The full text of my opinion piece first published in the Australian Financial Review on 3 February 2022.
Qantas places each customer into six categories of descending importance: Platinum One, Platinum, Gold, Silver, Bronze and non-frequent flyers.
Almost all medium and large law firms go through a similar exercise of grading clients. Few do it well.
Many firms place too much emphasis on historical revenue without due consideration to profit and profit growth potential. A persistent revenue bias in client grading can, over time, lead to margin erosion and stagnation.
The grading model should balance the benefits of securing the work from today’s high-revenue clients with tomorrow’s future stars.
The second mistake firms make is not really thinking through the consequences of grading. In other words, they don’t get clarity and buy-in on the critical differences in service and pricing between the various grades.
I recently came across a firm that had developed a three-tier grading model of “strategic”, “growth” and “valued” clients.
It sounded great on paper, but the only things strategic clients got that the others didn’t were a few extra invites to the corporate box at the football. There was also little difference in approach between the “growth” and “valued” categories.
To me, it seemed like a trivial response to months of work on the grading model and category allocation.
Lost opportunities
Getting the grading model wrong can mean overservicing at the one end, or big lost opportunities at the other.
In my view, the discrimination between client grades should address these five areas:
- Overall investment. This calculation would typically include specific business development expenses, the cost of partner and management time and cost of value-adds such as training, secondments, tailored reporting and access to proprietary apps and data;
- Resources and queue-jumping. The relative priority the firm is willing to give in terms of access to top talent and work scheduling. One large law firm makes special effort to give top clients access to its “A-Team” (my words, not theirs) and, if necessary, to divert resources to ensure key projects are finished on time;
- Preferential pricing, risk sharing and contractual terms. The level of discounting, risk sharing and preferential terms the firm is willing to offer its different client grades. The relative importance of the client relationship is one of the key factors in guiding the decision to share risk and to go “hard” or “soft” on pricing a particular matter;
- Relationship management model. In some instances, a particular client grade warrants a particular type or profile of client relationship partner (CRP). Using David Maister’s typology, “Finders” are great for high-growth-potential clients, “Binders” would be good for large multi-service, multi-location clients, “Minders” for clients the firm wanted to keep but had limited growth potential, and last, “Grinders” should be kept away from CRP roles. Other decisions include whether to have a formal client engagement team and the scope and quantum of business development support;
- Client engagement plan. Research shows that preparing a client engagement plan for high-growth, complex client relationships is generally a good idea. Being clear on the scope and detail can ensure the potential benefits are commensurate with the effort involved.
Qantas publishes a table on its website detailing the services and benefits each grade receives. It promotes the potential of customers getting to a higher level as a motivator for them to stay loyal and fly more.
Law firms could learn a trick or two from Qantas and use their key client programs not only for internal resource allocation and strategy decisions, but also as a powerful incentive for clients to strengthen the relationship and to buy more.

culture, growth, planning, professional service firms, strategy management
Will Danny Gilbert’s succession be a train wreck or triumph?
In Articles, Commentary on 1 April 2022 at 2:42 pmThe full text of my opinion piece first published in the Australian Financial Review on 31 March 2022. It was #2 most viewed article on afr.com’s Companies section on that day.
For law firms, a leader stepping down can be a moment of vulnerability. Most partners know succession done badly can have significant cultural and financial consequences.
So, it’s no wonder the announcement at Gilbert + Tobin that managing partner Danny Gilbert is stepping down is being closely watched across the legal industry.
I suspect the interest is less about the welfare of Gilbert and more about watching a potential train wreck in slow motion. Or, perhaps learning from a best-practice study in leadership transition.
Succession management in law firms is different to major public companies or government agencies.
It’s usually partners at large, not the board, who vote for their preferred leadership candidate. They can also fire them at any time.
The candidate pool for managing partner is usually much smaller, with a strong preference for those in the existing partnership.
‘Home-grown’
Only two of the top 30 firms in the latest Australian Financial Review Law Partnership Survey don’t have “home-grown” leaders. The country’s largest law firm, Minter Ellison, are again in that boat after having two external CEOs from the large consulting firms.
In larger firms, the candidates may have to give up practising law and take on a new career with poor employment prospects after their tenure ends.
In my view, law firms run into succession issues when there is a major power imbalance across the partnership.
Power in a firm is about:
It is usually concentrated in three areas: directed power from the office of the managing partner or executive leadership team; individual power held by specific partners and practice team leaders; and collective power which is held by the broader partnership operating as a whole.
Shared power
To work effectively over time, a firm needs to ensure a sense of shared power.
In other words, the partnership needs to be directed with an agreed strategy led from the top; individual partners need to feel empowered and have the autonomy to build their practices; and at the same time, the partnership feels part of one firm and involved collectively in making critical decisions.
Problems arise when there is a major power imbalance.
When a firm has too much directed power, it may succeed while the “dictator” is in control. However, their departure can result in a massive power vacuum characterised by infighting and wheel-spinning.
Firms with too much collective power become paralysed democracies. Endless meetings to resolve trivial issues mean less partner time on the things that really matter – clients and people. Most collectives also seem to do poorly in building a pipeline of future leaders.
Fly or fail
When partners have too much autonomy, sub-cultures or silos can emerge. If each partner is only looking after themselves, the firm merely becomes a shared office or a hotel for lawyers.
The construct of shared power can be a useful lens to analyse why some firms fly or fail.
From the outside looking in, Gilbert + Tobin appears to be addressing the potential succession risks with an extended process of selection and baton passing.
To avoid this issue repeating, Gilbert + Tobin would be well served by ensuring it has the right power and governance model rather than looking for Danny Gilbert mark II.
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