Classic: The cause of, and solution to

George Meyer, producer and head writer of The Simpsons in its glory years, was once asked about his favourite line from the show’s run. He cited the closing scene from the Season 8 episode “Homer vs. the Eighteenth Amendment,” in which the town is celebrating the end of a brief period of Prohibition. Homer stands atop a pile of beer barrels, hoists a sudsy glass, and proposes a toast to the gathered crowd: “To alcohol! The cause of — and solution to — all of life’s problems.”

In a similar vein, I would like to propose, if not an actual toast, then an explanatory observation for the business of legal services: “To lawyers! The cause of — and solution to — all of law firms’ problems.”

Take a moment to review the most frustrating afflictions of your own firm, or if you’re a client, the firms with which you do business. From an internal perspective, firms are bedevilled with difficult personalities, intra-competitive strife, short-term profiteering, and a focus on the interests of individual partners rather than on those of the firm. From an external perspective, problems include unpredictable pricing, lack of responsiveness, widespread inefficiency, and a failure to identify and focus on client value.

These are not problems created by tough competition or demanding clients. They are not challenges inherent to the delivery of legal services (as opposed to, say, accounting or architectural services). These stumbling blocks to happy, healthy, productive, and value-enhancing law firms arise from the decisions and behaviours of the lawyers who own, design, lead, and manage law firms and who price, sell, produce, and deliver their services. In a business where every facet of production and every detail of strategy is controlled by lawyers — and where every dollar of profit and accolade for success goes to lawyers — there really isn’t any other place to assign responsibility for the business’s shortcomings.

This is not a jeremiad against lawyers, much as it might resemble one. The problem is not that lawyers are bad people; the problem is that lawyers are doing too many things in law firms that they’re not best qualified to do. Lawyers in law firms are wearing far too many hats.

Let’s consider the sheer ubiquity of lawyers throughout the law firm business:

• Who owns law firms? Lawyers. For the moment, anyway, only lawyers are permitted to own equity in law firms.
• Who designs law firms? Lawyers. Most firms evolved haphazardly from lawyers’ longtime, habitual business activities.
• Who leads law firms? Lawyers. Most law firms are led by managing partners, occasionally in conjunction with a chief administrator.
• Who manages law firms? Lawyers. To the extent there is any formal management function in law firms, lawyers occupy it.
• Who prices legal services? Lawyers. They set a billable rate, track their hours worked, do the math, and bill the result.
• Who sells legal services? Lawyers. The most successful ones are “rainmakers.” The least successful ones are asked to leave.
• Who produces legal services? Lawyers. More than 99% of law firm inventory is lawyers’ billed time and effort.
• Who delivers legal services? Lawyers. Much client contact and most service provision is conducted by lawyers.

This isn’t even an exhaustive list of every facet of law firms. Purchasing approvals, hiring decisions, compensation systems, marketing priorities, everything down to the choice of colour for the firm logo — lawyers are in charge of it, lawyers spend their time and energy to accomplish it, and lawyers jealously guard their power over it.

Lawyers wear almost every hat there is to wear in law firms. They do this for three reasons:

1. Because they always have.
2. Because they need to be in control.
3. Because they believe they can do these tasks as well or better than anyone else.

I couldn’t tell you which of these three behavioural drivers — tradition, authority, ego — is the most significant. I only know that all three are immensely important to lawyers and are incredibly difficult to talk them out of. But the end result is that lawyers in law firms have overburdened themselves, taking on too many responsibilities that lie outside their expertise and not doing any of them as well as they ought to be done.

Here’s my complete list of the law firm roles and activities into which I think lawyers ought to be investing their time, talents, and efforts:

1. Using their legal expertise and judgment to create client value.
2. Using their personal empathy to strengthen client relationships.
3. Using their ethical compass to guide the firm’s vision and direction.

Come up with solutions that meet clients’ needs and opportunities, build relationships of trust and reliability with those clients, and provide the firm with the vision and wisdom to run a successful and sustainable professional business. Nobody else in law firms can fill these three roles as well as lawyers can — collectively, they represent lawyers’ unique value proposition to their own firms. Other individuals and resources should supplement lawyers’ efforts in these areas, of course, but lawyers should have the lead role and primary responsibility.

But that’s the extent of it. Lawyers in law firms should have a three-hat maximum. Putting any other hats on top of those is distracting and counter-productive. Here are just three roles that lawyers should at least share with qualified personnel, if not relinquish control over completely.

1. Law firm workflow. There are much better legal workflow systems available today than “Lawyers work until they’re finished and then bill their efforts.” We can build knowledge and experience management systems, create project management frameworks, use technology to do work faster and cheaper, and re-route simpler tasks to lower-cost performers. Judging from Baker McKenzie’s recent hire of David Cambria as Global Director of Legal Operations, law firms might be ready to implement these systems. But first, lawyers need to accept that orderly systems for getting work done add financial value to lawyers and outcome value to clients. This means hiring experts in operational design, giving these experts the authority and resources to build better legal workflow systems, and following their advice about re-allocating lawyers’ efforts to higher-value activities.

2. Law firm pricing.  There are better ways to price law firm work than “lawyer hours x hourly rate.” Chief pricing officers are increasingly common in law firms now, supplemented by independent legal pricing consultants. Pricing experts, however, grow frustrated by lawyers’ reluctance to negotiate a price in advance. Lawyers don’t like being paid for results (which they can’t control) rather than efforts (which they can), which is why their compensation systems incentivize revenue over profitability. To overcome this problem, lawyers will have to trust their pricing experts that profitability beats revenue, that price certainty pleases clients and differentiates firms, and that the experts can build systems with objective data and subjective experience to deliver these positive outcomes. Let the people who understand pricing better than anyone else take charge of it.

3. Law firm sales. There is no better example of a task for which most lawyers lack the talent or skill, but that firms insist on keeping within lawyers’ authority, than the sales process. The cultural directive that “every partner must bring in business” effectively requires full-time professional lawyers to also be part-time amateur salespeople. Law firms claim that ethical rules against fee-sharing with “non-lawyers” stand in the way of a professional sales force. But I suspect the truth is that even though most lawyers don’t like selling, they do it anyway because they don’t want any “non-lawyers” interfering with the client relationship. Lawyers could save themselves (and their clients) much grief by hiring sales directors and working with them to develop focused value propositions for their clients, rather than playing at a role they didn’t go to law school to perform.

You’re probably seeing a common theme emerge here. To accomplish what I’m suggesting, lawyers would have to:

• trust “non-lawyers” with expertise in areas beyond their own,
• delegate to these people control over several facets of their firms,
• follow recommendations by these people that will change their own habits and activities.

I know as well as you do how improbable that sounds. And believe me, I’m fully aware of the reflexive objections that firms’ leaders always raise. I can already hear managing partners and practice group chairs lining up to tell me, “Forget it. Our lawyers will never do any of those things. You’ll have to think of something else.”

Here’s what I need these leaders to understand: There is nothing else. If you’re looking for a solution to your law firm’s challenges that doesn’t involve fundamental behavioural shifts among your lawyers, then you might as well be looking for the end of the rainbow. The road to the transformation of your law firm into a modern, sustainable, client-first legal services business runs right through your lawyers’ comfort zone, right over their core belief that they know better than any “non-lawyer” how everything should be done. This belief is not defensible — simple reality disproves it every day — and your firm’s best hope for future success is for your lawyers to willingly divest themselves of it.

Because this all comes down to what lawyers believe — and if I’ve learned anything during my years on this earth, it’s that people believe what they want to believe. The facts have very little to do with it. If your lawyers don’t want to believe it’s time to loosen their grip on the reins of the firm, then they won’t believe it, and they won’t do anything about it. If they do want to believe it, then they will, and they’ll act.

And that brings us back to the Simpsons line that started this post. Lawyers are the cause of law firms’ problems — but they are, absolutely, the solutionto those problems as well. Because they hold all the power in their firms, and only they can choose to share it. Law firms need their lawyers to do more of the things they’re best qualified to do (deliver client solutions, build client relationships, guide the development of law firms’ strategies and culture) and fewer of the things they’re not (almost everything else). If you haven’t already made the case to your lawyers that this is the best way forward, now is the time to do so.

But once you’ve done that, then you need to stand back and let the lawyers make the choice. Because it’s their choice, made in accordance with what they want to believe is true about the world. You can’t control what they decide. Like the rest of us, you can only watch and wait for their decision.

Author

Jordan Furlong is a legal market analyst and consultant who forecasts the future development of the legal services environment.

For more information or to order a copy of Jordan’s recent book, Law Is A Buyer’s Market, visit law21.ca/books.

‘The cause of, and solution to’ was first published on August 1, 2018 by Jordan Furlong on his Law21 blog and generated 8 Comments.