From Tesco law to John Lewis law

I recently heard an excellent talk by Andy Street, the managing director of the John Lewis Partnership (JLP), known to millions as one of Britain’s leading retailers.

The JLP is on any basis an interesting business. All of its employees are partners and share in the profits of the business. Key decisions affecting its workforce are referred to its partnership council, to which its roughly 80,000 partners are entitled to elect representatives. The managing director and his top team receive bonuses at the same percentage of salary as all other partners within the business.

In parallel with these achievements in delivering democracy and engagement within the workplace, JLP also delivers a strong business performance in terms of its numbers and brand strength. The latter is well supported by a series of very popular TV advertisements, underlining the core brand values.

It’s not the only brilliant retailer out there, but JLP is clearly a retail industry success on its own terms. So the question for this post is whether a major law firm could look like that mutatis mutandis? Let me pose some initial thoughts on that question, to see what you think.  

Most law firms already have some of the formal characteristics that distinguish JLP. The partnership structure and the absence of external shareholders should allow for long-term decision making, although as an industry we have perhaps allowed the PEP culture to become too strong over the past two decades. The pressures for annual (if not quarterly) profits have consequently risen to levels similar to those experienced in listed companies, with a depressive effect in at least some areas of longer term investment.

As to engagement within the wider firm, there are reasons to believe that workplace democracy should also exist to a greater extent within law firms than in industry in general. Given the partnership structure, a high proportion of workers are also owners, albeit the participation of individual partners in decision making varies greatly from firm to firm. Given the nature of lawyers, there should always be effective advocates for the interests of the other legal professionals within the business, in particular the associate group, often the largest demographically.

Some firms – like Lewis Silkin – have also established internal forums through which employees can channel ideas, questions and concerns about the business. This stops short of the structured and constitutional democracy within JLP, but serves many of same purposes and allows direct contact with the senior management team for whom it can be in my experience a reality check (to put it delicately).

Moving beyond that, the universality of ownership and equal (in percentage terms) profit-sharing which is central to the JLP model would be tough to replicate within our industry, at least without breaking some strongly established norms, including those of organisational structures and full profit distribution.

Moreover, the different trading patterns between the two industries and the difference in labour market dynamics could pose pretty insurmountable problems, although I suppose you wouldn’t know until you had tried or at least built the theoretical model.

Turning to the brand values, most law firms aspire to be known and trusted for a similar combination of service, quality and value for money. We do not have (and nor do we need) the media budgets necessary to engage with a potential customer base of millions, but we do need to find ways to communicate similar brand values to those we have each identified as being within the client segments we will focus on. 

And finally, what of alternative business structures? Do these make the thought experiment easier or harder? I suppose it would all depend on how such structures were used.

If the notional law firm’s vision for its ABS journey was to list on the main market and attract substantial external capital from institutional investors, then it would likely find itself pulled further away from the defining characteristics of the JLP model.

If, on the other hand, it were to use an ABS structure to broaden ownership, extend its planning horizons and differentiate from the mainstream focus on single-year profitability, it too might make a notable contribution to the field of organisational design and employee (sorry, partner) engagement.

In short then, I don’t see any law firm that I know adopting the JLP model wholesale in the coming months, but, as we all continue to think about our longer-term evolution and the possibilities within our deregulated industry, there is definitely some food for thought available in certain major shopping centres.