Stop for a second and think.
Here you are, a law firm leader, facing some of the most challenging circumstances in your firm’s history. Your firm is at a crossroads, isn’t it? And by some twist of fate, you are the one standing at the precipice, looking out into the abyss, and it is up to you to decide how to move forward. There is disagreement all around you. What do you do?
The easiest thing to do is, of course, nothing. Decide not to decide. Make no mistake, though. Not deciding is a choice, and it is a greatly overused choice by law firm leaders facing such a crossroads. Yes, most law firm leaders are able to recognize that they are at the threshold of some of the most important and challenging decisions they have ever made, but too many of them are considering their options instead of making decisions.
Like it or not, law firms are operating in a rapidly changing environment. In fact, the great recession and an unprecedented push from corporate dients as of late have created widespread “unfreezing” in firms across the country. The term is derived from the original organizational change model, created in 1947 by Kurt Lewin. It sets forth a three-step process: (1) unfreezing, (2) change, and (3) refreezing. In today’s world, in law firms of all sizes, everything is unfrozen and up for grabs—partner and associate compensation systems, staffing models, recruiting processes and pricing systems.
The step beyond unfreezing is change. Unfortunately, many firms aren’t quite there yet. Instead they remain stuck between steps one and two. They are considering multiple options but deferring difficult decisions—unfrozen, but motionless or undirected. Despite a recognition that important clients and key partners are issuing serious value challenges to firm management such as greater income to the partners and more responsive, creative and efficient services for dients, law firm leaders are having trouble pushing through initiatives that would take their firm to the other side of the crossroads.
What is at the root of this phenomenon? Consider the maxim: “pay now or pay later.” It is understandably tempting for law firm leaders to delay the effort and pain involved in making lasting changes. Changing a compensation system, a governance system, or investing more resources in one practice than another can cause substantial turmoil and conflict in a law firm. Add to that the fact that in most small and mid-size firms, partners have an expectation of a high degree of input on big decisions, especially when they feel like they might be on the losing end of those decisions.
A firm can get away with avoiding tough issues when lawyers have plenty of interesting legal work to keep themselves busy and incomes increase handsomely every year. But when work slows, incomes drop and other opportunities present themselves, the big issues surge to the surface and need to be resolved. After all, in today’s dimate the “undecided” choice is leading to partners voting with their feet in unprecedented numbers.
What to do then? Step into phase two before it steps into you.
Consider the case of a 50-lawyer firm. The trigger to move from “undecided” to proactivity is a merger inquiry from a larger firm. The firm has two successful and relatively young partners who believe that the firm should seriously consider the inquiry. Not surprisingly, the initial discussion that ensues among the firm’s leadership is more about cracks in the culture that have been growing for years than it is about strategic benefits of a national platform.
The same decisions that have challenged firm leaders for the last five years are staring back at them, but this time there could be much more serious consequences for inaction. Does it make sense to have a seniority component in the compensation system? Does the firm need to be more deliberate about client succession and leadership succession? Is the non-equity category becoming a black hole and workflow logjam?
The attitude at this particular firm for the last five years has been, “we don’t agree on that issue so why bother talking about it?” Suffice it to say, the conflict avoidance syndrome has been very much at play in this firm. Therefore, a pivotal first step in effectuating change was shining a spotlight on the idea that the ultimate price of more avoidance was greater than the near-term price of a couple of tense partner meetings and difficult decision-making.
To create this spotlight, the managing partner understood that he needed to (1) create a common understanding of the firm’s current situation by having all partners review and discuss a summary of key performance data together, and (2) allow an opportunity for partner input into firm direction and options, including merger.
This managing partner was fortunate to have a technically skilled executive director who also had a high level of credibility with the partners to help with both of those steps. He analyzed and compiled key performance measurements over time and conducted one on one interviews with all partners to get their perceptions about the firm’s strengths, weaknesses and strategic priorities.
Next, the Executive Director and the Managing Partner created a presentation for the next partners meeting that took a more comprehensive and honest look a firm performance than ever before.
What was the result?
Although it took a merger approach to complete the unfreezing and create the impetus for change, a merger was not on the list of changes that the partners wanted to make. They did, however, decide to revise their intake system to focus resources on more profitable opportunities, to remove the seniority component of the compensation system and to create their first Executive Committee to bring two additional partners into firm leadership.
A year later (a challenging year at that for most firms) the firm views the merger inquiry and the push from the young partners as critical events in the firm’s evolution.
Decisions made and distractions minimized, the firm moved forward.