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Breakthrough at Linklaters: A Major Strategic Pivot Point

Posted in Law Firm Profits

 

“We must, indeed, all hang together, or, most assuredly, we shall all hang separately.”

                                                                Benjamin Franklin

Historically, few law firms have actively embraced Franklin’s formula for survival and success.  They paved the road to profitability by aggregating the revenue-producing activity of individuals lawyers, each operating as a discrete profit center and each driven to leverage personal achievement to maximize income.  By and large, interdependence has neither been much valued nor highly rewarded.  Younger lawyers are encouraged to become powerful rainmakers more than collaborative team players.  Legal service delivery remains locked in silos, and profitable firms are largely an assemblage of independently-profitable profit centers.

Win Some, Lose a Lot

This economic model has long economic legs, particularly when supercharged by scale effects in BigLaw firms that can afford to support scores of diverse practice groups.   But it creates no incentive to collaborate with other firm lawyers, spread legal talent across practice areas, leverage tightly-focused client relationships into a broader base of services and contributors, or develop the visibility and credibility of lawyers other than primary relationship partners.

Not So Super Market

We dined recently with the managing partner of a US AmLaw 200 firm who lamented his firm’s inability to get its strongest horses to pull in unison.  “We fight a constant war with our big hitters who just want to fish in their own pond and eat what they catch.  They will not cross-sell colleagues’ capabilities, they refuse to join in joint marketing efforts, and they will not provide access to their ‘private’ clients on behalf of partners who have distinctly different services to sell.  It’s like asking the store employee in your supermarket’s produce section where the fresh fish are and having him say, ‘Sorry, I can’t help you.’”

Entrenched Silos, Impatient Clients

The managing partner also complained of inefficiencies in leveraging legal talent. “As head of their closed fiefdoms, these big dogs may keep lots of worker bees busy – and of course that’s good – but this siloing also keeps those worker bees captive and unable to cross lines to support other practice disciplines.  At least in our shop, it’s a self-reinforcing culture, and its proponents are very resistant to change.”

Moreover, firms’ tolerance for large tracts of personal turf, internecine competition and personal “ownership” of high-buck clients has long annoyed the hell out of many clients who are put off by the lousy communication and limited collaboration caused by law firm politics.  They are concerned with their own legal needs, not with firms’ profits-per-partner.  Firms may not really like cross-selling and positioning the firm as broadly as possible, but clients tell us they welcome it and are surprised even top-drawer firms do such a poor job at it.

They Did What?

Now, a major change may be afoot, led by a bellwether event that could be a harbinger of cultural and operational shifts to come.  In a major strategy shift, Magic Circle member Linklaters, the 10th largest law firm in the world with annual revenues of over $2 billion, recently announced that it is phasing out individual partner metrics and annual assessments, and that it will henceforth focus on broader measures of team and firm performance.  Presumably they did not do this simply to foster a warm and affiliative team culture, but rather to respond better to client needs and, not incidentally, make a lot more money.

Let’s be clear: we think this is a huge — and courageous — development, a seismic, fist-pumping vindication for all of us who for years have been urging the global legal profession to see service delivery through client eyes, to foster team collaboration and improved law firm-client communication as fundamental operative priorities.

It’s important to emphasize that Linklater’s decision is not to eschew performance metrics altogether and default to subjective judgments – whether the firm’s or the clients — about partner performance and legal value added.  Indeed, we can applaud Linklaters’ decision and still cling to one of our most fundamental legal service axioms: If it can’t be measured, it can’t be managed.

What Linklaters is saying, bless their hearts, is that in the current legal competitive environment, most law firms are using the wrong metrics, thereby creating greater incentives for individual lawyer self-interest than for client satisfaction or the sustenance of collaborative law firm-client relationships.

Client-Centric Strategy that Goes Beyond Numbers

Linklaters’ former chief, Tony Angel, was a highly-respected numbers guy: under his leadership, revenue-related metrics were translated into numbers-driven assessment.  When introduced, Angel’s pioneering use of metrics was highly influential in the legal market worldwide, so obviously Linklaters did not make this seismic cultural shift away from individual partner numbers lightly.

But Angel’s approach had led to concerns that this approach to partner assessment was leading partners to game the metrics and focus on narrow origination and utilization benchmarks rather than broader business and client satisfaction goals.

The Big Picture, The Entrepreneurial Edge

Gideon Moore, Firmwide Managing Partner

To foster a more entrepreneurial firm culture, Angel’s successor, Gideon Moore, wanted to give greater weight to other dimensions of partner performance, including client development & relations, developing younger lawyers, collaborative team participation, and innovation.  Linklaters’ leadership concluded that this fundamental paradigm – and cultural — shift in assessment would allow the firm to focus more explicitly on cooperation, strategic practice development, and even its strengths as a lockstep-based firm that did not encourage its lawyers to claw and climb over one another.  Moore said, “We won’t have individual partner billings and other measures, but we are looking at other things such as client successes, regional and global practice performance…With individual metrics, people would be less likely to feel that their indirect contribution was appreciated.  We think this approach gives partnership back to the partners.”

A Linklaters spokesman said, “Our desire is to be an even more entrepreneurial firm, with teams and practices motivated and encouraged to present Linklaters’ whole offering to clients.  Removing the focus from individual partner metrics and placing it on the total value partners contribute, directly and indirectly, will significantly increase our ability to be agile, whilst giving clients confidence they are receiving the highest level of service.”

That roar you hear in the background is the many hands of clients applauding (in fact, the Firm surveyed over 100 clients before making the change).  Can it be that the time of the client-centric law firm is really upon us?  And that deeper rumble you hear is a shifting of law’s deeper tectonic plates, as the profession’s historical resistance to change and emphasis on individual achievement butts up against new cultural norms that see law firms as business partners supporting a broad range of client needs, rather than simply as providers of technical expertise and knowledge.

From our end, we hope Linklaters’ bold initiative takes hold, gains momentum and forms a contemporary template for measuring partner contributions and performance.  As the old saying goes, “What’s the difference between a fad and a trend?  Simple: trends matter.”

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