Altman Weil’s annual Law Firms in Transition survey, the 2015 edition, was just published, and as usual it makes for some fascinating reading—at least for me and I suspect for many of the devotees of Adam Smith, Esq. As you may know, this is the seventh year they’ve done this survey in more or less similar form. They report that this year they polled Managing Partners and Chairs at 797 US law firms with 50 or more lawyers and received completed surveys from 320 firms (40%) including 47% of the 350 largest US firms.
That they ask many of the same questions year after year provides one of those delectable rarities in research—a time series. Better yet, if the questions and the survey audience are consistent year to year, then time series can blank out methodological quibbles: Whatever issues you might have with the question or the respondent base, at least they’re the same year upon year. So variations in answers over time presumably reveal pretty much actual changes in attitude as opposed to mere noise resulting from self-selection, ambiguous question phrasing, or other common research faux pas.
There’s a great deal of meat in the survey (it’s 124 pages in total), but today I want to view the attitudes expressed through the prism of leadership. You might want either a fresh cup of coffee or a glass of wine, depending on where the sun is in the sky at your longitude just now, before you read on, because I find the results quite unsettling on the leadership dimension.
First some data points:
- 72% of respondents think the pace of change in the profession will increase going forward; 24% vote for “the same” and barely over 1% say “decrease” (my personal supposition is that this constitutes the “I’m exhausted—tell me it’s over already” vote); and finally, bringing up the rear is “not sure” at 2.5%.
- In the last four years the highest vote total “decrease” has ever gathered has been 1.4%—and “increase” has seen its vote percentage go up by 12 percentage points, or 20%.
- When asked about their confidence level in the firm’s ability to keep pace with new challenges, only 9% were in the “highly confident” range while 2-1/2 times that number (23%) were “low;” and 68% were “moderate.” (Remember who’s being asked these questions here, folks: The firms’ very leaders.)
- On the related question of evaluating their partners’ awareness of the new challenges, the results are even stronger: Only 6% high, 43% low.
- Finally, on the payoff question about their partners’ level of adaptability to change? A measly 1% “high” (1 in 100!) and 52% “low.”
If you’re looking for a recipe for stasis, you can’t do much better than this.
And clients seem to picking up on it, too.
For several years, Altman Weil has been asking law firm leaders how serious they think law firms are about changing their service delivery model to provide greater client value (just cutting rates doesn’t count). Diabolically, they’ve also started asking Chief Legal Officers the same question—their view of law firms’ change efforts on this score. Suffice to say the news is bad and getting worse. On a 0—10 scale (0 = “not at all serious” and 10 = “doing everything they can”), law firms have given themselves a median score of 4.9 or 5.0 for the past three years: right in the middle.
But the client perspective? Not just lower, but declining: from 3.8 to 3.6 to 3.4 from 2013 to 2015. Moreover, if you look at the skew of client responses, 15% give law firms a “0” or a “1,” while the total client votes for 6, 7, 8, 9, and 10 combined amounts to? That very same 15%.
By the way, Altman Weil is also kind enough to ask the law firm leaders “why isn’t your firm donig more to change the way it delivers legal services? [select all that apply]” 63%, the #1 response by far, choose “because clients aren’t asking for it.” The rational mind reels. At the very least, one must step back and ask if the law firm respondents are listening to their very own answers. Runner-up answers to this, by the way, include:
- We’re not feeling enough economic pain to motivate change (46%)
- Partners resist change (45%), and
- Our delivery model isn’t broken (30%).
I dare you to find a similarly sized private sector industry where clients have as low an opinion of their providers’ efforts at delivering greater value. This does not strike me as auguring well.
But you came in the door here thinking you were going to read about leadership.
It just happens that the other day I came across an article in October’s Harvard Business Review, “4 Ways Leaders Fritter Their Power Away,” which takes us there. What are those ways?
Essentially, the greatest risk to leadership isn’t abusing power, but abdicating it. Your greatest risk as a leader is not leading.
If you’re wondering how leaders fall into this trap, it’s quite seductive: “The last thing I want is to be perceived as a power-monger,” said one of the analysts’ interviewees. We can all empathize, and yet taking this too far courts disaster. It comes in these closely related forms:
- Paralysis: One victim of this syndrome earned the behind-his-back nickname “the waffle,” because he was constantly changing decisions, frequently under the influence of the “last one in” syndrome: Last person in his office persuaded him of their views. Of course, if you never want consensus to emerge or a clear direction to be adopted for the firm, this is your ticket. Everyone can claim that his or her view has your backing—because at one time or another, that has been (or will be) true.
- Over-inclusion: A perennial Law Land favorite. We want to get everyone involved, whether it’s to disperse risk or to build consensus. The problem is that when the time comes to decide, the vaunted “consensus” can disappear.“The number of people who expect to have a say in decisions is ridiculous. I spend more time building false consensus rather than increasing quality of the decision. I thought I would have more authority than I do.”
The effort to build “consensus” often resembles that spent on building a sand castle and when the decision has to be made, well, that’s just when the tide comes in.
- Accommodation: We also excel at this. Our HBR friends characterize it as “pandering to the agendas of others at the expense of a greater good.” I like this formulation because it stresses the price that must be paid, namely, the sacrifice of a “greater good.” Never forget that your job as leader is to look out for the best interests of the firm and its clients—not that of any individual partner, practice group, office, or internal faction. Part of your job will be saying, “No.” (Hint: It comes with the territory.)Does this mean individual partners should have zero degrees of freedom in terms of how they further the firm’s overall goals? Of course not; that’s not what remotely what we’re suggesting. If a goal is “greater collaboration and cross-serving,” for example, rainmakers may act on it by spreading their work more broadly; office managing partners may seek opportunities to have some work on matters done at some of the firm’s other offices; non-equity partners may delegate more down to associates; and so forth. But when the overwhelming urge to say “yes” trumps the courage it takes to say “no,” you have abdicated your role.
- Tolerating poor performance: This one has raised its head at some firms with a vengeance in the wake of the GFC. But understand that poor performance must be tolerated, and indulged in, from the top down. In terms of your role and responsibility as leader, if you leave articulation of the firm’s strategic priorities unclear, if there are no consequences for those who conduct themselves in ways antithetical to those priorities, if “mailing it in” and delivering half-hearted efforts are punished with nothing more serious than raised eyebrows and averted glances, then you have chosen who is primarily responsible for organizational drift and mediocrity: You are.
How does this square with the findings of our friends at Altman Weil?
If you believe their research, Law Land needs to get serious about addressing a disconnect with clients on the essential value of what we do. That will require change. Your partners would prefer not to (tough), and many believe clients are bluffing (they’re not). Now would be the worst time to indulge yourself—for that’s what it is, self-indulgence plain and simple—in accommodating the strident, tolerating the ineffectual (and uncoachable), or mistaking evanescent and phony consensus for high-quality decisions.
If you’re a leader, it’s time to act like one. The times, and your clients, are demanding it.
There may be some worthwhile analogies in “leadership” available from looking at academic research departments. One of the standard models for academics is that “leadership” is all about doing the dismal jobs that no one really wants to do, certainly not the galacticos. In this model, being Chair is a chore, one undertaken only by late-career sorts or people who aren’t really at the forefront – it would all be to distracting. And besides, who wants a leader who actually leads, when I know perfectly well what I want to do and how to do it, including how to make my own rain if I need to do.
The story I know that offers a good example of how it can work well, even in a regime of towering egos and little or no hierarchy, is the story of Robert Sharp, Chair of the geosciences programs at Cal Tech from 1952 to 1968, a period of enormous change in the underlying science and a large-scale re-direction of the department at Cal Tech. If anyone is interested, here’s a link to the oral-history files form Cal Tech:
Sharp took the department from a somewhat sleepy old-time geology department to the world’s premier program in geophysics and geochemistry, supplanting programs at Harvard and Chicago and elsewhere who could not read the writing on the wall for how the world was changing. He did it by (a) maintaining his professional expertise and teaching, (b) understanding the changing world outside just his domain, while (c) hiring the best people possible – with a few (but really only a few) lateral transfers. Sure, he helped manage the deans, provosts, presidents and trustees, but he also did it by having a strategy for what needed to be accomplished (research and teaching) and understanding the constraints (resources, time, competition) that applied. He understood his market, how his clients were changing, how to bring along junior people and work with old hands. When Harvard (where he had taken his PhD) declined to change its focus or its faculty’s ways to doing things because the new directions were not “real geology,” Sharp was ready to move and had his faculty backing the plan. And he was and remained throughout his very long career a good man, as well as a very successful one.
For any business that I know, and I should think certainly Law ( substitute tenured faculty for partners) , it is an instructive tale.
The comment from clients that firms aren’t adapting to change, and from firms that clients aren’t demanding that adaptation, could both be true. In fact, I think they both are true. It seems that the big-company clients who chime in on these points are frequently whining and complaining, while continuing to shovel money as fast as they can at the same old firms. I read anecdotes about complaints, but I don’t read anecdotes about clients who say, with specifics, I moved more work to Firm X b/c they did A, B and C.
After reading your thoughtful piece, this came to mind for me. (A tie in with a certain movie that you may know):