How to build a human-pow­ered law firm

Peo­ple screw up law firms 

In 2011 Stu­art Wool­lard, author of The Mature Cor­po­ra­tion — a Mod­el of Respon­si­ble Capitalism​, wrote a piece for The Guardian, where he argued that to under­stand the true suc­cess of an organ­i­sa­tion you could not ignore the peo­ple — the human sys­tems fun­da­men­tal to long-term busi­ness and soci­etal val­ue. In his writ­ing, Wool­lard wrote that any per­for­mance-mea­sure­ment must look at its com­plete matu­ri­ty — both its finan­cial and human value.

In any organ­i­sa­tion, argued Wool­lard, the things that cre­ate val­ue, risk and harm are human beings. And if we can’t cap­ture, mea­sure and com­mu­ni­cate this in a way peo­ple under­stand, and that is quan­tifi­able — com­pared to oth­er organ­i­sa­tions, to share good, bad and indif­fer­ent prac­tice — we’re miss­ing a key ele­ment of organ­i­sa­tion­al val­ue and maturity. 

If we take this approach it is no longer far-fetched to con­sid­er The Inde­pen­dent​’s Chris Blackhurst’s open­ing words in his 2019 arti­cle, about fac­tors crit­i­cal to organ­i­sa­tion­al suc­cess. It real­ly is the case that just as they hold trans­for­ma­tive pow­er, so too can ​‘peo­ple screw up businesses’. 

Since then we’ve seen the work­ing world trans­formed, as we’ve weath­ered pan­dem­ic, war and glob­al reces­sion. Work­ing prac­tices, human rela­tion­ships, val­ues and well­be­ing have been brought to the fore­ground as crit­i­cal fac­tors influ­enc­ing organ­i­sa­tion­al suc­cess. Indeed, as Wool­lard pre­dict­ed in 2011, ​‘those firms who man­age peo­ple with­in their ecosys­tem as a source of val­ue, as opposed to a cost of doing busi­ness, [are now gen­er­at­ing] bet­ter soci­etal out­comes and supe­ri­or finan­cial per­for­mance’.

How does this impact the legal sector?

When we look at the legal sec­tor, The Great Res­ig­na­tion is a major fac­tor play­ing out across pri­vate prac­tice firms. As more lawyers seek out con­sul­tan­cy mod­els, in-house coun­sel roles and even com­plete career changes, the val­ue peo­ple hold — both in terms of what they bring to a firm but also what they now demand from their employ­ers — is being keen­ly felt.

But it doesn’t just stop with the work­force. There is an increas­ing dri­ve to under­stand all human rela­tion­ships that a law firm might have. Suc­cess is no longer sim­ply based around bill­able hours but also the extent to which they are invest­ing in human cap­i­tal to deliv­er val­ue to all stake­hold­ers — share­hold­ers, employ­ees, sup­ply chain, clients and soci­ety at large. 

And, we’ve seen a sig­nif­i­cant increase in the num­ber of firms recog­nis­ing their respon­si­bil­i­ties for not only address­ing their own impact on envi­ron­men­tal and soci­etal mat­ters at large, but their roles as ​‘trust­ed busi­ness advi­sors’ pro­mot­ing sol­id, sys­temic change. ESG is now a term all firms under­stand with increas­ing num­bers recog­nis­ing that suc­cess isn’t on pure­ly finan­cial terms but also through min­imised plan­e­tary harm and max­imised soci­etal impact.

The demand for ESG com­mit­ment is com­ing from all angles

Law firms increas­ing­ly want to under­stand the real­i­ty of their organ­i­sa­tion­al matu­ri­ty in all of these areas, ver­sus where they think they are. And the rea­son for this sea change is that demand for change is com­ing from both exter­nal stake­hold­ers, as well as internal. 

Future tal­ent is increas­ing­ly mak­ing deci­sions based on a law firm’s matu­ri­ty — by which we mean their abil­i­ty to mar­ry pur­pose, human poten­tial and per­for­mance. Exist­ing tal­ent is demand­ing the oppor­tu­ni­ty to release greater poten­tial with­in their work­ing lives. Clients are ask­ing for firms that ​“fit” in terms of ESG, cul­ture and val­ues — and they want to see evi­dence for how this is mea­sured, tracked against objec­tives and inte­grat­ed with­in the over­all strate­gic plan. GCs are ask­ing to see greater insight and data so as to under­stand the lived expe­ri­ence at pan­el firms, dri­ving greater account­abil­i­ty and demon­stra­ble align­ment with their own organ­i­sa­tion­al cul­tures. And reg­u­la­tors are increas­ing­ly expect­ing firms to com­ply with guide­lines as to how they can demon­strate that they are ​‘authen­tic’ in terms of the ESG claims they make to clients. 

How can law firms under­stand their maturity?

At Lex­So­lu­tions we believe the future of the legal sec­tor lies in bal­anc­ing tra­di­tion­al finan­cial met­rics with a clear under­stand­ing of organ­i­sa­tion­al matu­ri­ty. View­ing suc­cess only in terms of finan­cial per­for­mance is short­sight­ed and, ulti­mate­ly, a frac­tion of the pic­ture. By look­ing at both the finan­cial and human health of the organ­i­sa­tion, law firms can get a fuller, more holis­tic pic­ture of over­all health. And we call this organ­i­sa­tion­al maturity. 

DNA Diag­nos­tic has been based around the OMIN­DEX®, a method­ol­o­gy that has been test­ed across acad­e­mia, invest­ment pro­fes­sion­als and cor­po­rates over sev­en years. It’s a full health check that cap­tures and mea­sures all val­ue and risk ele­ments aris­ing from human stake­hold­ers. It looks at 32 key fac­tors to diag­nose the human health of your firm. Indi­ca­tors of this include pur­pose, val­ues, prin­ci­ples, cul­ture, deci­sion-mak­ing, engage­ment, trust, diver­si­ty and inclu­sion, well­be­ing, reten­tion, inno­va­tion, burnout and more. In short, it is a com­pre­hen­sive study of the true health of your firm, from the per­spec­tive of how peo­ple gen­er­ate (or remove) value. 

How does the DNA Diag­nos­tic for law firms work?

An exam­ple of this in prac­tice is law firm one, which has a notable num­ber of fee earn­ers head­ing towards burnout, as well as sev­er­al peo­ple on leave due to men­tal health prob­lems. Despite both expec­ta­tions and what they’d wish, these indi­vid­u­als are unlike­ly to be able to work well, or to add val­ue to their firm. Allow­ing this to con­tin­ue will deval­ue organ­i­sa­tion­al poten­tial. Con­verse­ly law firm two has struc­tures and mea­sures in place to mon­i­tor burnout and men­tal well­be­ing, as well as to sup­port fee earn­ers expe­ri­enc­ing this. As a result this firm is like­ly to have a more pro­duc­tive, ​‘valu­able’ work­force. We can see how law firm one is there­fore less valu­able — less mature in com­mer­cial terms — than law firm two.

The out­put from this process is designed to be viewed along­side finan­cial per­for­mance report­ing and cred­it reports. Firms are giv­en data that shows how the ​‘human aspects’ are impact­ing on the bot­tom line, as well as what they need to do to fix the prob­lems. Firms are able to under­stand where they are, com­pared to where they think they are, how to dri­ve their val­ue propo­si­tion and brand, how to demon­strate authen­tic­i­ty exter­nal­ly and how to present this in an evi­denced, mean­ing­ful way along­side finan­cial per­for­mance met­rics. Togeth­er, we believe that this presents a com­plete pic­ture of the fir­m’s val­ue, health and maturity.

Will you adopt the DNA Diagnostic?

Just the oth­er week at Legal Geek, a meet­ing of minds when it comes to the future of legal, we lis­tened to Nico­la Beck­ett (Senior In-House Coun­sel) and Mar­tin Storrs (Glob­al Head of Sourc­ing) at Fideli­ty Inter­na­tion­al dis­cuss what mat­ters most when it comes to their sup­pli­ers, includ­ing their law firm pan­el. And embrac­ing ESG is top of the agen­da. We are at a tip­ping point. Clients are award­ing busi­ness based on ESG fac­tors and indus­try-wise stan­dards are becom­ing increas­ing­ly important. 

Our work with The Matu­ri­ty Insti­tute on the DNA Diag­nos­tic is amongst the most mean­ing­ful work we do at Lex Solu­tions in sup­port­ing law firms who want to put ESG at the top of their agen­da. Will you work with us in 2023 to build your organ­i­sa­tion­al maturity?

Con­tact Manu@​lexsolutions.​com for a con­ver­sa­tion on how we can work with you. 

14 Oct