About Trust Part II: Fighting the real White Walkers

“When the snows fall and the white winds blow, the lone wolf dies, but the pack survives”. Ned Stark, GAME OF THRONES.

The large number of comments I received after my latest I&P made me think that the topic of trust justifies yet another few more lines before I head in other directions. Insufficient trust is the Achilles heel for many law firms and lawyers. The “low-trust environments” found in law firms is triggered by the controversial and skeptical nature of lawyers, but that is not the only reason. It is also fostered by an inward, firm-driven approach to law practice, as opposed to market-driven. That is the subject of this article.

The modern corporate law firm, based on a pyramid model, offering an up-or-out career and fueled by the hourly billing system is a firm-driven model, which assumes an almost endless amount of need for legal work. This model was controlled by the supply (law firms), which dictated the terms of engagement, including type of service and communication, and also fees. This ideal world for lawyers lasted for several decades until the financial crisis of 2008/9. That moment crystallized a number of changes that were happening, with the overall result that the comfortable world of law firms turned into a much more competitive environment, driven by clients, and with other competitors (not just law firms) wanting a piece of the action. A fully tailored-made, constantly-reinventing-the-wheel system, moved into an increasingly commodity-based market, heavily influenced by pricing and efficiency.

Lawyers are not only frequently unprepared to deal with other partners in an open and constructive way. They also tend to lack the open-mindedness to think creatively about overall strategy and what constitutes ideal service to clients. It is rare to find lawyers thinking about innovative products or different ways of providing service, including pricing mechanisms. Their creativity is focused normally on the legal analysis of existing problems. When law firms were the only relevant competitors, the difference was made by the comparative quality of the individuals and the culture and systems needed to retain those individuals. But now the rules of the game are changing due to the appearance of new competitors with other tactics. In some cases, younger law firms are also trying other structures in order to operate more efficiently. The significant focus given to billing results in law firms show just how much the short term defines the priorities of partners. Investment for the longer term is resisted and only accepted when it becomes virtually mandatory, while collaboration is considered a nice-attitude requirement rather than a strategic way of supporting the business.

In a market-driven environment lawyers should be focused on clients and service. How can that be accomplished? What kind on investments (time and money) would be required to achieve that result? How can we improve our synergies to be more successful? All these questions and potential answers are uncomfortable for lawyers because they require a type of thinking that is unnatural to them: strategic thinking in the longer term. That means planning, means investing, means working with others while loosening some control. Lawyers don´t like that.

The problem with the above is that we keep on missing the key point. We clash with our partners and disagree on matters that, in the present circumstances, are almost irrelevant. Now that the last season of the series Game of Thrones is starting again, it´s fascinating saga brings a couple of resemblances to the current legal market (sorry for those not familiar with GOT). It is obvious that the White Walkers are now the real threat to the human kind. Those who have seen them and fought them understand it very well. It has become the task of Jon Snow to convince the different kingdoms and lords to postpone their perennial quarrels and unite against the common foe. But this is proving very hard. Most of the pretenders to the Iron Throne, and also those who are not, try to position themselves as best as they can, more concentrated on their internal battles than in the tremendous threat that the White Walkers imply. Only Snow has been sufficiently humble and strategic to submit to the other queen (Daenerys Targaryen) to help form the indispensable coalition against the White Walkers.

Law firms frequently look like the fight for the Iron Throne in the Seven Kingdoms. They spend too much time being concerned about power and relevance within the firm and forget where the real competition exists. Other law firms and new players in the market are the real competitors whom partners should focus on. Compensation and governance are topics that need to be sorted out, because otherwise it will be difficult to work in a coordinated and strategic way, but they are not the core of the matter.

This is when leadership becomes vital. Jon Snow showed real leadership for three main reasons (i) he understood what was the key aspect at stake, and put that goal ahead of any other, including his own interests; (ii) he disregarded the opinions of his peers on this key matter, when they tried to convince him that he was wrong (he actually died for that reason, though coming back later); and (iii) by setting his own interests to one side and acting humbly in favor of the cause, he won legitimacy in the face of others.

It is difficult to follow one´s gut feeling and intuitions when change is involved. Too many things seem to be in the way. Our comfort zones might be first on that list. Why change what seems to be working? To continue in the same way most times appear as the wisest alternative, because it worked better in the past and because everybody will likely tell you to do that. But if one´s gut feeling is telling you otherwise, one must ask why and take action boldly.

Markets have been shifting for the last decade, and this change is becoming more prevalent. Many firms still enjoy the old model and make good money. But without change it will be difficult to sustain in the long run. The shift will involve, more than anything else, a change of perspective. Understanding that our real competitors are outside the door of the firm, will be a big step forward. Markets are harder and more difficult, just like the long winters in Winterfel. There, like in our markets, the lone wolfs will die, but those who stay in the pack will survive.