Lawyers love conflict. They thrive on it. If anyone can coexist with conflict, it’s a lawyer.
At least that’s how most people think of lawyers. In reality, the opposite is more often true. The only people who “love” conflict might be candidates for the therapist’s couch. Most of us, especially lawyers, are averse to it.
The lawyer turned clinical psychologist Larry Richard has given personality assessments to over 5,000 lawyers over 20 years. As a “tribe,” lawyers are disproportionately low in the personality traits of resilience and sociability. Resilience is the mark of emotional intelligence that allows one to accept failure, rejection
That may be, but what does that have to do with the economics of a successful legal practice or law department? It might surprise a few of us who subscribe to the zealous advocacy theory of legal practice that collaboration is more economically sustainable than
Hold this thought in mind: In 2017 $10 billion in legal services revenue went from the BigLaw vault into the pockets of alternative legal service providers that are not law firms.
Why? Our conflict aversion is our greatest enemy in the Exponential Age of digital data, artificial intelligence and blockchain technologies. Doing “better, faster and cheaper” is the mantra of the collaborative economy. The legal business model that has worked extremely well in the competitive economy is on the verge of collapse, though that claim may seem a bit grandiose—even for a lawyer. But let’s examine the evidence.
Unresolved Conflict in Workplaces Is Expensive
Howatt HR Consulting provides a conflict cost calculator to gauge the cost of unresolved conflict in law firms and legal departments. I recently ran my calculator from the perspective of the most conflict-rich workplace I remember being a part of. It cost $100,000 per year in lost productivity, absenteeism, health-care claims, turnover and other profit-destroying contributors. That is simply the impact of one person in that workplace! Howatt points out that the Canadian economy suffers a loss of over $16 billion each year due to
It’s customarily calculated that the cost of an employee’s turnover—through termination or voluntary departure, then replacement—costs roughly 120 percent of that employee’s annual compensation. For a $55,000-a-year paralegal, the cost of losing him or her is $66,000. Lost productivity, training and bringing a replacement to the same level of performance as a predecessor is not cheap.
At the British Legal Technology Forum 2018, Kevin Gold, a Mishcon de Reya managing partner, stated in a plenary session that the firm had calculated the costs of bringing a new young attorney to the point of return on investment; it was £250,000, or roughly $340,000.
I have listened as partners proudly describe the economic brilliance of their firm’s leverage model in terms such as, “We have one associate make
According to Gold, the young lawyers at Mishcon de Reya become revenue-neutral somewhere close to their third year. Under the “business” model in my
Similarly, the numerous accounts and studies of lateral attorney
Of course, the law is one of the only professions that prohibits
What’s the cause of all this lost revenue and profit? Unresolved conflict is usually the culprit. Perhaps it’s the associate who isn’t popular enough with the firm’s power brokers and influencers to be “worth the effort” to
Admit it, you know it’s true. After 40 years of legal practice, I’ve witnessed more unresolved conflict in law firms and legal departments than in prisons. Prisoners just “take it outside.” Lawyers demonstrate what we call Nashville Nice around these parts. You learn how to smile to their faces and then stab them in the back with a politically correct criticism in the Nashville fashion: “Oh, she’s a nice person, and I would never say anything bad about her, bless her heart.” That’s conflict aversion.
Frankly, it’s more than an economic problem. It’s a societal, emotional and health problem. Lawyer addiction, suicide
The statistics cannot be questioned. Gender diversity in law school is far superior to that in law firms, legal departments, firm management committees, partnerships and the executive suite. Racial diversity doesn’t even begin to reflect the population. The steady reduction in diversity as the organizational level of power and status increases is an indictment on our entire profession. What are the economic costs? The answer is simply unimaginable—and totally unacceptable.
Thriving in the Collaborative Economy
We all remember the 1L experience when the most intimidating professor in our assigned classes made the recurrent sobering remark: “Look to your right, look to the left ...” Thus began our steady march into the competitive mindset of “thinking like a lawyer.” Unfortunately, for those of us wired that way, this culture of competition fed all our worst instincts. For
While the law has perfected radical competitiveness, the rest of the business world is becoming radically collaborative. This transformative transition is due to the inevitability of digital power and pace. For a full exploration of the exponential nature of the Digital Age and its impact on commerce and culture, read The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, by Erik Brynjolfsson and Andrew McAfee. The authors brilliantly compare the attributes of the first half of the Machine Age—from the steam engine up to 2006—to the second half. The first was competitive leading to scarcity. The second, also known as the Exponential Age, is collaborative leading to abundance.
A recent visit to Silicon Valley revealed how cooperative business has become. I spoke with a software engineer working for Dell who supervises a software development team. Nothing abnormal about that. However, he manages a team whose members change every day on projects that change every day. A Dell engineer manages a team that one day might consist of developers from Microsoft, SAP, Google, Apple
Some say attorneys could never do that. It would be unethical, wouldn’t it? Ask Pfizer and the small number of law firms that won the privilege of doing Pfizer’s legal work. A few years ago the pharmaceutical company required its successful law firm bidders to share work product, lessons learned and mistakes made with the other Pfizer core counsel after each matter. That’s distinctly unconventional—and the hallmark of successful business models in the Exponential Age.
Many other professions have already arrived in the cooperative age of business. Preparing for a recent training program for the Vanderbilt Medical School Leadership College, I discovered Quantum Leadership: Building Better Partnerships for Sustainable Health, by Tim Porter-O’Grady and Kathy Malloch. Remove the word “health” and replace it with “law” and the parallels are unmistakable. The tools of technology, artificial intelligence,
When did all this happen, you ask. Seemingly overnight, and without warning. That’s exponential. As a
What “quantum leadership” requires is a new form of leadership: one that’s radically collaborative. The old commercial model is hierarchical, structured and highly command-and-control oriented. The new model is flat, team-based and relational.
The new commercial model is focused on accountability rather than responsibility and output rather than effort. My life as a lawyer was spent selling effort, not output. Time has been the coin of the realm in the law since 1956 when the ABA informed lawyers that “time is your most valuable asset.” Man, did we buy that, and so did our clients—until they tired of it. Now they want value, not effort.
The difference between the old commercial order and the new is stunning. Working in teams is not taught in law school. I have been teaching Legal Project Management at Vanderbilt Law School for six years. Law students routinely report that this class is the first time they have been asked to work in a team in law school unless they are joint J.D./MBA candidates. Business students don’t understand why law school doesn’t value teamwork. Therein lies one of our greatest problems: Our clients are team-based, and we don’t know how to do that.
Replacing Hypercompetition With Collaboration
Let’s return to the question of the missing $10 billion. How could BigLaw lose that much value in a year? Let’s examine the data.
The data isn’t secret. It’s been building over 10 years. It’s more than an aberration; it’s a statistical trend. The data is submitted voluntarily by the nation’s largest law firms—namely, the Am Law 300—on a monthly basis and reported in the Thomson Reuters Peer Monitor Index reports. Although anonymized, the data collected over the last 10 years is stunning. Law firms are losing market share steadily, relentlessly and without response.
Spend time with the data reported in the Georgetown Law Center and Thomson Reuters Legal Executive Institute’s
Check out Table 15 in the Georgetown/Thomson Reuters report. The missing $10 billion went to nonlawyers and nonlaw firms such as PwC, Deloitte, Axiom,
The report pulls no punches this year. It states: “Stop doubling down on your failing strategy!” Citing the Harvard Business Review analysis by the same title, the report warns BigLaw leaders that their conflict aversion could make these hallmark firms irrelevant.
How so? Harvard and Georgetown Law
Specifically, the mental heuristics that take over our cognitive capacity in times of economic peril can be summarized with startling reality in the following ways:
- The sunk cost fallacy. A rational decision maker will look only at future costs, not at past ones.
aversion. Decision makers often prefer to allocate more resources to continue with a chosen course than abandon it.
- The illusion of control. People habitually overestimate their ability to control the future.
- Preference for completion. People have an inherent bias toward completing tasks.
- Pluralistic ignorance. This can result in everyone agreeing to a decision that no one believes in.
- Personal identification. Withdrawing from a commitment may result in a perceived loss of status or a threat to one’s identity.
When combined, these mental heuristics, which reflect simply how the human brain works, can be a toxic brew of mind-blindness, obscuring paths to rescue and ways out of a dilemma of our own making.
What’s a body to do? We must overcome our conflict aversion and welcome a path to open, respectful and strategic conflict competence rather than our preferred resort to passive-aggressive behavior.
The Harvard Business Review article suggests rules to follow to achieve conflict competence:
- Rule No. 1: Set decision rules. Agree to decision rules in advance. How we decide is as important as what we decide. Agreeing on the manner in which decisions will be reached is the route to
- Rule No. 2: Pay attention to voting rules. Power-based voting, as in by partnership shares, is disjunctive and therefore divisive. Criterion-based voting is conjunctive and far more reflective of objective consensus than sheer power.
- Rule No. 3: Protect dissenters. Cognitive diversity is the fuel for innovation. All thinking alike is the heuristic equivalent of “see no evil, hear no evil, speak no evil.” Opposing views should be encouraged, not silenced. Of course, the manner of opposition is important too. Respectful disagreement can open minds to previously unconsidered solutions.
- Rule No. 4: Expressly consider alternatives. When unanimity masks mere acquiescence, trouble is brewing. Mere binary choices may be easy, but they may be ill-informed. Take time, do some research and fully consider a number of alternatives even if they are not obvious in the current state.
- Rule No. 5: Separate advocacy from decision making. A course chosen is not always the best course to remain committed to
follow. A decision made too often instills an advocacy for its completion that can be unquestioned. It’s not being wishy-washy or indecisive to ensure that as a decision is implemented, it remains the best decision to adhere to when data suggests otherwise.
- Rule No. 6: Reinforce the anticipation of regret. Leaving familiar territory is uncomfortable, and it’s appropriate to regret the loss. However, imagining the state of being to be achieved if the journey is successful can be a better strategy than simply focusing on the land left behind. Visualize the future and plan for its arrival while acknowledging the reality of the comfort of the past. In recovery
circlesit is often said, “No one changes until the pain of change is more attractive than the pain of staying the same.” Put more positively, we change for a reason, and that is almost always a better state than the status quo.
Embracing the Cooperative Economy
Although unfamiliar to those of us steeped in a competitive model of economic success, the world has moved on and is continuing to stake out new opportunities for economic success through previously unheard-of degrees of cooperative effort.
Start small and learn as you go. Discover the power and the scope of building bridges rather than silos. As our digital world continues to explode in data and the power to process it, learn to learn from other disciplines. Make friends with a data scientist, a software engineer or a legal project manager. Learn to see from their perspectives.
And, most importantly, jump in, the water’s fine.