Human Capital in the New Legal Ecosystem

The COVID-19 pandemic has changed working practices across the globe. It has been predicted that as much as 80 percent of the legal work- force will remain transient or permanently working from home after the COVID-19 crisis ends, with only around a fifth as full-time office workers. Although law firms typically weather downturns better than the overall economy, revenues, working practices, and working culture will all change. The expected economic downturn may not directly translate into a decline for professional services, as market difficulties, regulatory responses, stimulus programs, changes in employment, and other stressors provide potential sources of demand – particularly in the legal sector.

What is clear is that personnel issues will come to the fore, and law firm leaders will have to respond proactively, both to mitigate risk and to make the best of a challenging and changing situation. Transitioning from an industry famed for office working to one that is more responsive, flexible and individualistic will provide as many opportunities as it will challenges.

Economic pressures of the past decade have been forcing law firms, in-house law departments, and others to look for ways to improve the quality of legal services while reducing cost. The COVID-19 pandemic has accelerated those efforts. Chapter one, by Michael Roster, formerly managing partner of Morrison & Foerster’s Los Angeles office, surveys ways to have junior lawyers functioning at mid- and even senior-associate levels; how to incentivize partners to implement more efficient yet more profitable staffing models; ways to improve client satisfaction and outcomes; and ways to restore high realization rates for law firms. Some might think this all is impossible. In fact, it’s very doable, and those firms and companies that hesitate are going to be the losers in a rapidly changing legal market.

Seventy-five percent of lawyers do not think that the law is a service industry. This is the single biggest commercial issue for law firms. Chapter two, by Jon Whittle, challenges law firms to address the structural flaw that will prevent many of them building competitive, commercially successful businesses in the new legal ecosystem. Law firms need to know how to recruit, manage, and advance non-legal skills to help drive their business forward. For generations, law firms have only ever been run by lawyers and in this chapter Jon investigates what skillsets are missing in many firms and, crucially, how law firms can incorporate the non-legal skills they absolutely need to thrive. Equally importantly, he explains how law firms need to address their culture and structure so that disciplines such as sales, marketing, HR, and customer service can shape the commercial direction of the business. No other industry puts their commercial strategy solely in the hands of the people that make the product, and yet, law firms contrive to put 99 percent of the control in the hands of lawyers. Success in the new ecosystem will require this to change.

Chapter three, by Jennifer Johnson, CEO and founder of Calibrate Legal, and Erin Meszaros, chief business development and client service officer at Eversheds Sutherland, discusses the professionalization of business services talent. The world is changing and so is the talent needed for a law firm business services group to really rise to the next level. With the focus on innovation and change, it only seems right that you would build a team of diverse individuals who have in-house legal services experience as well as those with non-legal services experience. This chapter focuses on strategies to support the need for business services professionals from non-legal backgrounds to really maximize a team’s efforts, as well as realize the benefit of bringing those non-legal and legal backgrounds together.

An organization’s culture is an intricately woven fabric of values, standards, traditions, and behavioral norms. Each law firm has a unique culture, often one that has been inherited rather than actively shaped and directed. It is most easily defined, not by a vision statement or set of values promoted on the website, but how its people actually behave and how firm policies and leaders inculcate, reinforce or deviate from the behaviors of the stated culture. The COVID-19 pandemic has forced law firms to shift their operating models and to adeptly move to a remote work environment. This has had significant impacts on the way firms communicate with and support clients and employees, how work is completed and delivered, and has tested many traditional norms and assumptions in how law firms and partnerships sustain themselves.

Chapter four, by Susan Duncan of Rainmaking Oasis, includes the core components of law firm culture, how the pandemic has changed traditional models and culture, how to assess the culture you have, as well as approaches for improving your culture to compete in the future.

In 2016, the publication of two prominent studies of lawyers and law students in the US highlighted the disproportionate rate at which these groups experienced substance use and mental health disorders. In response, the National Task Force on Lawyer Well-Being published recommendations for addressing these issues and calling upon the legal profession to go from a culture of ill health to one that prioritizes wellbeing. Recommendations for legal employers, particularly mid- to large-size law firms, were incorporated into the WellBeing Pledge Campaign, an ongoing project of the American Bar Association’s Commission on Lawyer Assistance Programs. Initial results from Pledge signatories demonstrate that many US and global law firms are adopting a variety of creative and comprehensive strategies to promote the well- being of their attorneys and staff. In chapter five, Bree Buchanan and Jonathan Beitner highlight some of the most exciting and innovative initiatives currently being implemented by some of the most successful firms in offices around the world, offering many lessons relevant to these challenging times.

Chapter six, by Renee Branson, builds on this, looking at how COVID-19 has changed our understanding and prioritization of well- being in the workplace. The legal industry, in recent years, has begun to place greater emphasis on mental wellbeing, and the COVID-19 pandemic shifted nearly everything about the way we work, meaning the pursuit of mental health and resilience will accelerate. New challenges to our wellbeing emerged, and pre-existing ones were exacerbated. Renee begins by investigating the impact of this global pandemic on mental health, productivity, and cognition. She then answers the question of how to create a culture of resilience that mitigates those harmful impacts. Renee explores the various domains and skills that make up a resilient mind and, ultimately, a resilient organization.

Chapter seven then looks at culture from a generational standpoint. With so much attention focused on generational challenges in the work- place, asks Lauren Stiller Rikleen, president of the Rikleen Institute for Strategic Leadership, why have we still not reached a demographic détente? In the legal profession, the level of disquiet and frustration that exists between partners and associates can be higher than in other workplaces where there is a greater programmatic focus on talent retention and management. But the important tasks of strengthening client service and building a client base for the future is dependent on bridging these divides.

The generational challenges experienced among Boomers, Gen Xers, and Millennials may soon be exacerbated as future Gen Z lawyers come of age and enter the workplace. The oldest members of this generation are likely in law school, while the youngest are just beginning their grade school journey. All are experiencing the effects of a pandemic at a deeply vulnerable time, resulting in the disruption of their education and social development.

How members of Gen Z will integrate into the workplace is currently an open question. Their lost opportunities may have long-term effects on some aspects of their development, but they may also emerge with a deep reservoir of grit and resilience. The sustainability of any law firm requires that these strengths and weaknesses be recognized and addressed. This chapter explores the generational conversations that need to take place in an increasingly competitive profession. Building a future that is client-focused requires a greater investment in and willingness to understand the backgrounds and experiences that shape generational patterns. As with all relationships, opening lines of communication is the first significant step to developing a blueprint for successful growth. For many legal businesses, the impact of COVID-19 has been felt most powerfully as a forcible shove into a new world of homeworking. As an accelerator, the pandemic has opened the gates to a new way of working that was perhaps already lumbering over the horizon. But are we ready to close the doors on the office?

In chapter eight, Clare Harman Clark of Taylor Wessing discusses the fact that many lawyers are currently finding that it’s less a case of working from home, more living at work – but the touted benefits of flexibility and balance are still tantalizing. If the future of work is to make the very most of this chance to rebase our working lives, is it truly possible to find a way of replicating digitally the collaboration and inspiration of the office that we miss out on at home? How might office spaces themselves be redesigned to better facilitate those features, and tempt workers back?

The force of change for employees has been dramatic in recent months. The coronavirus pandemic has driven through new ways of working, with staff being required to respond and adapt in the moment. The ongoing threat of the virus, and the resulting economic downturn, has created uncertainty about the future, bringing employee relationships and employee engagement front and center, for both the immediate and longer-term. Research shows that organizations with actively engaged employees outperform across the board. To maximize performance and maintain a competitive edge, therefore, it is an essential component of business strategy, and is more important than ever. Chapter nine by Chris Marston of LawNet highlights the current thinking, as well as technical tips and operational examples.

Chapter ten forms a case study. Chris Boyd, Allison Blixt, and Jullia Carretta collectively oversee professional development, diversity and inclusion, and employee engagement at Wilson Sonsini Goodrich & Rosati, and the case study demonstrates how the firm has adapted those to meet the logistical and human challenges of the pandemic and a fully remote work environment. The firm has taken a multi-pronged, collaborative approach to address challenges including moving everyone virtual, communicating and managing across 1,600 offices, maintaining well- being when work and home life merge, and connecting with colleagues and clients. Underlying all of these is a focus on supporting its diverse talent and developing additional D&I initiatives.

Our final chapter, by Tim Corcoran, looks at how the pandemic has exacerbated the need to recognize the different incentives that are required to allow lawyers to pursue different definitions of their highest and best use. Law firms have indisputably evolved into more complex businesses, and like all businesses, it requires a variety of skills and talents to run one effectively. However, too many law firm cultures recognize and reward but one contribution from their owners - billing time. Delivering legal services will always be critical, but other contributions have grown to be equally important. Developing and shepherding strategy, managing client relationships, managing lawyers and staff, generating new revenue streams, innovating to create competitive advantages, and managing daily operations are just a few of the tasks that law firm partners must take on, and not everyone is suited to these roles. In the new legal ecosystem, modern law firms must recognize and reward these meaningful contributions in order to remain competitive.

Human Capital in the New Legal Ecosystem is available at www.ark-group.com