The New Challenges of the Legal Profession and Business World
The legal profession has undergone substantial changes as a result of the recent economic crisis and the evolution of the legal industry and market. This has given rise to a new breed of client who is empowered to set the terms and conditions in the procurement of legal services.
The main challenges facing the legal market are encompassed by changes in the relationship with clients, the attraction and retention of talent, and innovation. One particular challenge for the vast majority of firms is institutionalization. The world of corporate lawyers has changed. At most companies, we are now seeing young professionals with a different mindset around business compared to that of traditional lawyers. They see the execution of their functions and responsibilities not only within the legal context, but also in terms of the needs of the industry in which they work. At the same time, clients want a clear and transparent relationship with external lawyers, which often requires a flat fee or other arrangements that give them more control in managing their budget.
Today’s companies need lawyers not only to resolve legal issues but also to support their business development efforts. They must stay current and, along with the standard deep level of legal knowledge, have additional training and tools in the areas of business, technology, project management or data analysis and psychology.
Furthermore, it is no longer sufficient or productive for the client’s relationship with the firm to be based solely on contact with one of its partners. There need to be strategies for developing multiple relationships to help the client understand that behind the service they are receiving is a horizontal group of professionals that includes partners and associates comprising cross-functional teams. In this context, technology is having a major impact on the provision of legal services. It provides every opportunity for lawyers to access client information and gain a deeper insight into their business and the sector they are operating in, with the ultimate goal of understanding their needs.
There is one thing that can’t be overlooked: captive clients don’t exist anymore. A company works with a law firm because it has the required expertise, trusted advisors and fees that align with the added value it is seeking.
Clients want a clear and transparent relationship with external lawyers, which often requires a flat fee or other arrangements that give them more control in managing their budget.
Attracting and Retaining Talent
The new generations are breaking away from the traditional model; they have a different outlook on the legal profession. Their perpetual connectivity and technological know-how enable them to work in a nontraditional way. At job interviews, candidates are interested in the culture of the law firm, whether it can meet their expectations, the flexibility of the work schedule, etc. Millennials work differently and must be motivated differently, so law firms need to revise a number of policies and procedures to get the best results from them. Likewise, it is crucial to understand that today’s young lawyers from this new generation don’t want a boss; they prefer to have a leader that they not only will learn from but who will also be their mentor and friend.
Secondly, within the context of a firm, innovation should not be seen as a trend, but rather the result of a need that demands a revision of processes and policies in order to keep achieving goals and objectives and better serve the client. Innovation is the outcome of a demonstrated need, and is not a matter of merely introducing a change, something that often finds resistance. Traditionally, lawyers are resistant to change; this reality is a constant in the profession. In addition to innovating based on needs, it must also be done while keeping in mind that the mission of innovation is to better serve the client.
As for artificial intelligence, the wisdom is not to compete against it, but rather with it. It is not intended to replace lawyers or launch robot lawyers to compete with humans. New technologies and metadata trends need to be seen as tools that can be used to empower and redistribute the necessary people, technology and financial resources to do more with less, better serve clients and get lawyers to progressively focus more specifically on the areas in which deep knowledge of legal matters is truly required.
Innovation should not be seen as a trend, but rather the result of a need that demands a revision of processes and policies in order to keep achieving goals and objectives and better serve the client.
Institutionalization and Legacy
Institutionalization at a law firm means having the complete framework of governance, clear policies, a regulatory system for all aspects related to the operation and a compensation plan tailored to the needs and realities of the firm. In this regard, it is essential to have policies that help clarify the vision, mission and culture of the firm, so that all of its professionals identify and work for the common goal of business development. A firm transcends the professionals comprising it; it has its own identity and develops its own brand. The firm must have the fundamental tools in order to prosper and for all members of the company to understand the business and identify with its philosophy, vision, mission and culture. That makes it easier to achieve the goals and objectives outlined in the strategic plan.
Institutionalization is key for law firms seeking to transcend their current leaders and leave a legacy for new generations. At an institutionalized firm, there is a democratization of power. Institutionalization is the only way to pass the baton to the new generations, and standardize without depersonalizing the service. It means establishing certain processes, parameters and indicators through which those systems and structures, which exist at the firm to serve clients, are reflected in the culture, and are meaningful, and enable clients to feel totally confident to go to any of the partners or practice areas of a given firm and identify and understand the firm’s culture. The key message for an institutionalized firm to convey to its client portfolio is that it transcends the partners who are currently managing and providing services to its clients.
In the institutionalization process, two other important factors are: the definition of the career path, so that everyone understands their role and responsibilities; and something that is traditionally met with reluctance—retirement. The retirement of a partner must be discussed openly and with plenty of time in advance. That discussion must begin three to five years before the planned retirement date, so as to understand the needs and expectations of the outgoing partner and align them with those of the firm. We see that many firms in the United States and England are changing the retirement age and have allowed partners to take on other responsibilities under a different arrangement.