By Maggie Miller, Principal
Most law firms believe they’re doing business planning well. Practice groups hold annual retreats, partners set revenue targets, and leadership teams discuss growth. But beneath the surface, much of this planning lacks true strategic depth. It’s often reactive, fragmented, and focused on short-term gains rather than long-term value creation. Without a cohesive, forward-looking strategy, firms risk misalignment, missed opportunities, and stagnation in an increasingly competitive market. A solid law firm annual business planning process can help address these issues comprehensively.
Why does business planning break down in law firms?
Annual business planning tends to fail for structural and cultural reasons rather than a lack of ambition. Several systematic challenges consistently undermine effective strategy.
Decentralized Decision Making
While law firms often pride themselves on empowering practice groups to lead their own planning, this autonomy can hinder collaboration. Groups may struggle to coordinate across practices, share resources, or align on broader firm priorities. Even when intentions are good, the lack of a shared framework across the annual business planning process leads to miscommunication, duplicated efforts, and missed synergies.
Entrepreneurism vs. Alignment
Each partner has their own priorities and growth strategies to focus on. Partners may be reluctant to engage outside their immediate group, especially when incentives are tied to individual or group performance rather than firmwide success. This fragmented approach makes it difficult to build cohesive strategies that leverage the full strength of the firm. Lorie Almon, Chair and Managing Partner-Elect at Seyfarth, acknowledges the need to align partners to the firm strategy:
“You have to put some responsibility on the partnership… for executing on our strategy. It’s an opportunity for partners to lead and drive the firm in a direction, to develop a sense of excitement, and to feel proud of producing concrete results.”1
Lorie Almon, Chair and Managing Partner-Elect at Seyfarth
Lack of Business Acumen
Lawyers are trained to practice law, not to run businesses. Many lack comfort with financial forecasting, market analysis, and key performance indicators (KPIs). This gap in business literacy leads to law firm annual business planning that relies more on intuition than data. Leaders may hesitate to engage deeply in strategic discussions or avoid long-term planning altogether, limiting the firm’s ability to make informed, forward-looking decisions.
Short-Term Focus
The pressure to generate immediate revenue and in-year profitability often overshadows the need for long-term planning. Partners may resist change or innovation if it threatens short-term billables, even when such changes could drive sustainable growth. This mindset stifles investment in new capabilities, technologies, and talent development.
The consequences of poor strategic planning
When structured annual business planning is weak or absent, the consequences are significant:
- Missed Growth Opportunities: Without a clear roadmap, firms fail to capitalize on emerging markets, client needs, or competitive advantages.
- Talent Attrition: High-performing professionals seek direction and purpose. A lack of strategic clarity can lead to disengagement and turnover.
- Inability to Adapt: Firms that don’t plan for market shifts or economic downturns are left vulnerable when conditions change.
- Big Plans, Poor Execution: Even when ambitious strategies are developed, they often falter due to unclear roles, lack of accountability, or insufficient follow-through.
How can law firms fix their business planning process?
To overcome these challenges, firms must take deliberate steps to embed annual business planning into their culture and operations:
Incentivize Strategic Leadership
Practice leaders should be held accountable for strategic planning, not just billable hours. Most incentive systems unintentionally disincentivize “non-billable” contributions that benefit the firm. Firms should seek to incorporate planning quality into leadership performance reviews and compensation outcomes. Ensure leaders allocate time for strategic work and are supported in doing so.
Simplify the Planning Process
Create a standardized, centralized planning framework that starts with firmwide goals. Practice groups can then determine how best to contribute within those parameters. This approach fosters alignment while respecting the unique dynamics of each practice.
Strengthen Planning with Data
Equip leaders with reliable, timely, and relevant data. Market trends, client feedback, financial performance, and competitive intelligence should inform every planning decision. Equally important is improving data literacy among firm leaders. When partners understand how to interpret and use data, planning becomes more objective, confident, and actionable.
Streamline Roles and Decision Rights
Define who is responsible for what, and when. Clear roles, decision rights, and timelines reduce ambiguity and improve execution. This clarity ensures that strategic plans move from concept to action efficiently.
Conclusion
Law firm annual business planning does not fail because firms lack intelligence or ambition. It fails because structures and incentives are misaligned with long-term strategy, and leaders are not consistently equipped with the business tools needed to plan effectively.
By addressing these systemic issues, law firms can transform annual planning from a burdensome exercise into a powerful driver of growth, resilience, and innovation. The key lies in shifting mindsets, building capabilities, and creating structures that support long-term success.
Not sure where your firm stands? Take our Strategic Planning Diagnostic Quiz to assess your current approach and uncover opportunities to strengthen your planning process.
Sources:
1.) Harvard Law School Center on the Legal Profession, “Preparing to Steer the Ship,” The Practice (May/June 2023) – conversation between Robert Couture and Lorie E. Almon.
