How to turn your law firm from good to great

Many an article will describe the strategies that law firms should employ to improve their success rate. However, going back to the root of success, which firms are considered to be the best and why? Justin Patten, a human resources consultant and solicitor, uses recent research to identify the most successful firms and what they have done to put themselves at the top of the pile.

Many of us can look at our own and other law firms and describe them as good but how many of us have actually seen a great law firm? Even if we did believe that the firm was great, what are the attributes that those law firms would possess?

Jim Collins a student of great enduring companies has identified a number of concepts, which have enabled good companies to become great. Collins is based in Colorado, and is a recipient of the Distinguished Teaching Award at the Stanford Graduate School of Business. He finished his academic career in 1995 and now works from his management laboratory. His book Good to Great is a bestseller in both US and the UK.

By analysing data from the US stock exchange over a 30-year period, Collins initially identified 1,435 companies that appeared in the Fortune 500 between 1965-1995 and whittled the list down to 11 companies who met the tough criteria that he set. He considered that these companies had made the leap from being good to being great.

The selected companies that made the final cut into the study obtained an average cumulative stock market return of 6.9 times the general market in the 15 years following the transition point when they experienced at least 15 years of unexceptional stock market growth. To put that into perspective, General Electric (of Jack Welch fame), which is considered to be one of the most successful companies in the latter part of the twentieth century, out-performed the market by only 2.8 times over the 15 years from 1985 to 2000.

Collins and his research team believe that he has found timeless principles that can be applied to all organisations. Indeed Collins sees his own work as discovering what creates an enduring organisation of any type. The reason why he has analysed American publicly traded companies is that they have a two-fold advantage for research as they have a widely accepted definition of results and a great deal of easily accessible data.

So what are the timeless and universal principles and how can they be applied to your law firm in its quest to improve morale and profit?

There is a duality in leadership

Every leader of the good-to-great companies was a study in duality. They were modest and wilful, humble and fearless. On the one hand they were humble and shunned the limelight but also possessed an almost ferocious resolve to ensure the success of the company. This resolve would manifest itself in an ambition first and foremost for the welfare of the company. Is there a model of this type of leader within a successful UK law firm? Maybe there is. One of the top growing UK law firms is Wragge & Co and its senior partner, John Crabtree may just fit this model. Within the firm Crabtree is considered to be exceptional, remembering people’s illnesses sending thank-you notes and creating a culture that is extraordinary within the profession. Crabtree, who was articled at the firm, has been senior partner of Wragge & Co since 1993. It is interesting that Crabtree is also involved in a hands-on way in charitable activities - for example, in 1998 and 2002 he organised and took part in two charitable mountain treks on behalf of Sense. With respect to the actual resolve of the welfare of the company, the results over the past five years bear testament to the success of the firm with Legal Week describing it in January 2001 as “the most celebrated regional firm in the UK”.

Don’t bring in an outside saviour

Another interesting fact is that ten out of the eleven great CEOs came from within their company – comparison companies turned to outsiders with six times greater frequency. An article in the Law Society Gazette, dated 5 May 2002, highlighted the increasing presence of head hunters in the legal market. Only in recent years have law firms followed the lead of commerce, and industry and the banking sector and turned to head hunters when looking to recruit at a senior level. The question is whether this will see long-term results bearing in mind that head hunter fees can represent around 30 per cent of the new partner’s salary. Perhaps partners should consider Collins’s data prior to embarking on such a course.

Rigorous but not ruthless

You might think that the companies that enjoyed such success on the US stock market were unpleasant places to work. Not so. The good to great companies rarely used head-count lopping tactics as a tactic and almost never used it as a primary strategy. Six out of the eleven good to great companies recorded zero lay-offs from the ten years before the breakthrough date, and four of the others only recorded one or two lay-offs. This contrasts with the fact that lay-offs were used five times more

frequently in the comparison companies. One of the interesting trends within City law firms is their desire to implement (or portray themselves) as more appealing places to work. For example, the firm DLA, that was ranked 31st in the Sunday Times, ‘Best firms to work for’, has casual dress on Fridays, free hot and cold drinks and subsidised canteens. Furthermore, there is a concierge service and free phone advice. On the surface this is an example of a firm making an effort to ensure an employee-friendly environment. An interesting fact is that DLA did not always enjoy such a good reputation. The firm has seen its staff turnover rate halve from 32 per cent to 16 per cent over five years, leading to a saving of £2m per annum. The lesson is, that change is possible and it can equate to having a successful business practice. This year the firm won two awards at the inaugural European Practice Management Awards for Best HR Initiative and Best Managed Firm.

Importance of character traits in recruitment

Another interesting fact is that the good-to-great companies placed greater weight on character attributes than specific educational background, practical skills, specialised knowledge or work experience. The actual people within the management team would consist of people who would debate vigorously in search of the best answers, yet would unify behind decisions, regardless of parochial interests. The legal job is technical and accordingly one is restricted in one’s search for talent. That said, firms could look less at recruiting on the level of PQE, experience and university and look more on the individual’s integrity, determination and basic intelligence. After all, there are still some legal skills that can be learnt compared to character traits that are more difficult to teach. While researching this article, I surveyed a number of City firms who professed their emphasis on character traits in the recruitment process. There is an apparent shift away from traditional selection criteria. The question is whether this will extend further and to what extent.

Don’t motivate the troops

The good-to-great leaders spent essentially no energy trying to ‘motivate the troops’, ‘create alignment’ or ‘manage change’. Under the right conditions, the problems of commitment, alignment, motivation and change largely take care of themselves.

Alignment principally follows from results and momentum, not the other way around. There was no single programme, no killer innovation and no miracle moment. This contrasted to the less successful companies who would tend to launch immediately

into breakthrough mould, frequently launching new programmes with great fanfare and hoopla aimed at inspiring the troops – only to see that the programmes failed. One of the difficulties for managing partners is that there is so much pressure upon them to succeed. They may have obtained their role on the back of their legal expertise and yet they are performing a role of a primarily non-technical nature. With the tendency within the legal press to have ‘celebrity’ type articles on how managing partner x turned around firm y to create a super firm, the danger is that managing partners feels the need to ‘do something’ when in fact they should perhaps do less.

Compensation

There is no pattern linking executive compensation from good to great. This is not to say that partnership and senior staff compensation remuneration is irrelevant but the key is that it is used to get the right people working for your firm. After all, who

would work for free? It is interesting that according to figures produced by the legal consultancy, Spherion, 36 per cent of the 383 law firm associates surveyed said they were looking to change jobs within 12 months and 27 per cent were looking to move within two years. The lack of mentoring programmes together with few career development opportunities, training and development, and poor relationships with immediate supervisors are said to quadruple the likelihood of an associate leaving a firm. Notice the lack of emphasis on money. It is interesting that the aforementioned Wragge & Co is very focused on mentoring and support. For example in 2001 the firm won the Best Training Environment at The Trainee Solicitors Awards 2001 when the firm was recognised for its high level of mentoring and support for its trainees, its excellent appraisal schemes, and for its encouragement of early responsibility and client relationship skills.

Justin Patten is a human resources consultant and solicitor. He can be contacted at justin@jpatten.co.uk.