Which kind of firm do you sell to your clients?
Professional services firms are under intense pressure to demonstrate authentic credentials with respect to a whole range of issues by which they’ll be judged. A new Law Firm Maturity Index aims to help the legal sector understand and address these matters holistically as well as improve a firm’s performance and impact.
Which kind of firm do you sell to your clients?
Professional services firms are under intense pressure to demonstrate authentic credentials with respect to a whole range of issues by which they’ll be judged. A new Law Firm Maturity Index aims to help the legal sector understand and address these matters holistically as well as improve a firm’s performance and impact.
“You are online 24/7. No exceptions, no excuses.” said the AMLaw20 law firm Paul Hastings in a leaked memo titled “Non-Negotiable Expectations and aimed primarily at its junior lawyers[1].
The message was simple. We are an elite firm, we pay you extraordinary sums and consequently, we own you. The demand on lawyers is well documented, as are the effects on mental health and wellbeing. Yet, law firms are hardly alone in driving their people to the edge, physically and mentally.
Many cases of worker harm have occurred across professional services and beyond. Why do firms allow, facilitate or even encourage it? And what is the real impact on true value? This does not mean the short-term profits of any one firm but the total impact on everyone – firms, staff, clients and wider society.
The response to the memo was a lot of dismay, disgust and disillusionment, but I wanted to see what a solution could look like. My redlined version that identified non-negotiable values rather than expectations also went viral. Through a few simple edits and amendments, I saw it transform; from one that set out to assert control and instil discipline into staff, to one that imbued trust, empowerment and human value.
The comments on my revised memo are almost universally positive. It seemed to catalyse a groundswell of opinion demonstrating that people want to work for, and with, firms who nurture and realise human potential; not those that seek to exploit or ‘sweat’ people to their limits. I believe that firms who put people at their heart, what we see as human-powered firms, should become the norm, not the exception. This is because they are actually capable of reconciling both social responsibility and high performance within their business models. Such firms are known as ‘Organisationally Mature’.
Organisational Maturity is defined by the extent to which a company is purpose-driven and has created the management systems, and the corporate culture necessary to be able to generate optimum value for all its stakeholders. Unfortunately, they remain rare. Many professional services firms suggest that they fit this narrative but most have much they need to accomplish to create this in reality.
To assess and diagnose your level of Organisational Maturity, you need to consider 32 interrelated factors, using a diagnostic approved by The Maturity Institute (MI). These include items such as purpose, innovation, decision-making, human governance, trust and authenticity. Academic testing has validated both MI’s underlying principles, methodological framework and each individual diagnostic factor. We can now say with a high degree of confidence that higher levels of Maturity link to improved financial performance and societal value.
Knowing that Paul Hastings strongly asserts this not to be their true reality, let’s say it is an accurate reflection of law firm PH1’s Maturity. Where would that place the firm on the Maturity Institute’s OMINDEX spectrum below?
“Pushing people to remain highly productive can often mean that the quality of work erodes. Can overworked and tired lawyers really be doing their best work? In medicine this issue can become a matter of life and death[7]. What quality risks does overwork and a disjointed approach create for a professional services firm and its clients?”
“Pushing people to remain highly productive can often mean that the quality of work erodes. Can overworked and tired lawyers really be doing their best work? In medicine this issue can become a matter of life and death[7]. What quality risks does overwork and a disjointed approach create for a professional services firm and its clients?”
Even at face value, the message that the PH1 memo sends is that its people are not managed as a source of sustained value. Rather, it conveys a message that they are viewed, managed and controlled to produce as much work as is humanly possible. This apparently exploitative approach to managing people would put the firm to the left of the mid-point on the Maturity scale.
If my redline then illustrate a reflection of an alternative law firm’s potential level of Maturity, where would that put it on the scale? The new firm – let’s call it “Profitt & Humann” (PH2) clearly views that its people are critical to value creation; that their human potential should be managed and fully realised. This strategic imperative suggests that Profitt & Humann is somewhere to the right of the mid-point.
What does the difference between PH1 and Profitt & Humann represent? Through a conventional lens, PH1 could well be highly profitable, even after paying its lawyers significant sums. Its clients may also appreciate the 24/7 work ethic that apparently means that clients receive its services as and when they need them.
Yet is this the full story? There is of course, a much bigger value assessment to unpack, which often unfolds over time. What might this include?
Firstly, working people extremely hard has serious consequences. Professional services firms typically focus primarily on generating output – billable hours that will be expected to be turned into revenue. Pushing people to remain highly productive can often mean that the quality of work erodes. Can overworked and tired lawyers really be doing their best work? In medicine this issue can become a matter of life and death[2]. What quality risks does overwork create for a professional services firm and its clients?
An obsession with output (and revenue generation) can also lead to other undesirable outcomes. We know that people can be willing, incentivised or coerced to cheat systems, to ensure that they hit targets when under extreme pressure.
Take a look at what has happened to patient safety in certain NHS trusts[3], or what people at VW designed, to ensure their cars could pass emissions tests and be sold to customers. How might this manifest in a law or professional service firm context? Myriad audit failures[4] since Arthur Andersen and the Enron scandal, and multiple law firm scandals, suggest that the nature of risks being carried is not insignificant when a top line focus becomes obsessive.
From a human perspective, there is also what is often a hidden cost. Mental stress through long hours and intense pressure affects wellbeing[5]. The London School of Economics estimate that it is a minimum of £118bn a year for the UK alone[6].
This equates to 5% of GDP. Firms that continue to drive their staff harder than ever, and who paper over glaring cracks with myriad workplace schemes that attempt to release the pressure, are bearing this cost through absence, presenteeism, and staff turnover. Individual lawyers and their friends and family will be suffering their own costs too.
Consequently, our evidence tells us that the size of the Maturity gap between PH1 and Profitt & Humann is likely to equate to a significant amount of potential value. Material risk is also likely to be being carried by PH1, its people, and its stakeholders. Is this value and risk gap sustainable or even acceptable?
Increasingly, people are raising their voices and arguing for change. Professional services firms are under intense pressure to demonstrate authentic credentials with respect to their social responsibility, or ESG. They are required to demonstrate these to clients, potential hires and regulators. The Paul Hastings memo has brought this firm into sharp focus among all its stakeholders. The reputational impact is unlikely to be positive.
Either way, what we need is the means and momentum to robustly and independently assess Maturity in the legal sector. Through this, we can understand law firms’ reality vs their internal perception and/or external PR. In seeing where they fit on the Maturity scale, they can identify gaps and risks as well as promoting their successes. That’s why we have launched the Law Firm Maturity Index in partnership with the Maturity Institute.
This has obvious benefits for the firms. It also allows their clients to go beyond self-reported stats and see the reality of the firms they do (or might want to) use and identify areas where they can collaborate to drive a meaningful change in improving the sector.
We can assume that having adopted my redline, Profitt & Hermann is A- on the Maturity index (in line with other firms who are reaching exemplar Maturity levels but can still make improvements.
So, where does the reality of your own firm fit and how will you use that data? What does this mean in terms of value, risk and opportunity? You can see where it may be by taking a free, confidential, 10-minute OMINDEX diagnostic via the link. This is a distilled version of the full diagnostic and provides for instant insights. These insights will collectively go towards informing the Law Firm Maturity Index.
[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2697084/
[3] https://jme.bmj.com/content/37/4/230
[5] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8977802/
[7] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2697084/