The 5 Leadership Styles of the Most Successful Founders of Professional Service Firms…and the One to Avoid

5 people with different leadership styles

The 5 Leadership Styles of the Most Successful Founders of Professional Service Firms…and the One to Avoid

5 people with different leadership styles

From the time you start working, you can’t help but notice that one executive’s approach to leadership can be much different from another’s. There are many reasons and backstories for this phenomenon. However, now that you’re the one in charge, you’ll want to gain a deeper understanding of the most prevalent types of leadership in business to see where you fit in — or want to fit in. One place to gain knowledge in this arena is by joining Collective 54 and chatting with our members.

Collective 54 is a mastermind community for leaders of thriving boutique professional service firms. Because we are hyper-niched into a single industry (professional services), segment (boutiques), and type of individual (founders), Collective 54 has become a wonderful laboratory, producing insights based on real and recent experience. We learn from our members constantly.

Part of our offering is benchmarking data. Members can see how they are doing on certain metrics compared to their peers in the community. In addition to providing members with insight into their own businesses, this provides insight into the broader industry as well— such as which members are leading the pack in their firm’s niche.

The 5 Leadership Styles of Successful Professional Firm Leaders

One recent industry insight we’ve learned is that there are five leadership styles being used by successful members. The founders that fall neatly into one or more of these leadership categories are doing very well, according to our benchmark data. The following are each of the five leadership styles and some of the successful members that embody them.

1. The Capability Seducer

This leader becomes known as “The Person” to work for in their niche. Skilled people possessing unique capabilities flock to the Capability Seducer.

What makes a founder a Capability Seducer? These founders look for expertise everywhere. They ignore conventional practices like CVs, degrees, job histories, etc. They find trapped and hidden genius in the most unlikely places. And they have an almost sixth sense in spotting a person’s native capability (e.g., something they do exceptionally well and easily that is in high demand). Often, these individuals are unaware that what they are good at is in high demand. Thus, the Capability Seducer becomes a matchmaker, connecting the hidden talent with the opportunity.

As you might suspect, Capability Seducers are fantastic at removing obstacles. For example, one Collective 54 member is empowering stay-at-home moms to have rewarding careers. She didn’t care that these brilliant, hard-working women were at home raising their kids. Instead, she leaned into their natural, nurturing, and motherly instincts to drive unsurpassed client support. This has resulted in remarkable client satisfaction and a stellar repeat purchase rate. Listen to her story.

2. The Emancipator

The Emancipator frees employees from the soul-crushing work environment of big corporate America, where they exist under constant restraints. These employees are capable of so much more than their jobs in corporate America allow them to contribute, and the Emancipator knows it.

An Emancipator creates elbow room for their employees to thrive. This is not done by accident. It is deliberate. It shows up most often in the work assignment process. Emancipators build slack into each project and encourage employees to lean into it and contribute.

Of course, this privilege does not come without conditions. For example, the Emancipator defines a standard and demands people live up to it. But they do not create stress because they do not hold anyone accountable for something out of their control.

Most compelling of all the traits of the Emancipator leadership style is that they fail often, early, cheap, and fast. It is because of this they rapidly move along the learning curve and out-hustle their competitors. For example, we have an Emancipator member who liberated a group of accountants from cubicle farms and built a fast-growing firm specializing in QOEs. Hear his story.

3. The Defier

The Defier constantly tests and stretches her employees. They believe people grow by being challenged and that firms grow by never being content. They’re often heard saying, “Grow through what you are going through.” Their teaching style is Socratic, never providing the answer but rather just the provocative question, allowing the employee to discover the answer on his or her own.

The Defier does two things over and over again. First, they lay down a huge “stretch challenge” and make it concrete, tangible, and measurable. They assign ownership of the challenge to their high-potential employees, allowing them to be in the hot seat.

Secondly, they generate a belief in their high-potential employees that the impossible is possible. The stretch assignment has a plan, timeline, deliverables, milestones, a budget, and resources. The Defier sends the message: “I defy you to pull this off.” For example, we have a member who retired from the Navy, lost his leg, overcame an addiction to prescription pain pills, and went from $0 to $22 million in roughly 10 years. Hear his Defier story.

4. The Head Bumper

The Head Bumper believes any problem can be solved if enough heads are put on it, i.e., “let’s bump heads on this.” They like to argue point/counter-point style. Working for The Head Bumper can feel like working in a courtroom whereby two sides argue an issue with a judge handling procedure and a jury issuing a verdict. This style of leader believes that no one has all the answers.

The Head Bumper makes 10 decisions before most of us have had our first cup of coffee and runs a fast firm. This is because The Head Bumper is a fast framer. They quickly frame up the decision to be made, the options to choose from, whose input is needed, and how the decision shall be made (as in by majority, consensus, etc.). The Head Bumper sparks a robust debate and calls on everyone to provide input. They delete opinions and listen only to facts. They overweight input from those most educated on a topic. And they have an uncanny knack for balancing rigor and creating a safe place to bang heads.

This leader doesn’t care who won or lost the argument, only that a sound decision was made. We have a member who does this for a living. He provides chiefs of staff to CEOs to act as a force multiplier… and bang heads. Listen to his story.

5. The Sponsor

The Sponsor is the opposite of a micro-manager and is as hands-off as one can possibly be. They sponsor a project or an executive and they empty the bank account in support of the initiative. They name a lead and make sure everyone knows that the success or failure of the initiative sits with this lead. They stretch this person, hold the lead accountable, and do not care how the objective is accomplished, only that it is.

To become a Sponsor, you need to be bold and bet big. Sponsors step in only when the person on the hook needs knowledge and resources to deliver. They teach and coach but never “do.” They also expect a complete job and reject partial work, demanding only solutions and not more new problems. Ultimately, Sponsors allow people to experience the natural consequences of their actions.

This is my personal leadership style. If you want to hear how I became a Sponsor, listen to this.

The Leadership Style You Don’t Want to Imitate

In addition to these five leadership styles, there is one leadership style to avoid. Members who use this leadership style to lead their firms are underperforming. It’s called the Pleaser.

The Pleaser has the best of intentions. They think they’re doing a good job but are not and just do not know any better.

How do you know if you’re a Pleaser and need to rethink your personal approach to leadership? You can quickly check any or all of these boxes:

    • You overwhelm your team with an idea a minute. This wastes resources and demoralizes the team, chasing crazy ideas. (The solution: Put your ideas into a holding tank until the time is right.)
  •  
    • You tend to suck all the oxygen out of the room. (The solution: Chill out and let others contribute)
  •  
    • You “rescue” employees. This creates dependents and prevents scale. (The solution: Let people get their stuff together.)
  •  
    • You run too fast. Not everyone in your firm can keep up with you. (The solution: Slow down or risk everyone just becoming spectators watching you sprint past them.)
  •  
    • You create traffic jams by centralizing decision-making. You must make every decision, or nothing is going to get done. (The solution: Push decision-making down to those closest to the clients.)
  •  
    • You live in the “reality distortion field” (made famous by Steve Jobs). Sometimes your optimism is destructive because people wonder if you understand the struggle. (The solution: From time to time, acknowledge the pain.)
  •  
    • You are a perfectionist. If you constantly criticize everything, your employees will stop trying. (The solution: Get comfortable with progress over perfection.)

I am not going to provide a member example here because I believe it is best to praise in public but criticize in private.

The good news is that it’s never too late to improve your leadership prowess. If you want to invest in yourself, consider joining Collective 54. Our community is filled with leaders in each of these five categories and members actively looking to change their leadership style.

Learning from peers is the best way to learn, in my humble opinion. By rubbing shoulders with leaders in our community, these leadership traits will seep into your leadership approach. This will help you scale yourself, which is step one when trying to scale your firm.

Poll: What is your leadership style?

Episode  127 – Alternative Fee Structures: How and Why to Move Away from Hourly Billing – Member Case by Sonia Miller-Van Oort

Moving away from hourly billing leads to better margins, higher client satisfaction, and happier employees. Yet, many boutique founders are afraid to do it, and do not know how. In this session, member Sonia Miller-Van Oort shares how she built her 12-person law firm using alternative fee structures.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Serv podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of boutique professional services firms. My name is Greg Alexander. I’m the founder and I’ll be your host today. On this episode, we’re going to discuss moving away from the billable hour. This is a hotly contested issue. Some might even say religious battle in certain sectors. And it’s important for us to have a point-counterpoint discussion around this, because sometimes making this move can increase profitability and client satisfaction quite a bit. And we’ve got a great role model with us today. Her name is Sonia Miller Van-Oort, and she is in the legal sector, which is rather married to the billable hour, and she’s got quite a story to share with us. So we’re very lucky to have her. Sonia, if you wouldn’t mind, please introduce yourself and tell us a little bit about your firm.

Sonia Miller-Van Oort [00:01:25] Sure. My name is Sonia Miller Van-Oort. I am the President and Principal Founder of a law firm called Sapientia Law Group. We’re located in Minneapolis, and we are a 12-attorney law firm that does a variety of work, mostly litigation, about 70% litigation and about 30% transactional work.

Greg Alexander [00:01:45] Okay. And where are you based?

Sonia Miller-Van Oort [00:01:47] In Minneapolis, Minnesota.

Greg Alexander [00:01:48] Okay, very good. So tell us a little bit about how you’ve moved away from the billable hour.

Sonia Miller-Van Oort [00:01:55] Yeah. So we started our firm 12 years ago, and prior to that I was a partner at another firm and this topic of billable hours. This is 2009, 2010 timeframe, clients, really not happy with ever-increasing billable hour rates. At that point, I was a more junior partner and there are a couple of things that I was seeing. One, clients weren’t happy with that system of billing they really wanted more budget certainty. And as a practicing litigator, what I what I observed as well was that the cost and the uncertainty of the cost to the clients became an impediment to them getting to the merits of their case. And as a litigator and advocate, that was a frustrating thing for me, trying to get the best result for them. So it was kind of a combination of those things. I participated in this about with my law school, which was kind of a big think tank about the traditional law firm model. And this issue came up and I started I heard about alternative fees, and it wasn’t so much that it was a new concept at that point people had been talking about for decades. But really very few law firms had really adopted it and were able to be successful in it. And kind of what I perceived was law firms would sometimes reluctantly do an alternative fee structure if the clients came and approached them about it, but they kind of did it kicking and screaming. And so when I was creating a new law firm model to start Sapientia Law Group, that was central to the concept of how could we deliver services differently to our clients, and trying to think how we could, instead of it being a reactionary and reluctant response, how could we lead with that as a something proactively always offered to clients, always giving them the option whether they wanted to do hourly or an alternative fee structure, but presenting it without clients having to kind of ask the question but to be upfront and say, here’s another way we can do this, which works best for your business. So that’s how it got there and how we really focused on that as a key core concept of Sapientia Law Group.

Greg Alexander [00:04:37] Okay, very good. You’ve mentioned alternative fee structure a few times, so if not the hourly or billable hour excuse me, what is the alternative?

Sonia Miller-Van Oort [00:04:47] Yeah, well, I always say the alternative is only limited by your own creativity. So we’ve developed quite a list of options. And so those can range from you can do, and I’ll just, to be clear, I’m a litigator, so that’s the world I live in. And people for years have said, well, you might be able to do alternative fees in law, but really you can’t do them in litigation. Is that way possible because there are just too many unknown factors? And I don’t believe that to be true. And so what we’ve developed are different flat fees, four phases of litigation. We’ve developed subscription fees, which would be more of a kind of that model I always liken it to your cell phone plan and paying for so many minutes a month and you can have rollovers. We do risk collars, which is another way to create some budget certainty that has a collar of risk around the price that you’re studying. And it allows some extra payment if you go beyond it, but it’s reduced and a greater payment if you come below the budget. We’ve done pullbacks, which is another way of saying we’re going to agree upfront. What are the key, key performance factors? And we’re going to hold so much back from what you’re paying us until we reach those milestones. And then one that I often use in complex litigation is the combination of a hybrid of flat fees for certain pieces of the work with success bonuses, again, around milestones or what the client defines as success at the beginning of the engagement. 

Greg Alexander [00:06:28] Hmm. Very creative. Thank you for walking us through those alternatives. And when we have our member Q&A on Friday, they’re going to ask a lot of questions about those, particularly the risk collar. That’s one of great interest to me. So if this is better for the client, better for the law firm, and maybe a way for a smaller firm to differentiate, why are founders of firms reluctant to go off of the billable hour?

Sonia Miller-Van Oort [00:06:58] Yeah, I think there’s a couple of reasons. I think the biggest impediment is the traditional law firm mindset, which is how we do business is billable hours and we’re going to, those are our metrics and that’s how we’re going to value our people and we’re going to set goals around how many hours people build. And when you get into that mindset, I will say that it is potentially contrary or conflicting with an alternative fee structure model. And the reason why is because the way I approach alternative fee structures is it’s a shared risk and a shared reward. And what we want to do is the professional services team is to be efficient in getting the results desired. That means you hopefully are using less time and working smarter to get the results. But if you’re in a firm that is going to measure and reward employees by how many hours they put in instead of the results they’re obtaining for clients, those two things get heads. And I think that is just the traditional way of law firms. And so I’ll tell you, when we first started our firm, I wondered, you know, people wanted to talk about the firm. And I was concerned about, do I really want to talk about alternative fees? You know, isn’t that the competitive advantage I’m trying to have and do I really want to be talking about so somebody else can do that. And what I finally came to is I can talk about it all day because as long as law firms won’t change their core structure and the metrics that they value people, how they value them, they can never effectively do alternative fees. And that’s effectively why I want to start a new firm, because I think it’s the whole infrastructure of how you run your business that can make alternative fees work really well. But if you got to look at what you’re compensating, how are you rewarding, how are you value your people, what are they being motivated by, all of those things. And if you don’t have that culture and model, alternative is not going to work. 

Greg Alexander [00:09:09] Yeah. And I agree with you. I mean. Talking about it and doing it. A very true two very different things for sure. So I think that’s a good explanation as to why law firms might do it. When you approach clients with this, I’m assuming maybe incorrectly, it requires quite a bit of education. Is that accurate? And if so, how do you handle that?

Sonia Miller-Van Oort [00:09:32] Yes, it does require some. So, you know, as I said, we are potentially going to be retained. We explain to our client there’s two ways we can do this. And for me to come up with an alternative fee structure, I want to talk about what’s going to be success to you. And I want to talk about what my strategy might be and how I see that playing out. The other challenge, going back to your last question, I think that attorneys and many other professional service organizations have answered the question, how much is something going to cost really when you get my bill, you’ll know approach as opposed to on the front side giving that client budget certainty. And so when you explain to the client what it is you’re trying to do, but you’re also saying but it’s up to you, you know, you decide what’s best for your business right now. Clients really appreciate that. And where I find that they’re more likely to try the alternative fee because there’s some skepticism at times if they’ve not done one before as well what’s the catch? What are they trying to do? Are they trying to get more money out of me? That kind of thing. So where it really works the best is where you have a trusting relationship. You’ve done work with the client before. You explain. Here’s how you’re still going to see. You’re going to get my bills. You’re going to see everyone who’s doing the work. You’re going to see what the work, what’s being done. So I want you to have that data. I want us to both have the data so that at the end of the day, you can look at it and decide, did you get value for it? And I can look at it and make the same determination. So there definitely is an educational process. But I will tell you that, you know, I’m not going to say ten times out of ten that might be too strong, but nine times out of ten, if a client has tried the alternative fee structure, they will do it again because they can see the real value of it.

Greg Alexander [00:11:30] And how about when you’re recruiting attorneys to your law firm, especially those that might have worked in other law firms where this is, you know, completely unconventional, do you have to sell them on why this is good for them or how does that go?

Sonia Miller-Van Oort [00:11:46] I don’t know, but I have to sell them on it necessarily. It’s always a point of interest for them when they want to understand how that works. And as I kind of alluded to before. I only think alternative fee structures work for our firm because of how we’ve built the firm. And so let me just give you an example. I’ve not practiced. I practiced in two other firms. I met a partner and other one before creating this firm, but not working environment that was as collaborative as our firm is. And the reason that is, is because that’s how you get alternative views to work. You’re able to identify your team. You can figure out where people’s strengths and you maximize where people strengths are. So on traditional firms, you might have, you know, a partner and an associate, and the clients don’t want to see more than two people on the bill because they’re afraid they’re going to be getting charged too much. But when I explain to them, what you get is a whole team and this is what it’s going to cost you. It doesn’t matter if there’s two or there’s five people. Okay. So your question is, so when I explain that to people about how we really work together, like we do a lot of roundtable brainstorms on the whiteboard, we’re coming up with our ideas and our strategy and how are we doing this? And you got this and I got this. And it’s a much different way to practice law than I’ve seen with other law firms. And so actually, when we’re trying to recruit people and we talk about that, I think they get excited about that.

Greg Alexander [00:13:11] And to a member who is inspired by your story and wants to give it a shot. What would be the first couple of steps you would recommend?

Sonia Miller-Van Oort [00:13:21] So I think, you know, it’s hugely important that you have data that you understand. What your costs are for what you’re going to provide and what the scope of work is. I mean, really for any potential representation, the question is what’s the scope of work? And in some ways, it’s not any different than a contractor who’s building a house for somebody. What is it we’re trying to do here? Yeah, and that’s the first piece that we always start with. What is it that’s going to need to happen? So when I talked about that strategy on the front side, that really is super important in communicating with the client. All right, here’s what I, this is what I see. These are the people who I can envision as witnesses in the case they’re going to get to close. Seems like this is the case with hundreds of thousands of documents or this seems like a case of like, you know, probably less than 500. You’ve got to kind of be able to know how you’re going to approach it. But listen, if you’re an experienced person in whatever industry it is, you do know that.

Greg Alexander [00:14:22] Right.

Sonia Miller-Van Oort [00:14:23] And if you have data, like if you have past matters that you’ve worked on, for me, it’s cases. But, you know, past deals, you’ve done whatever your industry, you glean from that. And that’s, I think, what should take away the fear of the unknown. Because you’re not just you’re just throwing it out like willy nilly and let’s see what happens. It should be based on data one and two, I think a really important thing and I think this really addresses fear, too, is defining the scope of work. And so attorneys are. That’s what they’re afraid of. But here’s the deal. These are my assumptions. So when I present the alternative to the client, I tell them what my material assumptions are. And if we go outside those material assumptions, that’s extra. Yeah, right. So I can take a package of what I can reasonably figure out my costs, what I want, who’s going to work on this, what I want my margins to be, and come up with that. I don’t have to feel like I’m going to dive off a cliff if all of a sudden we end up with twice as much because I provided for that in the agreement. 

Greg Alexander [00:15:32] Great advice. You know, I might add that when we look at our benchmarking data and you cross-reference firm profitability and client satisfaction, our power members that use alternative fee structures as opposed to billable hours tend to be more profitable and they have higher clients. And so that might be something to help people get over their fear as well. Yeah, well, listen, we’re at our time window here. We try to keep these podcasts short, but I’m so excited about the upcoming Friday session. We’re talking about this for an hour and our members will have the opportunity to ask you questions directly. So on behalf of the membership, thanks for coming today and sharing your wisdom with us.

Sonia Miller-Van Oort [00:16:11] Thanks so much. It was fun.

Greg Alexander [00:16:12] All right.  And for those that want to learn a little bit more about this, I’d give you a few calls to action. You can pick up our book called The Boutique: How to Start, Scale, and Sell a professional services firm. You can find that on Amazon. If reading is not your thing, consider joining Collective 54 Insights. And there you’ll get podcasts and videos and charts and things of that nature. You can find that also at the website. And if you want to join and meet fantastic people like our guest today, go to the Contact Us section on our website and fill out that information and then a representative will get back to you. But thanks for listening today and until next time. Best of luck as you try to grow, scale, and exit your firm.