I confess the analogy is not perfect, but reflecting on the bizarre and often contradictory pressures on partners in law firms today brings to mind the world of Alice in Wonderland. Today, many question the appropriateness of the partnership model itself. They certainly question the strange, often opaque feudal master/servant process by which the aspiring lawyer serves their apprenticeship.
They then work (following the white rabbit down the hole past many locked doors) until they leave all caution behind and take the option of partnership – a bit like Alice eating the cake with ‘EAT ME’ written on it. Readers of the story will know that the result is Alice growing to such a tremendous size that her head hits the ceiling! The analogy is maybe not so imperfect after all.
What complex challenges do partners grapple with?
Culture is the word that law firms use to describe the way in which they try to create both glue and purpose. Indeed, many feel that getting culture right is at least as important as having a clear strategy. I agree. But one of the problems here is that to many firms culture is a backward-looking thing. At a time when all the pieces are moving as quickly as they are in the legal industry, sifting through the components of a firm’s culture and working out which elements are enduring, worthwhile and to be kept and which ones are to be jettisoned is a fraught process. It is vital too. A firm’s culture must be a valuable asset, not a drag, not a liability.
Aspects of culture are less soft and amorphous than the word suggests. For example, one of the key components of law firm culture is the way in which a firm is managed and organises itself; how much democracy and transparency there is; and how much ‘firm management’ partners have endorsed. In most firms, clear rules have overtaken custom and habit in many aspects of the way in which the firm operates.
There is also some encouraging evidence that culture is becoming a more inclusive and outward-looking thing than it has been historically. Partly thanks to the US influence on law firms around the world, some of the more self-indulgent aspects of culture are being replaced by a focus on pro bono, diversity, social mobility and other values that help to define a positive and inclusive culture. That is becoming more important as law firms become not only larger, but more geographically and culturally diverse and as individual lawyers operate more frequently away from their own offices, either from home or in the field with clients. These features mean that a culture that works broadly across the firm and can help to hold it together is even more important.
Clients: The nature of clients in large law firms has changed over the last years as much as any other facet of the industry. Clients who often used to be relatively unsophisticated in their understanding of technical legal issues (chief executives, finance directors and the like) are now almost invariably lawyers whose expectations of outside counsel are rightly demanding.
One of the things that they demand is to be listened to. Indeed, the depth of understanding law firms are able to demonstrate as a result of having listened is one of the biggest challenges facing partners. While the day of the rainmaker as a dispenser of corporate hospitality and largesse are largely gone, they are being replaced by an equally important creature in the law firm: the client partner. The talent that a partner needs to show in order to fulfil this role successfully today is the ability to understand the client’s business and to be the client’s voice within the law firm. In other words, it is not about being the voice of the firm within the client organisation or trying to cross-sell in a ‘would you like fries with that?’ kind of way, but rather the other way around.
The other critical challenge in dealing with clients today is to demonstrate efficiency and cost effectiveness at every level of the market. General over-capacity and the intense competition for work among law firms clearly exacerbates the issue. You could characterise all this as ‘fee pressure’ and it is sometimes that and nothing more. That is certainly how it might feel to the partner who is suffering from the pressures of trying to marry the profitability expectations that they are under from law firm management with the expectations of clients. Especially as those clients are themselves under internal pressure from their own finance departments who see the legal budget as bloated and an easy target for attack.
Things are not set to get any simpler with the increasing use by clients of well organised and efficient legal outsourcing organisations, artificial intelligence (set to drive huge change in the longer term) and the arrival of those allies of the budget setters: the accountants.
Collaboration: The whole purpose of the partnerships which comprise nearly all law firms is that legal services can be delivered more effectively through collaboration among lawyers than by individual lawyers working as sole practitioners. It is a simple premise and words that few lawyers in private practice would question. But their hearts and deeds pull in opposite directions.
Lawyers are competitive creatures and a degree of healthy internal jostling in a firm is no bad thing. No surprise maybe then that the simple concepts of collaborating within law firms and communicating in an open, thoughtful, respectful way upward, downward and sideways within these firms is a work in progress and an aspiration in many firms. The fascinating data from Heidi Gardner of Harvard Law School amply demonstrates the rewards that can be unlocked by partners and firms that do succeed in collaborating internally. The future is going to call on them also to collaborate much more openly externally with both clients and other service providers.
Partners who are challenged on a failure to collaborate might claim in defence that the firm lacks strategic clarity or that the messages that they receive are mixed. Again, the academic work here is interesting. Professor Laura Empson at Cass Business School has done important work that shows that dealing with the ambiguities and paradoxes that operate within law firms is a vital skill of both leadership and functioning successfully in a law firm. Lawyers have a craving for certainty and direction and yet the environments in which we operate increasingly and necessarily require nuanced and complex approaches, objectives and messages.
The growing use of metrics or precise measurements (mainly of financial performance) in law firms has potential if deployed intelligently to improve efficiency and the lot of both partners and clients. But often it does not feel that way. Law firms can use metrics as a stick to beat partners with in a way that undermines both the need to collaborate and the need to embrace ambiguity. Such a use of metrics also has potential to create conflicts between the interests of the firm and those of the clients.
Skills: Like Alice, the horizons and minds of law firm partners are constantly being expanded. It used to be that being a good lawyer would get you there. Now, to be successful, lawyers need to develop empathy, be good listeners, project managers, demonstrate imagination and innovation and leadership in an environment where they are surrounded by independently-minded people who do not desperately want to be led. They are called upon to develop both self-confidence and humility at the same time. No wonder that lawyers make great clients for psychologists and psychiatrists and for the burgeoning array of advisers and support services that aim to help coach them and educate them through all this.
A vital set of skills today are those associated with successfully understanding and motivating younger lawyers, the so-called Millennials, whose motivations and expectations seem to be a world away from what older lawyers think their priorities were at an equivalent stage. The race is on among law firms to connect with them effectively.
Pay: Money or partner ‘compensation’ is the acid test of how a firm sees all of these pressures. Am I encouraged to collaborate? What is the culture of the place really about? How successful are my client skills? Many firms are struggling to produce a system that is fair and provides the right incentives and motivation for partners in today’s environment.
One of the reasons for the huge difficulties they face is the vested interests of longstanding partners who have organised their professional lives around an expectation of continuity of the arrangements that they consider as fundamental to the firm in which they have spent their professional lives. It is all very well fiddling around the edges with your partner compensation system, but radically changing it in the absence of a complete crisis of some sort is hugely challenging as many firms know very well.
I do not want to labour the Alice analogy but some readers might care to re-read the story with the above in mind. Elements will bring a smile to your face. The Sea of Tears with the vast numbers of animals and birds swept away in its rising waters. The dodo race which results in everybody running around in a circle with no clear winner. The crisis of confidence provoked by the caterpillar making Alice confess to her own inadequacies. The Mad Hatter’s tea party must remind many of the odd partners’ meeting or two. The Queen of Hearts with her fondness for an ‘off with his head’ approach must be reminiscent of the perception of many in law firm management today. The Mock Turtle and his sadness at feeling how he used to be a real turtle when he was in (law) school.
Just to wake up – as Alice does in the end – for a minute to the realities ourselves. While the pressures on law firm partners today are more multi-directional and intense than they may have ever been, the rewards are greater too. My hope is that those reading this who are currently partners in law firms will recognise only too well the strange paradoxes that I touch on and that those who aspire to be partners will be developing a full appreciation of the odd but exciting challenges that lie ahead.
Charles Martin is senior partner at Macfarlanes.