One of the more unusual reactions I’ve gotten to my book Growth Is Dead came from Kate Fritz, managing partner of Fenwick & West, who I had the chance to talk to recently.
Few lawyers will need an introduction to Fenwick, one of most respected practices in the West Coast of America and a leading adviser in California’s technology scene thanks for work for clients like Facebook, Apple and eBay.
Now, several people have taken the title of my book a bit too literally, but Kate challenged the concept on another level. She readily agreed that revenue growth substantially beyond inflation or headcount is probably over in law. But then came her insight. Kate believes firms have to grow a lot in the way fully mature animals or humans need to grow: smarter, evolving, learning new things, changing with the business climate, the demographics of the talent population, and changes in the world economy in general.
She went further: the mind-set of law firms needs to be one of radical change, which she described as change from the inside, not that driven by external forces. To elaborate: Kate believes law firms as institutions need to change, but they haven’t done so at all. How not? We have:
• the same positions
• the same hiring tactics
• the same recruiting practices
• the same compensation models
Kate warmed to the subject: ‘It’s crazy; what other business hasn’t changed those things in the last 100 years?’ Every company, every professional services firm, does everything radically differently than it did 15 years ago, and that’s just not true of law firms, she said. Change is ‘super-overdue’ and not just because clients are demanding it but because the talent pool has changed dramatically. For example, the degree of sophistication of people who aren’t lawyers but who can help lawyers to provide services to clients – and still lawyers refuse to adequately appreciate what people who don’t have a legal qualification can provide.
And, I assumed, that would carry over into a need to change the minimal respect people in the C-suite of most law firms get. Absolutely, Kate said: Just look at the financial analysts who can crunch data far more effectively than lawyers.
We turned to the subject of talent.
Kate said it’s not just demographic changes; it’s about technological changes. Starting to practise in the days of snail mail, hand delivery, faxes, FedEx, and no email, where responses were not expected to be instantaneous, is so different than the starting experience of today’s first-year associates. ‘So this isn’t the stereotype of baby boomers willing to work all the time and a new generation full of slackers,?’ I ask.
‘No; we may think we worked all the time, but 24/7 access was not really the reality it is today. Law firms behave as if these changes are merely on the margins but they haven’t asked what the real impact is on lawyers and others. We need some pretty fundamental adjustments.’
‘But there has to be something about demographics, right? And I gather you’re talking about more than the fact that women have babies and men don’t?,’ I ask.
Absolutely, she agrees, and turns to diversity in general. The talent pool, if not the workforce within law firms itself, is truly diverse. But you may have to change your institution, your firm, to make it a place where diversity is welcome. ‘Why diversity? Why does it matter?,’ I ask. Diversity makes the firm a stronger, more resilient institution, better able to serve clients. If that’s a core goal, you need to do more than bring a group of diverse people in through recruitment and then watch them leave.
‘Women are the canary in the coal mine for all the diversity issues.’ They’re in the crosshairs of work/life (im)balance because the critical years to partnership overlap with critical family formation years in ways not remotely as conflicting for men. To take a first step in alleviating that, Fenwick got rid of lockstep promotion for associates a long time ago; Kate called it a crazy idea that makes no sense and has never been used outside Law Land.
She suggested we get more comfortable about thinking of career progression as a ‘lattice’, and not a ladder. The path to advancement needs to be divorced from law school graduation anniversaries and needs to more closely match what people are capable of doing. Follow people’s accomplishments, in other words, not an arbitrary measure of time passing.
Law firms also need to experiment more not just with ‘time in grade’ but with the roles on offer. A lot of associates don’t want to be partners, but would still rather stay at a law firm than to go in-house; for others, the ultimate plan is to go in-house; and still others have different plans altogether. Law firms need to be far more candid – with themselves – about acknowledging that and acknowledging that firms don’t just train associates to be partners but to be corporate clients, knowledge managers, judges, legal product developers, entrepreneurs, client relationship executives, practice managers, community leaders, and much more.
Kate observes that corporations and in-house departments have done a much better job at diversifying their legal departments, so the problem has to be laid at the door of law firms and not the wider legal profession. And if law firms can’t solve it, we’re excluding a huge part of the talent pool.
I change the subject to lawyers’ psychology.
‘There’s so much to be done internally that’s difficult because of that psychology.’ For people within the firm to be resilient and embrace change when lawyers, according to several studies, are naturally the ‘least resilient people on the planet’ means you have to make the institution itself resilient. Obviously, law firms are different from corporations, flatter and less hierarchical, which can be a great strength, but there are also many things law firms can learn from corporations.
It comes down to this: people need to participate in the change, become invested in doing things, trying small experiments and gaining adoption.
I ask what she thinks of the concept of an R&D budget for a law firm? ‘However you can accomplish the result of having everyone not spend every hour doing the task at hand, I applaud.’ She adds that Fenwick tends to create change through project experiments that start small, which allows for evolution and growth for successful experiments or smaller failure. Again, Kate insists, whatever it takes, be that ‘signalling’ permission with an R&D budget or giving permission to pursue projects not immediately directed at the task at hand, we need to think creatively about ways of accomplishing new and different things.
I raise my new least favourite word, ‘value’. (Least favourite because almost everyone who invokes it has no clue what they mean.) What does ‘value’ mean in the eyes of clients?
Well, she says, if you think about ordinary consumers and perceived value, much has to do with expectations of what the cost would be. For many years, the lawyer was the access point to legal knowledge. Now clients have tonnes of choices and a stronger sense of whether they’ve gotten value. Pricing initiatives are just one way Fenwick is trying to deliver value.
The same service can seem to a client to be exceptional or disappointing, based on ingoing expectations. A cautionary thought to those of us who are tempted always to promise impeccability as a starting point.
• You could argue that Fenwick, with its roots in Silicon Valley and San Francisco, is unusually sensitive to the role of technology in driving change in the workplace. This may be true – it should be true – but I have news for you: listen up. The noted Canadian-American author William Gibson, who coined the word ‘cyberspace,’ also said ‘The future is already here; it’s just unevenly distributed’. So if Fenwick is closer to the future than most of Big Law, pay attention.
• Second, in going back over my notes something jumped out at me that I hadn’t perceived when we were talking: Kate used a single word a lot and invested it with great meaning. The word?: ‘Institution.’ This matters. It matters because law firms choose to be consumption and not investment engines, and tend to focus on the present and the immediate past, and never the future. The word ‘institution’ implies a strongly related concept, namely ‘stewardship’. Don’t we have an obligation to leave our institutions better than we found them?
Bruce MacEwen is president of Adam Smith Esq, the legal research and consulting company.
See ‘How to improve a law firm in 17 easy steps’ for more on how law firms can innovate.