It’s so easy to describe partners in generic terms, as an inflexible, stuck in their ways group of dinosaurs who are collectively responsible for the lack of change and adaptation to the new norm and changing client expectations in the legal industry. The partnership phenomenon is often discussed as an intangible stubbornness, unique to the business of law that the world has no choice but to accept.
To a certain extent attitudes and culture are to blame, but I’d like to attempt to deconstruct the partnership model and get to the heart of why implementing process improvement, and introducing technology can be such a painful process in modern law firms.
Let’s start with the obvious things.
Partners want different things
A mismatch in the desires for and expectations of a firm between the individuals within the partnership is the most obvious source of decision-making stalemates and is often talked about. Some older partners who are staring at a retirement without the kind of income they’ve enjoyed for the last 40 years couldn’t care less about the firms’ position in 5 years’ time and are intent on cleaning out the coffers, while other newer partners are desperate to invest in technology, and to rethink the underlying metrics and business model in order to gain an edge over competitors.
The ability for a single powerful partner to veto initiatives, even ones with proven business benefits, just because “that is not the way I run my practice” has been the death knell of many fine initiatives.
Partners are ‘too busy’
This old chestnut goes back to the dawn of time (well the last fifty odd years or so). The industry’s continued reliance on time recording as a measure of 1) fee earner performance 2) Fees, and 3) cost of goods sold, makes it difficult to justify non-chargeable time (for example discussing change or learning new skills) that isn’t directly attributable to practice development or adding value to a particular client.
And we could go on, but here’s what I believe is the crucial element
Partners are often criticised for their lack of business sense – an unbelievable accusation considering the nature of their work. Partners usually don’t get to where they are without a degree of success afforded by a measure of talent, intelligence, practicality, and… business acumen of some description. But at the end of the day actions speak louder than words, and obvious failures to apply the kind of basic business principles and best practice used with great success by all other service industries, leave partners with little in the way of rebuttal.
The question then becomes, why is it that partners are unable or unwilling to make these seemingly obvious decisions? I believe the answer is that partners rarely make decisions as business owners.
You see in most multi-million dollar companies there are layers. Horizontal layers as illustrated below.
At the top you have a board made up of a combination of executives and independent directors. Their sole purpose is to view the company from the widest angle possible, to identify issues and bottlenecks, and create strategies that will lead to greater profitability.
The next layer down is the executive team. CEOs, CFOs and other top managers whose role is to impose the will of the board. Below that you have more management layers, and eventually you get to the primary workforce, the groups of employees whose job it is, to do what they’re told.
It is a hierarchical system, which is as simple and effective. Decisions are made at the highest level that are in the best interests of the entity that are passed down the chain until they reach the affected party.
This is where law firms based on the partnership model differ. In a law firm, the role of the equity partner is stretched vertically across each of the traditional layers. Partners are board members, managers, team leaders and technicians. Below is a graphic illustrating this, along with an indication of the amount of time spent with each of their hats on in any given month.
As you can see, equity partners spend the vast majority of their time “on the tools”. What this means is that when they are sitting around the partnership (boardroom) table looking at proposals from software vendors, or enthusiastic admin staff, their decisions are obviously and understandably weighted based on the impact to their own workflow. The traditional board member can make a decision on the understanding that tomorrow they’ll be playing golf, or fishing with buddies. Law firm partners making calls at the top table don’t have that luxury and it’s this reality that I believe is at the root of many of the ‘bad behaviours’ demonstrated by equity partners.
What the graphic above ultimately illustrates is the structural nature of the issues law firms face when trying to adapt to the disruptive forces currently at play in the industry. They’re locked into a model that works brilliantly in times of plenty but utterly fails when stressed, and as I allude to in this article, I’m not sure that there is a consultant in the world who’s ‘Lean’ playbook, change management philosophy or pricing strategies will make a shred of difference when true disruption comes to town.