Linklaters, Schrage and rewarding the team not the individual

On June 30, 2015 Michael Schrage – a research fellow at MIT Sloan School’s Center for Digital Business (and author of Serious Play, Who Do You Want Your Customers to Become? and The Innovator’s Hypothesis) wrote a fabulous article on the Harvard Business Review website titled ‘Reward Your Best Teams, Not Just Star Players‘.

I remember reading Scharge’s article and thinking to myself at the time that law firm managers could learn a lot from it. I may even have posted a link to the article on my LinkedIn feed.

In the article, Scharge sets out that “top management should seek out talented teams, not just gifted individuals” and that “people need to feel that the benefits of being team players measurably outweigh the perceived and real costs of compromise and self-sacrifice“.

Scharge then goes on to set out that getting the incentives right and appropriately aligned in an organisation – such as a law firm – requires the firm embracing what he calls the 5 As:-

  • Acknowledge
  • Attribute
  • Assign
  • Award
  • Assess/Analyze

Concluding that “The 5 As are the essential ingredients for facilitating a transformation in teamwork incentives. They can put the right “I” in your teams.

With news overnight (Australian time) that my alumni firm Linklaters is “to ditch individual partner metrics to target team performance“, we may just be on the way to achieving Schrage’s goals.

And it may just be me, but doesn’t it make more sense to reward “client-winning, business development, training and innovation” as collaborative efforts rather than at individual partner level?

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PayPal’s Top Lawyer Louise Pentland comments on “Here’s the risk, you decide”

Casey Sullivan of Bloomberg Law‘s Big Law Business posted an interview transcript with PayPal’s Louise Pentland overnight [Australia time]. Overall this is a pretty good interview transcript, but there was one response in particular that Pentland makes that I wanted to bring to your attention. When asked by the team at BLB:

We’ve seen the general counsel role shift into more of a chief legal officer role that interfaces more seamlessly with the business side. Can you speak to that shift?

Pentland replies:

As an in-house lawyer, the best you can get is when you’re integrated with the business team and you’re part of the team making it happen.

I think with PayPal, it was different. It was almost like a law firm inside the company. People didn’t go to the business team meetings. They weren’t on the leadership teams. It was a very strange structure in many ways. People weren’t assigned or aligned by business initiatives. It’s a team of 200 people, so it’s not a small team. I immediately aligned people with their primary responsibility, dedicated to their teams and the businesses they supported. It was so welcome; businesses were crying out for it.

It’s easy for lawyers to sit in the background and say, ‘Here’s the risk, you decide.’ Then you think about how to litigate. But that resulted in what was sometimes, in the worst case, people were lawyer-shopping because they didn’t like an answer. There was no accountability.

(my underlining for emphasis)

It’s that last paragraph in particular that really resonated with me, and one which I think private practice lawyers accustomed to providing non-commercial but legally factual advice to clients should take heed of.

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“Good enough” advice and the billion dollar opportunity mid-tier law firms are wasting

Earlier this month (April 2017) LexisNexis published the latest in its series of legal market reports. Titled ‘Amplifying the voice of the client in law firms‘ and edited by the brilliant Mark Smith (no relation), this latest report from LexisNexis purports to identify specific areas of disconnect between UK top-50 law firms and their clients, by means of seeking answers from both sides of the equation to the following three questions:

  1. What are the points of disconnect between the client and the law firm?
  2. Why does the disconnect occur?
  3. What can law firms and their clients do to reduce the disconnect?

Among the report’s many interesting findings, the one that really stands out for me was the view of most in-house lawyers that, for the most part, solutions need only be “good enough”; provided they are delivered timely, and in a format that enables the in-house lawyer to make decisions quickly. But that, for the most part, in-house lawyers were not getting this service with most saying they received good legal diagnoses but very little by way of commercial solutions.

The findings here are reflective of what I heard Ann Klee, VP of Global Operations — Environment, Health & Safety, at General Electric Company say at a Big Law Business Summit in August 2015 – in describing how (in part) GE managed to reduce its outside legal spend by $60 million in a year – when she mentioned that the bottom line is that the role of a lawyer today is about managing more risk, it’s not about just being asked to do more for less, it’s being asked to do less with less.

So we are being told – by the clients themselves, from both sides of the Atlantic, that they do not need “gold standard” legal advisory services, but rather are not only happy to receive “good enough” advice, but would prefer it that way if the advice that was given was commercially applicable to them and provided in a timely manner (on this issue, see my recent post on ‘responsiveness‘).

And yet I have never seen any marketing or tender material produced by a law firm outside of the top tier in any country that says anything along the lines of “we are the good enough lawyers“. Conversely, I have seen more marketing material than any sane person should by mid-tier firms to the effect that “we provide top-tier gold standard legal advisory services at mid-tier [cheap] prices” – a service clients are repeatedly saying loud and clear that they don’t want.

To my mind, all of this adds up to be a massive billion dollar opportunity going to waste by any mid-tier law firm who would be happy saying to their clients (and, importantly, the clients of top-tier firms) “we’re the ‘good enough’ firm that will get you across the line at a fraction of the fee!“.

And I genuinely believe that the first firm that gets this – be it by unbundling, clause light reviews, collaborative teams, innovation, technology, knowledge sharing platforms, or a cross section of all and every, will make a motza!  

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How does your law firm encourage new clients to work with you?

As long-term readers of this blog will know, I’m not adverse to looking outside the world of law for ideas on how we might better position ourselves to attract and win new work. These same reader will also likely know that I have a very amateur interest in photography.

Combining these two was an article on diyphotography.net last week (4 April 2017) by Enzo dal Verme titled ‘How to encourage potential clients to work with you’, in which Enzo lays out 11 ways photographers can better market themselves to win work from potential new clients.

I really like Enzo’s suggestions and think that all but one would work well in the business development arsenal of any law firm. For that reason, I thought I give a high-level overview of Enzo’s 11 suggestions here:

  1. Have something unique to offer.
  2. Identify your potential clients.
  3. Be a specialist.
  4. Double check what you have to offer.
  5. Make sure you have what it takes to prove that you could really be valuable to them.
  6. Find a quick and impactful way to get your message across.
  7. Follow up.
  8. Be reliable, precise, professional.
  9. Don’t be pushy!
  10. Be creative.
  11. Ideally, you let your clients find you, you don’t go looking for them.

I’ll leave you to guess which one of the 11 items above I don’t agree with. In the meantime, take the time out to read Lenzo’s post in full – I guarantee you you won’t regret it.

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What does ‘being responsive’ mean to your law firm?

Ask nearly every lawyer you know whether or not they are “responsive” and to a T they will say “yes”. Most will likely back this up by saying they respond to emails within 24 hours and phone calls within 3 hours. Great stuff, but very reactive.

But does how a law firm see ‘being responsive’ equate with how in-house lawyers view their law firms ‘being responsive’? More importantly, can a law firm be proactively responsive?

A partial answer to this question was provided by Bupa’s legal chief Penny Dudley in an interview she gave to Legal Week yesterday (4 March 2017) – Bupa legal chief Penny Dudley on stepping up, what she looks for in a law firm and Brexit challenges -when asked the question:

What do you look for in an external adviser?

she replied, in part…

…I am obviously very keen on a firm’s responsiveness; even up to the point of anticipating things for us.

Wait, “anticipating things” for you – that’s not responsive! Or, is it…?

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Can a law firm ‘own’ a client?

If you were not already aware of it, a train wreck is currently taking place in the Australian legal sector:- the partners of Herbert Smith Freehills (HSF) are suing the departing partner leaving to set-up White & Case’s new Australian venture and nasty details of this divorce are being spread all over the Australian Financial Review on a weekly (sometimes daily) basis.

From yesterday‘s (Monday 3 April 2017) instalment we learnt that the departing partners collectively spent $364,000 on business development activities in the financial year 2016* on such things as:

  • trips to the exclusive Barnbougle golf course in Tasmania,
  • an $800 bottle of wine for a general manager of one of Australia’s leading energy companies (who is most likely hiding out in his/her office ruing the day they ever heard of HSF), and
  • getting in on the next generation, gifts for the births of clients’ babies.

The most interesting part of yesterday’s nugget wasn’t, however, all the unscrupulous details of what the partners at HSF call ‘business development’; but, rather the news that HSF are claiming that as they spent the money on the BD activities, and not the departing partners themselves directly, the client actually ‘belongs’ to the firm – and, therefore, the partners are ‘not allowed’ to take the client with them to White & Case.

Wow, hold on there for a second.

Leaving aside the fact that most of the clients who have been named and shamed for several weeks in one of Australia’s leading business publications and whose wining and dining (literally) has been described in miniature detail in court papers are unlikely to want to go anywhere near either firm for the foreseeable future, with the level of lateral hiring that has taken place in the Australian legal market over the last few years, arguing that because the firm has paid the business development dollars the firm owns the client raises a very interesting and thorny issue for the courts.

The next round in these hostilities is due to take place June 5, but I await the outcome of whether or not a firm can ‘own’ a client with interest. Because if the result goes one way, it may just kill the lateral hiring market overnight.

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*  poor Ms Draper must be wondering what she has done wrong too, having only ‘spent’ $2,865 on business development activities during that period but being pulled to the confession box along with all the other naughty sinners

Deutsche Bank, junior lawyers, being outcome focused, and a voice of reason

A fair amount has been written since Legal Week published its story on 21 March that ‘Deutsche Bank to refuse to pay for trainees and NQ lawyers after panel overhaul‘, which alleged that the Bank had told its panel firms it would no longer pay for trainee and NQ lawyer time on its files. Some of the commentary around this story has been in favour of the Bank’s position, some has questioned the wisdom of the Bank, and the vast majority of it has sat somewhere in the middle*.

With the level of public legal issues the Bank has had in the past few years, it’s little wonder that the Bank would look to reduce its legal fees, and not paying for trainees’ and NQ Lawyers’ time would certainly go some way to achieving that goal.

That’s all well and good, but to my mind if you are outcome orientated – rather than input driven – then the number of years a person has done something really doesn’t bother you – because what you are really paying for is the result. I mean: who is to know who will have that eureka moment?!?

Sure, it may be more likely to happen to a more experienced lawyer. But isn’t it just as likely that a senior lawyer will have their thinking clouded and the answer comes in the form of a fresh eyes approach from a junior lawyer?

And so enter a voice of reason into the debate – in the form of Vodafone Enterprise global general counsel Kerry Phillip, who is quoted in a later Legal Week article on the issue as saying:

“We do not expect to be charged for training time, but not everything a trainee does is training time. Law firms should absorb the cost of training solicitors, but where there is genuine value added to the client – rather than pure learning through shadowing or watching – then it is fair to charge.”

Absolutely spot on Ms Phillip.

But, crucially, this concept can be extended to all lawyers who act on all matters, in that where you genuinely add value to your client’s business/issue, then charge for it and more often than not you’ll be paid for it (without questioning of the bill).

But, where you don’t add value to your client’s business or issue, you cannot charge for it. Or, more accurately, you can: but increasingly you won’t be paid for it.

And just for the record, Ms Phillip goes on to say in that article:

“That said, we generally agree a fixed price for a piece of work. I expect the law firm to put an appropriately experienced and qualified person on that work, but we are paying for an agreed result or output that the firm puts its name to.”

Again, absolutely spot on:- clients are paying for an agreed result or output that your firm puts its name to – and there is a massive, massive, marketing lesson for private practice law firms to get their heads around in that statement.

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* NB: in my experience working tenders, Australia has seen this trend since at least 2010 – if not before.