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Digest 36

We are glad to present you the 36th issue of the St. Petersburg International Legal Forum Digest.

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News of the Forum

The VI SBILF preliminary programme is published

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VI Forum’s Business programme

Programme Committee expresses its gratitude for all of you who took part in defining the agenda and sent the detailed suggestions for the VI SPBILF programme.
The preliminary programme is published on the Forum’s site. The topics to discuss comprise 7 tracks:

  1. Private Law
  2. Corporate Practice / International Trade / Protection of Competition
  3. Litigation and Arbitration Practice
  4. Smart Society
  5. Investments/ Finance
  6. International Law / Rule of Law
  7. Cultural Heritage / Public Interest / Environment

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If you want to become an information partner of the event, please forward your suggestions to pr@spblegalforum.com.

We can help you to arrange interviews with delegates of the Forum both during the event and throughout the year.

"Just do something. This will spread project management, because when lawyers succeed, others in the firm will imitate their success"

Jim Hassett and Tom Clay

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Proven Tactics to Change Culture

Part 2. Part 1 please read in the Digest 35.

Change is inherently difficult, especially for lawyers whose mindset is steeped in following precedent and past practices. But there is a large body of research literature on how to change corporate cultures. It has been successfully applied to the legal profession to increase adoption of LPM.

In his book Leading Change, John Kotter, professor emeritus at Harvard Business School, noted that:

«Real transformation takes time … Most people won’t go on the long march unless they see compelling evidence within six to eighteen months that the journey is producing expected results. Without short-term wins , too many employees give up or actively join the resistance».

Kotter listed many benefits of short-term wins, including the fact that they:

• Provide evidence that sacrifices are worth it

• Reward change agents with a pat on the back

• Help fine-tune vision and strategies

• Undermine cynics and self-serving resisters

• Build momentum

Most lawyers will change their behavior if they are provided with convincing evidence that it is in their own self-interest. If partners whom they respect and trust say that an aggressive fixed fee deal became profitable because of the way it was managed, or that a lawyer working on an hourly basis avoided a write-down with a difficult client because he or she used project management tactics, the others will listen.

So, one key tactic to promote change is to focus on short-term wins with clearly measurable objectives. Instead of trying to train everyone in the firm to be more efficient, seek out lawyers who are motivated to change and help them to find their personal “low hanging fruit” that will prove LPM’s benefits to others in the firm.

For example, in 2012 LegalBizDev was asked to introduce an LPM program at Bilzin Sumberg, a Florida-based firm of about 100 lawyers. A few months before speaking at its annual retreat, we began coaching three lawyers on LPM. In weekly telephone sessions of about 30 minutes each, our coach walked the three lawyers through key problems and issues that they were encountering in their practices and how best practices from other firms might apply.

They selected real world matters to analyze and identified the key issues that were most critical in each situation, using the templates, job aids, and checklists in our Legal Project Management Quick Reference Guide. Then they reviewed the best practices described in the book and discussed exactly how to apply them to increase client value and protect profitability. At the retreat, the three lawyers then discussed their results.

One pilot participant was Al Dotson, a member of the Executive Committee and the practice group leader of its Government Relations and Land Development Practice Group. By the time of the retreat, Dotson’s coaching had already led to new business.

Dotson represents real estate developers and contractors in highly complex matters that involve a series of government regulatory agency approvals, and his developer clients loved the approach because they use project management to run their own businesses. One of them was so impressed by a legal project plan Dotson had produced that he asked Bilzin to take on a significant amount of new work.

As a result of the discussion of this quick win at the firm retreat, a number of other partners became interested in seeing if LPM could help them increase new business and realization. All 51 partners were offered the option to complete the same coaching program that Dotson had received. Over the next 15 months, a total of 26 partners volunteered for and completed the program, representing just over half of the firm’s partnership.

At that point, belief in LPM had reached critical mass and developed enough momentum that no more coaching was needed. The partners themselves and Bilzin’s internal staff took ownership of the effort, moving it forward and sustaining progress. The first quick wins had led to more wins and ultimately changed the firm’s culture.

This example also can be related to a second principle John Kotter described in another book (The Heart of Change, coauthored by Dan Cohen , a principal at Deloitte Consulting). Kotter and Cohen interviewed over 400 people who had been involved in change efforts at 130 companies to understand why some change initiatives had succeeded and others had failed.

They concluded that the managers who failed had used an approach that could be described as ANALYZE-THINK-CHANGE. They focused on rational arguments, compiled spreadsheets, and developed PowerPoint presentations to show workers all the intellectual reasons why they needed to change. This type of systematic approach can be effective in a stable and controlled situation, they concluded, such as when you need to cut your printing costs or reduce your commute time.

But in most corporate change efforts, it does not work because “the parameters aren’t well understood, and the future is fuzzy”.

As noted, at law firms there is an additional challenge: The lack of strong central authority leads to a lack of accountability. It’s a lot easier to get things done when someone is in charge; someone who can penalize people if they fail to execute. The nonhierarchical structure of most firms makes it very difficult to hold people accountable.

In change efforts for complex situations like the evolving marketplace lawyers now face, Kotter and Cohen found that successful managers relied on the sequence SEE-FEELCHANGE. Instead of trying to appeal to the rational mind, they focused on making an emotional connection, which is exactly what Bilzin Sumberg did as it gradually expanded successful LPM initiatives to create a new LPM-based culture.

It would be nice to be able to report that, once a majority of Bilzin’s partners had completed their coaching, their LPM work was done. In fact, it was just beginning.

It is true that the firm’s clients quickly saw significant benefits in reduced costs and greater responsiveness, which in turn led to new business. But when LegalBizDev interviewed firm leaders for follow-up reports over the next few years, they consistently used phrases like “baby steps,” “infancy stage,” and “aspirational rather than obligatory” to describe the firm’s current use of LPM.

Well, they should see the other guys! We spend our lives looking behind the curtain at a wide variety of law firms as we work with them to increase efficiency. Many firms have individual lawyers or practice groups that are quite advanced in LPM but, in our opinion, there is unfortunately not a single firm on the planet that can say that LPM has truly taken hold among all its lawyers.

There are dozens of firms that have put out more press releases than Bilzin announcing their LPM success. But in our experience, none has achieved behavior change more quickly or more cost effectively than Bilzin. LPM aims to change habits that have been reinforced over decades, and that kind of culture change will always occur one small step at a time.

According to Paul VanderMeer, Bilzin’s director of knowledge management, “The more successes we have gotten, the more converts we obtained, and the more that LPM has permanently changed the way we do business.”

One of the most important steps that Bilzin took to monitor and sustain progress was the formation of an LPM committee chaired by Michelle Weber, the firm’s executive director. Practice group leaders are required to report regularly to the committee and to the managing partner about how they are applying LPM and what works best.

“We’re following this so tightly because it’s an enormous priority,” says Weber. The result is that best practices are spreading. Many changes have been quite simple but still extremely effective. For example, she noted that:

«As matters come in, we routinely have a discussion at the outset with all team members, including paralegals, so that everybody understands what the scope is. At the same time, we discuss the task codes that everyone’s going to use so we don’t have major problems with consistency later».

Al Dotson, who was one of the three lawyers in the initial pilot test of LPM coaching, recently said he is now using LPM principles “in just about every matter that I have here. These principles are flexible and important enough to apply to nearly everything that I do.” For example:

«I routinely set up nonbillable team meetings to ascertain the status of the work at any given stage to avoid duplication of effort, to identify issues sooner rather than later, and to communicate quickly with the client if there are any issues. This is done early and frequently throughout the project».

A number of other proven tactics for changing behavior also have accelerated success at Bilzin Sumberg and other of our clients. When LPM first became popular around 2009, some firms experimented with training every lawyer in the firm in the hope of spreading innovation like jam across the entire firm at once. It is a common approach among firms and is part of the “CLE syndrome” that’s especially pervasive among professional development directors. It allows the firm to check a box and put out a press release proclaiming success.

However, from a broad behavior change point of view, almost all these training programs were failures. Typically, a few lawyers changed their approach, but the vast majority just finished the class and went back to work the way they always had. As the managing partner of one firm that invested in extensive LPM training put it:

«Project management will probably have the longest-term positive impact but it’s been the biggest challenge, because when busy lawyers start scrambling around, the inefficiency creeps right up».

It is much more effective to start by identifying a small group of lawyers who are most likely to be early adopters, by virtue of both the challenges they face (e.g., those who must manage fixed fee matters) and their personal openness to change.

The “tone at the top” is also extremely important. Enthusiastic support for LPM from senior management is very helpful in assuring acceptance. We have seen some firms succeed with a “bottom-up” effort that spreads LPM from the trenches with only lukewarm leadership support. But things go much faster if leaders are enthusiastic enough about LPM to keep pushing the effort past the inevitable speed bumps.

You may want to take a look at the third edition of the Legal Project Management Quick Reference Guide for additional examples of how proven tactics from the change management literature can be applied to law firms. In terms of what we’re talking about here, the most important point is simply that law firm cultures can be changed relatively quickly if you carefully apply proven principles from other professions.

What Should You Do?

If your clients don’t care about efficiency and are willing to pay whatever it takes to handle their legal matters, you may not need to do a thing. Yet. Just keep delivering services the way you always have, pile up those billable hours, and pray for the client’s health.

But even if you are one of the lucky few in this shrinking slice of the profession, it is worth asking whether you are sure your clients don’t care about cost. Is it in the best interest of your clients for you to remain inefficient? What would happen if a credible competitor offered a better deal? We would argue that it is prudent for every lawyer to consider whether LPM could help protect your practice in an ever more challenging profession.

For everyone else—all the lawyers who know that the demand for efficiency and cost-effectiveness is already here or coming soon to a client near you—it is critically important to meet those client demands for efficiency as quickly as possible.

Shlomo Swidler developed the following curve to illustrate the relationship between the speed of change and the competitive advantage it produces:

As this curve suggests, firms that change quickly will have a significant competitive advantage over those that adapt more slowly, and an even greater advantage over those that never change at all.

At the management level, too many firms are reacting to clients rather than taking a leadership position. We talked recently to one managing partner about an embarrassing meeting with the firm’s largest client. The general counsel described hiring a new legal project manager for his law department, and said “I’d like to arrange a meeting for him with your legal project manager.”

The managing partner not only did not have such a person at his firm, he wasn’t even quite sure what LPM meant. But, being a skilled politician, he said, “We’ll make that happen,” and then tap-danced his way through the rest of the meeting. Then he went back to the office and started asking questions about who was working on LPM. The result would have been much better if less tap-dancing had been required.

Fortunately, the research results for Client Value and Law Firm Profitability supported the idea that law firm leaders see change in this area as critical. One key question asked directly was, “Will firms have a competitive advantage if they change more quickly?” Eighty-five percent of respondents said yes and only 5 percent said no. (The other 10 percent didn’t know.)

The results of failure to change quickly could be severe. As one managing partner put it, “The firms that are most effective are going to do well, and I don’t think everybody will survive”.

In a November 2014 American Lawyer article entitled “Big Law’s Reality Check,” Aric Press reviewed a significant amount of data showing that, while a small number of law firms at the top have reason for optimism:

«It also seems clear that not every firm is going to make it through the next several years… During the good times it took extreme cases to bring down an enterprise. The limited recovery has shrunk the margin for errors in judgment and execution. The good times were forgiving. Today’s times are much less so».

Or, as investor Warren Buffet famously put it, “Only when the tide goes out do you discover who’s been swimming naked”.

As one AmLaw 200 senior executive interviewed for the book Client Value and Law Firm Profitability summed it up, “Firms that can’t deliver more value will fail”.

It is all too easy to identify law firm initiatives that have failed and to attribute the failure to the implications of that classic observation, “culture eats strategy for lunch.” As clients continue to demand greater value and competitors continue to become more aggressive, only the firms that actively move to a more business-like culture are likely to prosper.

Changing culture is never easy, but other businesses have learned how to do it effectively and law firms must learn from them:

• Develop internal champions for every initiative. The ideal champion is not the managing partner or chair, but a group of respected partners who can point to the success they have achieved.

• Aim for short-term wins.

• When wins are achieved, communicate them effectively throughout the firm.

• Choose an area like legal project management where it is clear that there will be benefits to both clients (in greater value) and the firm (in profitability). It will help reduce hurdles for many reluctant lawyers.

• Get everybody to understand the new initiative as an investment, not an operating cost. Investment and cost are obviously two totally different things, and underinvesting in any initiative will almost certainly lead to failure.

• Don’t form a committee that will postpone action until it is convinced there is a perfect solution.

• Do support lawyers who are willing to experiment to find out what works best for each client, practice, and personality.

• If things don’t work out precisely as hoped the first time, recognize that that is the nature of innovation and adaptation. Learn from it and try again.

Or, as partner Camden Webb of Williams Mullen put it after completing one of our

LPM programs: Just do something. This will spread project management, because when lawyers succeed, others in the firm will imitate their success.

Jim Hassett founded LegalBizDev (www.legalbizdev.com) to help law firms increase client satisfaction and profitability by improving project management and business development. He has written three books, including the ‘Legal Project Management Quick Reference Guide’ and the ‘Legal Business Development Quick Reference Guide’.

Thomas Clay is a principal with the management consultancy Altman Weil, Inc. He advises law firms on strategy, management, and leadership.

Originally published in Of Counsel (April 2015). For more information, please contact Jim Hassett (jhassett@legalbizdev.com) or Tom Clay (tsclay@altmanweil.com).


© 2015 Jim Hassett and Thomas Clay. All rights reserved.

Interview

Christophe Bernasconi, Secretary General, Hague Conference on Private International Law

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Leading experts in the spheres of law, economy and international relations, heads of world companies’ legal departments, members of international legal community have been interviewed by our journalist during the V SPBILF and shared their impressions on the Forum.

Find a video-interview in each issue of the Digest and enjoy viewing!



Coming in the next issue:

The next issue of the Digest to be launched on 25 November will keep you informed about the VI SPBILF news, as well as the interview with SPBILF’s participants.