Circling in the wings around almost any discussion of management and leadership issues in law firms, sometimes touted as a virtue above all others and sometimes only alluded to with caution, as one might a wraith, is the issue of a firm’s ‘culture’.
A few observations about culture in Law Land:
- Firms and their lawyers invoke ‘culture’ on the order of, I’d guess, 10—100 times more often than is customary in any other for-profit industry I know of. We are positively obsessed by it.
- It is always and everywhere: (a) highly distinctive to our firm; (b) collaborative; (c) collegial; (d) a key reason clients hire us; and (e) a key reason people work here.
- You think I’m kidding about ‘collaborative’ and ‘collegial?’ A Google search on ‘law firm culture collaborative collegial’ returns 7,220,000 results.
- When asked to describe the firm’s culture in terminology that’s not functionally interchangeable with that of every Tom, Dick, and Harry law firm, we are struck mute.
Nevertheless, far be it from me to deny that there is something, after all, to the notion of a firm’s ‘culture’. I choose to believe two things about it, however.
First, your firm’s culture is just about the very last thing a client would cite when explaining how they chose to work with you (or not). The reason is simple enough: Clients choose law firms, and lawyers, based on perceived value and benefits to them, and your firm’s culture is completely irrelevant on that score to clients. Yes, there are characteristics we may reflexively lump under ‘culture’ which provide tangible client benefits, but they actually have nothing to do with culture at all. Clients care about:
- Whether they’re hiring a bunch of really nice people they enjoy spending a lot of time with to work through a matter in close coordination, or whether they’re hiring nasty, alpha predators to teach somebody a lesson. (There are degrees in between, but you get my drift.) This is not culture: This is personality type and disposition.
- For matters that cross practice areas and/or geographies, whether your firm’s partners cooperate readily internally and play nicely among yourselves, so that the best lawyer at your firm for that exact matter gets the actual assignment and it’s not hoarded by the solitary partner who signs the bills—if it’s that type of matter. This is not culture: This is usually determined by compensation structure and incentives.
- Alternatively, for matters where a name-brand hired gun is what the client is looking for, that they can hire that pistol-packing individual and have them and them only run the matter. This is not culture: See above.
Finally, a very simple thought experiment: When was the last time you heard a corporation cite its ‘culture’ as a reason to patronise its products or services? Have you ever heard, say, Procter & Gamble or Ikea, or for that matter BMW or Giorgio Armani, use that as part of their pitch? Preposterous, and rightly so. Clients, my dear, just don’t give a damn.
Still.
We need to be able to talk about ‘culture’ in sharper, more pointed, and more trenchant ways. Because it does matter. It matters to the ultimate question facing any organisation: Its very survival.
Here’s an example from recent history about culture in financial institutions, specifically too-big-to-fail banks. Simon Samuels, a member of the Financial Stability Board ‘enhanced disclosure task force’, writes under the headline ‘A culture ratio is more important than a capital ratio’ (on the op-ed of the Financial Times):
‘Think of three pairs of superficially similar banks pre-crisis: Citigroup and JPMorgan Chase; Royal Bank of Scotland and Barclays; Belgian-Dutch lender Fortis and BNP Paribas. In each case, when crisis struck, the first needed a taxpayer rescue; the second did not. Yet here is the odd thing. Entering the crisis the capital strength of each pair was near identical. The overall risk culture, and not capital levels, explained their divergent fortunes.’
He notes drily that Tim Geithner realized Merrill Lynch’s risk culture was less than ideal when John Thain (then CEO) could not name his chief risk officer—sitting next to him at the time. Yet without such a blinding red light signal, how do we evaluate a bank’s culture? Samuels readily admits the challenge:
‘But it is hard to measure risk culture. Some weaknesses are, in retrospect, obvious. Citigroup’s board included the chief executives of a galaxy of famous US companies who between them had hardly any banking experience. However, a good risk culture is more complicated than knowing who your risk officer is or having banking experts in the boardroom. Entering the crisis, the directors of RBS included a healthy compliment of extremely experienced bankers who – at the time – regulators, investors and analysts regarded as suitably qualified. Between them the five critical boardroom lieutenants of Fred Goodwin, chief executive, had almost 150 years of relevant banking industry experience. Yet, apparently, the culture was not one that encouraged challenge.’
For Banking Land, Samuels has some suggestions, including having regulators make their own direct, albeit subjective, assessment of the strength of the institution’s ‘risk culture’, aligning chief financial risk officers’ compensation with the firm’s long-term viability by tying it to debt instruments, and disclosing actual loss ratios and records vs. projections. None has the least analog in Law Land.
I noted somewhat casually that culture matters ‘to the ultimate question’, but my thrust was not casual in the least.
The elements of internal law firm culture that are already becoming increasingly pivotal on the issue of that ultimate question centre around issues such as:
- The much-bruited ‘glue’ of the partnership; is it real or is it aspirational (or delusional) thinking?
- The real importance of the values of stewardship within the firm: Do people recognize their obligation to those who came before and attempt to reciprocate by leaving the place better than they found it?
- What is the short-term/long-term horizon ‘quotient’ of your firm’s partners? Is this akin to a marriage, where we’re all in it together for the long run, and relatively petty crimes and misdemeanours should be forgiven in light of focusing on the complete package? Or is it professional sports-free agency?
Questions that management and leadership can pose to itself don’t get much more serious than these.
It’s time to stop treating ‘culture’ as a throwaway line on your firm’s home page and start thinking about, and working hard on, ways to enhance and sustain it. Not for the sake of your clients. For the sake of your firm.
Bruce MacEwen is president of Adam Smith Esq, the legal research and consulting company. Click here to visit the website.
