Leading Transformation in the Legal Services Sector
January 31, 2018Change Leadership, Culture Change
Seven Tips for Leaders in Law Firms
It is only in the last five years that disruptive technology, changing client demands and generational shifts have created a burning platform for law firms to change direction and evolve their operating models, technology and culture.
Contracts can be reviewed by AI systems using hyper-intelligent algorithms; graduates are choosing in-house careers in modern corporates and start-ups over traditional law firms due to the value proposition of diversity, career variety and work-life-balance; and niche legal service start-ups like Jurimetrics, View Legal and Legal Zoom are making waves, offering low-priced services, targeted to customer needs.
Also, while the largest firms in Australia outperform the rest, the overall demand for legal services has decreased in four of the last five years despite reasonable economic growth. While firm consolidation has been the traditional growth lever, in these market conditions, there is only so much M&A that can occur. Firms must adopt new innovative approaches within their organisation to stay ahead of the competition.
So for managing partners and their leadership teams, transformation and change must be high on the strategic agenda. Making change happen in law firms can be hard, with traditional beliefs and norms pervading the halls as well as a lack of experience driving change among leaders. The following are some tips for law firm change leaders:
1. Establish a true transformation agenda
Law firms have experienced some change but Transformation wasn’t needed in the past. It is now.
This means focusing on influencing employee mindsets and behaviours as much as changing technology, business models and processes.
It also means developing a roadmap that articulates how all change initiatives link to the ultimate vision and each phase of the transformational journey and the capabilities and value realisation required to make it a success.
You’re more likely to come on a road-trip with me if I tell you where we’re going, how we’ll be travelling, where we’ll stop for lunch and all the excitement to be enjoyed along the way. If I tell you nothing or worse yet, put a gun to your head, what happens? Oh wait… you’ve already run for the hills.
The answers to the following strategically relevant questions will be clearer if the roadmap is laid out as a whole:
- Is our multi-year transformation elastic enough to flex to unforeseen market or technological shifts?
- Are we equipping our people and their leaders with the time, skills and motivation to adapt to all this change?
- How might our clients feel disruption caused by our change program?
- How will the upcoming acquisition, for example, impact our digital HR platform? When and how will we integrate people, processes and systems? Do we have the funds and capacity to do so?
2. Start small, win quick
Lawyers are conditioned to be risk-averse and transformation can be a daunting prospect (particularly for partners as owners). The key is to start small and fail fast. Banks, technology companies and consulting firms have embraced such agile approaches and there are no signs they’ll turn back. It’s time for law firms to join the fun.
Whether a pilot, proof-of-concept, test-and-learn or in-house innovation hub where ideas are tested and executed rapidly on a small scale first, firms can prove an idea works or not before risking the whole firm.
3. Listen and learn from other law firms and industries but know your difference
Your lawyers are smart. Listen to them. Don’t force them to change, it won’t work. In some industries (but not many these days) people will do what they’re told and trust senior management without too much questioning and the top-down change mandate approach can work.
When dealing with a highly educated workforce, change must be about enabling smart people to do what they already know how to do best. Given their expertise, their perspectives must be heard and change should enable, not control or limit their ability to spend time on revenue generation and deepening client relationships (which tends to benefit them and the firm).
If several partners feel the firm should prioritise profit rather than revenue growth but your change program is expensive and largely designed to grow revenue, you will meet resistance.
However if your Transformation roadmap demonstrates that profit will soar in the longer-term despite a short-term dip, you could gain their support. Find a way to incorporate all senior leader perspectives early in planning and design of the change.
If a partner feels restricted by a change and leaves, you might lose clients in addition to losing your talent.
4. Foster a growth mindset among senior partners and C-suite shared service leads
A growth mindset means being willing to accept you could be wrong and that you can learn and adopt new ideas, concepts, principles and behaviours quickly.
Creating this culture-change even in a small leadership group takes time, dedication and persistence but can result in not just an agile culture at the top but a change-capable culture throughout the firm as the mindset trickles down. Change-capable people mean less client and revenue disruption during a change.
5. Execute change creatively
Engaging people in change is tough in law firms. Just securing time from a senior fee-earner can be hard and you better be well-prepared. Also, senior partners don’t have time to hold their employees’ hands throughout the change journey, they need the productive action of thousands of inspired people moving in the right direction at the same time.
Achieving this means making each small step in the transformation journey – whether communications, engagement sessions or training – fun, engaging, inspiring, meaningful and hence memorable. Sending a slew of dull emails won’t get you anywhere. Don’t be afraid to get people out of their comfort zone – this is a pre-requisite for shifting habitual behaviours.
6. Know everyone’s role
Culture shifts are a necessary part of transformation and necessitate understanding and involvement of employees at all levels. Whether they are a fee-earner, shared service function, senior partner or grad, every employee must understand what the future firm looks like and more importantly what their role is in realising that vision.
Answer the likely employee questions like: “I know our company is becoming more client-centric but how do I act more client-centric? How does our new technology help me do so?”
7. Consider re-inventing the firm’s brand
Traditional law firm brands communicate an image of utmost professionalism and elitism with a hint of mystery (and masculinity). Historically this approach has been used by other big corporates and professional services organisations to convey the message: “you’re privileged to be doing business with the big end of town (and we charge accordingly).”
Many corporates and top-tier professional services firms have re-branded in the last 5-7 years, making their image more aligned with the diverse, well-informed, digital-savvy, purpose-driven customers and employees they now seek to attract. You’ll notice more bright colours, fewer capital letters and authentic simple language in their mantras. These new brands appeal equally to a changing customer base, the next generation of graduates as well as existing employees seeking a fresh, innovative identity.
Most big law firms are yet to follow suit. Legal services are becoming more of a ‘buyer’s market,’ so firms must consider what appeals to the market today and in future.
What the legal services sector looks like in 10 years’ time will be determined by which firms change fastest. As leadership and business expert Mark Sanborn said:
“Your success in life isn’t based on your ability to simply change. It is based on your ability to change faster than your competition, customers and business”
By Huw Thomas, Principal Consultant
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