A blog by Joel Barolsky of Barolsky Advisors

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Karate Kid lesson for law firms

In Articles, Commentary on 12 July 2021 at 11:49 am

There are two broad scenarios for the future of the Australian legal market: Vax On and Vax Off (with apologies to Karate Kid fans).

Vax On describes a scenario of buoyant demand and a growing legal market. Vax Off is the opposite.

Events over the past three weeks have increased the odds of the Vax Off scenario from highly unlikely to a distinct possibility.

The scenarios

Vax On is centred on the idea that Australia will be successful in vaccinating its population relatively quickly and emerge strongly into a post-Covid normal state within six to eight months. Most of the current drivers of legal demand are positive and will continue to be so in a Vax On world.

The Vax-Off scenario is based on slow vaccination rates and conservative health policy settings.

On 2 July 2021, the Morrison Government announced a four-phase plan to return to Covid Normal. If the snail-paced vaccination rates continue as they are, we may only reach Phase 2 in the second quarter of 2022 and Phase 4 in 2023.

Vax Off will mean we stay with closed borders and disruptive lockdowns for quite some time yet. A prolonged period before Phase 4 will have significant implications for the broader economy and law firms.

#1 Brain drain

In the Vax Off scenario, the UK, USA and other legal centres may return to a Covid normal state 12 months ahead of Australia. Many ambitious, talented young Australian lawyers will see major benefits working and living abroad. The pitch is compelling – do great work, earn good money, live without lockdowns, and put your passport to good use.

The current tide of talented ex-pats returning home will shift from a small flow to a major ebb.

This brain drain will hit Australia’s law firms when these resources are needed the most and firms have few viable Plan Bs. A second-order impact might be a significant spike in average salaries and benefits paid to those lawyers that have remained at home. 

#2 A depressed commercial property market

Lockdowns mean full-time work in the office is off the table. Border closures will result in fewer international students, tourists and migrants.

In combination, all these factors point to a significant drop in demand for commercial properties, hotels and high rise residential real estate.

A depressed property market will directly impact real estate lawyers, but it could also affect other related areas like construction, banking, project finance, and funds.

#3 Collapse in travel, tourism and education

Government support packages and insolvency moratoriums since April 2020 have kept most businesses in the travel, tourism and education sectors alive. In a Vax Off world, a vast majority of these businesses are too small to save, and the liquidators will eventually move in.

At one level, that’s good news for law firms’ insolvency practices, but the flow-on impact of significant job losses and the fall of iconic brands will lower consumer confidence and GDP. 

#4 A return of protectionism

Leading economist Saul Eslake recently argued that the long-term economic damage from closed borders might have a similar impact to the trade barriers that lowered Australia’s living standards up until the 1980s.

An extended Vax Off period runs the risk of Australian businesses and law firms becoming less relevant in global markets and losing out on major deals and projects.

#5 Disrupted operations

Almost all of Australia’s Top 30 law firms have some kind of international alliance or connection. Herbert Smith Freehills, for example, is a financially integrated global partnership. Maddocks is a member of ADVOC – a network of independent firms spread across the world.

Most cross-border collaboration is going to be negatively impacted in a Vax Off scenario. There will be no physical meetings and limited joint business development activity. International client and referral relationships that have taken many years to cultivate will weaken.

Scenario planning is often done when there are two or three alternative futures that are possible, uncertain and beyond any party’s direct control. In the case of the Vax On or Vax Off scenarios, our political leaders can have a major influence on which future we have.

Let’s hope they soon find the courage of Karate Kid’s Daniel Laruso and the wisdom of Mr Miyaji.

Hey partner, do you know where you sit on the career curve?

In Articles, Commentary on 28 June 2021 at 7:59 pm

The full text of my opinion piece first published in the Australian Financial Review on 10 June 2021.

In nature, a seed is planted, begins to sprout, matures, becomes an adult, and then eventually regenerates. While not as unequivocal as the laws of nature, the careers of partners in premium law firms generally go through five distinct phases.

  • Phase one: find my feet. Partners typically work hard to validate the business case for their promotion. They spend time working out how things really work, who calls the shots and what it takes to succeed.
  • Phase two: create backbone. Partners cement their anchor clients and referrers. They build the team and technology necessary for efficient service delivery and a compelling client experience.
  • Phase three: make hay. Partners really hit their straps and use their strong personal brands and honed business development skills to win and deliver an increasing flow of profitable work.
  • Phase four: widen contribution. In addition to growing their own practice, these partners collaborate actively across the firm, expanding existing client relationships, cross-servicing and seeding new opportunities. They share their knowledge and contacts widely and help monetise their IP in new algorithms, products and thought leadership. Some also take on practice and firm leadership roles.
  • Phase five: transition to others. Senior partners in this phase commence the development of designated successors. They start to let go of the reins and lend their social capital to others.

Proactive conversations about a partner’s desired career curve – shape, angle, timing and gaps of the phases – can be of significant benefit to the individual and the firm.

The shape of the arc

The duration of each phase varies significantly from person to person. It is not simply an average 30-year partner tenure divided by five equal phases.

Many partners would have a career that follows a classic “S” curve, with ordered progression through the five phases. There may be a few “J” curves or hockey-sticks that reflect a flat or declining phase one followed by continued rapid growth.

There are partners who have a career arc that looks like a series of angled “Ws”, going from boom to bust to boom, reflecting an innate ability to reinvent themselves.

In more recent times, there are career arcs that have missing chunks as people take extended time out for other commitments.

The early days

In the past, it was common for phase one and two partners to be left alone to sink or swim. It was assumed that, on promotion, the individual became all-knowing and capable.

But many progressive firms now offer tailored training and coaching support to build resilience and keep them on a positive trajectory. Most firms also recognise that these early days often coincide with major changes in partners’ personal lives, like starting a family and taking on more debt. Work-life integration at these early stages is beset with competing demands.

A missed opportunity

A firm filled with phase three “haymakers” sounds wonderful, but recent Harvard research indicates that there is much more to gain if they instead develop a strong collaborative culture with a healthy cohort of phase four partners. These benefits include more valuable client work at higher margins and greater staff engagement.

But going from phase three to four is easier said than done, especially for those individuals who are hard-wired to work autonomously.

Each firm should clarify what the “widen contribution” phase looks and feels like to them and whether there are any practice-area variances. Alignment of measurement and reward to create more phase fours is a good next step, with measurement used to improve not just prove.

Leaving well

Phase five is quite often dealt with too late or superficially. This may be due to a reluctance of a senior partner to let go, the inability of the next generation to step up, the risk of client defections and/or the financial circumstances of the individuals involved.

Like at all other phases, every partner should be asked, and should ask themselves where are they on the career arc, what to prioritise to succeed in the current phase, where next and how?

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.

How law firms can avoid 2021 burnout

In Articles, Commentary on 5 February 2021 at 3:51 pm

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

‘Exhausted.’

That’s how many managing partners described their firm in the last quarter of 2020. The reasons given for this sense of collective fatigue ranged from heavy workloads, endless screen time, social disconnection and pandemic-induced stresses. 

A key 2021 objective in many law firms is to build business resilience and to avoid burnout. Resilient organisations can ride out uncertainty instead of being overpowered by it.

The sense of exhaustion is mostly an indicator of sustained depleted energy. To cope better, firms must get better at understanding and managing energy levels.

Many law firms are rushing toward a flexible hybrid workforce with people working two or three days from home. While this makes sense, a potential trap is having a binary view that that sees work at the office as an energy drainer and home life an energy restorer. The opposite may also be true – activities at home like juggling parenting and family duties may deplete energy, where work-based tasks such as solving a complex client problem may be energising.

Related to this idea, the commute to and from work could be viewed as a restorative activity. If this time is merely replaced with demanding home or client work, the energy bank account stays overdrawn.

Taking a holistic view, working in a hybrid model might be wonderful for a few, but a net energy drain for many. If this is the case in your firm, then you’re on the road (again) to exhaustion.

There are two practical steps that law firms can take to manage energy levels better.

#1 Track the ebb and flow

‘What gets measured gets managed’, is an oft-cited quote from leadership guru Peter Drucker.

 Following his advice, law firms would benefit from developing better indicators or sensors around energy levels. This might range from a few scripted queries in regular staff check-ins to new questions in employee engagement and pulse surveys.

Tel Aviv-based McKinsey partner Gila Vadnai-Tolub defines four types of energy worth measuring: physical, mental, emotional and spiritual.

  • Physical energy defines how tired we feel and how well we feel in our bodies.
  • Mental energy is what we get from analytical and thinking tasks. Long periods of focused concentration are often mentally tiring. We each have mental tasks that seem to drain us or lift us.  
  • Emotional energy derives from connecting with others—from giving and receiving appreciation, or helping a friend or colleague discuss their troubles. In turn, negative emotions such as fear, frustration or anger drain energy and cripple performance. 
  • Spiritual energy is what we get from doing something meaningful to us, something that speaks to our inner core or sense of purpose. We each have experienced working hard and becoming physically and mentally tired, but somehow, we gain the energy to continue because it has fundamental meaning. 

Tracking energy levels over time can help to identify the ‘normal’ range within which energy ebbs and flows in your firm. It can signal the period just before people start running on empty.

Tracking also enables individuals to learn something of their own natural energy rhythms learning to readjust before fatigue sets in. 

#2 Build in replenishment

Elite athletes alternate between high-energy periods of performing and training with resourcing and recovery activities.

Time off on weekends, public holidays and annual leave is often as far as some law firms go in helping their people re-energise.

In recent years, many firms have expanded their health and wellness programs to address this issue. Things like paid gym memberships, cycling clubs, yoga, pilates, guided meditation classes, counselling and nutrition education are becoming more common. The biggest challenge is often to encourage those who are most in need to take advantage of the support that’s offered. 

With the rollout of the hybrid operating model, I suggest firms will need to redouble their efforts to find workable solutions. This will most likely involve conversations with each person to fully understand how they expend and restore energy over a typical day, week, month, and year. Together a tailored program can be developed to keep people productive, energised and, most importantly, resilient.

Partners or owners: the law firm divide

In Articles, Commentary on 14 December 2020 at 9:40 am

The full text of my opinion piece first published in the Australian Financial Review on 11 December 2020.

One of the most striking statistics from The Australian Financial Review Law Partnership Survey is the wide variation in the ratio of equity to non-equity partners across Australia’s top 50 law firms.

In some firms, like Colin Biggers & Paisley and McCabe Curwood, only 20 per cent of partners have an equity stake.

At the other end of the spectrum, nine firms report that 100 per cent of their partners have equity. However, partners in these firms are often not on an equal footing. Newly minted partners in these firms can earn as little as 25 per cent of a full share. In other firms, individual partner earnings are based more on an assessment of their annual contribution instead of the level of their shareholding.

Further analysis of the survey data suggests there is no discernible factor that determines the equity ratio. Variations can occur within and across tiers, service range and practice area.

The role of non-equity partner was first introduced as a form of trial period to assess whether a candidate should be made an equity partner. The “partner” title would allow the candidate to command the respect of clients, peers and staff necessary to build a successful practice and prove their worth. Being extra cautious in the final step to equity was prudent given the complexities in dealing with bad choices or established equity partners leaving.

In a similar vein, firms used the non-equity partner role as an entry point for new lateral hires on their way to equity partnership.

Over the past decade, the non-equity partner role has evolved into a de facto career position in some firms with the candidate having little chance of being offered an equity stake.

A large non-equity partner cohort can improve profitability – by lifting leverage and average billing rates – help share some risks and distribute the management load.

Challenges

While there are these benefits, a tightly held partnership does come with potential challenges:

  • An “us and them” schism emerging between the two classes of partner;
  • Flight risk of those non-equities who feel they can get a better deal elsewhere;
  • A lack of drive among non-equities who feel their careers have capped out;
  • A perception of inequity when the firm records super-normal profits that accrue only to a select few;
  • A cynicism that the non-equity role allows the firm to achieve its partner diversity targets without the need to share power;
  • A narrower base of internal funders and underwriters;
  • Duplication of partner communications and meetings; and,
  • A smaller pool of partners to select from for senior leadership roles.

A widely held partnership, on the other hand, faces the risk of being too conservative and too slow to promote top talent. A burgeoning bottleneck at the senior associate level can set the scene for a feeding frenzy for aggressive competitors.

To create a sustainable business and a positive culture, it is critical to make all partners, regardless of stake, feel and behave like business owners. They should be guardians of the firm’s assets and values, while embracing the agreed principles and disciplines of partnership.

Financial gain or pain

With senior equity partners, the money does a fair bit of the talking. The prospect of immediate financial gain or pain can help facilitate a proprietorial mindset.

For those with a little or no equity, their voice is often a bit softer, the risk is a bit higher and the task is that much harder.

The determining factor is the quality of leadership.

It means working with each partner to align firm and individual purpose, communicate what’s expected, provide the requisite support, give and get feedback – and hold them to account.

Firms face danger if they stray too far from the core

In Articles, Commentary on 10 October 2020 at 12:24 pm

Full text of my opinion piece first published in the Australian Financial Review on 9 October 2020.

Establishing non-legal businesses seems to be back in favour among Australia’s larger law firms.

Minter Ellison was an early mover with acquisitions of an IT consultancy firm and an executive remuneration practice in 2017. Others include Corrs Cyber (data breach and crisis management), G+T (Gilbert + Tobin) Innovate (in-house legal transformation), Ashurst Consulting (board risk and governance), TG (Thomson Geer) Endeavour (public affairs), McCullough Robertson’s Allegiant (insurance broking) and Hall & Wilcox’s Global Mobility Services (migration, tax and relocation).

The rationale for these new non-law ventures is mostly centred on strengthening or defending the core business and making significant client relationships stickier. Some firms pursue these adjacencies to deliver new sources of profitable growth or to provide a hedge in the event of industry disruption.

Original AFR article

To increase the chances of success of these new ventures and others seeking adjacent opportunities, there are four key strategies to consider.

#Reinforce the core

Many adjacency failures can be put down to firms straying too far from their core business.

Woolworths’ foray into the retail hardware sector via its Masters business was an unmitigated failure. Masters did not reinforce Woolworths’ core grocery business or leverage existing customer and supplier relationships. While its retailing and property management capabilities were strong, they couldn’t outmuscle a formidable incumbent (Bunnings).

Success comes from investing in areas where there are substantial, measurable and mutually reinforcing economies between the current and the new.

#2 Align financial expectations

One of the main reasons law firms have not persisted with non-law businesses in the past is that they have simply not made enough money.

Well-run premium law firms are very profitable. Despite intense competition, the market price for specialised legal advice has increased significantly over the past 20 years.

Many of the new ventures compete in market segments where the price point for partner-level advice is 30 per cent to 40 per cent lower than law firms. Others are pitched at the ‘brain-surgery’ end of the market with relatively low leverage and utilisation.

The upshot is there is a significant risk regarding profit expectations. My advice is to ensure everyone is 100 per cent on the same page early on – and if there are irreconcilable gaps, walk away!

#3 Pre-empt cultural clashes

While great strides have been made in recent years on using the talents of those without legal qualifications, the lawyers still market – and see – themselves as the smartest people in the room.

So, it is vital that your cultural due diligence cover over things like common aspirations, values and standards. When it comes to adding advisors from non-law disciplines, there is an added risk of professional arrogance.

One of the keys to success is to pre-empt and address any cultural differences between the lawyers and those other idiots. Only joking!

#4 Ensure a founder’s mentality

Why is profitable growth so hard to achieve and sustain?

Chris Zook from Bain & Company researched this question and found that when firms fail to achieve their growth targets, 90 per cent of the time the root causes are internal and not market related.

He also found that firms experience a set of predictable internal crises, at predictable stages, as they grow.

Zook suggests that managing these choke points requires a “founder’s mentality”— someone with fire in the belly who is relentless in pursuing the business’ mission, adept at leading others through change and imbuing the firm with a strong client focus.

So, in summary, all it takes to succeed is to have a driven intrapreneur leading a new venture that is deeply connected to the core business – from a market, financial and cultural perspective.

It sounds easy. Until you try.

Will law firms be more productive but less human?

In Articles, Commentary on 7 October 2020 at 9:00 pm

Full text of my Australian Financial Review opinion piece first published on 11 September 2020.

In April, I made three predictions about a post-Covid19 legal world – there would be deeper relationships between staff and clients, less paper and more flexible work arrangements. Five months on, it’s worth revisiting these predictions and to ask what else might change?

The argument for deeper relationships was based on the notion that people going through acute stress together come out at the other end with greater trust, understanding and connection. Given that we’re still living through the pandemic, it’s probably too soon to tell for sure whether this prediction will come true or not.

It appears the sense of a life-threatening emergency is being replaced by a collective consciousness of fatigue and despair. In Victoria, tempers seem to be a bit shorter and patience a little thinner. This trend doesn’t augur well for a future of more kindness and mutual support.

The predictions around less paper and more flexible work arrangements are looking rock solid. Many firms have eased into hybrid operating models and have hardly skipped a beat. Some have already publicly stated that this model is permanent.

But there are some emerging trends that justify three new predictions.

#1 Fewer legal secretaries and assistants

Over the past few months, some firms have reported increases in overall production but lower productivity amongst legal secretaries and assistants. Lawyer self-sufficiency and the move to working from home have been the primary reasons cited for this shift.

It’s not too much of a leap to suggest many firms will look to reduce secretarial support ratios by a combination of redundancies and retraining of some assistants as paralegals.

One of the possible consequences of reducing secretarial numbers is a more fragmented work culture. Secretaries often provide a bridge between people and practices by sharing news and gossip, fostering relationships and retelling stories.

They offer a valuable pastoral care role, especially when the senior legal practitioners are EQ-deprived. Without this cultural glue, firms run the risk of being more productive but less human.

#2 Renewed respect for HR

In many firms, the HR team has kept the ship sailing. This is no mean feat given the speed, scale and scope of change required, and the fact they operate with little formal authority within a partnership structure.

There is always extreme sensitivity around changes in people’s pay, promotions, leave entitlements, workloads and future job prospects. HR practitioners have advised on these issues as well as resource strategy, communication, mental health, resilience and fostering a strong team vibe.

Pre-Covid19, it was not uncommon for firms to suffer from the “HR standoff’. In one corner, the HR team members would complain about the firm’s partners being disrespectful and disempowering. In the opposite corner, the firm’s partners would regard HR as being process, not outcome-driven and uncommercial.

I think this standoff will be mostly a thing of the past, especially in firms where HR has risen to the challenge.

#3 Reset in decision-making

To deal with the government-imposed lockdown in March 2020, firms needed to make big decisions quickly. Managing partners were given the authority by the broader partnership to address the crisis. It appears many of these senior leaders accepted this mandate and blossomed with their increased power and autonomy.

Five months on and many firms have not shifted significantly away from the March model. With relentless partner workloads and no in-person partner meetings, the firm’s executives have largely kept their decision rights.

I expect that post-corona the pendulum will swing back slightly, but this recent experience reveals that the firm can still prosper without every partner having a say on everything.

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