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Three years ago, the managing partners of two mid-size Philadelphia-based law firms determined they would have to diversify from their heavily weighted insurance defense practices. The declining fee structure and the arbitrary work rules imposed by their insurance-carrier clients were making it very difficult to support the long-term profitable growth of their firms, match the higher compensation levels that had to be paid to recent law school graduates and the correspondingly increased compensation for experienced associates and the younger partners, and continue to compensate the mid-level and senior partners of each firm at the respective levels to which they had been accustomed. Not only did the managing partners of both firms announce to the partners and associates their new strategic initiatives, they also established elaborate plans to acquire attorneys with books of business in other, more profitable disciplines. Today, after several years of floundering in attempts to acquire and develop new disciplines, both firms are back to doing insurance defense work, and the two managing partners have been replaced. Both managing partners were successful in attracting individual practitioners and small groups of attorneys to their respective law firms. However, within two years after being acquired, the non-insurance attorneys in both firms departed. The problem wasn’t that the diversification plans were theoretically wrong or inappropriate. It was that neither managing partner had considered the extent to which their firms’ cultures, traditions and values of practicing law as insurance defense lawyers were entrenched in the majority of the partners. Those partners resisted the changes that the managing partners tried to impose. Both managing partners realized, too late, that strategies can be implemented only with the wholehearted effort and willingness of most everyone involved. If the recommended strategies violate 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 aggressiveness, collegiality, sensitivity to quality of life, competitiveness and democratic decision-making — that set patterns for a firm’s activities and the roles of its partners. That pattern is instilled in partners and associates by the examples set by 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, I have learned that a law firm’s culture can be one of its major strengths when it is consistent with objectives. But a culture that prevents a firm from meeting competitive threats or adapting 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, I am certain of one thing: partners cannot be fooled. They understand the real priorities of the firm. Faced by inconsistent management statements about what is “important,” they will always determine “what partners will be compensated for doing.” They will discover the more rewarding option when deciding, for example, whether to devote their time to hourly billable work or to take potential billable time to market to potential clients or sell the firm’s other services to existing clients. Indeed, consistency in every aspect of the firm’s culture is the secret to its success. CHANGING CULTURE The firm that succeeds in changing its culture has been willing to invest partner time to assess its needs and requirements, 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 most influential partners. Lawyer managers, by instinct, have the tendency to (1) control and (2) focus on problems they can see and do something about. It is necessary to exercise some control and to resolve “problems,” but many of the firm’s “problems” would disappear if lawyer managers spent more time 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. A principal role of lawyer management is to assess the needs and priorities of the firm and the partners and to cultivate a firm 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 who require a different kind of management than associates and staff. While the latter groups can usually be motivated with a carrot-and-stick approach, partners are 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 is 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 — or restore — a sense of professionalism and common courtesy among partners, 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 has 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 inhibit a particular kind of culture. Lawyers learn the “rules” by which compensation and other rewards are meted out. 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 action. It shows in their responses to crisis and in their relationships with each other, with members of the professional and administrative staffs, with clients and with the community at large. Joel A. Rose is a certified management consultant and president of Joel A. Rose & Associates, Cherry Hill, N.J., which consults to the legal profession. He can be reached via e-mail at [email protected]

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