What Does Management Have To Do With It?

Kathy Fortin

March 15, 2018

This morning I heard on the news that the well-known retail chain Toys R Us is closing 735 stores and liquidating its assets. The real casualty is the loss of 33,000 jobs nationally. My first thought was that this must be caused by consumers purchasing online, a change in the industry that has made other businesses and retail stores obsolete. I was surprised when CBS reported that the reason was “poor management decisions.” I was then struck by how management decisions in law firms is such a critical factor in their success. It is an issue I see every day.

Effective management and leadership is what helps make a law firm successful. In the extreme case, poor management can cause law firms to go belly up, just like Toys R Us. In reading more about what happened to this retail giant, I saw reports highlighting factors, which also directly apply to law firms:

  • Repetitive declining results meant the company’s demise was years in the making,
  • Falling behind financially led to tighter and tighter financial constraints, resulting in inability to catch up, in other words reaching a point of no return,
  •  Ignoring consumer trends put them behind the curve and then a tipping point is reached, and
  • They became unable to invest in the future.

Reading this made it clear that management decisions created each and every one of these dismal failures. I question how much an unwillingness to make necessary changes and improve the way of doing things early on also contributed to their problems. The pattern of failures created a domino effect that was unable to turn this company around. At some point, it became impossible to solve problems, which had become too big to manage.

For law firm owners, leaders and managers, the Toys R Us failure is a teaching moment.  You might ask yourselves these probing questions:

  • Are you looking and planning for the future of your law firm?
  • Are you paying attention to trends in law firms, whether it be adopting better staffing models, devising ways to build revenue, solidifying your brand or improving technology?
  • Are you making sound management decisions?
  • Is your leadership carrying the firm forward?

Most of all, waiting too long to address important issues is always a mistake. Problems normally do not get better on their own. This is something every good manager must recognize.