Tips and Trends

Sometimes Saying "No" Is Your Best Business Decision

The managing partner of one of our clients once said to me, “The hardest thing in the world for most lawyers is to decline an opportunity for increased business, even when it’s because of a conflict or a question of ethics.”

There’s obviously no question about having to say “no” in those situations. But there are other opportunities for increased business when the wise decision for the firm may be to say no. Here are examples from two of my clients.

LATERAL ENTRY OPPORTUNITY

A 40-lawyer litigation was approached by a widely recognized and successful partner at a BigLaw firm. He had a blue-chip client list and a large book of business and planned to bring in two younger partners and two associates. He demanded a guaranteed compensation package that would have made him the highest paid partner in the firm. He also demanded that his two partners and the two associates be made equity partners as well.

My client very much wanted this lawyer, his clients and the revenues that would probably ensue. But, after reviewing the situation, the partners decided to say “no.” If they met all this potential partner’s demands, it would disrupt the firm.

Six months later, my client was approached by another Big Law partner who also had a blue-chip client list and a substantial book of business. However, this person did not require his compensation be guaranteed, or that the two associates he’d bring with him be admitted as partners. My client said “yes” to this opportunity, which has proved very successful.

CLIENT DEMAND

In another situation, one of the top three clients of a 200-lawyer firm demanded a number of additional “value-added” services, or they would take all their work to another firm. The fee arrangement they demanded would have made this client unprofitable.

Despite the considerable revenue involved, my client said no. However, they offered to provide other additional services at no charge, and also proposed a different fee arrangement that would still be profitable for the firm. After some discussion and negotiation, the client agreed to the firm’s proposal.

Shortly thereafter, in a surprising development, the client informed my client that they were terminating the other firm they’d been using. All of the work would now go to my client — work that was also profitable.


It’s not easy and it requires courage, but successful operations have learned that sometimes the best business decision is to simply say “no.”



STRATEGIC DECISION

In today’s highly competitive legal market, some firms accept work from current or potential clients even though they have limited experience or capability in the area. It is an unwise attempt to be all things to all people. What most firms should do is make the strategic decision to focus on and develop certain practice areas, types of clients or industries and, in effect, say “no” to opportunities that do not fit their strategic positioning.

That said, this does not mean firms should tell clients that they don’t want their additional work. If the firms do not have sufficient depth or expertise in an area, what they should say is, “We’re not the best choice for this work. Let us refer you to a firm that has the expertise you need in this area.” By handling the situation this way, the firm strengthens its relationship with those clients because it demonstrates that it places their interests ahead of its own desire for any additional business.

Despite the soundness of this decision, there may still be partners who believe bringing another firm into the picture risks potentially losing all the current work they do with the client. Others in the firm may believe they can’t afford to say “no” to any work. The reality in these cases is that, if a firm accepts work for which it doesn’t not have sufficient depth or expertise, it will eventually lose all the work it has been doing with those clients anyway.

This principle doesn’t just apply to law firms. It applies to every business and professional firm. It’s not easy and it requires courage, but successful operations have learned that sometimes the best business decision is to simply say “no.”

Reprinted with permission from the May 2017 Legal Communique by Robert Denney Associates, Inc.

About the Author

Robert Denney is a recognized authority on management, leadership and strategy for law firms and companies. He is on several company boards and has served as an Interim Chief Executive Officer in crisis and turnaround situations.

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Bob Denney

Owner, Robert Denney Associates Inc.