Performance Leader CEO, Ray D’Cruz, recently collaborated with Joel Barolsky of Barolsky Advisors, presenting to the 2019 Managing Partners Forum on the Profoundly Human Law Firm of 2030.
The central premise was that the successful, premium firm of 2030 will be geared to solve complex client problems. Financial success will come because clients will continue to pay a premium for complex work (but not other less valuable work). And the key enabler? A profoundly human workplace where creativity, collaboration, diversity and other essentially human attributes come together.
The presentation sparked a great conversation, so Joel and Ray decided to record this podcast and write The Profoundly Human Law Firm of 2030 to bring more clients and friends into the conversation. We hope you enjoy listening.
Ray: [0:34] Today I’m joined by Joel Barolsky for 25 years. Joel has been one of Australia’s leading strategy and marketing advisers to the professions. As the founder of Barolsky Advisors he is valued by managing partners and boards for his detailed knowledge of the sector and his ability to help firms prepare for the future. Joel is also the creator of the Price High or Low app, a great self-service pricing tool for professionals.
Ray: [0:58] Joel welcome to the Performance Leaders’ podcast.
Joel: [1:01] Thank you. Lovely to be here.
Ray: [1:04] Joel, ordinarily we would go through a bit of a Q&A, but today we’re going to do something a bit different because you and I recently collaborated on a presentation to a group of managing partners on the law firm of 2030. So, I thought we might just have a conversation about that presentation and the sorts of ideas and concepts that we drew on when preparing for that presentation. Do you want to kick off by just telling us a little bit more about why we chose 2030 as a marker?
Joel: [1:36] Yeah look it felt far enough away that perhaps you won’t be held accountable for that for the predictions that we might make! But I wanted to in a way stretch people’s imagination a little to think beyond just the immediate trends to actually present an environment or context within which firms are going to be competing, which is I think different from what it is now, and therefore requires not just a minor tweak or a small change but something a bit more profound, something more meaningful.
Ray: [2:22] And you’re working with firms at the moment in a strategy context, you’re helping them with three and five-year visions and plans and the thing that struck me about 2030 is that those visions and plans you’re working on today take us halfway to that point. And so, if we’re going to successfully meet 2030, we need to be thinking about it now because the current plan in theory should take us halfway there.
Joel: [2:50] That’s right and it is a stepping stone and generally to set strategic plans in that sort of three to five-year mark as firms you know feel like they can action them straight away.
Ray: [3:01] And when we were preparing for this presentation one of the debates we had was about technology and where the technology could become a source for competitive advantage which is where I started the discussion. But you persuasively convinced me that in fact it would lead to parity, that technology would become ubiquitous, cheaper, more accessible and therefore some of the competitive advantages particularly say with augmented intelligence or artificial intelligence would in time disappear.
Joel: [3:42] I think that’s right. And I mean there may be particular proprietary systems that still give some firms an edge and they are aspects in terms of how firms use the technology or leverage the data and so on that might actually bring some competitive advantage. But I’m just imagining an environment where firms are actually more or less operating off the same platform, whether it’s as one platform that goes across the whole legal supply chain – it could be. So, there’s basically Google for legal and everyone uses that same platform. And there’s just little utilities that sort of add on to that particular function. What we’re assuming is that there’s a level of technological parity that it’s not going to be the main way firms are going to outcompete their peers. That it has to be something else that that allows them to succeed. And we think it’s actually it’s about people. It’s about being profoundly human. And it’s on that dimension that firms are going to sort of live and die. It’s not so much about you know finding the next best whizzy app that’s going t0 make the difference.
Ray: [5:00] Because being profoundly human is the smart competitive position when faced with this technology onslaught, isn’t it? It’s the only way, really, it’s the only place that we can carve out for professional advisers in in premium law firms. And we should say at this point that the model that we’re talking about, the future firm that we’re talking about, is a premium commercial firm. We understand that particularly as legal services become more accessible and perhaps the High Street law firm evolves into something more commoditised, that there will be profound change in those directions. What we’re really focused on is many of our clients, these premium commercial law firms that are really grappling with that future.
Joel: [5:55] I think that’s right and again there may be a whole lot of new entrants that we’re not even aware of now. But what we look at is really where does, where do these traditional premium firms go to and how do we think about their role. And I should also say that we’re not saying they’re going to be – they’re not disappearing. You know we’re not we’re not making the case for this complete disruption of these firms. I mean there are some people who constantly say the end of Big Law or traditional law is about, you know the sky’s about to fall on our heads. I don’t have that view. These firms are very, very successful now. They’re truly outstanding lawyers and leaders. And you know, and we’ll find and there’ll be those firms that will continue to thrive now and into the future.
Ray: [6:51] And if we go back to that legal supply chain what we see is that these firms will play in the world of complex client defined legal problems.
Joel: [7:02] Yeah. Look I think that’s, I think that the process work and that’s sort of the front-end grunt work, the sort of you know document preparation, document review, discovery, all those things. And a lot of these things are really in play already but a lot of that sort of grunt work will be done by technology in different ways. But that the true problem solving, working with the grey, you know creative optioning and framing of problems and helping clients work through, you know, risk issues and risk sharing and value creation, you know, that’s really highly complex and valuable areas of advice. And I think that’s where the firms are going to have to play.
Ray: [7:56] How do you think that differs from what firms do today? Because if you sit down with a lot of partners in law firms they would say ‘Well that’s exactly what we do today, how is that any different?’ How is it going to be any different in 2030?
Joel: [8:09] Well, there’s many aspects that will be similar because they’re still solving complex problems now. But I think at the moment there’s a fair amount of time and effort and energy that actually goes into process work, around just preparing contracts and reviewing contracts and particularly at the junior levels. if you ask junior lawyers what they do, they say ‘I spend all day preparing draft contracts and sort of taking a brief and writing and then editing’ and you know, they actually spent a fair amount of the energy and time on that fairly routine process work, not routine, but it’s work that is not how you define as true complex problem solving. And so, I think for partners actually, I think the role is not that different, but for many other practitioners and junior practitioners in firms I think things will be a bit different. And you know that’s one of the profound changes that firms will have to learn how do they develop their future problem solvers when they’re not perhaps learning in the same way that they learned in the past.
Ray: [9:22] And to come back to the legal supply chain and discussion, the client will control that to a degree that they haven’t in the past, and so whereas that work has been handed over as a chunk it’ll now be separated and allocated to the most efficient resource. When we were preparing for that presentation you suggested that we use the McKinsey 7S model in order to break down or make sense of the shift in a more specific sense. Perhaps introduce that model for us and then we can we can talk through how we use that model to describe the shift.
Joel: [00:10:06] Sure, the McKinsey 7S model has its origins in an article written by Peters and Waterman – In Search of Excellence guys – back in the 70s actually, in the Business Horizons Journal. They talked about organizations not just being about structure. If you ask someone to describe the organization, if I just hand over an org chart, that’s just one aspect of describing of the sort of roles and authority structure. But actually to describe an organization one needs to think more broadly around sense of shared values with the culture, strategy, where it’s headed, systems, so how it operates, style, the leadership style, operating style, staff what are the particular profiles of staff and at different levels. And lastly skills or competencies, you know, what are the particular knowledge bases and skills that the organization has. And so, in framing the 2030 view of a law firm we thought would be a useful way to describe the organization of the future, by looking at all of those 7S’s, not just looking at org structure.
Ray: [11:17] And this worked quite well for you and I, because it was a neat way to compartmentalize the work that we do respectively. You and I tend to complement each other when we work with firms. You tend to work in the strategy, values, structure, positioning space. I tend to work in the skills, staff, systems space, and so it ended up being a really neat model because it allowed us to bring our respective inputs into this discussion. So why don’t we start with the shared values part —
Joel: [11:53] Which is probably something we both share in sense and it goes to the heart of law firms, which is around, you know, what do they hold dear? What shapes their culture, their thinking, the way they work. And so, in the profoundly human law firm of 2030 you know, what firms have to love is, to love the grey, have to love complexity, have to love creating clarity, solving problems from that complexity. That’s their core value proposition. But their cultures need to align with that. They’re also about still being law firms. So, they’re still about loving the law and appreciating the essence of what the legal system is about. And it’s also about loving this idea of teaming and collaboration. One of the defining aspects of the firm of the future is that problems don’t fit very narrowly into one particular skill set or into one you know narrow field of law. They’re not just an IP problem, that’s unlikely, there clearly will be something that’ll still fit in one area. But more and more these complex problems will require diverse complex skill sets and knowledge bases. And the only way to get that is if those professionals collaborate and team together and they value that that sense of coming together.
Ray: [13:32] Let’s talk about strategy then. We’ve spoken a little bit about playing in the world of complex client problems. And moving on from that idea of the complex client defined problem is the notion of being able to predict client needs more accurately. Talk us through that a bit more.
Joel: [13:51] Yeah. Look, I’ll just take us out of legal for a moment, and you know at the moment you can go to Amazon.com and you look to buy a book, you will see there often Amazon will recommend other purchases or say other users that bought this book also bought something else or based on your previous searching history and purchasing history, we think you’re going to need these things. And it’s scarily good, well at least I find that, and if you think about it a typical law firm knows its clients much better than Amazon knows me and yet somehow law firms still are mostly in the sort of reactive model. So they’ll respond when a client says I have a need, I have a problem or come and help me, which is fine. But I see more and more opportunity for firms to be on the front foot, to be more predictive, to actually analyze the relevant data sets and say ‘actually, in six months’ time you’re going to be having these sets of issues’ or ‘in three months’ time this is going to come up based on our understanding of your business, based on our analysis of your data, based on your transactions, based on a whole range of other factors’.
Ray: [15:15] Let’s talk about structure because I know you’ve put a lot of time and effort into thinking about what the structure is going to look like, including the rocket model that you’ve described in a lot of these environments. Tell us more about how you see that changing, will it be recognisable, or will it be dramatically different?
Joel: [15:35] I think it’s probably going to change a fair bit in this dimension, and again there’ll be a spectrum and depend on the firm. But I imagine there, because of if you go back to structure following strategy and the strategies around solving complex problems, you would think that firms would have to be a lot more fluid in terms of how they team up, so people will come in and out of teams to solve a client problem. So they might have a notional home but I imagine there’s a much more fluid set of networks across the firm. I also imagine that will include other experts from outside the firm, subcontractors or partner with other consultants-
Ray: [16:18] Alumni —
Joel: [16:19] Alumni – so in a way almost the boundaries of the firm will become more porous.
Ray: [16:25] Would you go so far as to describe a future rainmaker as a broker of legal services?
Joel: [16:31] No I think it’s a bit too passive a broker I think they would still need to be a problem solver but there is an element of being a project leader, I think is probably a better description, where there will be corralling different resources and expertise to solve a problem. But a broker feels, it just feels a bit too removed.
Ray: [16:58] If we’re looking at a young lawyer today or even a young management professional in a law firm, not just a lawyer, we would certainly be identifying their networking capabilities and the nurturing of their networks internal and external as being a really critical thing that they will be able to bring to that firm in 10 years’ time.
Joel: [17:20] I think that that’s right. And I mean. Another analogy you might want to use: Imagine you’re a producer in Hollywood right, that you’re actually producing a film. Look at those lists of credits at the end of films and how many people are involved. And imagine project managing that. Well that’s sort of the idea that, you know, what you have in mind, is that someone who is incredibly well networked, incredibly able to bring a diverse set of talent to a particular project. And still, you know, deliver an incredible outcome. So it’s there is an element of broking and coordination and networking and leadership, coupled with some advisory aspects as well.
Ray: [18:14] Another element of the McKinsey model refers to system. And when we prepared for the presentation we identified accelerated learning as being really critical. You’ve already mentioned how these teams will be more fluid and flexible, internal and external. We’ve identified many opportunities for accelerated learning, one of them for example, is the use of after action reviews or project debriefs that still a dearth of law firms use, which is amazing and I think clients find that amazing. But we’ve also identified that firms will need to be a lot better at capturing value. Can you expand on that?
Joel: [18:56] Yeah look at again if you think of the offering as not just being people’s time, which is a lot of what it is now. But really a combination of core technology that might be developed by third party plus a whole lot of data that’s been analyzed, plus algorithms, plus, you know, human input as well. You cannot feasibly charge for that on a six-minute basis, you know you can just charge on time because you’re not capturing a fair share of the value. You know there’s a lot of IP captured in those algorithms, there’s a lot of IP captured in the software and firms have to get a lot better at actually understanding the results that they create, the benefits they have, the impact that they make, and capturing a fair share of that value. And that’s a different model – not a different model – but it’s an evolution of where firms are now. And clients have to get used to that too because it’s very clearly defined buying patterns around still hourly rates. Pick up most tender documents or RFP documents now from clients and they still say ‘What are your best rates?’ And they might say ‘What are your alternative pricing?’ but really it comes down to the rates conversation. So firms have to get a lot better at communicating value, working with clients around that and capturing a fair share.
Ray: [20:32] We’ll move on to style now. Another one of those S’s, and we hear a lot about collaboration in firms. We hear a lot of managing partners talking about how difficult it is to get collaboration happening particularly at that partnership level. I think I’m optimistic about where this could lead based on not a lot other than a sense that the current generations coming into the workforce are probably going to be a lot better at this; that their world is more instinctively collaborative. I shared with you a really interesting chart on the increase in collaboration in popular music and it’s dramatic, and I wonder whether this reflects a generational shift and whether firms might benefit from this whether we just need to be very conscious that right now we might be standing in the way of that collaboration.
Joel: [21:34] But again I go back to the client and the client problem, and the more I see it the clients are going to have wicked problems that just one person sitting in their own office, working alone is going to be, you know less and less able to solve. They just, you know, if they’re going to be relevant, they have to be team players. And I think that’ll drive more than anything else a collaborative mindset and behaviour. Now some will embrace it naturally and willingly and love it and others will be dragged kicking and screaming. But maybe that you know the client will drive that change.
Ray: [22:22] When we talk about staff, we’re acknowledging in our previous comments that these firms are going to be inherently more flexible so that they can be more agile; that this will lead to non-linear careers. A change in the very linear career model that has existed for a long, long time. We also talked about diversity and not just diversity in terms of how people look but also diversity in mindset, in skill set. I was talking in a previous podcast to a futurist [Eleanor Winton] who reminded me that diversity isn’t just about, in an age sense, isn’t just about getting young people into the workforce but that we also have at our disposal the most educated senior population that we’ve ever had in human history and that we can’t be letting that expertise just walk out the door. So diversity becomes really a lifeblood for solving these complex problems in bringing these different viewpoints to these complex problems.
Joel: [23:30] Look, one of the things that this raises for me and that’s enough in question is the – and it goes back to the structure a little bit – but is the partnership model the right model to effect this profoundly human law firm? And then there’s pros and cons. But there’s one big pro that actually the partnership model is potentially very empowering. It empowers a lot of partners who have these sort of self-managed teams and a deep sense of commitment to the know the owners organize them. And they are owners. In this organization is employee owned in a sense. Now you may argue that it’s just one layer of ownership, not broadly owned, compared to say some of the engineering firms which are broadly owned by employees. But you know, will the partnership model die with, you know, will it be an enabler or a constraint to the profoundly human law firm and I don’t know what your thoughts are Ray on this?
Ray: [24:40] Well I guess is the partnership model as it currently stands is exclusive and it excludes people in a vertical sense and a horizontal sense. I can see there’s an ongoing case for horizontal exclusion, that until you reach a level of seniority and contribution, you’re not necessarily entitled to that partnership title and all that goes with it. But I don’t really see a case for the vertical exclusion. So I don’t see a case for excluding someone who for example might be expert in predicting client needs. And that person might be coming from a knowledge or a technology background, but they might be adding so much value to the organization that to not acknowledge them as potentially an equal contributor to someone who’s got a legal qualification is just silly in my view. And the same goes for people in business development roles and HR roles. A lot of what we’re talking about today is client and people led challenges. And so, if these organizations get the right people in those roles then surely they are contributing as much as a traditional partner.
Joel: [26:03] Yeah I think I think that’s fair. Going onto the last topic which is really around skills and we’ve just really highlighted that point around you know people coming from different backgrounds and the importance of that. But I think, I think everyone in the firm will need an aspect of what they call these days RQ. In addition to being I know smart people with high IQ and open to work with others and a reasonable level of emotional intelligence. There needs to be a level of digital literacy or what Forrester calls RQ or robotic quotient, the ability to interface and work with and understand technology and so on. And that’s an ongoing challenge and trend in many firms and that will just continue right for the next you know the next decade.
Ray: [27:04] And this is true both of understanding the role of technology in the firm in which you’re operating but it also applies to being able to advise clients properly, because a lawyer without a RQ simply can’t advise clients properly into the future.
Joel: [27:24] I think that’s fair. I think that’s fair and reasonable. Look there may be exceptions and in some very esoteric narrow areas of the law or you know something that varies in a super specialized but in broad terms, going back to that central proposition that the lawyers are in business to solve clients complex problems, that ability to work with clients, to understand those problems, to co-create, to problem solve, with a diverse set of experts. It requires a level of human engagement and interaction which is perhaps, you know, it hasn’t been as valued in the past but it will become more valued in its future.
Ray: [28:11] And it’s probably a good place to close by coming to one of our final points on skills which is creativity. Because when we talk about a profoundly human law firm, we’re talking about accentuating our human characteristics and we’re possibly talking about doing that in opposition to machines. And so creativity becomes the great competitive leverage point for a knowledge worker over the next 10, 15, 20 years.
Joel: [28:43] I think that that’s right. And you’re really seeing the impact of sort of design thinking already in the way firms are approaching that development or product or process or, you know problem solving as well. And you know the integration of design into advice. So one of the major law firms, Corrs, have recently engaged a whole lot of graphic designers to work with the partners in expressing their advice. So advice not just expressed in a document with the text but to graphically represent their advice to tell the story.
Ray: [29:30] And is that mindful of the ultimate end user who might not be a lawyer?
Joel: [29:34] That’s exactly right. So it’s been very cognisant of that. That advice travels and lots of non-lawyers might look at it and a picture tells a thousand words. And can we reframe and represent our core legal advice in a more creative way, in terms of both graphic design. But it’s not just in the format of that advice, there’s also clearly creativity in the problem solving and coming up with options and navigating through all the complexity of things.
Ray: [30:10] Joel, we’ve covered a lot of ground in that podcast. And much of what we’ve spoken about is covered in article which we’ll make available on our website as well. It was fantastic collaborating with you at the conference. And it’s been great to have you on the Performance Leaders podcast.
Joel: [30:30] Thank you Ray. Thanks for the opportunity.