Masterclass: From lawyers to leaders

By Martin Richardson, director of professional development, Law South

With the Legal Services Act imminent, the next two or three years will generate major headaches for many managing partners of medium-sized practices. These are the firms that will be vulnerable to takeover or demise. The first may be a solid strategic ‘survival’ option for some. The second will not.

Here are a few of the problems, many endemic to professional practice, that medium-sized practices are now having to deal with:

Most lawyers, like doctors, teachers or any other professional group, are only trained (and interested) in practising their craft. They believe that clients and resulting fee-income is all that working life does and should demand of them;
The legal profession has traditionally been one that reacts to events rather than proactively makes things happen. Concepts such as change do not sit easily on lawyers’ shoulders;
The partnership as a business model is the ultimate in democratic individuality and, however astute the managing partner and however sophisticated the management decision-making structure, there is always the possibility of necessary change being scuppered by a single senior equity partner sticking his head in the sand or foot in the door;
Medium-sized firms do not necessarily have the resources to invest in senior support staff for advice on how to run the various business functions within the organisation. The larger firms have had this resource for 20 years or more. Many of them employ the best HR and marketing brains that money can buy, and this has been reflected over the years in the business success of the magic and silver-circle firms.

Fortunately, the prospect of imminent change has created sufficient angst in many medium-sized firms such that the question ‘what shall we do?’ is now on most of their lips. The external pressures for change and improved business thinking and practice are being generated, not only by legislative and regulatory issues, but also by job applicants demanding clear career structures, clients wanting a cost-effective approach to dealing with their matters and insurers demanding the set up of top-quality risk-management systems. There are many others.

How should a firm in this position deal with 2007 and beyond? The answer is to put in place an immediate short-term fix followed by a longer-term change strategy. The latter should be designed to change the hearts and minds of the firm’s lawyers, introducing a new world of business as opposed to purely professional practice. Training must be at the heart of this process.

Types of training

In the past, quite rightly, lawyers have concentrated on ensuring their fee-earning staff remain bang up-to-date with any changes in the law that affect their area of practice. They have also trained them in the ‘hard’ skills necessary to do an effective job for their clients – taking instructions, drafting, negotiating, etc. The more enlightened firms have even set up training sessions designed to analyse A-Z approaches to a particular type of transaction, or to keep standard forms fresh and up-to-date.

What lawyers have not been good at is training employees in the softer skills, without which business success is a pipe dream. Consider the following scenarios:

Lawyer A dislikes the administrative side of billing, and will only knuckle down to it under serious pressure from the managing partner as the year end approaches;
Lawyer B is very bright and an excellent lawyer but has ‘social’ problems, such that clients are put off by his lack of interpersonal skills;
Lawyer C works in disorganised chaos. The clients are pleased with his work, but there is a sense that his matter time recording is excessive and that occasionally some costs have been written off;
Lawyer D runs a team of fee-earners. He takes control of all aspects of any matter, delegates reluctantly, does not keep his people informed of what is going on, and has a consequential morale problem in the team.

These and many similar skills problems must now be tackled by all firms if they are going to survive. Never before has there been such a clear opportunity for law firms to run themselves as genuine learning organisations, where coaching, formal training and action learning come together to form the key driver for business success.

Example: Faith, Hope and Charity

The following is a case study, followed by some suggestions as to what could be done next.

Faith, Hope and Charity is a 20-partner law firm with offices in Newtown, Oldtown and Seatown. Eight of the partners are equity and 12 are salaried. There are also 35 assistant fee-earners, of which four are trainee solicitors, and 50 support staff, comprising secretaries and some 10 accounts and IT staff. The senior equity partner has been managing partner for 10 years following re-elections. He continues to fee-earn, however, and sees himself as simply a problem solver. No other equity partner is interested in ‘administration’. The firm is conservative by nature and has a turnover of £3m, which has only been rising in line with inflation in recent years. Profit per partner (PPP) is low. Clients are a mix of private and corporate – the firm offers a full range of services to all of them from all offices. Morale is low. One of the second-year trainees has already said that he will be moving on. The others are complaining about a lack of career and business direction in the firm. Training, outside the compulsory Solicitors Regulatory Authority (SRA) courses, is confined to the cheapest updating seminars run by the local law society. One of the salaried partners, who has some business vision and runs his matters and clients effectively and efficiently, has made it clear that if equity is not forthcoming shortly, he will leave with his clients. These, among other internal and external pressures, are beginning to create some anxiety in the partnership such that it knows change must now happen. But how?

The short term (the next 12 months)

Faith, Hope and Charity should ensure the following actions are undertaken immediately:

Make up the keen salaried partner to equity;
The managing partner should step down;
Assuming he is willing, the new equity partner should take over as managing partner with few if any fee-earning responsibilities (taking care to manage client-relationship transitions). If, in order to effect the above three stages, changes need to be made to the partnership deed, so be it;
Funds should be made available for the new MP to attend a short business-strategy course (e.g. the Harvard week) to take advantage of both course content and networking opportunities;
Employ a top law-firm consultant to take a look at the firm and advise on change;
Organise training across the firm in understanding and managing change;
Employ an executive coach for the new MP to help with personal development in his new role;
Prioritise change actions and begin to implement.

Throughout this process, communication with all staff is also critical, so that everyone understands and hopefully buys into what is about to happen. Equally, the partnership will need to make some personal sacrifices so that appropriate financial investment for change can be made.

The longer term (two to three years later)

The practicalities of change must go hand in hand with an emotional acceptance of the need for change. In the case of Faith, Hope and Charity, there will be a huge lurch as the culture of the firm starts to shift in the new direction. If the change-management training has been successful, it will have been given a solid kick-start. In the longer term, however, what is required is a cradle-to-grave training structure that supports the learning environment, and develops and permanently reinforces the new values. This will happen through the acquisition of appropriate personal and management skills at all levels within the firm.

Developing a skills-training structure

The typical method of identifying appropriate training is by undertaking a training-needs analysis. The starting point for this must be the firm’s business strategy. Ideally, this strategy will have been translated into a competency framework for individuals. The competency framework sets out the skills required by fee-earners and support staff in order to make the strategy happen. It is then a relatively easy step to define training needs from the competency framework. The resulting training structure will clearly be generic, as it has been arrived at objectively. To add a subjective element to the analysis, one can set up focus groups or design a questionnaire, and these can be used either at a particular level of seniority or in a 360-degree manner to provide additional feedback.

There is now a picture that shows what skills should be developed at each stage in the fee-earning (and/or support staff) career. Depending on the firm and its overall strategic thinking, culture and needs, there will be some variations in approach. The basics, however, will remain the same. Figure 1 is a matrix with examples of one type of approach to setting out a personal and business management skills development structure for fee-earners.

This matrix is by no means comprehensive and there are always differing views about when particular training should happen. What it does is give a taster of how a basic skills-training structure might look.

The level of sophistication of the matrix can also be substantially increased. Induction programmes are critical, particularly at entry and partner level. It is also possible to have separate training needs for those with particular responsibilities – team, financial, business development etc. The final structure for Faith, Hope and Charity will depend on the changes to the way the business will be run in future, as determined by the partnership following the consultant’s recommendations. Once in place, it will be the job of the training partner – alongside the firm’s departments – to implement the training.

When starting out, it is not a good idea to backtrack more senior people to training they have missed in the past. The effect of implementation will, quite rightly in the conservative environment of a law firm, take some years to percolate through in its entirety. Start by putting people through the courses at the level they are at now. Also, spread the training over around three years at each level. Begin with a skill that may have been agreed to be weak at performance appraisal. The appraisal should always be a vehicle for setting training objectives.

Really committed organisations allocate two per cent of turnover to training. For Faith, Hope and Charity, this would amount to £60,000 in current circumstances. It’s the old adage of spending money to make money. The investment will produce people with the skills and understanding to make the firm more profitable and successful in the medium to longer term.

How are the training structure and learning environment going to help our medium-sized firm to survive? Here are a range of positive consequences:

Career development and the steps to achieve it are clearly defined;
Increased motivation in staff;
Recruitment of a higher calibre of staff;
Binds the firm and its values together into a more cohesive unit;
Creates a more commercial and business-oriented outlook;
Clients notice the positive difference;
More new business is developed;
The firm’s thinking becomes more externally and proactively oriented.

All firms with some anxiety about their future should now be thinking seriously about a formal training structure as part of their survival strategies.

Martin Richardson is director of professional development at Law South – a grouping of nine law firms in the South of England. He can be contacted at martin.richardson@lawsouth.co.uk