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Lessons from the Law Firm Maturity Index

What are the links between a law firm’s purpose, staff wellbeing and business risk?


By Manu Kanwar and Stuart Woollard


The Law Firm Maturity Index is a unique diagnostic of culture and organisational health. A Lex Solutions and Maturity Institute initiative, it provides evidence and insights to help improve the legal sector deliver greater benefits to all its stakeholders.  Law firm leaders are under pressure. Evidence of deteriorating mental health, wellbeing and staff burnout continues to flow [1]. Importantly, much of the focus is now directed at root causes, rather than ways to alleviate symptoms. As more people ask why this is happening, a more difficult question keeps being asked. Are law firm business models still fit for purpose when many now see their potential to harm people? Legal leaders can no longer just offer up mental health first-aid or wellbeing programs that may relieve some pressure. They don’t provide a long-term release and it’s not just staff who are concerned. Clients, regulators and potential hires are increasingly concerned about the impact of poor workforce wellbeing. The Solicitors Regulation Authority states in recently issues guidelines:


we will take action if we believe that there has been a serious regulatory failure. For example, where the work environment does not support the delivery of appropriate outcomes and services to clients.” Such stakeholder voices and actions are forcing firms to reconsider the key question: what is the purpose of a law firm?


Despite what many firms communicate, business models remain dominated by the protection and growth of billable hours. Warm words on delivering benefits to clients and stakeholders often belie the lived reality inside a firm. A purpose driven by rhetoric is easily exposed through looking at how a firm defines and manages the kind of value it seeks. This can usually be found in the use of core financial KPI’s, its performance management processes, pay systems, and decisions about career progression. External rankings of firms’ profits per partner serve to reinforce the primary importance of financial success. [2]


In the words of one of our Law Firm Maturity Index (LFMI) respondents:


“There is still a huge focus on revenue which…can sometimes feel a bit like a glass ceiling…we need to understand that we need to get to where we want to be…. to attract and retain our people.”


A clear corporate purpose attracts and galvanizes people to contribute to organizational success. We know this from a growing body of research and Maturity Institute evidence. An authentic purpose that sets out how a firm benefits its stakeholders, and informs the way it does business, is a powerful driver of sustained value.


However, in measuring these factors, our LFMI data highlights a fundamental problem. Figure 1 shows that while leaders believe that their firm’s purpose reflects these key characteristics, staff have a significantly different experience. Not only does this evidence support a view, held by many, that revenue still matters more than anything else. It appears that law firm leaders are also blind to any problem. If this is the case, how will it get solved



Figure 1. LFMI data on law firm purpose and staff wellbeing for partners and associates


This LFMI data also shows an alignment between purpose and wellbeing. This suggests a causal connection between the reality of a firm’s purpose and the health of its people. This is crucial for law firms to understand, as the risks are not immaterial. Low levels of wellbeing that arise from primarily pursuing a financial purpose may eventually lead to burnout or staff turnover.


However, on a day-to-day basis, the quality of work and the efficiency with which it is done, will also suffer. How much does this matter? For a firm, whose leaders remain ignorant of this, the manifestation of this risk could come as a serious shock. 


How should law firms be responding? Mature firms are authentically purpose-driven and embed management systems and cultures that realize human potential. This takes time and effort to build. Bringing to life a new purpose that makes a difference to value creation is not a marketing exercise. Unfortunately, many firms and their advisors view it through a branding lens. This is an unhelpful distraction to engendering the positive change needed.  


Law firm leaders must first re-define their own value proposition by understanding how to reconcile commercial performance with responsibility to their people. This can facilitate the articulation of a new, clear and coherent company purpose, which can then be brought to life through a set of authentic values and principles. Once these are in place, the next step is to link them to a firm’s systems. For example, strategy setting and planning, how performance and progression are managed, talent management, and even how an organisation learns and innovates. Maturity of purpose requires revisiting how human capital is developed to realize potential; how the whole, human system is managed as a core source of value. These are all areas that require assessment as to how their role and impact can be optimised. It is something that the LFMI helps firms to unpack, gain the necessary clarity, and to build the best possible roadmaps.


The good news is that while building Mature firms is not easy, it is entirely possible. In fact, some already exist and are thriving. As one LFMI exemplar advised:


“I am really pleased to share that we have been named as a Band A firm by the Law Firm Maturity Index. It’s not something that is easy to achieve, nor something that can be done quickly…Each of the elements that go to making up the ranking are things that take time and consistency and don't necessarily grab the headlines on a day-to-day basis. Thanks to everyone who make this possible on a daily basis and to my colleagues and our clients for trusting in what we’re trying to achieve.” Florence Brocklesby, Founder, Bellevue Law


Issues of ESG and social impact have become permanent features on the corporate landscape. A question therefore arises as to whether business as usual is even possible anymore. The benefit of transitioning to new business models through a Maturity lens, is that it provides a route to improvement, where firms do not need to trade-off profit for purpose. Indeed, the quantifiable human value that arises from Maturity improvement greatly outweighs any necessary investment. Not pursuing such a strategy therefore becomes a serious risk, and one that does not need to be carried.   


 

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About the Authors

Manu Kanwar (l) is a former tech General Counsel, legal consultancy founder and a leadership and organisational coach.  His consultancy, LexSolutions, is dedicated to making life in the law better for all those who provide and use it, through flexible legal resourcing, legal operations and programmes around culture.  Manu combines his experience as a mindfulness facilitator, design-thinker and relationship systems coach to the work he does with legal teams, law firms and their leaders for a creative, progressive approach which is unique within the legal industry. (manu@lexsolutions.com)


Stuart Woollard (r) is a Founder and Council Member at The Maturity Institute. He has over 20 years of experience in helping organizations become purpose-driven and human-powered. Stuart co-designed the OMINDEX® diagnostic tool, which measures the organizational health and Maturity of companies; showing how firms can build better systems and cultures that drive sustained value. He also co-authored "The Mature Corporation - a Model of Responsible Capitalism", a textbook that offers a new vision and framework for sustainable Total Stakeholder Value creation. (stuart.woollard@omservices.org) #ManuKanwar #StuartWoollard #maturity #index #wellbeing #risk #purpose

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