iTimes have been changing for law firms for a while now. They must contend with shrinking revenue streams, due to sophisticated clients with increasingly complicated problems. Such clients know what they want and are not afraid to make demands. Adaptation to the new normal is imperative so law firms can accommodate how consumers of legal services now expect to get their needs met.
Dr. Heidi K. Gardner, a Lecturer on Law and Distinguished Fellow at the Center on the Legal Profession at Harvard Law School studies law firms and how collaboration works in law firms. She will be a speaker at the Thomson Reuters 20th Annual Law Firm Leaders Conference in New York on October 8-9, 2015. Her research analyzes and demonstrates the value of collaboration to the modern law firm, and how effectively collaborating--or getting specialists to work together across the boundaries of their expertise-- can help law firms provide more client-focused service and increase their revenue streams in the process.
Most recently, Gardner has interviewed a wide variety of consumers of legal service providers, to see what clients need and value from their legal service providers and to better understand collaboration in law firms from a client perspective. Gardner and her research team conducted a series of interviews with everyone from large companies to nonprofits. Gardner describes her sample as “a broad swath, from the least to most sophisticated consumers of legal services.” By asking these consumers about their preferences and needs in terms of their legal providers’ ability to collaborate, Gardner has been able to show that “when done well, collaboration creates a more client-focused approach, and then clients care that their firms are collaborating.”
Collaboration has become necessary in part, because lawyers have become so specialized. With the need to stand-out as an expert in an area coupled with the incredible complexity of the modern world, those niche areas have become increasingly differentiated. However, clients are interested in answers and solutions that span across an attorney’s specific niche area, and she says, “the only way to square the circle is to get the experts to work together across disciplines.”
Clients are looking for solutions to the complex, real-world problems they face; they are looking for solutions that are practical and actionable. Basically, Gardner says, “Clients need lawyers to understand the whole problem, not just the legal aspect of the problem.” In fact, many clients struggle to find lawyers who will address their issues holistically. Gardner paraphrases a client who complained that attorneys want to give the 100% technically accurate, legal answer--but oftentimes what the client wants is a less technical legal solution that is 100% practical. In order to provide the client with a holistic, actionable solution, attorneys must understand the problem completely--and with the many complex problems faced by clients, to understand the nature of the problem attorneys must reach beyond their own areas of specialty and work with other experts in their firm to understand how the client’s business works, how the problem fits within the business in order to create a workable, integrated and viable plan to address the issue.
Adding to the compelling need for attorneys to collaborate is the motivation for the consumers of legal services to streamline and simplify their own processes. Gardner points out there is a drive “to reduce the complexity within an organization, and narrow the number of external advisers companies are using.” This applies to legal services. In some instances, companies are reducing the number of external law firms they use by up to 90%; offering a compelling reason for law firms to be the firm that can provide the client with what they are looking for.
Additionally, clients are willing to pay for collaboration when it adds value. Gardner says, “Contrary to what many lawyers believe, their clients are willing to pay for teamwork—provided that it clearly adds value as opposed to simply adding costs and time.” Gardner gives the anecdote that a client with a legal and tax problem would prefer their attorney to call a tax expert and get an answer to that specific issue in ten minutes, and bill them for the ten minutes, rather than have their attorney spend several hours researching the problem themselves. This is the ideal situation for clients--to have their attorneys equipped with the kind of connections and relationships in their Rolodex where they can get those answers quickly. Justifying that billing is an easy case for attorneys to make to their clients.
What they are not willing to pay for is increased coordination and communication costs. Gardner says, “Clients are willing to pay for the expertise--not the handoffs, intra-firm communication or errors caused by poorly-briefed team members.” Clients want the transition to be smooth and the collaboration to be easy and already established, and as sophisticated consumers, they will take their business to where that is the case. Using sophisticated statistical techniques, Gardner has analyzed millions of timesheet, financial and personnel records across a range of law firms to demonstrate empirically the effects of collaboration on outcomes such as firm profits, integration of lateral hires, individual business development, and more. Her research shows that ultimately, it pays for law firms to begin investing in an infrastructure of collaboration, and for firms to encourage their attorneys to reach across discipline lines and establish relationships as a way of working in order to attract the clients who will become consistent sources of revenue.
However, there are obstacles to creating collaboration and making it a consistent, integrated practice. As Gardner points out, “It takes some investment to get collaboration going, and there is a discrepancy in the investment vs the payback period.” Getting into the habit of collaboration requires partners and other law firm employees, many that are siloed and comfortable in their own specialized niche--to go out and learn who can offer what in their firm, get to know the resources, perhaps adopt new jargon and become familiar with a completely different discipline, then learn how that can add value to “their” clients and who in their firm can be trusted to provide the level of service and attention to “their” clients. This can be a daunting amount of effort and can seem like too many barriers, especially when the benefits accrue over a longer period of time. Gardner says, “you have to be patient to collect on the investments in collaboration.”
Despite these barriers, there is a lot to be done to encourage collaboration. Gardner says, “Law firms need to be figuring out ways to complement formal systems with ways to kickstart collaboration.”Creativity will play an important role as law firms adapt to the new way things work and adopt collaboration into their work systems. There are several areas that work as natural jumping off points for collaboration--including key practice groups, important clients that can be mined for more business, and industry verticals that already combine different legal areas. By getting creative within existing systems, law firms can establish collaboration as a business practice, better serve their clients and better position themselves for whatever the future holds.
You can learn more about the Thomson Reuters 20th Annual Law Firm Leaders Conference in New York here.
