Inside: Meet the new normal; same as the old normal

It’s all about culture, relationships and value

“Same as the old normal,” that is, if you’re a client, not a law firm. Within the legal industry, surviving the recent economy has demanded broad, fundamental changes, and I agree with analysts who say the industry has been permanently transformed, whether or not the down-economy is the root cause. However, one might easily argue that the new operating paradigm of the legal industry is merely aligned with the practices and drivers that have characterized its client base for decades — their “old normal” is our “new normal.”

To the point, we attorneys now operate in an intensely competitive environment, where we must compete every day to retain relationships with lifelong clients, who are actively courted by other firms looking to replace us. Likewise, an ever-increasing component of organic growth relies on convincing businesses to move relationships from other firms to us. Success is based on our ability to proactively serve clients’ needs and deliver real value. Think of it as providing “superior client service” or “alternative rate structures” or “enhanced project management” or anything else you like, but our corporate friends long ago embraced bare-knuckled competition as their daily lot in life, while big law firms were still enjoying an ever increasing universe of work to do, at rates that rose like clockwork every year.

Well, the 2008 economic crash changed all of that, didn’t it?

I’m not a keeper of the secrets of the universe, so I’m not here to tell you what to do in response to economic shocks that change the rules for success across an entire industry, legal or otherwise. The pervasive message is about culture; after all, the market can impose change on every participant, but how each firm individually reacts to change will determine their relative success in the marketplace. What separates “the hunters” from “the hunted,” to borrow a concept from author James B. Schwartz, is the ability to react and change quickly in a world where everything can alter overnight. Ultimately, a firm’s culture will determine what it does with the imperative to change — not money, not intelligence, not past success, not market share, not consultants, not even competitive advantage, but culture.

Happily, Quarles & Brady had already begun to embrace a new operating culture before the economic downturn and the contraction of the legal services industry that came with it. And luckily for us, it was a cultural change that put us in a good position to roll with the overall legal industry transformation, pushed over the tipping point by the 2008 economic meltdown. It was an essential piece of cultural evolution, to which my colleague Kimberly Leach Johnson referred in her previous Inside Counsel October 21 guest column, “Diversity, of course.”

As early as 2004, former Quarles chairman Patrick Ryan began to speak of moving from the “I” to the “we.” As successful as the firm had been during its century of existence, we grasped the common business-marketing wisdom, that it is easier to keep an existing customer by providing superior service than it is to persuade a nonclient business to upset an existing, satisfactory relationship. We began encouraging our partners to work together more effectively for our clients, even before the practice of cross-selling legal services became necessary to our survival.

Like attorneys within many fellow law firms, our partners were highly entrepreneurial and competitive, which historically and effectively drove revenues from fiscal year to year. Also like most law firms, we assiduously protected our client relationships, overseeing all work performed for each client with a hyper-attentive eye, supervising each document and transaction with meticulous care, and helping each in-house attorney to proactively meet the needs of their internal clients. And, unfortunately, like most law firms, in our zeal to safeguard client relationships, we could regard even our fellow partners with some suspicion, concerned that any work performed over which we had limited or no control could inflict real and permanent damage on the relationship if it went awry for any reason. As a result, we frequently didn’t ask our clients what their other legal needs were, and therefore we didn’t know. That natural sense of risk aversion which keeps lawyers on their toes had traditionally been an asset, but Pat Ryan recognized it as a liability. He understood that it was inefficient. And very smartly, he articulated the need for change in cultural terms, rather than “enhanced productivity” or “higher profits per partner”: Moving from the “I” to the “we.”

Years later, we have heard from our clients, through various channels, that our commitment to help is a differentiating attribute of our firm. That reaction pleases us, because commitment to help in the broadest sense defines us: commitment to help our clients solve problems and attain goals; commitment to help one another grow and succeed professionally; commitment to improve our communities, and so on.

Today, we serve clients through multidisciplinary teams. We pursue new project management initiatives that cut the costs of doing business while making the business run more smoothly. We balance workloads across our talent and rate structure, employing resources in every office within our network in order to deliver the best results at the lowest price. In other words, we’re doing what most smart law firms are doing.

The biggest difference, as far as we can see, is that we’re motivated by the cultural norm of that relentless commitment to help. We seek and adopt operating efficiencies because it helps our clients by improving the quality of our services and reducing delivery costs, not because abstractly we must all change or die, not because we’d rather be hunters than the hunted, and not because that’s where the profits are. We like our “new normal” because it’s a lot more like our clients’ “old normal,” and there’s nowhere we’d rather be than in the same boat with them.

It’s all about culture, relationships and value.

Contributing Author

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Fred Lautz

Quarles & Brady Managing Partner Fred Lautz practices in the areas of mergers & acquisitions and corporate finance/securities, with a focus in...

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