Most countries in Europe are now in their third week of working from home. The first week most energy was devoted to shifting all operations from centralized to decentralized. For many law firms this has been an unprecedented technical and organizational operation. During this first week lawyers were still working on existing client work and scrambling to keep up with new legislation and government measures, converting this to Corona-newsletters and webinars. So, in week-1 everyone was very busy.
In the second week partners started to notice that the first M&A transactions were put on halt or aborted. Some countries closed the courts, which had an impact on litigation. It also quickly became apparent that associates working structurally from home were less productive than usual. So, in week-2, production started to drop. Not by much, but still.
Now we are in week-3 and we are seeing the first signs of partners getting nervous. The prospect of having an empty desk is unsettling for partners even in normal times. It becomes even more unsettling when it looks as if the ‘empty desk’ is becoming structural and widespread. Some law firms have decided to defer partner payments. Although this is a sensible thing to do, it also contributes to making partners nervous. Once partners openly start to panic, the state of the firm will quickly turn from bad to worse.
It is important that partners keep their nerve!
Typically, in any law firm there are partners, the rainmakers, who are performing solidly above the average. These heavy-weight partners will have a great deal of influence on the strategy of the firm. It is not likely that they are actively participating in the firm’s leadership, as they are way too busy with client work. They are however the ones who are the opinion leaders and who are the informal power within the firm. The formal leadership will have a large degree of freedom as long as it does not upset these heavy-weights. The moment their practice slows down, the heavy-weights, having time at hand, will start to meddle in the leadership. Even more so if they still feel the leadership is weak.
(On 21 March we have strongly advised you to implement wartime leadership.)
One might be inclined to think that this is a great idea. Wouldn’t it be better if these strong partners take the reins? Well, actually: no. There is a huge difference between being a five-star rainmaker and being an effective wartime law firm leader. The qualities that make a great lawyer become a huge hindrance as it comes to managing the firm. Any managing partner can confirm just how much time it takes to transform from being a full-time lawyer to become an effective managing partner. It easily takes between three and six months. Being absorbed by a demanding practice and expressing your views during partner meetings (and then return to your practice again) is absolutely not the same as having the real-world responsibility for day-to-day management and actually having to execute and implement in the real world. Just as it is different being the CEO of a company or one of the non-executive board members.
You definitely do not want multiple captains on the ship (especially during a storm)
What you definitively want to avoid is to have multiple captains on the bridge. In times of crisis, the firm needs strong wartime leadership. Where the normal modus operandi will allow for partners expressing their opinion and to have decision taking based on a workable compromise, this will turn disastrous in times of crisis. Wartime leadership must be lean, agile and fast. Under normal circumstances you can push most decisions forward to the next meeting without any harm. Doing this in a crisis will probably mean that you are already too late. Under normal conditions it might be best to water down proposals until the majority of the partners can live with it. In times of crisis this could be lethal for the firm. If the situation gets sour and dread, democracy and common decision making needs to be suspended*
*Only for day to day management. For fundamental issues the normal governance structures should stay in place. Firms need leadership, not dictatorship.
In times of crisis there can be no decision making based only on consensus. That is why a law firm needs to install a compact wartime leadership, authorized to take all necessary measures without first having to go to the partner meeting.
We see that at many law firms, partners are already starting to put pressure on their firm’s leadership. Some partners put pressure that the weak partners will – finally – be kicked-out. Some partners may have delicate personal financial situation (e.g. just bought an expensive home) and, needing to preserve their income at all cost, put pressure to cut costs and dismiss some staff and/or associates. There will be many examples of partners each having their own opinions, their own agenda and priorities. It is the task of the wartime leadership to look after the interest of the firm as a whole and take all required decisions to secure the future of the firm.
Wartime leadership should actively invest in the cohesion of the partner group!
It will be most important to prevent partners from panicking. Whereas the wartime leadership needs to lead and act, they also need to actively spend a lot of time and energy to keep the partner group together and to keep partners confident that the firm will weather the storm without too much damage. So, at the same time as taking decisions, there must be permanent and open communication. The leadership should aim to be totally transparent. All information must be shared on a structured frequent basis (once a week preferably).
Even though the partners do not get to vote on the decisions, the leadership should be in permanent dialogue with the partners and listen to their views, fears and ideas. There will be many great ideas and insights coming from the partners that could be used as input for the leadership, leading to better decisions.
Especially in a situation like we are seeing today, where we are all working from home during the crisis. Law firm leaders will need to set up a structure to communicate with the partners. This should also be done in one-to-one conversations and conversations with small groups. The effectiveness of the communication between the leadership and the partners will be crucial in gaining and keeping the confidence of the partners and to prevent panic.
If partners are getting nervous and anxious, there is a real risk that the cohesion in the partner group gets lost. Under normal conditions there will be partners who do not like each other, do not trust each other and who see some of their fellow partners as weak and/or useless. In times of heightened tensions this could easily escalate, causing the partner group to fracture.
In times of crisis law firms need to double the effort to keep the partners together. It is important to downplay differences, actively increase trust and teamwork. TGO Consulting has developed special tools for this purpose. These tools have already been actively employed at some of our clients and the feedback has been tremendous. These ‘programs’ need to be repeated in order not to lose their effect. Your partners are your most valuable asset, you must keep the partner group strong, confident and united!
We are here to help
TGO Consulting is there to help you navigate the crisis. We are currently writing a book on this topic that will be finished by end April. This book will be made available for free to all our clients. We will also continue to publish weekly articles on topics that are most relevant to you right now.
Our experience with law firms in China gives us a two month head start in knowing what best to do. There will however remain many important unknowns and things can change really fast. This is where our unparalleled creativity has proven to be extremely valuable. We have a proven track-record to find effective solutions faster and better than anyone else. In the meantime, our TGO Consulting Research Team keeps to monitor the state of the economy literally 24/7 to ensure that our approach always remains fact-based.
Please do not hesitate to contact us to find out how we could help your firm navigate these challenging times.