Just before the Second World War, an American by the name of Douglas MacGregor published a seminal paper contrasting the effectiveness of groups and individuals when it comes to making predictions1. What came to be known as the `MacGregor effect' results from his conclusion that predictions made by a group of people are more likely to be right than predictions made by the same individuals working alone.
Surely Mr MacGregor did not consider the workings of most law firms in reaching his conclusions!
But wait – other researchers too had their doubts.
"face-to-face meetings have several problems such as being dominated by one or a few individuals, falling into a rut of pursuing a single train of thought for long periods of time, exerting considerable pressure on participants to conform and regularly becoming overburdened with periphery information" 2
Ah! - that sounds more like the partner meetings that I have had most dealings with.
However, determined not to loose the benefit of MacGregor's discovery, and with World War II out of the way, another bunch of academics3 developed an approach which came to be known as the Delphi technique, after the Greek oracle which the Greeks visited for information about their future. The full significance of the technique and its immense commercial value might have been somewhat undermined by their decision to use predictions of horse racing results as their subject matter! Presumably they must have done quite well on their stakes because enough organisations have since recognized the value in the approach for it to have become one of the most widely used tools in looking ahead into the future.
Although there are a range of Delphi techniques now in use and adapted for various needs, all follow broadly the same approach:
A panel of "experts" is created. These experts are chosen either for their detailed knowledge of the sector in question, or for their skills in a particular field such as economics or technology. The subject of the study is circulated to the participants in an unstructured manner to enable them to comment on the issues in question. This material is then synthesized by a monitoring team (one or more people coordinating the study) and distributed to the participants in a questionnaire format. The questionnaire aims to ascertain the opinions of the experts and to elicit points of convergence and divergence.
Questionnaires are distributed repeatedly, each time with the information from previous questionnaires that has been interpreted and reformulated by the coordinating team. The feedback provides textual and statistical material to participants with the group's response as well as their own and asks them to reconsider their response or, if their response is radically different from the group, to justify it. The aim is to repeat this process until a certain level of consensus or stability is reached. A final report, pulling the responses together, is then prepared by the coordinating team.
A Law Firm Delphi
Over the years, Gracechurch has worked with many firms on their strategic planning. I have often been struck by the extent to which discussions are hobbled by an inward looking approach. Discussions of competitor threats are dominated by the impressions of a few round the table. This or that firm can be written of as "crap" – when actually their growth and performance far outstrips our firm in question. Similarly markets and work types can be dispatched from consideration by no more than a blast of prejudice.
All this means that few firms look much beyond their immediate experience in formulating a view of the world – and, perhaps as a result, there have been few attempts to try to create a better attested view of the likely shape of the legal market in years to come.
Recognising this, last year we conducted a Delphi exercise drawing on a panel of experts drawn from fields such as: in-house counsel; economics; IT; legal recruitment and training; organisation culture and regulation. The report4 was completed towards the end of last year and we have been using the findings to help firms think through their planning in a more informed context. Even so, it has been interesting to note how many managing partners have commented to me critically on the use of "outsiders" as experts – rather than those who manage the firms themselves.
The results of the study are far more detailed and wide ranging than we have the opportunity to discuss here. Instead, I'd like to set the overall context and then explore a couple of key themes which emerge.
Critical Success Factors
The overall context is, perhaps unsurprisingly, continued globalization and consolidation – both among firms themselves and amongst their client base.
The panel identified five factors which they believe will be critical to success for any law firm competing in this environment:
- Client service many factors revealed in the study suggest that clients will demand and receive greater levels of operational transparency from their legal advisers. This, coupled with increasing globalisation, will demand major enhancements in the management of client service between offices and jurisdictions.
- Knowledge sharing clients will increasingly resist paying for re-invention of the wheel. Client demand and fee pressures will mean that firms who can leverage through knowledge sharing will outperform those who do not. There will also be an increasing need to share knowledge of clients' organisations and their business as both clients and the firms themselves are getting larger and more complex.
- Sharing and communicating brand values clients will increasingly demand the same service style and standards wherever they do business with their law firm and whoever in the firm they are dealing with. This means brand values will need to be more than cosmetic – but be reflected in real experiences of the law firm product.
- Recruitment and retention the panel believes that there will be ever increasing competition for the best people. That competition will be increasingly global. But the definition of best people extends much beyond "the best lawyer".
- High level of business skills clients will become increasingly discriminating over value add. The panel believes that the main determinants of added value arise from a widening skill set from lawyers to include much deeper understanding of business.
Management
In order for a firm to succeed in the above, the panel believes that firms will have to enhance the quality of management – both at the overall firm level and at the operational level.
Already the largest firms are grappling with the increasing dimensions of their business: office, practice, jurisdiction, sector. Matrix management will become inevitable as firms move more towards de-centralisation into product group and geographical area. Though there will be increasing centralised strategic development and resourcing, significant localised decision-making will remain.
This seems likely to have two consequences. First, the strength, credibility and capability of overall firm management will have to increase if firms are to deliver the consistency of brand promise identified as a critical factor. Second, larger firms are expected to move from partnership structures to become more corporate. Size will produce a need for delegated management and better processes for accountability.
This will inevitably cause great cultural upheaval in the firms concerned. Partners will have to learn to trade historical autonomy for a better managed and co-ordinated firm. But such gains are not going to be easy and many will rail against such changes and the measures introduced to affect them.
The need for greater attention to and respect for departmental/practice area management and managers will require re-thinking the roles of partners and change what is culturally and economically valued and rewarded. Many firms have been historically poor at role definition. When pressed they will say that a partner needs to be a rounded practitioner who can give legal advice, develop business, manage relationships and manage staff. But in the future, greater role specificity will be essential and firms must develop mechanisms to attract, develop and motivate partners with the specific skills required.
Changes In Work Practices
The law firm of the future will have to be more commercial and have the capability to deliver results to clients within the fee the client is prepared to pay. This requires all providers in the legal marketplace to understand in depth how, when, and why legal services deliver value to the client.
The use of IT and knowledge management will be a prevalent issue. Technology will be used ever more to leverage the value offered to clients which means that firms will thus need to invest significantly in systems and training to stay competitive in terms of knowledge utilisation, innovation, and service delivery.
The panel doesn't hold out much hope that IT will significantly reduce working hours or make home working more commonplace. On the contrary, working hours seem likely to be sustained at their current level or increase in the light of profitability drives. There must be serious concerns that there will be an increasing trend of early burn out for many lawyers and as a result it may be harder to attract and retain young lawyers in private practice for lifestyle reasons.
Recruitment & Retention
For firms looking to offer global reach and practice area specialisation combined with high quality work, improved relationship management, and business knowledge, recruitment of top talent, either with significant business skills or with the ability to learn them, will become increasingly critical.
Despite increased globalisation, regional differences will still exist between jurisdictions. Servicing global clients will thus require recruitment of people with local expertise who are also able to operate in the global domain.
It is expected that the elite universities will themselves expand to a global base with tie ups across Europe and the US and courses covering both regions. For the firms recruiting from them, they will be competing for talent who have a broad range of skills and geographical expertise, for example people who have studied and worked abroad. The panel believes that there is likely to be an increased flow between in-house and external lawyers which will enable the generation of international and diverse skills and ultimately better balanced and experienced lawyers.
Of course, firms' own programmes of exchanges and secondments bear scrutiny. Many have only acceded to secondments under duress from clients or regional offices. But the demand for wider based lawyers necessitates an investment approach. Law firms which can demonstrate an active programme of managing career diversity will find it easier to recruit and retain talent. Conversely, the top talent will ensure that they acquire the right portfolio of skills along the way - and if that means swapping firms – so be it.
As it becomes easier for law students and recent graduates to obtain compensation and benefit statistics, the lower end of the career ladder will find top firm salary rates fairly standardised. At later career stages, bigger gaps will emerge between practice areas and skill sets more sought after. There will be increasing benchmarking too against top in-house pay.
Remuneration will usually be a reflection of the firm's market position and economics, but access to clients and high value work will be the principal factor in retention of talent. Herein lies a conundrum. As firms find ways to make relationship management a more distinct role for partners, they nevertheless need to find ways of preserving direct client access for talented fee earners who will resist simply being a wheel in the production machine.
The next five years are likely to see a change in the balance of the compensation and benefit package. Salary has to give way to other forms of remuneration as being more important. Remuneration will change to reflect quality of work, status, career opportunities, as a result of law firms becoming increasingly management based.
Firms may have to seek arrangements to avoid the high salaries – particularly for young associates – without some linkages to results achieved (e.g. align compensation with the achievement of client goals and objectives). The firms will have to look for ways to ameliorate the gulf between the long hours culture and a work-life balance.
Skills Development
The development of skills will not only be driven by client demand for client service and commercial acumen. Individual lawyers too will be looking to manage their portfolio of skills. Skills development is likely to become a key retention issue.
On the organisational level, communications and general management skills will become more important as team effectiveness becomes a success factor. This will require the commitment of continued time and money investment.
Conclusion
Unlike Gandalf, we have no magic ball to reveal the future! The only certainty is that change will happen and will be driven at an evermore bewildering speed. Firms which dedicate themselves to informed debate about the future are likely to be much better placed to meet its challenges successfully.
Footnotes
1 David Loye, An Arrow Through Chaos: How We See Into the Future, 2000, pp. 173-200
2 Preble J (1983). "Public Sector Use of the Delphi Technique" in Technological Forecasting and Social Change Vol 23, pp 75-88
3 Woudenberg F (1991). "An Evaluation of Delphi" in Technological Forecasting and Social Change Vol 40, pp 131-150
4 Gracechurch Legal Futures 2007, published December 2003.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
