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Practice Innovations - Managing in a changing legal environment

January 2011 | VOLUME 12, NUMBER 1spacer

Talent Change Management in Law Firms-A Solution in Stormy Weather?

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»Change Management in Law Firms—A Solution in Stormy Weather?
»Carnegie Report: An Update on Educating Lawyers for Real Practice
»New Faces of the Future Firmspacer
»Corporate Social Responsibility Programs in Law Firms
»Professional Development: Downtrodden but Not Defeated
»Book Review: Followership: How Followers Are Creating Change and Changing Leadersspacer
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Terri Mottershead, Principal, Mottershead Consulting, San Francisco, CA
Change Management in Law Firms-A Solution in Stormy Weather?
The legal industry has been impacted by three main drivers for change: technology, the changing role of in-house counsel, and globalization. ....

The Legal Industry in Transition

Managing a law firm or working in the legal industry the last few years has felt like living in the middle of a storm. Much of what we knew and had grown accustomed to has been questioned and challenged. We have been forced to confront change head on and it has been uncomfortable but, it was also inevitable. The legal industry has been long overdue for significant change and although the global financial crisis may have hastened the progress, it was not the only catalyst. Change is here to stay!

The legal industry has been impacted by three main drivers for change: technology, the changing role of in-house counsel, and globalization.1 The technology revolution has made more knowledge available to more people and spawned a multilayered and more sophisticated buyer of legal services. In-house counsel have increased in number and decreased the work briefed to outside counsel. They have articulated, with increasing clarity, their expectations of outside counsel through associations, initiatives, and calls for action. Although often shorthanded under the all-encompassing headline of "alternative fee arrangements," these expectations have driven much deeper and wider demands of outside counsel. These fee arrangements can only be mutually rewarding if highly motivated and highly functioning teams with project management skills are available to support the consistent delivery of cost-efficient, high-quality legal services. These two drivers for change alone demand an unprecedented level of focus on and investment in leadership, talent management, knowledge management, and technology but, when the demands are elevated to the global level, they increase exponentially.

In 2007 the legal industry saw its first firm, Slater Gordon, floated on the Australian stock exchange.2 Multidisciplinary practices will be possible in the United Kingdom next year.3 More and more overseas lawyers are qualifying to practice in the United States but are remaining resident elsewhere. More U.S. lawyers are moving overseas and practicing U.S. and local law from these locations.4 Legal process outsourcing organizations (LPOs) are taking on more and more commoditized work and delivering it from low-cost locations (inside and outside the United States).5 These LPOs are also competing with firms for other types of work. More and more overseas law firms are opening in the United States. This last year has seen a noticeable movement by U.S. law firms away from organic international growth to growth by transatlantic merger. The merged entities' combined presence in Asia, once rationalized, has resulted in coverage in additional countries and continents. Law firms are considering moving U.S.-based head offices overseas. Globalization is occurring in response to local, regional, and global clients doing business in more than one country, employing people in more than one country, and needing their legal advisers to service those needs in more than one country. Globalization means seamlessly practicing law through a single firm or as a member of a network of many geographically dispersed firms.

Law Firms and Change Management

For many firms, the depth and breadth of this change is daunting. It impacts almost every aspect of the firm from its business model, to governance structures, to leadership and talent management. It emphasizes more effective and efficient management of the firm's business performance and its talent resources. The nature and type of change required of 21st-century law firms cover all types of change management: strategic, structural, technology, process, financial, and cultural (attitudes and behaviors). It also requires change at all levels of the organization: firm, group, and individual. Change of this magnitude, if it is to be successful, must be proactively managed and navigated and it will take time.6 It requires different leadership skills, upgrading of skills across the board, and personnel counseling. The pivotal point, the place where change starts, progresses, ends, and supports continual improvement and adaptability, is communication—inside and outside the firm. There can never be too much communication! The big question for leading firms today is, therefore, increasingly less about defending the status quo and more about where and how to begin to change.

Ten Steps for Successful Change Management

There is no magic to change management. The magic comes from law firms embracing it and the adaptability, flexibility, and consequent competitive advantage it gives those firms in the marketplace. Change management is, in many respects, project management with significant consequences. However, if research into lawyer personality traits7 and the recent emphasis on project management training in law firms8 are any indication, change management may prove to be more challenging for lawyers than others. Lawyers are renowned for challenging assumptions (skepticism), being detail oriented, and working by themselves (autonomy and sociability) to deliver solutions to problems quickly (urgency). While this serves lawyers well in their legal work, it can sidetrack change initiatives that require time to take hold, a leap of faith to get done, and advanced skills in consensus building, stakeholder engagement, and relationship management for success. Project management skills (and other management skills) are mostly not taught in law school. Unless firms provide their own training programs (in-house or through external providers) or an individual pursues this as part of his or her own professional development, a lawyer receives no formal training in these areas.

Having noted this, the following 10 steps9 provide a checklist and starting point for any change management initiative:

  1. Determine what and why you need to change.

    It is important to articulate the business case for change. A change initiative is unlikely to get off the ground if more than half your leaders and managers do not agree on what and why the firm needs to change.
  2. Determine if your firm is ready for change.

    Three key conditions determine whether or not your firm is ready for change:
    1. Leaders are respected and effective. This applies to leadership of your firm as well as leadership of the change initiative. If your change leaders do not fulfill the criteria, the change initiative will not be taken seriously nor will it be viewed as a critical initiative in the firm.


    2. People must feel personally motivated to change and be rewarded for it. People are seldom motivated to change unless there is a real sense of urgency around the change. Communication about the change initiative must emphasize this urgency at the individual level within the firm. In addition, and as the change progresses, it is important to identify, celebrate, and reward those who embrace the change. This helps to provide examples and role models for change and starts to align professional development, evaluation, compensation, and promotion around the change initiative. It is for this reason that associate (and partner) competency-based development models have been viewed as part of a strategic change initiative by the firms that have adopted them.


    3. A nonhierarchical firm where people are used to collaborating. If the firm does not encourage widespread feedback, input, and suggestions, and the people working on the change initiative are not skilled at working in a collaborative environment, the change initiative will be viewed negatively—as a threat to be defended against and the change agents as interlopers with no authority to question leadership and the status quo. The change initiative needs to be viewed as an opportunity to increase competitive advantage.

  3. Identify and describe the change vision (what the changes will look like).

    All change initiatives need to have a clear vision about the future, and it needs to be compelling, realistic, focused, flexible, and easy to communicate.10 This step is not a repetition of the first step, but rather builds on it. In this step, the change agents have accepted the need for change and are now articulating how the firm will be viewed internally and in the marketplace; this is a focus on outcomes or results rather than on activities.


  4. Ensure you have top management support and buy-in.

    While a rigid management hierarchy can hinder change, top management support is nevertheless essential. If the leaders of the firm have not fully bought into the change, do not drive it, are not consistently messaging the change, or fail to "walk the talk" through all firm initiatives and communication opportunities, then people become confused about what is expected of them and will not be motivated to embrace it. All change initiatives take time. Top management has to be sufficiently sold on and understand the change initiative such that they are committed to see it through from start to end (but are also willing to adapt should the need arise).


  5. Ensure employees understand the need for and benefits flowing from the changes.

    Effective change cannot be mandated. Fear will not motivate change. For change to be effective and sustained, individuals need to understand how they can contribute to it (feedback for buy-in), how and where they can go to better understand it (training and communication), how it affects them, and most importantly, what is expected of them (clear expectations or standards).


  6. Identify the change management team.

    While any change management initiative is intricately connected to people, it is important not to restrict the change management team to those dealing with people matters in the firm. Different specialists will be required, depending on the focus of the change, but it will always be critical to have representation from the firmwide leadership team, practice group leaders, and any other support department leaders who will ultimately need to lead and articulate the change. The team may also include a consultant or two depending again on the nature of the change. Consultants should be thoroughly vetted and are likely best retained for the purposes of providing industry know-how, delivering dedicated or discrete tasks, and acting as an external sounding board for the team. While consultants can also offer advice about implementation or assist in aspects of it, this is something best left to the firm so it can sustain the change within, build skills, and not become dependent on the consultant. The main criteria for team membership should be diversity of opinion and skills; innovation; contribution; commitment and ability to articulate the vision; advanced people skills including the ability to persuade, influence, negotiate with, and motivate people around the vision (stakeholder engagement); and the ability to work in a collaborative environment to find a common path (consensus building) and the best path (leadership). Remember this is a change initiative so while historical perspective is important, it should not dictate team outcomes. The same leadership and input that led the firm to where it is now may not be able to lead the firm through the changes it needs to make tomorrow.


  7. Appoint a highly skilled project manager.

    This is important enough to single out as a separate, although related, step from step 6. The project must be monitored and controlled if it is to be delivered on time and on budget. The project manager needs to be someone with excellent project management and people management skills. He or she must also have strong internal political connections, firmwide respect, and outstanding interpersonal skills in order to communicate, network, and motivate the change management team to get the job done and the firm leadership to stay the course to see the change initiatives through to the end.


  8. Develop a detailed project plan.

    As mentioned earlier, a change management initiative is a project and, like any well-managed project involving many people and many interrelated tasks, requires a plan. The project plan needs to identify the scope of the work to be done and the budget, assign responsibilities (and accountability), determine timelines, and anticipate and cater to risks, trade-offs, and adjustments.


  9. Develop a detailed and inclusive communication plan.

    The communication plan needs to inform and encourage feedback at a firmwide, group, and individual level. It needs to track the launch, progress, deliverables, and achievement of success measures or return on investment of the change initiative. The communication plan cannot be an afterthought. Internal and external communication specialists need to be part of the change management team. The form (print or electronic), mode (in-person, e-mail, phone, social media—wikis, blogs, discussion boards), and format (behavioral interviews, focus groups, in-person meetings, roundtables, town hall meetings, training programs) of the communications should be tailored to the receiving audience. The communication plan should ensure that the firm leaders are front and center in delivering the change message not only when milestones are reached, but also through regular updates including all policies, protocols, or systems that seek to capture and entrench the changes.


  10. Develop a detailed and inclusive implementation plan.

    Implementation plans can get lost in a multitude of activities. While it is important that these activities take place, they should reinforce, explain, report back, and deliver on results. The success or failure of the change initiative should not be measured by how many training programs took place but whether or not the "what and why" of step one and "vision" of step three have been realized in the time frame proposed and, if not, what steps need to be taken to recalibrate, reinvest, and reinvigorate the initiative to achieve the change.

A Few Thoughts to End With

Given the preceding discussion, it is not surprising that leading law firms have recently added a new skill set to their strategic management teams—organizational and change management specialists or change agents. These specialists represent one of the outwardly visible examples of the many change initiatives taking place in firms today. Another is the adoption of competency-based development models mentioned earlier. The recent spate of law firm, in-house counsel, continuing legal education provider, and law school summits suggests that these changes in law firms will have a "knock on" effect in law schools. Defining competencies for the profession and changes to law school curricula that support a more practical emphasis and vocation transition from law school to law firm are shaping up to be some of the law school-based changes. The changes we are witnessing in our industry are not changes for the sake of change alone. These changes are overdue. They have come at a cost—financial and personal. But they have also sharpened our skills, demanded we develop some new ones, and opened the door to new voices, new approaches, and different ways to lead and manage law firms. They have encouraged us to manage our firms in a way that better aligns with client expectations and is more akin to business practices in the 21st century, and have pushed us to get comfortable with change as part of the way we will need to practice law in the "new normal."11


Sources

1. For a more detailed discussion of these topics, see Terri Mottershead, The Business Case for Talent Management in Law Firms—Are People Really Our Greatest Asset? in The Art and Science of Strategic Talent Management in Law Firms (2010); and Eversheds, Law Firm of the 21st Century—The Client's Revolution, An Eversheds Report on the Post-Recession Legal Sector in 2010, http://www.eversheds.com/clientsrevolution (last visited Sept. 26, 2010).

2. For details about the firm, visit the Slater and Gordon website at http://www.slatergordon.com.au/.

3. The Legal Services Board in the United Kingdom announced in February 2010 that licenses for alternative business structures would issue from October 6, 2011. In essence, this will mean that nonlawyers can invest in law firms and provide legal services outside the traditional law firm partnership model. See Claire Ruckin, LSB Greenlights Alternative Business Structures for 2011 Launch, Legalweek.com, Feb. 23, 2010, http://www.legalweek.com/legal-week/news/1593191/lsb-alternative-business-structures-green-light-2011-launch (last visited Sept. 26, 2010).

4. See, for example, the more than 400 percent increase in U.S.-qualified lawyers taking the Hong Kong Overseas Lawyers' Qualification Exam from 2008 to 2009 and holding steady so far in 2010: Suzi Ring, HK Bar Sees Influx of Applicants as US Firms Target Local Instructions, Legalweek.com, Sept. 22, 2010, http://www.legaltreehouse.com/?p=100 (last visited Dec. 22, 2010).

5. For a list of the many companies offering this service, see Prism Legal at http://www.prismlegal.com/index.php?option=content&task=view&id=88&Itemid=70 (last visited Sept. 26, 2010).

6. For a more detailed discussion of the change and talent management, see Heather Bock, Organizational Development and Change in The Art and Science of Strategic Talent Management in Law Firms (2010).

7. Larry Richard, Report to Legal Management, Herding Cats: The Lawyer Personality Revealed; Altman Weil (August 2002), http://www.managingpartnerforum.org/tasks/sites/mpf/assets/image/MPF%20-%20WEBSITE%20-%20ARTICLE%20-%20Herding%20Cats%20-%20Richards1.pdf (last visited Oct. 22, 2010).

8. See, for example, Altman Weil's work with Dechert: Gina Passarella, Dechert Puts Its Attorneys Through Project Management Training, Law.com, April 2, 2010, http://www.law.com/jsp/article.jsp?id=1202447368069 (last visited Sept. 26, 2010).

9. See Richard Luecke, Managing Change and Transition (2003) and John P. Kotter, Leading Change (1996).

10. See Luecke, at 36–38 (citing John Kotter, Realizing Change, an interactive CD-ROM (1997)).

11. "The new normal" is a phrase used beginning in early 2010 to describe the shift in the legal industry to accommodate the drivers for change discussed earlier in this article. It appeared in advertisements for the Churchill Breakfast Club, Innovation and Change, A "New Normal" for the Legal Industry, March 3, 2010, http://www.churchillclub.org/eventDetail.jsp?EVT_ID=853 (last visited Sept. 27, 2010), and in an article discussing that event by Paul Lippe, Welcome to the Future: Embracing the New Normal, The Am Law Daily, March 19, 2010, http://amlawdaily.typepad.com/amlawdaily/2010/03/0319future.html (last visited Sept. 27, 2010).

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