By Heidi K. Gardner
If you ask most law firm leaders what their firms’ greatest assets are, you are most likely to get a rather simple answer: “our lawyers.” Dig a little deeper and you are likely to uncover that what these leaders really mean is their colleagues’ specialized expertise—their aptitude to do world-class legal work in tax, IP, M&A, employment, and the list goes on. On the one hand, this is a comforting answer. It recognizes the unique role lawyers play as technical experts—professionals who are able to diagnose particular legal problems and offer legal solutions (see “Professionalism in the 21st Century”). Indeed, this trend toward greater specialization has intensified as the pace of knowledge change has relentlessly sped up.
On the other hand, clients are continuing to globalize and confront more-sophisticated technological, regulatory, economic and environmental demands (to name just a few). As a result, their problems have become, to borrow a term from business, VUCA (volatile, uncertain, complex and ambiguous). Most of their problems transcend traditional practice areas and disciplinary silos, and crisscross geographies and jurisdictions.
Together these two trends—increased specialization and a growing complexity in client issues—create a demand for lawyers who are not only technical experts in their own particular domain but also lawyers who can collaborate with others throughout the firm, and often around the world, to solve multifaceted problems. The conundrum is, however, that most firms have lawyers trained as subject-matter specialists. Because most top-tier law firms understand that their clients increasingly expect each of their lawyers to be the foremost expert in a specific domain, firms have fostered expertise specialization by creating narrowly defined practice areas and by rewarding professionals for developing reputations in precise niches. The collective expertise has therefore become distributed across people, places and practice groups. Consequently, tackling client problems that transcend practice areas and disciplinary silos seriously challenges traditional models of law firm structure and ways of doing business. To keep up, law firms and lawyers have to collaborate across their boundaries in order to address clients’ most complex issues.
Below we look at what collaboration entails for the 21st-century lawyer—what it involves, what are its benefits, why it is so difficult to achieve and what you and your colleagues can do to promote effective collaboration in your firm.
The growing complexity of legal work—work that is increasingly cross-practice and multijurisdictional in nature—requires lawyers to collaborate across expertise and organizational boundaries. Data shows that when lawyers do work across specialties, their firms earn higher margins, clients are more loyal, and individual lawyers are able to charge more for the work that they do. By deemphasizing input measures, such as billable hours, and focusing more on output variables, like breadth of service per client (known in some firms as “proliferation”), firms can lower the barriers to collaboration and land higher-value work.
What is collaboration? True multidisciplinary collaboration requires people to combine their perspectives and expertise and tailor them to the clients’ needs such that the outcome is more than the sum of the participating individuals’ knowledge. Collaboration occurs when knowledge workers integrate their individual expertise in order to deliver high-quality outcomes on complex issues. These relationships typically extend over time and across discrete projects as the participants identify new approaches and initiate further engagements. In addition to offering up their expertise, these professionals also help, advise, stimulate and counterbalance one another. By truly collaborating, a team of lawyers is able to address issues that none could tackle individually.
True multidisciplinary collaboration is more than the sum of the participating individuals’ knowledge.
In these ways, collaboration, as I define it, is different from mere assembly, where experts simply contribute “their piece” and someone else pulls inputs together, or from sequential, interdependent work, where a lawyer builds on the prior work of others and hands his or her work over to the next partner. Though these interactions may not be direct or face-to-face, collaboration does require repeated or ongoing interactions—interactions that, over time, allow the generative recombination of different people’s information, perspectives and expertise. The outcome of collaboration is therefore more than simply the sum of participating partners’ unique knowledge.
In the legal context, it is important to make clear that the type of collaboration discussed here is firmly distinct from what the industry often dubs as “cross-selling.” Cross-selling occurs when, for example, Partner A introduces Partner B to his or her own client so that Partner B might provide additional services. Although Partner A may provide a level of general oversight to ensure that his or her client is satisfied with Partner B’s work, he or she is unlikely to get deeply involved. Put simply, cross-selling is the legal equivalent of “Do you want fries with that?” Collaboration of the type discussed herein involves specialists working together substantively to deliver a project rather than experts working separately in disciplinary silos. Though this definition of collaboration may seem commonsensical, it is also frequently misunderstood given the longstanding barriers to it in the legal profession.
Having been a professor at Harvard Business School before moving to Harvard Law School’s Center on the Legal Profession, I’m often asked what’s it like working with lawyers all the time. My answer is typically, “Lawyers are admittedly a tough crowd—skeptical and argumentative. But the good news is that they respond to evidence.”
With that mindset, my research team at the Center on the Legal Profession and I have embarked on this project to build a convincing set of evidence, consisting of millions of data records from across multiple professional service firms combined with hundreds of interviews with lawyers, law firm leaders and their clients. The research reported below is based on decades of time sheets and other financial and personnel records received from multiple law firms. These records allow me to study collaboration patterns and outcomes in a fine-grained, objective way. The quality, depth and volume of data allow for robust statistical analyses, some of which are presented in this article. The statistical findings are supported by surveys conducted across dozens of firms, both in the United States and around the world.
We validate and explore these quantitative results through our interviews and workshops with practicing lawyers and their firms’ leaders. To ensure the validity of our findings from the client perspective, I am now embarking on a round of interviews with general counsel and other “consumers” of legal services, such as procurement officers, from organizations across a range of industries, geographies and sizes.
Finally, to help uncover ways to surmount the barriers to collaboration, I have spoken to more than 4,000 partner-level professionals in the past two years, including participants from executive education courses such as Harvard Law School’s Leadership in Law Firms and the Accelerated Leadership Program for equity partners.
Collaborating for gains
My research shows that when firms can get their partners to collaborate across practices, offices, jurisdictions or other internal boundaries, the financial gains to the firm are unambiguous. One of the clearest measures of this finding is the link between cross-practice collaboration and revenues. Simply put, the more practices that are involved in servicing a client, the greater the annual average revenue that client generates. For example, in one law firm we studied, moving from one to two practices serving a client on average tripled the revenues from that client, and the addition of each subsequent practice continued to generate fees. Clearly, if 1+1=3, then the lawyers involved in cross-practice service were doing more than just referring their colleagues to provide their own siloed work. Similar numbers arise for international firms doing cross-jurisdictional work: client projects involving offices in several countries are significantly more lucrative than single-office engagements.
What is the rationale behind this? First, having more partners involved with a client gives you more information about that organization’s needs, priorities and preferences—and that allows the firm to better serve the client, particularly when it comes to highly sophisticated needs. Also, having more people involved with a client who are prospecting for work ought to drum up more business. As one law partner said in an interview:
Getting more of our people in front of the client more often created a virtuous cycle because we became the top-of-mind advisor across their legal department. When a new matter came up, we were the go-to team. It simplified life for the client who didn’t need to make a conscious decision or wonder if their colleagues were going to question their choice.
It is also not merely more work from the client—it is also more sophisticated work. That is in part because cross-specialty work is likely to be less subject to price-based competition. Whereas clients tend to view single-specialty expertise (e.g., about a basic tax issue) as commodity work that can be awarded to the lowest bidder, they know that cross-specialty work is complex and harder to accomplish.
While increases in revenue are one big rationale for greater collaboration, there are other important impacts. My research also shows that greater collaboration is directly associated with greater client stickiness for two reasons. First, teams of lawyers—as opposed to individual experts—are hard to replace. As one general counsel of a Fortune 500 company put it,
Despite what they think, most individual lawyers are actually quite replaceable. I mean, I could find a decent tax lawyer in most firms. But when that lawyer teamed up with colleagues from IP, regulatory and ultimately litigation, I couldn’t find a whole-team substitute in another firm.
Clients served by multiple practices are far more likely to retain their law firms for longer—even when the client-relationship partner leaves.
Second, the more partners that serve a particular client, the more likely that client will become “institutionalized”—owned by the firm, not by a particular partner. Think about it: when there are more lawyers serving a client, the risk of any single individual absconding with the client if he or she leaves the firm decreases. Yet, even when multiple professionals serve a client, it is no guarantee that they cannot leave en masse and take the client relationship to their next firm. This phenomenon, known in industry parlance as “lift-out,” occurs when a firm hires a high-functioning group of colleagues, who are often successful in taking many of their clients with them to the new firm. Lift-outs, however, are generally constrained to individuals working within a single unit. This reasoning suggests that there is stronger retention of clients who are served by a team of cross-practice lawyers, as opposed to those served by either sole partners or groups of partners from within the same practice unit. Our empirical results confirm that clients served by multiple practices are far more likely to retain their law firms for longer—even when the client-relationship partner leaves.
Of course, there is a fear that by institutionalizing clients, collaboration may ultimately erode margins. The logic goes: because the firm is now a bigger item on the general counsel’s budget sheet, he or she will have the leverage necessary to negotiate a volume discount and other freebies. Why bother doing more work for less money? Our research suggests that this possibility is real, but that, on average, clients served with multipractice engagements are more profitable in the long run. Data from some major international law firms shows that the profitability (in percentage terms) holds nearly steady as more practices are included in a client’s service mix. Naturally, the numbers shift depending how narrowly you define practices, which “magnet practice” anchored the initial relationship and so on, but the results on average show fairly steady margin rates even as the account size grows. Given that the firms are earning about the same percentage on much higher revenues, it’s clear that the overall profits stemming from cross-practice service are significant.
Further, broadening the range of services in an existing client (what some firms call “proliferation”) is far more efficient than prospecting for new clients. When you factor in the lower cost of sales for these clients, it should outweigh the slightly lower margins from additional work. Indeed, as one partner noted, “The clients are much more generous on fees because if the deal’s so big, it’s got to get done, they cannot waste time negotiating or nitpicking.”
I strongly encourage professional firm leaders to undertake similar analyses with their own data; if you find a different pattern, then it should trigger deeper inspection about the mix of practices, nature of your negotiations and so forth. Law firm leaders need to be vigilant in determining—through hard data and rigorous analytics—which clients are profitable for their firm to invest in. Overall, I expect you’ll find a pattern that illustrates what one Fortune 100 CFO recently told me about the link he has observed between his company’s legal advisors’ services and their profits: “Margins rise with complexity.”
But let’s be clear: these benefits flow only if clients are delighted by the value their legal teams provide. Partners often say to me, “But my client won’t pay for collaboration.” It’s true: one of the first hurdles you need to overcome if you’re to achieve the benefits outlined in this chapter is gaining your client’s commitment to performing collaborative work. As Ben Heineman, the former general counsel of General Electric, has written, “Bigger isn’t necessarily better.” No general counsel is willing to pay for inefficient advisors handing off work among themselves. They expect their professional teams to use adequate project management discipline to control quality and avoid billing for unnecessary work, poor work and rework.
For firms that get it right, cross-practice collaboration not only helps institutionalize clients, it can also foster loyalty from a firm’s own lawyers. First, partners whose work consists mostly of institutionalized clients become less marketable: competitors recognize that it is much harder for them to defect with their clients that are served by multiple practices within the firm. Moreover, the more a partner works in a team, the more likely he or she will come to identify with the firm and the less likely he or she will see himself or herself as a “lone wolf.” Stronger organizational identification means that professionals are more likely not only to stay at their firm but also to engage in prosocial, firm-building activities such as mentoring junior lawyers. These activities, in turn, enhance the desirable retention of high-performing associates.
Integrating lateral hires
The lateral hiring market is once again hot, but most law firms have come to a sobering conclusion: accumulating stars is no longer enough. All that expensive talent cannot be harnessed for profit growth unless they find a way to integrate the newly joined partners into their firm.
Collaborating brings lateral hires up to speed with firm practices, allows them to get to know their colleagues and, most importantly, builds trust between the lateral hires, their colleagues and their new clients.
Our analyses of firms’ client and personnel records demonstrate that collaboration is essential for helping to ensure that lateral hires become successful and productive postmove—or else their flight risk is radically higher. For laterally hired partners to be successful at their new firm, the evidence shows that they have to be sufficiently integrated with incumbent partners and clients within the first 18 months, if not sooner. The exact number varies by firm and practice. But our data confirms that if a partner reaches the year-plus stage and hasn’t convinced at least a couple of the incumbent partners to work on clients he or she brought with him or her, and if the partner hasn’t also been invited to join the account team for a couple of the firm’s existing clients, there’s a very, very high chance that he or she will leave within the next year or so. Collaborating brings lateral hires up to speed with firm practices, allows them to get to know their colleagues and, most importantly, builds trust between the lateral hires, their colleagues and their new clients.
It’s not only the firms writ large that benefit from partner collaboration; individual lawyers also reap huge rewards. Our research shows that rainmakers who collaborate—that is, share the work that they originate—end up with significantly bigger books of business than those who tend to hoard work. To illustrate how collaboration enhances a professional’s ability to generate business, let’s compare two nearly identical lawyers using an example that was first published in Harvard Business Review a few months ago.
Two partners in the same practice area at the same firm graduated from law school the same year. They billed nearly the same number of hours in a given year, but the diagram clearly shows that they spent those hours very differently. Lawyer 1 brought six other partners into client work he generated, half of whom were from outside his own practice area (as shown by the gray instead of aqua dots). Lawyer 2 involved more than 30 other partners in his client work, two-thirds of them from outside his practice. Lawyer 2’s cross-practice approach paid off: total revenue that year from his clients was more than four times higher than the revenue from Lawyer 1’s clients. Although this illustration can’t tell us whether collaboration led to the increased revenue or was a result of it, the link seems worth investigating.
Our research examining outcomes over a decade actually shows a clear causal pattern: we find that rainmakers who systematically involve other partners in their work benefit by significantly growing their books of business in coming years, even controlling for the size of the rainmaker’s book in the starting year. In other words, no matter how much work the partner generates this year, if he or she refers that work to other partners rather than hoarding it, then that partner’s origination amount will increase significantly the next year. This pattern holds even after controlling for additional factors that are likely to affect individual billings, such as one’s office, practice group, organizational tenure and gender. We’ve now replicated these findings using data from multiple law firms that varies in size, geographic scope and compensation system.
Rainmakers who systematically involve other partners in their work benefit by significantly growing their books of business in coming years
Further, by teaming up with colleagues from different practice areas, your colleagues understand what you have to offer—and that makes them more likely to refer you for matters down the road. Surveys and interviews with hundreds of practicing lawyers reveal that trust in colleagues is the key ingredient that enables knowledge sharing and collaboration. When partners collaborate, they form bonds of trust that allow them to work together more efficiently to produce high-quality outcomes. Collaboration gives them the opportunity to observe and understand one another’s capabilities—and it is these firsthand experiences of one another’s work that builds competency trust. And, because referrals are a more efficient way to generate work than prospecting on your own, they make it easier to reach revenue targets. Indeed, according to data from one large law firm, a single work referral typically generated about $50,000 of extra revenue for the partner who received it. Of course, throughout all of this, it helps whom you collaborate with; teaming up with a rainmaker or other well-connected colleagues is the most powerful way to enhance your own reputation.
A single work referral typically generated about $50,000 of extra revenue for the partner who received it.
Working with colleagues from different practice areas typically goes hand in hand with working on more-sophisticated work. And that has real economic benefits for the individual lawyers involved. Across firms we studied, we found that the more cross-discipline projects partners worked on, and the more complex each one was, the more their hourly rates increased in following years. Again, these analyses all statistically controlled for alternative predictors of rates such as a partner’s practice, office, seniority, gender and other variables. We still find that cross-practice collaboration experience is a very robust determinant of a partner’s ability to raise rates faster than his or her peers in the same firm who do more siloed work. To put this concretely, according to statistics in the American Lawyer’s November 2014 issue, the average big-firm lawyer who billed $500 in 2008 would bill about $600 now. If that same lawyer had performed significant, complex cross-practice work in the interim, his or her rates would now be well over $750, my analysis shows. Clients recognize your ability to provide strategic direction, not just technical expertise. They’re willing to reward you for that counsel and for your prowess at running big matters or deals that deliver the most value on their most sophisticated issues.
The average big-firm lawyer who billed $500 in 2008 would bill about $600 now. According to my analysis, if that same lawyer had performed significant, complex cross-practice work in the interim, his or her rates would now be well over $750.
Finally, collaboration can help insulate lawyers from economic downturns. According to my data, even professionals who were moderately connected to others in their firms—that is, they had worked each year with just 10 other partners in the three years prior to the 2008 recession—preserved their revenue during the financial crisis. The revenue of the more isolated professionals dropped significantly. Moreover, the revenue of the more collaborative partners climbed much more quickly during recovery. The logic is threefold. First, those who had teamed up before the downturn were more likely to continue sharing their client work even when the total amount was greatly reduced. As one partner said, “When the food got scarce, we took care of our own”—and noted that he considered his tribe a subset of colleagues rather than the whole partnership. Second, collaborative partners were living the financial principle of portfolio theory: they spread their exposure across clients such that they benefited when some of those clients survived better than others during a crisis. Third, by working on multipractice projects in good times, the professionals became more adaptive: they had learned how to handle a broader set of topics to draw on in leaner times.
In recent years Harvard Law School has stressed pedagogical styles meant to supplement traditional, instructor-centered courses. For example, all 1L’s are required take the January term’s Problem Solving Workshop, or PSW. Unlike instructor-centered courses, PSW is principally team-oriented and set up to teach practical skills (see “Preparing Lawyers for Practice”). Students work in preassigned, five-person teams on all their assignments during the mandatory three-week course. Harvard Law School Professor David B. Wilkins, who has taught a section of PSW since its inception in 2010, uses a series of team-building and feedback exercises that provide hands-on team-process coaching. Wilkins says, “PSW is all about teaching law students how practicing lawyers work on real-world problems. And that, more often than not, requires them to work in teams.”
Other courses in the law curriculum also incorporate team-based learning. For instance, Professor Scott Westfahl has designed a team-based seminar, Innovation in Legal Education and Practice, where small teams create business proposals and “pitch” presentations to outside panels of experts. Students learn and practice teamwork and group presentation skills while also deepening their understanding of how disruptive forces are affecting today’s legal practice. Similarly, students in Professor John Coates’s M&A class work in preassigned, self-organized teams throughout the semester to deliver group-based practical exercises on preliminary deal negotiations, design of a sales process and deal financing. Teams are encouraged to divide tasks, work collaboratively to draw on different skill sets and discuss current and future work projects. Their final projects are also team-based.
The white whale of collaboration
If collaboration provides so many benefits for so many people, why is it so hard to get partners to collaborate? Below we review some of the major obstacles to effective law firm collaboration.
Long-term return on investment. The benefits of collaboration—for the individual lawyers and the law firm—tend to accrue slowly, whereas the investment costs are borne up front. For instance, figuring out what services the firm offers, how those would specifically benefit your own client at the right time and whom to turn to for a specific type of expertise requires a significant time commitment. The additional revenues might hit the books only in the next year, but your nonbillables have crept up this year. Risk-adverse lawyers are often loathe to take this “leap of faith” and therefore opt to go it alone.
Lack of Trust. We have all heard horror stories about a decades-long client relationship jeopardized by one mistake: “I spent decades building a deep client relationship, but the first time I took Joe along, he screwed up, and we were kicked out for good.” The risks of involving a new partner with one’s own client are real, and taking the leap of faith to involve others requires trust, both relational and competency-based.
The risks of involving a new partner with one’s own client are real, and taking the leap of faith to involve others requires trust.
- Relational trust is the willingness to make oneself vulnerable to another person, such as the partner with whom one begins a new collaboration. It arises from the emotional bonds that connect co-workers and develops through shared experiences, reciprocal disclosure and demonstrations that the individuals will not take advantage of one another. This trust gives professionals confidence that they can introduce colleagues into their most valued client relationships without concern that the collaborator will introduce friction, “steal” their client or undermine the client relationship in some way. As one lawyer said, “I’ve always won on my own: my college grades and LSAT scores got me into law school, my law school grades got me hired here, my associate review score got me to partner. I haven’t played on a team since high school lacrosse. Why would I be a team player now?”
- Competency trust is the belief that another individual is competent, reliable, professional, well prepared and dedicated to his or her work. When professionals develop mutual competency trust, they are more likely to rely on and use one another’s knowledge. The closer someone else’s expertise is to one’s own, the more easily and accurately competence can be judged and trust established. When lawyers from different practices work together, they may have to bridge dissimilar “thought worlds”—for example, new jargon, differing assumptions or unfamiliar approaches. Bridging these gaps can be hard, particularly for individuals who are often at the top of their own game.
Changes in the legal sector—including firms’ rapid growth and internationalization, along with heightened individual mobility—have made it challenging for lawyers to develop trust, even within the same firm. For example, when firms grow through lateral hiring or mergers, it becomes difficult for partners to know, let alone trust, their colleagues. To the extent that new entrants come from firms with different norms and cultures, trust may be even harder to establish. Research also shows that the more tightly intertwined a group of lawyers were in their legacy firm or practice—as measured by the amount of business they referred to one another—the less integrated they are likely to become in a merged firm.
Internationalization also raises cross-cultural issues that pose challenges to collaboration and building trust. For example, legal training differs significantly across jurisdictions, and lawyers develop different competencies based on their exposure to client work of varying sophistication. If a partner is unable to predict the capabilities of lawyers in another country, he or she will likely hesitate to bring them into his or her client work. Although partner-level capabilities may even out considerably as careers progress, other divisions based on different cultural norms can remain.
Ignorance of the firm’s offerings. To offer their clients sophisticated service, professionals need to know what expertise exists across their own firm, how it maps onto their clients’ needs and when it’s better to refer work to an outsider. But as firms grow, staying current on credible inside offerings becomes increasingly difficult. In our surveys across many professional firms, this lack of knowledge was one of the most frequently cited barriers to collaborating. We ran a quiz at one partner retreat: questions focused on the services and practice groups offered by the firm, and all answers could have been found on the firm’s public website. It turns out that most partners failed.
Inefficiency and politics. Even after knowing what the firm can offer, collaboration requires finding the right individual expert who has both complementary knowledge and a willingness to engage in joint working, both of which become harder to find in firms that expand rapidly. As one partner in an international firm recounted:
I used to know enough about my partners’ work that it would take me only one or perhaps two phone calls to locate even the most esoteric expertise I needed. Now [after a series of mergers], the firm has a lot more experts available, but finding them is exponentially trickier. Plus, people no longer feel the same personal accountability to each other that makes them interrupt their own agenda to help on another partner’s client. I feel like I need to negotiate or incentivize, whereas before people would just do the right thing for each other.
It becomes even more difficult once the parties have committed to working together. Traditional teams formed to tackle a specific matter typically have clear goals, a defined leader and a relatively clear hierarchy. In contrast, collaboration in law firms increasingly happens among peers, who are experts in their own domains and have their own sources of power and prestige.
Even when the partner who “owns” the client is nominally “in charge,” collaborators need to mutually establish task allocation and decision-making norms. Moreover, these arrangements must be continually negotiated, as partners who lead one engagement may need to defer to another on the next. Reordering the status hierarchy may be simple in principle, but it is a difficult, politically charged act. Lastly, integrating highly specialized expertise is cognitively complex and can generate competition and conflict when lawyers have even slightly misaligned objectives.
“Star-based” talent. The legal profession is filled with “star lawyers”—lawyers who have cultivated a distinguished reputation for their legal wisdom and client-handling prowess. As one partner put it, many firms value “rock stars, not the whole band.” The problem is that this individual hero is often at odds with a collaborative approach. Lawyers also tend to consider themselves a breed apart. Wilkins, the director of the Center on the Legal Profession, quips, “Lawyers are the only people who define the world into two camps: lawyers and nonlawyers.”
Individual preferences are malleable: as people gain the experience of interdependence, they grow more accepting of it and even come to prefer it to solo working.
Moreover, classic training for lawyers reinforces this mindset. Law schools are notoriously bad at helping J.D.’s develop skills to work in teams. Although HLS has recently built teamwork into a couple of the courses (see the sidebar “Teaching teamwork”), most of the lawyers I meet have had far more experience working in competitive, individualistic settings than working in teams. In one lawyer’s words, “Throughout my training and junior years, practicing law was a dog-eat-dog world. After I made partner, people expected me to rear pups and hunt in packs. What’s that expression about old dogs and new tricks?”
These characteristics—both natural and socialized—suggest that collaboration may not come naturally to the average lawyer. Research shows that people who have strong autonomy preferences may avoid working collaboratively and concentrate on aspects of the task that allow them to work alone, free of the obligations and constraints that come from working with others. Because they tend to avoid collaboration, they fail to build skills and knowledge that enable smooth cross-practice working and thus continue to perceive the costs of collaboration as high.
Importantly, research also shows that individual preferences are malleable: as people gain the experience of interdependence, they grow more accepting of it and even come to prefer it to solo working. In part, these preferences shift as people learn how to collaborate: it becomes less time-consuming or daunting, and they begin to understand the benefits outlined above, such as the ability to do more-sophisticated client work.
Performance pressure. In today’s hypercompetitive marketplace, law firms and their leaders face unprecedented pressure to deliver superior results. All lawyers would like to believe that they use the challenges of a high-stakes client situation to shine, showing off their own and the firm’s best talents. Paradoxically, the pressure to perform drives people toward lower-risk options, with suboptimal outcomes. Performance pressure occurs when someone must deliver exceptionally high-quality performance. Because their projects are so important, those facing performance pressure generally have the time and resources needed to complete the work; the trouble is that they stop using these resources effectively. High stakes breed anxiety among team members, their clients and their bosses. Consequently, performance pressure leads people to become risk-averse.
Rather than becoming more innovative and pursuing best solutions for their client, teams under pressure start thinking of their matter as something that cannot fail. This failure-prevention mindset puts them at risk of using proven approaches that are focused on narrowly defined performance objectives. By definition, these outputs are less innovative because novel solutions seem risky. In addition, individuals facing performance pressure seek control, which lowers their desire to collaborate. It feels safer to complete the work themselves. Overall, performance pressure can greatly undermine the collaborative process.
Promotion and compensation. Despite leaders’ insistence that they want collaboration, many firms continue to use processes and systems that cater to “stars” rather than team players. Promotion systems that foster individualism, and even rivalry, interfere with attempts to promote collaborative practices. Law firms’ classic up-or-out model—rightly described as a “tournament system”—pits associates against one another for promotion and makes it hard for them to see any value in sharing knowledge or helping colleagues. Moreover, as these competitive values become ingrained, it is hardly surprising that the winners find it counterintuitive to collaborate as partners. As one lawyer said, “I’ve always won on my own: my college grades and LSAT scores got me into law school, my law school grades got me hired here, my associate review score got me to partner. Then two years after I make partner, someone asks why I’m not a better team player?! Why should I be?”
The compensation system in some firms is perceived as a barrier to collaboration (see the sidebar “Compensation explored”). Too often, a firm espouses the desire for partners to collaborate, but then carries on remunerating people for individual results. Even the most altruistic partner is unlikely to sacrifice potential financial rewards indefinitely. In a recent panel I moderated at Bloomberg’s Big Law Business Summit, Faith Gay, co-chair of Quinn Emanuel Urquhart & Sullivan’s National Trial Practice, publicly called for the abolition of origination credits in order to better align the interests of individual attorneys and the way their firm needs them to behave. She said that origination credits “tend to divide people; they also tend to never be administered the way people want them to be—they are a distractor 80 percent of the time or more.”
In our research across professional sectors, we find that even when firms attempt to tinker with the allocation of origination credits, they can still be poisonous. For example, one lawyer recently described the reaction to his firm’s mandate that at least two partners attend all new-client pitches and that they split the credits: “We all followed the rules and brought a colleague along to the pitch. But we drove separately so that after the meeting ended, we literally ran to our own car and raced to the office to be the first one to enter the matter in the system. Even though we technically split the credit, everyone still wanted their name as the lead partner.” In other firms, partners report spending more time up front negotiating the credit split than actually preparing for the pitch.
“I thought I’d done exactly what the CEO wanted by mentoring those rookies and splitting credit with them. But it was the only year I wasn’t called up onstage at our annual meeting, and I’ll never do it again.”
Even a lockstep system, which is meant to eliminate the focus on individuals, can produce counterproductive behaviors. For instance, one lockstep firm I’ve worked with measures office-level P&L’s. So even though the figures don’t affect their pay, partners still hoard work at the local level to boost their office profitability. Why? They want “bragging rights” at the year-end retreat when the numbers are reported. This is an outcome that economists might doubt, but psychologists could predict. Clearly, firms need to be realistic about how much they can engineer partners’ behavior purely through compensation, and well-intentioned policies can backfire if they’re not supported by the right performance metrics and culture.
Further, firms need to carefully consider the incentives they create through nonfinancial rewards. Consider a firm that celebrated individual sales performance by inducting them into a “Million Dollar Club” at its annual banquet. One partner described applauding his colleagues all the while gritting his teeth that he missed the target because he had shared most of his client origination credits with junior colleagues who were struggling to build their own rosters. “I thought I’d done exactly what the CEO wanted by mentoring those rookies and splitting credit with them. But it was the only year I wasn’t called up onstage at our annual meeting, and I’ll never do it again.”
My research has explored collaboration in a range of professional service firms where compensation systems span from highly individualistic “eat what you kill” approaches, to those with more-balanced weighting for origination and execution credits, to modified lockstep systems. We find that every firm has a wide array of collaboration: in each firm, some partners spend nearly all their time on collaborative, cross-practice matters, whereas others work almost exclusively alone. Clearly then, a firm’s compensation system plays a large part in shaping partners’ behavior, but a great number of other variables matter, too.
While beyond the scope of this article to explore in detail, a few principles are essential to keep in mind in thinking about a compensation system in general.
- Behavior is strongly influenced by people’s beliefs about the distribution of rewards. Ultimately, collaboration depends most of all on trust. If firms espouse the value of team-based client service and collaboration, partners expect to be rewarded for demonstrating this behavior.
- The way that a firm implements any given compensation system will affect people’s perceptions of fairness, in turn shaping their willingness to collaborate. Lawyers must understand what actions are rewarded and how they are measured. And they must believe that their firms have reliable ways of capturing the performance metrics on which compensation is based.
- Compensation takes on exaggerated importance in people’s minds when it is their main way of figuring out how much the firm values them. Therefore, provide abundant psychosocial rewards, such as recognition for excellent client work or firm-building initiatives. Compensation still matters, but people pay far less attention to it than in places where “the number” is their only signal of their worth.
- A well-designed compensation system can help to foster joint working only when it is paired with other collaboration-enhancing approaches and a broader reward system that emphasizes interdependence rather than competition.
- Firms should resist changing systems as a direct means of fostering collaboration. In both my research and experience teaching hundreds of law firm leaders, any system that directly rewards specific input actions, such as the number of multipractice pitches, is subject to being gamed.
- It is better to reward the outcomes of effective collaboration—such as increased levels of client satisfaction and retention, growth in revenue and profits from existing accounts or the acquisition of new clients in target areas—that input metrics. For instance, the annual compensation process at Duane Morris involved a “matter contrition analysis,” which calculates profitability for individual lawyers by comparing the revenue received (not just billed) on an attorney’s cases with the attorney’s costs (including salary and overhead). Learn more here.
Strategies for fostering collaboration
Having looked at the benefits and the challenges of fostering collaboration, one arrives at a classic conundrum: the benefits of collaboration—for the firm and the individual—are clear and unambiguous, but the steep barriers to collaboration engrained into lawyers and law firms frequently create suboptimal outcomes. What should the legal profession do? Below we review some strategies for building collaboration in law firms and among lawyers.
Promote relational trust. The single most important factor in fostering collaboration is fostering trust, both relational and competency-based, among all those in the firm. Face-to-face meetings and events, such as partner retreats and practice group offsites, allow people to develop interpersonal connections. Many firms find that events that include families or spouses help lawyers develop stronger bonds because people have the change to glimpse the nonwork aspects of their colleagues’ personalities. Ancillary bonds, such as friendships between spouses, also help foster trust as those webs of relationships make people behave better toward one another. Wherever possible, encourage associates to form strong bonds—among one another and with partners—not only because their relationships can be important accelerators for an efficient team, but also because that trust will propel their business development efforts as they advance in the firm. Effective steps include a budget for colleague lunches (or even just vouchers for coffee) and invitations for senior associates to present at practice group meetings.
Build competency trust. The best way for a lawyer to understand another’s capability is to work directly together, so practice group and sector leaders should actively seek and introduce those opportunities. They should be seen as an “honest broker” who can connect professionals with credible experts and give a balanced view of how and why those experts might fit the client’s needs. All partners should feel responsible for promoting their junior colleagues’ reputation and experience, acting as the agent who helps to place these individuals on increasingly complex client work so that others can develop firsthand trust in their capabilities.
A robust, firmwide talent management system builds a reliable basis to help partners know what to expect from lawyers at all levels. Lawyers are therefore better able to judge the competencies of their colleagues, which in turn removes some of the potential uncertainties with respect to competency trust. Informal professional development through on-the-job learning is also an important way for junior lawyers to develop their capabilities and demonstrate their competencies to senior lawyers. A partner who invests time in coaching and giving real-time feedback will not only enhance the technical skills of the recipient but also foster the junior lawyer’s ability and willingness to provide further feedback to those with whom he or she works.
All partners should feel responsible for promoting their junior colleagues’ reputation and experience.
Secondment programs between offices, particularly of senior associates and junior partners, also help build bridges of competency trust as well as expose lawyers to all the talents the firm has to offer. For example, one global firm saw cross-jurisdiction referrals increase threefold in participating offices in the first year following the implementation of a secondment program for associates.
Increase familiarity with the firm’s offerings. Lawyers need to know not only what their colleagues do, but also enough about those services to understand how that expertise might benefit their own clients. Help partners develop this “T-shaped knowledge”—that is, broad familiarity with a range of areas to complement their own deep expertise in a specific domain—by exposing them to one another’s client work. Some firms, for example, devote part of their annual partners’ retreat to a series of 15-minute presentations, where partners highlight the work that they do and explicitly focus on potential growth opportunities for lawyers in other practices. To ensure follow-up, the best firms follow these sessions with facilitated workshops, grouped by “sector verticals”—that is, industry groups of their major clients like life energy, hospitality or insurance. By the end of the workshop, partners are required to identify at least one concrete, cross-practice opportunity and a clear plan of action that they’ll pursue with at least one colleague. Firms equip either practice group leaders or highly respected business development staff to hold partners accountable for delivering on their intentions. This approach helps to kick-start collaboration by making it part of a lawyer’s day-to-day job, rather than feeling like a cumbersome add-on. Reinforce the momentum by sending short, internal newsletters featuring recent collaborative success stories so that professionals understand how others in the firm have combined expertise to solve client issues.
Instill confidence and capability to dig into clients’ real issues. The biggest complaint we hear from general counsel is that their lawyers fail to understand their business—indeed, most GC’s I interview suggest that few of their outside counsel even ask about the GC’s pressing concerns outside the narrow domain of the task at hand. Many professionals admit to being like the survey respondent who bluntly wrote, “I won’t venture conversations outside my core knowledge, which is what it takes to collaborate.” This hesitation prevents partners from finding ways for their colleagues from other practice groups to add value; instead they’re stuck trying pitch work at unreceptive clients who don’t need that type of service, and the clients’ bad reaction reinforces their belief that collaboration doesn’t work. Professional development can turn this situation around, provided that it is hands-on, equips lawyers with some core business and strategy concepts that their own clients use, and holds partners accountable for both behavioral change and results. In our research, we’ve come across just a few consultants who are able to provide this sophisticated level of instruction for law firms.
Get yourself on the radar of partners who can benefit from your expertise.
Self-promote. While perhaps sounding counterintuitive to fostering collaboration, showing others your particular skill sets is a vital part of building competency trust. Get yourself on the radar of partners who can benefit from your expertise. A partner in the New York office of a global firm uses this tactic: from discussions with her colleagues and articles in the press, she gets a sense of how her expertise in data privacy might help an existing client’s corporate strategy. She then writes a one-page memo to the client relationship partner outlining what she can offer to that client and how her expertise will help solve a particular problem.
Increase efficiency and minimize politics. To increase collaboration, leaders can help professionals learn about others’ expertise, find competent and willing partners to collaborate with and focus on a culture of reciprocity. Many firms run “speed dating” exercises for this purpose, but the best ones focus first on helping partners to hone their elevator pitch and, second, have some way to hold partners accountable for following up on at least one idea that was generated during the exercise. It’s necessary to have an easy way for partners to look up others’ expertise, but in reality, the lack of a brilliant internet is often just an excuse: colleagues’ bios are readily available online. Other firms have developed intranet-based tools for professionals to announce client opportunities, find experts and ask or answer questions; it is essential to remember, however, that such tools are merely enablers of collaboration rather than a silver bullet. If partners lack trust in one another, their firms’ leaders or the reward system, they certainly won’t use a software program to collaborate. What’s often missing is clear, concise marketing collateral that a partner can send as a “teaser” to his or her client as a way to introduce an expert colleague. Leaders need to create the environment where it’s normal, even expected, for people to seek and provide inputs on client engagements.
Leaders need to create the environment where it’s normal, even expected, for people to seek and provide inputs on client engagements.
One critical way for leaders to shift this mindset is to contribute, visibly and proactively, to others’ client engagements. Make a point of handing off work and supporting others’ pitches without expecting personal gain. When someone approaches you with a client opportunity, think twice about whether there’s a credible alternative, such as a newly elevated partner or lateral hire who really needs the work to build their reputation. Further, celebrate partners who behave collaboratively. For example, Herbert Smith Freehills, a leading London-based law firm, developed an online tool to help measure and promote collaboration firmwide. The tool allows partners to allocate points to others who have contributed to their success, with a focus on “What has someone done to contribute to your success and what’s been the business impact of that?” Leaders use these results to recognize the partners who are most collaborative, and the allocation of the “points” is also used as an input into partner performance management and compensation. In CEO Mark Rigotti’s words, “The process helps to build a praise culture in our firm.”
Collaboration in law firms
Collaboration is increasingly essential in today’s law firms. The complex, international and integrative nature of legal work requires professionals to combine their specialized expertise in order to successfully serve the most attractive clients. Data shows that when lawyers do work across specialties, their firms earn higher margins, clients are more loyal, and individual lawyers are able to charge more for the work that they do. While collaboration undoubtedly entails risks and coordination costs, these challenges can be mitigated by implementing appropriate measures. Lawyers who develop their own collaboration capabilities and network are likely to reap both intellectual and financial benefits.
Want to learn more?
I’m currently writing a book that will expand on my research about professional collaboration. It will be published in 2016 by Harvard Business Press.
In addition, I’m developing a “Board of Contributors” for my forthcoming book. Board members commit to periodically reviewing some preliminary ideas from the manuscript and provide input, critiques and examples. Active contributors will be sent a copy of the book as soon as it’s published. If you’re interested in joining this Board, please email me, or visit the site and sign up online.
For easy access, many of the articles referenced in this piece have been collected on the Center on the Legal Profession’s website. Our site also hosts a few brief videos of me describing this research.
Finally, my first book, Leadership for Lawyers: Essential Leadership Strategies for Law Firm Success, has recently gone to press with Globe Law and Business. Co-edited with Rebecca Normand-Hochman, the book offers guidance for law firm leaders and partners to enhance their leadership capabilities. The book will be launched at an event held at the Boston offices of Goodwin Procter on December 2. Email me for more information.