Remaking Law Firms: A perfect primer

It arrived in the mail yesterday, a perfect primer for those who are thinking about remaking their law firm. “It” is the The Clayton M. Christensen Reader, a 2016 treasure trove compilation of Christensen’s and co-authors’ writings that are as relevant to legal services as they are to music, taxis, postal services and every other industry.

This post draws on the fifth of the 11 chapters, ‘Reinventing Your Business Model’.

In crafting the title of ‘Remaking Law Firms’ – our forthcoming book to be published in March by the American Bar Association – we choose ‘remake’ over ‘reinvent’ to reduce the dissonance law firms leaders, owners and others might feel when confronted with the holus bolus prospect of reinvention of their successful firms.

That explained, the ideas and their explanation in this chapter make it a perfect primer for those who want to understand more deeply the fundamental reasons why remaking is essential for those firms that intend to continue to serve their clients and, in doing so, prosper in the decades to come.

A perfect primer

“Christensen’s work on disruption is nuanced and often misunderstood” states the Introduction to the Reader. To paraphrase, not every huge innovation is disruptive, not every NewLaw start-up will beat the incumbent BigLaw business model firms, and not every BigLaw firm is going to be disrupted.

To Christensen, the role of a law firm leader is to lay the foundation for future growth, that is to fulfil the stewardship role law firm leaders hold dear.

To that end law firm leaders need to “understand disruptive innovation, the threat it poses, and how to lead their firms can create growth to keep pace with ever-evolving technologies, industries, and clients.” (paraphrasing again)

This is precisely the point I make in ‘10 reasons BigLaw managing partners are not sleeping very well‘, a call for all in the BigLaw industry to see the opportunities that are as many as the threats inherent in the changes sweeping over them. Check out this legal services-specific slideshare and my post on Fresh thinking on the evolving BigLaw–NewLaw taxonomy for an explanation of what a business model is, how the BigLaw and NewLaw business models differ, and why this difference is so important to understand.

Christensen’s view on the business model

Christensen describes four inter-locking elements of a firm’s business model:

• Client value proposition – far and away the most important element,
• Profit formula – which defines how the firm creates value for its owners,
• Key resources – people, technologies, brand, etc that are needed to deliver the value proposition, and
• Key processes – ways the firm efficiently and consistently delivers the value proposition that enable it to scale.

The most important section in the Christensen chapter

The most important section in the chapter is titled ‘When a New Business Model Is Needed’.

Christensen writes “Established [firms] should not undertake business-model innovation lightly….There are clearly times that require….venturing into unknown business model territory. When? The short answer is ‘when significant changes in all four elements of your existing model.”

QED. The case for our book ‘Remaking Law Firms: Why and How‘ is made. Check out the summary of the Contents and you will understand the reason I say this with such conviction.

Better still read the Testimonials from those wiser than my co-author and me and grasp the insights in the Foreword by Eduardo Leite, Chairman of the Executive Committee of Baker & McKenzie International.

You can register for early notification of the publication of Remaking Law Firms and receive a complimentary copy of NewLaw New Rules: A Conversation About the Future of the Legal Services Industry.

More on this topic may be found in these posts

+ Fresh thinking on the evolving BigLaw–NewLaw taxonomy

+ Shared lessons for BigLaw firms and taxis

George Beaton