So indeed we come to change.
Organizations’ ability to change is a function of their constitutional DNA and doesn’t often have much to do with the external market stresses imposed on them. Some organizations are supple and have few ingrained internal “interest groups,” vastly facilitating their agility and flexibility, but others are afflicted with institutional sclerosis through the power of vested internal constituencies self-interest. This is not news.
But it is what makes me worry so much about law firms.
May I digress momentarily?
As a management consultant to firms, I often hear that a firm’s first priority is to increase revenue, or it’s stronger business development, or it’s higher profits. Often.
The problem is that those goals are not actually goals, they’re outcomes. To analogize to your own life, if your goal is to “be happy,” you’re in for a long, tough, fruitless, and depressing slog. The route to happiness lies through the hard work of figuring out what work you’re passionate about – and working yourself into a position where you’re actually able to do it – plus finding the love of your life, plus staying fit and healthy and curious and energized and optimistic. Achieve all those things and “happiness” will be within your grasp: No guarantees, understand.
So with higher revenue, more powerful business development efforts. Not goals, outcomes.
Thus did I find myself delighted and almost amazed when a managing partner I recently met with answered the question, “What’s the greatest challenge facing your firm?” with “Getting our partners to present ideas to our clients.” This fellow gets it.
The legal profession is a profession of ideas. They are what count, and they’re all that counts.
But, and here ends the digression, this was extraordinarily unusual. I dare to say unique.
So what is law firms’ DNA?
- The individual lawyer, in cultural terms, is the over-riding unit of organization: not the firm. This is often shamelessly or boastfully cloaked in the rhetoric of “entrepreneurialism,” when what it really is is anarchy.
- Our compensation systems revolve around the Sun of billable hours and origination credits of each and every individual lawyer, with hardly any regard to standards of good citizenship, the contribution of everyone in the firm who happens not to be a lawyer (a/k/a nonlawyers, a term I’d like to banish from the earth).
- Near-total ignorance about what normal companies call business intelligence, meaning insight into where profitable revenue comes from by practice area, client, attorney, activity, and much much more.
- And finally our profoundly antique business model of laboring in the trenches as the source of revenue. A friend of mine likes to say that when it comes down to it, lawyers are glorified hourly workers, and that has the distasteful ring of truth.
So if we as firms are really going to change we’re going to have to change some of these fundamental characteristics.
But we can’t.
They’re not surface or recently grafted-on characteristics; they’re intrinsic to how we envision ourselves as firms and as partners within those firms. The first one in particular.
If law firm leadership needs to alter the ship’s course, not everyone can get a vote. In fact, it shouldn’t be up for a vote.
Your reaction to this heresy should tell you all you need to know about our ability to change.
Excellent post as ever. The value vs quality trajectories point is interesting. I wonder about it. Gulatti and Scott’s Three and a half Minute Transaction book came to mind. Blue chip partners in blue chip firms not providing quality (post here http://lawyerwatch.wordpress.com/2013/09/29/securities-lawyers-and-sticky-contracts-innovation-and-elite-law/). A deepening of the gloom was provided by their observation that the sages on these firms, who actually understood the law they wrote, or rather had a better chance of understanding, were about too fall off he retirement cliff and were not being replaced.
Bruce, take it from a guy who is happy: You have hit the nail right on the head with your statement “To analogize to your own life, if your goal is to “be happy,” …..”
If more lawyers realized the wisdom of your point, things would go better for all of us, and our friends, families and clients. You would be doing us a service to expand on this thinking as a separate post, which I and many of your readers would enjoy reading.
The last point of your post is pretty pessimistic about BigLaw, but I guess “If they do not listen to Moses and the Prophets, they will not be convinced….”
Congratulations on a continuously interesting and fruitful website.
Paul Bannon, B.A., LL.B., LL.M.
Barrister & Solicitor
#360-33 City Centre Drive
Mississauga, Ontario L5B 2N5
(905) 272-3412
(905) 272-0142 fax
Paul@BannonLaw.ca
Bruce –
An unresolved question in the comments on the Beacon post was, “What do you do with the $XX million you raise via the BigLaw IPO?” In a way that is immaterial.
Your closing point – “If law firm leadership needs to alter the ship’s course, not everyone can get a vote. In fact, it shouldn’t be up for a vote.” – answers the question of why ownership structures need to change. As long as a strong, productive, but ultimately selfish and shortsighted, group of partners can block change, change will be blocked.
And, that is unsustainable over the long run for large, sophisticated businesses – legal or otherwise.
Are quality and value are necessarily separate? While I can see how they might be, there is really a lot of room for improvement in low-end tasks done in high-end law. And some of these quality improvements also make lawyers faster at their work, which, depending on pricing model, enhances value. A few quick examples:
– Ken Adams points to how nearly all firm lawyers draft by cut-&-paste as opposed to using document assembly software, which could help them provide more consistently high quality contracts in less time. Contract errors matter and are more likely with today’s slower cut-&-paste drafting.
– Ediscovery technology enhanced review software enables better quality litigation document review in less time. Better quality document review means the parties to the dispute have better evidence to work with.
– Our contract review software has been shown to help a lawyer do due diligence contract review with greater accuracy in 20–60% less time. Due diligence contract review takes up a lot of time in M&A deals; junior lawyers are slow and sometimes make mistakes in this work. These mistakes hurt clients.
There are a number of other examples where big firms currently underperform on quality, and could provide better work product in less time if they chose to.
l’m new to this site, so if this comment has been discussed in the past, I apologize. I wonder how much of the innovations and changes in BigLaw are really just “rearranging the deck chairs on the Titanic”. The reality is that there are just too many of these larger law firms. While there is no doubt in my mind that “BigLaw” will survive, there will not be nearly as many and their primary business will be large litigation matters or large financial deals. However, the latter will be in danger if the prohibition on non-lawyers owning law firms ever truly comes down (not in an investment structure manner, but in a true ownership – as in subsidiary – structure). At that point, I think the large accounting firms will acquire several of the larger firms and absorb them into their structure to handle large financial deals.
I think that a good exercise that I have yet to see anyone undertake is a comparison of what the legal industry is going through now compared to the accounting industry in the 70s, 80s and 90s. At that time, technology was making a huge impact on the accounting industry, firms of all sizes were consolidating, fee were dropping and fee structures were changing (introduction of the flat fee and project based model) and the industry was changing dramatically. There were winners and losers and today’s environment (big four, smaller number of midsized) was shaped by that tumultuous time. How can we learn from what happened to our accounting cousins and do better than they at managing the change?