Redefining legal strategy in the ballistic Baltic

Dramatic strategic change in the legal profession is a global phenomenon, now impacting lawyers who had learnt to be reactive rather than proactive.

By Rolandas Valiunas, managing partner at Lideika, Petrauskas, Valiunas ir partneriai LAWIN

The ‘Baltic tiger’, ‘ballistic Baltic’ and ‘rising star’ are a few of the descriptions applied to Lithuania and its recent development. The World Bank has recently announced that GDP growth in Lithuania in 2005 and 2006 will be one of the most significant among the eight new EU members – six per cent according to forecasts.

When the country moved from post-Soviet oligarchic capitalism to a fast-growing market economy, business law firms in Lithuania were boosted to change their outlook to professional services. An incomprehensible novelty for legal advisers was understanding that their earlier reactive behaviour would no longer be effective. Proactive thinking and hunting for possibilities was now in vogue.

Clients stopped being ‘visitors on appointed time’ and became selective. A line of clients knocking at the lawyers’ doors, turned into a queue of lawyers at the clients’, especially foreign investors’, doors. More than that – clients started to work with more than one law firm, thereby holding them on a much shorter leash.

Increasing numbers of sophisticated transactions in the market also raised the demand for specialised legal professionals. A one-stop-shop business approach became more attractive.

Law firms had to re-consider their organisational structure and review their service portfolio.

Why reform?

In 2001, Lideika, Petrauskas, Valiunas ir partneriai LAWIN, the leading and largest business law firm in Lithuania (and the Baltic states), with about 30 semi-specialised business lawyers and seven partners, faced the need to identify and implement this new strategic thinking.

Even though it had been recognised as a leader in the Lithuanian commercial/ corporate field for a number of years, it became obvious that the firm could no longer rely on its built-up reputation for service quality. Although critical, quality could no longer determine competitive advantage as there were a dozen other players in this market delivering technically excellent legal consultations. Furthermore, a number of young law firms started to aggressively offer services at a very low price.

Where we started

In 2002, the firm nominated a group of change initiators from the partners, associates and administration to start the discussion with external consultants, trying to define the desired future for the firm, determining its long-term goals and key ways of achieving them. External consultants were expected to play the role of catalyst, driving the process forwards.

The first step for the group of change initiators was to identify the areas that needed urgent change. The external consultants completed the organisational climate survey and found several problematic fields:

Lack of knowledge of organisational goals (where is this law firm going?);
Imperfect organisational structure (no practice group, no clear responsibility, merely everyone reporting directly to the managing partner);
Defects in the evaluation of people performance and efforts, with no clear career plans;
Insufficient co-operation and communication among lawyers, including a tendency to hoard work and agreeing to work of any legal nature if the client was prestigious or important.

Change tools

After the problems were identified, the group of change initiators, together with consultants, discussed the specific tools that would help implement the new strategy:

Several strategic-planning workshops for partners, a plan of communication of the new strategy and a joint meeting for all people to discuss business goals would help clarify the firm’s vision and the setting of business goals;
A written evaluation on the effectiveness of current working processes, a plan of suggested changes in this sphere and the creation of client-relationship-management guidelines, would support a more structured and better arranged working environment;
Assessment of the law firm’s management process and a review of career opportunities, aimed at helping people understand their responsibilities, would build stronger motivation;
And, finally, implementation of a systematic training plan would support a friendly, open and co-operative culture within the firm.

Practical obstacles to managing change

Potentially problematic areas were identified and solutions found. But there was one major challenge left: to convince the decision-making levels of the firm that the changes were critical; and to make the partners want to participate in the creation of the new strategy.

The activists mapped out a scenario of how ‘the idea of change’ should be sold to the firm, including all partners. Together with external consultants, they made an internal organisational-climate survey and formulated concrete suggestions on how the situation could be changed.

One of the change supporters was sent on secondment to one of the most prominent Nordic law firms to see how strategic processes were managed there (her knowledge later served as a strong argument and convincing example of the real ‘success story’).

We were keen to give partners the opportunity to discuss the new direction, so several strategic-planning workshops were organised. Afterwards, we arranged one joint meeting for all our people, where the new strategic business goals were agreed.

Gradually, people became more accustomed to the idea of impending change, and even stopped fearing it. This preparatory or mobilisation stage lasted for about six months.

Strategy design, roll-out and execution

The main firm’s statements (vision, mission and values) were formulated, put down and conceived by our people. The long-term goals were discussed and a consensus reached.

But the actual implementation of the new strategic thinking started with an evaluation of current working practices. This resulted in a plan of suggested change and, in less than three months, five practice groups (corporate and Ì&A; finance and tax; trade and technology; dispute resolution and transport) were created. The practice groups are led by partners who are leading specialists in respective practice fields. Thirty partially-specialised lawyers were also accredited to specialise in certain fields of law.

Creation of the practice groups has led to a need to implement project management as a new working-process management tool and a new era of internal cross-selling has started. An increased number of billable hours has proved that the restructuring was a positive move for the firm. Simultaneously, the law firm’s managing process was reviewed.

After a few months, this led to the establishment of four support functions: human resources; quality; marketing and PR; and client-relationship management. These are led by the associates, which helps fill the gap that can exist between partners and the rest of the firm in the legal profession. It has also worked as a perfect communication channel to the firm’s associates. Furthermore, to improve back-office work, we hired a professional administrative and finance director and, after a further six months, also hired a professional marketing and PR specialist.

Now, instead of dealing with some 40 lawyers and about the same number of administrative staff, the managing partner has ten (although still too many) reporting persons: five partners heading their practice groups, four associates responsible for the support functions; and the finance and administrative director, managing the back office.

All these people have started to hold periodical meetings within the managing group. And every December, as of 2003, the managing group has a general discussion on the firm’s action plan for the coming year, where the practice groups and support functions present their separate plans in line with the general plan of the firm.

The assessment and change of our managing process has helped our people define their responsibilities. Most likely, it has resulted in greater motivation.

The strategy design and roll-out took almost a year, with plenty of time spent on different discussions; but looking back, the implementation of the new strategy was right on time.

In addition to the firm’s reputation and the expertise of our professionals, the efficient practice-group structure and strong specialisations proved to be a key competitive advantage against other Lithuanian firms where individual lawyers still tend to deal with different fields and have no organised practice streams.

As experience has shown, the successful launch of practice groups and process management has further strengthened the firm’s leadership in the market. Chambers Global and the Legal 500 now recognise Lideika, Petrauskas, Valiunas ir partneriai LAWIN as the number-one Lithuanian law firm (that is, single firm in the top-tier) in corporate/commercial. In 2005, Legal 500 has granted the firm number-one rankings in seven out of nine ranked categories, which also highlights the firm’s capabilities in the European market as a whole.

Though already the largest law firm in Lithuania, Lideika, Petrauskas, Valiunas ir partneriai LAWIN continues to grow and increase market share. The last year has been extremely busy for the firm and marked further significant growth of the client base and work load, which increased by about 25 per cent. The number of fee earners reached 41, compared to 34 at the end of 2004, which represents a 20 per cent increase. The firm is currently looking for additional lawyers to accommodate the high increase in workload.

Fact sheet:

The firm is full-service and provides services in all major fields of
business law;
The firm has participated in majority of the largest M&A, banking, foreign investment, privatisation and other transactions in Lithuania over 12 years;
Provides services to 17 of the 30 largest investors in Lithuania;
Spontaneous firm-name recognition in Lithuania (TNS Gallup, 2004):

– Business, media, NGO, academic target groups – 43.8 per cent
– The nearest competitor – eight per cent
Ranked by the Chambers Global as number-one law firm in Lithuania in corporate/commercial (the only category for Lithuania) for five years in succession. Ranked by Legal 500 as number-one law firm in Lithuania
for seven out of nine categories: banking and finance; corporate and commercial; foreign investment; IT and telecoms; privatisation; real estate and construction; tax (in remaining two categories ranked among several leading firms in maritime and transport, and intellectual property);
Member of LAWIN – a group of leading Baltic law firms also including Klavins & Slaidins LAWIN in Latvia and Lepik & Luhaäär LAWIN in Estonia;
The principal office of Lideika, Petrauskas, Valiunas ir partneriai LAWIN is situated in Vilnius and since 1998 its branch has been operating in the seaport of Klaipeda;
At present, the firm has 41 legal professionals. Services are provided in English, German, Russian and Lithuanian.

Rolandas Valiunas is managing partner of Lideika, Petrauskas, Valiunas ir partneriai LAWIN. He can be contacted at rolandas.valiunas@lawin.it