CULTURE OFTENTIMES DETERMINES A FIRM'S SUCCESS

by Joel A. Rose
 

     Five years ago the managing partners of two mid-size Manhattan firms determined they would have to diversify out of their significantly weighted insurance defense practices because the declining fee structure and the increasing competition could not support long term growth and the relatively high compensation levels paid to the members of each firm. Not only did the managing partners announce their new long range plans to the partners and associates, but they established elaborate plans to acquire attorneys with profitable books of business in other disciplines. Today, after several years of floundering in attempts to acquire and develop new disciplines, both firms are firmly back doing insurance defense work, and the two managing partners have been replaced.

     Each of the managing partners had been unable to implement their diversification strategy, not because it was theoretically wrong or inappropriate, but because neither had understood that their firm's culture was so entrenched in the traditions and values of practicing law as insurance defense lawyers that a significant number of the partners resisted the changes that the managing partners tried to impose. Both managing partners realized, too late, that strategies can only be embraced and implemented by the partners with the whole hearted effort and willingness of everyone involved. If implementing the recommended strategies violates the partners' basic beliefs about what the firm should be and their roles in the firm, or the traditions and values that underlie the firm's culture, they are doomed to fail.

     Firm culture implies values, such as aggressive, collegial, sensitive to quality of life, competitive, democratic, etc., that set a pattern for a firm's activities and the roles of its partners. That pattern is instilled in partners and associates by the examples set by lawyer management and other influential partners to the succeeding generations of attorneys. The managing partner's words alone do not produce culture; rather, his or her actions and those of other influential partners do.

     As a management consultant to law offices, it has been the author's experience that a law firm's culture can be one of its major strengths, when it is consistent with its current and longer term objectives. But a culture that prevents a firm from meeting competitive threats, or adopting to changing economic environments can lead to the firm's stagnation and decline, unless its partners make a conscious effort to change.

     Because a firm's culture is so pervasive, changing it becomes one of the most difficult tasks that any law firm can undertake. What stands in the way is not only the "prevailing culture," but also the fact that few partners consciously recognize how their firm's culture manifests itself. For example, in one of the above insurance defense firms, the partners stressed "billable hours" and methods for reducing overhead, rather than exploring other more profitable practice areas that could benefit from the firm's litigation expertise. Also, because the firm's compensation system was so heavily weighted toward personal production, a majority of the partners were unwilling to "invest" their time to explore other potentially profitable, non-insurance defense practice areas.

     After years of consulting with law firms one conclusion is certain: Partners cannot be fooled. They understand the real priorities of the firm. At the first inconsistency, in terms of what a firm considers being "important," or more simply stated, "what partners will be compensated for doing," i.e., devoting their time to hourly billable work or taking potential "billable time" time to market potential clients and selling the firm's other services to existing clients. Indeed, consistency in every aspect of the firm's culture is success to its success.

To Change Culture

     The firm that succeeds in changing its culture has been willing to invest partner time to assess its needs and requirements and to determine the kind of firm its partners want the firm to be and to make that entity as palatable as possible to a significant majority of its members. Much work needs to be done from within by lawyer management and the more influential partners.

     Lawyer managers, by instinct, have the tendency to (1) control and (2) focus on problems they can see and do something about. Although it is necessary to exercise some control and to resolve "problems," it is the author's opinion that if lawyer managers spent more time focusing their attention identifying opportunities as well as the firm's immediate and longer term needs, and attempted to create an environment to encourage and reward the lawyers for developing and implementing strategies to achieve these opportunities, many of the firm's "problems" would disappear. A principal role of lawyer management is to assess the needs and priorities of the firm and the partners, and cultivate the type of culture that encourages partners to use their skills and abilities toward achieving the desired objectives. An important point that is often overlooked by lawyer managers is that partners are creative people and require a different kind of management than associates and staff. While the latter groups can usually be motivated by using the carrot-and-stick approach, the former is self-motivated. They will work as hard as needed to perform as perfectly as they can because they identify their work with themselves. What they want from lawyer management and other partners are the professional and financial recognition which should result from doing a good job.

     How effective a firm's lawyer managers will be in achieving the kind of culture needed to encourage the partners to identify objectives and to develop and implement strategies to accomplish these goals will depend, to a great extent, upon their willingness and ability to develop and articulate shared values? To what extent are they willing to establish/restore a sense of professionalism and common courtesy among and between partners, partners and associates and partners and associates and staff? Does lawyer management have a vision for the firm, or are there as many visions as there are partners? A firm in which there is no agreed upon vision frequently experiences unresolvable tensions, and can become less than collegial. Are the partners' expectations for the firm realistic in light of those internal and external factors which influence the firm? If not, how has lawyer management dealt with this problem? To what extent is lawyer management willing to communicate with the partners - from the bottom-up, as well as from the top down? And finally, how the lawyer managers define productivity can contribute to, or be destructive of a particular kind of culture. Lawyers learn the "rules" which underscore the criteria by which compensation and other forms of behavior are rewarded. Benevolent and well-meaning comments espoused by lawyer management about what should be the prevailing culture notwithstanding, a firm's culture will depend upon the attitudes displayed by lawyer management and the more influential members of the firm in response to various situations with which they must deal, and the interpersonal relationships toward each other, members of the professional and administrative staffs, clients and the community at large.

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