Recently I was asked by the managing partner of a well-known tier-1 law firm, what in my opinion was the number one reason why change processes are so hard to successfully accomplish in a law firm. This is not an easy question to answer as there are multiple reasons. Lack of ownership and the deep-rooted wish for magical solutions among the most noticeable. After I had given the question some thought my answer was: “fear”. Fear is a very powerful driver of behavior.
Lawyers are trained to virtualize every potential downside or risk. In general, it is hard for a lawyer to focus on opportunity instead of potential risks. Even though there might be several reasons NOT to do something, there might be ONE good reason to do it. This is the way in which entrepreneurs look at the world. This is not how lawyers see it. This is equally true for company lawyers as it is for outside counsel. Virtualizing potential hazards, lawyers prepare for the worst possible scenario. This also applies to any process of change. Almost all resistance to change, both active and passive, boils down to fear. Not fear for the future of the firm, but a very personal fear of how any change might negatively impact the partner’s personal position. Find the core of the fear and you have found the key to change.
Find the core of the fear and you have found the key to change
Personal fear comes in many shapes and forms. Among them is the fear of being ousted. Notwithstanding the fact that partners are shareholders and as such owners of the firm, mentally they often remain employees. Just like employees can be fired, partners can be made to leave. Market data shows that partners that are made to leave, unlike the partners that choose to leave, most of the time end up earning less. Partners are aware of this and that is why they will do whatever it takes to hang in there and avoid being kicked out of the partnership
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We have discussed KPI’s for partners before. Reality is that today most law firms measure and monitor the amount of revenue that a partner brings in. This is equally true in eat-what-you-kill as it is in equal sharing full lockstep. Revenue is king, closely followed by hours. Partners are under constant pressure to bring in money. Not being natural born rainmakers, many struggle to do so. Often it takes years for a new partner to build a practice that produces a more or less steady stream of revenue. For many partners meeting the revenue requirement remains a permanent major headache.
Most partners recognize the fear of an empty desk
Unlike many other types of businesses, lawyers generally handle one-off assignments. People will need to buy groceries every day, just as they will have to keep buying fuel for their cars and new clothes to wear. Supermarkets, oil companies and fashion brands will have a steady stream of recurring customers as no one can do without. This is different for legal matters. For most companies M&A is a once in a lifetime event, as is litigation. Unless they have some big companies that are repeat players as a client, lawyers are depending on finding new clients as soon as a matter is completed. A partner and his team that have just completed a major M&A on which they have worked for months, will be worried whether and when the next big mandate will come in. In general, many lawyers fear the prospect of not having enough work. Lawyers live in fear of an empty desk. This fear is amplified by the pressure to produce revenue and hours. Even a short period of time without sufficient work might jeopardize meeting the targets.
Fear of an empty desk leads to all kinds of bad behavior
When we at TGO Consulting are working with law firms, we are in many cases consulting on improving the practice and raising profitability. Working towards a better, more profitable practice might entail raising the average file size, higher average rates, or a higher share of blue-chip clients. On a rational level, partners understand that it would be better if their average file size would be a lot higher. Bigger files are, in the eyes of the client and the market, considered more important than small files. But convincing a partner to actually stop accepting files below a certain size, is a totally different ball game. The partner will fear that once he rejects the small files, there might not be big files to fill the gap. The fear of an empty desk will prevent the partner from raising the quality of his/her practice. As more partners will feel the same way, this will frustrate implementation of a strategy that is aimed to increase profitability.
The same mechanism will apply when the partner is asked or pressed to raise the average rate. Again, the partner will fear that existing clients might walk away, without sufficient new clients to fill the gap. The fear of an empty desk is a consequence of the fear of not meeting the targets, which in turn is fueled by the fear of being ousted. The fear of an empty desk is a driver for partners to take on clients and mandates that do not fit the strategy of the firm. Personal fears of partners can be so strong that they stand in the way of growth and greatness.
No safety-nets
Based on the above, one might be inclined to think that one solution to this problem could be to give the partners a guarantee that they will not be ousted if they fail to meet their targets due to the process of adapting their practice to the new strategy. I personally do not believe in this approach. The only way to succeed is to not have a plan-B. Having a plan-B or any other safety net will kill the burning platform that is needed to change any existing routine. Successful change can only be achieved with an all-or-nothing mentality. Do-or-die, otherwise mediocrity will rule.