Full text of my opinion piece first published in the Australian Financial Review on 4 June 2020.
For the past three months, many law firms have been in crisis management mode.
The focus has been on ensuring staff safety, staying close to clients, sustaining productivity and shoring up financial reserves. The mindset has been mainly about conservation and survival.
It’s time now time to look up and to look ahead – to work out what’s needed to succeed in the next normal.
Here are four things to think about in creating your future.
#1 Organise for a hybrid workforce
Most law firms will seek to capitalise on the success of remote working and will adopt a model in which people work two or three days a week in the office and the balance at home. While this offers benefits in terms of staff flexibility, reduced commute times and lower occupancy costs, the rhythms of office life will be very different from life before coronavirus.
Firms will need to help their staff create boundaries and new work habits. This includes setting clear ‘office hours’; finding new ways to socialise that replace the serendipitous corridor bump; ensuring consistent supervision of graduates and clerks; and providing regular and balanced performance feedback.
#2 Speed up decision-making and execution
During the ten days from March 16-26, most law firms discovered that if push comes to shove, they can execute big decisions very quickly.
My advice: keep going!
The short-term public health crisis helped concentrate decision-making power. And it appears that in the main those vested with that power acted promptly and professionally.
Firms should build on this experience and streamline decision-making processes for times when things are back to normal. It could mean less consultation on trivial matters, fewer meetings, better communication and greater respect and appreciation for leadership roles.
Most law firms are designed as network organisations with self-managed practice teams as nodes and a small central bureaucracy. In theory, this should make them agile and responsive, but the reality is often quite different. Firms should harness their structural strength to move earlier and faster.
#3 Plan and budget with less inertia
The coronavirus crisis has given firms the opportunity to assess the merits of every revenue and expense item. Recent McKinsey analysis shows most organisations only reallocate 2 to 3 per cent of their budgets year to year. But those that do more—in the order of 8 to 10 per cent—create more value.
While starting each year’s budget with a blank sheet might be overkill, reviewing each item on a two- or three-year rotating cycle should ensure smarter allocation of resources.
Revenue targets might set with an honest assessment of market potential and how your team stacks up against key competitors. Expense items can be set with a clear-headed view on value creation.
#4 Personalise the client experience with scale
The client experience pre-coronavirus included numerous face-to-face meetings; document preparation shared via email; and multi-touch file handling.
The evidence from the past few months is that productive client meetings can still be held without a barista on call; documents can be prepared collaboratively in real-time and remotely; and that most aspects of file management can be automated.
In designing the firm of the future, think about creating a client experience that is personalised, streamlined and scalable.
This is the time to start imagining your firm as it should be. If you stay in conserve mode too long, you will land up being two or three steps behind those that are determined to create their own future.
client relationships, culture, governance, growth, innovation, Measurement, planning, professional service firms, Sales management, strategy management, Training
Will new partners need to keep grinding away?
In Articles, Commentary on 13 July 2020 at 6:18 pmFull text of my opinion piece first published in the Australian Financial Review on 9 July 2020.
Most practice teams in the larger law firms have been set up with partners as the “finders” and “minders” and associates as “grinders”.
A decade’s worth of time records analysed by Thomson Reuters Peer Monitor shows that associates have around 10 more billable hours per month on average than partners in the same firm.
However, in April and May 2020 – the first full months of the COVID-19 lockdown and remote working – this long-term trend reversed and partners recorded more billable hours than associates.
There are two questions worth asking. Why are partners producing more now? Can all the new partners in the Financial Review Law Partnership Survey expect a permanent change in their role? In other words, will they have to be finders, minders and grinders?
Why now?
Many law firm clients went into crisis mode with the onset of the coronavirus. Deals needed to be completed quickly. Funding needed to be secured urgently. Disputes on unfulfilled contracts needed rapid resolution. Almost daily changes to government regulation needed interpretation and action.
To deal with these pressing and complex issues many clients indicated a strong preference to get more direct access to partners. This meant fewer opportunities for delegation to associates.
Cost-conscious clients also had less tolerance for juniors being allowed to learn on these matters. As one general counsel put it to me: “I was happy to see one maybe two people [from the law firm] on [Microsoft] Teams, but not a football team.”
Another factor that has led to the increase in partner hours at some firms is partners holding on to more work due to fear of a broader market slowdown so they can hit their personal billing targets.
During the GFC, many large firms cut partner numbers through a combination of de-equitisation, early retirements, dismissals and reduced promotions.
While many firms now prefer measuring the contribution of a team rather than an individual, having a healthy personal practice can strengthen a partner’s case for retention if things get tough. In recent weeks, it appears that some partners and associates have been getting a little tired of working from home.
After the rush of adrenalin in dealing with the crisis and keeping connected during March and April, there’s now slightly less enthusiasm for the weekly video drinks – and growing frustration with the clunkiness of a distributed workforce.
Supervision, training and delegation is hard enough when everyone is co-located and physically present in a purpose-designed city office. It’s that much harder when associates are working from a kitchen table in a shared rental apartment with variable NBN speeds.
As time moves on, some partners might resort to the easier – though strategically flawed – option of doing most of the work themselves.
Will there be a permanent change?
No, and yes.
Leverage of non-partner fee-earners is at the heart of the law firm business model. The economics of having lots of associates doing lots of production will not change in the years ahead. Effective and efficient delivery of larger transactions, projects and disputes will still require teams of lawyers, paralegals and legal technologists at different levels.
Over time, firms that don’t tailor their approach for each project will lose out to those that do.
When demand returns, the issues around less delegation should ease. Intransigent hoarders will get caught out and move on – or be moved on.
As technology and workflows improve over time, the clunkiness of the remote workforce should diminish and become less of a handbrake.
One change that will hopefully stick is that of the law firm partner as the client’s primary strategic risk advisor. The coronavirus crisis has revealed the relevance of experienced lawyers in assisting clients on things that matter. This period should hopefully build their confidence as strategic advisors from a legal perspective and not just narrow technical legal specialists.
The discussion above suggests that perhaps the finder minder grinder characterisation is a little out of date.
A better description of the role of partner is that of a strategic advisor and leader – a thought leader, a team leader, a client account leader, a project leader and a sales leader.
The winners will be those firms that recruit and develop outstanding legal leaders and not just see their associates as high-billable grinders.
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