Feature

posted 16 Nov 2005 in Volume 8 Issue 6

Putting people first

Law firms are facing huge pressures to overhaul their professional traditions to become modern competitive businesses. But success will largely come down to understanding and better managing people.

By Annabelle Lawrence, Cripps Harries Hall

The legal world is facing unprecedented change and we could be forgiven for feeling under siege.

The outcome of the Clementi Report will be a radical re-design of the way legal services are delivered in England and Wales (advanced by the government in the recently published white paper, ‘The Future of Legal Services: Putting the Consumer First’1). The white paper views the current regulatory framework as flawed and overly focused on the lawyers providing the services, rather than the consumers who are paying for them. Our regulatory and complaints mechanisms, together with our current business structures, are under the government microscope, while the Law Society’s Training Framework Review puts forwards far-reaching proposals to change the way lawyers are educated.

The legal world is also becoming more mobile, faster-moving, competitive and challenging. A growing number of mergers, increasing globalisation and conversions from traditional partnerships to LLP status are inexorably moving firms from a traditional partnership model to new business structures. We now even have the prospect of external investment in law firms or outright ownership by non-lawyers. It is little wonder that many lawyers feel threatened.

To survive and particularly to succeed in this new world calls for law firms that are well run, effectively managed modern businesses.

Some people may question whether an increasing interest in the management of law firms is more imagined than real. In my view, however, there is a genuine and growing interest in the way firms, particularly our own, are managed. I see it as a very healthy interest and one that must be encouraged if we want our firms to survive and thrive in the years to come. Law firms are businesses and need to be managed. Failure to appreciate this simple fact is likely to prove expensive or even fatal.

Management skills spread throughout a firm are essential if it is to make the transition from a traditional hierarchical professional legal partnership to a successful 21st century legal business.

Building a modern legal business

Law-firm management today must focus on delivering a well managed professional business where the emphasis is on clients and overall business success. A clearly defined strategy is needed that everybody understands and where there is genuine buy-in to the firm’s goals and aims.

A consistent and sophisticated approach is needed that involves managing three key areas: clients, employees and finances.

To succeed there must also be a three-pronged internal push for more involvement in management:

Strategic level

Board members must accept they need management skills and that these must be spread throughout the firm;
They must walk the talk;
They must recognise they can’t walk alone.

Partner level

Partners must understand and appreciate that each and every one
of them needs to develop and use management skills, and has to have a genuine involvement in management;
They must buy in to the management concept and lead the way for their team;
There is increasing evidence that younger partners expect to be provided with opportunities to acquire and use management skills – often they are the champions of change.

Assistant level

Assistants come from a new generation with different values from those at the peak of most law firms;
They are looking for more varied career-development paths and expect to be trained in management skills and to be given opportunities to use them.

Many assistants today recognise they can’t all be partners. They want broader career opportunities. We should take advantage of their interest in management and help them build their skills.

The main areas of change

Much of the world that was familiar territory to the majority of partners currently heading up law firms has gone – they are finding themselves in a very different climate from the one into which they qualified.

This highly competitive landscape creates tremendous opportunities. The over-riding need is for leadership with clear thinking and good judgement to identify the strategy and skills best suited to provide the changes that will be essential for success in legal-service delivery in the future.

What skills do partners need?

The partners need new skills and to apply their significant intellects in different ways. Failure to re-orientate their talents and efforts may prove dangerous. There are often reports in the legal press of firms in trouble or under threat – this is usually because the management have either been slow to change or the change has been ineffective.

Traditionally, law firms were a bit like oil tankers: courses were fixed and controlled by the bridge; someone was pressing the old familiar buttons; the results rolled in; and the partners were happy. Few questions were asked and each year was much like the one before.

Then things began to change as loyalty ebbed away – both from clients and employees. The market for the supply of legal services and the recruitment market became increasingly competitive.

Today, assistants are being lured away by the prospect of higher salaries and ‘greener grass’ elsewhere. They hope that things in a new firm may be different or more suitable to their personal needs and ambitions. Having moved once, they are more likely to move again – a vicious circle of moving firms has been created as the most difficult first move is overcome. If they don’t find what they want elsewhere, they may even leave the law altogether.

Our assistants were born into a different world from our partners. The priorities and key drivers of the two groups are often out of sync. Law firms have to understand these differences and adjust or bear the consequences.

Managing the divergent expectations of today’s partners and assistant solicitors

There is evidence of a split between the expectations of partners and assistants. They view the world and its values differently.

Dealing first with the assistants, there are many scary and dramatic articles in the press. These seem to point to widespread discontent and high turnover levels among private-practice assistants. Some of the discontent is fuelled by recognition that not everyone can or wants to be a partner.

Although many may not want to be partners and are looking for alternative career paths, there are still many more seeking partnership than spaces available. Their expectations have to be carefully managed; all too often the partners lack the skills to do this.

Recent surveys have revealed it is also taking longer to get to partnership. The average age of new partners at the top ten City firms increased in 2005 to almost 35 (The Lawyer, 26 April 2005), and the overall number of promotions has been static for three years.

There are frequent reports of culls of underperforming partners and de-equitisation, which suggest that the trend towards fewer partners is unlikely to be reversed.

There seems, however, to be a growing number of assistants who do not aspire to partnership. The idea of sacrificing oneself to the partnership ideal is seen as incompatible with the expectations of the up and coming group of assistants who are looking for a more balanced lifestyle.

This apparent discontent is not new – I think it has been with us for some time – but it is becoming more vocal. As long ago as 2002, the Legal Business ‘Survey of Assistants’ revealed that over a third of the assistants surveyed were not keen

to become partners. Their unhappiness with their work environment was also revealed. Over half believed that firms did not recognise work/life balance and just under half felt they were neither fully valued nor appreciated.

Partners and assistants have much in common – they are all lawyers aspiring to deliver solutions to client problems. However, they seem to be growing apart. I believe this divergence is largely attributable to a misalignment of values between the generations, which leads to misunderstandings and sometimes a conflict of aspirations.

Most partners were born in the post World War II baby boom of 1946 to 1964. This group are said to have the following characteristics:

Are driven and dedicated;
Work at a gruelling pace – try to be supermen and superwomen;
Want to do a good job – raising children, caring for aged relatives, excelling in whatever they do, but above all excelling at their jobs;
They prioritise work over life.

Baby boomers are said to be:

Highly competitive;
Money is a key driver;
Idealistic;
No news = good news – they don’t understand the need for feedback and are often ill equipped to give it;
They raised salaries in the late 1990s because it was the only response to skills shortages that they could think of as the competition for legal talent heated up.

For the new generation of assistants salary is important but it is very much a ‘hygiene’ factor – they need to earn enough to enjoy a good lifestyle but the pursuit of money is not an aspiration in itself. Salary hikes fail to satisfy their deeper seated concerns.

Assistants are largely drawn from generation X – they were born between 1965 and 1980. They are said by demographers to be:

Risk takers and entrepreneurs;
More independent;
More outside-the-box thinkers;
Keen to have freedom to manage their own time;
Place a high value on leisure time (having seen their parents sacrifice their life to work);
Commitment to an organisation lasts only as long as they see it to be in their best interest;
Value training and development;
Need to feel valued, appreciated and involved.

Potential conflicts exist between the aspirations and values of this generation and life in a legal firm run by baby boomers, where the format is dictated by chargeable hours, the culture is more dictatorial than consultative and work/life balance is low down the list of priorities.

We need to bear in mind that the gap is still wider with the up and coming generation, the nexters, who were born after 1980 and are starting to enter the workforce. They are said to be:

Independent;
Even more laid back than the X generation;
Working in a fun environment is key;
Teamwork;
Camaraderie;
Feedback and praise;
Routine bores them;
Quick to voice their dissatisfaction;
Quick to vote with their feet.

Those from generation X attach growing importance to diversity, corporate social responsibility and involvement; the nexters rate these areas even more highly.

It is predicted that the baby boomers will dominate the workforce until around 2015. As the retirement age will be rising it is likely that the influence of the baby boomers may be around for even longer. If the baby boomers are to get the most out of the next two generations I believe they need to understand and work to bridge the generation gap.

I hope I have demonstrated why I believe we must change if we are to engage and motivate the new generations of lawyers. We need to try to move with the times and break away from tradition.

Cripps Harries Hall LLP: A modern business?

During 2005, at Cripps Harries Hall LLP we have introduced a good many changes as we work towards our goal of being a more modern and effective legal business. The most significant changes have included:

New business structure, focused on client sectors;
Elite practice-management system (PMS) to provide financial and other management information;
LLP status to provide a more corporate structure, which is more attractive to clients and future/current employees;
New bonus structure for all, linked directly to the profitability of the LLP – all for one and one for all;
More merit-based pay to replace assistant lockstep and reward individual high performers;
Management-training skills to spread good practice, show commitment to individual personal development;
Competency framework to endorse the behaviours and attitudes expected throughout the firm;
Openness, flatter structure, increased information flow to involve, engage and build commitment;
Groups and teams replace departments to underline the move from being a lawyer to being, first and foremost, a supplier of client services;
Employee forum. A think tank to enable us to gain feedback and also to inform and consult people about significant changes to the business;
‘Investment’ time replaces non-chargeable time to emphasise the importance of commitment to non-billable activities;
Service teams replace support staff to emphasise they are vital, not secondary, to the management of the firm;
New graduate-recruitment brochure to show appreciation of the generation gap;
New recruitment message, saying ‘take control of your career; enjoy more direct responsibility and client contact at a more junior level; and, work hard but retain a life outside the office’.

Our next move

We are introducing an initiative to re-invent and invigorate our client care, which aims to retain and develop our client base and get under the skin of each client.

The many changes have brought new challenges and we have started to see a change of focus.

Our success will be measured by the end-of-year results and what happens in subsequent years. It is early days but the signs are promising.

We are five months into the new structure and we are comfortably above our budgeted profit. Heightened awareness of the importance of client care has led to an increase in good-news stories and compliments from clients. People are settling into the new groups and teams, and accepting the changes around them.

The underlying structural change

Fundamentally, the changes involved business reorganisation along client lines, into:

Eight sector-driven business groups;
Groups supported by our business-service teams (for example, facilities, finance, HR, IT, knowledge management, marketing, secretaries and reception).

The hardest thing has been to persuade lawyers to think of themselves not as property or family specialists but as legal advisers who provide services and solutions to clients in their sector, whether it is private clients, partnerships, transport, or whatever.

People have had to re-invent themselves. The word ‘department’ was banned to try to re-direct thinking towards clients.

There has been some resistance but less than was anticipated. Success so far has been largely due to the huge effort put into communication.

We kicked off the winning of hearts and minds by meeting with individual key partners and then moved to sessions with small groups of partners. We took account of their comments and views, and have continued to listen to their feedback as the structure has evolved, thereby retaining their engagement and input.

Once the partner-level sessions were well underway we held question and answer sessions with staff to explain the new set up. This was backed up by full details on our intranet. The intranet has been re-organised to include a forum for each business sector so that all members of each business group have a focal point of information about developments directly related to their clients. This information is also accessible to everyone within the firm; secrecy is actively discouraged.

Initially, a good number of people were horrified to be removed from their traditional framework. Now they appreciate the freedom and flexibility it brings, and the ability it gives to focus on their clients.

The comfort of their traditional practice area remains in the background in what we call the back-office structure. Our PSLs and knowledge-management team still provide back-up to the same ‘internal clients’ as before. The legal practice areas remain but they are no longer the main focus that they had traditionally been. Our focus is now client centric.

The change to the management structure

There was a major change to the structure of the management of the firm. Traditionally, the practice was run by a partnership board that dealt with both strategy and operational issues.

The new board comprises the senior partner, managing partner and five others elected by the partnership. This was a great opportunity to bring not only new but much younger blood onto the board.

The new board deals only with strategic practice-wide issues. Operational issues are dealt with by the managing partner and the heads of the eight new business groups.

The prime responsibility of the eight business groups is to develop their part of the overall business – focusing heavily in the early months on improving their understanding of their clients and working out how best to meet and hopefully exceed their expectations.

The heads of the business groups have quickly appreciated that if they are to provide excellent client service they must also focus on managing their people and the finances of their groups.

The bold change to our management structure was in flattening out the structure and spreading responsibility over a greater number of people.

I have been pleased to see a number of partners who are currently heading up groups/teams who are taking a far keener interest in all areas of developing their people.

There are fewer places to hide: billing is done by business group, and responsibility has to be taken by the group heads who are encouraged to see themselves as the leader of their team and as part of the overall management structure.

The role of technology in assisting the change

During the first quarter of 2005 we introduced Elite’s practice-management system, which has made information far more accessible to all. The timing was excellent. As the client-sector focus was introduced, the new group heads were able to access information of a far more comprehensive nature and in a user-friendly fashion. The system has also brought greater transparency and openness.

Sessions for partners in how to interpret the data and use it to improve their understanding of the finances of the practice and their own particular group have had high attendance and been very well received.

Encouraging people-management and client-handling skills

We have also taken steps to develop people-management, client-handling and business-development skills. We have run a series of short sessions for partners to give them opportunities to build up their skills, including seeing things from a non-lawyer perspective. Some partners have taken to the new ideas very quickly and we have seen leads converted into new work. We have also seen improvements in client-relationship management and employee management.

The effect of the LLP conversion

The re-aligning of the business along client-sector lines took place at the same time as our conversion to LLP status. The LLP model provides a major change, which underpins the whole structure of the practice and reflects our new ways of thinking.

I am sure like many firms, our change to an LLP was driven initially by concerns to limit exposure to major negligence claims but there were other key drivers:

We wanted more of a corporate entity, which is more easily understood by corporate clients and is closer to their own structures;
We believed we could further attract new recruits by showing we have a forward-thinking, realistic firm that is not afraid to take steps to safeguard the firm’s future by reducing risk;
We wanted to encourage employees to see themselves as stakeholders in the business and to identify with our corporate aims and objectives.

The role of the new bonus scheme

Although we are unable to incentivise and reward employees via share ownership, we abolished our overly complex bonus structure and replaced it with a single scheme linked to budgeted profit.

The scheme has caught the interest of service staff who eagerly watch the billing figures going up as the month end nears (our intranet keeps them well informed). More than once, I have heard secretaries ‘bullying’ their lawyers to get their bills finished because their own bonus depends on it.

Building on the twin themes of engagement and communication

It is vitally important to link the pieces together, make people feel involved, communicate, be open and receptive to ideas, and engage people’s interests and enthusiasm. In short, you need to manage the people and the situation.

It is early days, but, fingers crossed, the signs are good as we remain ahead of our profit target. Attendance at our recent AGM was significantly higher than last year, suggesting that our people are indeed more engaged. The challenge is to keep that up and retain our new-found focus.

One thing is certain, however. While we continue to face the challenges of a changing industry, we cannot afford to lose focus or ignore any of the key areas that we have identified.

Box out

Communication is key. Take time to:

Communicate overall aims and objectives;
Know your people. Understand what motivates them and ensure they know what you want;
Know your clients. Make sure you understand their business and check you are delivering what they want;
Develop your financial-management skills;
Never make the mistake of believing that others think like you, have similar motivations or similar career aspirations. You need to know and recognise the differences;
Be on the look out for opportunities to build your firm’s management expertise.

Reference:

‘The Future of Legal Services: Putting the Consumer First’, published by the Department of Constitutional Affairs, 17 October 2005

Annabelle Lawrence is head of human resources at Cripps Harries Hall. She can be contacted at aol@crippslaw.com