From lawyers to leaders

With the Legal Services Act now on the statute book, the next two or three years will generate major headaches for many managing partners of small and medium-sized practices. These are the firms which will be vulnerable to takeover (which in fact may be for some a solid strategic ‘survival’ option) or demise (which is not).
Here are a few of the problems, many endemic to professional practice, that the smaller sized practices are now having to face up to and deal with:

Most lawyers, like doctors, teachers or any other professional group, are only trained (and interested) in practising their craft. They believe that clients and resulting fee income is all that working life does and should demand of them;
The legal profession has traditionally been one that reacts to events rather than proactively makes things happen. Concepts such as ‘vision’ and ‘change’ do not sit easily on lawyers’ shoulders;
The partnership as a business model is the ultimate in democratic individuality and, however astute the managing partner and however sophisticated the management decision-making structure, there is always the possibility of necessary change being scuppered by a single senior equity partner sticking his head in the sand or foot in the door;
Small and medium-sized firms do not necessarily have the resources to invest in senior support staff to advise them on how to run the various business functions within the organisation. The larger firms have had this resource for twenty years or more. Many of them employ the best (for example) HR and marketing brains that money can buy, and this has been reflected over the years in the business success of the magic and silver circle firms.

Fortunately, the prospect of imminent change has created enough angst in many small and medium-sized firms that the ‘what shall we do’ question is now on most lips. The external pressures for change and improved business thinking and practice are being generated not only by legislative and regulatory issues, but also by job applicants demanding clear career structures, clients wanting a cost-effective approach to dealing with their matters, and insurers demanding the setting up of top-quality risk-management systems. There are many others.
How then should a firm in this position deal with 2008 and onwards? The answer is to put in place an immediate short-term fix followed by a longer-term change strategy. The latter should be designed to change the hearts and minds of the firm’s lawyers towards a new world of business as opposed to purely professional practice – and training must be at the heart of the whole of this process.
Lawyers, quite rightly, have concentrated in the past on ensuring that their fee-earning staff remain bang up to date with all changes in the law which affect their area of practice. They have also trained in the ‘hard’ skills necessary to do an effective job for their clients – taking instructions, drafting, negotiating, and so on. The more enlightened firms have even set up training sessions designed to analyse A-Z approaches to a particular type of transaction, or to keep standard forms fresh and up to date.
What lawyers have not been good at is training in the softer skills, without which business success is a pipe dream. Consider the following scenarios:

Lawyer A dislikes the administrative side of billing and will only knuckle down to it under serious pressure from the managing partner as the year end approaches;
Lawyer B is very bright and an excellent lawyer but has ‘social’ problems such that clients are put off by his lack of interpersonal skills;
Lawyer C works in disorganised chaos. The clients are pleased with his work, but there is a sense that his matter-time recording is excessive and occasionally some costs have been written off;
Lawyer D runs a team of fee earners. He takes control of all aspects of any matter, delegates reluctantly, does not keep his people informed of what’s going on and has a consequential morale problem in the team.

These and many other similar skills problems must now be tackled by all firms if they are going to survive. Never before has there been such a clear opportunity for law firms to run themselves as genuine learning organisations, where coaching, formal training and action learning come together to form the key driver for business success.

Converting theory to practice
Faith, Hope and Charity is a 10-partner firm with offices in Newtown, Oldtown and Seatown. Three of the partners are equity and seven salaried. There are also 15 assistant fee earners and 25 support staff comprising secretaries and accounts personnel. The firm practises residential conveyancing, family and trust and probate law. Many of its clients are elderly. The senior equity partner has been managing partner for 10 years following re-elections. He continues to fee earn and sees himself as simply a problem solver. No other equity partner is interested in ‘administration’. The firm is conservative by nature and has a turnover of £1.5m, which has been rising only in line with inflation over recent years. PPP is low. Clients are a mix of private and corporate – the firm offers a full range of services to all of them from all offices. Morale is low. Many staff are complaining about a lack of career and business direction in the firm. Training, outside the compulsory SRA courses, is confined to the cheapest updating seminars run by the local law society. One of the salaried partners, who has some business vision and runs his matters and clients effectively and efficiently, has made it clear that if equity is not forthcoming shortly, he will leave with his clients. These and other internal and external pressures are beginning to create some anxiety in the partnership such that it knows change must now happen, but how?

The short term (the next 12 months)
Faith, Hope and Charity should ensure the following actions are undertaken immediately:

1. Make up the keen salaried partner to equity;
2. The managing partner should step down;
3. Assuming he is willing, the new equity partner should take over as managing partner with little if any fee-earning responsibilities (taking care to manage client relationship transitions).

If, in order to effect the above three stages, changes need to be made to the partnership deed, so be it.

4. Funds should be made available for the new MP to attend a short business strategy course (for example, the Harvard week) to take advantage of both course content and networking opportunities;
5. Employ a top law-firm consultant to take a look at the firm and advise on change;
6. Organise training across the firm in understanding and managing change;
7. Employ an executive coach for the new MP to help with personal development in his new role;
8 Prioritise change actions and begin to implement.

Throughout this process, communication across the firm with all staff is critical so that everyone understands and hopefully buys in to what is about to happen. Equally, the partnership will need to make some personal sacrifices so that appropriate financial investment for change can be made.

The longer term (two to three years later)
The practicalities of change must go hand in hand with an emotional acceptance of the need for change. In the case of Faith, Hope and Charity, there will be a huge lurch as the culture of the firm starts to shift in the new direction. If the change management training has successfully taken place, then that process has been given a solid kick start. But for the longer term, what is required is a cradle-to-grave training structure that supports the learning environment and develops and permanently reinforces the new values. This will happen through the acquisition of appropriate personal and management skills at all levels within the firm.

Developing a skills training structure

1. The typical method of identifying appropriate training is by undertaking a training needs analysis. The starting point for this must be the firm’s business strategy. Ideally, this strategy will have been translated into a competency framework for individuals. The competency framework sets out the skills required by fee earners and support staff in order to make the strategy happen. It is then a relatively easy step to define training needs from the competency framework. The resulting training structure will clearly be generic since it has been arrived at objectively. To add a subjective element to the analysis, one can set up focus groups or design a questionnaire, and these can be used either at a particular level of seniority or in a 360-degree manner to provide additional feedback.
2. There is now a picture which shows what skills should be developed at each stage in the fee earning (and/or support staff) career. Depending on the firm and its overall strategic thinking, culture and needs, there will be some variations in approach. The basics however will remain the same. Figure 1 is a matrix which shows, with examples, one type of approach to setting out a personal and business management skills development structure for fee-earners.
3. This matrix is by no means comprehensive and there are always differing views about when particular training should happen. What it does do is give a taster of how a basic skills training structure might look.
4. Also, the level of sophistication of the matrix can be substantially increased. Induction programmes are critical, particularly at entry and partner level. It is also possible to have separate training needs for those with particular responsibilities – team, financial, business development and so on. The final structure for Faith, Hope and Charity will depend on the changes to the way the business will be run in future, as determined by the partnership following the consultant’s recommendations.
5. Once in place, it will be the job of the training partner (and one of the firm’s partners must be formally designated as such) alongside the firm’s departments to implement the training. When starting out, it is not a good idea to attempt to backtrack more senior people to training they have missed in the past. The effect of implementation will, quite rightly in the conservative environment of a law firm, take some years to percolate through in its entirety. Start by putting people through the courses at the level at which they are at now. Also, spread the training over, say, three years at each level. Begin with a skill which may have been agreed to be weak at performance appraisal. The appraisal should always be a vehicle for setting training objectives.
6. Really committed organisations allocate two per cent of turnover to training. For Faith, Hope and Charity, this would amount to £30,000 in current circumstances. But it’s the old adage of spending money to make money – and the investment will produce people with the skills and understanding to make the firm more profitable and successful in the medium to longer term.
So, how are the training structure and learning environment going to help our small to medium-sized firm to survive? Here are a range of positive consequences:

Career development and the steps to achieve it are clearly defined;
Increased motivation in staff;
Recruitment of higher calibre staff;
Binds the firm and its values together into a more cohesive unit;
Creates a more commercial and business-oriented outlook;
Clients notice the positive difference;
More new business is developed;
The firm’s thinking becomes more externally and proactively oriented.

All firms with some anxiety about their future should now be thinking seriously about a formal training structure, such as the above, as part of their survival strategy. ?

Martin Richardson is director of professional development, Law South, Chichester. He can be contacted on 01243 817154 or e-mail martin.richardson@lawsouth.co.uk

This article was originally published in the November 2007 issue of Managing Partner magazine.