The impact of innovation in the war for talent

An increasing number of international law firms have been reshaping their partnerships so that they are more consistent with corporate business models. As Professor Laura Empson et al noted in a recent paper,¹ these innovations have included the introduction of:

• large-scale operational and infrastructural management expertise;

• integrated approaches to business services functions;

• the growth of sophisticated business development skills; and

• tightly managed costs.

At the same time, partner autonomy has been gradually eroded by the introduction of formalised partner performance measures and management systems. There has also been a greater preparedness to remove partners from the partnership by de-equitising them or removing them from the partnership altogether.

These changes are not confined to the international law firm sector alone. With the intensity of competition now being experienced in North Asia, Southeast Asia and Australia in particular, all firms need to embrace some or all of these innovations and change the way that they are led and managed, or face the risk of losing ground to their competitors.

In other words, apart from the issue of scale, the challenge is to:

1. allow your business services functions to bring their expertise to the business and add value;

2. empower your BD team to up-skill the partners to better meet the challenges of attracting business from highly sophisticated markets; and

3. control your costs so that only focused and necessary expenditures are incurred.

These are relatively straightforward and obvious innovations that any modern law firm must embrace if it is to be successful.

Subtleties exist, however, in the area of people management, from partners to secretaries. Here, there is room for a more intimate approach in smaller independent firms, which can avoid the increasingly process-driven, rigid and arbitrary performance management regimes that large national and international firms have adopted in response to pressure to show fairness and share equity across hundreds of partners in multiple locations.

As the legal sector continues to change, all firms in all jurisdictions must respond by innovating. Some of these responses are obvious and universal and you will ignore them at your peril. Others, however, need to be tailored to your firm and its experience. When they are well implemented, they will provide an opportunity and a point of difference in the way that your people are recognised and rewarded.

Those independent firms that embrace the changes that have been forged by international firms but bring subtlety to the way that they recognise and reward their people will prosper and provide a real point of difference in the highly competitive market for talented people.

Malcolm Shelton-Agar is chief executive officer at Australian law firm Jackson McDonald (www.jacmac.com.au)

Endnote

1. See 'Managing Partners and Management Professionals: Institutional Work Dyads in Professional Partnerships', L. Empson et al, Journal Of Management Studies, Vol. 50 Issue 5, July 2013