Biglaw

The 'Culture Card' In Law Firms

Why 'preserving culture' can be code for stifling innovation in law firms.

By  
on

“I swear, culture is a dirty word when it comes to law firms.” A good lawyer friend of mine was visiting from out of town recently. The two of us and few colleagues grabbed dinner and started talking shop. “If I hear another lawyer throw around ‘preserving culture’ to justify rejecting a new idea,” he said, “my head’s gonna explode.”

But wait — isn’t preserving firm culture a good thing?

The value of firm culture is hard to overstate. A strong, identifiable culture can be a difference maker for a firm looking to retain current attorneys, market itself to laterals, and set its long-term strategies and goals. People want to participate in something bigger than themselves, and culture can provide that. Firms with positive, supportive cultures generally take pains to achieve them, and don’t want to give them up without a fight. Culture matters.

But good cultures have to be more than doing what we’ve done before. “Preserving culture” too often becomes shorthand for “we’ve done things this way forever, so we’re not going to reevaluate it.” Healthy cultures need to evolve.

I’ve heard lawyers from firms large and small, across the country, complaining about going through the same old cycle. Lawyer A proposes buying a new refrigerator for the attorney lounge to replace the current broken one. Lawyer B passionately opines that there’s nothing wrong with the current refrigerator, the departed founders of the firm used to keep their sandwiches in that exact same refrigerator, that refrigerator was part of the reason they and many others joined the firm, and replacing the refrigerator would irreparably damage the firm’s culture — leading to its to slow, painful demise. Fear of a potential apocalypse causes the new refrigerator concept to be safely referred to a committee for revision, where the idea loses steam. Lawyer A learns not to bother trying to make things better, Lawyer B learns nothing, and the refrigerator is still broken. Apply as needed to all proposed changes, rinse, repeat.

Once a lawyer plays the “culture card,” it’s game over for most any new idea.

Part of this is probably the fundamental tension of attorneys running their own business. As lawyers, we’re trained to look for potential failure points in any proposal our clients bring to us. We catastrophize. Our job is to call out risk factors and err on the side of caution. If we fail to notify our clients of a problem that later crops up, our relationships and business are on the line. The status quo is safe, and safe is good.

Sponsored

That kind of cautious-to-a-fault mentality is invaluable when we’re counseling our clients, but it can be absolute death when trying to run our firms. In order for firms to be successful in times of rapid change and declining demand, it takes the stomach to take risks and embrace change — concepts that make people trained at avoiding risk queasy.

Several of my teammates and I recently had the opportunity to tour the Las Vegas headquarters of Zappos, the internet shoe juggernaut. Zappos operates nothing like a typical international retail giant, but it’s running on a model that more and more companies may emulate in the future.

Internet companies, by their nature, involve people with a sense of adventure and willingness to accept risk. At some point, the founder of Zappos said, “You know shoes, those things you always try on in the store before you buy them? Let’s sell those over the internet, where trying them on is impossible.” The counter-intuitive idea somehow worked, and Zappos has been dominating its market and raking in comfortable profits for years.

But Zappos realized that even the best ideas have a shelf life. In 2013, Zappos’s leadership became convinced that in order to survive and thrive in the competitive e-commerce space over the long haul, it needed to rethink the business model that led to its initial success. As part of this effort, Zappos implemented a companywide policy of “holacracy.” In holacratic companies, there are no traditional managers. Top-down org charts and job titles are basically non-existent. Self-management is the name of the game.

Zappos’s leadership expected the change to cause some dissatisfaction, and it leaned into those feelings. Every employee received an offer to opt for a generous buyout with no hard feelings if they didn’t like the new direction. Attrition soared, and those who remained struggled to implement a wildly different system that had never been attempted in a business of Zappos’s scale in the modern era. The growing pains were real, and Zappos’s critics stood ready to call it a disaster in the making.

Sponsored

Then, quietly, Zappos posted its highest operating profit in company history.

By all accounts, the transition to holacracy remains a work-in-progress, but the company weathered the initial criticism and attrition. Its employees refined the new systems to fit their needs. Productivity is up, and the team vision is united across a company that is now nimbler than it was before. The radical reinvention of the company ended up reaffirming and refining Zappos’s fundamental culture: one of innovation, determination, and fearlessness.

I’m not advocating that law firms jump onboard the holacracy movement. Our ethics rules require more formality and supervision than the format provides. Every business in every industry will have its own unique needs. The point is that Zappos’ leadership understood that company culture needs to evolve in a way that propels a business forward — not holds it back.

Firms that fail to adjust their cultures to the changing market risk losing market share, or just losing their shirt. Am Law 100 firms working off the high-leverage, high-billables model will need to come to terms with the fact that technology and an influx of low-cost competitors are eroding the foundation of their profit pyramid. Am Law Second Hundred firms and below have to take a long look in the mirror and admit that stalling demand means that having a building filled with the “best lawyers” in town simply isn’t enough anymore. Barring a unique market position or a lot of luck, stagnant firm cultures are doomed to fail in a legal market that is shifting at a break-neck pace.

Positive change takes time and effort. It’s often ugly, and there will be haters aplenty. It might fail, and guess what: that’s okay. A moderate dose of failure is necessary for any successful company. It means new ideas are being implemented. Some ideas that made all the sense in the world end up faceplanting. That doesn’t mean it was wrong to try them out. There are attorneys out there who brag about having never lost a case. Chances are that just means they never took on a case that was actually worth fighting.

Invoking a law firm’s culture to shut down experimentation and new ideas doesn’t just preserve the existing culture, whatever that may be. It inculcates a deeper culture into the firm, one of fear, stasis, and decay. You can’t have a firm culture if your firm doesn’t survive. Everything about the world of legal business is up for grabs in the coming years. Resistance to change is no longer just stodgy — it’s swiftly becoming an existential threat.

Whether culture is a good or bad thing depends on where you find it. In museums and art galleries, culture means intelligence, refinement, and beauty. In a lab, culture means a plate of mold. Culture should be something that drives a law firm to grow, not something that grows over a law firm’s corpse.

James Goodnow

James Goodnow is an attorney, commentator and Above the Law columnist. He is a graduate of Harvard Law School and the co-author of Motivating Millennials, which hit number one on Amazon in the business management and legal communications categories. You can connect with James on Twitter (@JamesGoodnow) or by email at jgoodnow@fclaw.com.

Topics

, , , , ,