The end of serendipity

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Posted in: Culture, Leadership, Management, Talent

I plan to write about law firms a little less often in future, as part of a shift in the focus of my work (more about that in an upcoming post). But lately I’ve been thinking about the lessons law firms have been learning (or not) from the pandemic, and I wanted to share some thoughts about why managing and leading a law firm is going to become a lot more work in future.

To start us off, this American Lawyer article suggests that the “law firm leadership playbook” has been rewritten over the last several months. I think this is not quite correct. What’s happened is that many law firms have realized they don’t really have a leadership playbook as such — their leaders and managers, if I can extend the football analogy, are often sent onto the field without any plays at all. Consider some of the observations in the article about how much more difficult management has become during this crisis:

“…[W]e have to be really intentional about reaching out and making sure people are OK, mentally and physically. It’s not something any of us have ever trained for …  [I]t requires a lot more responsibility and time of our current leaders.” The remote environment … “has taken a big toll… because of the new demands of virtual management. [Managing partners] spend significantly more time managing.”

You’d have thought that managing is, you know, what managing partners do — it’s right there in the title and everything. In reality, of course, most managing partners are not trained for the role — they’re “managing” temporarily and part-time, keeping their practice running on the side with minimum lights and power until they can return to their real job full-time. This is a feature of law firm management, not a bug. Low-intensity management is standard in law firms because lawyers don’t like being led or managed. Actual leadership and trained management are not part of traditional law firm culture.

A consultant quoted in the article makes this connection more explicit:

“There’s a lot of concern out there about firm culture and what the glue will be that holds a firm together when people are not running into each other in the office, particularly with engagement and retention.” … In the past, a leader’s job could often be accomplished “just by bumping into people during the day, but now it has to be a lot more deliberate—and some are not up to that challenge.”

Now, what’s interesting is that the way law firms have gone about managing the firm and building culture is remarkably similar to the way in which they have gone about developing their junior lawyers: putting everyone together in the same space and hoping they run into each other in a constructive fashion. Consider the following claims made about the challenges of professional development when everyone’s working from home:

I’ve heard all these concerns expressed by managing partners I’ve spoken with — when people aren’t around each other physically, when junior lawyers can’t cross paths with senior lawyers and pick up work opportunities, how will they learn? How can they develop their business and professional skills? How can they absorb the firm culture, and how can that culture flourish if we’re not all together all the time?

But the answers to these questions, while obviously important, are less significant than the unspoken assumption upon which the questions are based — that the only way to really train and manage and acculturate lawyers is to have them show up in person and brush past each other many times a day.

Maybe that’s true. But if it is, law firms have a problem, as illustrated by this AmLaw article about the fundamental changes coming to legal workspaces post-COVID. A commercial real estate company’s survey of law firm personnel that asked people where they now want to work produced some noteworthy results:

Somewhere between 50% to 80% of [staff] would prefer to work completely remotely, although they may not get their wish. Even a majority of partners have said they wish to be in the office between zero and two days a week. Associates, likewise, appreciate the flexibility of working from home but also value the human interaction, collaboration and training they get in the office; 30% to 40% would like to come in less than two days a week. 

We are not going back to the “everyone in the office at the same time, all day, five days a week” law firm. Whatever its merits and demerits, that model has run its course, and something different will take its place. When it does, law firms will have to find new ways to train junior lawyers, manage senior lawyers, and build and maintain firm culture. More specifically, they’ll have to do these things strategically and intentionally.

Many law firms, it’s becoming clear, have been substituting mere physical proximity for planned and purposeful efforts to build culture, teams, and professionals. They’ve been content to set lawyers to work side-by-side in the same physical office and assume that culture and development would just follow automatically, like shy teenagers mixing at a high-school dance.

In a word, law firms made serendipity a core element of their culture. They hoped that random encounters generated from the shared use of narrow office corridors would render unnecessary any efforts to actually exercise leadership or develop professional skills or build firm culture. Let lawyers be who they are and work as they like — culture will happen naturally. Let juniors attach themselves to partners and follow them around — they’ll learn the ropes on their own. (And if the juniors most successful at attracting partner attention happen to be overwhelmingly white and male, hey, what can you do?)

If the foregoing scenarios describe your firm in whole or in part, start thinking about how to build culture, management, and professional development systems intentionally and strategically. Some suggestions:

Culture: Every good article about intentionally developing a great law firm culture returns over and over again to two fundamental features: your firm’s purpose and its values. Why does your law firm exist? If its purpose is only to make money for the partners, it will always struggle to draw and keep good people. If it’s only to carry out whatever clients want, it will never stand out as truly superior or praiseworthy.

And then, what values animate the firm? Choose the ones that matter above everything else and make clear to everyone their primacy — where necessary, by requiring anyone (and I mean anyone) who violates those values to leave immediately. Force the issue of culture and values: Don’t make hazy declarations of good intentions while letting people do what they like. No good culture ever developed laissez-faire.

Leadership: The first rule of lawyer management has always been, you do not talk about lawyer management — never suggest to lawyers that they are obliged to follow a prescriptive set of rules about how to go about their business. But lawyers’ emotional frailty about being managed is unprofessional, and law firm leaders and managers must stop coddling it.

Tell lawyers what you expect of them, and hold them to it. Don’t let star lawyers attain diva status. Require people’s participation in difficult conversations. But most of all, legitimize management and leadership as essential standalone roles. End the silly tradition that leaders must also bill work and bring in clients. Hobbyist leadership is over. Law firm management is real, hard work. Treat it that way.

Professional Development: It’s not a coincidence that the pandemic has slowed associate development and left junior lawyers adrift. A crisis reveals an organization’s true priorities, and many firms have made very clear where their newest lawyers rank among their concerns. But it also reveals that, lacking physical proximity, most firms simply don’t know how to train new lawyers.

In future, a mix of online training, creative team-building exercises, and continuous mentoring will complement in-person experience on those occasions when your people can’t gather physically. So take this opportunity to reconfigure your suddenly available office space into a dedicated professional development centre. It’s nice that you really want to get back to the office. But “the office” isn’t going to be what it once was.

This is obviously a huge challenge for law firms — but it’s also a great, once-in-a-lifetime opportunity. Most aspects of law firm culture and infrastructure evolved inadvertently, through everyday practice, decades ago. They seem random and irrational because of how they came about, making them especially ill-suited to the 21st-century (post-)pandemic world. This is a chance to put aside all those old ways of doing things and replace them with smarter policies and practices — deliberately designed, expressly intended, and systematically rolled out.

You inherited a law firm model that was built almost by accident. Bequeath to your successors a model that was assembled very much on purpose.

Burn the ships

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Posted in: Leadership

Someone emailed me the other day to ask whether I had contracted COVID-19, because I hadn’t posted anything here in several months. I took that as a hint to start writing again.

I’m fine, fortunately, and so is my family, and I sincerely hope the same is true for you. I’ve been active on Twitter throughout this time, and I’ve published three columns at Slaw as well. My absence from Law21 since May is owed primarily to a major project that came my way in the spring and just wrapped up a couple of weeks ago. I’ll be posting separately about that when the project is officially unveiled early next month, since it also marks a significant shift in the focus of my work that I’ll talk about at more length then.

For the moment, though, here are a few thoughts about our progress through the first year of the pandemic and what seems likely to happen over the course of the next one.

● After most Western nations slammed the brakes hard in the spring and slowed the ascent of the curve, we eased off too soon and too quickly, egged on by toxic leadership and hamstrung by confused messaging. We could have learned from New Zealand, South Korea, Vietnam, Australia, Rwanda, Scotland, Uruguay, and other national successes. Instead, we insisted on getting up and going outside while the tornado was still churning. The results were predictable and are terrible — surging cases and hospitalizations, overflowing ICUs, and (in a couple of weeks’ time) rapidly rising death rates.

● As a result, the next few months are going to be really hard. Even if we all went into “full lockdown” tomorrow, which we won’t, the hospitalizations and deaths of people who caught COVID-19 weeks ago are already “baked in.” If the US handles its Thanksgiving as poorly as Canada handled ours last month, you can count on the current surge lasting past Christmas. Some states have already hit ICU capacity; other states and provinces will follow, and it’s an open question whether hospitals and health-care systems in these places can survive it.

● It’s been a terrible year. But there is reason for hope. The recent announcements of very successful vaccine trials from Pfizer and Moderna are well ahead of the schedule most experts had expected. Our understanding of SARS-CoV-2 has vastly increased since March — it’s a multi-system disease rather than a respiratory illness, and we’ve developed better protocols for treating it and helping people survive it. Even though too many people refuse to wear masks, millions more do. And let’s be grateful that everything about fighting this pandemic will get easier starting January 21, 2021.

● I originally figured the pandemic had at least two to three years to run, and I made my projections accordingly. The unprecedented speed of vaccine development inclines me to revise that estimate downward. But. An announcement by press release is not the same as a vaccine in people’s bodies. We don’t know how long any of these vaccines confer immunity. Producing, bottling, distributing, and deploying (in two doses) hundreds of millions of vaccines across just one continent is a massive logistical challenge. Now multiply that tenfold worldwide. Until the pandemic is over everywhere, it’s not really over anywhere.

Among other things, this pandemic has been an object lesson in change management. People don’t like change and will resist it; you can frighten them into change for a while, but the fear wears off and complacency creeps back in.

What you need to do instead is explain what’s happening as best you can, identify the goal you’re trying to achieve and why it’s important, and tell people clearly what they need to do and how they need to do it in order to help achieve the goal. (I’ve just written a cover story for ABA Law Practice magazine on this very topic.) We did that reasonably well in April; by October, we had lost the thread. We need to get it back.

What about the legal sector? When I wrote my mini-series about law and the pandemic in the spring, my feeling was that we were in for a lengthy period of intense difficulty that would likely overwhelm parts of the legal system, but that would also create both the mandate and the opportunity to survey the damage done and come up with new and better ways to run law firms, educate law students, and administer justice. I figured that 2020 would begin a lengthy period of pain and endurance, but that 2021 would begin to generate progress towards improvement and eventually transformation.

In the event, I’ve been pleasantly surprised by the amount of progress that’s been achieved already.

● Lawyers took to working from home like fish to water. Six months after lockdown, I don’t know any firms with more than 30% of their workforce in the office every day (most are around 15%), and that number will not grow over the winter. I think everyone-here-all-the-time law offices are done. We’ll see a few people WFH full-time, some in suburban satellite offices (maybe practice groups), and some in the main office a few days a week or full-time. But law firm culture and professional development, both built on the everyday physical proximity of lawyers,  won’t mesh with that, creating more change.

● Some law firms began getting serious about changing up their business models. More than a third of the AmLaw 100 now has a captive law company (or ALSP, if you prefer), and while COVID didn’t cause that surge, it surely accelerated it. Firms have also ramped up their commitment to technology, not just for remote work, but investing in software companies directly, merging to acquire software, designing platforms to help clients buy software, or even building and selling software of their own.  (To say nothing of standalone legaltech investments.) Law firms finally seem to be diversifying their means of production and sources of revenue.

● The biggest shift to this point has occurred in legal services regulation. Utah got the ball rolling by launching a regulatory sandbox that will allow unauthorized providers of legal services to operate on a pilot-project basis while the regulator assesses their reliability and effectiveness. British Columbia followed suit earlier this month, and California is still thinking about it. Expanded roles for para-professionals have also been approved or are being considered in Utah, Arizona, Minnesota, BC, and Ontario. But Arizona went furthest of all, to throw out Rule 5.4 against sharing fees with non-lawyers altogether.

● Not all the news has been good, of course. The justice system has responded less well than I’d hoped, but about what I realistically expected. Zoom hearings are nice and all, but courts’ troubles are multifarious and deeply rooted, while most of the solutions and better ways put forward are still theoretical. I’ve had some encouraging conversations with law school deans, but legal education still has a long way to go. Bar admission in the US has been an infuriating fiasco (#barpocalypse and #bloodybarpocalypse tell you what you need to know), while bar admission in Canada … well, check back here next month on that.

That’s as concise an overview as I can provide of an astonishing six months of upheaval in the world and in the law. For the balance of this post, I’d like to examine the one thing that, to my mind, really stands between where we are today — as lawyers, yes, but also as people and as members of our communities — and where we need to go.

In the final entry of my “pandemic series” in May, I wrote:

We need to appreciate that COVID-19 isn’t only, or even primarily, a public health crisis. It’s a political system crisis, in which a serious threat to public health fully reveals and further exacerbates the failure of disintegrating political systems, public institutions, and social norms. COVID-19 is not “merely” a crisis like the 2007-08 recession — it’s a catalyst, perfectly timed both to signal and to bring about the end of one era and the beginning, for better or worse, of another. The old world is passing away, mostly because it was time for it to pass away and to be replaced by something else.

I still believe that to be true. I regard the pandemic as the culmination or logical end point of a well-worn path of choices and a warning to respond and adapt urgently to their consequences. But what matters more is what you believe about the pandemic, and what everyone else believes, and why.

The distinguishing feature of the last six months has not been an unexpected mutation or heightened deadliness of COVID-19 — it’s essentially the same virus now as it was last December. The key feature of the last six months is what people decided to do about the virus. A remarkably large number of people decided to do very little, to keep living their lives the way they did last year, and many governments chose to allow or encourage those decisions.

Why did people make these choices? Maybe they didn’t want to believe COVID-19 was real. Maybe they believed it was real, but wanted it to be just a random bad thing, an “act of God” with no more meaning than an earthquake, something to be gotten through and moved past.

But I think that in most cases, it was because if people really accepted the truth and seriousness of COVID-19, then they would have to stop living one kind of life and start living another, for an unknown period of time. They would have to let go of the world they knew. They could not, or would not, do that. They weren’t ready.

Here’s another lesson about change management: People don’t change their minds. They change their hearts. They make a decision, consciously or unconsciously, to feel differently about something, and once they feel differently, then it’s the work of a moment to think differently and then act differently.

You’ve experienced this if you’ve ever decided to leave a job. Once you’ve accepted the offer from your next employer, it doesn’t matter that you’ve got two weeks left at your current job — you’re already gone. Your heart is no longer there, and your body can’t wait to follow it out the door. You mentally and emotionally crossed over, and suddenly your present became your past and your future became your present.

All of which brings me to the legal sector. Just as in everyday life, many lawyers are resisting the call to leave behind the traditional “legal world” and start building the next one. They recoil from the prospect of losing the old and familiar environment for the delivery of legal services, and they desperately hope for the disruption to be temporary.

They might very well get their wish. I remain deeply skeptical that the actual deployment of vaccines will go smoothly, and I find projections that we’ll all be “back to normal” by the spring very hard to believe. But I’m obviously not a medical expert, and I’d of course be delighted to see the pandemic brought under control as soon as possible. I’d like to see my kids back in school, to dine out, to travel again. I’d like to see an end to people’s suffering.

But that happy event would risk overshadowing the unhappy reality that our old legal system (not to mention our old world in general) still needs extensive repair at least and complete replacement at most. It would risk obscuring the reality that we have travelled a long way down an unsustainable path, and that if we hop right back onto that path whenever COVID-19 is tamed, we will inevitably wind up in crisis again. In the immortal words of Ed Yong, “Normal led to this.” Going back to “normal” will just bring us right back into the downward spiral.

You might very well feel torn right now, between your admirable hope for a better legal world and your understandable desire to get the old world back. If you work inside or operate or lead a legal entity of any kind, you might experience this feeling as wanting to hedge your bets, to hang back in a holding pattern, to wait and see if change really is necessary or if we can kick the can down the road once again.

But pause a moment, and look down — there are countless cans littered around our feet right now, all of them kicked there by us time and time again in the past. It’s COVID-19 that’s disrupting our lives right now; next time, sooner than we would like to suppose, it’ll be something else. How many “temporary disruptions” do you think we’re going to experience? How many more warnings of imminent system failure do you suppose we’re going to receive?

While I dislike its colonialist connotations, I do feel like the appropriate metaphor right now, for those of us able to lead change in the legal sector,  is to “burn our ships.” We need to commit, truly and fully, to change for the better in the law. We need to take this opportunity to transform the legal world and run with it. If we hesitate — faltering at this fork in the road, yearning to keep all our options open — we risk missing this chance to open up some distance ahead of the tsunami that’s still gathering behind us, gaining speed.

A door to the future has been pushed open by awful circumstances, which hopefully will soon end. But do not let that door close. Wedge it open, and help lead others through it. The sea is still rising behind us.

We’re here for a good time, not a long time

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Posted in: Generations, Leadership, Partners

In the spirit of Casey Flaherty’s recent excellent post “Me Being Wrong,” I’m starting off the year with an admission of (at least) one thing about law firms I’ve totally swung and missed on. In some article or other within the last year or two, I wrote that “law firms are supposed to be multi-generational entities.” I’m now reluctantly set to admit that they are not.

I’ve had growing doubts about my multi-generational thesis for awhile, but the decisive blow against it was struck by this post at Adam Smith Esq. wherein Bruce MacEwen and Janet Stanton tick off all the reasons why the average law firm apparently stays in business only 40 years:

  • The desire of the firm’s leaders to avoid awkward “succession” conversations with longstanding friends and colleagues,
  • The immovability of senior rainmakers who will not be managed and will certainly not be “transitioned” anywhere they don’t want to go,
  • The confluence, in smaller law firms, of the rainmaker, founder, and senior management roles in the same people, and most of all,
  • The sorry fact that many senior lawyers really don’t care what happens to the firm the day after they retire.

What all these factors share in common is that the law firm hasn’t managed to become something more than the sum of its parts. As Dorothy Parker once said of Oakland, there’s no there there. The concept of the firm as a thriving legal services enterprise independent of the lawyers who supply its services never really caught on, at least not with the most important lawyers therein. 

A few years ago, I was contacted by some people at a boutique firm who were facing an existential problem: the name founders were all coming up on retirement, but were showing little interest in devolving authority, transitioning clients, or planning for the future. It was probably dawning on everyone else in the firm — junior partners, senior associates, staff — that the reason the firm existed was to be the commercial vehicle for the name partners’ legal careers, and that when those careers ended, the vehicle would have served its purpose.

I once wrote that many law firms seem to be run these days as if they intended to close their doors in five years’ time. I was half-joking at the time, but I now think there was more truth in it than I realized. Five years is probably the anticipated remaining career length of a typical law firm’s most powerful partners. If your law firm’s engine seems to be pushed into overdrive, such that it’s going to be immensely profitable in the short term but is imperilling itself in the long term, maybe there’s a reason for that.

Bruce and Janet are sanguine about whether one-generation firms are necessarily a bad thing, and they make some good points. I still think it’s kind of a sad turn of events, though, because although the firm’s founders and rainmakers might be perfectly happy to drain the contents of the firm and recycle the empty afterwards, most of the other people in the firm, especially associates and staff, put their backs and their hearts into the enterprise and believed that there was, in fact, a “there” there. Most will probably find employment elsewhere, that’s true; but they’ll also have lost something more personal that they’ll find harder to replace.

There’s no shortage of helpful information about law firm succession planning and partner exit strategies out there, and I plan to contribute something along those lines here soon enough. But I think there’s a critically important preliminary step that you need to take before your firm commits to any of these courses of action.

I think your firm’s leaders need to sit down and have a private and very honest discussion about whether your firm is one-generational or multi-generational. It doesn’t matter that much, from my perspective, which answer you come up with. What matters is that you arrive at a clear-eyed agreement about what the firm’s leaders really, genuinely want and expect from their firm.

Beware of being too aspirational, of saying, “Yes, we’re building for the future, we want to leave a legacy, etc,” if you don’t really mean it. Because if what the firm’s powerhouse people really want is to mainline cash from this machine for the next few years and then close up shop, then it’s wasteful and counterproductive to spend time, money, and effort on succession plans and generational handovers that will never take place. Everyone will be left poorer and more embittered. You’ve got to be honest with yourselves about what sort of firm you have here.  

But if you decide, during these conversations, that yes, you truly do want the firm to last beyond the current generation of rainmakers, then everyone needs to be clear about the hard choices and time-consuming mechanics that choice requires. This might, in fact, be the best way to go about the whole “succession” issue: start by establishing beyond any doubt whether this is a firm that wishes to have succession at all. 

Challenge the default assumption that your law firm will continue on in perpetuity. That’s a hard conversation to have, it’s true; but holding it will make every subsequent conversation about your firm’s future easier.

Break the law firm business model

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Posted in: Leadership

The ABA’s Center for Innovation, where I serve as an advisory board member, asked me to submit a post for its excellent new blog. I was happy to send them this takedown of the traditional law firm, which I’ve also posted here below.

“Innovation destroys hours.”

Those three words, written by Neota Logic founder Michael Mills in a 2014 blog post, summarize the fundamental challenge that every law firm faces today. They reflect two market realities that are inherently incompatible with each other.

1. Virtually every recent innovation in the legal services market — from automation to process improvement to multi-sourcing — has operated to reduce the amount of time and effort required to produce and deliver legal services.

2. Virtually every law firm in the legal market prices its work, bills its clients, compensates its lawyers, and rewards its shareholders on the basis of the amount of time and effort required to produce and deliver legal services.

This fact has to constitute the starting point for all our inquiries into “why law firms don’t innovate.” The hours billed by a traditional law firm’s lawyers represent the entire inventory of the firm — it’s what the firm sells and the sole means by which the firm makes money. When a law firm engages in any of the most common types of innovation, it eliminates hours, thereby reducing its inventory and lowering its lawyers’ revenue. It’s no wonder innovation is anathema within most law firms: it’s antithetical to the law firm’s foundational business premise. You might as well ask a ship to innovate by drilling holes in its hull.

Don’t make the mistake, therefore, of blaming lawyers for the lack of law firm innovation. Sure, lawyers are change-resistant and conservative and all the rest — but so are most people, to a greater or lesser extent. Since almost any worthwhile innovation in a law firm will destroy hours and therefore reduce lawyers’ stock in trade, lawyers will understandably fight those innovations. It’s an entirely rational response.

The true barrier to law firm innovation is the firm’s ironclad insistence on measuring value — both external to the client and internal within the firm — on the basis of lawyers’ time and effort.

Law firms maintain a direct, causal connection between the time and effort lawyers expend to deliver a service and:

(a) the money clients pay to receive that service, and
(b) the money lawyers receive as compensation for their services.

But there is no fundamental economic reason why either of these should be the case. These aspects of your business can and should be largely independent of each other.

(a) Clients need not be charged on the basis of lawyers’ time and effort. They can be charged on the basis of successfully accomplishing a task within previously agreed parameters for a previously agreed price (with both parameters and price established according to competitive market realities). Indeed, clients have been telling firms this for the last ten years: they don’t care how much time and effort was required to generate their legal services. All they care about is the result they received and the experience they enjoyed (or endured) to receive it.

(b) Lawyers need not be compensated on the basis of the time and effort they expended to deliver a service. They can (also) be compensated for other means of contributing value to the firm, including clients landed, business generated, relationships maintained, solutions identified, teams managed, projects led, efficiencies found, juniors mentored, and a host of other criteria. Should we really be surprised that law firms that incentivize maximum lawyer time and effort are filled with overworked male lawyers disproportionately prone to depression and substance abuse?

Law firms have trouble appreciating that their costs of production and their revenue from clients aren’t really supposed to be causally connected.

If you want to successfully introduce innovations into your law firm, therefore, you first need to recognize that these innovations pose an existential threat to the way the law firm does business. So your real challenge — the challenge every law firm faces, whether it wants to innovate or not — is to change the way the law firm does business. Break the causal relationship between the amount of time and effort required to render a client service and (a) the price clients are charged for those services, and (b) the rewards provided to lawyers who helped deliver those services.

That’s not going to be easy, obviously. In fact, it might seem like I’m just substituting one insurmountable challenge for another. But here’s the difference: You have zero chance of stopping innovation from destroying lawyer hours. But you have a non-zero chance of changing the way law firms charge their clients and compensate their lawyers.

You’re going to have to change your law firm’s business model eventually. Eventually might as well start today.

Tomorrow’s law firm, today

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Posted in: Law Firms, Leadership

When I spoke at the Lexpo ’17 legal technology conference in Amsterdam earlier this year, I had the good fortune to finally meet Jacky Wetzels of Salesmoves (a Dutch consultancy specializing in business training, coaching, and strategy for lawyers and other professionals), with whom I had corresponded in the past. Our conversations led to an extensive interview about both my book, Law is A Buyer’s Market, and my thoughts on how lawyers and law firms can respond to the major shifts underway in the legal market. I’ve posted edited excerpts from my interview with Jacky below; you should read the full interview to get the longer version.

Q. Could you share some of your ideas that come to mind when you think of the future of the law business?

A. Well, we’ll still have law firms in future. They’ll be strong professional businesses, they’ll give good service to their clients, and they’ll help the justice system work as well as it can. But most firms, 10 to 15 years down the road, won’t look much like they do today.

Whereas firms today generate 99%+ of their revenue from the real-time application of lawyers’ billed efforts, future firms will generate less revenue that way. “Non-lawyer” technicians, programmers, related professionals, and others will drive revenue in ways most firms don’t imagine today. The legal profession will have had to change its rules around fee-sharing with “non-lawyers” in order to attract and keep the best people in these areas, as a competitive necessity.

Ownership of these firms will change as well, from being 100%-lawyer to probably 50%+1 — maintaining putative lawyer control. This will affect almost everything we now assume to be immutable about firms, like compensation and promotion systems based on business generation and hourly billing. That will have knock-on effects in diversity, bringing more women into firms and especially their leadership ranks. Firms will be very purposely geared towards the interests of clients and the market, not to lawyers and partners as they are now. All of this will generate huge cultural changes.

Q. Let’s talk about the roles of leaders, lawyers and the other professionals in the law firm. Will it be lawyers using technology, or do you expect data scientists and other tech professionals to start taking over the jobs?  

A. Law firms, like most other successful enterprises, will be multi-dimensional. It’s not going to be just lawyers, supported by staff. It will be lawyers heavily supplemented by professionals and technicians from a broad range of industries and backgrounds. It will be not only lawyers’ services, but legal products made possible by the twinning of lawyers’ expertise and technicians’ know-how.

Yes, lawyers will absolutely use technology, but the nature of that usage will vary. Some lawyers will be deeply immersed in code as they create expert applications to answer commonly asked legal questions within financial institutions. Other lawyers will dip into predictive analytics before recommending whether to proceed with a litigation. It will depend on what makes sense for each practice area and market segment. Whether all these lawyers will do these things inside law firms, or on some superior platform, is an open question. But the more law firms resist change, the more these roles will leave firms and go to alternative platforms, or go directly to the client.

I’m really not sure whether lawyers will adapt well and start using new tools. But if we give lawyers new skills and attitudes, then yes, they can remain at the forefront of this market. I don’t see much interest by “non-lawyer” technicians in acquiring legal skills — they’ll recognize that the easiest way to access legal expertise is to ask a lawyer. In the future law firm, everyone will do their part, what they’re good at — division of labour. It works in every other industry, so I think it’s about time law gave it a shot.

Lawyers will have to choose our spots, figure out what we’re really good at that nobody else can do as well as we can. We won’t do everything in the future legal market — that seems absolutely certain to me. So the question is, what are we going to do?

Q. What skills do you think lawyers need to best cope with these challenges?

A. I’ve written about this in a few places now (here’s one), but I think we need to be equipping lawyers better in terms of collaboration, customer service, empathy, financial literacy, process improvement, and technological affinity, among other things. People sometimes deride many of these as “soft skills,” but I think that’s badly mistaken. Most of life is “soft skills.” The things that clients complain about most with their lawyers amount to soft-skill breakdowns — failure to listen, failure to empathize, failure to set expectations, failure to communicate.

If you talk to satisfied clients, both everyday individuals and corporate leaders, they’ll say the same thing: My lawyer listens to me, understands my situation, and responds to me in a way that makes me feel heard and recognized. You don’t need devastating intellectual power to provide that. Care about the person you’re speaking with. Stand in their place. See the world through their eyes. Commit an act of emotional imagination. It’s not nearly as hard as you think.

If there’s one thing we could use as a profession, it’s a strong dose of humility. We don’t have all the answers. We’re not the smartest people in the room. We’re not indispensable. We’re here to serve, not to be served. I would teach a whole law school class on humility if I could.

Q. What firms do you think will “survive” (stay profitable)?

A. I really think the difference-maker will be leadership. Not just the formal leadership of managing partners and practice group leaders, but the informal leadership of heavyweight rainmakers and political players inside a firm. Will a top-earning senior partner willingly and cheerfully divest himself or herself of 30% of their annual income, during the highest-earning final years of their career, in order to transition the firm to a new generation of leaders and ensure client continuity, or to invest in a powerful new technology platform that will generate massive revenue for the firm after the partner has retired? How many partners in your law firm would do that?

The hard reality is that very few partners would. It’s an unreasonable thing to ask. But leadership is about doing the unreasonable thing. It’s about taking a hit today so that others can enjoy some of your own good fortune later, long after you’re gone. It’s about stewardship and sacrifice for the next generation, paying into a fund that might never pay you back. The more people like that who are in your law firm, the better the chance that your firm will not just survive, but dominate, in the years to come. If you don’t have anyone like that in your firm, I suggest you start looking for your next position now.

Q. What can lawyers do in the meantime? 

A. Three practical steps. First of all, understand who and where you are. What is your unique value proposition to the market? Emphasis on “unique” — what have you got that no one else has, or that no one else does unquestionably as well as you? Collect intelligence on your market presence, or have someone do it for you. It’s no insult to say the category of their “unique value” is smaller than most lawyers think. If you don’t have the value proposition that you want, which one do you want? Then set yourself the task of establishing it.

Second, reach out to the markets and clients you want to serve and learn everything you can about who they are, what they experience, where they’re going, and what they need. What they need won’t always be what they tell you they need, by the way. Know your markets cold.

And third, start acquiring the skills and tools and expertise, wherever you can, as soon as you can, to present the unique value proposition you want to the markets you’ve researched and learned about and have committed to serve. That’s as good a start as any.

 

 

Fight the future

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Posted in: Leadership, Strategy

Most law firm retreats are not what you’d call somber exercises in austerity. Lawyers don’t go out that often, but when they do, they usually go in style. Smaller firms might gather in high-end lodges or resorts adjacent to lakes or golf courses, while larger firms will convert a luxury hotel ballroom into a casino or book entertainers for a private concert; in both cases, the food is abundant and the drink flows freely.

I’ve come to think that firms shell out the money and crank up the fun at these bonspiels for a couple of reasons. First, they serve as internal messaging to signal the firm’s success and self-confidence to its shareholders; and second, they act as an incentive strong enough to persuade lawyers to give up perfectly good billable time for mere socializing.

Often, the business agenda at these meetings will strive to match the upbeat vibe. Because really, who wants to fight about partner succession or de-equitization just before hitting the links? So when lawyers gather to talk about their firm, they prefer to visualize a sunnier future and to discuss expansion, rate increases, new business opportunities, and the like. And so they should, of course: Growth is essential for law firms, so obviously these are good and important topics to tackle.

But hard issues and tough choices are no less important, especially now, when challenges to law firms seem to multiply around us. The understandable tendency is to punt these issues to an “offline discussion” or hurry past these parts of the agenda. But I would submit that the more uncomfortable a topic makes everyone, the more important it is to deal with it, and soon.

So in the time-honoured spirit of Spoiling It For Everyone, I’d like to propose that at your firm’s next retreat (or at least, at an upcoming executive or partnership meeting), you engage in a strategic visioning exercise that’s more of a downer. Specifically, I suggest that you and your colleagues contemplate the following unhappy scenario: It is two years into the future, and your law firm has just failed. (Credit where it’s due: I picked up this idea in a discussion at the Toronto Legal Innovators Roundtable earlier this year.)

The scenario goes like this: Your small group (and there can be multiple groups pondering this question at a larger gathering) is part of the cleanup team charged with sorting through the fallout of your firm’s collapse. Your group’s specific task is to conduct a post-mortem on the firm’s failure, to ask and answer two questions:

  1. Why did our firm fail? What was the proximate cause, and were there contributing causes? What was the general sequence of events that led to this outcome?
  2. What could we have done two years ago (i.e., today), to prevent the firm’s collapse? What steps could we have taken, in what order, and at what cost?

You’ll need to provide the group(s) with enough information that they can make informed predictions about extinction-level events. This would include summarized financial indicators from the last few years (e.g., revenue per lawyer, collected realization rates, profitability by firm and sector), client churn, lawyer departures, and so forth. But you don’t want to drown people in facts and figures; just give them enough that they can detect troubling or dangerous trend lines and reasonably extrapolate from them. And ask your people to focus more on the second question, the “if only we had” part, because our goal here is not to find scapegoats, but to reduce the need for any scaping at all.

You’ve surely read accounts of major law firms that have failed, publicly and spectacularly, in the last few years. You may also have heard insider stories about less publicized failures of smaller firms in your region or community. What all these reports and accounts share is their dazzling 20/20 hindsight. It’s easy to pick apart the entrails of a deceased firm after the fact, but it doesn’t do the departed much good. Travel back in time before the disaster, though, and you can stop the chain of causation before it gets started.

It might also be helpful, especially if your people haven’t given these issues much thought before, to provide the participants with some potential “failure trigger” candidates for their consideration. Here are some seriously important issues that I know law firms are (or should be) seriously concerned about right now:

  • Client attrition during a process of key partner succession.
  • Technology changing the old rules of workflow, leverage, and pricing.
  • Shrinking market share in sectors critical to firm revenue.
  • Over-distribution of profits relative to contribution and cash flow.
  • New and discomfiting client criteria for satisfaction and firm retention.
  • Cybersecurity and the inevitability of a client data ransom attack.
  • Dangerous clients that could ruin the firm’s brand and reputation.

Your firm almost certainly faces some of these challenges. (If your firm is facing them all simultaneously, you might want to rethink the partners’ retreat at the ski resort.) But not all challenges are risks, and not all risks pose an equivalent threat. So encourage your visioneers to rank these challenges in order of their risk payload; that is, which challenges does your firm face that have real potential to:

  • Drive away clients,
  • Push out key personnel,
  • Cripple your operations,
  • Damage your brand,
  • Infect your culture,
  • Invite regulatory scrutiny, or
  • Expose your firm to liability?

Rare as they might be, these risks are nonetheless existential; that is, they threaten the firm’s continued viability. But few law firms convene their partners to think about potentially ruinous developments, not least because it’s kind of a drag. Who wants to spend a weekend at a posh resort thinking about all the ways the firm might go belly up? No one’s in the mood to listen to Hootie and the Blowfish after that.

But risks and rewards await your firm in equal measure, tomorrow and in the months to come. During times of intense market dynamism like this one, the peaks are higher, but the depths are deeper. You don’t want to keep your firm’s eyes so fixed on the mountains that you stumble into the valleys. And there are assuredly valleys ahead of you right now.

So ask yourself: What risks does your firm face today? Which of them are more threatening than others? Which of these has the potential, alone or in combination with other factors, to wreck you? Then, once you’ve settled on the clearest dangers to your firm, select the most acute one and assemble a crack team of the firm’s leaders and power brokers, with instructions to demonstrably reduce this risk in the next 120 days. It might put a damper on the party; but it could also go a long way to ensuring there’ll be many more parties in the future.

How to bring about change in law firms

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Posted in: Change, Leadership, Management

(Note to readers: Pursuant to the terms of the New Author Self-Promotion Act of 2006, please be advised the statutory maximum of three (3) plugs for my new book will appear in this post. Thank you.)

Everyone’s gotten the memo by now. The legal market has experienced fundamental change, and law firms need to respond in equal measure. If your firm’s leadership doesn’t know or accept this, then with great respect, I think your firm needs new leadership. Ignorantia mutatio non excusat, to muddle a phrase.

Nor should any law firm leader be allowed to say, “I don’t know what we can do.” There’s now a wealth of practical, reliable information about how firms can change their operations and run themselves more effectively and profitably. This information is widely and easily accessible in countless articles, blog posts, and books, such as the brand-new and well-reviewed Law Is a Buyer’s Market: Building A Client-First Law Firm. (1)

So we know what we need to do. What we don’t yet know, for the most part, is how to do it. Bringing about change in a law firm remains extraordinarily difficult, and the more fundamental the change, the greater the difficulty. That’s a problem, because we need to start implementing all these great ideas and putting them into practice at our earliest opportunity. Owning the tools won’t help us if we don’t take them out of the toolbox and start using them.

These were some of the thoughts on my mind when I addressed the annual meeting of the Association of Legal Administrators in Denver earlier this month. I felt confident that this audience of law firm leaders and managers understood, more so than most, the steep challenges looming over law firms today. I also hoped — correctly, as it turned out — that they would be able to share some success stories about how they had overcome the incredible resistance within law firms to doing things differently.

In this post, I’m going to lead off with some of my observations about why change in law firms is so hard, and follow that up with suggestions and examples, drawn from the ALA conference and elsewhere, about how firms can nonetheless bring change about.

Why it’s hard to change law firms

Change in law firms is hard mostly because change is hard, period. People hate change. I mean, they love it in the abstract, and they’re happy to tell other people in great detail why they should change, but they don’t want to actually do it themselves. This is human nature, and unless you plan to automate your entire law firm (which I do not think you should do), you’re stuck with it.

I go into more detail about this in Chapter 14 of my new book, Law is A Buyer’s Market (2), but there’s extensive psychological research documenting people’s resistance to change. Two behavioural patterns in particular, the status quo bias and the endowment effect, show that people naturally prefer things as they are, fear a loss more than they desire an equivalent gain, and place a higher value on an item simply because they already own it. Change represents a loss of the known and familiar, and people will fight that, no matter how attractively you sell the replacement.

But of course, lawyers fight change more aggressively and successfully than other people. Partly this is because we’re wired to be more conservative and trained to be more risk-averse than the general population, and partly because we’re skilled at arguing our way around and past an unpleasant or inconvenient fact. And since law firms are the concentrated commercial expression of lawyer culture, they are especially change-recalcitrant places. For better and more detailed analysis of lawyers’ resistance to change, read this excellent article by Anne Collier and review this slide deck by Ron Friedmann and Jim Tuvell.

So it’s worth keeping in mind, before we proceed to possible solutions, the nature of the problem. Lawyers aren’t fighting your change efforts simply to be difficult. They’re fighting it because everyone fights change; the fact that they’re lawyers just makes them especially good at it.

How to change law firms

The first thing to recognize is that there’s no single right answer. Experience has shown that facilitating change, especially in law firms, requires the use of more than one tactic or even several, sometimes applied in sequence, sometimes simultaneously. This complicates the process, of course, but it might also be a relief to know that there’s no magic bullet out there to which other firms have access and you don’t.

The second thing to recognize is that you are not going to accomplish change by working against your own people. No matter how frustrating you may find their resistance, they are not your enemy. They perceive their own interests very clearly and will fight to protect them, as would you in their place. Strive to understand those interests. You shouldn’t place those interests ahead of the firm’s, but you do need to know them and clearly acknowledge them.

All that having been said, here are five approaches that I’ve seen and heard about that have had some success advancing change in law firms

1. Build trust through transparency. This is my preferred tactic, and it received a lot of support from the ALA audience. Leaders of law firms in difficult circumstances opened up the books inside the firm, showed everyone the nature of the challenge, and asked people to help overcome it. They personally visited lawyers and staff, answered questions as best they could, and tried to defuse any suspicion of a hidden agenda. Call it “change management by walking around.” If you prove yourself trustworthy, you’ll gain trust, and thereby cooperation. I’ve written on this subject before, and I’ll re-up this quote from that post: “Every change requires effort, and the decision to make that effort is a social process.”

2. Give people control. People’s feelings of powerlessness in the face of change fuels much of their resistance to it. You can’t give people the power to reject or excuse themselves from change, but you can give them the power over how to adapt to it. One ALA attendee described how her firm wanted to help improve people’s physical and mental health, but couldn’t settle on a program to achieve it. So they gave everyone a $1,000 voucher to spend on any wellness-improving activity they liked. The diversity was amazing — gym memberships, yoga lessons, vacations, etc. — but so was the massive, firm-wide improvement in morale and productivity. People chose how they wanted to adapt to a new firm directive, and that improved buy-in tremendously.

3. Make it a game. Much has been written on gamification in the law, and possibly it’s been oversold a little at this point. But for lawyers, who like competing and love winning, gamification has a lot of potential to help facilitate change. Another ALA attendee described how her firm struggled to get lawyers to turn in their dockets on time. So they made it a competition, offering incentives to file dockets by a certain time every week and publicizing within the firm which departments and groups led the firm in hitting their deadlines. Cash prizes were also offered to the monthly and annual leaders. Docket compliance, which had been limping along in the 40% range, roared to the mid-90% level. Lawyers love winning.

4. Occasionally, apply the hammer. Carrots are fun and attractive incentives, but sometimes, you just need the stick. There are limits to the volume and intensity of punitive measures you can apply in law firms, especially to lawyers; but on a short-term basis, backed by strong leadership, it’s highly effective. A number of law firms, including one ALA attendee’s, have withheld a partner’s payouts until that partner turned in his or her dockets. This measure was strengthened by its logical argument: we can’t pay you if you don’t bill your work. The bonus here, to my mind, is the quiet, morale-boosting delight junior lawyers and staff take in seeing consequences applied to powerful rule-breakers; it makes them likelier to follow the rules themselves, too.

5. Await new conditions. This can be phrased, less charitably, as “Wait for the difficult people to leave or die.” I included this on my list at the ALA partly as a joke, but it did get a few hands raised here and there. Sometimes there’s a small number of influential people who are blocking a change initiative because they feel it would hurt their personal or financial interests. Pressure from respected peers can often lessen this resistance, but not always. I once advised a legal organization facing this kind of problem. I said, “If you can’t change the landscape, change the weather.” My client introduced a fleet of minor innovations and talked repeatedly about how the future would bring more change. Soon enough, some resisters began to move on, partly because they could tell the climate was changing and it wasn’t going to suit them as well.

We talked about other approaches at the ALA event, such as alarming everyone with dire warnings, or selling the benefits of change in detail, but these were generally held to be less effective. “Scared straight” has a checkered history of success as a change tactic, and as mentioned previously, people are usually not persuaded to give up present conditions by the promise of future benefits. I also added my own recommendation that whatever change you want to accomplish in your firm, enlist your clients in the effort. It’s easy to ignore what some consultant or even the managing partner says; it’s harder to ignore what the person behind your origination credits says.

I’d love to hear your own thoughts and success stories about change in law firms in the comments below. But it’s worth emphasizing, again, that the most effective change management processes will combine several of these and other approaches and will be careful to administer the right medicine to the right people.

What matters above all is knowing your firm, knowing your people, listening to their concerns, showing you’ve heard them, and continuously enhancing the level and quality of trust between the firm’s leadership and the people they’re leading. Change isn’t something you do to people. Change is something you help people go through. Make that the mantra of your firm’s change management efforts.

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Here’s what the business intelligence director of an AmLaw 100 firm wrote me about my new book, Law is A Buyer’s Market: Building A Client-First Law Firm: “You offer an exceptionally clear diagnosis of many law firm ills and concrete recommendations on changes law firms should make in order to thrive in the buyer’s market. It is a very practical book … I hope more lawyers and law firm decision-makers read this book and take appropriate actions.” Law is A Buyer’s Market is available here. (3, right under the wire)

What leadership really means

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Posted in: Leadership, Purpose

I recently had the opportunity to speak with John Kain, managing partner of Kain C + C Lawyers in Adelaide, Australia. John’s company (it’s an incorporated legal practice, not a firm), which specializes in high-end corporate, commercial and M&A work, is one of the more progressive and innovative legal service providers that I’ve come across in a while.

Among the interesting features of Kain C + C Lawyers is a short-form advisory memo that lawyers are sometimes asked to give clients. This memo, which can run no longer than two pages, must contain one of four recommendations concerning the client’s proposed course of action: “Very Good,” “Good,” “Poor,” and “Very Poor.” When John relayed these measures to me, I immediately identified what was obviously missing among the choices, and I’m sure you have as well. And then I realized why it was missing.

John does not offer a middle choice, a “Fair” or an “It Depends” between “Poor” and “Good.” He does not permit his lawyers to be ambivalent in their advice to clients. Either recommend something or recommend against it, strongly if you so choose; but you must take a stand with your advice and you must sign your name to it. Invariably, every new lawyer in the company, when first confronted with this memo, comes to John asking for the middle-way option, and he always refuses. The client, he tells them, is paying us to advise them. So: advise — and be ready to live with the results.

I found this a really interesting practice, because it forces the lawyer to shift from the easier role of “analyst” into the more perilous role of “advisor.” We’re quite comfortable, as lawyers, with analysis: it’s an intellectual exercise that allows us to occupy a safe, low-stakes position. The “reasonable person” that we fetishize in the law is an analytical construct, an imaginary neutral against whom we measure actual human behaviour for fun and profit.

Advice is a different beast. Clients act on advice, making decisions that carry consequences for which we bear at least partial responsibility. It’s the difference between “What does the law say?” and “What should I do now?” There’s a good argument that advanced technology (e.g., expert applications, IBM’s Watson) could provide sound legal analysis; but nobody seriously argues that technology can render trusted counsel, or that any client would act on such counsel even were it offered. To my mind, a lawyer “grows up” the first time she gives actionable advice to a paying client. You’re not just writing a memo anymore; this time, it counts.

Every practicing lawyer can probably recall the thrill of her first real “advisory” moment — and the deep anxiety that accompanied it. Because the flip side of advice is responsibility: the possibility of error, the risk of failure, and the finger of blame pointed at our heart if it all goes wrong.

Everyone suffers from a fear of consequences for a wrong decision, but I sometimes think lawyers are unusually prone to it. We talk about our “risk aversion,” our overabundance of caution and hesitancy. I’ve written before that lawyers are more properly described as “embarrassment-averse” — we hate looking bad in front of clients and colleagues, and nothing looks and feels worse to us than failure.  The nadir of this phenomenon is what you might call “responsibility aversion”: the desire to avoid any action with more than a nominal amount of uncertainty and a corresponding probability of failure.

The antidote to all these aversions is the same: it’s courage. Courage is not simply one of the virtues, as C.S. Lewis has written: it’s “the form of every virtue at the testing point.” I would argue that no characteristic is more important to a good lawyer than courage: it’s what allows us to stand up for our opinions and to stand by our clients as they implement those opinions and change the course of their lives. The best lawyers aren’t just the smartest or hardest-working or the most caring: they’re also the bravest. The worst lawyers, by contrast, are the most timid and the most easily led away from their instincts and standards.

That’s all well and good. As I see it, though, our profession has something of an issue with courage these days. Specifically, I think we need to start showing more of it. Here are four examples of what I mean.

Our advisory role. I’ve only been part of this profession for 20 years, so I can’t give first-hand accounts of the “old days.” But I have the distinct impression that lawyers used to be firmer and more direct when giving advice than we are now. Conditions and reservations seem to be a more common feature of legal advice these days. Clients complain that we frequently default to “No” (if there’s a chance something will go wrong, don’t try it) or hedge our bets (do this, unless any of these seven things are present, in which case don’t). Clients seeking our counsel about what to do often receive advice about what not to do instead.

Our procedural habits. The apocryphal story of the in-house counsel, who asked his law firm for a chair and got a dining room set instead, illustrates our tendency to employ diligence far beyond what’s often necessary. Lawyers are infamous for turning over every stone and tracking down every possibility, which prolongs legal matters and increases costs. We like to say this is because we’re thorough and perfectionist, and we are. But it’s also because we fear the remotest possibility of a bad outcome and seek to eliminate all uncertainty, which is just not practical. There’s a cost-benefit line at which reducing uncertainty any further ceases to pay dividends, but we often lack the courage to stop at that line and say, “Enough. We’ve got what we need.”

Our business practices. We price our services by the hour because we want clients to bear 100% of the risk that something unexpected will happen (as if often does) during the course of a retainer, rather than having the gumption to calculate that risk as best we can and explicitly share it with our clients. We resist changes in our firms’ practices and procedures because we fear the consequences of failed innovations, and so we timidly wait for a dozen other firms to go first and thereby miss our chance. We dwell more on the personal and professional risks of adopting new methodologies and technologies than on the rewards they could provide to our firms and our clients.

Our regulatory approach. Lawyers do not permit competition in legal services from anyone outside our profession, even in the face of the clear failure of our present system to provide affordable legal services to more than a handful of potential clients. You can call that many things — protectionist, paternalistic, callous — but it also comes across as a lack of conviction that we could hold our own against “non-lawyer” providers. If lawyers are so convinced of their superiority, these entities argue, why are they afraid to compete against us in an open market? Where is the courage to take on new comers, or to take a measured risk of liberalization that could improve access to the law?  [do_widget id=”text-7″ title=false]

Please understand: this is not an attack on the moral backbone or personal courage of individual lawyers. This is an expression of growing concern that our professional habits have driven us into a culture of doubt and apprehension, a general meekness and conservatism in how we view our world and act within it. That world is undoubtedly riskier and more perilous than it’s ever been: the mind-boggling complexity of the law, the challenges of sustaining a viable practice, the savagery of competition between lawyers, and the spectre of client retaliation in court for mistaken advice all play a part. How much easier to reduce our exposure, stay the familiar course, adopt defensive postures, and reinforce our strongholds.

But when we bend to these challenges, rather than rising to meet them — when we spend too much time thinking about the worst-case scenario and how to avoid it — we miss out on so many opportunities and we accomplish so much less than we could.

Our ultimate value, to both clients and society generally, lies in our willingness to speak the truth and recommend the right course, regardless of the discomfort or pain that will entail, especially to ourselves. Our professional calling is to assess, manage, and recommend courses of action (and their attendant risks) that serve both our clients’ interests and the greater good, and to gladly accept responsibility for doing so. That’s courage, as manifested in the legal profession — and in all its manifestations, it takes one familiar form: leadership.

This is the time for leadership in the law, and I’m here to tell you that no one is exempt. Every lawyer has both the opportunity and the responsibility to visibly exercise leadership, in our firms and with our clients and in our profession, by acting courageously. Assess risks, accept them, and act accordingly; stand tall for what you believe is correct; look failure in the eye until it blinks; put yourself on the line for what’s right and necessary. We’ve become too passive, reactive, and defensive for anyone’s good, too reliant on what we’ve always done before. We can’t afford any more “it depends” or “wait and see.” It’s time to stiffen our collective professional resolve and show the world what a powerful, confident legal profession can do.

So: advise, and live with the results. Innovate, and stand by your efforts. Speak out, and welcome everyone’s eyes turning to you. Lead, and watch everyone else get out of your way.

Jordan Furlong is a lawyer, consultant, and legal industry analyst who forecasts the impact of the changing legal market on lawyers, clients, and legal organizations. He has delivered dozens of addresses to law firms, state bars, law societies, law schools, judges, and many others throughout the United States and Canada on the evolution of the legal services marketplace.

So you designed a law firm: Your survey results

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Posted in: Leadership, Management, Purpose

Previously on Law21 … after discussing the apparent disconnect between what lawyers seem to believe they can accomplish within law firms and what they’re actually empowered to do, I set up a brief survey inviting lawyers to distribute 100 points among 10 features of a hypothetical law firm to create an ideal working environment. First, the results (click on each image to get a larger version):

Question 1: Below are listed 10 features of a law firm. You have been given 100 points to assign to these features. Please assign these 100 points among these features according to how strongly you would prioritize their presence in your law firm. 

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Question 2:

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And Question 3:

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Now, my comments:

1. Law21 readers, and those in their immediate professional circles, are not big questionnaire fans. The post containing the link to the survey received in the range of 1,500 unique page views over the past several days, yet only 82 people completed the survey. In future: free coffee with every survey filled out! Limit one per customer. Not actually redeemable.

2. Not surprising to me, anyway, but Law21 readers aren’t a typical cross-section of the legal profession. “Client Service” finished comfortably in the lead among all 10 options, to be followed by “Good Workplace,” with the pre-race favourite “Partner Profit” barely finishing ahead of “New Lawyer Development” for third place. I think it’s fair to say that few law firms in the physical world actually match that profile. But I’d happily work for the law firm you’ve collectively designed here.

3. Nor am I really surprised to see “Community” and “Diversity” in the lower third of results. But I do think you should all be more concerned about your pension situation than you evidently are.

4. Does it say something that the survey attracted more responses from support staff than from non-equity partners and senior associates combined? At this level of statistical significance, probably not. But it at least suggests that the “non-lawyers” (sic) who work in law firms have a vibrant interest in what their firms could and should be.

Now, given the small response size, I’m reluctant to break down and compare categories against each other. But you may find this interesting: when I isolate the “Equity Partner” responders from the overall group (40 in total), the results are virtually even: that is, out of the 10 responses, no option received more than 11% of the total and no option received less than 9%. The variations in the final overall results are almost entirely the work of non-equity partners, associates, and staffers:

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I want to draw two statistically indefensible but nonetheless interesting conclusions from this.

First: equity partners want their firms to be everything, all the time. They want to be profitable yet collegial, prestigious yet affordable, elite yet community-minded. This, of course, is not possible: when you try to be all things to everyone, you end up being nothing to anyone. My own extrapolation is that this is at the root of many law firms’ problems: the people running these firms can’t prioritize among competing visions and demands, making them vulnerable to those demands that have the shortest time frame and the most severe short-term impact (hello, Partner Profits).

The second statistically indefensible conclusion from this exercise is that when you move outside the equity circle, a law firm’s other stakeholders have a very clear vision of what they want in a firm: one that serves clients above all else, one that provides a positive working environment, and one that yes, makes lots of money for its equity owners  — so long as those first two conditions have been met. You might or might not think that’s a good vision for a law firm. But at least it’s a vision: it’s the result of choices among options that result in a firm with an identifiable personality and profile. The firm designed by equity partners, as described in the results above, might as well have been formed at random.

So my last word on this exercise is to reiterate my message to law firm partners: you can make your law firms into whatever you want them to be. You are not helpless victims, floating like flotsam of the surging tides of commerce — that would more accurately describe your associates and staff, who, as previously noted, have a much clearer idea of what your firms could be. You and no one else are the captains of your ships, and their direction and mission is up to you. Accept your power and embrace the opportunity to make hard choices about the purpose and personality of your law firms — you’ll be rewarded for your courage and determination with praise and recognition of your leadership. We’re all waiting on you — make it happen.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

Design your own law firm: A Law21 lawyer survey

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Posted in: Leadership, Management, Purpose

Not for the first time, and probably not the last, I find myself reading reports from the legal marketplace and wondering why lawyers are asleep at the switch.

The latest head-scratcher comes courtesy of Altman Weil and its fifth annual Law Firms in Transition Survey of 238 US law firms. Importantly, only one-third of the respondents were within the AmLaw 200 — we’re not talking about the giants here, but about firms whose lawyer complements range from 50 into the hundreds, and whose clients likely include some national companies, a lot of regional businesses, SMEs, and individuals. Here are a few highlights from the Am Law Daily report:

  • 80% of respondents think the move towards non-hourly billing will continue — but only 29% had made significant changes to their own pricing practices.
  • 96% believe the focus on improved practice efficiency has become entrenched — but only 45% had made significant changes to improve efficiency.
  • 67% think smaller annual rate increases are also a permanent change — but between 21% and 40% of all fees at all firms are still simply being discounted.
  • And despite all the foregoing, when asked to cite the greatest challenge they expect to face over the next two years, the #1 response (15.2%) was “increasing revenue.” Coming in at #8 (5.6%) was “delivering value to clients,” while the afore-mentioned “improving efficiency” — which, remember, 96% think is here to stay — finished at #11, with  2.8%.

Near as I can tell, many of these respondents must believe that permanent, radical change in the market is something that’s happening to other people. The disconnect between “This is really happening” and “We’re doing something about it” remains perplexingly wide.

Now here are the results of another survey, one that didn’t get quite so much attention, but whose implications are far more chilling. The UK’s Legal Services Board released the results of an incredibly comprehensive survey of small businesses — an astonishing 9,703 of them, ranging from solo entrepreneurs to companies with up to 50 employees. (Although the countries are different, the two survey populations suggest a high degree of overlap between the law firms and the clients in each.) Here are some of the findings:

  • 38% had experienced a “significant” legal problem in the past year, almost half of which had a tangible financial impact — a total market value of £100 billion when scaled up across all small businesses.
  • 91% of respondents took action to respond to their problems — but most either handled it themselves or got help from family and friends.
  • Of the minority who sought formal advice, only about 40% went to members of the legal profession — the rest sought out accountant, trade associations and the like, especially for tax issues.
  • Bottom line: Legal service providers were involved in just 16% of these matters. That means that roughly £84 billion worth of potential small business legal services are being resolved without the legal profession.

Oh, and here’s the kicker: When asked to assess the statement that “lawyers provide a cost-effective means to resolve legal issues,” only 13% agreed.

So I find myself wondering: faced with reliable, overwhelming, and readily available data that shows a near-complete misalignment between them and their markets, why are law firms doing so little in response? Why are firms, even while openly admitting that many essential marketplace fundamentals have permanently shifted, moving so slowly, it at all, to address these changes? I’ve previously suggested the confidence of the dinosaurs as a culprit, but I think there’s something more at work here.

When I talk with lawyers in law firms about these issues, I’m sometimes struck by the impression of powerlessness that I get. Lawyers, including partners, seem to almost shrug, as if to say, “Yes, but what can I do?” The structure and culture of the firm are presented as an unalterable reality, a mix of good and bad that’s just the way it is. The firm delivers profits, prestige, and security — albeit ever-decreasing amounts of each — but it’s also hidebound, reactionary, and highly vulnerable to change. But what are you gonna do? Priorities have been set and choices have been made, and we have to live with the results.

There are times, when confronting this malaise, that I feel like responding, with some force: “Yes, but you own the firm! It’s yours; you’re the equity owners. Nobody else is in a position to make the firm something different and better than what it is. The associates, the staff, the clients — they might not much like the state of affairs either, but it’s not their show; they consider both the firm’s successes and its shortcomings to be entirely your responsibility. If you’re not in charge, who is?”

What I would really, truly like is for more partners to accept full responsibility for their firms — to recognize the need for decisive action to adjust the firm’s bearings, to take that action, and to fully own the changes that follow. I’d like to see them act as the owners they are, not as the passive sideline observers many of them seem to have become.

To that end, I’ve decided to try introducing a third questionnaire into this mix — my own. I’ve created a very short survey — only three questions — at SurveyMonkey, and I’m making it available to anyone who wants to take it. It’s directed towards lawyers in law firms, and I hope they constitute the majority of respondents, but anyone in the legal industry is invited to take part as well.

The title of the survey is: Design Your Own Law Firm. And that’s exactly what you’re invited to do. The survey provides you with 10 features of a law firm, gives you 100 points to distribute among those 10 features any way you like, and asks you to use those limited resources to design the kind of law firm you want to be part of. Here’s a preview of the 10 features, listed in alphabetical order (they’re randomized in the actual survey):

  • Affordability: The firm’s services are priced for maximum client accessibility.
  • Client Service: Clients reward the firm’s efforts to provide extraordinary service.
  • Community Leadership: The firm is widely praised for its active community efforts.
  • Diverse Workforce: The firm is more race- and gender-diverse than its peers.
  • Elite Reputation: The firm is considered among the very top tier in its market(s).
  • Funded Pensions: The firm ensures post-retirement income for both lawyers and staff.
  • Good Workplace: A positive, collegial atmosphere produces collaboration and referrals.
  • New Lawyer Development: Junior lawyers receive superb training, mentoring and work.
  • Partner Profit: Equity owners derive highest levels of annual revenue from the firm.
  • Prestigious Clientele: High-profile or respected clients frequently retain the firm.

Here’s the link to the survey — it’s open today, May 23, and will stay open for either one week or until I have enough responses to draw some conclusions. Please take the survey — Note: print out your choices before pressing “Done,” so that you retain a copy — and forward it to your friends and colleagues. Be honest with your answers: give the responses you really feel, not the ones you think you “ought to” give.

I’m very interested in finding out how — when given several good options, but only a limited amount of resources — lawyers prioritize the structure and culture of a law firm. And I’m hopeful, maybe even optimistic, that by going through this process, lawyers will realize that they really do have the power to make their firms the way they want them to be.

Here’s your chance to be the architect of your law firm. You’re responsible for its priorities. What will you create?

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.