Don’t let your law firm overlawy to death

technology

Six months ago, most of us had not even heard of generative AI. Today, leaders in the legal industry are all grappling with how much this new technology will affect the way we do business, from basic research to drafting contracts to potentially changing the number of employees a firm can or should keep. These days, generational shifts in the practice of law seem to happen every two or three years. The law today is not for the faint of heart.

When change was more gradual, law firm leaders could make decisions slowly and deliberately. This generally fits the personalities of lawyers. Our work is precedent-based. We make a living helping clients identify and avoid risks, and experience their grand business visions through established operations and safe ports. Being cautious and considerate about change is in our nature.

The slow decision-making processes were also a result of the relatively unique ownership structure of most companies compared to the larger business world. When looking at the world of companies that generate hundreds of millions or billions of dollars in revenue annually, most of them either have a very concentrated or very sparse ownership structure. You’ve closely owned major corporations, often governed by the owners themselves, and your own publicly traded entities, governed by a C-suite and a select board of experienced business professionals.

What you don’t find very often are companies in the middle, those with flat organizational structures and large numbers of stakeholders. None of the stakeholders has huge voting power alone, but all of them have a significant voice and a significant amount of influence. In the survival-of-the-fittest business world, only a few organizations have been able to develop this kind of structure. However, this is the model that many companies operate on, and it is to their great detriment.

Alien industry out

Most of the commonality of this form strikes me as a combination of historical accident and an artifact of mood. The modern law firm started with the classic partnership model, which makes sense when there are just a few people in a room trying to make decisions about their joint venture. But as the practice of law has expanded, our business model has remained largely the same.

In part, this is because, for better or worse, law firms are made up of lawyers. We are smart, opinionated, and well-paid people to influence key decisions for our clients. Is it any wonder that a group made up of people who are drawn to this kind of work have so many strong voices interested in keeping their seat at the table? What’s more, we are owners and operators who live and breathe our company in ways that passive investors and hired executives simply cannot. Shareholders can sell all of their shares, and executives can move on, but a lawyer never leaves his practice behind.

While most professions and industries have shifted responsibility for management and vision to higher-ups over the past decades, most of the legal industry has kept its leadership structure consistent and widely distributed. Their legal structure may have changed, but at their heart most law firms remain partnerships.

All of these factors—temperamental, historical, and structural—foster a culture of slow, measured change in law firms. We analyze, discuss and debate ideas thoroughly. We campaign within our companies to build consensus, and compromise to get the votes we need. It is the same deliberate and deliberate decision-making process that the Framers of the Constitution sought when they created the congressional system.

But if you have cared about our government at any time in the past 30 years, this comparison should not inspire confidence.

What makes sense today?

I understand why the partnership decision-making model has dominated so long, but I don’t think it made sense from a business perspective for decades. Once law partnerships went from a few lawyers around a conference table to mature firms with hundreds of lawyers and thousands of employees, the old model stopped working. Most partners spend most of their time tending to their practice and keeping their cases moving forward, and they simply don’t have the bandwidth to keep up with industry trends and changes – let alone have important statistics allocated to memory and know what’s inside. The company’s business.

Moreover, the sheer number of votes to be heard on every issue in the Partnership Management Model is a recipe for death by committee. By nature and training, we tend to be good at spotting problems and pitfalls in proposed solutions, while we are lagging behind at spotting and seizing opportunities. Consensus building tends to be easiest around old, proven, safe ideas, while transformative and disruptive concepts struggle to get off the starting line. Although partnerships sit down and discuss concepts to death, and put forward bold actions for further consideration, only the smartest corporate entities can swoop in and eat the partnership lunch.

Perhaps when the economy was booming and industry-wide changes were rare, perhaps we could get away with suboptimal leadership styles. The strong market conditions were masked by the shortcomings and errors. But those days are over.

Can we stop ourselves?

It’s no secret that lawyers have high opinions of themselves. We think we’re the smartest people in the room. We are a control freak. We love to share our views with others. Why should we stop ourselves from embedding ourselves in every management decision – pointing out the flaws and the risks?

The answer: Because you will kill your law firm if you don’t. Law firms that wish to thrive in the coming years must adopt governance models that enable their leadership to make quick, bold and sometimes controversial decisions. Companies need to embrace the risks, change, and discomfort that comes from experiencing something transformative. Partners need to shift from thinking of themselves as individual shareholders and thinking more about the health of their company as a whole. It’s a big request, but time demands it.

This is not a call to give company management teams a blank check and a lack of oversight. Enabling corporate managers to make tough decisions quickly will make consensus-building more necessary than ever. The executive team of a law firm needs to relentlessly communicate its ideas, goals, and vision. There must be an open door for partners, colleagues and employees to be heard and possibly influence the decisions that are made. More than anything else, leadership needs to develop trust and acceptance within the company, to increase our ability to take risks will It leads to failure at some point. By building trust, we can survive failures, learn from them, and resist the inevitable rush back to the old business model that no longer works and never did.

James Goodnow He is the CEO and Managing Partner of NLJ 250 Fenimore Craig. At the age of 36, he became the youngest known CEO of a large US law firm. He holds a JD from Harvard Law School and two business administration degrees from the Massachusetts Institute of Technology. He is currently studying at Judge Business School, University of Cambridge (UK), where he is working toward his master’s degree in Entrepreneurship. James is the co-author of Motivating Millennials, which took first place on Amazon in the Business New Releases category. As a practitioner, he and his colleagues have built and run a technology-based company plaintiffs practice and business model. You can reach out to James on Twitter (@JamesGoodnow) or by emailing him at James @JamesGoodnow.com.