Reducing Law Firm Real Estate Spend While Retaining Culture

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By Mike White | Jul 6, 2020

The Opportunity

Remote working has revealed a new adaptability and capacity in firms, and many firms have landed on the following two insights: i) lawyers can be very productive without having to be physically proximate to their firm colleagues; and, ii) remote working has broken down significant cultural barriers associated with being attached to commonly shared physical space.

Over the past months, I’ve had many clients tell me, “Mike, even the most resistant, old-school dinosaurs at our firm, who often are the most senior and influential partners, have gotten comfortable with not being tethered to the office…” The connective tissue of most law firms has been disrupted and even the more hidebound firms are seeing needle-moving opportunity to increase distributable profits by reducing real estate spend.

It’s Complicated

“Ok, so let’s just ditch the office space as fast as possible; easy peasy!” Not so fast. There’s a reason real estate has always been one of the two biggest spend items for firms. For years, law firms have built and reinforced their culture, their values, their professional development and mentoring, and their way of working through immersive physical exposure to their colleagues. Firms are now asking these questions:

  • How can the osmosis necessary for imparting learnings occur without regular physical proximity?
  • How can we build and maintain institutional connective tissue without being around each other?
  • If we don’t come up with a good answer, how do we avoid becoming the proverbial “hotel for lawyers” (a mercenary environment bound together by the economics and nothing else)?
  • What are the lawyer retention implications to all of this?

“Despite the clear pathway to greater profits, this seems really risky, Mike. After all, pre-Covid, our firm’s most important catalyst of communal bonding were the foosball table and keg we placed in the large conference room. There’s no way for our people to enjoy that setup virtually!”

Addressing this complex opportunity while maintaining strong connective tissue requires balanced attention at two levels: the strategic, “Big Wheels,” that create strategic magnets for coherence, and the tactical, “Little Wheels,” that reinforce connectivity in the short term.

The “Big Wheels”: Signature Client and Team Member Experience

Physical exposure is not a primary enabler of strong connectivity. In the absence of strategic clarity of purpose, it is, at best, a contributing factor. The activities that build shared values, processes, motivations, standard operating procedures, and proprietary firm “IP” can be supported quite ably without experiencing shared office space. The same methods that I often use with firms to create a unitary firm within the context of merger integration are applicable equally to the remote working challenge. These methods begin with keeping the client at the center and inform the multi-year “Big Wheel” initiatives that drive cohesiveness, identity, differentiation, and a deep sense of “why we’re better and confer more value than our peers.” They are designed to help firms define and deliver “signature experiences” in the following ways:

  • Define/deliver a signature, external client experience
    • What are the sources of value conferring technical legal expertise (good lawyering) that make our firm/practice different and better? What are the sources of value conferring non-legal external client value and differentiation for which clients are capable of giving us credit?
    • What can we create in addition to the above to support “signature experiences”?
  • Define/deliver a signature, internal team member experience
    • How can we develop, be mentored, and collaborate in a way that supports our firm’s signature external client experience?
    • How can we build the right systemic support (processes, incentives, alignments) to deliver our signature internal team member experience?
  • Use “team of teams,” ad hoc venturing and other collaboration principles to integrate and link the signature internal team member experience of your lawyers and staff with the signature external client experience you want to deliver to your clients (and prospects)
  • Once defined, document it.
  • Once documented, teach it.
  • Once taught, monitor and measure it.

Structure of The Signature Experience Project Journey

So how do we go about building the “signature experience” scaffolding to create the durable institutional bonds we desire?

  1. Outcome: begin with the end in mind, and work backwards; what are the business benefits and objectives you want to achieve for your law firm?
  2. Intake & Present State: survey and interview representative clients; survey and interview representative lawyers and staff; review relevant writings; inventory existing firm practices and behaviors that support differentiated experiences.
  3. Analysis: what are the unique external client and internal team member experiences your firm wants to deliver to different sets of external clients and internal team members? How do we need to work individually and together to link our desired internal team member experiences with our desired external client experiences? What best practices from the market and other firms can inform our analysis?
  4. Roadmap: create a plan to achieve the recommendations generated by the analysis. Are there any “unwritten rules” and cultural barriers that could prevent us from executing the plan?

A great example of what we’re referring to is Goldman Sachs, whose professionals arguably enjoy and benefit from the strongest set of cultural bonds of any professional services firm. Goldman Sachs bankers learn from day #1 why they are different and arguably better than other investment banking firms. The “Goldman Sachs Way” (“GS Way”) is defined, specific, and articulable by each Goldman Sachs investment banker. The GS Way does not consist of conventional platitudes and bromides alluding to “excellence;” rather, it is made up of inputs and evidence associated with a way of doing business that put prospects and clients in a position to conclude (to infer) that the institution and its professionals deliver excellence. Each banker can explain how each element of the GS Way is designed to confer value on the firm’s external client. In short, prospects, clients and internal team members believe Goldman Sachs delivers a “signature experience.” Moreover, the common language (processes, incentives, trainings, differentiated market positioning, etc.) the bankers adopt is imparted independent of the physical office space they may or may not share.

The” Little Wheels”: Maintaining Connectivity in the Short Term

When a law firm decides to commit to a “signature experience” project, by definition it is doing something very strategic. The benefits are too big (removing the risk from re-capturing big margin that has gone out the door on real estate spend) and too durable (multi-year impact) to be viewed otherwise. “Big Wheel” engagement, efforts, and commitment across the firm are aligned and activated to effect transformational change (see “The ‘Big Wheels’: Signature Client and Team Member Experience” above) from which the firm will benefit for many years. However, firms that embark on a “signature experience” journey have to experience – and need to see – “Little Wheels” making immediate impact.

What do the “Little Wheels” look like? These are the low hanging fruit, near term opportunities to build and strengthen identity, differentiation, connective tissue and culture. They are easy to implement immediately and support. They also tend to create in team members a visceral sense of connectedness to each other and to the enterprise. They express inward empathy for the firm’s internal team members (employees, lawyers). The “Little Wheels” recognize that maintaining connectivity in the short term can no longer be addressed simply by rolling out the foosball table and keg. Across industries, particularly professional services, organizations are evolving best practices for maintaining connectivity at a distance. This includes launching virtual water cooler collaboration spaces, lunch and learns, pop up brainstorming sessions, and other deliberate community building and social networking approaches in addition to physical gatherings outside of the traditional office setting. The “Little Wheels” are not window dressing efforts but rather are purpose-driven, substantive experiences.

Conclusion

Reducing your firm’s commitment to expensive shared office space is a generational opportunity to increase dramatically the pool of firm distributable profits. “Signature experience” projects, which can last from one to six months, are non-disruptive to your current work streams and processes. ” Per Peter Drucker, “culture eats strategy for breakfast!” A well- designed “signature experience” effort, deployed through a detailed roadmap, is your firm’s insurance policy against the erosion of bonds that can turn your firm into a “hotel for lawyers.”