In the introduction to Good Governance in Law Firms: A Strategic Approach to Executive Decision Making and Management Structures (Globe Law & Business, 2014), I raised the question of whether the traditional law firm will survive the 21st Century.
I mentioned that the multiple, frequently competing, responsibilities that law firm partners must perform in a successful law firm -- e.g., marketing, sales, delivery of services, management, professional supervision -- are unique in the business world. The traditional concepts of partnership, upon which most law firms are still based, are increasingly becoming obstacles to meeting the strategic, business, and professional challenges posed by sophisticated clients in highly competitive markets. The rise of alternative business structures for the practice of law, combined with the consolidation of law firms into gigantic global professional services organizations, are signs that the traditional law firm might become almost extinct by the end of the century, if not before.
Consider this question: If you were starting a business to deliver high-value professional services to sophisticated customers in a highly competitive market, would you want to use a traditional law firm structure?
Even if the traditional law firm structure disappears, the demand for legal services, and for business structures and organisations to deliver them, will continue. In the meantime, even if they are an endangered professional species, law firms must continue to try to manage the many strategic, financial and professional challenges that they face here and now. Good law firm governance is therefore a strategic imperative for every law firm and, for some, a basic survival skill.
Even if you do not accept such a gloomy prognosis, it is clear to me that the law firm, as we have known it for the past 100 years, has become an endangered species.
Managing a business structure that might be an endangered species can present an interesting paradox that merits careful consideration:
- Focus on the basics. For most independent law firms, especially midsize firms, a focused return to the basics of profitability and outstanding client service will be essential. Partner time is the firm's most valuable asset, and firms should avoid rushing to "new normal" best practices and marketing fads that distract partners' time and attention.
- Innovate. Law firms in this century are challenged as never before to offer innovations that are relevant and significant to clients and that create a differentiating competitive advantage. It is possible to innovate oneself out of profitability and into market irrelevance.
So what should a midsize, independent law firm do? Stick to the basics? Innovate?
These appear somewhat contradictory, but both can be true at the same time. Tolerance for ambiguity and the ability to navigate between apparently contradictory priorities are emerging as management habits of law firms that might otherwise be in danger of extinction.
As one client recently mentioned to me, "It is all a matter of balance."
This is a republication of a WorldView article originally posted on 29 January 2015. We are republishing this item because some of our RSS subscribers did not receive it, due to an erroneous failure by our website hosting service to renew our certificate.