"Why don't we get the results we expect?"
This is a common frustration of many law firm partners and managers. One way partners can dramatically increase the likelihood of achieving satisfactory results is to incorporate cultural due diligence into their decisions and the execution of their strategic priorities and goals.
cultural due diligence
Cultural due diligence is a process of discovery and analysis. Information can be gathered in many different ways. It provides essential information to partners so they can confidently make important decisions about the implementation of changes in their firm. These changes typically affect the future of the firm, the future of professional careers, and the current and anticipated service needs of existing and potential clients.
Most law firms present, at first glance, a compatible professional culture. The cultural due diligence process allows all parties to test their assumptions and anticipate cultural factors, at a deeper level. These factors can optimize a successful implementation of specific goals; but their potential effectiveness also can be undermined if they are not managed well.
getting to the key questions
The opportunity to "combine" with another firm – by a merger, alliance, or "best friends" relationship -- often appears attractive from a strategic perspective. The financial business case may look strong. The bigger questions then become:
- To what extent will the cultures, politics, historical patterns, clients and firm members affect the potential business opportunities in both the short and long term?
- What steps will we take to mitigate risks and manage the anticipated changes to achieve our short and long term goals?
Revised or newly constructed compensation plans may make financial sense. They might have worked in other firms and have adequately addressed the current partners' concerns about their investments. The next test is:
- To what extent can we realistically plan on achieving the performance improvements and the anticipated returns on our investment in this change?
- What steps will we take to mitigate the risks of underperformance and ensure we achieve the positive outcomes we desire?
In both of these cases, the partners want to be able to confidently make decisions and move ahead with the implementation of anticipated changes in their firms. If they are unable or unwilling to confront their own realities – both strengths and limitations – their plans may be based on denial or wishful thinking, rather than powered by knowledge, agreed priorities, and agreed practical strategies for success.
Every challenge in a law firm brings lots of questions. The purpose of cultural due diligence is to help the partners find some reliable and relevant answers to their questions – beyond the obvious ones – that have significant implications for their ability to actually get the results they expect. It should also:
- build trust among decision makers and leaders
- surface any inconsistences in expectations, perceptions and proposed actions
- define problematic and sensitive issues in transparent and constructive ways
- recommend and propose solutions, strategies and actions to make necessary decisions and manage the change process
A recurring theme from partners who participate in a cultural due diligence process is "Why haven't we done this before?" and "Even though we didn't proceed (with the proposed merger, transition or change), we learned so much and our partners have a renewed commitment to our ongoing success!"
So, why are law firm partners reluctant to conduct cultural due diligence?
Why don't partners more frequently invest in a cultural due diligence process -- prior to taking significant decisions or implementing important changes? Sometimes they may be intellectually skeptical because they don't know enough. Sometimes the obstacles are more deeply rooted.
Partners may prefer to make decisions on "gut instinct." They move into action as quickly as possible – dealing with problems as they occur. This is analogous to "Ready! Fire! Aim!" as opposed to "Ready! Aim! Fire!"
Getting Ready, identifying the opportunities or problems and anticipating the changes that need to be made can be quite straightforward. However, when firms then rush to solutions – without setting well-informed goals based on cultural considerations – they are usually disappointed. Doing so also sets up a vicious cycle of then trying to fix what went wrong – after the fact – which usually leads to more disappointing results and an erroneous conclusion for future efforts, "We already tried that and it doesn't work."
When partners don't Aim! before they Fire!, they often miss! By jumping immediately into a decision and execution, they risk finding that their intended opportunity or solution back fires – or at least gets disappointing results – and they spend more time and money fixing the consequences of a poorly planned and superficially thought out response than if they would have simply paused to follow a logical and proven cultural due diligence process.
Partners may live in an "ivory tower" with limited perspective about how things currently get done in their firm and how the firm members feel about the existing culture and leadership of the firm. So they may devalue the importance of doing cultural due diligence.
There is usually a big gap between expectations and actual results when partners – for whatever reason – lack the necessary scope and depth of knowledge in making and implementing important decisions.
Partners may forget that performance is the result of the total work environment – not a single decision. For example, how information and communication flows currently work, how disagreements are resolved, and how efficiently and effectively technical or operational problems get solved all will have significant implications for performance during a change effort. Just knowing in advance where the "weak links" are gives partners the opportunity to make plans and handle potential risks before they become problems.
Some partners may have difficulty accepting others' perceptions of "the truth." They may resist other points of view or prefer to rationalize away any suggestion that things aren't okay. On paper this sounds counterproductive, but it is not an uncommon dynamic. These partners may be primary owners of their firms, they may be used to having their decisions accepted, not questioned, and they may be most comfortable in an authoritarian role with firm members doing as they are told.
Cultural due diligence as a process does not judge anyone or anything. There is no presumption, for example, that authoritarian law firm leaders lack a sense of caring, vision, or even effectiveness. Every firm is different. What it does do is help to bridge the information gap between what partners may not know or may not have considered in the context of the proposed change with their stated (and sometimes assumed) expectations and desired results.
Partners may assume cultural compatibility. For example, when testing the suitability of a merger or alliance, they may prefer to make a simple judgment based on whether they like and trust the people involved in the proposed change.
Whether certain partners like and trust each other may indeed provide a strength during a transition or the implementation of a change, particularly if the partners are aware of the specific factors that influence their perceptions. Feeling that you like and trust someone can help create positive synergies right away.
In the case of a merger, however, how things have been done in the past is not likely to be the same as how things will get done in the future. Cultures evolve in response to internal and external changes. These changes impose new ways of thinking and behaving. Beyond the "what" of substantive business issues there are unlimited opportunities for even the most amenable relationships to go array if partners don't take responsibility for sustaining trust and compatibility in their relationships.
For example, when consensus is a binding expectation for partner decision making, it can be used, often unintentionally, as a vehicle for discouraging dissent. Those who have traditionally held roles of formal power and influence may expect others – after some discussion –simply to "go along" as a sign of continuing "compatibility."
Partners new to the firm or newly appointed managers may need more frequent opportunities to test and examine decisions that impact them. They may seem to be overly concerned with whether they can meet expectations. They may want to demonstrate their unique value to partners who they feel don't know them well by verbally expressing their individual views and competencies. These behaviors may be interpreted as annoying or even as dissension. Without realizing it, if partners discourage these differentiating behaviors rather than encouraging them, they damage prevailing good will.
International mergers have unique cultural considerations. For example, trust generally declines with distance, even when partners are in the same firm. When firms are in different regions and countries, trust is further challenged and it is even more important to sustain. Systemic problems usually require collective action to resolve them; so geographic distance, cultural differences (as well as similarities), and prevailing levels of trust become ever-present variables to monitor and to plan to manage consciously, transparently and competently.
Partners may assume that once they've made a decision, the implementation of the decision is someone else's job.
Considering the viability for success is an important part of a well informed decision. When two firms consider a merger, they would not think of making a decision solely on whether they think they are a good cultural "match," without also evaluating the financial risks and opportunities present in the business case. Similarly, successful firms understand that even with a compelling financial incentive, there are other equally, if not more important, factors to consider in understanding whether or not to proceed and if so, how to manage a transition.
Successful partners understand that the future is a moving target. So, they are continuously seeking information from new sources and continuously testing their assumptions, taking nothing for granted.
Partners may think the process is too complicated or will take too long.
Cultural due diligence it is not a rigid, prescribed process. Sometimes firms have a significant amount of information readily available to answer questions. Sometimes there are one or two specific "deal breakers" that firms in a merger want to test. The degree of urgency in making and beginning to implement a decision may also have a bearing on the approach. So, the design of a cultural due diligence process – along with the questions to be answered – varies and is agreed in advance by all the involved parties.
Cultural due diligence can be efficient, but it is a process. The experience of conducting cultural due diligence has the potential to build levels of confidence, buy-in, and collective will among the key decision makers and practice leaders. These factors help firms "stay the course," manage a successful transition or change, and achieve the intended synergies and beneficial outcomes that they seek.
Lisa M. Walker Johnson