of thick-skinned professionals, you may waste time and energy trying to insulate your workers from painful decisions and consequences. 

It is better to expect to be unpopular at times and have team members who can take a dressing down when necessary.

Preparing Your Team for Changes 

Change is essential for a thriving and growing law firm. A law firm CEO should not only recognize this but also be an instrument of positive change in the firm. They should be prepared for change and understand how to effectively prepare their team for expected (and unexpected) changes.

Spending time focusing on the future is key to preparing for change. Generally speaking, law firm CEOs can focus on three types of futures: short, medium, and long-term. All three are important and should be considered. 

However, it has been well documented over various studies and surveys that those law firm CEOs who focus more on the long-term fare much better than those who do not.

Focusing on the long-term helps make a law firm CEO better able to deal with changes because they can anticipate them before they occur. This anticipation comes from focusing on the big picture and shying away from concentrating too much on short-term issues. 

Additionally, long-term thinking and strategizing lead to a healthy view of setbacks as an integral part of attaining goals rather than viewing them as failures. According to some numbers, CEOs who see setbacks as normal and essential are more likely to find success for themselves and their businesses.

Managing, Not Doing

For some reason, many CEOs of law firms and other businesses, in general, tend to want to do it all or a lot of whatever it is they are supervising. However, when there's a competent team in place to handle a particular task or obligation, there's no need for the law firm CEO to do anything but manage.

It's all about delegation. If you are interested in learning how to be the best CEO of a law firm, you'll never forget about the delegation of jobs and duties. Delegating work requires you to be a confident leader with strong communication skills. Those to whom you delegate tasks need firm guidance from a leader who is in charge.

The key to successful delegation is the existence of a system or operating procedures that give clear guidance on how delegated tasks are to be done. For example, if you delegate a particular attorney in your firm to accomplish a certain task, this attorney will likely need guiding parameters to get the job done in a satisfactory fashion. 

Without guidance, you can expect workers to lose a bit of confidence when delegated a task. They may also do the job in a way you don't prefer when not managed appropriately. The answer is never doing the job for them but educating them on how to do it properly.

Top 7 Tips for Becoming a Great Law Firm CEO

1. Your Business Will Grow as Large as You Grow as a Leader

Do you want your law firm to grow into a profitable business? Then, you must grow yourself as a leader. Your law firm is dependent upon your ability to learn and implement the strategies and plans necessary to turn it into a strong, money-making law firm that continues to attract clients.

Get the Education You Need

There are plenty of classes and materials out there that can teach you some of the basics of how to be a great CEO. Classes teaching basic business knowledge and skills all the way to masters-level courses are available for you to learn the fundamentals and specifics you need to take your firm to the next level.

Acquire Leadership Skills

Knowledge is great, but leadership is another component of being a successful law firm CEO. Some leaders are indeed born, but many must learn how to take leadership roles. Even those with an innate ability to lead would do well spending time on the basics of leading in the business and legal worlds.

2. Acquire a Law Firm CEO Excellence Model

Stacking the Odds in Your Favor: You likely know how competitive the legal market is. In fact, if it is anything like for-profit corporations in general, the odds are not exactly always on your side. In the business world, 10% of companies produce 90% of the wealth. This means aspiring CEOs in the other 90% of companies have an uphill but winnable battle requiring them to continually reconceptualize their goals, make bold moves early on, and keep active in the pursuit of finding new ways to optimize their firms' business.

Organizational Strategies and Talent: Talent and strategy are two sides of the same coin. A successful law firm CEO will know how to strike a balance between the two by focusing on each one without excluding the other. Successful law firms tend to have top CEOs who actively take stock of their company's employees and assign talented individuals to tasks suited to their abilities. They don't hesitate and leave individuals in positions best suited for others. Successful CEOs also spend time assessing their company culture through various sources beyond employee engagement to get a comprehensive portrait of their firm's health.

Effective Teams and Processes: Dynamics Trumps Mechanics – When it comes to planning and strategizing, there's a lot that looks good on paper. However, in practice, many of the plans a CEO and other law firm leadership executives develop may lack the functionality they need, or other problems may manifest with a particular plan in action. Experienced law firm CEOs anticipate problems like this, which allows them to take wrinkles in stride and counteract negative outcomes with constant observance and adjustment of performances. CEOs also effectively battle against organizational biases and constantly work to foster coherence.

Board Involvement: A board of directors is a powerful group with much influence and authority over the company it represents. It is beholden to shareholders and, thus, has the financial interests of the firm as its primary concern. CEOs with disdain for board members typically shut them out and act out of concert with them when doing the opposite would lead to better results in the long run. Law firms with CEOs and board members who collaborate can focus on forward-looking plans and visions and hash out and solve many of the issues facing a firm and its profitability for growth. CEOs can also be instrumental in strengthening the board by suggesting the addition of particular board members with expertise that could benefit the firm.

Stakeholders Outside of the Firm and Long-Term Reasons for Being: Good business CEOs know what their companies stand for and the values they hold. Excellent CEOs act on and enforce these values. And we are not talking about mottos and slogans. The core values and purposes of a company form the whys of a law firm or any other business and often include a component that is beneficial to society. These core values typically represent everything not included in the category of making money. They give investors further reasons for putting their money with a firm beyond profitability. An excellent CEO will constantly be strengthening these core values and reducing a firm's risk of running afoul with customers, stakeholders, and other important parties.

Excellent CEOs Look After Themselves: The life and work of a CEO can be quite lonely, despite the fact that they are typically in touch with multiple people involved in the business chain each day. The research showing that CEOs regularly deal with frustration, loneliness, and disappointment is not lacking. As the saying goes, "It's lonely at the top." However, law firm CEOs can do things that help insulate them from these undesirable results, such as careful time and energy management. Carefully planning and plotting every aspect of meetings and law firm procedures can help reduce the load CEOs must carry. CEOs can also train their staff to do the same and end up with more time for other important firm business.

3. Demand Concrete, Accurate Data

You have to measure success in order to truly evaluate your law firm. But what is the best way to measure it? 

The obvious answer is through the analysis of a variety of data and information. And this data and information need to be reliable and easily obtainable. It must also be available to you in a timely manner in order for it to be considered valid and viable.

A successful CEO of a law firm will make sure there are multiple sources of information and data and various methods available for managing performance. 

However, establishing these sources of information and data is impossible without strong planning and strategizing skills and a solid commitment to the collection and organization of this data and information. It is also infeasible without a strong team of employees surrounding the CEO.

4. Analyze

Most successful CEOs spend ample time each day analyzing many aspects of their law firm. They know that critical thinking is not only beneficial to the growth of their law firm but also required. It is not good to analyze pertinent business metrics and information only sometimes or at long intervals.

Focusing weekly on firm objectives and goals will help you monitor your firm's progress toward milestones and allow you to tweak certain parameters for optimal firm performance. However, it's important to employ a top-down method and philosophy when analyzing how to grow your business. Doing so will help prevent you from getting bogged down by many of the distractions at the bottom that in no way help move your firm forward into the future.

Employing a top-down approach necessarily means focusing on expanding your company's value and offerings. It requires you to plan as much as a decade ahead as to where you want your firm to be. With this approach, you get a more comprehensive picture of what strategies work to advance or impede your firm's growth.

5. Study Core Areas to Outsource

Outsourcing is a way for you to get tasks done by others who are in a position to do these tasks better, cheaper, or faster than you can. No CEO is superman. However, an excellent CEO can give the appearance that they and their firm are exceptionally competent by outsourcing tasks at the appropriate time.

One of the most common areas of tasks that great CEOs of law firms often outsource is marketing. Marketing is the lifeblood of any business; without marketing, law firms have fewer clients and, consequently, fewer profits and growth. 

However, law companies aren't typically capable of handling a successful law firm digital marketing campaign. So they outsource their advertising. The same holds true for other aspects of their business, such as law firm accounting, recruiting, and even legal services.

6. Acquire a Specific Set of CEO Skills

Most successful CEOs of law firms are professionals who know what skills are necessary to successfully grow their law firm. No CEO or law firm can handle every task or duty effectively. But there are some skills that CEOs should acquire that will help make them more effective leaders.

Foresight and Planning

• Think Creatively: Successful CEOs need foresight to effectively run a law firm. Foresight allows them to anticipate problems and deal with them creatively before they occur. An effective law firm CEO with self-confidence can deliver unique solutions that efficiently handle bumps in the road in the moment.
• Perform a Cost-Benefit: Foresight also allows a law firm CEO to take greater advantage of profitable situations by performing a cost-benefit analysis on every move the firm makes. With an experienced chief executive officer behind the wheel, the pros and cons of each decision are fully known before any action is taken.
• Stay Up-to-Date on Business: A growing law firm has a lot going on. A competent law firm CEO stays abreast of all pending and actual business, focusing on future opportunities. If you're a lawyer becoming CEO, invest in tools that help you to stay on top of trends.

Flexibility

• Flexible Mind: Rigidity is not the best business strategy. Lawyers who are CEOs must have a level of elasticity that allows them to pivot on a dime and change course when necessary. To make the leap from lawyer to CEO, recognize that plans always change. Effective CEOs can adapt when and where necessary.
• Preparation and Scenario Building: You can't predict the future, but you can play out scenarios that are likely to occur. Through this, you can plan how your firm will respond. Knowing which steps to take when an event does occur gives your law firm the flexibility it needs to move ahead.
• Embrace Improvisation: If the legal industry were predictable, a computer could handle much of your planning and business activities. However, you never know what can happen. Therefore, as a CEO lawyer, it pays to embrace the art and skill of improvisation to help you make decisions on the fly.

Dependability

• Reliability: Law firms continue to get clients because they are reliable. There is no substitute for this essential trait. The law firm CEO can foster this reliability in every move they make. If you're considering a lawyer as CEO of law firms, look for reliability. By carefully serving metrics and performance reports, potential issues can be averted before they become problems.
• Consistency: Similar to reliability, consistency refers to the quality of your legal services over time. Working to guarantee this consistency is one of the most important jobs a law firm CEO has.
• Predictability: Good business is predictable business. It allows clients and other professionals to make reasonable assumptions about the future and their business dealing with your law firm. This is why high-performing CEOs are in demand; they give you assurances about the future that you can bank on.

Ability to Work Within Teams

• Team Selection: The best CEOs of law firms take time to assemble their teams after considering many potential employees. They know that team dynamics will determine how efficiently the law firm will run. As such, they set the parameters for hiring as they see necessary for the firm's best interests.
• Productive Dynamics: The ultimate goal of a team is to produce. In some cases, the demands on law firms require them to ramp up production, whether in the litigation or transactional realms or in marketing. Law firm CEOs make sure their teams can handle the load while continuing to produce quality work. CEO success depends on it!
• Positive Dynamics: Toxic workplaces are a reality. Without the proper leadership that a great CEO can bring, your workplace can slide into toxicity during stressful times your law firm may be experiencing.

Ethics

• Good Faith: Good faith requires two parties to conduct business fairly and with honor toward one another. Sadly, there are law firms that don't operate in good faith. This is typically for financial reasons. Reliable CEOs of law firms see this as dishonorable and always operate with full transparency with their clients. With an ethical CEO, law firms will often grow.
• Respect: The legal profession is a respectful one. As you discover how to be a successful CEO, you'll find that maintaining this respect is not accomplished simply by winning large settlements. There's a manner in which lawyers should behave toward clients and others to keep the legal profession respectable.
• Discretion: Law firm CEOs respect the privacy of their clients' lives and have the experience to make appropriate decisions for their cases – decisions that respect the delicate information and situations their firms deal with.

7. Learn from Things that Went Wrong

No ship crosses an ocean without some problems popping up. You can effectively deal with risk to your law firm by creating multiple contingency plans that address specific issues. Keep in mind that although you did not foresee a certain risk, this does not mean that risk was not unforeseeable. 

In other words, when something goes wrong unexpectedly, it may be a good opportunity to learn why neither you nor your team could predict its occurrence.

When you're learning how to be a good CEO, instead of moving on from a bad situation, take the time to analyze every aspect of the occurrence to determine why things went awry. Doing so is especially helpful for small business owners who may not be able to absorb as many negative blows as a larger law firm.

What Makes a Great CEO?

There are many ways to answer this question. The Harvard Business Review came up with its list of four specific characteristics that qualify a person as an effective CEO. They are:

1. Successful law firm CEOs are decisive and great decision-makers
2. Excellent law firm CEOs strive to make a big impact and create significant value for stakeholders
3. Great law firm CEOs learn from their mistakes and welcome them as part of their success
4. Effective law firm CEOs have great follow-through, and they deliver

If you are interested in taking your law firm to the next level, keep these tips for CEOs in mind. If you follow the right CEO advice, you may choose to be the CEO of your law firm instead of just the head lawyer. 

More goes into operating a successful law firm than simply winning cases for clients. The CEO mindset is needed as well as critical thinking, team building, and analysis of metrics for the growth of your firm.

What makes a successful CEO? High-performing CEOs know when they need a partner. Grow Law Firm is a premiere high-performance law firm digital marketing company ready to help you take your law firm to the next level of profitability and sustainable growth. Contact our office today for a consultation.