Ben McGuire, Innovation & Business Change Director, Simmons & Simmons was quite clear about the way forward. The 4 essential ingredients seem to be :
… 1) more than just the the legals…
“Advice is no longer enough, transactions are no longer enough; we have to be providing a solution to the whole business problem, or at least contributing substantially to that, or maybe convening the services that have to do it.”
…2) an altered partnership model…
“And leadership becomes, therefore, way more important because actually we will be slightly reducing partner autonomy…”
…3) a different kind of collaboration…
“…and trying to align them together with technology, new ways of working, data scientists - a whole package of capabilities such as exist in Simmons & Simmons Solutions - in order to deliver an output which can't just be done ad hoc, can't rely on what was previously an effective way that partners would collaborate, split up, form teams or deliver a matter cross-border.
…4) a different kind of leadership..
Don’t think it’s “ enough to be billing x million, be a partner and then you get the leadership job – you need to be showing us that you will be able to do the job and that level of complexity requires a significant change in leadership development which should supported and assessed from NQ onwards.”
The rich smell of Tech is all over this statement. Power to the CIOs, I say, and this seems precisely what Simmons have given him.
All this is neatly captured in a quote from Ginni Rometty, talking about the future of IBM: "The resulting restructure would push forward transformation supported by IT. There will be business transformation, it will need of a new set of skills - this will accelerate back into a different kind of job that is going to sit at the intersection of tech and some kind of business function”.
Ginni and Ben are clearly from the same galaxy.
From the client perspective, Andrew Garard, Group GC & Director of Corporate Affairs at Meggitt, offered a helpful hint wrapped in a warning to law firms:
“One of the differentiators we see is the need for how we consume legal services (and other advisory services). This is changing - and is changing quite rapidly. What we really look for is value in its broadest sense, whether that is the benefit of wisdom, experience, lateral thinking ... we are looking to demonstrate to our business colleagues that we can bring value in different ways as well. Once you can begin to show what value looks like there is an appreciation of what lawyers can bring to the table. And that has been sadly lacking in a number of ways”.
Not a new request by GCs and yet clearly the law firm ‘added value’ piece still isn’t clear needs to be developed, it seems.
“I've also long been a critic of the way that law firms price their service: if you're going to price your product by how long it takes you to do it, don't be surprised if other business models will supersede you at some point.”
That law firms don’t properly engage or listen to their clients has been a GC complaint at our roundtables for the last 15 years. Ditto with pricing and sharing the pain and giving ‘added value”. There is clearly - still - some disconnect at the client interface, here.
"I am keen for law firms to set up more systematised ways of engaging with their clients to actually shape the service to meet the demand. Law firms go through this process of client listening, it’s often called ‘the voice of the client’ or however they want to badge the program, but I don't think that's done in a way that gives them access to the way their source of revenue is really thinking.”
“I have found, throughout my in-house career, that there is a lot of willingness in legal advisory practices to try and effect change, but the pace at which it can be done leaves them open to some hostile intruders coming into their territory. I still think there is time for the external legal profession to reinvent itself but at some point, someone will come along with the right model.”
He’s being nice. The ALSPs and other challenger brands are already on the scene. Nigel Boardman, Slaughter and May offered some interesting predictions:
“I think alternative business models will be more successful over the next decade. There will be increased pressure on fees but the high quality advice will still come from the same people, at least for the time being. So unless there is some fragmentation and some firms move to a different model which is more effective, the existing weight will stay where it is.”
“Also, we will see a reduction in globalisation and more nationalism and therefore the likelihood of territorial incursions by other law firms is going to diminish. For those that survive that means probably less competition from other law firms, but increased competition from in-house, where the legal teams have been growing significantly.”
Nigel's words offer both a conclusion and a way forward:
“Now is the time to reshape the organisation – take, for instance, the arrival of AI - will the partner to fee-earner ratio, which has underpinned ‘profit per partner’ figures, work for the future? I think not if firms maintain their current approach to work.
But there are many other areas which need addressing – and I will touch on only three:
- the impact of Brexit increasing the importance of the laws of trade and tariffs;
- the demise of oil impacting the geopolitical landscape (who will need offices in the Middle East in 5 years?) and the role of project finance lawyers (aside from green energy projects)
- the change in insolvency legislation moving some way to a Chapter XI in the new legislation we’ve been promised which will have a moratorium in it, will increase the attractions of a tactical insolvency – you’ll need to strengthen your insolvency law both as a creditor and as a corporate.
Leaders must use this opportunity to rethink and re-engineer their businesses – they have only themselves to blame if they do not take advantage of this crisis.”
Allow me to lighten the mood here. Meggitt’s strapline is 'enabling the extraordinary' (“and that’s why they got me”, quipped Andrew). More seriously he explained some of the extraordinary products they supply, such as:
“One of the greatest causes of death in helicopters in armed services is through the fuel tank exploding either through munitions or when it crashes. We have developed a range of fuel tanks for helicopters that actually heal themselves: there is amazing evidence of people firing bullets through a fuel tank - and because of the technology (it has a number of layers) it self-heals. It really is quite remarkable. “
The next comment was both unexpected and unexpectedly moving:
Ben: “And a personal thanks for that, Andrew, having flown in those helicopters with people shooting at me, albeit from a long way away!”
Andrew: “I'd like to say I am personally responsible for that, Ben, but this is way beyond me!”
Meggitt’s strapline is a fitting conclusion to what law firms and businesses should surely be aiming for: 'enabling the extraordinary'.
Nothing wrong with aiming high, but having listened to our guests, my conclusion is that any shape-shifting gets buried under a list of the impossible constraints of the partnership model on those leaders bold enough to want to instigate change.
It is also depressingly clear that the obvious need for 2nd order change (dramatic paradigm-shifting change) cannot happen in law firms as they stand. In my view, their structure with its stress on consensus building, partner autonomy and management rather than leadership, is long due an overhaul (and ditto for their pricing model).
Surely though, in a time of crisis (and not just a little crisis), any impediment, however big, to effective and necessary reform should be examined and assessed, right? So why is there an overwhelming sense that “we just have to muddle through the current crisis and then everything will return to normal”? There was talk of the Emperor’s New Clothes in the session, and that resonated with me long after the debate ended.
So, maybe, on reflection, I should be content with the good stuff: after all, starting over could unpick some of the hard-earnt work that has gone into law firm evolution in the last 10 years. An acceleration of trends is, actually, great news; the rise of the CIO voice and impact is also a very hopeful trend, and perhaps enough of one to save law firms from themselves. And, okay, leaders as story-telling connectors or empowering role models isn’t a new concept, but it is in law firms, and a dispersed working model will be in dire need of that kind of leader.
That being said, the conclusion has to rest on the (many) words of warning to the leaders of legal organisations: the world about them is changing fundamentally, corporates are evolving in radical ways and if the legal organisations servicing them don’t act, and act decisively, they will not just lose ground to their competitors but risk being by-passed by new entrants.
Nothing new there either, except now the stakes are truly about law firm survival.
This AuDela SmartTM is part of a series of AuDela virtual roundtables designed to look at “Shape-shifting: the new shape for legal services in a post Covid-19 world”. Click here to access the whole series.
"Law firms go through this process of client listening - ‘the voice of the client’ or however they want to badge the program - but I don't think that's done in a way that gives them access to the way their source of revenue is really thinking.”Andrew Garard, Group GC & Director of Corporate Affairs, Meggitt plc