Institutional memory — a diversity problem?

The BBC has discovered that knowledge management is important, at least in the form of improving institutional memory. In a report for Radio 4’s Analysis programme, Phil Tinline writes:

Each time someone leaves their job, a chunk of the organisation’s memory leaves too. How, then, do you run complex systems, see through long-term projects, or avoid past mistakes?

Short-term contracts and outsourcing reduce the appetite for learning company or product history. And when job losses land, even more knowledge is lost.

In 2012, one institution found that, as City firms poached its bright young employees, its staff turnover was hitting 28% – faster, apparently, than McDonalds.

And for Her Majesty’s Treasury, after its experiences during the financial crisis, this was rather scary.

The report describes a number of initiatives in commerce, industry and the public sector, but I was particularly struck by the inclusion of the UK civil service as an institution suffering particularly badly from organisational amnesia. How is it that one of the world’s pre-eminent administrative cadres, studied by academics of all types, with record-keeping and archival traditions dating back hundreds of years, can forget experiences and decisions made just a few years ago?

SIgning the way

Tinline suggests that staff turnover is an important component of the problem and I suspect that, as with many other organisations, the faster pace of work probably also plays a part. But what struck me was a reference to ‘folk memory’ by the outgoing Treasury Permanent Secretary. Without trying to read too much into the Permanent Secretary’s words, I think there may be a slight, but significant, difference between ‘folk memory’ and ‘institutional memory’.

When I learnt, and then taught, constitutional law, the civil service was still regarded as a very traditional force within British government. The research of Peter Hennessy and the comedy of Yes Minister suggested that centuries of experience were distilled into power exercised gently but forcefully to sustain a variety of constitutional norms. Almost invariably, senior civil servants were men, Oxbridge-educated, and with good networks across government through which traditions could be maintained. Those traditions contribute to a particular kind of folk memory that allows people to communicate and work more efficiently, since they can rely on a shared understanding.

Even when I was a student, this traditional approach was changing. The civil service recognised the need to improve the breadth of its recruits — drawing people in from roles in the private sector, and working to improve the diversity of recruitment — more women, and more non-Oxbridge graduates. At the same time, the civil service also found itself competing with political appointees — special advisers — for the ear of ministers. Yes Minister gave way to The Thick of It. There is no easy way for folk memory to be transmitted in a more fragmented system like this. What is needed is a concerted effort to develop and sustain shared understanding — the more formal institutional memory.

In a sense, folk memory can be sustained by lazy adherence to outdated standards of recruitment and advancement that lead to a lack of diversity. As organisations (not just the civil service) become more diverse, the benefits that come from diversity are matched by a new burden of finding new ways of ensuring that there is a proper understanding of the organisation’s history. This might be a personal obligation, as shown in the obituary of the late Chris Martin, the prime minister’s principal private secretary.

Martin, who has died of cancer aged 42, had always thought deeply about the place of the civil service in the constitution. He wrote his university dissertation on its role, and was a compulsive reader of biographies and political works that helped him understand its history and its place in the British story. The network of relationships he built up through successive jobs at the top of Whitehall was not just tactical; he used it wherever he could to enlist support for the civil service as an essential institution.

In Downing Street he set up a History Board with Anthony Seldon and Peter Hennessy to record and preserve No 10’s own story.

But organisations cannot rely on there being people like Chris Martin to take responsibility for learning like this. The range of examples provided in the BBC report show clearly that organisational amnesia is a widespread and pernicious problem. Overcoming it should be a priority. Doing so demands careful consideration of the problem, how best to address it, and proper resourcing of the prescribed remedy. What organisations should not do is avoid good current actions (such as improving diversity), simply because they may lead to future forgetfulness. That approach stands in the way of inevitable progress and is lazy.

Measuring performance and setting priorities

Today is a leap day, a quadrennial adjustment of the calendar on which tradition dictates that women may ask men to marry them. (Of course, this is just a convention — nothing in reality prevents either gender from popping the question.) In that spirit, I want to take a look at a convention in law firms that could do with being upset — recording time.

The sun is setting, tide incomingThis isn’t simply a plea to move away from time-based billing: that topic has been done to death by other commentators. In any case, I think clients are increasingly resistant to the idea to the extent that it has almost become the charging model of last resort rather than the starting point. No, I am more concerned about a figure that looms large in the daily life of almost every private practice lawyer: the annual chargeable hours target.

Even firms that have adopted alternative ways of billing clients still cling to timesheets. Their lawyers are expected to account for every six minutes of every day. (Even holidays — many time recording systems need to be told that a lawyer is not working.) Many of the same firms set annual targets for their lawyers — they must record a certain number of hours per year. I understand why this is important. Even when the link between time spent and the price of legal services is broken, firms still need to know what their input costs are in order to know whether the work is profitable.

I think the cost of this knowledge is too great. Although they are potentially useful to firms, these targets have a pernicious effect on lawyers’ behaviour, law firm culture, and client service.

Behaviour and culture

Although the point of recording time is to give the firm an idea of how much effort is being expended on client work (and other activities, so long as non-chargeable time is recorded too), many firms also use targets to inform other things, such as eligibility for bonus payments, suitability for promotion, and so on. As a result, lawyers prioritise meeting their annual targets above all else. Any work that cannot be attributed to a client file is therefore given a lower priority. Unless the firm explicitly elevates the priority of non-client work, perhaps by allowing work on specific internal projects to be counted towards the lawyer’s annual target, lawyers will naturally be reluctant to contribute to activities such as knowledge management.

Law firm culture is, in part, an accumulation of the way people commonly behave. As such, habitual prioritisation of chargeable work in preference to certain types of non-chargeable activities will naturally cause those activities to be considered less worthy. The personal financial preferences of time-recording lawyers become cultural norms. Worse than that, however, the act of recording time has come to signify importance within many firms. That is where the fee-earner/non-fee earner distinction arises. Firms that claim to deprecate the use of the term ‘non-fee earner’ will only succeed in changing their culture by removing fee-earners from the stage. If nobody records time, the most obvious distinction between lawyers and business services professionals is eradicated.

A fruit-based digression: customer focus

In my last blog post, I linked to and quoted from a fascinating piece by Horace Dediu on the way Apple appears to measure performance, and how that affects (and is affected by) the priorities the company sets. Dediu points to a difference between the way most businesses measure performance and the way Apple appear to do it. He argues that the norm is to depend heavily on easy to measure financial data:

These “financial” measures of success are considered prudent and optimized for return on equity (also known as the maximization of shareholder returns).

Unfortunately, Dediu argues, financial metrics prioritise some forms of information over others, to the extent that the wrong decisions might be taken in consequence:

The mass phenomenon of measuring the wrong thing because it’s the easiest to measure is called “financialization”. Financialization is the process by which finance and finances (rather than creation) determine company, individual and society’s priorities. It comes about from an abundance of data that leads to fixation on what is observable to the detriment of awareness of hazards or obstacles or alternatives. This phenomenon is more likely when the speed of change increases and decision cycles shorten.

By contrast with companies wedded to the need to maximise shareholder returns, Dediu notes that Apple puts the customer, rather than the company, at the centre of its decision-making processes. In doing so, it aims to make the best product it can for customers. The challenge is to assess how successful it is in doing that.

The idea that the purpose of the firm is to create and maintain customers is not new but it is relatively rarely practiced. The reason is that the data is harder to obtain. The data that comes from sales is crisp and concrete. The data about customers is muddy and soft. In a world where spreadsheets are used as weapons, the crisper the data, the better the ammunition.

Optimizing around customer acquisition rather than equity returns leads to a new set of metrics. What would these metrics look like for Apple?

The company publicly offers three separate sets of quantity of customers and quality of customers.

In terms of quantity we have:

  1. Number of iTunes accounts
  2. Number of iCloud accounts
  3. Number of active devices

In terms of quality of customers we have:

  1. Average selling prices for devices (as a proxy for willingness to pay)
  2. Customer satisfaction (as a proxy for loyalty)
  3. Services and accessory revenues (post-sales and recurring value)

Dediu then shows graphically what Apple’s performance over the last ten years looks like against those metrics. (Generally good.)

Client focus for law firms

There is no reason why law firms should not also consider themselves as client-focused. In fact, there is a good case for arguing that they should be more client-focused than a company manufacturing quasi-commodity technology products and services. Law firms’ dependence on basic financial metrics suggests, however, that they struggle to measure how well they perform from a client perspective.

Firms’ persistent emphasis on time recording may be the most significant factor working against proper client focus. In prioritising measurement of the time taken to perform tasks, rather than finding a way to assess their importance for clients, firms choose to elevate quantity over quality. Even when a firm has a good system for assessing client satisfaction, it is rare for that information to be integrated into decisions about individual lawyers’ progression or bonus. (And I suspect good systems for assessing client satisfaction are vanishingly rare in themselves.)

The leap-year challenge for law firms, then, is to consider what good qualitative measures of client service they might have or be able to generate, and to work out how those metrics could be used to supplant the outdated conventional measures of firm performance. In doing so, they should find improvements in lawyers’ openness to involvement in important practice support and development activities, in the firm’s culture, and in the quality and creativity of service provided to clients. I can’t promise that those improvements will lead to Apple-scale profitability, but other examples across the corporate world suggest that better performance flows more often from a customer focus than from a shareholder focus. In addition, firms would no longer need to invest in time-recording technology and the panoply of enforcement tools and processes that flow from them.

 

Fighting the right battles

Perhaps a more appropriate title for this post might be “not fighting the wrong battles.”

Over the past few weeks, I have come to a realisation that at various points in my career I have spent too long trying to achieve things that were actually impossible.

They weren’t impossible because they couldn’t be done. They were impossible because something about the organisation made them so.

Sometimes these were small projects, sometimes major programmes of change. The detail is irrelevant. The point is that, even though I could persuade important people to join me on the journey, I didn’t spot that success depended on a number of factors that would never fall into place.

So what are the right battles? Simple: the ones that are genuinely winnable. Anything else is a waste of effort. Hope rarely triumphs against institutional inertia. No matter how much someone wants something to happen, if success depends on someone else who doesn’t care or who actively works against it, it will never happen.

What does winnable look like? The key is to be sure about the essential components. The following questions should help.

  • What is the bare minimum to demonstrate success?
  • What resources are needed to make the project work?
  • Will the support you are promised really materialise, or are people just paying lip-service to your ideas?

The first question is probably the most important, but the hardest to answer. It’s important because you have to know when a project comes to an end. Goals like ‘creating a knowledge culture’ are really difficult because they seems to promote a worthwhile end, but it is impossible to say when the job is done. If something can’t be said to be complete, its success or failure cannot be assessed. What measurable change is there?

Breaking a vague notion into measurable components then leads to the next two questions, which are simply a means of gauging how likely it is that the end might be reached. Few projects, especially in the knowledge context, can be completed without significant assistance from other areas of the organisation:

  • IT: is this a technology project that needs to fit with other things that the business is demanding?
  • HR: does your project affect the way incentives are managed across the organisation? Is that an easy change, or something that demands significant realignment?
  • Finance: few things are free — what other costs are coming up, and how are they prioritised?

The reality is that few organisations can do everything that might be suggested. Projects will often be dropped because there isn’t the resource this year or because too many other things are happening in a similar area. But if the things you want to achieve keep hitting resistance, it is more likely that your goals don’t fit what the organisation is comfortable with. In other words, you’re trying to achieve the impossible.

What to do in such a situation? In general, there are only three real options when faced with difficult challenges: accept things; change them; or leave.

  • If change in the organisation is impossible, can your goals be achieved in different ways?
  • If no change is possible, is there any merit in staying just to maintain the status quo (and possibly make some minor tweaks)?
  • If neither of these is attractive, take the decision to leave as quickly as possible. The sunk cost fallacy applies.

 

Law libraries: The heart of legal practice

The library has historically had a central position in the life of the law. The popular view of legal practice links it strongly to dusty tomes. Law is bound to texts as closely as theology is. Library at Calke AbbeyUntil recent years, large law firms and barristers’ chambers would often present their library holdings as a mark of their seriousness. National and local law societies established libraries as a priority for their members.

Some modern lawyers have forgotten the significance of libraries in their legal practice. They point to the ready availability of online and portable electronic resources as a better alternative to bound volumes. They resent the space that those volumes occupy at a time when property costs are rising. They encourage their firms, chambers and professional bodies to treat libraries as just another expense: to be trimmed when necessary.

It is true that libraries cost money to establish and maintain, but these costs are different from others that burden legal practice. The value of a library is often as much in its historic holdings as in its current content. Once lost, the older material can rarely be replaced. Like professional reputation, a good library depends on goodwill and credit accumulated over many years.

One of London’s Inns of Court, the Inner Temple, has proposed a major upheaval to its own library. David Allen Green has eloquently noted why these proposals are wrong-headed. He concludes:

A good law library, as I said at the head of this post, is a Public Benefit.  It provides a lawyer – any lawyer – with the same access to the very same legal resources as his or her opponents, however well-resourced or expensive those lawyers are.

And in every lawyer’s case there is a client; and so the access a lawyer has to first-rate legal resources benefits the client.  And the public benefit too: cases which are properly argued are more likely to be properly decided, and the output of our courts has an effect on society generally.

David also links to the Inner Temple’s library committee’s response to the proposals. That document contains many submissions by eminent library users decrying the erosion of the library.

Amongst those submissions, there are a couple of points that are not often enough made about the purpose of libraries, and which I think are particularly important in modern legal practice. Libraries are not just about books and resources — they offer a community focus, and a kind of space that may be missing elsewhere.

Space

A good library is not just a space for books; it is also a space for people. In particular, it is a space for people to focus on a specific task. That is now unusual in the workplace. Technology (whether desktop or mobile) is built around the assumption that all a lawyer’s needs can be provided through the same screen. That might sound useful, but it also leads to distraction and thence (in all likelihood) to poorer quality work. The ability to remove oneself to a desk in a library, to focus on a single task, may improve the quality of work.

This opportunity to find a dedicated working space is particularly important in open plan offices. Firms sometimes forget this. Some lawyers have also lost the habit of working away from their desks. Their fear of missing a particular communication ties them to their technology and renders them more susceptible to distraction. Firms often point to lawyers’ habits as grounds for reducing the space available to libraries, without considering whether those habits are the right ones. Often they aren’t. Designing good working spaces shouldn’t just be a reflection of what people do — it should lead them to do things that are better.

Steve Jobs knew this:

Then there’s our building. Steve Jobs basically designed this building. In the center, he created this big atrium area, which seems initially like a waste of space. The reason he did it was that everybody goes off and works in their individual areas. People who work on software code are here, people who animate are there, and people who do designs are over there. Steve put the mailboxes, the meetings rooms, the cafeteria, and, most insidiously and brilliantly, the bathrooms in the center—which initially drove us crazy—so that you run into everybody during the course of a day. He realized that when people run into each other, when they make eye contact, things happen. So he made it impossible for you not to run into the rest of the company.

Just as Pixar’s building is designed to connect people, shouldn’t legal businesses lead their people to work better? Libraries can help to do that.

Community

In addition to being good dedicated workplaces, libraries can become a focus for communities. This is one explanation for the existence of law libraries run by law societies and the Inns of Court. Those institutions were established at a time when the typical legal enterprise was too small to sustain a meaningful library of its own. Sole practitioners or small partnerships need all kinds of support — starting with access to books and other resources.

As larger legal businesses have become prevalent, many local law societies have struggled to maintain their investment in libraries. Many have closed.

There is no guarantee that large law firms will remain the norm. Cheaper technology (amongst other things) allows smaller organisations or individuals to compete on equal terms alongside the leviathans. The communities supported by thriving law libraries should help that happen.

Although they might appear to hark back to historical legal traditions, law libraries have changed alongside the rest of the legal world. They remain the unsung heart of legal practice.

Generating value through unavoidable irritation

Having worked in both, I can say that one thing that law firms and universities have in common (and there are more than you might think) is that they have a clear purpose built into their fabric. Universities are supposed to further knowledge by teaching and research. Law firms advise their clients on the law to guide their future actions. Diversification would change the organisation in unpredictable ways. (Both may have commercial interests on the side — publishers and conference businesses for universities; consulting arms or resourcing agencies for law firms — but those tend to be arms-length subsidiaries.) As a result of this clarity of purpose, there is a tendency to treat those who are not directly involved in the core activity as ‘other’: non-lawyers (or non-fee-earners) and non-academics. There are many articles and blog posts decrying this terminology, but few have found an easy way round it. This post won’t change that state of affairs — please take as read the decrying and absence of solution.

Thames foreshoreInstead, the past few months observing, and reflecting on, this state of affairs from the outside have led me to a curious conclusion. I suspect knowledge teams in law firms are not ‘other’ enough.

In a previous post, I drew attention to the respect that law firms generally have for their PSLs. This is partly a reflection of professional comity, but it has another aspect — comfort. By contrast, my observation of interactions between lawyers and their colleagues in IT, HR or Finance was that they were a lot less comfortable. The partner who wants to dismiss their PA or the associate who can’t be bothered to complete their timesheet accurately will find that their preferences conflict uncomfortably with those of the firm’s HR specialists and accountants. The outcome is tension between irritation about being unable to do something that seems reasonable and an understanding that there must be standards that apply to everyone. Successful IT, HR and Finance teams manage that tension carefully. They work out how far they can push their professional preferences for locked-down systems, carefully managed grievance processes, or perfect time recording and then they back off. In return they provide something that the lawyers cannot do for themselves: well-functioning systems, effective graduate recruitment, or efficient cashflow. In this ideal scenario, the lawyer’s casual dismissal of the IT geek, fluffy HR person or bean-counter hides a grudging respect for the value that those specialists generate for the firm. There is respect for the profession even if the individual is disrespectfully branded a ‘non-lawyer’.

I think something slightly different happens to BD/Marketing and Risk & Compliance teams. Lawyers are much more likely to consider that they are capable of doing the work done in these areas. In some cases (especially in Risk) the ‘non-lawyers’ have been practising lawyers in the past. Also, there is an expectation that lawyers engage closely with the activities that are notionally the responsibility of these teams. As a result, BD/Marketing and Risk professionals have to work much harder to generate and show the value that their functions deliver for the firm. Where they fail to do this, they are much more likely to be seen as an unnecessary irritant when times are hard.

I was thinking about an analogy for the relationship between these essential services and the firms they work in, but I could only find a cliché. They are like the grit in an oyster that is essential for the development of a pearl. By lodging themselves unavoidably within the fabric of a firm, something better is produced than would exist without their presence.

It is hard to imagine a modern business of any type, even a law firm, surviving without the services of good HR, IT, Finance or BD/Marketing folk. As a regulated business, a Risk & Compliance function is essential for firms (and would be wise even without the regulatory pressure). By contrast, many firms manage without a significant knowledge function. (This conclusion is drawn from observation and the research of the Legal Support Network.) Why is this? I think the answer is a combination of proximity to the lawyer role (even closer than BD/Marketing and Risk), not being irritating enough, and failing to demonstrate or communicate value.

Whilst lawyers love their PSL colleagues, they don’t always understand how their work is different enough from their own to generate value that can be distinguished from normal legal work. Some PSLs and knowledge teams are complicit in this because they want to be seen to be helpful, so they work to an agenda set by the practitioners they work with.

That is why knowledge teams in law firms are not ‘other’ enough. They and their work are respected because they are not irritating or threatening. That is not to say that they should be deliberately obstructive. Like their colleagues elsewhere in business services, greater clarity about the purpose of knowledge management as a professional discipline would generate sufficient unavoidable irritation to create valuable pearls that could not otherwise come into being. Firms that continue to believe that their knowledge teams merely work as extensions of ordinary lawyering will continue to undervalue what those people actually do whilst treasuring their existence — the opposite of their feelings about the rest of business services.

This conclusion demands consideration of the purpose of knowledge management in law firms. That is a topic for another day.

In praise of Professional Support Lawyers

Yesterday I attended Ark Group’s Professional Support Lawyer (PSL) conference, along with nearly 50 PSLs from over 35 firms. The presentations and audience contributions reminded me that PSLs are the hidden gems of legal business.

Holborn BarsWhen firms first realised that they could improve the quality of their lawyers’ work, PSLs were expected to focus on technical excellence — creating and maintaining key documents, and ensuring that developments in the law were addressed through training or current awareness briefings. Like other aspects of legal practice, this focus has shifted over the past 20 or more years. Now firms can expect their PSLs to be an essential part of their strategic armoury. This can be seen in a variety of ways, but just two highlight particularly well how PSLs make a real difference: innovation and culture.

Innovation

Coincidentally, today sees the publication of the FT’s annual Innovative Lawyers report. Looking at the list of standout, highly commended and commended initiatives by law firms, I see many that will have involved PSLs at some stage in their development. Some of the client service innovations depend for their success on materials created specifically by PSLs. Some of the innovations in legal expertise draw on insights made possible by the broader overview that PSLs can have over the legal landscape, unencumbered as they are by client demands.

In my own experience working alongside talented lawyers, I have seen a higher rate of products and services created or delivered by PSLs than by partners. And crucially, PSLs tend to be much better at seeing a product development cycle all the way through to the end — partly because they may have fewer distractions, but mainly because they know that this is a significant part of their role and they take it seriously.

Innovation is a tricky concept, much misunderstood and misused, but David Hepworth’s observations last week about ‘improvements’ read just as well when applied to ‘innovations’:

This is a classic case of Hepworth’s Law Of Improvement, which I developed over years of watching people trying to improve magazines. There’s improvement, then there’s the kind of improvement which is recognised by the user and finally there’s the kind of improvement which is both recognised and valued by the user.

Only the third sort is worth the trouble.

PSLs are often the most capable people in a firm to assess dispassionately what putative innovations would be recognised and valued by clients (and potential clients).

Innovation can clearly happen without PSLs, and some PSLs may not be in a position focus on new products and services for good reasons. But if your law firm is struggling with making innovation stick, try involving some PSLs — you may be surprised by the results.

Culture

Like many commercial organisations, law firms often struggle with culture. Sometimes this can result from the multiple role that partners have as owners and managers of the business as well as workers in it. A junior lawyer working alongside a partner is unlikely to see them as a co-worker, so will hold some things back that they might share with a peer. Partners therefore can only have a distorted view of their team. (Just as the Queen only ever sees perfectly clean, freshly-painted offices and hospitals.) PSLs, on the other hand, see lawyers at all levels in all types of situations. They help juniors with their panics over misfiled forms. They work as peers with all areas of business services (especially BD, HR, Risk and IT). They may be used as confidantes for aspiring partners.

At the same time as having strong relationships with a wider range of people working across the firm, PSLs are often regarded as peers by partners. Many of them will have experience in their area of expertise far in excess of some of the partners they work with. They may also have seen partners in other areas of the firm grow up from innocent trainees to practice-hardened lawyers. As a consequence their dealings with partners are different from any other group in the firm. PSLs often have the trust and confidence of partners across the firm.

This privileged position means that PSLs understand what is really going on (a shorthand for culture) much better than most other groups in the firm. Firms can use this insight intelligently in all sorts of ways. For example, mergers are one area where a number of firms have experienced the benefit of drawing on PSLs for more than their legal expertise. In the phase before a merger takes effect, PSLs from the two merging firms start work on the knowledge infrastructure for each new team. As the merger beds in, PSLs build new relationships with new colleagues — binding the team together better than partners can manage alone.

Why hidden gems?

Even if PSLs only do the core function of maintaining technical excellence, they generate more value for the firm than fee-earning lawyers. An hour of fee-earning will translate directly to income generated at the appropriate rate. There may be some intangible value in a deeper client relationship, but that is not guaranteed. By contrast, a well-focused hour of a PSL’s time spent drafting a standard document or a guidance note, or in providing training on a difficult new legal issue, should translate into many hours additional value by allowing fee-earners to work better. Over time, that single hour could multiply to 50 times as much value for the firm.

When PSLs go beyond the traditional core, they add even more value in all sorts of ways (not just innovation and cultural support). Not all firms see that yet. They forget to value the PSLs in return, or they suppress opportunities for PSLs to demonstrate their full potential (often by allowing them to be distracted by less significant chores). Firms that allow their jewels to shine see real returns on their investment.

If your firm is interested in working better with your PSLs — perhaps finding new ways of supporting their work; encouraging new ways of engaging with them as a group; or allowing them to lead more than they have so far — drop me a line: I would love to help you and your PSLs become more successful.

Working with intent

“Why?” is the question of the moment.

  • Why do you want me to do this?
  • Why are you doing that?

Fewer and fewer people accept what they are told at face value. Many organisations, professions and individuals are treated with a modicum of mistrust. Until we know and accept why someone is behaving as they are, we may be suspicious of their motives.

In particular, the way we think about work is changing. After a century of treating work as a mechanical activity, typified by the Taylorist school of management, we are being guided by a number of critical thinkers to wonder why things are organised the way they have been for so long. We know that even a simple instruction will often be freighted with meaning — the bigger picture. Until we know and accept what that picture shows, we may be cynical about the task.

San Gimignano towersThere are many reasons for this suspicion and cynicism. Everyone will have their own combination of factors. But one stands out for me. The pervasiveness of alternative sources of information means that it is harder to conceal the impact of decisions made.

These sources of information are not the traditional media or sanitised official channels, but networks of individuals sharing items of genuine interest. And in that sharing, as Euan Semple pointed out earlier this week, intent is critical.

Intent also came up in an article by Eric Kraus on Medium, “Social Intent:
Interested vs. Interesting”. Eric’s article is particularly illuminating in the way he distinguishes between the core intent prevalent in public social media and that which is most useful in the use of social tools within organisations.

Facebook and Twitter are social networking platforms I’m sure many of us are familiar with. They were created and became popular during the Culture of Personality. It’s not surprising these social platforms define success by things called “Likes” and “Favorites”. While there are many great benefits to these platforms, many people use them to share personal information. And on these tools…they strive to be the most “interesting” or liked person.

In our professional careers, having a message ‘Liked’ by our peers doesn’t necessarily have a great correlation to our success. So, it doesn’t make a lot of  sense that the way we use Facebook and Twitter today would be helpful in collaborating with or leading our teams.

I argue, it’s actually not a problem with the tools. It’s a problem with our intent. I’ve heard from many leaders who say they struggle with enterprise social because they fear posting messages that are not insightful to their team… Their intent is to be interesting. I think they have it backwards.

The ‘Culture of Personality’ that Krause refers to was posited by the historian Warren Susman as a development resulting from the 20th century decline in natural communities in favour of larger cities and organisations where it was hard to know people well.

During this time, we think of people with qualities like knowledge and communication skills. People valued “personality” more so than ever. Are you outgoing? A good public speaker? Are you liked among your peers?

In prior times, when small farming communities were more prevalent and people had real connections within and to those communities, Susman identified a ‘Culture of Character’.

We think of people during this time as having qualities like being helpful. People valued, above all else: “Character”. Were they good people? Were they generous? Did they benefit and provide value to their community?

Kraus argues that meaningful use of social tools within organisations demands that people use them with the kind of intent that comes with a culture of character.

This resonates with something I have linked to before — Pixar’s ways of selecting people to work well within that organisation. The key factors are described by Randy Nelson (then Dean of Pixar University and now Head of Artistic Development and Training at DreamWorks Animation) in this video clip.

The key section for now is transcribed below.

What we’ve gotta find is people who are extremely broad. And the predictor there, we want somebody who is more interested than they are interesting. Yeah, anybody can have a pink Mohawk and enough piercings so that wind blows, you whistle without pursing your lips.

That’s interesting and that’s easy to get. Interested is tough. That’s a real skill and I’m sure all of you have that sense, somebody in your life who you just always think of when you think, that’s the person I want to talk to. Why? Because they’re so bright? Yeah they’re bright. But what they do is they amplify me. They give me what I need. I say, I’ve got a problem and they lean in. They don’t say, “Oh yeah, I got problems too. I bet my problems are more interesting than your problems.” No. They want to know what you want to know. They want to know what’s bothering you.

That’s the kind of intent that builds an organisation where people should be less cynical and suspicious because they understand why others are behaving the way they are — their intent is clear.

Surely that is a meaningful goal for any organisation? Increasingly, good people will move away from the places where being interesting is valued more highly than being interested.

[Picture note: this is a view of the famous towers of San Gimignano, built for no other purpose than to express the power of rival Guelph and Ghibelline families.]

People in the legal ecosystem

This is the third part in my exploration of the legal environment. I have done a general overview and looked at the role of clients. Now I want to turn to people — the people who work in the law in one way or another. What impact do changes in the legal ecosystem have on them, and how might they affect it in turn? This is a slightly broader overview than the clients post, for reasons that I hope will become clear.

These boots have been walking

Any legal business depends on people. As I have argued previously, the law is a human system that depends on humans for its operation and interpretation. That is as true for traditional law firms as it is for their new forms of competition. (Those new businesses that offer technology solutions will have some human involvement somewhere — it is just outweighed by technology.)

The way people work in the law is changing. There are two major strands to this change — uncertainty in legal careers and diversification of roles within firms. We are partway through the first change, and the second is fairly novel but may be more far-reaching.

Lawyering now and in the future

Until a decade or so ago, the obvious choice for someone who wanted to embark on a career providing legal services (in England and Wales, at least) was to become a trainee solicitor (other options include going to the Bar or becoming a Legal Executive, but fewer of those opportunities were available).  In 2002/03, 5,650 training contracts were available. (This and other statistics here are compiled by the Law Society annually, unless otherwise stated.) By 2012/13, this number stood at 5,302. There had been a slight rise during the decade, but there was a sharp drop in 2011/12 (for comparison, 3,681 training contracts were available in 1992/93). Over the same period, the number of solicitors with practising certificates had risen from 92,752 in 2003 to 127,676 in 2013 — a 38% increase. So the profession is growing, but not necessarily renewing itself at the same rate.

Where are solicitors employed? The majority are in private practice, but there is a long term trend of growth in the in-house sector: until 2003, about 15% were in-house, but this had grown to 21% by 2013. However, training principally takes place in private practice: in 2002/03, almost 95% of all training contracts were offered by law firms. I don’t have access to the most recent statistics, but in 2008/09 law firms provided 93.5% of training contracts. Of those contracts, about one-third are provided by firms with 81 or more partners (32.9% in 2002/03 and 34.9% in 2008/09).

Alongside solicitors, legal work is done by barristers (of whom there were 15,387 in 2010 — nearly 3,000 employed in law firms or in-house), legal executives (around 20,000 members of the Chartered Institute of Legal Executives) and paralegals (about 200,000 according to estimates by the National Association of Licensed Paralegals). As one moves away from the traditional legal professions, it is harder to find authoritative figures — the Legal Standard Board in its 2014 Annual Report only claims to cover a regulated community of 163,110 (including solicitors, barristers and legal executives, but not paralegals), whilst the Institute of Paralegals appears to provide no data at all on its membership numbers.

Overall, the picture for aspiring lawyers is less rosy than it might have been in the past. Opportunities to become solicitors or barristers appear to be stagnant. At the same time, some firms appear to be using paralegals without considering how the role might develop. This is illustrated starkly by a statement extracted from the Legal Education and Training Review report by Alex Aldridge:

There is an amusing quote in the Legal Education and Training Review (LETR) report from a ‘legal employer’:

“I want technicians who are prepared to do the something 100 times over and over again and are happy to be really good at that for 50 years.”

Unfortunately for big-earning law firm partners, the world doesn’t work like that. Life can’t stand still: everyone needs new challenges, promotions, more money — a sense that their careers are developing. That is the problem now facing law firms which have taken advantage of the growing surplus of cheap paralegal labour that has been churned out by the law schools over the last few years.

Aldridge is concerned that this is a problem for law firms, but I think it is a greater problem for paralegals. Some firms will work hard to develop proper career structures and help their people acquire relevant qualifications, but many will not. Until there is a change in the market, I doubt that firms will be driven to do the right thing even by disgruntled paralegals. (It has to be noted that their representative bodies are trying to force the issue, but the more recalcitrant firms will ignore them as they have always done.)

Making the law work for clients (without lawyers)

There has long been a divide in law firms between lawyers and so-called non-lawyers. (The term ‘non-lawyer’ was deprecated even before the Managing Partner Forum launched its Unsung Heroes campaign in 2004. A quick web search will also show that professionals of all types use ‘non-‘ as a marker for those who don’t have their expertise — lawyers are not unique in that.) This divide means that lawyers have usually been responsible for all aspects of client work — managing the relationship and providing the legal service. On top of that, lawyers are privileged by most regulatory regimes by being the only permissible owners of the firm — in only a few jurisdictions are non-lawyers allowed to become partners (or to wield equivalent de jure power).

It is illuminating to see how things work in other professional services firms. Advertising agencies, for example, have long divided work between account managers (handing the client relationship, but not actually creating advertising) and so-called ‘creatives’ (who write the advertisements and create the artwork, but rarely deal directly with clients). Despite having distinct roles, neither is privileged over the other — partners in an agency will be drawn from both sides of the divide. Over time, other important roles have developed (such as media buyers and account planning) because there was a clear need for those functions.

But just because there are different roles contributing to client success (whether in advertising or legal terms), we need to be sure we know how all the bits fit together. Dave Trott puts this well in this presentation to a group of young planners (0’0″ to 1’30” in the video).

This is apparently “What Creatives Want From Planners.” That’s really quite simple. What creatives want is simplicity, clarity and inspiration. What they don’t want is complexity, confusion and prescriptive thinking.  What they normally get is the latter — complexity and confusion — and they don’t get simplicity, clarity and inspiration.

Most creatives don’t like planners. I don’t like planners. I also don’t like creatives or account men. I don’t like anyone who limits themselves to their department. Anyone who thinks the job is just to do what their department is.

So I don’t like planners who think their job is just planning. They’re useless to me and they get in the way.

What I love is people who are bigger than their job. I love ad-people.

I love people who want to understand the whole job of what we do. And people who want to contribute to the whole of what we do — not just learn some useless planning language, talk useless planning language and impress each other with their planning language. That’s just planners talking to planners about planning, and it’s not advertising.

It is interesting to contrast this notion of people being bigger than their job with the idea that one person should do a multitude of jobs (the normal law firm model). The motivation for both is the same — a desire to be sure that good work is being done for clients. The outcome is very different. Jacks-of-all-trades are known not to do as good a job as specialists who understand other jobs and can evaluate them but don’t do them. Most important — clients know the difference. And because they know the difference, they can act on it — to the point of moving their business to a firm that suits their needs better.

That is one reason why a number of law firms and new legal businesses have developed new roles, many of which break down the barrier between support and delivery.

  • Law firm finance professionals have become pricing experts — advising lawyers on better ways of charging for their work. They can only do this if they understand the client’s perspective as well as the work being done (as well as the obvious finance issues).
  • Business development people have become more prominent in managing client relationships. Some of them will work as closely as the firm’s lawyers with an in-house legal team — helping them resolve issues that are as important to them as legal problems.
  • The way legal work is done is being rethought — using process mapping more intelligently and developing project management techniques. This may draw on a firm’s internal project management capability and its knowledge team,
  • Firms are starting to think of themselves as more than providers of legal advice. They are using internal expertise in HR, Risk and other areas to offer consultancy services to clients.

These and other initiatives are breaking down the expectation that only lawyers can be responsible for so called ‘client facing’ or ‘fee-earning’ work.

How do firms decide what to do? The first thing must be to take account of what clients are asking for (both directly and implicitly). But there is another factor — what skills and capabilities does the firm have at its disposal? To some extent, the direction a legal business takes will depend on the things it can already do and the things it can easily buy. As a result, good people who don’t fit the existing mould (like traditional lawyers) will be at a premium. They are the ones who are likely to be best able to help steer the most dynamic businesses in new directions.

What does the future hold?

It will take time for firms to settle on the mix of roles and activities that suits them and their clients best. Over that time, some will also move to different business models. For some, opening up internal roles to the outside will lead to appointing some of their best specialists of all types to the partnership. Some may choose to move away from partnership altogether. For firms that take on (and develop) significant numbers of non-traditional lawyers, there is a choice to be made about the remaining lawyers — should there be fewer of them? how should they specialise? what does a development programme look like?

For a long time, law firms all looked pretty similar. That homogeneity made it hard for clients to differentiate between firms. As a result, clients tended to focus on individual lawyers — they decided who to instruct based on historic personal relationships. That will still continue, but trust is more likely to become a hygiene factor. As clients become more sophisticated and law firms develop in different directions, it will become easier to latch onto the the things that a firm does that fit what the client business needs when choosing lawyers.

But what does it mean for people who want to provide legal advice to clients? Law businesses are moving away from providing legal solutions to solving business (and personal) problems. Doing that successfully will demand a wider array of different roles and approaches than firms currently have. But the uncertainty about how those will evolve — which will be successful and which will fail — will be borne primarily by people. Those individuals who find a niche that fits them and the environment will be successful. But there will be others who won’t find a comfortable fit.

As Dave Trott says later in the video (at 12’11”) “Form follows function. First we define the function, then we work out the form. And we’ll know if the form is good by how well it delivers the function.” (He then goes on: “We’re solving business problems, we’re not solving advertising problems. Advertising is solving business problems.” We have more in common than many lawyers would like.)

At the moment, the functions of different legal businesses are still being redefined. Until they are more settled, there are plenty of opportunities to test different forms. Different ways of working. New opportunities for people who want to play their part in solving our kind of business problems.

Hiding behind technology: what kind of a job is that?

I think our relationship with technology is detracting from our capacity to work effectively. In order to change this, we need to reassert what it is that we actually do when we come to work.

One of the staples of TV drama is the workplace, another is espionage. The BBC is currently showing a short series, The Hour, in which those elements are combined with a touch of social/political comment in a not-so-distant historical setting — a BBC current affairs programme (The Hour of the title) in 1956, as Hungary is invaded by the Soviet Union and Egypt precipitates the Suez crisis. It isn’t the best thing that the BBC have done — Mad Men beats it for verisimilitude, nothing can touch Tinker, Tailor, Soldier, Spy for British cold war espionage drama, and at least one person who was in TV in the 1950s is adamant that its representation of news broadcasting is a long way from the reality. That said, it is relaxing Summer viewing.

One of the things that struck me, watching the most recent episode, is that everyone is intimately engaged with the objects of their work. Cameramen wield cameras; editors cut film; reporters write words (with a pen or pencil) on paper. And they do one thing at once. During the episode, the producer of The Hour is admonished by her superior (for having an affair with the programme’s presenter). As she enters the room, he is making notes in a file. He closes it while berating her for putting the programme, and her career, at risk. When finished, he returns to his paperwork. There is no doubt at any point during this sequence as to his focus, his priorities or his wider role.

I think we have lost that clarity. As I look around me, in all sorts of workplaces, there is little or no distinction in the environments inhabited by people who actually do very varied jobs. Generally, it looks like we all work with computers. People sit with a large flat surface in front of them, which is dominated by a box filled with electronics, umbilically attached via (in my case) ten cables to a variety of other bits of electronics, to power and to a wider network. One or two of those other pieces of hardware are really intrusive. The screens we work at (I have two) are our windows into the material that we produce — documents, emails, spreadsheets — to the information we consume, and to our connections with other people. But physically, they fail miserably to benefit our human connectivity. In my case, the screens sit between me and the rest of the occupants of my working room. We all sit in a group, facing each other, but our screens act as a barrier between our working environments. When we converse, we have to crane round the barriers, and we are easily distracted from the conversation by things that happen on the screens.

But if you asked the average law firm employee (whether a lawyer or not) what they do every day, very few would respond that they work with computers. They would speak in terms of managing teams, delivering quality advice to clients, supporting the wider business with training, information or know-how. Some of our IT colleagues might agree that they do work with computers, but some would claim instead that their role is to enhance the firm’s effectiveness and that computers are just the tools by which that is achieved. That is consistent with research conducted by Andrew McAfee, for example. At an organisational level, then, technology improves performance. However, it is also well-observed that many forms of technology, inappropriately used, can distract people and reduce their personal effectiveness. That is manifest in complaints about information overload, email management, social media at work, and so on.

The problem is that, through this box and its two big screens, I have access to absolutely everything I need — the software tools, the online information, the worldwide contacts — to do my job. Unfortunately, because everything is in the same place, it is hard to create clear boundaries between all these things. Outlook is open, so I see when email arrives even though I am working on a document. When I am focusing on an email on one project, it is sitting next to one on a different topic, so it is practically impossible not to skip to that topic before I am actually ready. We can discipline ourselves, but that actually makes work harder, and so we must be less effective.

In some organisations, the technology is configured to provide access just to the tools people need. This is typically the case in call centre environments, for example. I think this only really works when people are working through clearly defined processes. As soon as a degree of creativity is required, or where the information needs of a role are emergent, bounded technology starts to fail.

Instead, I think each of us needs to understand exactly what we need from the technology, to create a clear path to that, and to take steps to exclude the less relevant stuff.

My current role requires me to take responsibility for a group of people who have not previously thought of themselves as a single team. I shouldn’t do that from a desk which is at a significant distance from many of them. The technology may fool me into thinking that I am bridging that distance by sending emails and writing documents, but I am sure that isn’t really the case. We have technology to allow me to divest myself of the big box and its screens. I am seriously considering doing just that — doing my job, rather than working with computers.

 

The nature of the firm, and why it matters

Jordan Furlong‘s justified question, “Why do law firms exist?” is something that isn’t just relevant to partners (or potential investors in firms). Those who support the core functions of the firm need to be aware of its implications. I’ll come back to Jordan’s question, but first I want to reflect on something else.

Thanks to the generosity of Headshift, I was able to attend the Dachis Group’s London Social Business Summit at the end of March. One of the most interesting sessions that day was the presentation by Dave Gray of XPLANE. Dave outlined his current thinking about the nature of the company, which can be found summarised in the initial post on his new site, The Connected Company.

Dave is concerned about the short life span of the average company:

In a recent talk, John Hagel pointed out that the average life expectancy of a company in the S&P 500 has dropped precipitously, from 75 years (in 1937) to 15 years in a more recent study. Why is the life expectancy of a company so low? And why is it dropping?

He is also worried about their productivity:

A recent analysis in the CYBEA Journal looked at profit-per-employee at 475 of the S&P 500, and the results were astounding: As you triple the number of employees, their productivity drops by half (Chart here).

This “3/2 law” of employee productivity, along with the death rate for large companies, is pretty scary stuff. Surely we can do better?

I believe we can. The secret, I think, lies in understanding the nature of large, complex systems, and letting go of some of our traditional notions of how companies function.

The largest complex system that still seems to work is the city.

Cities aren’t just complex and difficult to control. They are also more productive than their corporate counterparts. In fact, the rules governing city productivity stand in stark contrast to the ominous “3/2 rule” that applies to companies. As companies add people, productivity shrinks. But as cities add people, productivity actually grows.

A study by the Federal Reserve Bank of Philadelphia found that as the working population in a given area doubles, productivity (measured in this case by the rate of invention) goes up by 20%. This finding is borne out by study after study. If you’re interested in going deeper, take a look at this recent New York Times article: A Physicist Solves the City.

Drawing on a study of long-lived successful companies commissioned by Shell Oil, Dave spots three characteristics of those companies also shared by cities:

Ecosystems: Long-lived companies were decentralized. They tolerated “eccentric activities at the margins.” They were very active in partnerships and joint ventures. The boundaries of the company were less clearly delineated, and local groups had more autonomy over their decisions, than you would expect in the typical global corporation.

Strong identity: Although the organization was loosely controlled, long-lived companies were connected by a strong, shared culture. Everyone in the company understood the company’s values. These companies tended to promote from within in order to keep that culture strong. Cities also share this common identity: think of the difference between a New Yorker and a Los Angelino, or a Parisian, for example.

Active listening: Long-lived companies had their eyes and ears focused on the world around them and were constantly seeking opportunities. Because of their decentralized nature and strong shared culture, it was easier for them to spot opportunities in the changing world and act, proactively and decisively, to capitalize on them.

The whole post is worth reading and reflecting on. Dave’s prescription for success, for companies to be more like cities, is to shun divisional structures, and to build on networks and connections instead. This has been refined in a more recent post into a ‘podular’ system.

A pod is a small, autonomous unit that is enabled and empowered to deliver the things that customers value.

By value, I mean anything that’s a part of a service that delivers value, even though the customer may not see it. For example, in a construction firm, the activities valued by customers are those that are directly related to building. The accounting department of a construction firm is not part of the value delivery system, it’s a support team. But in an accounting firm, any activity related to accounting is part of the customer value delivery system.

There’s a reason that pods need to focus on value-creating activities rather than support activities. Support activities might need to be organized differently.

This idea appears to be closely related to Steve Denning’s notion of Radical Management, as described in his latest book. It also reflects the way that some professional service firms organise themselves. That’s what brings us back to Jordan Furlong’s question.

Why do law firms exist? Or, more properly, why should law firms continue to exist? (One important reason why they exist is that their history brought us to this point. What might happen to them in the future is actually more interesting.)

Jordan’s post starts with Ronald Coase, but also points to a number of ways in which law firms might not meet Coase’s standards.

Companies exist, therefore, because they:

  • reduce transaction costs,
  • build valuable culture,
  • organize production,
  • assemble collective knowledge, and
  • spur innovation.

So now let’s take a look at law firms. I don’t think it would be too huge a liberty to state that as a general rule, law firms:

  • develop relatively weak and fragmented cultures,
  • manage production and process indifferently,
  • assign and perform work inefficiently,
  • share knowledge haphazardly and grudgingly, and
  • display almost no interest in innovation.

That’s an inventory of defects that would make Ronald Coase wonder exactly what it is that keeps law firms together as commercial entities.

Worse than that, Jordan points to a range of recent commentaries suggesting that things aren’t getting any better. I think he is correct. In fact, it is interesting to note that John Roberts spotted the germ of the problem in his 2004 book, The Modern Firm.

Many authors, including Ronald Coase and Herbert Simon, have identified the essential nature of the firm as the reliance on heirarchic, authority relations to replace the inherent equality among participants that markes market dealings. When you join a firm, you accept the right of the executives and their delegates to direct your behaviour, at least over a more-or-less commonly understood range of activities. …

Others … have challenged this view. They argue that any appearance of authority in the firm is illusory. For them, the relationship between employer and employee is completely parallel to that between customer and butcher. In each case, the buyer (of labor services or meat) can tell the seller what is wanted on a particular day, and the seller can acquiesce and be paid, or refuse and be fired. For these scholars, the firm is simply “a nexus of contracts” — a particularly dense collection of the sort of arrangements that characterise markets.

While there are several objections to this argument, we focus on one. It is that, when a customer “fires” a butcher, the butcher keeps the inventory, tools, shop, and other customers she had previously. When an employee leaves a firm, in contrast, she is typically denied access to the firm’s resources. The employee cannot conduct business using the firm’s name; she cannot use its machinery or patents; and she probably has limited access to the people and networks in the firm, certainly for commercial purposes and perhaps even socially. (The Modern Firm, pp.103-4)

The benefits Roberts identifies are almost always missing in a law firm. The firm’s name may be less significant than the lawyer’s and there is little machinery or patents. In the seven years since the book was published access to networks and people has become infinitely more straightforward, thanks to developments in social software and similar technologies.

Joining Roberts’s insights with those of Dave Gray and Jordan Furlong, I think it is likely that we will see much more fluid structures in law firms in coming years. Dave Gray’s podular arrangement need not be restricted to one organisation — what is to stop clients creating their own pods for specific projects, drawing together the good lawyers from a variety of firms? Could the panel arrangement now commonly in use by larger companies be a Trojan horse to allow them to pick off key lawyers whenever they need them? Technology is only going to make that easier.

So that leaves the support functions. In Dave Gray’s podular model, support is provided by a backbone, or platform.

Podular platform

For a podular system to work, cultural and technical standards are imperative. This means that a pod’s autonomy does not extend to choices in shared standards and protocols. This kind of system needs a strong platform that clearly articulates those standards and provides a mechanism for evolving them when necessary.

For small and large companies alike, the most advantageous standards are those that are most widely adopted, because those standards will allow you to plug in more easily to the big wide world – and the big wide world always offers more functionality, better and more cheaply than you can build it yourself. Platform architecture is about coordination and consistency, so the best way to organize it may not be podular. When it comes to language, protocols, culture and values, you don’t want variability, you want consistency. Shared values is one of the best ways to ensure consistent behavior when you lack a formal hierarchy. Consistency in standards is an absolute requirement if you want to enable autonomous units.

Interestingly, there is often little variation between different law firms in terms of their technical standards. In some practice areas, these are dictated by external agencies (courts, industry associations, etc.), whilst in others they converge because of intervention by common suppliers (in the UK, many firms use know-how and precedents provided by PLC) or simply the fact that in order to do their job lawyers have to share their basic knowledge (first-draft documents often effectively disclose a firm’s precedents to their competitors). It is a small step to a more generally accepted foundation for legal work.

Will clients push for this? Would they benefit from some form of crowd-sourced backbone to support lawyers working for them in a podular fashion? Time will tell, but don’t wait for the train to leave the station before you decide to board it.