World Masters – why law firms should ‘reimagine’ their future during COVID-19
[Uncategorized] October 30, 2020
In the first session of the new World Masters Webinar Series, leading law firm consultant Joel Barolsky explains why leaders should use the COVID-19 crisis as a time to challenge their business model and potentially pursue growth opportunities, rather than going into hibernation.
As a long-standing consultant to legal practices, Joel Barolsky has watched with interest in recent months to see how firms have responded to COVID-19 uncertainties.
His verdict? “Most have reacted like deer in the headlights,” he told attendees in October at the opening session of the World Masters Webinar Series, titled ‘PC19’ Post-Covid – Bring the Future Forward.
Managing director of Barolsky Advisors and a Senior Fellow of Melbourne University, Barolsky adds that many firms have been paralysed and not sure what to do. So they have resorted to typical crisis-management responses – they are spending on essentials only, freezing recruitment, preserving cash and focusing on short-term budgets.
“The whole view is very short-term and very much wait-and-see … I think that’s a missed opportunity.”
Be an ‘out-performer’
Part of Barolsky’s warning stems from a McKinsey study of previous economic crises which shows that a crucial part of the path to recovery for firms is the actions they take before, during and after a crisis.
Importantly, the decisions that leaders make now will determine how strongly they come out of the pandemic. McKinsey notes that “out-performers” generally do three things:
1. They make short-term adjustments to their business, but remain committed to long-term growth strategies.
2. They free up cash and other resources before and during the crisis so they can invest early in their own recoveries.
3. They keep their foot on the ‘growth pedal’.
The latter can include moving into complementary services and buying distressed but valuable assets.
In the webinar, Barolsky cites the example of Australian commercial law firm Thomson Geer, which in recent months has made a series of lateral team hires from firms such as DLA Piper, Russell Kennedy and Dentons to expand during the crisis. “[Lateral hires] have been around forever, but some firms have used this period to be particularly aggressive,” Barolsky says.
Such a move fits with his advice to firms: “Rather than waiting for the future, bring the future forward.”
Restore, reset, reimagine
As Barolsky sees it, law firms have three post-COVID-19 options:
- Restore – go back to where things were in February 2020.
- Reset – lock in some of the short-term changes as a result of the pandemic; such as the success of working-from-home and adopting a flexible, hybrid model that balances office and home-based work.
- Reimagine – view the current crisis as a catalyst to transform the firm to compete more effectively over the long-term and seed the next phase of growth.
Although he encourages managing partners and their fellow leaders to reimagine their firms, he acknowledges that even the most progressive firms are probably locked in the reset phase at the moment. “[But] you owe it to your firms as stewards of your firms to exploit the reimagine option.”
Even if firms do not end up making radical changes, Barolsky says the very act of using this time to explore different models and consider new ways of doing business can have positive outcomes. Some firms may find that simply returning to ‘normal’ is a viable strategy, but firms ignore analysis of their current position at their peril.
As part of a firm’s evaluation process, they should consider where they will grow (new or complementary legal products or services, or geographic expansion, for example), how they will grow (organic, or through acquisitions, among many options) and how will they operate (factoring in issues such as brand and people management).
Some firms are already taking the lead. For instance, Sydney firm Coleman Greig has made a decision to double down on its strength in the fast-growing western suburbs, highlighting the merit of a targeted geographic client-acquisition strategy. Major firm Allens has rolled out a series of new online product lines to assist clients in areas such as compliance training, contract reviews, and data and technology management. The move recognises that such areas are increasingly on the minds of existing clients and represent a value-add for them and the firm.
Multinational firm Pinsent Masons has been innovative through the acquisition of a diversity consultancy to advise business on such strategies.
Going for growth
In terms of growth options for firms, they could go organic, through lateral hires, via acquisitions or joint ventures, or through passive investments, to name but a few.
One example of smart thinking is the joint venture between Lander & Rogers and YBF Ventures to create a LawTech Hub that provides an immersive experience where start-ups have access to legal expertise and business experience. The beauty of such an idea is that it enables prospective clients, in this case start-ups, to come into Lander & Rogers’ environment – “the bee comes to the honey” – rather than the firm always having to go out to look for them.
With the transformation of operations, firms could consider greater brand and relationship building, overhauling pricing strategies, and embracing new technology around document review or legal assistants. “This whole fear factor around technology is falling away,” Barolsky says of the COVID-19 change.
However, what firms should not do, Barolsky insists, is sit on their hands. “Don’t shy from the big bets.”
‘PC19’ Post-Covid – Bring the Future Forward is the latest offering in a long line of World Masters of Law Firm Management seminars designed to educate firms on law management issues. The masterclasses are being conducted as webinars this year because of COVID-19 travel restrictions. In this webinar series, leading management experts will tackle the biggest challenges facing law firm leaders as they respond to the pandemic. To register and learn more about upcoming webinars, click here.