Are you sensitive to the prevailing archetype of governance within your firm?

Many professional service firms operate with upside-down leadership. The hierarchical authority inherent in the structures of corporate Britain carry little weight in professional service firms, in which everything appears to remain up for negotiation.

As professor Laura Empson’s research has found, leaders in professional service firms need to lead individuals who expect a high degree of autonomy. However, their leadership role is contingent on the continued support of fellow partners.

Indeed, the very notion of leadership remains anathema to many professionals. As Empson notes, “the problem with portraying yourself as a leader in a professional service firm is that your most valuable colleagues are likely to resent being cast as your followers”.

So, in a world full of reluctant leaders, how well positioned does this leave professional service firms, and law firms in particular, to embrace the changes to delivery that are not only necessary but long overdue? Or will an improving economy convince partners, in a rush to return to business as usual, that such calls were always hollow and unfounded?

One in-house head of legal recently confided: “My business is unconcerned about law firms changing the way they deliver. They still do not fully comprehend the role and value of the in-house team”.

However, in response to a growing cacophony of requests from in-house lawyers, who themselves are tasked with producing more with less, a number of progressive law firms are embracing and leading change. Mapping legal processes, near-shoring, new pricing structures, collaboration between firms and greater use of LPO providers on specific deals or types of work are already taking hold.

But, on occasion, when these innovations are taken to the very clients who requested them in the first place, there appears a degree of reluctance to make the changes necessary to fully leverage the benefits. So for all the calls for change, is it a case of the emperor’s new clothes? Or is a degree of hesitancy and uncertainty on the part of all parties simply a part of the change process?

A number of firms were very effective at making hard and difficult decisions – including dequitisations – in the months after the onset of the global financial crisis. But when change is less urgent, less immediate, sometimes less apparent – such as right now in the legal sector – how well equipped to position the firm for the future will traditional partnership structures and approaches to leadership be? How will such structures fare when set against the more corporate entities entering the market, replete in some instances with external funding and lower fixed costs?

Compared to their corporate counterparts, a significant number of law firms remain essentially democracies, with ultimate power remaining in the hand of their partners. In their book Aligning the Stars: How to Succeed When Professionals Drive Results, Lorsch and Tierney demonstrate how this power is born of the three distinct roles that partners perform and how this can create a culture that disposes partners to both resist control and conflict with firm leaders:

1. they are producers who sell business and serve clients;

2. they are managers, in that they must help to run the firm; and

3. they are owners with a long-term interest in the firm.

The structure of a firm (as a product of its size and maturity) and the role of power, benefit and accountability therefore have significant implications for its leaders. These leaders must be sensitive to the prevailing archetype of governance within their firm; controlling and coordinating the entrepreneurialism of individual professionals to ensure that they serve the interests of both the firm and its clients.

Clearly, then, one of the most significant challenges facing leaders in professional service firms is designing and implementing a forward-facing strategy and securing alignment by a majority of their partners. Within the legal sector, as it stands at an evolutionary edge, this is no easy task.