INDUSTRY ANALYSIS

INDUSTRY ANALYSIS

A touch of human strategy

It pays to consider ways to get the best out of people in law firms, though focusing purely on utilisation may be missing the optimal method for leading achievement-hungry, yet very human, legal professionals. Mark Smith, director of strategic markets at LexisNexis, offers three questions for leadership to coax the best from themselves and their people

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Despite the march of technology, law firms remain human capital businesses. While market pressure is slowly but surely eroding the billable hour as a pricing mechanism, utilisation of course remains at the very heart of the law firm financial model. At a very simple level, this makes sound economic sense firms want to ensure their expensive assets are working and generating as much revenue as possible. Yet, taken to its extreme, an industrial-era attitude to sweating the assets can be counter-productive and, in some cases, hazardous to health. Is busyness really synonymous with high performance?

Turning first to the lawyers, though empirical research is limited, studies on lawyer personality traits by Daicoff (2004) and Richard (2002) suggest high levels of achievement orientation and urgency exist among lawyers. These characteristics, coupled with a focus on utilisation, have provided an environment where generations of lawyers have routinely worked long hours for sustained periods of time in the service of their firms and clients. In many cases, this has contributed to financially rewarding and intellectually satisfying careers.

Firms want to ensure their expensive assets are working and generating as much revenue as possible. Yet, taken to its extreme, an industrial-era attitude to ‘sweating the assets’ can be counter-productive and, in some cases, hazardous to health. Is ‘busyness’ really synonymous with high performance?

Yet the world has changed and continues to change further. The advent of fully virtual, and now hybrid, working has increased the scope of what is possible in terms of utilisation. By removing commuting time, blurring the boundaries between work and home, and removing microbreaks (walking between meetings, for example), the volume and intensity of work have increased simultaneously. Client demand has exploded (described in late 2021 as limitless by one managing partner) and client expectations of availability have increased to near 24/7 levels. As a senior associate recently remarked, When did it become ok for my clients to WhatsApp me at the weekend?” ‘Work anywhere has become work everywhere.

The available talent pool simply cannot keep up with this demand. Aside from a straightforward shortage of lawyers and other key professionals, traditional, UK-headquartered law firms are competing for the best people with fast-growing alternative legal services providers, platform lawyering businesses, the Big Four, highly profitable US competitors and, of course, talent-hungry in-house leal teams. This has compounded the pressure on law firms. The most direct consequence of the intensifying war for talent has been skyrocketing salaries. This in turn has increased talent mobility, with workers moving for considerable increases in salary. That level of attrition increases pressure on remaining team members and adds on time, effort and stress for the team leader responsible for recruitment.

Talent models

Given that both Daicoff and Richard’s personality research suggested a predisposition of lawyers to psychological distress, these high levels of utilisation and additional pressures may well prove unsustainable. While the profession has become much better at talking about mental health issues and providing support for staff, the underlying challenges remain (as highlighted by LawCares 20/21 Life in the Law research). Addressing burnout and lawyer wellbeing is clearly important, but it addresses a symptom rather than the cause. Perhaps the question leaders need to ask to get to the heart of the issue is How can we get the best from our people? While it may seem trite, this approach implicitly looks at more than financial performance and volume of output. The emphasis on people shifts the focus away from the outdated distinction between lawyers and business services, and by acknowledging the potential for burnout, also encourages longer-term thinking, rather than a near-term focus on in-year financial performance.

Addressing burnout and lawyer wellbeing is clearly important, but it addresses a symptom rather than the cause. Perhaps the question leaders need to ask to get to the heart of the issue is “How can we get the best from our people?” While it may seem trite, this approach implicitly looks at more than financial performance and volume of output

Yet, does this simple question deserve a place on the leadership priorities for todays law firms? Lets be clear this is an extremely challenging time to lead a law firm, and the legal services market is changing faster than it has in generations. New competition, both for work and for talent, has emerged at pace. Clients are increasingly sophisticated in the way they procure and resource their legal needs. Client service expectations continue to increase, and new technologies and digital transformation are forcing change in business models. A multigenerational workforce is challenging traditional career paths, incentives and rewards, just as bigger-picture questions around ESG and purpose become increasingly impossible to sideline. All this against a macro-economic and geopolitical background of extreme turbulence.

Despite these hurdles, we must return to the fact that law firms people are central to the solutions of every other challenge. Getting the best from the firms most important asset must be a leadership priority for any professional services business.

Theres no easy answer to the how of getting the best from legal talent, and each firm must find its own unique answer. To progress the thinking in this domain, I suggest leaders consider three questions.

How will you measure people’s contribution?

Given the achievement orientation of many people in law firms, what gets measured is critical in shaping behaviours. However, when looked at through the lens of how to get the best out of people, the answer to the question is not straightforward. There are a host of output metrics that are undoubtedly important utilisation, profitability and write-offs to name a few – yet these are only part of the picture. Beyond client satisfaction, retention and origination, there are many critical skills and behaviours that have a meaningful impact on the short- and long-term success of a law firm. How does the firm value and measure genuine collaboration and innovation, team engagement and attrition, learning and development, leadership and inclusion?

As technology and process grow to play a larger role in service delivery, the roles of the lawyer and business professional are changing. Career structures and expectations are evolving in response to market demands and the impact of a multigenerational work force. This is an opportunity to fundamentally reassess metrics that have not changed in decades, and to rethink the contribution people make to the success of the firm.

There are a host of output metrics that are undoubtedly important – utilisation, profitability and write-offs to name a few – yet these are only part of the picture. Beyond client satisfaction, retention and origination, there are many critical skills and behaviours that have a meaningful impact on the short- and long-term success of a law firm

What’s the right environment to get the best from your people?

Getting the best from people requires them to be situated in an environment that enables high performance. Research has firmly established the connection between psychological safety and high performance this idea is gaining traction, partly driven by initiatives to increase diversity and inclusion in the profession, and partly by an understanding that psychological safety can be an important component of the employee value proposition. Yet the statistics on levels of safety in law firms (reported in the LawCare research mentioned above) suggest there is more work to do for firms to create psychologically safe environments.

The ability to speak up is not the only environmental requirement to get the best from people. Culture is undeniably a part of this discussion, with the vast majority of firms claiming to be collegiate and collaborative. Yet the reality is that the behaviours associated with these characteristics can vary wildly between firms. Workers with different personality types will want different things from their environments, but the more accurately the firm can identify and articulate its culture, the lower the risk of cultural misalignment between the firm and its people.

Role-modelling behaviours and values

Among the many different definitions of leadership, few practitioners, authors or academics underestimate the importance of role modelling as a key dimension of leadership. Today, leaders are faced with a relentless stream of, if not full-blown crises, then certainly significant challenges, so its easy to default to a reactive, firefighting style. Creating the time and space to think deeply about longer-term strategic issues is hard at the best of times, and opportunities for reflection today are both scarcer and more valuable than ever. Reflection is central to learning, which itself is key to competitive advantage at an individual and organisational level.

Returning to the impact of a utilisation mindset, many leaders have emotionally invested a great deal in looking after their teams during the pandemic, with their own self-care being a casualty. In an office of highly motivated, conscientious professionals, telling others to look after themselves, while personally going above and beyond the call of duty, may send conflicting signals. Though pastoral care is an important facet of leadership, many leaders struggle to offer themselves the same respite.

Perhaps the most important step in getting the best out of their people is for leaders to ensure they are working in a way that gets the best from themselves.

To find out more, visit: www.lexisnexis.co.uk