Something’s actually happening

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There’s a lot of buzz building about an article in today’s New York Times with the rather odd title “Who’s Cuddly Now? Law Firms.” It summarizes a recent rash of new business models in American law firms, from flextime for lawyers to flat-fee bills for clients to alternative billable-hour schemes and more. It’s the second article the Times has run recently about lawyers seeking satisfaction, and it prompted its rivals at the WSJ’s Law Blog to ask: is there really something happening here?

The WSJ blog’s readers are providing their usual snarky responses: “This new ‘movement’ will dovetail nicely into the massive layoffs that will be coming in the coming months,” says one. “So, you want more time with your family or to pursue your passion for flamenco guitar? Here is 3 months severance.” Nice. So, here’s my answer to the blog’s question: yes. As Judith shouted at Reg in The Life of Brian, “Something’s actually happening!”

I can refer to you any number of articles and links about law firms that are making changes to the way they manage their employees and their work — see the Financial Times‘ law firm innovation report and the Innovaction Awards, for starters. In addition to the firms identified in the Times article, there are others making changes to how they operate in terms of compensation, of partnership, of billable hours, of women in law firms, and even of the entire firm itself. And these are just a few of the ones we hear about — other changes are occurring, quietly and beneath the radar, in areas such as recruitment, retention, training, parental leave, and evaluation.

Law firms are under pressure. They’ve gotten used to a comfortable world where they could set the tone and pace of operations. That comfort zone is evaporating from two directions: externally from clients and internally from lawyers. Clients really are more sophisticated and more demanding, and they’re looking for more than their firms have traditionally been willing to give them. And lawyers really are more inclined to walk away from (or try to change) work conditions that don’t satisfy a wide range of personal needs.

But even that’s not really new — both clients and lawyers are longstanding complainers, and pressure has been brought before, which law firms have ignored. And keep in mind that many, many law firms are continuing to ignore these pressures. What’s really new this time, I think, is not just that law firms are changing the way they do business, but why. I think they’re doing it, voluntarily, to gain a competitive advantage.

That’s what’s really changed about the legal industry: competition is now tough, brutally so — for the best clients, for the most lucrative work, for the finest talent. The genteel, informal, non-compete culture that law firms have traditionally relied upon with one another is gone. The pie has never been bigger or richer, but only the sharpest, best firms are going to get a slice of it. Some firms — not very many, but more than just a handful — get this, and they understand that business as usual won’t work now.

They need ways to get clients’ attention, so they switch their billing systems — not because they necessarily think it’s better, but because the clients do. They need ways to find and keep the most talented lawyers, so they fiddle around with billing, compensation and promotion methodologies — not because they care about their lawyers’ lives, but to hook young lawyers and stand out from the crowd. They need ways to ensure their whip-smart lawyers do better work than their rivals’ whip-smart lawyers, so they’re investing in training, skill upgrades and client secondments. They do all these things, as much as the partnership committee can stomach, because they understand how close to the edge they are, and how thin the margin is becoming between glory and disintegration. This is all brand new, and it’s not going to stop anytime soon.

They say no revolution ever started inside the castle. Well, you might want to creep up to the profession’s fortress and put your ear to the wall. You might hear something really interesting.

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