In our article “How High is Your EI?,” published in 2010, we discussed emotional intelligence (EI) as a key benchmark to a successful legal career. Now, in addition to focusing on EI, the legal industry needs to turn its attention to collaborative intelligence (CQ), an essential component of effective organizations and successful attorneys. In this highly competitive legal market, an attorney needs a high level of CQ to help clients meet their strategic business goals and law firms and other legal organizations need to foster a culture where knowledge and expertise are shared openly and effectively.

The CQ of a group, as defined by Wikipedia, generally refers to the measurement of the collaborative effectiveness of a group, which can be greater or less than the aggregate knowledge and capability possessed by individual group members. When looking at an individual’s CQ, several components are considered: the willingness to collaborate and share, knowing how and what to share, building trust, developing networks, understanding team dynamics, openness to new ideas and flexibility, willingness to mentor and coach others, and an understanding of how to use tools and technology effectively.1

Although collaboration is common practice among many professions, law firm professionals have historically tended to work independently—a trait that most law school curricula seem to foster. However, with the challenging market trends that law firms are facing, it’s become even more essential for lawyers to leverage their collective network and work more effectively together to solve client problems.

While there has been a clear improvement over the collapse seen in 2009, the trajectory for demand growth in legal services has remained essentially flat to somewhat negative for the past three years. Industry leaders are cautiously optimistic for 2014, anticipating possible modest growth, but clients continue to examine their need for outside counsel and the scope of work they give to law firms.

A 2013 Chief Legal Officers survey by Altman Weil reported that 42 percent of corporate law departments plan to add in-house counsel in the next year, including recent law school graduates, and 47 percent reported a decrease in their outside counsel budget. Firms understand that in order to increase their revenues, they must take business away from another law firm. This leads to fierce competition.

For a firm to differentiate itself from the pack, it’s essential to illustrate their collective intelligence. Clients are looking for a strategic partner who understands their business. They want their lawyers to add value, not only through legal know-how, but through effective and strategic management of relationships with inside counsel, local counsel, other law firms, as well as within their firm. Within their own firm, they expect attorneys from all practice groups to work seamlessly to solve their legal issues. And they want a partner who perhaps also offers introductions to professional networks and business referrals.

Many law firms are developing client-based portals where information is shared between in-house lawyers and attorneys at the firm. Pfizer, one of the largest pharmaceutical companies in the world, has started Pfizer Legal Alliance, a collaboration program for Pfizer’s outside counsel, which makes them work more closely and collaboratively both with Pfizer and with each other.2 Clients want all of their attorneys to work together effectively, and they don’t want to pay a law firm to get their attorneys up to speed.

Another challenging issue for law firms remains client pushback on billable rates. Law firm realization rates are dropping. In 2007 realization rates were 92 percent, and in 2013 they were 83.5 percent.3 What this means is that for every dollar billed, firms are now collecting on average 83.5 cents on that dollar.

Clients want more value for less money and many are willing to retain law firms that they may not have considered in the past. In a survey conducted by AdvanceLaw, general counsel at 88 major companies were asked about their willingness to move high stakes work away from “pedigreed firms” (essentially defined as AmLaw 20 or Magic Circle firms) to “non-pedigreed firms,” assuming a 30 percent difference in overall cost. Of the respondents, 74 percent indicated that they would be inclined to use the less pedigreed firms, with only 13 percent saying they would not. Brand value is clearly decreasing as many clients are choosing law firms based on price and efficiency.

More legal work has also been moving to law firms in the 201-500 attorney size category, which are more likely to offer alternative fee arrangements (AFAs). When a firm uses an AFA, such as a fixed fee arrangement or blended rates, efficiency and collaboration become paramount for profitability.

Regardless of pricing challenges, though, the best approach to ensure business continuity is through effective collaboration. An effective team “has great potential for solving hard problems in challenging contexts … [and] brings more knowledge, skill, and experience to the work than any single individual could.”4 Law firms need to focus on best practices for offering premiere legal services.

Knowledge management is one of these best practices. Knowledge management is a key component to effective collaboration within an organization. Knowledge management involves the use of technology to codify a firm’s accumulated knowledge and makes that information available to its attorneys. Law firms have to look at ways to better share knowledge from their individual’s experiences, better re-use documents they have developed, standardize routine work, and analyze their most valuable knowledge in order to leverage it fully to support their clients.5

The American Lawyer’s survey reported recently that law firms seem to have realized this need for a more strategic approach to knowledge management and that firms are pushing for greater efficiency in their internal operations. Internal tools can help attorneys work more efficiently and collaboratively. Technology, when leveraged appropriately, offers innovative ways to deliver legal services faster and thus more economically.

The responsibility to share and collaborate, whether through knowledge management initiatives, mentoring or otherwise, should be shouldered by all attorneys in an organization. However, partners bear a greater burden as leaders and revenue generators. And certain partnership compensation models can incentivize collaboration, while others may not. In an “eat what you kill” compensation model where partner income is linked only to originations, partners are not motivated to share intelligence and work together. Altman Weil’s best practices for law firm partner compensation include those where “decisions are those that demonstrate … [c]ultural alignment—[s]upporting the group’s agreed-upon values and desired work environment.”6 Fostering a culture wherein knowledge is shared and networks are developed is an imperative for all law firm leaders. In The American Lawyer’s survey, nearly half of the 200 responding law firms said that they had aligned partner compensation with a willingness to cooperate in new initiatives, such as knowledge management.

It’s clear that law firms must cultivate leadership that incentivizes and recognizes CQ by putting specific mechanisms in place for sharing knowledge and encouraging collaboration in a globalized economy. But perhaps law schools should begin developing CQ in their aspiring lawyers so they can become effective members of “intelligence teams.”

Unfortunately, though, most law schools are better known for competition rather than collaboration. The curriculum and style of teaching has done little to foster CQ. Unlike most business schools, there are very few group projects in law schools. While many students form study groups and share outlines within the study group, grades are almost always based on individual performance on exams. Business schools, in contrast, often have group projects that result in a grade for the entire group. The traditional law school teaching model should be reconsidered, especially as law school applications continue to fall. Given the evolving legal market, perhaps law schools should consider restructuring certain classes in a manner that will reward collaboration and cultivate CQ. In the meantime, today many law schools partner with potential employers, including law firms and government agencies, to provide law students with clinical, real-life opportunities where they can build their CQ and create mentoring relationships.

Although specifically developing a student’s CQ does not appear to be a priority in most law schools, law firms should expand their criteria to include an assessment of a potential recruit’s CQ. Is the candidate someone whose academic and work experience has illustrated a strong understanding of team dynamics? Has the candidate served as a mentor or been a mentee? Working effectively as a team member has never been more critical than in today’s legal market. And an associate’s ability to work as a team member is considered a core competency in many law firms’ evaluation process.

Teams today can be made up of members from four different generations, which can pose additional challenges. “Generational differences not only affect working relationships within the firm but also impact just about every aspect of the practice of law, such as relationships with clients and marketing efforts to current and prospective clients.”7 Certain generations, such as the Millennials, are more apt to collaborate. Millennials generally do not consider themselves limited to meeting people in their neighborhood, but instead create relationships with people all around the world based on interests, instead of locality. In this era, new business can be gained through referrals and by creating relationships through social networks.

Business development teams with attorneys at all levels increase the team’s intelligence and probability in securing a client. The Millennial generation’s familiarity and comfort with technology and social media create a great partnering opportunity for senior attorneys. As technology and social media continues to increase in its popularity among law firms as an important vehicle for successful branding and business development, Millennials offer expertise in this area that older generations may lack. Attorneys at all levels should also collaborate on business development initiatives with administrative groups within a firm, such as a firm’s marketing group, public relations personnel, and talent management professionals. These administrative teams, along with members of the Millennial generation, can provide expertise that should be optimized to meet an organization’s business goals. Many other industries have created social media teams to build their branding and develop business.

Many of the driving changes in the legal industry, such as technology, collaboration, and providing information for free, are familiar concepts for Millennials, who generally want a work environment where their employer can “demonstrate how what they are doing will contribute to the success of the firm.”8 Law schools and law firms are populated with great talent from this generation who want to be on a team mentored by previous generations, where they can share their knowledge and build their network.

But it’s not just the Millennials and clients who are looking for better collaboration. Lateral partner moves are at an all-time high and many moves stem from partner dissatisfaction with the support they receive from their prior firm. Many lateral partners today say they are looking for a new firm with a formal integration program that will provide them with the proper introductions to other groups in the firm where they can cross-market and collaborate on client work. Law firms, in turn, also search for lateral partners or groups that add to their organization’s intelligence and profitability. Building collaborative groups of talent is imperative for attracting talent. In addition, in a market where lateral partner moves are so prevalent, if a client is being serviced by a cohesive team, they are less likely to follow a partner to a new firm. And if they do, it’s possible that the client will insist that the old firm retain certain matters, possibly forcing the departing partner to continue working with their old team, even at a new firm.

The legal market is facing many challenges in today’s unpredictable economy, but if a law firm incentivizes and recognizes CQ in their business model, they likely will be more successful in navigating through these challenges. CQ fosters innovation, and an ongoing assessment of strategies and metrics leads to greater performance in anticipating client needs and solving their problems. Therefore, law firms should consider CQ in their hiring criteria for effective talent management and leadership must put specific mechanisms in place for their existing talent to share knowledge and encourage collaboration. Additionally, law schools should consider adapting their curriculum to better address the new demands of this challenging legal market. Whether looking for a first job, considering the next professional move, or seeking a loyal lifetime client, law students and attorneys need to distinguish themselves by demonstrating how their CQ compliments an existing or potential group.

Alison Nina Bernard is the director of corporate practice at Fried, Frank, Harris, Shriver & Jacobson. Niki Kopsidas oversees firm-wide lateral partner hiring and integration at Blank Rome.

Endnotes:

1. David Coleman, “10 Components of Collaborative Intelligence,” CMS Wire, Nov. 21, 2011, http://www.cmswire.com/cms/social-business/10-components-of-collaborative-intelligence-013549.php.

2. Helena Hallgarn and Ann Bjork, “Future of Legal Services and the Development of Legal Knowledge Management,” Aug. 30, 2013, http://blog.law.cornell.edu/voxpop/2013/08/30/future-of-legal-services-and-the-development-of-legal-knowledge-management/ (“Future of Legal Services”).

3. Thomson Reuters Peer Monitor 2014 Report on the State of the Legal Market.

4. J. Richard Hackman, “Collaborative Intelligence: Using Teams to Solve Hard Problems” (Berrett-Koehler Publishers 2011).

5. “Future of Legal Services,” supra note 2.

6. James D. Cotterman, “Compensation Best Practices,” Altman Weil, 2014, http://www.altmanweil.com/dir_docs/resource/5ec7221c-2db4-433e-a8c7-df7ef604f6ca_document.pdf.

7. Joan Newman, “Working with Different Generations,” Altman Weil, http://www.altmanweil.com/index.cfm/fa/r.resource_detail/oid/6824c95c-fd37-43a6-8f3b-155ef8ded25d/resource/Working_with_Different_Generations.cfm.

8. Id.