Over the past 30 years, there have been changes in virtually every aspect of UK law firm operations – from re-organisation of work, to mergers and acquisitions that minimise duplication. This pace of change continues to accelerate rapidly.
Yet despite this new reality, there’s a widespread view that the pace of change within law firms is not keeping up. The consequences of the failure to react fast enough can impact not only the profitability, but the survival of law firms.
LexisNexis held two breakfast seminars to look at this issue and to help provide some answers.
The panel was asked to consider if the case for change is so widely accepted, why have large law firms not responded fast enough? And what are the principal barriers to change?
The discussions, which took place on 15 and 17 March 2016, were chaired by Nigel Rea, Director of Precedents and Drafting at LexisNexis. The panel comprised of Mark Smith, Market Development Director at LexisNexis, Kishore Sengupta, Professor at Cambridge Judge Business School, Tim Skipper, Managing Director at Totum, Paul Browne, Partner at Møller PSF Group, and Robert Millard, Partner and Head of Strategy Practice at Møller PSF Group.
5 barriers to change
Kishore Sengupta undertook research on behalf of LexisNexis to look at what’s stopping lawyers from making the necessary changes in their firms. The ensuing report Changing at client speed – what’s stopping law firms? was the basis for his points.
Mr Sengupta conducted a qualitative research programme of the top 50 law firms. This included detailed conversations with senior and junior partners and associates, and senior executives in business support functions. He found five components that acted as a barrier to change.
- He suggested that the first barrier is interpreting implications of the external environment. Decision makers need to judge when to act on external changes and look at the wider repercussions – which is no easy task. If a firm is profitable at that moment in time, why should the focus be on changing things?
- The next was an inability and unwillingness to take the lead. If the case for change has been made – and accepted – who should lead on it in the firm? Leaders of law firms are focused on external clients and often don’t want to act as internal managers.
- The third was business models and organisational structures. One question frequently asked was what change means in terms of job roles. How do leaders in firms decide what aspects are outsourced and what remains inside the organisation?
- Fear around technology and processes were next on the list. Research reveals that there is an ambiguous relationship between lawyers and technology. In conversations Mr Sengupta had with various lawyers, they cited how technology often doesn’t work for what they do. While they do often see it as a necessity, there are concerns over how it will change their role in the long-term.
- The final barrier to change was professional identity. What happens when traditional routes to progression breakdown and lawyers are forced to look at other career paths? If lawyers enter the law because they have a certain set of skills and plan to develop those skills to progress, but that route to progression is no longer available to them, then there’s a fundamental problem with identity.
Insights and learning from other industries
Mark Smith, Market Development Director at LexisNexis, said that traditionally in law firms change management becomes the responsibility of managing partners. However, unlike in other corporate organisations, there are three reasons why leaders in law firms will find implementing change particularly difficult:
- Capacity – partners have the producer/manager dilemma. They are not only responsible for doing the work but bringing it in as well. They will also be part of various committees and will have all the administration and management duties of running a team. He suggests that to expect them to take on additional change management duties is simply ludicrous.
- Capability – lawyers are usually either good at doing and delivering work or skilled at winning work. Leading on or delivering organisational change requires a whole different set of skills. While he stated that partners are absolutely capable of learning those skills, the reality is there isn’t the same tradition of management training that there is in the corporate world.
- Appetite – how many law firm partners really want to lead on change? If most people are wired to like predictability, as it’s safe and secure, if you change things it is often uncomfortable for people.
A lot of the change that is required by the industry, to work in different ways, to do different types of work, to embrace new processes and technology challenges the very heart of the identity of the profession and some of the people.
Mr Smith suggests that while there are partners that do have the capacity, capability and appetite to lead on change – in many ways they are not set up to do so in the same way a leader is in a corporate organisation.
Tim Skipper, Managing Director at Totum, explained that he had found things had moved on considerably in the last 18 months in terms of new job roles in the market.
He said that the changes they had experienced were driven by the environment, new entrants to the market and – most importantly – client demand. Clients want law firms to better understand their markets, provide flexible pricing and billing, offer greater efficiency and work with them as a partner.
Totum has seen more investment in firms in new roles such as account management, client care, client listening, senior pricing professionals, commercial managers, sector focus, marketing, thought leadership, and more sophisticated business development initiatives.
In fact, he had seen five new heads of pricing in last six months alone – a role that hardly existed two years ago.
Who makes change happen?
Paul Browne, Partner at Møller PSF Group, said it needs more than managing partners to drive change – it needs partners, associates and the support side of the organisation.
To really deliver change you need to have a top down and bottom up approach. If you don’t have the partners and associates on side it’s very difficult to make things happen. It’s particularly important after a non-negotiable change – such as after a big merger – you can’t stop it, you can’t avoid it, and you don’t have a second chance. Appetite for change throughout the whole organisation is crucial.
If you’d like to read about these issues in more depth and find out about some of the potential solutions, please see our change management white paper Changing at client speed – what’s stopping law firms? You can access it by filling in a short questionnaire.
Or, alternatively, contact the Future of Law editor, Sarah Plaka, for more details.