Practice Management

The Future of Law Practice, Heller Ehrman Style

By Ronda Muir

In an article entitled "Welcome to the Future: Heller Shock?", Paul Lippe, founder and CEO of Legal OnRamp, a private interactive legal services site, makes the case that, in the future now dawning on the legal services industry, the inevitable downsizing will not only be a matter of laying off lawyers, but, as with the case of Heller Ehrman, the failure of large, global firms.

And Lippe argues that none of us should be surprised.  He cites the underlying fallacies that have driven many of the mergers that created these firms: inevitable growth, economies of scale, and organizational allegiance, among other things.

The truth behind these fallacies is often associated with the unique personalities of lawyers.  See Muir's "The Unique Psychological World of Lawyers."   Lawyers often lack the inclination or ability to collaborate or the critical relationship skills that are necessary to fuel the drivers, such as cross-selling and teamwork, that produce economies of scale, increase revenues and reduce expenses.  And many compensation systems don't incentivize lawyers away from their natural tendencies toward those results.

Similarly, lawyers' lack of institutional loyalty and the personal traits that fuel it, like high skepticism, low sociability and strong autonomy, are not only individual attributes but have become embedded in their organizational ethos also. The failure to build strong individual relationships within the firm is often compounded by firm policies that fracture what relationships exist--such as partners with stakes in the financial success of the firm being reduced to non-equity employees--and that again encourage what are already ingrained lawyer tendencies, such as compensation arrangements that don't incentivize client sharing, so individually horded clients become easily portable away from the firm.

Other traits, like low lawyer resiliency and high pessimism, play a part in keeping firms from exploring innovation-- and thereby risking failure--at a time when nimble, creative, proactive change is vital.  Virtual law service?  Different fee structures? Customized work arrangements both with employees and clients?  Hard for most lawyers to consider, let alone agree on and deliver. 

Similarly, lawyers' preferred methods of dealing with conflict--winning and avoiding--limit their ability to recognize, confront and address collaboratively those divisive issues that could determine the future of both their own practice and their firm.

Lippe concludes that managing the changes that are going to be forced on firms will require greater investments in capital and culture, a difficult pill to swallow in these lean times, but one, he maintains, that could make the difference between survival and failure.

In spite of the economy, now is the time to invest in your people, the most critical asset of law firms and law departments.  Your strategic plan, leadership model, partnership structure, partnership compensation arrangements, legal services delivery model, recruitment policies, attorney education and development methods, associate compensation, evaluation and deployment systems, and client relationship evaluations and business development strategies all require a well-informed understanding of the lawyers who populate your workplace.  It is a wise investment in those people that will bring your organization out the other side of future shock.

Full post as published by Law People on October 27, 2008 (boomark / email).