The Changing Lawyer - Obstruction At The Top
by Litera Microsystems
Law firms' partnership model is proving a barrier to change, with senior people all often struggling to take the long view.
The legal profession is notoriously slow to embrace change. Its risk-averse practitioners, protected by layers of regulation, bill by the hour as they sift slowly and meticulously through precedents and casework.
Law firms today are facing unprecedented challenges that demand their rapid attention and adaptation. Client expectations are changing, technology is having an increasing impact, and new, low-cost competitors are emerging to take a slice of the market.
“If it ain’t broke, don’t fix it,” has been the profession’s mantra for too long, suggests Jim Hassett, founder of legal consultancy LegalBizDev. He points out that law firms may have been particularly slow to adapt because historically they have not felt under pressure to do so.
“Since so many lawyers are so resistant to change, on the law firm side and the client side there really isn’t the pressure for it. If everyone is extremely inefficient you only have to be pretty inefficient to be better than everybody else.”
He also believes the whole partnership model is proving key to obstructing change and modernization. “At the leadership level in firms I think there is enormous interest in changing working styles, particularly linked to the introduction of legal project management, to respond to client demands for efficiency. The problem with implementing such innovations is at the partner level and below.”
Part of the issue is that the nature of law firms’ partnership structure is such that it is very easy for key fee earners simply to jump ship if they’re faced with changes that don’t appeal, Hassett adds. “There are large numbers of laterals every year and it’s extremely difficult for management to enforce any kind of change, much less something as radical as a transformation of working styles. They just don’t have the power.”
Procertas’ Flaherty agrees: “At every level, the problem is that firms are not solution-orientated,” he says. “Lawyers still have a very theoretical approach. They’re often excellent abstract thinkers with very little training in more concrete skills.” This, he says, has meant lawyers have been slow to grasp the importance of tech advances and capabilities. “It’s less that people are deliberately avoiding technology. But they’re busy, they’re short of time and change introduces a possibility of failure and friction that they would rather avoid.”
Firms may also have a demographic time bomb on board, Flaherty adds, with senior people too keen to hang on and hope for the best. “Partners who are near retirement may think the status quo is fine. But that creates the problem that the people with the most authority to drive change can be among the most unlikely to encourage it.”
Such an approach can create an understandable split in attitudes within firms, he warns. “If you’re a partner in your fifties or sixties and you’re considering whether you should be making wholesale changes to your business, you may well be making a bet that you can keep things going as they are until you retire. Every dollar the firm spends on technology is coming out of your pocket. So why spend that money? It’s a reasonable bet for you, but it’s a terrible bet if you’re a newly minted partner in your thirties.”
75% of law firms estimate they spend between 0% and 4% of their total revenue on technology. In contrast, financial services spend 7.9%. Source: Inside Legal (2016), CEB (2015).
Hassett agrees about the concept of a generation gap. “Generally, younger lawyers are more accepting that the profession is changing,” he says. “They recognize that if they’re expecting still to be successful lawyers in 20 years’ time, they need to figure out how to change personally and what needs to change in their firms.
“Older lawyers don’t have that motivation. And they also have a longer history. Probably the biggest barrier to any kind of change is the person who says they’ve been working in a certain way for 30 years, they’ve made a certain amount of money doing it that way and their clients have always been happy. They have a history of success with behavior that today would be considered inefficient.”
Tom Clay, a principal at legal consultancy Altman Weil, says this is a situation he sees frequently. “In the smaller firms in particular there’s no doubt about it. Senior people don’t want to make changes, they’re maybe even standing in the way of change. And it’s not just in terms of technology.”
Clay identifies the residual power and influence of senior lawyers from the baby boomer generation who, while they may now be well into their sixties and seventies, are reluctant to retire and step away from businesses they have built up over decades.
“Unless you can persuade the boomers that they need to let go of the reins for the benefit of the younger folks, longer term it’s a real struggle,” he adds. “That’s why the succession planning issue has come into stark relief in the US in recent times. Firms have not really done a good job at succession planning and now as a result they’re struggling to catch up.”
Hassett points out that in such circumstances, chief information officers (CIOs) and non-equity leaders can face an uphill struggle. “The partnership structure means that you might have 300, 500, 1,000 owners, all of whom are highly intelligent and the vast majority of whom are rather skeptical and argumentative. To get them all marching in the same direction is just extraordinarily difficult. The amount of influence non-equity partners and associates have is pretty small. It’s the owners who have to change—the laborers can’t do that much about the situation.”
Someone who has witnessed this aversion to change from a different angle is Richard Seabrook, managing director Europe at AI software provider Neota Logic. His experience in the UK market may strike a chord with CIOs in the US.
“We’ve been running Neota in the UK for about 18 months,” Seabrook explains. “In that time I’ve probably spoken to more than 400 firms. I would say that 90 percent of them would fall into the category of an interesting conversation with the partnership that I’m sure they enjoyed, but they will do largely nothing about.”
Part of the reason for this, Seabrook suggests, is that partners may struggle to grasp the gravity of the situation and the rapid evolution of technology.
“To an extent we’re still at the education stage in the journey. We’re not yet at the fear stage. They haven’t seen business drop off and so they are quite legitimately asking if they really need to be doing this, balanced against all the other things they could be doing. At the moment [law firms] balance investment in our kind of technology with whether they could be taking the clients out for another nice dinner.”
He does not think such attitudes can endure, however, as the market continues to transform. “Currently outside of the really big firms, there hasn’t been a huge demand from clients saying things have to be changed fundamentally, but I think that’s changing.”
Originally published by Litera Microsystems 2017. To read the full publication click here. The Changing Lawyer document was created by Litera Microsystems and distributed in the Red Carpet Club - United Airlines over the 2017 Holidays. While it has no copyrights or publication information, all credit goes to Litera Microsystems .