Most effective business plans, if not done correctly, are relatively useless. Why? Because many partners end up borrowing a template from a friend at another firm, and they just fill in the sections.
There is not that much thought about why certain information is included, and how it fits with the LPQ and the overall business case for joining the new firm. Effective business plans often read like a rehash of a partner’s website biography and contain duplicative information that will be included in other documents as part of the due diligence process.
But effective business plans don’t have to be superfluous, and here are recommendations.
There are three main questions partners have regarding effective business plans:
- “Should I have a effective business plan?”
- “If so, when should it be presented to the firm?”
- “What should the business plan include?”
Main Purpose of Business Plan
Before I answer the above three questions about effective business plans and it’s important to explain that the purpose of a effective business plan is to show your future vision for your practice at a particular firm.
Effective Business plans are used in conjunction with a Lateral Partner Questionnaire (LPQ), which is a detailed questionnaire that focuses on various aspects of your practice and includes questions about the historical, current, and projected financial aspects and economics of your practice. Taken together, these provide firms with the most comprehensive 360 degree view of your practice and how it will potentially fit in to the new firm.
In short: The LPQ looks at your past and present practice, and also encompasses projections for the future. Business plans supplement the LPQ by putting more “meat on the bones” about your current practice, where you want to go, and how you plan to get there. The business plan is also, at times, a stand-alone document that can be used at the new firm to present to the executive/hiring committee to explain why you should be hired.
Now let’s address each of the above three questions.
- “Should I have a business plan?” Answer: it depends.
If you have an immediately portable practice that is at least self-sustaining (meaning you can keep yourself busy with your own work), or the new firm has enough work to keep you busy based on your unique skillset, a business plan may not be needed. The information that you include in the LPQ will likely be sufficient.
If it’s unclear as to whether you may have enough business to keep yourself busy, a business plan is important to help explain your vision and plan for your practice. It’s a piece of the puzzle that helps the new firm answer, “What’s the likelihood this partner will be successful at our firm?”
- “When should it be presented to a firm?”
Do not present a business plan before you are interviewing (the exception is if you are coming from the government).
The business plan must be tailored to each specific firm you are considering, and you will learn important information during the interview process that you will use to help build your case as to why you and your practice is a good fit for the new firm. A big mistake is presenting a generic business plan. I remember attending a seminar a few years ago on lateral partner business plans, and the speakers (hiring partners at law firms) basically said, “We don’t like generic business plans and think they are sort of useless. If we actually want a business plan, it should be focused on our firm specifically.”
Your business plan ideally connects these dots: (1) what the firm wants to accomplish, (2) what you want to accomplish, and (3) how coming together could help you both accomplish these mutual goals. You are (obviously) unable to connect the dots if you have a generic business plan that is presented at the outset. As a result, presenting it after a round or two of discussions will enable you to connect the dots much better.
- “What information should it contain?”
The level of detail included in your business plan will depend upon your particular circumstances, where you are in the process, and what you wish to highlight. Below are the most relevant sections that can be presented. Think of this as a general lateral partner business plan template, which should be modified and tailored based on your specific situation.
DETAILS TO INCLUDE IN THE BUSINESS PLAN
- Practice Description. Briefly describe nature of your practice, including areas of expertise or specialization; ideal to provide breakdowns (e.g., example 30% M&A, 25% private equity, etc.).
- Practice Development to Date: What you have done to develop your practice to date. Although the LPQ will cover your business development track record, it doesn’t hurt to reiterate your main clients, origination track record over the past few years, and your billing rate.
- Highlights/Accomplishments: Any highlights about your practice (e.g., particular high-profile deals or cases) and/or industry recognition.
- Firm Citizenship: Leadership roles, etc.
- Key Strengths: What are your unique strengths as a partner? Where do you see yourself adding the most value to a new firm/practice?
- Future Goals: Where you want your practice to be in the next 3-5 years. For example, do you want to expand your practice area or enhance a particular industry focus? Are there additional clients you want to pursue, but you are limited at your current firm due to conflicts, rates, or geography?
- Industry Trends: What industries do you focus on? What is happening in your particular industries that could create more opportunity at the new firm? What are the untapped opportunities and how are you positioned to capitalize on them?
- Limitations or Challenges with Current Firm (this is optional, depending on the particular circumstances of your situation): Why are your future goals difficult to accomplish at your current firm? Note: the challenges can also be “softer” factors such as the manner in which client credit is shared is not consistent with the type of culture in which you enjoy practicing, etc. Be careful, however, not to come across as venting your frustrations. The more this is focused on business and limitations to your practice, the better.
- Connecting the Dots – Why the New Firm Could be a Mutual Match (this is perhaps the most important section).
- Your understanding of the new firm’s goals/strategic needs as it pertains to your practice (based on your discussions).
- How your background/experience could fit into the firm’s goals/strategic needs.
- How the new firm could help you (1) more easily accomplish your goals and/or (2) reduce some of the challenges with your current firm. In short, how could both sides come together in a way that meets everyone’s needs.
- Your Network of Contacts: Include a list or chart of people you would plan to continue receiving business from, and who would you expect to approach to develop new business. The ideal format for the headers is the name, company, title, and the nature of your relationship, including how long your have represented the client (if they are a current client). This can include the new firm’s clients to the extent it has been discussed already. If you do mention the new firm’s clients, be sure to take a collaborative tone that includes pitching together as a group and not as a lone wolf. Note: Some partners are understandably reluctant to “share their rolodex” too early in the process. If you are uncomfortable, it’s ok to hold off on providing too much detail regarding your network if it’s still early in the process and you are unsure if the firm is a fit. If the firm presses you for information on your network and future prospects, you can equalize the process by asking the firm to share information on their main clients/contacts as well, so it’s more of a “mutual brainstorming.”
- Specific Business Development/External-Facing Activities: Many business plans have generic sections such as “Writing: I plan to write articles” or “Speaking: I plan to speak at industry conferences to help get my and the firm’s name out there.” There is nothing wrong with this, but it often comes across as very generic. To make more of an impact, provide specific examples of what you have done to date, and what you plan to continue doing. For example, are you on the Board of any high-profile publications or do you often participate at certain industry conferences?
The business plan is not a one-size-fits all approach, but the above provides more clarity on the key issues these documents involve and how to best approach this part of the lateral hiring process.
