Law firms - a Coldplay problem?

I was reading a review of the performance of Coldplay at this year’s remote Glastonbury. Not for the first time the critique was that they were competent, energetic, tuneful but ever so slightly bland. It’s a challenge also laid at the door of Sir Keir Starmer. Listen to him on Desert Island Discs and you find yourself yearning for just a bit more Tim Minchin (not that he would be an ideal leader of the Labour Party).

So what about Big Law? Commercial law firms are not generally in the business of being noisy. Discretion is a quality that would often be seen as desirable and it is not a good day at the office for the managing partner when the firm becomes the story.

But are law firms too willing, in 2021, to be a bit grey, to fight shy of primary colours? The remote working driven by the pandemic has tugged at culture and loosened bonds of friendship and loyalty. With vaccination thankfully beginning to have an impact and return to office initiatives gathering pace, might now be a good moment for law firm leaders think hard about culture and challenge themselves to articulate and drive the personality of the firm?

A few strands to this thought:

• Purpose;
• ESG and sustainability;
• Feedback;
• Having a view; and
• Distinctiveness.

Purpose

It has been striking to me to see how corporates which have set out a clear and inspiring purpose, and then been led by that purpose, have made progress over the last couple of years. Examples include Anglo American, NatWest and Reckitt - “We exist to protect, heal and nurture in the relentless pursuit of a cleaner and healthier world. We fearlessly innovate in this pursuit across our Hygiene, Health and Nutrition businesses”. Commentary from internal and external stakeholders suggests that purpose has driven real cultural change at Reckitt.

In these businesses, purpose is shaping strategy and capital allocation, motivating employees to stretch, engaging customers and suppliers and resonating with investors.

Many law firms have, of course, appreciated the importance of purpose both to clients and to employees and have worked (with surveys and focus groups) to articulate values and give authentic expression to them. There must be more to purpose than maximising profits - right?

There are challenges:

• law is just not that exciting. It is important, absolutely, but it is not a subject which will naturally yield a lively narrative which will motivate; and
• the legal press is fixated with metrics such as profits per partner and revenue per lawyer and with league tables driven by them (the AMLaw 100, the LB 100) . Other KPIs (such as client satisfaction or reduction in carbon footprint) just don’t cut through in the same way.

But you do see law firm leaders talking more about values and there are increasingly punchy purpose statements on websites. For example, there is “Navigate uncertainty with authority” at Davis Polk and “Delivering legal certainty in a changing world” at Linklaters.

This is all good stuff, but is it enough? Themes of integrity, excellence, innovation and collegiality are key of course but can firms go the extra yard and express a purpose that is genuinely distinctive and then be led by that purpose? Meaning that the conduct and development of the business, and its interaction with key stakeholders, is really seen through that prism.

You’ll tell me that this is all a bit fluffy and woke, but take a look at what Pinsent Masons have been doing. It’s bold and it’s interesting. They explain how they are transitioning from being “an expertise-based law firm” to being “a purpose-led professional services business, with law at the core” pursuing a purpose of “making business work better for people”. As part of this, their results announcement last year included three, statistics based, metrics of success other than financial performance being:

• Our colleagues trust us and advocate for us,
• Our clients trust us and advocate for us, and
• Our business works better for the communities in which we operate.

This kind of approach won’t be for all firms but, particularly in a Covid world where an adrenaline shot to culture could be of real value, it is worth asking the hard questions - “What is our firm for?” “Does it have soul?”

ESG and Sustainability

Talk of purpose naturally leads us to ESG. This is, of course, the topic du jour for many clients and will be front of mind for law firm leaders. But how should a law firm’s approach to ESG - essentially sustainability - be framed so that it is resonant, coherent and (ideally) exciting?

Core building blocks might be:

1. The client advisory proposition. Recent Thomson Reuters data suggests that 42% of its Large Law clients have ESG practices advising on ESG compliance and ESG “opportunity”. Clients can really benefit from sage and proportionate advice about how to bring order to reporting against differing ESG standards and frameworks and how to think most creatively about, for example, sustainable financing structures. This area can, of course, yield consultancy opportunities outside the purely legal. But the proposition has to have shape and edge. So, here at Wasser, Saul and Kane we are developing the offering for our sustainability practice on one side of paper. It has three areas of focus - climate, finance and people. We are then going to road test it with five clients and five prospective clients, sand it down in light of feedback and roll it out;

2. Sustainability of, and within, the firm. The great Freddie Mercury sings, in “Love of my life”, of a bond that will endure “when everything’s all by the way”. This can be helpful in thinking about law firm sustainability. What are the fundamentals that will attract talent, retain talent, be important to clients (who are increasingly focussing on the ESG credentials of their external lawyers) and have genuine social impact? How are these fundamentals articulated and communicated and how is progress to be tested? Many law firms describe on their websites their progress in reducing carbon footprint, their commitment to diversity and inclusion and employee well-being and their social and charitable work. Few, however, undertake and describe a formal materiality process to identify the issues most important to their business and their stakeholders or set targets or report on KPIs beyond basic environmental issues. So, there is an opportunity for firms to give shape and structure to their sustainability initiatives. At Wasser, Saul and Kane we are working on a Sustainability Charter which keys off the UN Sustainability Goals and will set out a five-year path to WSK 2.0; and
3. Tone set by leaders. Law firm leaders are very visible - within the firm, with clients and in the legal press. So, the way they behave and communicate is vitally important and their messages around diversity, inclusion, wellbeing and other ESG themes need to be authentic and carefully judged. Many leaders have, for example, been thoughtful in their expression of concern for their teams during the pandemic but face a delicate balancing act with return to the office. There are cultural, learning and idea-sharing benefits to being back in the office but some team members will continue to have health concerns. Deft messaging will be important.

Feedback

I have been reading No Rules Rules by Reed Hastings (Netflix co-founder and CEO) and Erin Meyer (Business School professor) which was kindly sent to me by a friend.

One of the key themes is that candid and constructive feedback improves performance although it needs to be given and received in the right way. It should be given with intent to assist (not, for example, to hurt the other person), actionable (what can the recipient do differently?) and genuinely appreciated by the recipient who can decide whether to accept or discard it. And various examples are given of senior people in Netflix being pulled up on bad behaviour enabling “high performers to become outstanding performers”.

A few years ago, I gave a talk to a group of senior associates at a law firm. I went out to dinner afterwards with three of the partners. One of the partners said, over the starters, “Can I give you some feedback on your talk?”. “Sure” I said, bracing myself. “Well, a couple of the associates thought that it was meant for a more junior group and was a bit basic.” I thanked the person and reflected, stomach churning, that I had indeed probably misjudged my audience.

That wasn’t a great moment. But it was really valuable as I now take extra care to check that, when giving a talk, I have a clear idea of the seniority and expectations of my audience.

All big law firms, of course, have regular review processes for partners, legal staff and business services staff. But structures tend to be quite hierarchical so that tough (but important) messages for seniors can remain undelivered. 360-degree feedback processes help to address this somewhat, but you do find that junior team members will hold back for fear that the process is not as anonymous as billed.

So, the challenge for law firm leaders is to find ways of encouraging more regular candid (but never unkind) feedback. A few ideas on the how:

• encourage partners to convene short “feedback sessions” with the team at the end of each job as part of which the lead partner invites each team member to identify one thing that the partner could have done better;
• partners could volunteer for regular “peer review” sessions at which a peer, with whom the partner works, offers feedback (having polled the views of others);
• each lawyer could have a business services team member as a “critical friend” to help the lawyer appreciate his or her impact on the non-legal staff;
• “Feedback on our last meeting/trip/client dinner” could be the first item on internal meeting agendas; and
• pursue elegant, non-questionnaire based, ways of obtaining honest external feedback (for example by commissioning trusted third parties to meet clients and observers) - this is gold dust.

Having a view

Law firms, and their leaders, are naturally wary of expressing a view on big issues of the day, particularly where there is a political dimension. Inevitably not all partners would subscribe to the same view and nor would all clients. You hesitate to pin your colours to a mast that would offend some part of the client base.

Brexit is a classic case in point here and, cards on the table, I was part of the group at my former firm which decided back in 2016 that whilst each partner would have their own (strongly held) views we were not in a position to have a view as a firm.

But I find myself wondering whether times have changed and whether law firms should be more willing to get off the fence. Law and regulation keep getting more complicated as globalisation cedes ground to nationalism (USA/China, Brexit), the business of law continues to grow in success and influence and ESG themes are ever-more resonant. Many law firm leaders spoke out in relation to the Black Lives Matter movement and Paul Weiss have recently gathered an impressive group of law firm leaders in issuing a statement denouncing anti-semitism. Does this signal the beginning of a step change in law firm engagement?

I think that it does. Particularly against a backdrop of much greater focus by business on ESG and on the interests and needs of stakeholders other than shareholders and owners, it will be increasingly hard for law firms and their leaders to say “no comment” when asked about environmental, social and governance issues of moment. Does the firm, for example, support the lifting of nearly all Covid restrictions in the UK on 19 July?

And I believe that this change will help to bring more texture to the personality of law firms.

Which said, the area remains delicate and complicated:

• if you are visible in supporting particular values, you may find (as Paul Weiss have) that this bumps up against representation of clients which others may characterise as zealous; and
• firms will surely remain coy on the purely political (though I wonder where independence for Scotland sits on that spectrum?).

Distinctiveness

You are the managing partner standing, hopefully physically, in front of a group of vacation students. They look expectant. How do you describe the firm? How, without in any way disrespecting the (annoyingly good) competition, do you explain in three crisp points how the firm is different?

It might be best to go easy on expressions like “high quality” and “solutions-driven” and reflect on the DNA of the organisation. How has it been built up, what does its legacy say about its future, how is it structured, what do clients say when they meet the team on reception, “what three words?” would your spouse or partner use to describe the firm?

Thinking about Purpose is helpful of course.

I used to find motor car analogies helpful but one could equally go for guitars - are we a Fender Stratocaster, a Gibson Les Paul or a Jackson Pro Series Jeff Loomis Kelly? Or we could go for bands - the Cardigans, the Rolling Stones, Coldplay…?

Christopher Saul

Christopher Saul provides independent trusted advice to senior executives and key stakeholders within publicly quoted and privately owned businesses and professional service firms. His areas of focus are governance, succession and the moderation of differences.

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