Turn and face the change

How law firms must prepare for the changes which are set to impact the legal profession.

By Peter Scott

When Charles Darwin wrote in his book Origin of Species that: “It is not the strongest of the species that survive or the most intelligent, but the ones who are most responsive to change” he could have been talking about an endangered species we know well – law firms which are not adapting to the changing world around them.
The changes which are impacting on the legal profession may in some cases threaten its continued prosperity and the greatest challenge is to manage those changes in ways which enable firms not only to prosper but also for some, to survive.

Changes
Perhaps the area of change which demands the most responsiveness is that which relates to the ever increasing requirements of clients. Clients know what they want and in this competitive world they will take their business to whichever law firms can provide the performance they require.
How many law firms find out from their clients what they really want from their lawyers? Do they ever ask them? There can be a ‘perception gap’ between what clients want and what their lawyers think they want. Law firms need to take a reality check.
Often clients complain that law firms are always trying to sell to them on the basis of price, when in reality what clients want is a good job done at a reasonable price.
At the same time, other forces of change are impacting on the way law firms operate:

Technology: For some, particularly firms with process-driven volume businesses, the use of technology to continuously drive down the cost of doing the work is crucial to keep their clients, in whose minds ‘added value’ means ever lower prices. Continued investment in technology for such firms will require deep pockets;
Crises: Today we are seeing economic and political forces directly impacting on the future of many firms including the Legal Services Act, the current ‘credit crunch’, Government attitudes towards publicly funded criminal work and more regulation concerning how law firms operate on a day-to-day basis.

How are law firms responding to change?
While, some firms are adapting extremely well to the changes outlined above and are as a result prospering, others are falling by the wayside.
The element which is most often present in those firms which are adapting well is leadership. Leadership which:

Challenges everything about how a firm operates:
* Why do we do things around here like this?
* Why do we accept this low level of performance?
* What kind of firm do we realistically want to be?;
Is thinking and visionary;
Is inspirational and can obtain partner buy-in;
Has a determination to implement change.

Thinking leaders focus on the big issues such as:

The vision of what the firm can realistically become; and
Its ability to compete.

A firm with such leadership is more likely to be able to manage the process of change than a firm which has no leader at the helm.
The starting point in this process is to develop a strategy which is:

A realistic plan to gain competitive advantage;
Which has clear and achievable objectives; and
Uses available (but scarce) resources, which exist or can be generated.

However, while levels of performance are set by clients and the market place, it may be the case that the majority of partners in a firm have chosen a lifestyle and working environment which is inconsistent with achieving the levels of performance necessary for the firm to be competitive in its market. Unless those attitudes change, such a firm will set a course dictated by those values and attitudes – its ‘culture’. Is there a future for such firms?
Leaders of law firms may believe they know how their partners and staff think but perceptions can often be very different to reality. Identifying at the outset what partners and staff value is vital if progress towards responding to change is to be made. If partners in a law firm are going to buy-in to a strategy, their views need to be carefully canvassed and assessed.

Overcoming obstacles
Having created a clear vision for the firm and having obtained buy-in from partners to that vision, a firm needs to plan its first steps.
However a common problem in law firms is failure to implement agreed plans. Law firms are about people and implementing agreed strategies is about taking people with you on the journey. This can be a difficult task. Below are a few guidelines which may help in overcoming some of the hurdles placed in the path of change.

Ensure you have the necessary skills for the task in hand.
Those who are tasked with implementing decisions and managing change should ask themselves whether they have the necessary skills to successfully carry out these tasks. If not, it may be advisable to recruit or bring in external professionals who do have the appropriate skills to help ensure success.

Develop the idea of ‘partner accountability’.
When we talk about partner accountability we are referring to the idea that within a partnership each individual partner should accept the obligation of being ‘accountable’ to every other partner for his or her actions and behaviour. How often have we heard a partner declare: ‘I am an owner of this firm and you are not going to tell me what to do!’ ?
Accountability, which focuses on the obligation of partners to put the firm first before personal interests and requires them to support, in the fullest possible way, the implementation of agreed decisions, those mandated with the onerous task of managing the firm and other partners in the firm can be key to successful implementation.

Know your partners.
Understanding partners can be crucial in helping to implement desired changes.

What makes partners tick?
What motivates them?
How will they react to a specific proposal?
How can the fall-out from any particular action be limited?
What makes them insecure?

Strike while the iron is hot.
Those driving change will often be faced with a crucial decision about when to push to win ‘the battle’. Choosing the most appropriate battlefield is one of the keys to success in implementing change. Often once a decision has been reached it can be important to immediately set about the task of turning the decision into action. This is not to say things should be rushed into with undue haste, but beginning the job of planning how to implement a strategy should start as soon as possible before others have had an opportunity to have second thoughts.
For example, even before a partner retreat finishes, it can be important to ensure that the process of turning decisions into reality is commenced. Responsibilities for tasks should be assigned to individuals there and then or groups of partners and acceptance of those responsibilities publicly recognised. If matters are left over until Monday morning, the chance may have gone.

Lead by example.
Once decisions have been made, it is vital that those driving the process of change live according to the words they preach. For example, if a strategy relating to say risk management is agreed upon, then those in management roles must not only drive the process but importantly, should be seen to be ‘living’ the strategy by themselves adopting the new procedures designed to manage risk rather that implying that change is okay for the rest of the team but not for you.

Use the ‘power of the team’.
When it comes to ‘making it happen’ it can be important to harness ‘the power of the team’. Having a loyal and able team to handle the implementation of agreed changes and spread the word throughout the firm can mean the difference between success and failure.
Some firms have successfully adopted the ‘task force’ approach, putting together a hand-picked team from across a wide spectrum of the firm under a strong and purposeful leader, which is given a mandate to ‘go do’.
Success breeds success and partners tend to like winners but often find it difficult to tolerate failure. However, because the process of implementing strategies is a continuous one, there will be some failures from time to time. Having a strong and loyal team which has built consensus within the firm, will often help to limit fall-out from failures when they do occur and enable the process to continue.

Just do it.
Sometimes in difficult situations just getting on with it and working without further reference to those persons who if asked, would only say ‘no’ can be an effective way of making progress.
It needs a brave leader to do this but if there is enough support across a partnership for taking action (remember the 80/20 rule), this can be very effective, particularly in circumstances when it would not be possible to gain agreement from everyone.
The benefits of such action can often far outweigh the potential flak from a small minority but it does take a robust approach to managing change to follow this line.
Putting one’s head above the parapet can be dangerous and is not advisable for every situation, but sometimes it is the only way to get things done.

Sanctions.
What can be done if a partner refuses to comply with what has been agreed by the partnership?
Is there a need for sanctions if firms are to successfully implement their agreed plans? There are firms that say sanctions are not necessary because they have partners who always comply. That has not been the experience of many managing partners and in those firms which say they do not need sanctions, more often than not the reality is that management backs-off facing up to partners on crucial issues, so nothing gets done.
Sanctions will need to differ to meet the particular type of problem encountered and each individual firm will need to consider, within the parameters of its culture and the needs of the firm, the type of sanction which should be applied.
So a firm may need appropriate sanctions even for minor transgressions, because if partners know they can get away with small things, then they are more likely to believe they can get away with more serious refusals to obey the rules. And many firms will in any event have the ultimate permit of being able to require the compulsory retirement of a partner. Sanctions, in one form or another, whether peer pressure or threat of dismissal, are usually a necessary part of a firm’s armoury when endeavouring to implement change.

Bank progress and move on.
Managing change is rarely about making quantum leaps. Usually it is about working steadily every day, making incremental progress, according to a well thought-out plan. Sometimes it can be frustrating, taking two steps forward and one back, but whatever progress is achieved it should be ‘banked’.

In summary
Being at the helm of a professional firm during a period of change, such as that which many firms face at present, can be a difficult task and it takes determined leadership to drive through changes if firms are to adapt to new market circumstances. Ultimately, it may be necessary to issue an ultimatum of some kind using language such as: ‘This train is about to leave the station, but you still have a chance to jump aboard’. The choice for partners is therefore made clear – get on board or be left behind. In conclusion, the words of Jack Welch, former CEO of US technology and services conglomerate General Electric, come to mind “Change before you have to.”

Peter Scott is founding director of Peter Scott Consulting. He can be contacted at pscott@peterscottconsult.co.uk