Build Resilience

Yes, things look pretty good on the surface. Salaries and profits at large firms are rebounding. There seem to be plenty of big litigation matters, big transactions, and snarly compliance issues to keep the machine running. But what if there was another Great Recession? How resilient are lawyers and law firms today?

Resilience thinking has become a dominant framework across many disciplines, from engineering to ecology. Resilience is formally defined as “the capacity of a system to absorb disturbance and reorganize while undergoing change so as to still retain essentially the same function, structure and feedbacks, and therefore identity; that is, the capacity to change in order to maintain the same identity.” In the theoretical model there are two kinds of resilience: “engineering” resilience refers to building in hard barriers to stress disturbances, such as a concrete seawall to fight off big storms, whereas “ecological” resilience refers to methods that bend more but bounce back, such as enhancing coastal wetlands to take the brunt of the storm.

Ten years after the Great Recession swept through the economy like a big storm, we can ask, how resilient was the legal services industry and how resilient is it today? This gets us deeper into what goes into resilience. There are five attributes, with some trade-offs at play:

1. Reliability. The parts of the system have to perform as expected, and the system has to perform if a part fails.
2. Efficiency. The system should minimize waste and perform as expected even in times of resource scarcity.
3. Scalability. The system can perform as expected even as its scale increases or decreases.
4. Modularity. The system can rearrange and replace its parts to respond to disturbance.
5. Evolvability. The system can make changes necessary to perform as expected long-term.

Engineering resilience is often associated with boosting reliability and efficiency, whereas ecological resilience is often more about working on scalability, modularity, and evolvability. You can quickly see where some of the trade-offs could complicate matters. For example, to build scalable and modular features in a system may require redundancy of parts, which may not always promote efficiency. Optimal efficiency would build in just the right amount of redundancy to keep the system resilient, but knowing how much that is can be a challenge.

Contrary to all the “death of lawyers” rhetoric at the beginning of this decade, it didn’t happen—the industry was resilient. Yes, it has changed, but change to some degree is a hallmark of evolvability, an essential ingredient of resilience. The question is whether the legal services industry has maintained close to the same identity, and I would say for the most part, it has.

But how resilient is it going forward? The concern may be that the legal services industry has been so driven by the efficiency goal that it has dispensed with too much redundancy to take another serious financial sector fail. Of course, building efficiency through legal project management and trimming the fat was long overdue in the legal industry, but it can’t be all about “engineering” resilience. A concrete seawall may provide more immediate protection than a coastal wetland, but when it blows out, it’s ugly.

There are signs that law firms are responding to the need for more “ecological” resilience. The more diversified firm structure, with new tiers and kinds of lawyers, was initially thought of as a bad sign but actually can contribute to modularity and scalability. The individual lawyer, particularly young lawyers, can diversify areas of specialization and, to be blunt, develop one’s career path with a “plan B” exit strategy always ready to go.

In short, to stay resilient, it’s good to be reliable and efficient, but keep an eye on continuing to build scalability, modularity, and evolvability, too.