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Confronted with new competitive and market challenges, lawyers across the country face a critical choice: either wait and see what happens to demand for traditional legal services, or anticipate the changes certain to affect the future and act now to shape the direction of these new services. The competitiveness problem being faced by so many law firms today is not a problem of "foreign" competition, but rather a problem of "nontraditional" competition¹.

People throughout the legal community are beginning to realize that clients are demanding creative and pro-active lawyering, driven by new ways of thinking about legal solutions, while focusing on reducing rising legal costs. Lawyers will need to put aside the presuppositions of the old competitive world and compete according to totally new rules of engagement to survive in the increasingly turbulent business environment of the future.

A good example of new market competition and challenges comes from many of our own state courts. As an example, let’s look at Utah State Court, whose mission is,” to provide the people an open, fair, efficient, and independent system for the advancement of justice under the law.” Utah State Court’s Web site includes an area designed to help the public: Complete Divorce Papers Online, File Landlord-Tenant Disputes, and File Small Claims. The Court’s mission includes nothing about preserving the lawyers’ role in any of these transactions.

Richard Susskind, widely regarded as Europe's leading legal technology expert was one of the first attorneys to write about the disruptive potential of the Internet on legal practice. In his book, The Future of Law: Facing the Challenges of Information Technology² , Susskind predicted that, “Law will be gradually transformed from an advisory service to an information service as lawyers package their conventional work product in electronic form.” If consumers can find what they need to know on the Internet, will they still need lawyers? Perhaps lawyers will have to assume an entirely new role? If Susskind is even remotely close to being right, what impact could this have on firm profitability, based upon the billable hour?

Consumers have changed much more than the business organizations upon which they depend and many of these same consumers believe that today’s organizations are failing or ignoring the very people they should be serving. Young people want to “opt in” and make their own choices, controlling their destinies and their cash. They want their voices to be heard, and they want them to matter.”³ Shoshana Zuboff and James Maxmin, authors of The Support Economy⁴ claim we are seeing a new type of consumer with dramatically different buying patterns and interests. These authors cite “the interplay of new technologies, the new structure of consumption, and an enterprise logic capable of connecting these two”⁵ as being the driving forces behind today’s economic revolutions.

In 1903, Henry Ford recognized a new kind of market arising from the needs of “ordinary” people—farmers and shopkeepers wanted a robust, well-made, inexpensive automobile.⁶ Ford’s ability to unite mass production and mass communication was so successful that it helped fuel the shift in manufacturing from proprietary capitalism to a new enterprise logic that allowed the production of affordable products for mass consumption at a profit.⁷ Henry Ford said that, “People can have a Model T in any color—as long as it’s black.”

Today, “ordinary” people have once again changed. They now prefer to rely on one’s own judgments; a deepening sense of self, increasingly internalized values and a growing need for self-authorship. People are willing to pay for brand names and designer labels out of all proportion to their actual “value.” Individuals no longer want to rely on group identification and compliance with group norms. Today’s young consumers are clearly unlike any the world has ever seen.

Law firms and many of the other professional service providers face the same uncharted challenges in shaping the future of professional services. The medical profession has discovered that more than half of all Americans are not satisfied with the availability of their doctors and the amount of information they receive in an office visit. As a result, fifty-two million adults now turn to the Internet as their primary source of health-care information.⁸ Is there any reason to believe changes in consumer demands will not affect the delivery of future legal services in similar fashion? Could the legal profession be immune to the disruptive potential of the Internet?

A friend of ours recently demonstrated how new markets characterized by wholly new approaches to consumption are created. My friend’s mother had been diagnosed with Alzheimer’s disease, and rather than relying on their family physician to solve this problem, she immediately turned to the Internet. It was not very long before my friend had gained access to electronic community and person-to-person communications with experts throughout the world. The Internet has clearly changed my friend’s relationship with her family physician. No longer was she relying on the family doctor as her only source of information. My friend and her physician were now partnering to find the best clinical trials for her mother. Will consumers, like my friend, who can find the information they need to know on the Internet no longer need doctors or lawyers? I think not, but perhaps, the role of the professional needs to change.

New Direction, New Focus, New Culture

If lawyers are to compete in this new market, which is arising from the changing needs of “ordinary” people, they will have to compete according to totally new rules of engagement. Determining exactly what these new rules should look like is a challenge every law firm will struggle with in the coming months and years. Because professionals have so much discretion and autonomy in a law firm setting, culture⁹ is the dominant force in determining how lawyers of the firm actually behave towards one another and towards their clients, so one of the greatest leadership challenges that law firms will face in the years ahead will be changing the firm culture to ensure an adequate supply of qualified leaders. Firms that will not be able to adjust their cultures to meet these new challenges will struggle to survive.

David H. Maister, widely considered to be one of the world's leading authorities on the management of professional service firms, was the first widely known academic/practitioner who focused on law firm culture, leadership and the need for a new paradigm for the practice of law. Maister believes that contrary to popular belief, culture should not be seen as a given—it both can and must be managed.¹⁰ This is a fundamental change in approach to attorney recruitment, training and management that will help firms prepare for new markets that will be characterized by wholly new approaches to the delivery and consumption of legal services.

Two aspects of culture that young people are now demanding include: a strong performance orientation and an open, trusting environment. It logically follows that, law firms whose culture supports both a performance orientation (which includes inspiring mission, stretch goals, accountability for results, and tight performance systems) and an open, trusting environment will have a much greater chance of attracting and retaining talented people. Dimensions such as character, work ethic, emotional intelligence, dedication to fulfilling commitments, and values will be of renewed importance in identifying strong leaders for the future.

Leadership in Managing Talent

In 2001, McKenzie and Company published a, War for Talent survey,¹¹ which should prove to be of particular interest to law firms and other professional service firms. The survey was developed to find out how companies build a strong pool of managerial talent—how they attract, develop, and retain key people in their organization and how they build a pipeline of younger talent who might one day move into more senior positions. The survey results showed how dramatically the recruiting game has changed, and of particular note to professional service providers, how development is so critical to attracting and retaining key people.

In an effort to attract and retain talented young professionals, law firms will need to alter their recruiting and development strategies. One of the first challenges law firms must resolve is creating an enterprise logic that brings together the new technology, the changing consumer profile and the interests of talented young professionals. In order to begin to accomplish this, law firms will need to begin prioritizing people—empowering them, serving them, supporting them in new ways, while at the same time, putting systems in place to exceed the expectations of clients and potential clients. The War for Talent survey confirmed that, “Excellent talent management has become a crucial source of competitive advantage. Companies that do a better job of attracting, developing, exciting, and retaining their talent will gain more than their fair share of this critical and scarce resource and will boost their performance dramatically.”¹²

The War for Talent survey identified: improvements in the frequency and candor of feedback; and enhancements in mentoring and coaching as effective ways for attracting and retaining talent. Another important research finding by the Corporate Leadership Council’s, Voice of the Leaders study,¹³ found that corporations benefit quantitatively when they allocate their resources to partner with their employees to help them gain the skills needed to become effective managers. Corporations that actually incorporate mentoring into their corporate culture actually return greater profits than corporations that do not use mentoring. This approach lies in stark contrast to the “rank and yank” approach towards career development in which the burden is placed on the employee to “shape up or ship out;” i.e., bill 2500 billable hours a year or forget about being considered for a permanent position.

A final report we reviewed is the Randstad 2004 Employee Review,¹⁴ which is a comprehensive study of workplace issues and trends. From the first Ranted study in 2000, trust has been the single most important concern for employees, and two years later, when corporate scandals left thousands out of work, and retirement plans evaporated, ethics and integrity joined trust as the key aspects of employee loyalty. In the early years of the Randstad study; employee needs were essentially the same—money, advancement, incentives and rewards. By the year 2002, the balance between work life and family life became an issue. Today, employee needs are even more dynamic and fluid. Quality of life, being in control, stability, personal career solutions, better benefits and a feeling of value to society have all become higher priorities,¹⁵ along with cutting down on hours, billable or otherwise, spent working.

New Market Challenges and Finding New Talent

The American Productivity and Quality Center (APQC) is a consortium that focuses on identifying business best practices and innovative methods of transferring those methods. In 2001, they explored links between succession management and company leadership development process. The APQC study pointed out that if economic growth continues at a modest 2 percent for the next decade and a half, this would result in the need for a third more senior leaders than there are today.
Yet the supply of the age cohort that has traditionally entered into the executive rankings (35 to 44 year olds) is actually declining in the U.S. and will have dropped by 15 percent between 2000 and 2015, because of the differences in the size of the Baby Boom generation and the much smaller Generation X. So, law firm strategists have to wonder where this talent pool of endless reserves will be found?

Today, there are 40 million people 65 and over (14 percent of the population), in 2030 there will be a whopping 70 million people (20 percent of the population) in this age bracket. People over the age of 85 are the fastest growing age group. The average retirement age has declined from around sixty-five, some fifteen years ago, to around fifty-eight today. At the same time, people are living longer. Males can expect to live an average of 72-½ years, while females will live almost five years beyond that. Eighty percent of baby boomers are expected to live to be 100.

Today, young professionals find it increasingly difficult to trust that their interests are being well served. Fifty-seven percent of Americans say they do not trust corporate executives or brokerage houses to give them honest information.¹⁶ Sixty percent of investors believe that well-known corporations are using questionable accounting practices, while 28 percent believe there is an “epidemic of deceptive accounting practices” among well-known corporations.¹⁷

Another important finding of the Ranstad’s 2004 Employee Review was that even though 60 percent of employees are satisfied with their hours, there are noticeable differences between the generations. They found that more experienced employees are far more comfortable than their younger co-workers. Only half of Generation X and Generation Y employees were satisfied with the hours they are asked to put in each week, as opposed to 72 percent of Matures.¹⁸ Not only will it be more difficult to find and retain talented professionals in the years ahead, those you do attract will be less interested in working extended hours. These new individuals—your future employees—want tangible support in leading the lives they choose.¹⁹

Coaching as a Part of the New Law Firm Culture

In David Maister ‘s book Practice What You Preach,²⁰ he showed (statistically) that success in professional businesses can come from stricter adherence ("discipline") to a set of standards that other groups may also advocate, but do not enforce. Maister proved that a skilled manager, team leader, or coach whose job it was to manage the team and coach the individual players actually returns greater profits to his firm than firms that provide no coaching or mentoring. David Maister has long challenged senior attorneys to become skilled managers who should be able to coach teams and individuals in setting higher standards for clients and for the firm. Those firms that can effectuate such a change in firm culture will create new economic value for these firms.

Today’s intense competition dictates that cultural change needs to be performance driven, and coaching for performance is a way of obtaining optimum performance. This can mean a fundamental change in attitude in dealing with training and supervision of attorneys. Coaching is becoming one of the leading development interventions in the corporate world, and according to David Maister, the most financially successful businesses do better than the rest on virtually every aspect of employee attitudes, and those that do best on employee attitudes are measurably more profitable.

Probably the single most important principle young recruits will be looking for is a trusting, collaborative working relationship among firm members and amongst suppliers, other business partners, clients and community members. Young professionals will also be looking for law firms that have made a significant commitment in technology to promote rapid communications and information sharing to make their work lives easier and to better serve clients. The best leadership development programs are structured around action learning: solving real and important business problems and these programs can only be delivered face-to-face. Collaboration is becoming more and more an imperative; it is no longer a matter of choice.

An increasing number of attorneys from sole practitioners to managing partners of some of the Nation’s largest law firms are turning to professional coaches to assist them in growing or changing the business or professional practice. Many of the managing partners, who are working with professional coaches, expect more than personal growth in attaining goals. They frequently are looking for a long-term return from the relationship in terms of a fundamental transformation of management style and culture brought about as a result of this coaching relationship. Whether you call it “coaching,” “advising,” “counseling,” or “mentoring,” done well it can help firms harness the potential within each of your people.

Law firms that think they can ignore the impact the Internet is having on the profession will be sadly mistaken. Firms that continue to throw money at new recruits, while demanding 2000 to 2500 billable hours per year, while providing them with limited feedback regarding their career advancement may find their talent moving to firms more closely aligned to young professional’s core values.

When the supply of talented young people seemed endless, law firms rarely placed great weight on character attributes and leadership skills. Firms relied almost exclusively on class rank, educational background, practical skills, specialized knowledge, or work experience. As you sit down with your partners in the coming weeks to discuss these emerging market challenges, keep in mind that young professionals—your future employees, and today’s consumers—your future clients, no longer want to rely on group identification and compliance with group norms. Each is unique and they want to be treated as such. They now prefer to rely on their own judgment, and you will need to find a way to accommodate both groups at the same time. Let us suggest you start by exploring the following possibilities.

• Could it be that clients will seek proactive advice that will not be completely customized but will be targeted enough to meet client needs at a price far cheaper than one-on-one legal advice?
• Could it be that firms will be able to reduce billable hour requirements, while improving firm profitability?
• Could it be that young professionals will be looking for firms with a greater sense of social responsibility, such as improving the global environment or improving business ethics?
• Could it be that the same senior partners that many firms are now looking to “sunset,” may be the untapped resources firms will need to lead the talent pool of the future?
• Could the new role for the lawyer be more of a "coach", insofar as they assist with the client's newly "Googled"²¹ knowledge by using the lawyer's own experience, judgment, and expertise to put the knowledge into context?

As you work your way through these challenging questions, the only thing we can assure you is that, “squeezing another penny out of costs, getting a product to market a few weeks earlier, responding to customer inquiries a little bit faster, ratcheting quality up one more notch, capturing another point of market share, tweaking the organization one additional time—these are the obsessions of managers today. But pursuing incremental advantage while rivals are fundamentally reinventing the industrial landscape is akin to fiddling while Rome burns."²² Rest assured that yesterday’s strategies just would not work in answering tomorrow’s problems.

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Stephen P. Gallagher, president of Leadershipcoach.us is the former Law Practice Management Advisor for the New York State Bar Association. Leadershipcoach.us provides a range of coaching services directed at enhancing attorney competitiveness, profitability and facilitating positive change. Stephen can be contacted by e-mail at sgallagher@leadershipcoach.us.

Leonard E. Sienko, Jr. Esquire is a sole practitioner in Handcock, NY. He has been a general practice lawyer for more than 25 years, and he is well known for his use of the Internet for legal research.

Resources:

1. Hamel, Gary and C. K. Prahalad, Competing for the Future (Boston: Harvard Business School Press, 1994), 18.
2. Susskind, Richard E. The Future of Law: Facing the Challenges of Information Technology (Oxford: Clarendon Press, 1996), 46.
3. Zuboff, Shoshana and James Maxmin, 10.
4. See Zuboff, Shoshana and James Maxmin The Support Economy: Why Corporations are Failing Individuals and the Next Episode of Capitalism (New York: Penguin Putnam Inc., 2002).
5. Zuboff, Shoshana and James Maxmin, 33.
6. Nevis, Allan with Frank Ernest Hill, Ford: The Times, The Man, The Company (New York: Scriber, 1954), 576-577.
7. Zuboff, Shoshana and James Maxmin, 53.
8. Fox, Susannah, et al., “The Online Health Care Revolution,” Pew Internet & American Life Project, November 26, 2001.
9. Culture in any organization is the system of beliefs that members share about the goals and values that are important to them and about the behavior that is appropriate to attain those goals and live those values.
10. Lorsch, Jay W. and Thomas J. Tierney. Aligning the Stars: How to Succeed when Professionals Drive Results (Boston: Harvard Business School Press, 2002).
11. See Ed Michaels, Helen Handfield-Jones, Beth Axelrod. The War for Talent (Boston: Harvard Business School Press, 2001).
12. Michaels, Ed, Helen Handfield-Jones, Beth Axelrod, 7.
13. Corporate Leadership Council, “Voice of the Leader: A Qualitative Analysis of Leadership Bench Strength and Development Strategy.” Washington, DC.: Corporate Executive Board, 2001.
14. Ranted North America is a wholly owned subsidiary of Randstad Holding nv, the fourth largest professional employment service provider in the world. Randstad’s 2004 Employee Review marks the fifth year in Randstad’s continuing exploration of real workplace issues and trends.
15. Randstad 2004 Employee Review: What you Should Know Now About Your Workforce – A comprehensive study conducted in partnership with Roper Public Affairs & Media of NOP World. 6. (www.us.randstad.com )
16. Harwood, John, “Americans Distrust Institutions in Poll,” Wall Street Journal, June 13, 2002, p. A4.
17. Ipsos-Reid/Business Week poll, published in Business Week, February 25, 2002, p. 108.
18. Randstad 2004 Employee Review: What you Should Know Now About Your Workforce – A comprehensive study conducted in partnership with Roper Public Affairs & Media of NOP World. p. 15. (www.us.randstad.com) For the purpose of this study, the employee universe had been divided into four generations cohorts, Generation Y, Generation X, Baby Boomer, and Mature.
    • Generation Y is defined as adults between the age of 18 and 24 (Year of birth – 1980 to 1986)
    • Generation X is defined as adults between the age of 25 and 39 (Year of birth – 1965 to 1979)

• Baby Boomer is defined as adults between the age of 40 and 58 (Year of birth – 1946 to 1964)
19. Mature is defined as adults age 59 and older (Year of birth 1900 to 1945)
    Zuboff, Shoshana and James Maxmin, 4.
20. Maister, David H. Practice What You Preach (New York: The Free Press, 2001) See www.davidmaister.com.
21. Google is a global technology leader focused on improving the way people connect with information. Google's innovations in web search and advertising have made its Web site a top Internet destination and its brand one of the most recognized in the world. Google maintains the world's largest online index of Web sites and other content, and Google makes this information freely available to anyone with an Internet connection.
22. Gary Hamel and C. K. Prahalad, x.