A blog by Joel Barolsky of Barolsky Advisors

Posts Tagged ‘#professional service firms’

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.

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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