Responding
Strategically to the Still Changing Legal Landscape
BY SUSAN
LETTERMAN
I wish I
could report that the legal landscape, which is complex, competitive, and the
result of significant economic changes over the past 10 years, is finished
changing. Unfortunately, that is
unlikely. The thought leaders in the business and legal world, who spend their
days noticing and analyzing the economic patterns, locally and globally, know
that significant changes continue and that most lawyers are not yet prepared to
respond strategically and effectively.
The Still
Changing Legal Landscape
1995
We are in
one of those great historical periods that occur every 200 or 300 years when
people don’t understand the world anymore, and the past is not sufficient to
explain the future. —Peter Drucker
Lawyers are
particularly susceptible to looking toward the past to predict the future. It’s
part of our training. Indeed, the best lawyers are particularly adept at using
the past to make sense of the present and explain the future. Using this skill
for business decisions is a huge mistake. The only way lawyers avoid this trap
is by adjusting their thinking in ways that are contrary to the thinking that
has largely contributed to their professional success.
2013
We have
entered an Age of Disruption. —C. Otto Scharmer and Katrin Kaufer
Changes in
statutory and case law usually happen slowly. These changes are never
proactive. They respond to a significant need that has been present for a
while. They lag behind the needs of society. Responding to a business
environment defined by disruption requires being proactive, anticipating
possibilities, trying out solutions to see what might work, and adjusting
strategies that are implemented iteratively. This type of process is the
antithesis of the change paradigm that lawyers have been practicing religiously
since law school.
The changes
in the business of law are profound, ongoing, and continue to create future
scenarios that are difficult to anticipate with the clarity that lawyers crave.
The wisest approach is to manage the business with competencies to manage ambiguity
and adapt to an unfolding future as it appears.
The market
for legal services has changed permanently.
In firms
where the profits-per-partner measure of firm performance has grown steadily,
it is mostly a function of significant cost-cutting. This is not a growth
strategy. This is a strategy that creates organizational vulnerability.
When firms
employ a growth strategy by acquisition or merger, the expected return on
financial investment and time spent nurturing the merger is often not realized
because the law firm business model and consequential culture does not support
the expansion of business from current clients through cross-selling, and
instead encourages lawyers not to share access to their clients and not to
spend the time to develop trust and communication with new partners and across
practice groups. Coincidentally, the model and culture also drive behaviors contrary
to those required to support diversity with inclusion.
Even
assuming that the empowered leaders of a law firm want to change their business
model and culture, actually doing so is still a significant challenge,
demanding external support, development of new competencies, and a
well-executed, planned, change strategy.
Responding Effectively and Changing When Change
is Hard
When you can’t anticipate the change to come,
it’s important to be capable of adapting to the situation that arises. —Edward
E. Lawler, III & Christopher G. Worley, Built to Change, 2006
Adapting to
change is a process and situational adaptability is a competency that people
can learn and master. Law firm leaders are responsible for creating law firms
capable of adapting to an unfolding future as it unfolds. Doing so is
“extremely difficult because it often requires the development of new core
competencies and… changes in structures and [processes]that were built for
stability,” Lawler and Worley wrote in their book, Built to Change. However, it
is achievable with an understanding of how intentional, strategic change is
created.
Organizational changes include:
Planned
culture changes to improve adaptability, communication, leadership, business
development and client retention, continuous learning and improvement,
innovation, and inclusion.
Client
development, retention, and cross-selling programs and plans.
Post-merger
and acquisition integrations and organizational alignment.
Succession
planning for leadership and clients.
Talent
engagement, development, advancement, and retention programs and plans.
Change is
hard, so resistance is common and manifests with myriad symptoms, including
complaints about fairness or reasonableness of a situation, concerns about risk
and safety related to oneself, one’s group, or the entire organization, and
even denial of problems, confusion about what to do, or paralysis. Frequently, change initiatives fall short of
creating the intended outcomes or fail altogether.
Call to
mind the list of law firms that equated growth with mergers or acquisitions and
measures of profit per individual partner instead of creating a culture that
would drive organizational profit through expansion of services and legal work
for existing clients and client retention through succession planning. Exactly
where are they now?
Approximately
75 percent of change initiatives fail, threaten the survival of the
organization, create substantial disruptions to the business, or otherwise
leave an organization worse off than before the strategy was implemented.
Successes, mild or otherwise, seem to hover around 10-15 percent, according to
Kim S. Cameron and Robert E. Quinn in Diagnosing and Changing Organizational
Culture. Law firm leaders who design growth strategies on a foundation of the
four principles of strategic change increase the likelihood of success and
minimize substantial threats to their organization.
The four principles of strategic change are:
Strategic
change begins with a clear vision and goals. What is the law firm trying to
change and why?
Strategic
organizational change requires leadership. In particular, it needs a leader who
is able to communicate, drive vision, goals, engagement, and persuade others
take on their part in making the strategy successful.
Strategic
change succeeds when those involved in the planning or implementation and those
affected by the changes created have the right competencies. The predominant
competencies are the ingredients of the firm’s culture and ability to implement
the change strategy.
Change is
difficult and uncomfortable for everyone. It is easy for the process to stall.
Leaders must be able to diagnose and address obstacles when they arise.
Principle #1: Strategic Change is Strategic
Strategy is
a process of noticing changes in the legal landscape, making an organized
series of decisions, and taking action that causes forward movement toward
goals and a vision of success. Astute leaders notice changes in the legal
landscape, analyze them, and decide the possible and likely opportunities and
threats that will unfold in the near future.
These key elements include your clients and their business or personal
needs, wants, expectations, pain points, and preferences, your vendors, your
competitors, and the general economic environment.
They also
identify organizational strengths available to access those opportunities and
address those threats, and then develop a plan. Today, prescient leaders are
routinely discussing with their teams the present situations in their external
and internal environments. They discuss their organization’s values, identity,
and vision. They evaluate their organizational culture and whether it is
aligned with the organizational vision and goals. If not aligned, culture will
serve as an extremely strong source of resistance. Given the massive changes in
the legal industry, effective responses, and new growth strategies for law
firms of any size often requires changes to a law firm’s values, identity, and
culture, especially if the culture drives stability over responding to changes
in the external environment by intentionally changing.
Principle #2:
Strategic Change Requires Leadership
Intentional,
strategic, organizational change starts when a leader becomes aware of growth
opportunities and threats to continued performance levels, develops ideas about
what to do to improve organizational performance, creates a vision,
communicates what to do and why, and engages empowered partners to support and
participate in the implementation of a strategic plan.
Organizational
change is a team process. The law firm managing partner or CEO leads the change
leadership team, often composed of office managing partners, executive or
policy committee lawyers, practice group leaders, and the partners in charge of
talent development or business development. Each member of the change
leadership team leads his or her own team in implementation of the change
strategy action plan. Change plans are implemented in a cascading fashion from
the highest levels of formal authority down.
Principle #3: Those Leading a Change Initiative
and Those Affected Must Have the Right Competencies
The most
important competencies required of leaders at all levels include:
Understanding
the legal industry, the industries of key clients, and the relevant
perspectives that may be global and culturally different, and applying the
knowledge to advance organizational strategy and goals.
The ability
to make good and timely decisions that are relevant to moving forward the law
firm’s growth strategy and in particular the specific change initiative, even
when there is a lot of information that is complex and appears contradictory.
The ability
to anticipate and address the needs of multiple stakeholders with contrary
interests and concerns.
The ability
to be action oriented and drive results even under difficult circumstances – to
take on difficult challenges with a positive, energetic, and resourceful
attitude.
The ability
to manage others with strong communication skills, including giving and
receiving feedback effectively, managing conflict, delegating tasks to others
clearly, relating with a diverse group of people effectively by adjusting
styles when necessary, and holding others accountable.
The ability
to build relationships with others to meet shared objectives and locate and
leverage the resources (people, money, time) necessary to support
organizational goals.
Resilience,
courage, adaptability, and the ability to instill trust.
Assessments,
including 360ᴼ
assessments, are valuable to (1) evaluate the ability of the people to lead and
respond to change, (2) develop a common language for change and leadership as
an early step to a culture change, and (3) design a skill-development plan to
create sufficient competency to drive the change forward. Although many
assessments are available, I suggest using an assessment backed by a robust
model and developmental materials. A law
firm has no reason to create its own developmental model from scratch when
excellent resources already exist and can be integrated into talent development
models. Law firms also can build a
robust change leadership team by using a consultant certified and trained to
use resources such as the Korn Ferry Leadership Architect and Voices 360.
Principle #4: Change is a Difficult and
Uncomfortable Process
Change is
hard and filled with discomfort because of the loss of familiar routines and
the challenge of learning new skills. It is particularly difficult for people
and cultures ingrained with beliefs that change should be slow, risks avoided,
stability is best, and the past is a good source of information about how to
approach the future. Strategic changes also take more time than is often
anticipated. For example, a culture change takes years to achieve. Organizational
growth through merger or acquisition depends on a culture that encourages
cross-selling. Successfully moving into a new market (geographic, industry, or
expertise needed) is a multi-faceted project, requiring adjustments to many
parts of the organization’s structures, processes, and the competencies,
thinking, and behaviors of the people.
Most people
resist change and implement strategies built on familiar ways of doing things.
In other words, they try to change the problem situation by using the strategic
plans, thinking, and behaviors that it.
Examples:
A law
school with a declining applicant pool, following rising unemployment or
underemployment for its graduates, adds new law practice management courses
without changing its business model.
A job
hunter has received few interviews and submits more applications without
changing where to look for job openings, the types of jobs considered, or the
content of a resume and cover letter.
A law firm
hires a consultant to create a strategic plan for organizational growth and
then is unable to implement any changes. The leadership group meets regularly
to discuss the plan, and every meeting has the same people arguing the same
positions and offering the same reasons for the firm’s inability to implement
change instead of addressing the group’s inability to communicate effectively
and reach decisions they can implement without resistance.
The legal
landscape continues to change. Law firm
management tactics aimed to maintain stability are not effective. Only those
law firms, with leaders prepared to respond intentionally and strategically,
will survive and thrive.
Resources:
Bridges,
W., Transitions: Making Sense of Life’s Changes (2nd ed. 2004)
Cameron,
K.S., & Quinn, R. E., Diagnosing and Changing Organizational Culture (2006)
Denning, S.
& Cross, R. The Organization Network Fieldbook 125 (2010)
Heifetz, R.
& Grashow, A., The Practice of Adaptive Leadership (2009)
Kahneman,
D, Thinking Fast and Slow, (2011)
Lawler, E.
& Worley, C., Build to Change (2006)
Marshak, R.
J., Organizational Change: Views from the Edge (2009)
About the
Author
WhiteSusan
Letterman White is principal of Letterman White Consulting, a business
consulting firm focused on law and accounting firms.
