Collaborate to Innovate

In an excellent conversation with columnist Erik L. Mazzone, legal industry experts Bruce MacEwen and Jordan Furlong discussed the many challenges law firms have faced since 2008, and the need for innovation throughout the profession. [“The Innovation Imperative: Adapt or Die?” Law Practice. July/August 2013. Vol. 39 No. 4] The main change they identified is the shift in relative market power from firms to their clients. In simple terms, this shift means it’s now a buyers’ market for clients: they are increasingly able to insist that their lawyers be cheaper, better, more diverse, and more responsive. They are now far less likely to stick with long-established law firm relationships when more efficient alternatives exist.

Inefficiencies in many firms’ business practices have become apparent as they have attempted to respond to new and existing clients’ demands. Firms are discovering that they must do a better job of pricing their services, optimizing and systematizing their workflow, managing their resources and overhead, and communicating with their clients and the general public. In short, they must innovate and become more business-like.

Firms have begun addressing these issues. Many are testing alternative and value-based pricing methods that are a better fit for a specific client’s situation. They are expanding their use of contract and staff attorneys to keep costs down. Project management and process improvement are starting to receive greater attention in the legal profession. Firms are increasingly relying on technology for competitive intelligence, marketing (social media), internal operations, and discovery. With increased and more reliable connectivity, firms are taking a serious look at their infrastructure, and now outsourcing or establishing captive operations centers. Back-office and repetitive administrative functions are no longer being performed by employees working at expensive locations; co-location is becoming less necessary and desirable.

Furlong and MacEwen emphasized that innovative thinking and risk-taking will be needed as firms continue to adapt to these new market conditions, but also expressed concern that lawyers as a group may have difficulty in adopting this mindset because of their tendency to be skeptical and risk averse. They agreed that a new style of law firm leadership must evolve that encourages innovation and supports lawyers taking risks. They stopped short, however, in describing what that leadership style would look like.

Leadership is of critical importance in these times of uncertainty and rapid change. As law firms struggle to adapt and innovate, it’s not enough for their leaders to merely “steer the ship.” They must take an active role in “setting the course” and communicating the firm’s vision, direction, and strategy. At the same time, they must develop a firm culture that embraces and rewards risk-taking. A collaborative style of leadership is best suited to meet these challenges.

Lawyers at all levels are now being called upon more frequently to collaborate, whether it’s within their firm, with their clients, with outside vendors and service providers, or with other law firms. As legal matters have grown more complex and firms have grown in size and geographic scope, the need for collaboration has become greater. Although the image of the lawyer as the rugged individualist may persist, these days lawyers more frequently act as members of a team—and not necessarily as the leader of that team.

Although lawyers’ responsibilities have not entirely changed, their role on legal teams has. They are less frequently the captain of a ship with full authority and control. They’ve shifted to a more facilitative leadership role like that of a coach or orchestra conductor trying to get the best and most harmonious performance from all of their players. Their leadership skills will consequently need to change to embrace this new, more facilitative role.

First and foremost, collaborative leaders need to connect people and ideas from outside their law firm to those inside it. This means encouraging the firm’s lawyers to fully understand their clients’ business models, operations, and challenges, rather than looking at matters solely from a narrow legal perspective. Firm leaders will need to model collaborative behavior to show others how to leverage diverse talent and become inclusive, yet not get stuck in endless meetings or delay reconciling multiple proposals or points of view. These facilitation skills will become more important for law firm leaders as co-location decreases and the use of outsourcing and virtual teams grow.

Collaborative leadership is already practiced to some degree in firms where equity is widely held and authority is vested in numerous individuals and committees. Few managing partners and firm chairs exercise the kind of autocratic, command-and-control style of leadership that is found in traditional hierarchical organizations. Effective law firm leadership is instead based on relationships; most firm leaders serve at the pleasure of their fellow partners or shareholders, and work hard to build consensus and achieve buy-in for their ideas. Such collaboration in the governance and management of firms is a good start, but it is not a substitute for broader collaboration and shared decision making with people both inside and outside the firm.

Many people wrongly assume that consensus and collaborative leadership are the same. Although building consensus is a valuable aspect of collaboration, over-reliance on consensus can result in unproductive meetings and decisional paralysis. Collaborative leaders—even though they may not be at the top of a hierarchy—assume a strong role in directing teams and have clear responsibility and authority to make final decisions. They encourage robust and productive debate, but know when to end it, make a decision, and move to implementation. This is necessary when firms must innovate, make timely decisions, and nimbly adjust to changes in market and economic conditions.

It’s not enough for law firm leaders to model collaborative behavior; they must also make sure that it becomes an integral part of their firm’s culture. They should insist that all members of the firm (lawyers, executives, and staff) have joint responsibilities beyond their individual goals, and that their compensation depend on meeting these collective as well as individual goals. Doing this will not only motivate members of the firm, but also minimize firm politics, power struggles, and individual agendas.

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