Book Review (Part 2) - Smarter Law: Transforming Busy Lawyers into Business Leaders by Trevor Faure
Forgive me for starting on a negative note but the chances are that many of you are unlikely to get beyond the third paragraph of this article, less likely still to pull out a credit card and purchase Faure’s book, and therefore most unlikely to study the contents of the book with a focus that will transform your business life. That would be a great shame.
It is not that Faure’s book isn’t interesting reading — actually, I would say essential reading — and highly pertinent both to the very survival if you find yourself in an international law firm and also if you are part of an in-house legal team tasked with rolling out greater efficiencies in your department. No. The simple fact is that the majority of us have an inbuilt barrier towards new learning, as I will explore. And as Faure’s book grapples with ‘transforming busy lawyers into business leaders’, having an inbuilt barrier to learning stops you at the very first gate.
I am going to make an informed guess, based on more than intuition, that those of you who have been in-house lawyers for some time are actually more likely to pull your wallet out and purchase ‘Smarter Law: Transforming Busy Lawyers into Business Leaders’. To establish this requires me to share with you ‘The Tale of Two Workshops’.
In 2017, the In-House Community organised two workshops on a single day. The morning workshop was dedicated to training for managing partners and senior partners at private practice law firms; the afternoon workshop was dedicated to general counsel from around Asia. The one factor in common with all of the invitees is that if we go back 20 years or so — they were all studying law at university.
It seems infra dig for an event organiser such as myself to admit that not all our workshops have been filled to the brim with eager delegates. That said, the In-House Community has in its 21-year history done relatively few events for private practice lawyers. The morning workshop was to be hosted by none other than the author Trevor Faure and we marketed it aggressively to not only our list of commended external private practice lawyers attending the In-House Counsel Awards later that evening (this was included in their package) but also managing partners and senior partners in Hong Kong. Faure’s seminar was titled ‘The Smarter Client–Advisor Relationship’ and promised to share the secret sauce on: “What clients want and how to still make a buck without having to spend more than a dime”. Pretty compelling you’d have thought? Not so apparently as remarkably few managing partners from Hong Kong-based offices signed up and more than half of our expected commended external counsel skived off — preferring to go shopping with their wives or husbands, apparently, than learn from a 20-plus year general counsel veteran.
In complete contrast, our afternoon workshop, conducted by knowledge management specialist Bill Proudfit, was simply marketed to general counsels as a ‘Bohm Dialogue’, with no agenda at all. The only clue to what the interactive workshop was going to be about was the enigmatic questions:
“What is the most achievable change I can make in the next 12 months?”
“What resources can help me achieve this change?”
More than eighty percent of the signed up general counsel showed, they all participated enthusiastically despite or because of the fact that Proudfit put them out of their comfort zone. All of them learned from each other and shared with us that they had enjoyed the experience. What conclusions can we draw? That general counsel are less attracted to shopping? No. That managing partners in private practice law firms are less open to learning. And that general counsel are open, flexible and humble enough to learn.
I consider myself extremely fortunate to have been exposed to various mentors who have appeared at crucial junctures in my career and generously provided me a rare insight into what I was supposed to be doing. Chief among them is Whit Pidot, former global managing partner at Shearman & Sterling who became my boss during my time at the firm. Luckily for me, Pidot had not only studied law at Columbia College, but had also studied business there, as well as being a graduate of Harvard College where he had studied business, also. He asked me whether I expected certain of the senior partners in Asia to pause from talking long enough to listen to a word that I had to say. “Difficult”, I conceded.
“Do not fear, a doctor is at hand.” Pidot said as he passed me a much-cherished copy of an essay by the late Chris Argyris entitled: ‘Teaching smart people how to learn’: “Once an illness is identified then you are well on the way to the cure.”
Indeed, Argyris had skillfully identified the problem that because becoming a lawyer or a knowledge worker requires a degree and a certain amount of academic ability, that we all tend to think that we are good learners. This is very often not the case. Argyris says that: “People often profess to be open to new learning, but their actions suggest a very different set of governing values:
the desire to remain in unilateral control;
the goal of maximising “winning” while minimising “losing”;
the belief that negative feelings should be suppressed;
the desire to appear as rational as possible.
Taken together, these values betray a profoundly defensive posture: a need to avoid embarrassment, threat, or feelings of vulnerability and incompetence.”
This closed-loop reasoning explains why so many of our external lawyers failed to even show up: either they thought they knew it all already (they were mistaken) — or were embarrassed to admit that another external advisor could teach them anything new. Further, from an anthropological perspective, the very culture of a private practice law firm cultivates a hierarchy that is not conducive to learning. A managing partner’s status is tied to her / his perceived fathomless knowledge and so to admit to not always being the cleverest in the room is neigh on impossible. Faure neatly explores this phenomenon as one of the ‘Maleficent Seven’ – number 6: ‘Having to say the three little words that are the hardest in a professional role: “I Don’t Know.”’
Contrarily-wise, lawyers who have spent a significant amount of their careers inside corporations or banks are left in no doubt that they are not the most important person in the room, that board management is interested solely in conclusions and not analysis (“Can we do this or not?”) and have no time for legal niceties and clever arguments. In short, having been beaten up by life, general counsel have found themselves molded into being effective learners. Faure identifies some of these learned traits as ‘The Magnificent 7’. These include: wise and trusted advisor, sales person, politician, psychologist, coach, conscience, best friend and executioner.
In his chapter, ‘The prizes and paradoxes of the ‘New Normal’’, Faure casts himself as the new Cassandra, who in Greek mythology was blessed with the power of prophecy but cursed by the fact that nobody believed her. As early as 2009, he had been warning about the challenge of globalisation. Richard Susskind has for over 30 years been a Cassandra voice warning the legal industry to wake up and adapt to how technology is changing the way that clients are able to implement legal services. The global financial crisis of 2007-8 put legal spend under the spotlight for the majority of listed companies in North America, thus initiating some of the efficiencies and processes that Faure has helped implement and are provided as case studies in the appendix of ‘Smarter Legal’ (see especially the Avis example). But the evidence presented in the book indicates that the legal profession committed the crime of letting a good crisis go to waste: “Law firms could have changed the paradigm since the crisis. They failed,” according to Catrin Griffiths, editor of The Lawyer.
The below is one of the many fascinating charts provided by Faure and provides an insight into the present economics of the international private practice legal industry, and backs up Griffiths’ view.
“…the lines on the right-hand side of the Chart…are farther apart than the lines on the left-hand side. This reflects increasing client pushback to rate increases and suggests that realisation rates must be declining.” (Faure, p375)
This tallies with anecdotal evidence of various more junior partners of law firms sharing with me that senior management’s ‘solution’ to declining profitability is to demand an increase of billed hours from say 8,500 hours annually to 10,500. It rather suggests that the private practice legal industry is ducking real innovation and client service and adopting the padding of billed hours instead.
It also seems to me that the private practice legal industry as a whole is suffering from the very human weakness of confusing the future projection of a market on present and past performance. This is a charge that has been leveled by several financial commentators regarding GE. According to one commentator writing in the Financial Times, GE over-expanded in their most profitable business of the time, coal-fired turbines. As a result GE missed the rise of alternative energy, such as fracking, wind and solar energy. The old mistake of believing that the past is a reliable indicator of the present and future means that GE is no longer the darling of the stock market that it once was.
This is ironic in regard to the fact that GE employed the greatest of all business consultant gurus, the late-great Peter Drucker who while coaching the then in-coming chairman Jack Welsh, urged him to think of GE as a green-field project and asked him: “If you were to think from scratch, would you create this as a company in the way it is presently configured — and if not, why not?” This is a great question for senior partners of law firms, especially when Richard Susskind has given the date of 2020 as the tipping point for when AI is really going to bite as far as law services is concerned, both in terms of the appetite by alternative legal providers and by buyers of legal services.
Faure’s chapter on ‘The New Legal Work Value Chain’ proves an invaluable insight into the new spectrum of legal services through the prism of the value associated with different levels of client service. In this regard, he has extended the pioneering work of legal consultants Hildebrandt by defining legal services into Cream, Core and Commodity and then actually leading the project management of re-aligning the various cohorts of services available in the most cost-efficient manner for the client as a whole. And on a global scale. For the many of us bewildered by the choices available to the legal services consumer, the section of ‘Smarter Law’ that introduces some of the new players in the industry (‘Enabling Legal Services’) into the helpful categories of 1) Strategy, Performance Improvement & Project Management; 2) Quantitative legal analytics; 3) Insourcing & Secondments; 4) Virtual / Self service platforms; and 5) Legal Process Outsourcing.
In my opinion, what marks out Faure from the various consultants in this space is the fact that he is not just a keen observer of the legal scene, but an active catalyst and protagonist, pushing the envelope of the most efficient project management of legal services on a global scale.
The process of automation and the application of greater efficiencies in the legal industry are if anything going to accelerate in the next two decades. This will present the leaders of the industry with challenges — both as individual practitioners and the leaders of teams. Technologist Michael Osborne estimates that 47% of American jobs are currently at high risk of Automation. This is one of the factors responsible for what economists Anne Case and Angus Deaton have called “deaths of despair” — suicides, alcohol abuse and opioid overdoses — that mean the average life expectations of middle-aged middle-income white men in the US is actually declining for the first time in modern history. Senior lawyers have a duty of care not only for themselves but also for the new generation of lawyers — as a recent report from the OECD concluded, “one cannot expect a generation of master-chefs to emerge from short-order cooks assigned to re-heat burgers”. Leading by example and providing a model of an engaged, curious and open practitioner is an important first step.
In his chapter ‘Why do we typically resist change?’ Faure looks at personal development and identifies the factors that make us resistant to personal change and illustrates effectively how careers can hit the doldrums through ‘The Plateau Effect’. This was first explored by Bob Sullivan and Hugh Thompson, authors of ‘The Plateau Effect: Getting from stuck to success’.
According to Sullivan and Thompson, we naturally try the same solutions, even when the problem has changed. “People, relationships, businesses and even physical processes become immune to the same techniques, the same approaches, the same solutions. What worked so well yesterday just won’t work today.” Sullivan and Thompson suggest various approaches as to how to get ‘unstuck’: “If you aren’t getting where you want to go, maybe it is time to change your approach.”
Many law firms are experiencing a plateau — a discontinuation of growth. What we instinctively do when we reach a plateau — as individuals or as institutions — is redoubtable our efforts, working harder than ever doing the same thing (increase our hourly billing) that brought us success in the first place. A more intelligent and focused approach is definitely required. Reaching a point of realisation requires us first of all to recognise that we have indeed reached a plateau — and then realise that we need to change something, or maybe even approach the problem in an entirely new way. As Drucker urged us, everyone in the knowledge industry needs to become their own CEO and ‘Smarter Law’ provides us with the working manual to transform ourselves into business leaders. On a personal level, Faure suggests that it may require us to stop spending all our time on the things that we like and the things that have got us so far in our careers, and dedicate some of our time to learning new things. For example, going on a sales skills course; or think through the value relationship from the shoes of our clients.
Many of us will recognise and sympathise with Faure in his role as Cassandra — indeed I have always thought of good lawyers as being the bearers of uncomfortable truths and hence Cassandra as being the Patron Saint of the legal industry. For senior private practice lawyers, the warning implied in Faure’s ‘Smarter Law’ is that we are at a moment of the Changing of the Guard, where for some law firms at least, the Patron Saint will morph into St Jude, the Patron Saint of Lost Causes. To prevent that happening to you — and thank you for still being with me – buy, read and then implement some of the transformative suggestions provided by Faure in this book!
For more information on SMARTER Law, contact Lana Gersten at lgersten@groupgordon.com
*’The Value of Everything: Making and Taking in the Global Economy’, Mariana Mazzucato, Allen Lane.