A blog by Joel Barolsky of Barolsky Advisors

Law firm leaders fail on fun, fame and fortune

In Articles, Commentary on 17 May 2021 at 2:54 pm

Full text of my opinion piece first published in the Australian Financial Review on 14 May 2021.

There is a significant leadership deficit in most Australian legal organisations – and your firm is unlikely to be an exception.

The evidence for this claim is strong – mental health problems at three times the levels of the general population; 20 per cent-plus turnover among junior lawyers; slow progress on diversity and inclusion at partner level; and a general predilection to resist, rather than embrace, change.

Less measurable, but probably even more important, is the opportunity cost. Legal firms and teams with effective leaders tend to outperform their peers on the indicators that keep people happy – that is, fun, fame and fortune.

What’s more, they seem to be able to sustain their success regardless of bumps in the road such as a global pandemic, major advances in technology and intense challenges from competitors.

One of the key reasons for the leadership deficit is the emphasis on creating outstanding technical legal advisers, but not great legal leaders.

There is no leadership component in the undergraduate law or juris doctor (JD) curriculum and many continuing legal education (CLE) programs for the first 10 years post-qualification focus on improving legal know-how and functional tasks such as delegation, presentation skills, networking and using social media.

Decisions on who gets promoted and who doesn’t are heavily weighted towards legal competency. Leadership potential may enter the frame, but it’s usually third or fourth on the list of criteria.

Hurry to Harvard

For the past three decades, many law firms sent their senior partners in management roles to the United States to attend Harvard Business School’s Leading Professional Services Firm program.

More recently, some firms have engaged leading business schools and other providers to develop tailored in-house executive educations programs for their partners and business service leaders.

Many firms now offer the assistance of executive coaches to help their senior practitioners in running and building their practice.

While many of these programs and initiatives are worthwhile, it appears the focus is on lawyers on the cusp of partnership, or older. In contrast, leading corporation and government agencies start to identify and develop their future leadership talent among those in the mid-20s – often a full decade earlier.

Brighter futures

Ironically, many of the high-potential or “rising star” programs in corporates are heavily populated with super-smart graduate lawyers who have switched to careers in commerce or policy.

Perhaps this is one reason ambitious young lawyers see brighter futures elsewhere?

In response to the leadership deficit and the other issues noted above, many of the state-based law societies have recently revamped their legal practice management courses (PMCs) to include contemporary leadership topics.

Completion of a PMC program is often a prerequisite for any solicitor seeking to practice as a “principal” or “partner” of a private law practice.

The College of Law launched its Master of Legal Business program in 2018, aimed at enhancing the skills of those in, or aspiring to, leadership and management roles within legal organisations. The course is delivered 100 per cent online with virtual workshops and self-paced course work.

New program

The University of Melbourne Law School (MLS) is about to enter this growing category and will be launching a new Specialist Certificate in Legal Leadership program in mid-May. The subjects will be taught by Anthony Kearns, practice leader consulting at Lander & Rogers, and myself.

The MLS program is aimed at practising mid-career lawyers in law firms, in-house and government, rather than those in current management or leadership roles.

The course will be delivered with a hybrid approach with local students in the classroom (COVID-19 permitting) and those from abroad joining them virtually.

The legal world is crying out for real innovation in the learning and development arena.

We need the right balance between technical legal, leadership and digital skill development. We need concurrent, not consecutive, learning of requisite skills. We need new learning methods that don’t just rely on chalk and talk. We need programs with a manageable cost, both direct and opportunity cost.

It’s time to disrupt the current model. If we don’t, we will be here in 20 years’ time stressing over high turnover, mental health, diversity and productivity issues.

Where was Minters’ chairman during the Kimmitt crisis?

In Articles, Commentary on 26 March 2021 at 7:28 pm

The full text of my opinion piece first published in the Australian Financial Review on 26 March 2021

“The Minter’s chairman went missing in action. One of the most important jobs of a chair is to resolve major disputes within the partnership without it spilling out to the rest of the firm, and even worse, into client land.”

This quote reflects a sentiment expressed by many law firm leaders I spoke to about the recent saga at MinterEllison.

While I’m not privy to the internal machinations at Minters to say whether this is a fair judgement or not about the firm’s chairman, David O’Brien, it does raise the question as to what should be expected of a chair?

 In my view, the answer lies in the confluence of governance, guidance, and glue.

Governance

The chair of partners usually has an active leadership role in firm governance. As such, his or her job is to ensure that management’s direction is broadly aligned with the interests of equity partners and other stakeholders.

Unlike company structures, partnership governance roles and responsibilities are not stipulated in any statute and are largely ambiguous. All partners are assumed take on all responsibilities concurrently. In this context, the chair and managing partner are expected to carve out a tailored governance framework that balances stewardship, operational efficiency, risk-taking, control, transparency, partner autonomy and accountability.

The chair of partners would usually be expected to facilitate the effective functioning of board and partner meetings, ensure accurate timely and relevant information flow, oversee risk and compliance, manage board composition, and lead the process of reviewing the managing partner’s performance and succession.

In some firms, the chair is actively involved in deciding profit allocation and progression. In other firms, their role is more of an independent arbiter in profit allocation appeals. 

Guidance

While most medium and large firms have adopted a more ‘corporate’ governance model, partners as owner-operators still often want a say when it comes to critical decisions around firm purpose, values, capital allocation and broad strategic direction.

The chair plays a critical role in helping the firm’s executives navigate this decision-making minefield.

Their guidance is critical in deciding which fights to pick, what options are on or off the table, what’s the best approach and forum to raise issues, and where power really lies in and around the partnership.

Chairs often act as cultural barometers – forecasting the mood, energy, and tone of the partnership. Their predictions of an imminent storm, or conversely, a period of calm and confidence can be hugely beneficial.

At a more micro level, firm chairs often act as a sounding board or mentor for the managing partner. In this role, they help talk through tricky issues, provide honest feedback, and offer comfort when exasperation overwhelms.

This mentoring role is particularly important for the induction of new managing partners or an external appointment. In the latter case, the chair needs to lend some of their social capital until the new leader’s position is firmly established. 

Glue

The third role of the chair is to foster partnership cohesion and stability. This doesn’t mean leading the firm cheer squad, but rather putting out spot fires and addressing corrosive politicking.

Spot fires may include a major fallout between two senior partners or where an individual partner has displayed behaviour incongruent with the firm’s values or there is a case of systemic underperformance.

It is quite common for the chair to join the managing partner in having a fireside chat with these problem partners. The chair helps create a sense of deep collective concern. This threat is hoped to be the catalyst necessary to change aberrant behaviour.

Pie-splitting is often a source of ‘corrosive politicking’. For example, in meritocracies choosing a side when there’s a commercial or legal conflict could result in a major differential in individual earnings. In these instances, the chair may get involved in dialling-down the emotions and ensuring that trust in the model is maintained.

Coming back to the MinterEllison situation, I don’t have any first-hand information as to assess whether the firm’s chair did an effective job in governing, guiding, and gluing? As with so many tricky issues in law firm partnerships, that’s ultimately for Mr O’Brien’s partners to decide.

How law firms can do more with less

In Articles, Commentary, Legal Technology on 5 March 2021 at 6:22 pm

The full text of my opinion piece first published in the Australian Financial Review on 4 March 2021.

Commercial law firms face constant pressure from clients to do more for less.

They can respond in three ways: say it can’t be done and risk losing out to competitors, drop their prices, or make a step change to improve productivity.

Most are pursuing option 3 and are looking to legal operations to make it happen.

What are legal operations?

Legal operations usually include some or all of these disciplines:

  • Business Management – commercial managers focused on improving profitability, increasing revenues and optimising efficiency.
  • Service Design – workflow and client experience specialists that evaluate, accelerate and support legal process improvement projects. They also often assist with new product development and act as incubators for new business ideas.
  • Legal Project Management – project professionals that make legal work tractable, trackable and transparent, for both lawyers and clients.
  • Pricing – pricing experts that help partners to have better client conversations, align price with value, protect margins, and where appropriate, use alternative fee arrangements.
  • Alternative Legal Services – a team of paralegals, legal technologist and lawyers focused on high-volume process work including e-discovery, transactional and dispute support, language editing, document review and IP management.

Australian experience

In Australia, some very large national firms have embraced a centralised approach to legal operations. Others have adopted a more decentralised model with each major practice group acquiring the resources specific to their needs. 

Over time, I would expect most firms will move to a model of centralised governance to avoid duplication and facilitate the sharing of knowledge and applications. At the same time, operational specialists need to work right at the coalface to find smarter ways to deliver more for less.

Innovation roles will be also subsumed into legal operations. Legal secretaries and assistants will still work directly with local lawyers but will be more connected with and directed by legal operations.

In medium-sized and smaller law firms, a new business service function will likely emerge with the status of HR, marketing and finance. It will often start with outsourcing basic IT services – hardware, software and helpdesk – and the insourcing of specialist tech-savvy resources to help lift productivity and client connection in key practice areas. Once this is established, other roles involved in supporting legal service delivery will enter the legal operations orbit.

New career pathways

This emerging area of legal operations is also creating an alternative – and attractive – career path for lawyers.

They benefit from a deep knowledge of the intrinsic needs within a legal workflow, but also enjoy the respect of the various stakeholders involved in migrating to a new way of working.

MinterEllison offers new lawyers the option of entering its Legal Operations Graduate Program. The program gives candidates exposure to lean six sigma, design thinking, change management and agile methodologies. The firm recently graduated its first cohort and is reported to be delighted with the outcomes so far.

The growth of legal operations is not just confined to law firms.

Stuart Fuller, the global head of KPMG Legal Services, recently predicted that “half of the [in-house] legal team will not be lawyers by 2025”.

Fuller says the use of automated solutions, chatbots and other forms of productised legal services will rise, and these will need support from lawyers as well as a more multidisciplinary workforce with different skill sets. As a result, the proportion of legal work done by paralegals, data analysts, operational experts and other specialists might rise to the point where legal professionals become a minority.

The key message is that the path to improved productivity is not pressuring lawyers to bill more time, but rather working smarter with the evolving disciplines of legal operations.

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