The Legal Innovator's Dilemma.
By Jordan Furlong
Law firm leaders, listen to the words of Harvard's Clayton Christensen in his groundbreaking 1997 book The Innovator's Dilemma: he's speaking to you.
Christensen noted that market incumbents frequently see upstart competitors emerge with effective new technologies or ways of doing business. Recognizing the threats posed by these new methods, the market leaders attempt to adapt and replicate those methods themselves -- but, with astonishing frequency, fail in the attempt. The problem, he concludes, is trying to maintain both the old ways and the new ways in the same organization:
It seems to be very difficult to manage the peaceful, unambiguous coexistence of two cost structures and two models for how to make money within a single company. ... [A] single organization might simply be incapable of competently pursuing disruptive technology while remaining competitive in mainstream markets. ...
[M]ost managers try to ... maintain their competitive intensity in the mainstream, while simultaneously trying to pursue disruptive technology. The evidence is strong that such efforts rarely succeed; position in one market will suffer unless two separate organizations, embedded within the appropriate value networks, pursue their separate customers.
By "separate customers," Christensen is referring to groups of customers that seek and reward different values in the market. Managing partners are familiar with that dichotomy: clients who insist on innovations like alternative fee arrangements and outsourced lawyers versus clients who are happy to continue with the status quo. Many managing partners believe, correctly in my view, that this latter group is growing.
Managing partners themselves might well favor these innovations and try to implement them, but time and again, they come up against the brick wall of partner intransigence and financial infrastructure. According to Christensen, these obstacles are not merely bad luck; they are the natural and inevitable result of a business that has been successful for decades and simply will not be able to absorb fundamental changes to its model.
You can't grow two plants in the same plot of land, says Christensen: you need to find a new patch of soil in which the new plant can take root. He cites several successful examples of companies that harnessed new technologies by creating new, parallel businesses that employed innovative methods and keeping them away from the main company serving the mainstream market.
That same trend has now arrived in the law. Last year, UK firm Berwin Leighton Paisner created, then eventually spun off, a new service called Lawyers On Demand that employs 80 BLP-endorsed freelance lawyers who work with clients on a contract basis at client offices or remotely.
More recently, the consulting wing of UK firm Eversheds announced the creation of Evesheds Agile, a similar on-demand service that also doubles as a business development tool for the firm's consultancy services. Both LOD and Agile have already signed up several major global clients.
BLP and Eversheds have glimpsed the future of legal talent and workflow and have acted accordingly. But more importantly, they've applied the lessons of The Innovator's Dilemma and have created separate parallel businesses that use new technologies, business methods and approaches. They are among the very first movers in this area. Will your firm join them? Contact the Author, Jordan Furlong.
Tackling Partner Underperformance
in Law Firms
A new report addresses a difficult and sensitive subject.
By Nick Jarrett-Kerr
My detailed Ark Report into this difficult and sensitive subject has now been published. In researching for this 145 page report, I spoke to many law firm partners and managing partners and twenty firms agreed to participate in a specially designed survey into the issues. The vast majority of firms that agreed to participate did so on a non-attributable basis. Around 70 firms were approached representing firms which fulfilled three criteria. They had to be known to be thoughtful, well managed firms as one of the objectives of the survey is to identify best practice. The study also needed to track global trends, and so firms were chosen in a broad range of jurisdictions. Finally, we needed fair representation across a spectrum of law firm sizes. Twelve participating firms were principally based in UK, three in the United States of America, and one each in Australia, New Zealand, Ireland, Scandinavia and Eastern Europe. As a small-sample survey, it may of course not be totally representative of the profession as a whole, but it does reveal some interesting insights into how these issues are currently being handled in law firms to add to the more detailed case studies in the Report.
What is immediately clear is that the issue of underperformance is not "done and dusted" and remains a live issue for the profession globally - a constant and thorny problem with which firms continue to grapple. Around 85% of firms surveyed confirm that they are likely to have to take action over the next two years in respect of this issue. This is because underperformance continues to affect law firms in many ways - not least of which are diminished profitability, loss of opportunity, disaffection of high performers, challenges to the firm's values and falling morale. What is more, underperformance has to be seen not just in terms of productivity but also in terms of a more holistic approach to a firm's standards. My definition of underperformance therefore includes the consistent failure of a partner to meet the firm's reasonable expectations or standards for productivity, profitability, quality, technical proficiency, client service or interpersonal relationships.
Firms seem iteratively to go through some or all of three phases in addressing issues of underperformance at partner level. The first phase, for a few firms long since concluded, has been to identify the shirkers and serially below average performers (sometimes referred to as C partners) and manage them out of the firm. A second and more recent phase has seen firms restructuring their partnerships and slimming down the number of equity partners. This phase has usually resulted in non-core partners finding themselves in the wrong place at the wrong time and being asked to leave. In the third phase, firms are considering how to tackle those partners who in relative terms are making a more modest contribution than the majority of their peers. Prior to phases one and two, these partners would have been solid performing B partners, ranked well away from the 'relegation zone'. As one of our case studies points out, it is perhaps a misnomer to label such partners as underperforming, but they nevertheless form the low contributing end of the performance curve. Contact the Author, Nick Jarrett-Kerr.
Obtain a copy of the Tackling Under Performing Partner Report
Retreats that Pay for Themselves
In the era of cost cutting, not holding partner retreats may be a false economy.
By Ed Wesemann
In an attempt to control expenses, many mid-sized law firms have postponed or eliminated their retreats and firm-wide practice group meetings. While cutting out these lavish events may yield attractive budget savings, firms will likely find that the loss of the benefits from these meetings may be an unacceptable trade-off for the savings. It might make more sense to more precisely define the objectives of these meetings and restructure the meetings around those objectives.
In many firms the concept of law firm retreats expanded dramatically during the 1990s. Retreats went from being simple annual business meetings to multi-day events inluxurious resort locations. Some firms broadened the scope of their retreat to include associates and spouses. Then, as firms focused their internal organization more around practice groups, multi-office firms often instituted separate mini-retreats for members of practice areas. In a competitive environment, the planners of these events tried to outdo each other and their own efforts for the previous years. The size and expense of law firm meetings grew.
As financial pressures cause law firms to rethink their lawyer meetings, it is worthwhile to reconsider the objectives that motivated retreats in the first place. Typically, retreats started with the requirement to have an annual business meeting to elect new partners and select the firm's leadership for the next year. As the importance of "cross-selling" became apparent, law firms realized that partners needed to know each other better, and especially appreciate the knowledge and capabilities of fellow partners. And, since everyone was together in the same place, it made sense to hold firm-wide CLE events at retreats. Finally, as firms became aware of the importance of their culture, activities were added to support collegiality by permitting lawyers to get to know each in a non-business social setting.
The question facing law firms is the relative importance of each one of these objectives and whether they can be achieved under some alternative means. While each is important, the business meetings of most law firms are pro forma events that could be done by video conference, and CLE programs are add-ons to take advantage of everyone being in the same place. Getting to know each other is important but most firms find that partners, like birds of a feather, tend to cluster together at retreats with people from their own office or practice group - people they already know.
The promotion of cross-selling may be the greatest advantage of a law firm retreat. It is difficult to refer work for your best client to someone you don't know. Creating a level of knowledge that builds trust with a broad spectrum of people requires face to face contact. And, if structured properly, nothing does that better than a law firm retreat. Contact the Author, Ed Wesemann.
Legal League Consulting, LLC
Dehli and Mumbai,
|At The Podium: Upcoming Appearances by Edge Partners
November 15, 2011
Nick Jarrett-Kerr speaks to CLT's Allocating Partnership Proceeds conference in London, UK
November 17, 2011: Pamela Woldow speaks on Best Practices in e-Discovery in Pentagon City, VA
November 17, 2011: Nick Jarrett-Kerr gives the Keynote at UK200 Group Annual Conference in Liverpool, UK
November 21, 2011
Chris Bull presents at CLT Outsourcing for law firms conference in London, UK
November 24, 2011
Chris Bull gives the Keynote at TikitTFB National User Conference in London, UK
December 1, 2011
Chris Bull presents at the Managing Partners' Forum in Birmingham, UK
January 25, 2012
Jordan Furlong addresses the ACLEA Meeting in New Orleans, USA
April 16, 2012
Jordan Furlong gives the Keynote at the Canadian Judical Council Conference in Ottawa, Canada
April 18, 2012
Pam Woldow presents a Webinar on the Role of Legal Administrators in Legal Project Management for the ALA
June 8, 2012
Pam Woldow speaks to the ALFA in Palm Beach, USA