Law firm business models and workplace culture

Law firm business models and workplace culture contributed by Michael Milnes is an especially welcome contribution to Dialogue on Remaking Law Firms; the piece is based on a Masters thesis and examines the nexus between business models and workplace culture.  

Michael sets out what he learned about making BigLaw firms a great place to work. 

Organisational culture has been a constant theme in the Australian legal press, with law firms and in-house teams regularly announcing how they are embracing, for example, an “innovation culture”, a “flexible working culture”, a “client-centred culture” or similar.  These announcements tend often to be against the backdrop of another important theme; that of the various pressures and challenges facing the “traditional” law firm and the growth of NewLaw business models.

Having had the opportunity in my career to work in very different legal environments, I chose to investigate these themes for a research project I recently undertook for my final MBA thesis: “Making law firms a great place to work: a case study on the role of a firm’s business model in developing a successful workplace culture”.

About the research

My research set out to investigate how different elements of a law firm’s business model can play a role in developing a successful organizational culture. Adopting a case study approach, I worked with a recently established Australian legal practice, which forms the legal “division” of a multi-disciplinary professional services firm. The firm had several interesting attributes that differentiated it from the “traditional” law firm business model and made it relatively unique in the Australian market:

• Incorporated rather than partnership structure;
• Legal services being provided alongside tax, accounting, wealth management, human resources and digital strategy services;
• Future growth funded through capital raisings, including employee share participation;
• Focus on adopting new technology solutions to support client requirements, through improved systems and standardized processes;
• Openness to partnering with alternative legal services providers; and
• More use of fixed and other alternative fee arrangements than hourly billing.

Interestingly, the firm had been rated very highly as one of the “best places to work in Australia”, with the firm also winning awards for its creative and collaborative culture. This workplace culture was seen by the firm as an important source of competitive advantage, in attracting and retaining talent and in developing strong relationships with clients. Other studies have in the past also established a relationship between workplace culture, organizational health and a greater likelihood of above median financial performance. (1)

A range of different research techniques was used to understand the firm’s activities, including interviews with leaders of the firm and new employees, site visits and observation and analysis of documents or materials about the firm (such as job advertisements, social media activity and website).

Using these insights, different aspects of the firm’s business model were mapped using two tools originally described in Remaking Law Firms: Why & How  (2): the “Taxonomy of Legal Service Providers” and “BigLaw-NewLaw Continuum”.

Understanding a law firm’s workplace culture

Culture is notoriously difficult to define.  At its simplest, it has been described as “the way we do things here”. (3) More formally, a classic definition of workplace culture is:

“the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” (4)

Much has already been written about legal professional culture and the culture found in BigLaw firms. Building on this literature, and using the insights gained during exploratory interviews and site visits, I found strong evidence that allowed this firm’s culture to be scored highly for positive characteristics including collaboration, entrepreneurialism, client-centricity, innovation, transparency and focus on employees’ well-being (including health, fun, personal growth and providing of opportunities).

Conclusions and implications

My research concluded that there were individual aspects of the firm’s business model that are instrumental in explaining key aspects of its culture. In particular:

• Being part of a multi-disciplinary practice. The firm’s value proposition to clients, as part of a multi-disciplinary practice, was centred on being able to provide legal service solutions alongside any other type of professional service the client may need. Putting the client’s needs at the centred of the business model had inspired a client-centred culture and emphasized the need for effective collaboration, both internally and with clients. This collaboration had also allowed the firm’s lawyers to learn about how other professional disciplines approach problems, driving innovation and adoption of technology solutions.
• Incorporated structure. The firm’s incorporated structure meant less pressure to return profits annually. This differed from a traditional partnership where partners (having made sacrifices in their career to reach partnership) are motivated to withdraw current profits rather than invest to increase the profit pool for future partners. Involving investors, and allowing employees to participate, had helped create a risk-taking, entrepreneurial aspect to the firm’s culture.

More broadly, the firm’s own awareness that its business model was different to that of other firms appeared to have played a key role in the firm being willing to implement non-traditional management strategies.  These had also been important in shaping the firm’s successful workplace culture.

Ultimately these findings were used to support recommendations for the firm’s management team to consider. These covered a range of issues (such as the firm’s growth and expansion strategy, pricing, business development and go-to-market tactics, staff engagement strategies and future capital management plans) where it would be important to protect the competitive advantage derived from the firm’s successful workplace culture.

Author

Michael Milnes is the Head of Commercial and Competition at Practical Law Australia, Thomson Reuters. He is a lawyer with experience of working as in-house counsel and at law firms in Australia, the UK and France.  

Outside work, Michael is kept busy with a young family and enjoys being outdoors, particularly running and has previously run (and trekked and limped through) the Marathon des Sables, a 250 km ultramarathon across the dunes of the Sahara desert in Morocco, described as the toughest race on Earth.

 

References

1. Keller S. and Price, C. (2011) Organizational health: The ultimate competitive advantage. McKinsey Quarterly. 2, 94-107.
2. Beaton, G. and Kaschner, I. (2016) Remaking Law Firms: Why & How. American Bar Association.
3. Deal, T. and Kennedy, A. (1982) Organization Cultures: The Rites and Rituals of Organizational Life. Addison Wesley.
4. Schein, E. (1984) Coming to a New Awareness of Organizational Culture. Sloan Management Review 25(2), 3-16.