Strategy and Management in 2015: between the oximoron and the opportunity

My non-lawyer friends often give me that smile –between compasionate and skeptical- when I describe them my job. Many believe it is a lost cause to try to help lawyers in strategy and management. Almost like an oximoron.

A few times during 2015 I had that sensation myself. Lawyers just don´t like strategy and management, even when it is evident and in front of their eyes that they need it as part of a successful firm. Some recognize that limitation, but seem helpless to do something about it. So they complain a little bit, do nothing and move forward. This was also observable when we were trying to organize an IBA management conference in Sao Paulo in August (“Law Firms as Businesses”). It was a good conference (both in terms of speakers and organization) and my guess is that it would have obtained significant interest and high leveles of attendance in any other industry –specially with equal levels of need in the subject-. We received an audience of around 130 attendees, and that was considered quite successful by the IBA; however, if you consider the amount of lawyers in the region and the need for improvement in management topics, that number could be considered all but too low. To some extent, this shows how much time and money lawyers are willing to invest in learning and discussing about their organizations.

On the other hand, this oblivious attitude towards management seems to be changing. A lot of firms and lawyers in the region are starting to take more action and pay more attention to management topics. Harvard professor Heidi Gardner, expert in collaboration in professional service firms, was in Latam twice in the last two years as conference speaker, in addition to other private presentations. This is not bad for an industry so unfamiliar to the importance of collaboration.

One of the reasons for this interest is the growing globalization and regionalization of the Latam legal market. 2014 and 2015 have been years of significant news on that front. Lawyers are less receptive to changes as a consequence of internal causes. Inefficiencies and internal crisis have not been good enough reasons to change and improve in many firms. The pain that would result from those changes produce wrong diagnosis and a tendency to look the other way. And since many firms in the region have done the same thing, well … the problem was not so bad.

When global and regional players come into the scene it is not so easy to look the other way. You can speculate that nothing significant is going to happen, but the risks are higher if your bet goes wrong. As a consequence, partners start to aks questions and become concerned. What should we do?

This is where strategy and management becomes an opportunity. Changes are still in an initial stage in the region and, consequently, it is not easy to have a clear choice as to your next strategic move: become global or regional, consolidate, stay the same. So in the absence of an easy answer to this question –which would be nice to have, right?-, law firms need to do what they have been reluctant to do until now: discuss strategy among the partners, align their vision and develop firms that look more like institutions than a group of desorganized individuals, as good as they may be. This process in itself will provide two beneficial results: (i) it will help to figure out what the partners want to do as a group; and (ii) regardless of the answer to that question, it will improve the quality of the firm for any of the potential scenarios that the firm might want to choose.

The last point is very important and has been a constant advise given to firms asking me about what to do: it might be still difficult to figure out the best way to go, but there is one safe path where you won´t make mistakes, and that is to improve your firm as an organization, become an institution, and that strenght will help you in whatever scenario you need to face. Conversely, poor firms from a management perspective will be in a weaker spot when a more competitive market start selecting winners and loosers.

So like an adolecent coming of age the Latam legal market is finally facing the need to mature and become more institutional. Some of the leading firms in the region had already started that process years ago and it has payed dividends for them, since turning their firms into businesses and institutions allowed them to reach levels of quality and stability very difficult to achieve to firms still internally divided. The investments required to become a leading firm can only be done by an organization with partners deeply involved and aligned with the firm´s goals.

But this is still a small group of firms and, as inspiring as they may be, insufficient to change the general level of quality of the regional legal market. As argued in my previous Insights and Perspectives (“Raising Industry Standards: the case of the Peruvian Cuisine”), markets really change when a substantial number of significant players adopt new standards and paradigms. Until then, the market remains the same with a few outliers that are unable to obtain all the benefits of their efforts (although it might seem different from a relative perspective).

Globalization and regionalization is only one evidence, although notorious, of how the legal market is changing in the region and worldwide. But there are many others related to the way the services should be provided and valued, the relationship with clients, the development of talent and how the competition is going to be framed in the future. The longer firms in the region delay facing these changes, the harder it will be to adjust and the higher the risks of not doing it. However, if firms understand that these challenges bring clarity into the discussion of how much firms need to adapt and begin working in their strategy and management issues, then the region as a whole can start a new era where firms will not just be a group of sophisticated and well prepared lawyers –an achievement of the efforts done in the 90´- but a developed and solid market of legal firms.

I hope you have an exciting, creative and successful 2016.