The Coronavirus Crisis Has Forced Firms to Act Quickly. Will They Continue When It's Over?
From remote work to summer associate programs to pay cuts, firms have expedited their decision-making to meet the demands of the times. Whether they carry that newfound approach forward remains to be seen.
June 03, 2020 at 07:39 PM
6 minute read
A rapid shift to remote work. Snap decisions on the fate of carefully planned summer associate programs. And, in many cases, compensation cuts for lawyers and staff, along with furloughs and layoffs.
Law firms of all shapes and sizes have been forced to pivot quickly in responding to the coronavirus crisis, a disruption that many leaders and industry observers say dramatically outstrips the Great Recession in scope and impact.
Not that firm leaders have had much choice in the matter. State and local shutdown orders mandated the move away from the office, and the nearly instantaneous rupture to many clients' businesses forced their hands on financial matters.
"The clients themselves were feeling so much pain—from a law firm perspective, when you see clients themselves slicing the prices they're willing to pay by 10, 15, 20%, it doesn't take a mathematical genius to tell that you need to make a change," says Michael Kim, the founder of litigation boutique Kobre & Kim.
Nonetheless, in some quarters there's optimism about a future in which firm leaders recognize that they can make decisions with substantial consequences with more alacrity than in the past. Just as firms have used lessons from 2008 to guide them over the last three months, COVID-19 could serve as another inflection point toward nimble leadership.
For Adam Smith Esq. partner Janet Stanton, the Great Recession offered empirical evidence demonstrating the favorability of centralized management.
"The firms that made those kinds of changes came out much stronger than firms that did not," she says.
Leaders of both smaller firms, like Kim, who notes the rise of litigation boutiques like his own since the last financial crisis, and larger firms, like Hogan Lovells CEO Steve Immelt, believe it's unfair to pigeonhole the legal industry as a collection of lumbering dinosaurs unable to prepare for a changing future.
"If you really think back at the changes in the law firm sector in the past 20 years, there have been a lot of changes and a lot of adaptation," Immelt says.
Nonetheless, one fundamental point remains unaltered. Law firms are still partnerships. And these partners expect to have a say. Furthermore, their expectations are backed up by the fine print—partnership agreements that methodically enumerate the types of decisions that partners have to agree on.
"We're big believers in making decisions quickly with the best evidence you have and then moving on," says Altman Weil consultant Tom Clay. "A law firm has to cover every possible thing that could happen based on a decision; it's like the practice of law. You have to look at every possible thing that could happen. That slows you down."
Stanton agrees. "The whole notion of relitigating decisions that are already dead—we know that happens a lot in law firms," she says. "It's really going to need a headset change."
Clay is skeptical about partners ever ceding substantial authority to professional managers or the managing partner elected from their ranks, even when confronted with evidence showing the value of agile decision-making from empowered leadership, as in recent months. Altman Weil's 2019 Law Firms in Transition survey found that 69% of firms were stymied in efforts to change how they deliver legal services because "partners resist most change efforts."
"Tell me why they'd have an epiphany all of a sudden," he wonders.
But Clay does acknowledge that the largest firms in the marketplace have already begun to operate differently. "The big, rich firms—they're not nearly the democracy that a lot of firms are, by virtue of gross size," he says.
At 2,600-attorney Hogan Lovells, with over $2 billion in revenue, Immelt credits a disciplined, professionalized approach to decision-making for smoothing the transition to the new normal.
"You can make a poor decision quickly, but I think it really is a matter of thinking about yourself as a business that has to respond to the business situations that you're confronting," he says. As firms grow in size and vault across the $1 billion threshold, "that just brings with it a level of complexity that means you need to have a certain skill set."
In practice, that means having a management structure with a sharp chief financial officer and a highly professionalized human resources department, where the team can devote the proper amount of time and energy to understand an issue before taking its judgment to the partners. With these mechanisms in place, partners are persuadable.
"Lawyers are very evidence driven. Having a sophisticated CFO allows you to put together the analysis and put together the strategy in a form that the partners can understand," Immelt explains. "There's a deep appreciation of what your business services people bring to the table, and a crisis like this makes that even more manifest."
Even if the obstacles to transformation might be steeper, there's no rule that smaller firms can't embrace similar principles. Angela Sebastian-Hickey is CEO of midsize Chicago firm Levenfeld Pearlstein and oversees a management team stocked with experts who, like her, have credentials other than law degrees.
"We have a model that is built on streamlined decision-making that's helped us get to the heart of the issue, make a quick decision and communicate with transparency," she says. "That's how we've been managing through this."
Sebastian-Hickey also is convinced that the "consensus-driven approach" embraced by lawyers can be a hindrance, and that the economic theory of comparative advantage suggests that relying on lawyers to make strategic business decisions is a poor use of their time, which is finite.
"What's the highest and best use of lawyers: to manage the firm or to be in contact with clients? If you're spending time at the table, deciding to do what for the firm, you don't have the time to be advising clients," she posits. "That's not a good business model."
But even in firms where partners may resist relinquishing their hard-earned voice, leaders should still act to take advantage of the moment. There are still gains to be made via strategic thinking, whether or not the trend line of the last two decades points toward increasingly nimble decision-making.
"One of the things you need to do as a leader now is don't come out of this with a sigh of relief and go into stasis," Clay advises. "You need to be planning now to come out of this and beat the competitors."
Email: [email protected]
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllA Look Back at High-Profile Hires in Big Law From Federal Government
4 minute readArnold & Porter Matches Market Year-End Bonus, Requires Billable Threshold for Special Bonuses
3 minute readGrabbing Market Share From Rivals, Law Firms Ramped Up Group Lateral Hires
Law Firms Mentioned
Trending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250