Adapt or perish
Managing partners reveal how they adapt to changes in the legal industry’s business model and workforce.
These are challenging times for managing partners. In firms big and small, managing partners are responsible for addressing a host of tough management issues—some new and some old.
“The newest issue I have seen is the demand by younger lawyers to have greater autonomy, a better work/life balance, and more meaning in their work," says Simon Kent, Founding Partner of Kent Employment Law in British Columbia. “But everything else feels eerily similar: billing by the minute, lack of court resources, clients who can't afford legal representation, and calls for the Law Society to open up legal work to non-lawyers.”
To help managing partners adapt in today’s business environment, CBA asked a few law firm leaders for their advice. Here is what they told us.
Billable hours versus fixed fees
The debate over billable hours vs. fixed fees is not new. But it is becoming more prominent due to growing financial pressures facing law firm clients. “Clients increasingly seek non-hourly billing arrangements like fixed fees and other alternative pricing structures,” says Paul Saunders, Practice Innovation Partner at Stewart McKelvey in Atlantic Canada. “There are increases in the use of RFP processes and the involvement of procurement professionals in buying decisions, where in the past client buying decisions were primarily based on the relationships between clients and the partners of law firms.”
“The shift from billable hours to fixed fees is only really happening where the client has enough negotiating ability to get the firm to consider the shift,” says Omar Ha-Redeye, principal at Toronto’s Fleet Street Law. Smaller clients don’t have this clout, which is why billable hours are not on their way out. Still, billable hours can’t be applied as widely to clients as they were in the past.
How should managing partners cope with this change? By accepting that times have changed, and signalling a willingness to negotiate fee structures on a client-by-client basis.
“The structure of how legal fees will be billed, in all practice areas, has to be significantly more fluid and adaptable,” says James MacNeil, Managing Partner of BoyneClarke in Dartmouth, Nova Scotia. “Going forward, I can see there being a hybrid model that uses both fixed fees and billable hours, where clients who go beyond X amount of hours under a fixed fee agreement will then be converted to billable hours.”
Bridging the generation gap
The young baby boomers who coined the term ‘generation gap’ likely gave little thought that they would be on the other side of this gap decades later – but they are. Today, baby boomer managing partners are dealing with staff from Generation X (now in their 40s and 50s), millennials (ranging from 25 to 40 years of age) and the post-millennial Generation Z, all of whom have their own attitudes to life.
“It is difficult for managing partners who are 56-57 years old, to go back and remember what life was like when they were 26-27 years old,” observes Bruce Engel, Managing Partner at Ottawa’s Engel & Associates. “To understand what your young lawyers are going through, you need to think back to that period in your life; and consider what your own grown kids are dealing with.”
Managing partners also need to educate themselves on the cultural differences between generations at work (for instance, workers under 30 have never lived in a world without the internet). They can use this knowledge to mediate intergenerational disputes when they inevitably arise.
“I manage such disputes by having the different groups discuss their issues/conflicts with each other when they arise,” says Kent. “I also try to create a safe space where younger lawyers feel that they can be open and honest with me or other senior lawyers at the firm, without fear of any negative repercussions for speaking their mind.”
It is about the money
In some cases, intergenerational conflicts may have more to do with millennials’ money issues than any cultural differences with their elders. “The reality is that lawyers and support staff are now working with levels of tuition and personal debts that have never been seen before,” says Ha-Redeye. “If employees are making decisions based on the installment payments for their debt, it’s pretty difficult for a firm to find fault in those decisions.”
At the same time, he says, “because younger lawyers and staff have often worked so hard to get to these positions, they often have delayed personal and family decisions later in life than previous generations.
“What this means is that they want to have a social life now, given that they have sacrificed so much previously.”
‘Fairness for all’ a guiding principle
The “eerily familiar” issues cited by Simon Kent at the start of this article – “lack of court resources, clients who can't afford legal representation, and calls for the Law Society to open up legal work to non-lawyers” – point to the larger issue of fairness.
Managing partners who make ‘fairness for all’ their operating mantra are better placed to deal with these issues than partners who indulge in discrimination and power politics. In addition, the principle of fairness can be applied to address workplace concerns such as diversity, bullying, and the prevention of sexual harassment.
“The demographics of Canada have changed, increasingly in every province, and this diversity is now being reflected in our law schools,” says Ha-Redeye. “Law firms are actively attempting to recruit diverse lawyers, recognizing that they cannot maintain their homogeneity indefinitely as it is bad for business and deters many new lawyers from even considering joining their firm.”
When Charles Darwin popularized the phrase “survival of the fittest” (originally coined by fellow Englishman Herbert Spencer), he meant not that the strongest individual within a species is the most likely to live. Instead, he meant that creatures who are most capable of adapting into the changing demands of their environments stood the best chances of survival.
It's an observation that applies to managing partners and their ability to prevail in an ever-changing legal industry. Saunders suggests that managing partners learn about the discipline of change management, because it will help them manage the resistance that comes during necessary evolution. As MacNeil summarizes, his firm’s leaders succeed by “being adaptable and responsive to clients’ needs.”