As I posted recently, earlier this year I attended a one day symposium at Georgetown Law School, Washington D.C.titled “The Shrinking Pyramid:Implications for Law Practice & the Legal Profession”.
There were several interesting presentations and discussions on the day but one that really fascinated me was by Assistant Professor of Business Administration in the Organisational Behaviour Unit Harvard Business School, Heidi Gardner. Prof Gardner’s presentation was on “Collaboration:A Challenging but Strategic Imperative for Today’s Law Firms”, her research concluding that professional firms who have more people collaborating together on projects, the higher a firms’ billings, plus the higher both the employee and client satisfaction.
Prof. Gardner found that average revenue per client increases significantly with growing collaboration across practice areas, client “stickiness” improves (principally because there is more than one contact in the firm), client relationships are more easily institutionalised and that people who collaborate together identify more positively with their firm. Prof Gardner believed that collaboration leads to higher productivity and that cross practice group collaboration is a better predictor of revenue growth than many other firm measurements.
There was particularly interesting data analysis on 2 (nearly) identical lawyers with similar practices, annual billings and time with firm, which identified that the lawyer who was essentially a rainmaker and who regularly introduced work to colleagues outside his/her practice area had nearly 4 times the book of business than the lawyer who did most of the work him/herself or kept most of it within their team. (Those firms that have a differential profit share and/or those that tie their rainmakers to the desk to extract minimum daily personal billings take note!)
Yet as I sat through the presentation and contemplated the undeniable benefits of collaboration, I couldn’t help but think how much genuine collaboration and cross selling do professional firms-especially law firms-really do?
I think most firms do far less than what they say they do and for most far, far less than what they are capable of, and as such rarely optimise the benefits Prof Gardner speaks of.
A myriad of challenges to effective collaboration in firms were identified by Prof. Gardner and they included:
- acknowledgement of a core tension in most firms where on the one hand there is demand for increasing specialisation (narrower yet deeper expertise) and yet a more complex market often requires multiple layers of expertise to solve client problems,
- people with differing areas of expertise often have different views and different vocabularies, and
- what Prof Gardner calls the “Performance Pressure Paradox” where, especially on high stakes projects where collaboration should be most utilised, key leaders often become risk averse & controlling, leading to bad team dynamics and weaker team performance, less creativity and less knowledge share.
In addition to these challenges I believe the greatest impediments to effective collaboration is manifested by the firms themselves.
For lawyers perhaps it all starts at law school where we essentially learn to not only work as individuals but from the studies of old case law we are taught all about the heroic protection of the rights of individuals against the tyranny of the state and/or anyone who seeks to infringe those individual rights. This”philosophy” is then more than enhanced in many firms where the leverage based people x time x hourly rate business model promotes, measures and rewards individualistic behaviour over any semblance of teamwork. Lets face it, it is much harder to precisely track and measure, let alone reward in dollar terms, collaborative behaviours, than it is billings, so we default to the latter. It matters little,as Ron Baker has said for nearly 2 decades now, that whilst such measurements might be precise- they are precisely wrong as they measure the wrong things.
Whilst firms might make a song and dance about collaboration, teamwork and cross selling, on their websites, in their published corporate values and may even make provision for same in individuals KPI’s, in most firms such behaviours run a distant second to the billables in the mistaken belief that it is these billables that make individuals valuable and profitable to their firm. For a generation or more we have been led to believe that as a professional my worth is really my book of business so I am not going to share it with anyone. If the firm does not want me, or I want a change of scenery where I can get more dollars or opportunities at another firm, I need to take my book of business with me so why should I share it with you?
The view that we are mostly measuring the wrong things in professional firms in the forlorn hope that such measurements actually increase the success and profitability of a firm, was given some airing in recent days when noted international law firm thought leader, commentator and consultant Jordan Furlong posted 2 excellent blogs “Death to “Profit Per Partner”” and “Law firm profitability metrics: Just subtract lawyers”. I encourage you to read both these articles as any summary cannot do them justice but essentially Jordan too argues that it is time firms junked the longstanding use of “average Profit Per Partner”(“PPP”) as a measure of profitability and success. Jordan says that:
“by using PP as the primary (if not the only ) criterion by which to assess our law firms health, we perpetuate a host of self-destructive habits and impair our ability to operate our law firms in a truly profitable and professional manner”
and that “….increasingly in the coming years, law firms are going to make alot more of their money through non-lawyer means. This is why it is absurd to cling to a lawyer -centred metric like PPP. Defining law firm profitability is like defining Wal-Mart profitability by salesclerk. The only way to know if a law firm is profitable is to look at the profits of the firm. The longer we keep our focus on individual partner profit, the more time we’ll waste measuring the wrong thing.”
Thank goodness there are an increasing number of firms that woke up to the errors of these false measurements sometime ago and who no longer care as much about who gets the credit, but instead care much more about working collaboratively as a team to achieve sustainable firm success. In a future blog I will share some of those firms “measurements”.