The Altman Weil, Inc. 2018 Law Firms in Transition survey that was recently released contains a number of thoughtful insights including perhaps capturing the essence of why law firms are so slow to embrace necessary change.
Basically, the proposition is that “threats” to the legal profession in the past have been driven by “known types of events,” i.e. recession; societal change; legal rulings; etc. These known events could be dealt with through simple endurance and a belief that “this too will pass.”
The threats faced by law firms today, and really in recent years, seem to be driven in a sense by “unknown events.” The greatest unknown of these threats is the evolution of technology over the past decade or more. The historical “this too will pass” mindset has not and will not work for law firms when they attempt to deal with technology in particular.
There are a number of reasons why such an approach will fail and result in many law firms no longer enjoying the growth of financial success as seen in the past (although I am not advocating a fundraiser for law firms – yet) and, in fact, will be the actual demise of tiers of law firms. Most failures will stem from a lack of a foresight:
While in the external world, you could make a case that these were in fact somewhat “known events” even if the legal profession did see the oncoming change “this too will pass” approach is neither nimble enough or sufficiently proactive to address these evolving events.
To compound the quagmire that many firms find themselves in, they have resorted (once again) to various historical approaches, including:
The respondents to the Altman Weil survey were comprised of law firms of the following size:
One telling item from the survey was the reasons selected by participants as to why their law firms were not doing more to change the way they delivered legal services. The top four answers were:
No one should take comfort from the integrity with which the participants answered. The following recasting of these responses will likely put me on a no-fly list in many law firm management circles, but sometimes the obvious has to be stated:
To bring balance in dealing with this issue, resistance to change in law firms is well documented and has legendary status. It is easy to take a penetrating look at the problem but much harder to try and be part of the solution.
In many law firms, it is the “right messenger” who has the best chance at moving the partnership along the change curve. So I would suggest firms seriously consider choosing a new messenger if they are meeting resistance to change, lack knowledge of alternative solutions, or there is a feeling that clients are not seeking changes. (Clients often don’t state or give notice that they are “seeking change”. They simply change – firms that is.)
Sounds simple, right? Clearly, it isn’t as this requires firm members to step outside of their comfort zones. Given the lack of progress in many firms and the resulting explanations for this lack of progress, there would seem to be no downside to changing up the messenger.
So, why not create a platform for one of the following messengers at your next practice group meeting, partners’ meeting, or retreat?
The above sounds crazy to many I expect, but clearly, the status quo is not conducive to ensuring financial health in the medium to the long term for most firms.
At its simplest level, firm members and management need to remember the truth in the comment:
“You are free to make whatever choice you want, but you are not free from the consequences of the choice.”
a CPA, CA and the Managing Director of Applied Strategies, Inc. Steve leverages 29 years of hands-on experience with law firm management combined with his professional financial training to offer small to medium-sized law firms, and individual lawyers, practical, pragmatic solutions to a wide range of law firm management issues.