Top 10 Reasons Why Law Should First Be a Business, Second a Profession
1. Nice Guys Finish First. It turns out that reputable behavior is good for business. Most lawyers think that unbridled business practices are bereft of morality and beneath the dignity of the law profession. But in Jim Collins famous business tome “Good to Great” he argues convincingly that companies which identify and reward their top talent, while building clear succession plans that offer opportunities to move up within the organization, along with humble and modest leadership, actually outperform companies led by egotistical, “rock star” CEOs and gain superior market capitalization.
2. Training. The very definition of a profession is “a paid occupation, esp. one that involves prolonged training and a formal qualification” (see New Oxford American Dictionary) but plenty of business positions require a high degree of training, yet no one thinks of those positions as similarly august professions. An excellent sales manager, a strategic sourcing expert, or an information technology programmer all require elaborate skill and training, and none of these positions necessitate formal qualifications. The very need to provide a high quality service in order to make money ensures that businesses train their people well, whether or not they’ve attended “Procurement School.”
3. Long Term Strategy. Most Big Law firms operate as if they are publicly traded companies, publicly announcing their annual profits per partner in the hopes of attracting new partners with portable books of business. As a result, firms focus on never dropping that number. So if profits per partner can be maintained in a lean year by letting go some of your most talented associates and income partners, firms are perfectly happy to do so. The same kind of behavior occurs at large, publicly traded businesses. Smaller, closely held companies don’t face this kind of pressure, and realize they need to build for the long run. Law could do well to emulate this superior business approach and better identify and hold onto its talent. Additionally, law firms typically exhaust all of their profits each year in partner disbursements to maintain their profits per partner “stock price” which leaves little left over for long term investments. That’s why even major law firms lag behind most other companies in the business world in terms of adopting superior software and business practice management approaches, there’s simply not enough room left in the budget to do so.
4. Service Quality vs. Ethics. Lawyers focus heavily on ethics all the time (as well they should), but we sometimes make the mistake of caring more about technical violations without any affect on service rather than ethically compliant behavior which compromises clients. For instance, it’s illegal for an experienced technology transactions attorney who is a member of the Arizona bar, but not the New Jersey bar, to handle a complex, custom software development agreement. However, it’s perfectly ethical for an attorney straight out of law school who has just passed the bar to butcher the same deal for the same client as long as a judge recently swore in that attorney to the NJ bar. In this case, professionalism ironically undermines our prolonged training and formal qualifications.
5. Rent Seeking. Not allowing competent attorneys who are not members of your state bar ensures that you can earn client fees in your state while the competition cannot, regardless of whether or not the competition provides clients with better, faster and cheaper service. Large corporations attempt to similarly insulate themselves from competition, particularly with legislation. But smaller businesses who have to compete against thousands of others don’t have this protectionist cushion, and, accordingly must compete at a higher level to provide client’s with best mix of service and price.
6. Knowledge Management. Many businesses bring a structured, scientific approach to their knowledge base. Companies upgrade customer service with elaborate databases that answer customer questions before they can even ask them. Sales experts use strategic scripts predicting all possible customer concerns and objections in order to optimize sales performance. But in the legal profession, we rarely use a knowledge management database with a document automation tool to ensure superior performance.
7. Process Improvement. There are better and worse ways of doing things in life. Businesses use process improvement methods such as Six Sigma and Lean to create and capture the most efficient series of steps to ensure consistently great achievements from a client satisfaction standpoint. Rarely do law firms do the same.
8. Measurement. There’s an old adage that if you don’t measure an activity, than it might as well not occur. I think it’s a bit extreme, after all, if we followed this statement to an extreme level, we wouldn’t have much in the way of theater or other performing arts. I will say that many of the issues we battle over in the legal profession tend to be ones that are actually, distinct, measurable data points. You might be pitching to a potential client and insist that you provide the same quality of service as your competitor, but you close your deals more quickly. However, without actual data tracking your cycle time metrics, your statements are most like unconvincing, and may even be untrue. Transactional attorneys argue all the time over whether the permutation of a particular clause is “market” or typically agreed upon by parties in a particular industry. But there is a definite answer to that argument, and could ostensibly be answered by a mathematical measurement of the incidence of that permutation across SEC EDGAR contracts or some other large contractual database. The point is that we can massively improve legal services quality by embracing the corporate world’s strenuous focus on measurement as long as we implement this approach logically. You would not, for instance, want to constrain an able litigator’s preparation of her closing argument with formulas that fail to capture the richness and creativity of a silver tongued orator.
9. Division of Labor. It’s hard to imagine a serious company relying solely on the people who create and provide its goods and services as the also the key salespeople for the business. But, oddly, that’s exactly how most law firms function. And due to state bar ethics requirements, a partner can almost always pick up and leave at her leisure with key clients of the firm. Clients of the firm, sales expertise.
10. Consistency. Having been the client many times myself, I’m always shocked at the lack of consistency in legal service from lawyer to lawyer at a firm. Often times, in terms of teamwork and coordination, lawyers at the same firm are less in sync than lawyers are from different firms. And Big Law partners who need assistance in a practice area they don’t specialize in will tell you how often they are frustrated by the lack of support from their colleagues. With a hard core business focus, you instead elaborate the exact processes that produce consistently terrific client results, and require everyone to follow these processes so the client can rightfully expect a consistently excellent experience with your firm.