If, as Cicero said, man is his own worst enemy, then partners are posing the biggest risk to the sustainability of large law firms. From my vantage point, individual attorney, practice group and other internal silos are preventing most firms from making needed change in the way they do business.
With the latest Hildebrant Baker Robbins Peer Monitor (Q2 2010) reporting that the outlook for the legal industry as flat, law firms can no longer expect economic improvement will solve their profitability challenges.
The report concludes:
“The challenge to firms will be in their willingess to innovate, experiment and change long-standing firm traditions in order to find new avenues of growth and profitability.”
The time is now for firms to address their proverbial enemy head on.
An article in the June issue of the Harvard Business Review suggests one of the best ways to force a change in thinking is to reorganize.
In “Change for Change’s Sake,” authors Freek Vermeulen, Phanish Puranam and Ranjay Gulati argue that by periodically reorienting organizations around different criterian, “the firm gets the best of both worlds.”
In one case, Cisco System changed its business unit structure (a.k.a. practice groups in the law firm world) into a centralized structure organized by function (e.g. marketing, sales, R&D).
The reorganization created new teams who were able to work together and exchange ideas with peers across the company. Because each member of the new team still maintained ties with their old networks, the knowledge base of each new team expanded as each team member had a set of trusted advisors they could call upon to validate ideas.
As a result, communication and collaboration increased across the company.
The authors argue:
“When a firm reorganizes in this way, the old networks and culture do not suddenly vanish; employees often maintain their old patterns of interaction for quite a while… so at least for the near term, employees cooperate along both informal and formal networks. As a consequence, the firm gets the best of both worlds.”
For law firms, new client development structures offer a way to reorganize attorneys to break existing silos and encourage the development of new relationships.
If attorneys are organized around practice groups, this may be the time to create industry or client teams. If a robust client team program is in place, consider creating new teams but comprised in a new way.
Law firms can no longer take a “wait and see” approach to profitability. Change is needed — if for no other reason that for the sake of it.