Industry analysis from LexisNexis: For a change?

This article was also featured as an industry analysis in the May 2016 issue of Briefing. To read the issue in full, download Briefing

Few in the legal profession fail to recognise the turbulence the market is facing. The Law Society’s recent report, the Future of Legal Services, opens: “Changes to legal services will have an inevitable impact on the solicitor profession.”

That’s fairly self-evident. But the fact that change is positioned as something that will have an impact on those working in the law – rather than being initiated and driven by them – is telling, and it raises two interesting questions:

Why might firms be reacting to change rather than driving it?

Law firms, like any business, are affected by external factors that are (largely) out of their control. The global recession triggered by the financial crisis in 2007/2008 is an obvious example. Such shifts create new and unexpected norms, locally and globally, which even the best-laid schemes of lawyers haven’t fully taken into account. In cases like these, some degree of reactionary behaviour is inevitable.

However, in many cases the changes are structural and come from within – fundamentally driven by the changing behavior of the client, whether in-house legal team or consumer.

The years of austerity that followed the financial crisis meant a lot of businesses began seeking to do ‘more for less’. For example, buyers of legal services are doing more legal work in-house, demanding fixed fees as well as greater cost transparency generally, and disaggregating chains to distinguish between what’s commoditised and bespoke legal advice.

However, there’s a strong belief that firms are reacting to client requirements rather than anticipating them and shaping the change themselves. Could this be because the firms themselves are change resistant?

What’s stopping firms from driving change?

LexisNexis recently commissioned research to find the answer to this second question. After surveying 50 top law firms, we produced the report Changing at client speed – what’s stopping law firms?

The results highlighted five major barriers to change, most of which should also be familiar to lawyers from smaller firms as well as in-house teams: interpreting implications of the external environment; leading change; business models and organisational structures; technology and processes; and professional identity.

As ever, the devil’s in the detail, but even taking one snippet of the specific feedback on each barrier reveals an interesting pattern. Consider:

  • Identifying the need to change: “The changes don’t affect what I do”.  
  • Leading change: “No one is responsible because everyone is responsible”.
  • Business models and organisational structures: An overly conservative approach to balancing “control and anarchy”.
  • Technology and processes: “How much will really be left for lawyers to do?”
  • Professional identity: Lawyers can be reluctant to deal with relatively standardised work. “It’s difficult to get associates to understand that not every piece of work needs to be of ‘Rolls Royce’ quality”.

There are, of course, significant pragmatic issues in overcoming these barriers, but all five also have strong emotional elements.

Taken in isolation, this observation may not be particularly surprising for a knowledge-based professional services industry with human capital and relationships at its core. Nevertheless, it can be easy to lose sight of the central human element in managing business challenges.

Take technology. Asked to identify the most potent threat to the rapid and successful implementation of a new solution, for example, you might expect a lawyer to suggest something that was technical in nature – rerolling software out across multiple countries perhaps, or addressing security concerns.

But the technology projects that run over schedule or budget most often are those where there was a failure to involve and align the right people at the right time (such as failing to engage the IT director early enough).

Decision discrepancies

Other research on medium-sized law firms (titled Mind the Gap) suggests similar challenges in relation to aligning decision makers and the rest of a firm’s employees more generally.

The report was based on interviews with 56 decision makers as well as more than 100 lawyers who aren’t decision makers.

Those without decision-making responsibilities were asked to identify the changes they’d most like to see implemented over the next year or so. The answers were then mapped against the extent to which the decision makers reported planning any changes in those areas, and they reveal some interesting disconnects between the decision makers and the other respondents.

For example, ‘increased investment in processes/technology’ was the change most wanted by the 100 lawyers surveyed, but only 25% of decision makers reported plans in that area. Similar discrepancies apply in relation to marketing and training.

The findings suggest lawyers (at least those who aren’t decision makers) are aware (and in favour) of a need for change across a number of key areas, but that, in mid-sized firms at least, action is lagging.

If this is representative of the majority of legal business, it’s serious. It’s perhaps appropriate to end as we started, with another quote from The Future of Legal Services: “Business as usual is not an option for many, if indeed any, traditional legal service providers. Innovation in services and service delivery will be a key differentiating factor.” This fairly unequivocal statement brings us neatly back to that question – what’s stopping law firms driving change? – and to tackling those five barriers in a sufficiently human way.

 

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