Richard Potter (RP): How would you distil the messages in your recent book for the benefit of lawyers in your audience?
David Maister (DM): If you follow this strict but simple sequence in your law firm, you will make more money. First, you must energize, excite and enthuse your people to achieve high standards of performance and service to clients. Secondly, if you do that while also cultivating teamwork and good employee attitudes, you will serve the marketplace with higher value. Thirdly, once that occurs, you will make more money. Making more money is an outcome, not a cause, of achieving better employee attitudes and higher standards.
RP:David, is this news? Haven't you-and others-been saying this for some time?
DM: Yes, I've advocated this type of thinking for years. The message that there's a correlation between standards of excellence and profitability isn't news. What's new, however, is that the studies we've documented offer fairly solid evidence that there is a causal relationship here, not just a correlation. We now have fairly concrete evidence that if you are interested in making money, then you don't do that by merely managing the money-the way you make the most money is by following the three-step sequence I just outlined.
RP: Sounds fairly easy.
DM: Only if you practice what you preach. My clients have no trouble in agreeing with the logic of my proposition about standards and attitudes. Take two common examples. Virtually all law firms have no difficulty in embracing these two aspirations: high client satisfaction and excellent mentoring of associates. But now comes the hard part. Is the firm prepared to enforce these standards to the point of intolerance of individual lawyers who fail to meet expectations? If it is, it will be practicing what it preaches-and, most importantly-it will be rewarded financially for doing it. In most law firms, however, you can get forgiveness for almost anything by billing more hours, yet billing more hours doesn't guarantee compliance with standards-it often has quite the opposite effect. To bring us back to the practical basis for "practice what you preach," a firm only gets commercial benefits from what it does, but gets no commercial benefits from what it merely aspires to.
RP: Obviously you need general acceptance by the lawyers of the standards if you're going to enforce them.
DM: Exactly. That's why I don't advocate this approach as if I were a moralist or some sort of abstract philosopher. It's a purely pragmatic position. If the firm management is empowered by the partners to enforce the standards, then there is a good chance they will be enforced and the financial results will flow. But most firms are consciously unmanaged.
RP: "Unmanaged"? What do you mean by that?
DM: Law firms are administered, but are seldom managed. And it's usually not because they have poor managers. It's because the partners have never given the managers a mandate to do anything but administer. At many law firms, if you ask the partners to rank the two concepts of autonomy and achievement-that is, would they prefer to keep their autonomy within the firm or would they prefer to achieve desirable goals (whether professional or financial)-they would choose autonomy. So they have consciously chosen not to be managed.
RP: How can we consultants deal with this?
DM: Well, I try to get partners, in effect, to include their commitment to standards in their partnership agreement so that management receives a mandate to truly manage.
RP: What results do you see if a firm does that?
DM: If a firm voluntarily accepts that it will be intolerant of failure to meet standards-that is, that it practices what it preaches-the results I've seen are that within two years profits per partner will rise by at least 50 per cent.
RP: That's remarkable. Besides increased profits, what else do you see happening?
DM: It should be no surprise but, by the end of that period, usually 15 per cent of the partners have left the firm. And that's because it's been shown again and again at the firms that really achieve excellence that the price of having high standards is losing people.
RP: Should that be a concern?
DM: Not at all. In the name of "keeping the family together," firms will retain people who shouldn't be there. Peter Drucker and I were once serving a mutual client and the CEO bragged that no one ever left his firm, to which Drucker retorted: "Boasting of never losing a partner is like boasting of never going to the toilet."
RP: At one of your workshops I've heard you elaborate on the nature of the standards you are talking about. I gather you don't much care about the mechanics of, for example, client satisfaction surveys. Rather, you care about what happens to the results of the surveys and how they are used to make lawyers more accountable to the firm and the firm more accountable to the client.
DM: Exactly. Let's suppose you have a policy to survey the client after each and every mandate is completed. Broadly, you can deal with the results in two ways. You can shove the report into a drawer and deal with it in follow-up terms only if it discloses an egregious error in the way the matter was handled. In other words, so long as there was no incompetence, nothing happens. That's one scenario. Here's another. If the firm has articulated a standard of client service that talks about "excellence" and the survey reveals something short of excellence, i.e. mere competence, the managing partner or practice group director could sit down with the partner to try to discover what happened and why. The client would then be approached and explanations made why excellence is the firm's standard and what will be done to ensure that this is adhered to in the future. Finally, the result of this survey and the follow-up would be published to the entire firm. Now which of these two scenarios is going to produce more dramatic results for the firm?
RP: Well, I think we would all agree that the second scenario will produce immediate change-for the partner, the client and all other lawyers in the firm.
DM: And why? Because it involves accountability, for both the lawyer and the firm. The details and the mechanics are irrelevant. The survey could be done quarterly, not after each brief. It could be done by the partner or by the managing partner or by an outside survey firm. The report circulated around the firm could be written by the partner, not by the managing partner. The important element, however, is that there has been accountability to the standard and everyone involved can see that.
RP: And, as I understand it from your previous books, it's not failure to reach the standard itself but, rather, a failure to accept and attempt to achieve the standard that you want us to be intolerant of.
DM: Right. As I've said in another place, you're allowed to fail, but you're not allowed not to try.
RP: David, so far when we've talked about client service standards, although we haven't articulated it, we both are assuming what you and I know to be true about client attitudes, namely, that they almost always rank overall attentiveness to their needs above sheer technical expertise. My experience as a lawyer, a marketing director and now a marketing consultant, indicates that one reason why lawyers don't fully assimilate our advice is because when we say "quality standards" they think only in terms of quality of legal advice. And of course most law firms spend a great deal of time fussing over the quality of legal advice they give.
It's almost as though lawyers, on this question, operate in an alternative universe, one which is closely linked to "ours" but which is nevertheless on a different plane.
DM: Yes, I agree, but it's interesting that most lawyers, when they themselves seek advice from other professionals, such as a doctor or a dentist, behave exactly as do the clients of lawyers. That is, they too seek out the providers of a more complete service, one who is timely, one who explains things well, including fees, and seems more interested in the result for the patient than in all the nuances of how to get there.
RP: Your recent books are deliberately less about firm structure and governance than they are about creating a firm culture that fosters excellence, growth and good human resource management. However, have you found any correlation between a certain structure and the ease with which a strong firm culture can be maintained and promoted?
DM: In one important sense I have. Patrick McKenna and I are co-authoring a book which will be published next year, First Among Equals, and which espouses the critical importance to the success of the firm of practice group leaders. As you know, managing partners are usually too remote to engage in the emotional interpersonal skills of energizing, motivating and enthusing their troops. Today, that job has to be performed primarily by the practice group leaders.
RP: Am I correct that the best qualified practice group leaders are not necessarily the best personal performers?
DM: Indeed, they're not. In the very best firms, the practice group leaders are chosen for their success in leading the group and not on their personal accomplishments. Mind you, in addition, they must be given a broad mandate, the time to manage, the training to do so and an adequate budget.
RP: In Practice What You Preach, you report that in the most successful firms you included in your study the standards were high. For example, on the topic of teamwork, it was not sufficient for these firms to say that they "encouraged" teamwork. Rather, "they say 'we have no room for' individualists." Is that a realistic standard, do you think, for law firms?
DM: I simply report to you that, objectively, and on average, team players make more money. We now have 20 years of statistics to back this up. Yes, you can allow individualists in your firm if you wish, but you will pay a financial price for it.
RP: If you had the ability to change just one general attribute of lawyers, what would it be?
DM: After making them less risk-averse, I would want to change their short-termism, so that they could look beyond the next month's revenues. It simply isn't good enough, for example, to decide not to delegate work to juniors because it could reduce the partner's billable hours this month. All the studies show that delegating work downwards benefits everyone-the partner, the junior, the firm and the client. So, once again, if lawyers can focus on the longer term, they'll make more money-and that should make us all happier.
David's views are often controversial and are therefore widely discussed within the legal services marketing community. We await with anticipation David's take on the role of practice group leaders in his next book. Many of us believe that, especially for the larger and second-tier Canadian firms, the position of practice group leader is indeed the interface that will determine which firms will succeed and which will fail over the next five years.
Richard Potter, Q.C., is an independent legal services marketing consultant (www.i-lawmarketing.ca) who practiced for over 30 years as a business lawyer and computer/IT specialist before becoming the marketing director for a major national law firm.