Do you plan or merely react? Do you manage your practice or does it manage you? Lawyers and practice advisers preach the importance of strategic planning to long-term success.

While nothing is guaranteed in life or law, attorneys and firm management consultants say taking a step back and looking at the big picture, whether you're a solo practitioner or at a large firm, is essential to knowing where you've been, where you're going - and how you will keep growing. And such a strategic planning process is the best way to achieve success in the long run, even if it seems like you've been doing just fine dealing with the day to day.

Managing change. "The world is complicated. It doesn't stay the same forever," says Craig Caldwell, department chair in marketing and management at Butler University and a speaker on strategic planning for law firms at the April 16 Solo & Small Firm Institute program in Peoria (see sidebar). "Firms can get blindsided by getting too down into the weeds of their business. It's necessary at times, for the livelihood and success of the firm, to pop your head up, see what's going on in the marketplace, and see whether your firm needs to make some changes."

Lack of strategic planning might not negatively impact a law firm as quickly as another type of business - say, a technology firm - because of the highly regulated legal environment, which provides a buffer of sorts from economic and other changes, Caldwell says. "But if there are aspirations for growth, or skill sets within the law firm that simply aren't as in demand as they used to be, you're going to find yourself in a scenario where strategic planning is going to be critical," he says.

One current scenario that's affecting consumer-oriented firms in particular is the trend toward websites that help people handle some of their own legal matters, Caldwell says. "They have a choice to make - do we find other ways to get those dollars that we've lost to law.com, or do we join that site?" he says. "If we decide the Internet's the thing, let's chase that business."

The most common strategic issue facing firms in recent years has been how to respond to the economic shift in the legal market since the Great Recession, with fewer clients and a tighter bottom line, says John Olmstead, principal at St. Louis-based consultancy Olmstead & Associates.

"The process doesn't change. The need for strategic planning doesn't change," he says. "Sometimes what changes is the fundamentals and what's going on, and what firms need to develop strategies to deal with. In recent years, most of the challenges firms are having are the same, everything from pressure on the economics, to resistance from clients to fee increases."

Don't just react - plan. It's easy for firms to lose sight of the big picture as they're working through day-to-day matters, says Terrence Truax, managing partner at Jenner & Block in Chicago.

"You have your nose to the stone, you're working flat out as hard as you can, and it's difficult to step back and ask those important questions: What is my priority? Where do I want to be in 24, 36 months?" he says.

"That doesn't mean you don't react to the moment," Truax adds. "Every day is filled with new opportunities and new curveballs."

For smaller firms and solos, there's always a temptation to do nothing but react to the moment, says Bill Wilson, principal at The Law Offices of Wilson & Wilson and The Center for Estate Planning and Elder Law, based in west suburban LaGrange.

"But then you're just going to work each day and letting your environment dictate to you how you're going to manage and work your law firm," Wilson says. A strategic plan provides "a guidebook where you're intentionally doing things to get you to a certain point, instead of having clients or other external forces dictate to you where you're going," he says.

When it comes to planning, firm size matters

Olmstead figures that probably three quarters of large firms have strategic plans, while mid-sized firms in the 50-attorney range are closer to 50-50, with the likelihood shrinking to 15 percent or less of firms with 10 attorneys and fewer. "Different approaches to strategic planning [for different-sized firms] would be appropriate," he says. "The challenges and issues are different."

Big firms hire big help. In larger firms, top partners typically sit down, figure out where their practice has been growing and where it's become stagnant, and decide whether and how to recast lines of business that fall into the latter category, Caldwell says. His talks aren't tailored to large firms because "they have a lot of their own educational systems - they hire some hotshots and bring them in and pay them a lot of money to walk them through the strategy," he says.

Jenner has its practice broadly divided between litigation and business transactions groups, with several disciplines in each, and at the beginning of each year each group develops its own strategic plan. Those are then "vetted and cross-examined, and people are being encouraged and challenged in a positive way," Truax says.

"We ask all the basic questions any business enterprise would be asking. What do we look like today? What are our strengths, weaknesses, opportunities, and threats? Where do we want to be in 12 months, and in five years?"

The plans are revisited throughout the year iteratively, Truax says, which "requires focus and discipline, making sure everybody stays on message. They're refined throughout the year; we ask people to pull together their plans and test them."

Smaller firms - breaking out of crisis-management mode. In smaller firms, there are fewer people involved and fewer decisions to make but also less time, Caldwell says. "People don't engage with the same discipline because they're doing work," he says. "They're fighting fires, meeting deadlines, getting things filed in court." Plus, he adds, "They don't have the resources to hire an expert to do it for them."

Small firm attorneys need to pick out a time and day, on a regular interval, to pop their heads out and look around, Caldwell says. "It requires the discipline to say, Friday afternoon, from noon to 5, we're going to sit down, and not be billable, and work through some stuff about what we're going to be when we grow up," he says. "Three to five years from now, what are we going to be doing?"

Wilson finds it very important to "disconnect" when he creates his strategic plans, "meaning I get off premises," he says. "I need to do that where the phone isn't ringing, or I'm tempted to look at my e-mails.

"I go off site and hibernate. Then I come back and talk to the people I need to talk to, my bookkeeper, marketing person, other attorneys, to figure out how are we going to get there, and what do we need to do? I start soliciting some advice. I have my own ideas, but they're more down in the trenches and know a lot of things I don't know, or forgot, or need to keep in mind."

Firms should not confuse strategic planning with crisis management, Olmstead says - and the latter is more urgent. "In some of the smaller firms, especially, I've run across some where I've advised them, 'You guys have so many tactical issues going on in the swamp; you're trying to survive day to day. Until you do some things as far as operations in the short term, maybe you shouldn't think about strategic planning,'" he says. "It's hard to think long term when you can't think through the current day."

For example, Olmstead has worked with firms who have legal accounting software but need to hire a consultant to pull reports for them. "If they're not using technology right, and they can't even pull any basic reports to know how they're performing financially, they can't pull together reports as far as what they're paying their people, if they don't have a website or some of those basic things - and you'd be surprised how many don't. If they've got 14 or 15 attorneys and don't have an office manager in place," they should take care of that first, he says.

The challenge intensifies for solos. Sole practitioners face particular challenges, Olmstead says, because figuring out what they are trying to do and where they want to take their practice - and what steps they need to take to get there - ideally should not be a solo activity. "It's hard to do a long-range strategic plan by yourself," he says. "It's not something you do in one sitting, and you need somebody looking over your shoulder, whether that somebody might be your spouse or your staff person."

Olmstead worked with a solo practitioner in Iowa who did not realize he was only paying his associate of 10 years a $60,000 salary - or that he himself had only cleared $20,000 the previous year. "He sent me his numbers, and I'm looking at the financials, and they're terrible," he says. "When I say I ought to be seeing $300,000 in fee revenue per year, that's an achievable number, and I've got some who are barely doing $100,000. I told one guy, 'I hate to say this, but your effective rate is $45 per hour.' It involves internal analysis and benchmarking."

The importance of implementing - and measuring results

Because attorneys tend to enjoy discussion and debate, the process of putting together a strategic plan can seem natural and appealing, Olmstead says. "The bigger challenge is getting them to implement anything. [The plans] go into books, they go on shelves, and very little happens as a result," he says.

A plan that isn't implemented is only a list of suggestions. Here's how to increase the odds that strategic planning will lead to real progress.

Don't bite off too much. It's important to keep things manageable, Caldwell says. He cautions smaller firms not to take on more than one or two significant strategic initiatives at one time. "To take on more is simply not tenable because there are not enough horses," he says.

That goes for the planning document, too, Olmstead adds. "Most of the [plans] I've done for 15 and 25 attorney firms and under, particularly even smaller ones, will typically be 10 pages or less," he says. "To me, if you can keep them briefer and to the point, as opposed to carrying on and making these things too elaborate, they've got a much better chance of implementation."

Define goals clearly. "If you're going to get into family law going forward, you have to have some ideas about what success is going to look like before you launch it," Caldwell says. "If you're wanting to grow your corporate law practice, maybe it's the snagging of three to five major accounts, something that will let you know you're getting a little bit closer to what the plan had set out for you."

Make people accountable. Be sure to assign responsibility for specific planks of the strategic plan, Caldwell says. "To the extent you can reduce implementation down to metrics that let you know how much progress you're making, that's critical," he says. "And then also, it's important to get back to people in the organization with feedback about how things are going."

Olmstead agrees. "I want to know: When are we going to do it, and whose name am I putting in the box, and when is this task going to start," he says. "It needs to get down to the nitty-gritty, hold people accountable for some of the action items you're going to get done. Otherwise, it's just one of those non-billable activities."

Move quickly. While a larger firm might take six months from the kickoff meeting to the presentation at the end, smaller firms can get such plans finished in a month - and that's probably wise given that they don't have the professional administrators and other support staff in place to help out, Olmstead says.

"They may only have one shot at doing it," he says. "They're not going to have the patience for a time commitment over a period of months. It might have to happen in a retreat setting. You do the pre-work, financial review and analysis, beforehand. And then we lock ourselves up for a day or two in a retreat-type setting and basically work through the whole process."

Measure results. To measure success financially and otherwise, Jenner uses a range of metrics and compares performance throughout the year against the strategic plan, monthly, biannually, and annually, Truax says. "That will guide us as to whether we're moving forward with respect to that strategic objective," he says. "There may be all kinds of reasons why your performance deviates from the plan, but we measure that on an ongoing basis."

What sort of metrics? Wilson's strategic plans go out five years and attempt to project for each year the gross revenue, net income before taxes, the number of people he will employ, and numbers of matters he expects to handle. He measures his marketing success in terms of numbers of articles published, newsletters contributed to, seminars delivered, and new contacts and referral sources. "From that, we would also try to back in the number of new clients we would get each year," he says. "These obviously are all projected goals."

Wilson considers his plans living documents that he revisits continuously to see how well the firm's efforts are matching the vision laid out. "If my plan is to increase estate administration and asset planning, and I see we're putting too much time into real estate, I'm not adhering to my plan," he says. "The reason it's important is because it's a guide for a firm to keep on topic and on goals, so we can always look back and bring it up at a monthly meeting."

Ed Finkel is an Evanston-based freelance writer.