{"id":799,"date":"2019-02-12T15:29:23","date_gmt":"2019-02-12T14:29:23","guid":{"rendered":"https:\/\/lam.unisg.ch\/blog\/?p=799"},"modified":"2019-02-12T15:29:23","modified_gmt":"2019-02-12T14:29:23","slug":"building-the-law-firm-of-the-future-the-shape-of-things-to-come","status":"publish","type":"post","link":"https:\/\/lam.unisg.ch\/blog\/en\/building-the-law-firm-of-the-future-the-shape-of-things-to-come","title":{"rendered":"Building the Law Firm of the Future \u2013 The Shape of Things to Come"},"content":{"rendered":"

Michael, in December you spoke at a conference of the International Bar Association that explored the law firm of the future. With some distance, what are your reflections?<\/strong><\/p>\n

 <\/p>\n

\"Michael
Michael Smets<\/figcaption><\/figure>\n

It was a fascinating event that looked at the future of law firms in all their dimensions. That really brought home how many of the features of law firms that we take for granted are coming under increasing pressure to change; anything from the nature of expertise to new career preferences of associates to the billable hour and professional ethics.<\/p>\n

Having said that, it was also inspiring to feature alongside people who are taking big strides to bring the opportunities of the digital future into the present, such as Brian Kuhn of the Watson Legal Practice at IBM, Peter Lee of Wavelength law or Shruti Ajitsaria who heads up Fuse, Allen & Overy\u2019s LegalTech incubator. They all reminded me of William Gibson\u2019s lovely quote: \u201cthe future is already here, it’s just not very evenly distributed.\u201d<\/p>\n

 <\/p>\n

That sounds as if the legal sector has a pretty good handle on its own future?<\/strong><\/p>\n

Maybe, maybe not. It was refreshing to see lots of efforts to involve clients in shaping the future and to learn from other professional services, such as consulting. Yet, while it was good to see more inter-disciplinary connection, I\u2019m not sure people are connecting all the dots yet for a fuller picture.<\/p>\n

 <\/p>\n

Ok, you\u2019ll have to explain that. What are the dots and why aren\u2019t they connected?<\/strong><\/p>\n

As I said, law firms are facing disruption and opportunities of many kinds: technological disruption of AI and blockchain, social disruption in terms of work-life balance and other career preferences, market disruptions such as the \u201dmore-for-less\u201d challenge and the market entry of new rivals, to name but a few. Make no mistake, each one of those poses complex challenges that deserve their own conversation. But the much bigger challenge is that these dynamics interact in an even more complex constellation that affects how law firms change \u2013 or not. So I would argue that unless we pay more attention to these connections and convene a bigger conversation, we will continue to struggle with the future.<\/p>\n

 <\/p>\n

So are you saying that \u201cnot changing\u201d is an option?<\/strong><\/p>\n

Not really, but it\u2019s a possibility! I think we are currently too easily tempted to blame the wrong culprits for the inertia we see. I often hear talk of people\u2019s fear of change, the risk aversion of lawyers, the lack of a \u201cburning platform\u201d that makes change inevitable. They are all relevant, no doubt; but they distract us from the systemic inertia that is built into the very structures that have sustained law firm success in the past.<\/p>\n

 <\/p>\n

How does something that used to be a strength suddenly turn into a weakness?<\/strong><\/p>\n

Inconsistency! Or, more accurately \u2013 misalignment. Organizations change as their environment changes to stay aligned. However, as they do so, they often do so very selectively. As a result, if law firms fail to connect the dots and continue to change selectively, they undermine their original strengths as elements become misaligned, and this misalignment creates friction and inertia.<\/p>\n

 <\/p>\n

So how do you suggest law firms should think about change more holistically?<\/strong><\/p>\n

Traditionally, three control mechanisms have aligned to sustain law firms: their strategic, operating and financial control. In a recent editorial,[1]<\/a> some colleagues and I started to imagine that law firms are sitting on a clockface, starting with strategic control at noon, operating control at four o\u2019clock and financial control at eight o\u2019clock. Let\u2019s fill in the gaps!<\/p>\n

Strategic control has been notoriously difficult, because the quality of professional services is hard to assess. So a lot of \u201ccontrol\u201d is exerted through collegiality, reputation, and routines that reassure clients they are getting the best possible services. Beyond that, however, professionals enjoy a lot of autonomy and professional discretion to serve their clients to the best of their ability.<\/p>\n

In terms of operating control, this has been unproblematic, as lawyers have enjoyed relatively homogeneous training and are bound by strong ethical commitments. Given this personal autonomy and ethical commitment, operating control has largely relied on incentives, such as contingent performance and rewards \u2013 especially in the form of billable hours and the up-or-out tournament for limited partnership slots.<\/p>\n

Which of course brings us to financial control, which used to be quite simple because pure-play partnerships have no outside owners, don\u2019t need to protect outside investors and can therefore focus on partnership governance and an ethos of collegiality in their strategic control. Which brings us full circle.<\/p>\n

Together, this configuration deals with three traditional issues: handling \u201cquality opacity\u201d, a professional workforce, and the \u2013 traditionally \u2013 low capital requirements of law firms.<\/p>\n

Even though some of these elements have come under pressure in the recent past, I think how they sustain each other is intuitive. Therefore trying to change one element only runs into resistance from other structural elements. That said: changing one element inevitably creates pressure on the others! So when pressure becomes strong enough, there may be a domino effect!<\/p>\n

 <\/p>\n

Can you give us an example?<\/strong><\/p>\n

Let\u2019s take the much-discussed technology disruption. Anything from artificial intelligence to data analytics. We now hear a lot of clients actually asking their legal service providers to demonstrate their capability before their services are formally commissioned. Quality opacity gives way to transparency! Reputation and routines may become less important, as long as technology is used in a transparent way. Professional autonomy may be increasingly curbed by technology protocols. The question arises as to what extent law firms will still be dominated by a professional workforce in the traditional sense. What part of law firms will still be committed to legal professional ethics? As professional means of control get weaker, so do traditional incentive systems. Billable hours become more meaningless, partnership tournaments become less meaningless as fewer young lawyers aspire to partnership and the route to partnership may not be open (yet) to technology specialists. Simultaneously, I heard a lot of representatives \u2013 especially from smaller and medium-sized law firms \u2013 complain that many tech solutions are simply not affordable for them. So raising outside capital becomes a real option, which would require investor protection and put pressure on collegial decision-making among partners. Broadly speaking, every element that has traditionally been neatly aligned to sustain law firm success would be pushed out of line. But that doesn\u2019t seem to be getting a lot of attention at the moment.<\/p>\n

 <\/p>\n

So what does that mean for how law firms can manage this transition into the \u201cnew normal\u201d?<\/strong><\/p>\n

We can imagine change coming about in one of three ways: first, we can imagine these increasing misalignments like tectonic shifts. Despite superficial stability \u2013 or inertia \u2013 a lot of tension builds up. When that tension is eventually released, change will be transformational \u2013 like an earthquake. Alternatively, a more holistic approach would manage those tensions as several of the elements around our imagined clock-face change in sync and quickly settle into a new self-sustaining constellation. That, however, takes a carefully orchestrated change programme.<\/p>\n

Finally, let\u2019s apply our \u201cclockface\u201d imagery to new entrants, let\u2019s say a tech-based law company. While traditional law firms move \u201cclockwise\u201d and regularly run into the inertial forces of their own structures, new entrants move \u201canti-clockwise\u201d \u2013 with the grain, if you like. They don\u2019t set up as partnerships, don\u2019t raise outside investment to finance their technological capital. As a consequence, they don\u2019t have legacy systems like partnership tournaments and billable hours to contend with, but develop incentive schemes that work for legal and technology specialists alike. As you can see, the dominoes fall one by one! This structural advantage still needs a bit more attention!<\/p>\n

 <\/p>\n

That sounds a bit like doom and gloom!<\/strong><\/p>\n

Sorry, it wasn\u2019t meant to, but hopefully it shows how different the picture looks, once you connect the dots and think about current changes more holistically and systematically. That will make all the difference!<\/p>\n

 <\/p>\n

[1]<\/a> \u00a0\u00a0\u00a0 Smets, M., Morris, T., von Nordenflycht, A., & Brock, D. (2017). “25 years since \u2018P2\u2019: Taking stock and charting the future of professional firms.” Journal of Professions and Organization 4(2): 91-111.<\/p>\n

 <\/p>\n

Picture by John Barkiple<\/a>\u00a0on Unsplash<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Michael, in December you spoke at a conference of the International Bar Association that explored the law firm of the future. With some distance, what are your reflections?   It was a fascinating event that looked at the future of law firms in all their dimensions. That really brought home how many of the features […]<\/p>\n","protected":false},"author":1,"featured_media":804,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[62,59,31],"tags":[182,243,110,124],"acf":{"excerpt":"

Dr Michael Smets is Associate Professor of Management and Organization Studies at the Sa\u00efd Business School and a Fellow of Green Templeton College at the University of Oxford, where he also obtained his doctorate. For the past 15 years he has specialized in studying and advising professional service firms. He especially focuses on internationalization, innovation and partner development. He serves on the editorial board of the Journal of Professions and Organization, on the advisory board of Business Law Magazine, and on the expert panel for the German Legal Innovation Award.
\nMichael\u2019s research has appeared in leading management journals and practitioner publications; it has also been covered by the Financial Times, Forbes, Bloomberg, CNN, CNBC, the Guardian and the Economist. Thinkers50 consider Michael \u201cthe up and coming voice of leadership\u201d and have included him in their \u201cRadar\u201d list of 30 emerging scholars to watch in 2019.<\/p>\n","school":{"ID":166,"post_author":"1","post_date":"2017-12-04 17:17:12","post_date_gmt":"2017-12-04 16:17:12","post_content":"The Law & Management department provides world-class executive education at the intersection of law and business management. The programmes are designed for legal professionals interested in acquiring management skills and executives keen to learn about commercial law.","post_title":"Law & Management","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"law-management","to_ping":"","pinged":"","post_modified":"2017-12-04 17:17:12","post_modified_gmt":"2017-12-04 16:17:12","post_content_filtered":"","post_parent":0,"guid":"https:\/\/lam.unisg.ch\/blog?post_type=school&p=166","menu_order":3,"post_type":"school","post_mime_type":"","comment_count":"0","filter":"raw"}},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/posts\/799"}],"collection":[{"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/comments?post=799"}],"version-history":[{"count":0,"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/posts\/799\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/media\/804"}],"wp:attachment":[{"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/media?parent=799"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/categories?post=799"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lam.unisg.ch\/blog\/en\/wp-json\/wp\/v2\/tags?post=799"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}