24 January 2005
Like a cake that has all the other ingredients but needs a raising agent to make it edible, what is the vital characteristic that partners of a firm in The Lawyer Rising 50 firm need to sustain growing income and profits? What can be done to stimulate or maintain it?
As The Lawyer reported (The Rising 50, November 2004): “The Rising 50 firms wrestle with many of the same issues faced by the top 100 firms… but with so much competition, differentiation is vital.” Competitive advantage is rarely achieved merely by choice of services, price, location and so on. Instead it is achieved by the unique way in which a law firm coordinates its resources (principally its people) and delivers value. Partners will need to have many qualities and to exhibit many behaviours – drive, legal and commercial analytical skill and teamwork are commonly understood ones. Above all, however, they will need to continue to adapt, to create new recipes that are simultaneously appetising to the markets they choose as well as to staff and partners: they need to be able to learn and to stimulate a culture of learning. Now that the Clementi Report urges more competition, the need for adaptability is all the greater.
As part of a research project I undertook last year into a range of top 100 law firms, I explored how learning could be enhanced, the barriers frequently placed in its way and the very real economic consequences for firms. Of the eight firms I interviewed, some were enjoying success because they had fostered a culture, processes and support to keep learning. If The Lawyer had considered The Rising 50 some years ago, it might have identified some of those firms. It is therefore entirely possible that, as the magazine put it, “the next national powerhouse may be among [the current ones]”.
Do your partners think they must be seen to be right?
The need to be right is perhaps one of the positive hallmarks of a professional. But the pretence of appearing to colleagues always to be right is one many will recognise as an unattractive cultural feature of law firms. Authors and consultants Thomas Davenport and Laurence Prusak describe, however, in their book Working Knowledge, how a single test of a firm’s willingness to learn is “how often its executives question their own knowledge”. Other writers describe how leaders (partners) feel they cannot be seen to learn lest it undermines their credibility.
A cult of omniscience simply breeds a culture of distrust. Intolerance of failure creates a politicised climate of self-protection and of win-lose competition; partners feel they are succeeding only if they are outperforming someone else. Competition on personal billings, for example, is one that usually can be won only at the expense of the rest of the team or other practice areas. Who cares, then, about coordinating resources? Probably the valuable staff who leave. A senior manager of one top 100 firm described to me how it was simultaneously the insecurity of partners that drove them to try to succeed and yet the risk of being seen to fail that made them feel they could not win big client work.
Are your partners in the right millennium?
A number of firms I interviewed were grappling with partners’ behaviour reminiscent of a discredited philosophy espoused by Frederick Taylor in 1911. Taylorism advocated that control and knowledge be shifted to managers (say, partners?), that teams defeated individual drive, and workers (assistants?) should be rewarded by a piece-rate method (chargeable hour-only bonuses?). It is like a highly controlling parent-child relationship – the very antithesis, therefore, of an openness to professional learning which requires the mutual respect of an adult-adult relationship.
Are your partners stressed?
In his book Understanding Organizations, Charles Handy might have had in mind partners coping with their wider role beyond personal chargeable hours in describing how “the role of leader is a complex one, riddled with ambiguity, incompatibility and conflict”. Ambiguity is a huge cause of stress and one of the most frequent coping mechanisms is to downplay the stressful elements – typically called ‘non-chargeable’ (aka non-important).
But what about the hard numbers?
The Rising 50 report also identified correctly that, when it comes to the figures, “in a smaller firm it does not take much movement either way to make a big difference”. Consider the hypothetical firm in the table below (or equally a practice group in a large firm). Partners’ chargeable hours go down by 20 per cent. If the additional available partner investment time (260 hours) is used to generate an increase in the firm’s total chargeable hours of only 4 per cent, the blended rate changes by only 0.2 per cent and income increases by just under 5 per cent, but that is enough for profits per equity partner to soar by around 20 per cent. Worth reflecting on.
The rising firms support learning
Of the three vital stages of the learning cycle (plan, do, review), the review stage stands little chance if partners are intent on proving that they already know everything. Some firms I interviewed had successfully used a combination of hard objective data to cause a sense of crisis or urgency to stimulate reflective practice. Client feedback was successfully used by some. The threat of good staff leaving also “had partners sitting on the edge of their seats”, as one managing partner put it.
The firms that had learnt most about how to survive and thrive in the long term were clear about what was required of partners and used professional coaching to support them. By contrast, the manager of another City firm struggling with productivity and profitability considered that partners would not accept coaching because “it would mean admitting they were not doing something well and… a lot of partners find that difficult”.
Perhaps unusually for any law firm, let alone a firm in The Rising 50, Campbell Hooper is developing a coaching programme for partners. Cautious like most firms, it is starting with its five most recently appointed partners to help them define the support they might require to succeed in their new roles. If (or rather when, in my view) it is established successfully, it will be extended – but only to those who do not already know everything.
Jeremy Dutton is the chief executive of Campbell Hooper