Strong leadership is fundamental to driving innovation in law firms. This is not a discussion point. There is no discussion. This issue, Legal Business teamed up with Berwin Leighton Paisner (BLP) for an extended look at the role of leadership in a period of uncertainty and the strength of that core conclusion surprised even me.
While it’s not surprising that law firm leaders hold that view – it would be odd if they didn’t – it was more telling that clients did as well. But the real acid test is the overwhelming endorsement of the need for robust leadership from partners and associates in our research. As this involves partners downplaying their own contribution – which they are neither culturally inclined nor structurally incentivised to do – that’s saying something.
As striking was the endorsement among hardened fee-earners of the wider importance and contribution of leadership in law and confidence that governance standards have improved over the last ten years. It turns out turkeys can vote for Christmas if you sell it well enough.
If we assume central leadership is key to fostering a culture of creativity and improvement, the next question is whether partnership is a block to innovation. On this, our findings are more ambiguous. Nearly half of the polled associates felt that partnership and innovation were a poor fit, against only 28% of partners. Managing partners are more upbeat on the point, but again, they would say that, wouldn’t they?
Here is a personal view: the model is often confused with what it means to be a lawyer. Partnership has been successfully deployed in creative industries like advertising and architecture – it’s an effective structure for engaging strong-willed, high-achieving individuals. Much of the criticism laid at partnership’s door is to do with the psychology of lawyers – both the kind of people attracted to it and inherent professional obligations – which promotes conservatism and risk aversion. But some of that scepticism is what we need lawyers for. Partnership in itself is not a bar to innovation.
The biggest structural issue with partnership is full distribution of profits, but that can be resolved. This is a major point: you often hear talk that law firms need outside investment. In reality most large law firms generate huge amounts of capital, easily enough to fund their activities and investments over the medium term – they just choose to keep giving it away and thinly capitalise their businesses.
On innovation in general, I’d maintain that major law firms are pretty good at continual refinement of their business. In contrast, they are much less effective at dislocating, tear-it-up-and-start-again innovation. In academic speak they do sustaining not disruptive innovation. But then it’s been empirically shown that most major companies are poor at handling such inflexion points.
Does that mean they will go the way of the dinosaurs as Axiom and Riverview rise? The point is far from settled – these challengers are closer to the law firms they are supposedly disrupting than the sales pitch and traditional legal firms have proved more adept at bolting on new models than commonly accepted. It looks like the industry is ultimately heading for one mammoth showdown between law old and new. If law firms want to win that contest they should assume they can lose. Those leadership skills will certainly come in handy.
For more on leadership and innovation, see The partnership dilemma – A special report on leadership in law in the age of disruption