Culture: An
obstacle to success for law firms?
Reda
Bennani : Consultant
The global
financial crisis that truly impacted every economy, made a lot of radical
changes in the way businesses operate and generate revenue. Those that
anticipated ever-demanding customer needs thrived despite competing in very
tough industries. Others however lagged far behind in terms of structuring a
business model that understands the realities of the global economy and
corporate clients’ behaviour.
There is a
consensus that many big corporate law firms aren’t built to run like modern
businesses. The tough reality is that modern corporations are allocating fewer
resources to legal work, and establishing more strict measures to verify the
efficiency and productivity of the law firm engaged. This changing environment
has penalized law firms, which are already punished by their culture and
structure. The Partnership structure aims to look after the partners as the
ultimate financial goal. They have adopted complex corporate finance techniques
to generate revenue in multiple ways to support the income stream.
In a law firm
environment super stars’ pay checks are tied to profits, this creates a level
of financial volatility within the decision makers and is in conflict with the
desired longevity within the firm’s management. A fractured structure and
culture can be deadly for a law firm once a group leaves and run with some
cash…which we have witnessed in the last couple of years. Law firms then need,
to think short term for rebuilding their financial structure, and anticipate
long term trends by starting right now on internal changes. A danger is the practice of attending several
peer conferences, where few of the subjects discussed are really translated to the
law firm practice survival. The difficulty with chasing averages is that is the
best that can be hoped for.
There is not a
magic formula to fix the partnership model. The reality is compensation must be
less generous than it previously was for associates and mid-level attorneys.
The barrier to partnership must get harder. We are In an efficiency era, one where
VC backed IT companies are thriving to automate pretty much EVERYTHING! Is your
firm waiting for the inevitable or trying to get ahead of the curve?