Over the past several years, we have seen a growing gap between the highest performing firms and the rest of the market. In working with and observing law firms across market segments and jurisdictions, we see clear differences in how firms respond to market changes. The most agile firms benefit from a strategic advantage based on their ability to respond to change and capitalize on opportunities more effectively. This agility frequently drives superior performance relative to the rest of the market. By contrast, firms lacking agility seem to fall behind, whether through inertia or because their focus is elsewhere.
Many firms perceive themselves to be agile, when in fact they are not. Our role in advising firms often involves helping them to recognize the challenges associated with a lack of agility. So what does a strategically agile firm look like? And what are the characteristics of firms that lack agility?
The Agile Firm
The agile firm demonstrates a clear direction of travel, seeking out and responding quickly to market opportunities. Partners in these firms understand and support the firm’s strategic direction, and leadership takes action to proactively grow the firm’s practice and market share. Whether evaluating a lateral hire or assessing a new client at intake, these firms demonstrate an organized and systematic approach to considering market opportunities and reaching and communicating timely decisions.
Strategically agile firms are also strongly market facing. They research market trends and competitor moves; they communicate openly and frequently with clients to understand better and align with their needs; and they look for early signs of changes among competitors and in demand for the firm’s services. These firms also tend to be more active in seeking out emerging growth areas and markets while maintaining a focus on their core practices. No single strategy – global vs. domestic, multi-service vs. single practice focus - embodies strategic agility. It emanates from strategic alignment, market orientation and effective leadership.
However, as is the case with a number of management principles, strategic agility may be best defined and understood not by describing what an agile firm looks like, but instead, identifying the forces which oppose agility in law firms.
Enemies of Agility
Unfortunately, a number of the structural and behavioral elements inherent to law firms often act as opposing forces to the development of an agile firm culture. While these characteristics are certainly not true of all law firms, many struggle to overcome variations of some or many of the following challenges:
- Consensus dominated decision-making
- Overly decentralized or centralized management
- A high degree of partner autonomy
- Independent practices/offices
- A strong internal orientation
- Risk aversion to the point of paralysis
Such traits restrict the pursuit of new opportunities and in some cases, directly inhibit a firm’s ability to take action. For some firms, these characteristics also represent widely accepted or agreed upon behavioral or cultural norms within the partnership. This makes it virtually impossible for those charged with leading the firm to rally partners and get them on board in pursuit of a single, coherent direction.
Interestingly size and agility are often inversely related. Larger firms are often more decisive and have more management bandwidth to focus on the market and clients, while small and medium firms can get more wrapped up in internal day-to-day issues.
To ensure long run competitiveness, firms benefit from taking a critical look at themselves to test their own nimbleness; this insight enables them to challenge those elements of their culture, operations and behavior which inhibit agility. Is the partnership as externally oriented as it might be? Is ‘thinking outside the box’ valued or is there a strong bias towards ‘the way we do things here’? Is leadership empowered to take aggressive action when warranted? If the answers to these questions are repeatedly “no”, there is likely to be a strong case for the firm’s leadership to seek ways to establish a more sharply defined direction, a more market-centric focus, stronger internal alignment and a more agile culture.
For those firms where strategic agility requires cultivation, we have found the following approaches as effective:
Develop a clear strategic focus: A well defined strategy not only gives direction and cohesion to a partnership, but also provides context to decision making. It allows opportunities to be considered and priorities set against agreed upon goals. Moreover it is likely to result in more efficient and effective management – and hence greater management agility – with those delegated the task of leading the firm having a clear mandate from the partnership.
Foster a more externally oriented environment: New ideas most often result from group interaction and the sharing of information across diverse teams of people. Getting lawyers together to share experiences, communicate ideas, and challenge existing norms is one of the most effective methods for brainstorming new ideas and opportunities. Focusing these discussions on external market changes and client feedback helps ensure that partners are informed about the changes in the marketplace and are actively engaged in assessing opportunities which will help build the firm’s competitive position.
Build alignment: Partnership alignment represents the Holy Grail in driving strategic agility in a law firm. A first step in building alignment involves generating buy-in from key opinion leaders. By actively seeking out support from critical players and those with significant influence, management can more effectively ensure that influential partners are on board before pursuing change. Once opinion leaders support a particular approach, management will more readily garner support from the rest of the firm.
Avoid permanent thinking: One of the greatest inhibitors to agility is the fear of change and a predilection to remain at status quo. Firms most successful at cultivating strategic agility have developed an appetite for change while still preserving the core of the firm’s culture. A culture more comfortable with change becomes more open to new ideas, more willing to challenge old norms, and as a result, more likely to innovate. In treating things as temporary, firms avoid attachment to a single way of thinking or doing things and promote a culture more open to change and new ideas.
Strategic agility is a valuable attribute in many of the highest performing law firms today. The most agile firms are able to out-compete others for both clients and resources, driving better financial results and market position. Given the structural and cultural norms common in law firms, being proactive and taking decisive action can represent a significant challenge. However, it can be done. Firms which cultivate agility will benefit from an advantage over others in the marketplace as they seize additional market opportunities.