Every law firm, although unique, is in some way experiencing the economic and client pressures presently affecting the entire legal industry. The common response to these pressures often begins, and sometimes ends, with a broad comment that your firm needs to “function more like a business.” This article will briefly discuss how we see this phrase commonly perceived, the unique difficulties it creates within the legal environment, and the challenge law firm leaders must face if they want to thrive during these challenging times.
“Function more like a business.” While everyone will have their own unique definition of this phrase, I see them fall into two general perspectives.
The first is by those who have experience in industries other than legal or have formal business training or education. These individuals envision efficient and profitable operations where performance metrics are routinely developed and utilized almost exclusively as their basis for major decisions affecting the business. I call this the “innovator” perspective.
The second is by those whose experience is nearly exclusive to the legal industry. While these individuals also desire profitability, they envision many business practices as restrictive or as a distraction from the regal nature of the practice of law and the profound impact it has on our society and nation as a whole. I call this the “traditionalist” perspective.
The Leadership Challenge
Anyone who observes the legal industry knows that economic and client pressures presently have momentum on the side of the innovators. However, those in law firm leadership who try to implement innovative change continue to experience the traditionalist’s significant ability to resist that change. But change they must. In fact, despite reluctance, the last several years have brought dramatic changes to the legal industry.
Consequently, if change and resistance are both inevitable, the challenge presented to law firm leaders is to find balance by seeking ways to implement innovative change while simultaneously working to preserve the cultural aspects of the practice that make it unique among professional services.
Proactive vs. Reactive
Much of the change law firms have experienced in recent years happened as the result of internal reactions to external pressures. Because external pressures are often unexpected, the resulting internal reactions occur with little time for management to research and plan for the change effectively. As a result, the change can often have unintended, and certainly unexpected, consequences.
As a result, when we talk about law firms functioning “more like a business,” an excellent place to start can be summarized as follows…
“Working proactively to minimize the unintended consequences
of changes we need or desire to implement.”
“We have undertaken multiple efforts to gather information about our organization.”
You have, and I do not mean to imply that those efforts were not successful (common examples include interviews, focus groups and surveys). While these efforts likely accomplished their intended purpose, they are often too narrow in scope or lack sufficient detail for their results to be useful for larger purposes.
“Our management team has a firm grasp on our internal operation.”
Yes, senior leaders and departmental managers, each focusing on their area of responsibility, have a general understanding of what activities individuals in their respective departments perform. However, systems are often not in place for this information to be gathered and compiled allowing it to be effectively referenced during their decision making processes. Additionally, where individual departments collect performance data, systems do not exist that correlate and compile the data with data from other departments providing management with a holistic view of the firm’s operation.
Attorneys: “We establish an understanding of an attorney’s role by practicing with them and reviewing their time sheets.”
While observations, conversations and reviewing time sheets can certainly provide a view of an attorney’s client-chargeable activity, it is not a complete picture. What about the rest of the attorney’s time? An average attorney can spend a significant amount of time (commonly between 15%-25% of their total work day) performing non-chargeable activities. Because these do not generate revenue, they are often overlooked. Wouldn’t a better understanding of this time improve our understanding of the attorney's true work habits and productivity? Consider the following:
Secretaries: “We establish an understanding of a legal secretary’s role by obtaining an assessment from those they support and in some cases a dedicated supervisor.”
Establishing an assessment of a secretary’s performance by compiling fragmented information from multiple sources is the best most firms can accomplish. While satisfactory, this commonly produces an incomplete picture of what is actually a highly diverse and specialized role. Wouldn’t a better understanding of a secretary's time improve our understanding of their true work habits and productivity? Consider the following: