Understanding Your Firm's Culture

“Our strategy calls for our partners to collaborate more. We want them to work in teams to develop business, and not hoard their client relationships.”'

“We can't afford to churn associates any more. We need to get the most from those we have, so we want to cultivate a culture of continuous feedback, like McKinsey's.”

'

As experienced law firm leaders know, implementing new strategies often requires reshaping established cultures. That change is difficult because cultures are usually deeply imbedded, and also risky, because any type of change can have damaging side-effects on the “glue” that binds people to a firm. In this article, we describe a simple but effective approach, adapted from Rob Goffee's and Gareth Jones' seminal book, The Character of a Corporation (New York: HarperCollins 1998), to understanding your firm's culture and how it may need to change.'

What's Your Culture?

Culture is the consistent pattern of day-to-day behaviors by which members of a group interact with each other and choose how to spend their time. Behind these patterns lie a set of assumptions and values that range from the explicit (e.g., “Everyone here works hard, and for a partner than means 2000 billable and a few hundred non-billable.”) to the deeply implicit (e.g., “At the end of the day I'm responsible only for my own success, not the success of others.”).

Culture is easy to take for granted, but difficult to describe. Goffee and Jones clarify its amorphous nature by focusing on two of its key dimensions: “friendliness” and “common focus.”'

Friendliness

At one end of this spectrum, people do what friends do: they offer help freely and often; they drop by each other's offices and socialize outside the office; and they care about each other's personal as well as professional welfare. The opposite is not a hostile culture, but an indifferent one:' people interact collegially, but only when they need to; and there's not much casual exchange of information or work-product.

Common Focus

In groups with a strong common focus, everyone understands ' and buys into ' the group's goals, understands how they will be evaluated, and takes pride in meeting the group's expectations. In law firms, common focus may relate, for example, to levels of productivity or the types of clients or work that the firm handles or avoids. In groups with little common focus, people have a high degree of autonomy to decide what to do and how to do it. There are no clear standards of performance or, at least, none that anyone takes seriously.

If we were to turn these two spectrums into the two axes of a chart, we could group cultures into four types, as we will describe in more detail below. Cultures that have a high degree of both friendliness and common focus are “collaborative.” Those that are high only on the common-focus spectrum are “meritocracies.” Those that are friendly but lack a common focus are “networked” and, finally, those that are low in both friendliness and common focus are “silo” cultures.

Some firms may have strong, distinctive culture across the whole firm; others may be more a collection of local cultures. Even in a relatively homogenous firm of any size, there will probably be variations: for example, the firm as a whole may be Networked, but some practice groups may be Collaborative. To complicate matters further, each type of culture can manifest itself in a positive, healthy way, or in a negative, dysfunctional way.

Let's take a closer look at the healthy and unhealthy manifestations of the four cultures and the strategic issues that tend to arise in each.

Networked Cultures (High Friendliness, Low Common Focus)

Healthy

Lots of interaction and socializing; people share knowledge and contacts; and close relationships facilitate communication and consensus-building.

Unhealthy

Underperformance is tolerated and criticism avoided (except behind people's backs); in-groups rule (with closed-door politicking); and there are too many meetings with too little progress and no accountability.

The Networked culture works well for practices in which partners need the multi-disciplinary expertise of colleagues to serve clients, but value their autonomy. Practice groups, industry teams, and committees proliferate, and much time is devoted to group meetings and retreats. Not surprisingly, leaders in these firms often recognize the strategic need to develop more “common focus” among partners.

Silo Cultures (Low Friendliness, Low Common Focus)

Healthy

Individuals are left alone to do their work; there are few rules and fewer meetings; and lawyers are recognized and respected for their professional success.

Unhealthy

There's little sharing of work product, information, or clients (at least, not without an immediate quid pro quo); people avoid firm tasks such as recruiting; they often avoid each other by closing their doors or working from home; and there's little loyalty.

The Silo culture is ideal for lawyers who tend to find and do their own work, without the need for multi-disciplinary or multi-jurisdictional expertise. For these lawyers, autonomy means independence, which they like. The Silo culture tends to favor an “eat-what-you-kill” compensation system. Lawyers see a direct connection between working harder and earning more money, which can lead to highly profitable practices. Managing partners have a mandate to manage the overhead, not the lawyers. When they do turn to strategy, the leaders ruminate about the potential returns of greater collaboration and common focus, and then they get back to work.

Meritocracy Cultures (Low Friendliness, High Common Focus)

Healthy

Everyone is focused on getting results; performance is rewarded and criteria are clear and consistently applied; the strategy is understood; and decisions are made efficiently and objectively.

Unhealthy

Internally competitive; a sink-or-swim environment; people do only what's measured and only care about their own work; associates often feel like “cogs in a machine” and partners burn out.

The Meritocracy culture is ideal for hard-charging, ambitious lawyers who want to be the best and do the most sophisticated, high-profile work. That kind of work usually requires teams, and these Type A players play well together on client matters. There's no need for strong practice-group leaders in a Meritocracy culture because everyone knows what to do, and is doing it. The compensation system favors partners who bill the most. Healthy Meritocracies are usually very successful, but leaders sometimes recognize that more teamwork in business development and managing key client relationships could lead to even more success.'

Collaborative Cultures (High Friendliness, High Common Focus)

Healthy

People identify strongly with the firm and its values (“alumni forever”); they believe they are the best and the brightest; everyone shares ideas, knowledge, and opportunities; clients are “clients of the firm.”

Unhealthy

Partners are complacent and see no reason to change; there's no balance (life is work); and “clients of the firm” are underserved between engagements because individual partners are reluctant to take the lead.

The Collaborative firm tends to favor lockstep or modified lockstep compensation systems, or a subjective system that relies heavily on peer review. The most significant challenge for a Collaborative culture is maintaining the culture as the firm grows, faces major competitive threats, or undergoes other significant changes such as the departure of a revered founding leader.

Conclusion

Why is it worth focusing this intently on culture and its various flavors? When law-firm leaders create or modify a firm's strategic goals, they typically do not spend enough time thinking through the ways in which they may have to change the culture if the strategy is to succeed. That analysis should go hand-in-hand with the strategic analysis. And, just as managing strategy requires a framework for analyzing where you are and where you want to be, so managing culture requires a framework for thinking more clearly about your existing culture and the changes that your strategy requires. Part Two of this article will discuss the tricky process of changing a culture without destroying it.

Steve Armstrong and Tim Leishman are principals with Firm Leader Inc. They develop customized training programs in leadership, business development, and managerial skills for partners and associates. Reach them at [email protected] and [email protected], respectively.

“Our strategy calls for our partners to collaborate more. We want them to work in teams to develop business, and not hoard their client relationships.”'

“We can't afford to churn associates any more. We need to get the most from those we have, so we want to cultivate a culture of continuous feedback, like McKinsey's.”

'

As experienced law firm leaders know, implementing new strategies often requires reshaping established cultures. That change is difficult because cultures are usually deeply imbedded, and also risky, because any type of change can have damaging side-effects on the “glue” that binds people to a firm. In this article, we describe a simple but effective approach, adapted from Rob Goffee's and Gareth Jones' seminal book, The Character of a Corporation (New York: HarperCollins 1998), to understanding your firm's culture and how it may need to change.'

What's Your Culture?

Culture is the consistent pattern of day-to-day behaviors by which members of a group interact with each other and choose how to spend their time. Behind these patterns lie a set of assumptions and values that range from the explicit (e.g., “Everyone here works hard, and for a partner than means 2000 billable and a few hundred non-billable.”) to the deeply implicit (e.g., “At the end of the day I'm responsible only for my own success, not the success of others.”).

Culture is easy to take for granted, but difficult to describe. Goffee and Jones clarify its amorphous nature by focusing on two of its key dimensions: “friendliness” and “common focus.”'

Friendliness

At one end of this spectrum, people do what friends do: they offer help freely and often; they drop by each other's offices and socialize outside the office; and they care about each other's personal as well as professional welfare. The opposite is not a hostile culture, but an indifferent one:' people interact collegially, but only when they need to; and there's not much casual exchange of information or work-product.

Common Focus

In groups with a strong common focus, everyone understands ' and buys into ' the group's goals, understands how they will be evaluated, and takes pride in meeting the group's expectations. In law firms, common focus may relate, for example, to levels of productivity or the types of clients or work that the firm handles or avoids. In groups with little common focus, people have a high degree of autonomy to decide what to do and how to do it. There are no clear standards of performance or, at least, none that anyone takes seriously.

If we were to turn these two spectrums into the two axes of a chart, we could group cultures into four types, as we will describe in more detail below. Cultures that have a high degree of both friendliness and common focus are “collaborative.” Those that are high only on the common-focus spectrum are “meritocracies.” Those that are friendly but lack a common focus are “networked” and, finally, those that are low in both friendliness and common focus are “silo” cultures.

Some firms may have strong, distinctive culture across the whole firm; others may be more a collection of local cultures. Even in a relatively homogenous firm of any size, there will probably be variations: for example, the firm as a whole may be Networked, but some practice groups may be Collaborative. To complicate matters further, each type of culture can manifest itself in a positive, healthy way, or in a negative, dysfunctional way.

Let's take a closer look at the healthy and unhealthy manifestations of the four cultures and the strategic issues that tend to arise in each.

Networked Cultures (High Friendliness, Low Common Focus)

Healthy

Lots of interaction and socializing; people share knowledge and contacts; and close relationships facilitate communication and consensus-building.

Unhealthy

Underperformance is tolerated and criticism avoided (except behind people's backs); in-groups rule (with closed-door politicking); and there are too many meetings with too little progress and no accountability.

The Networked culture works well for practices in which partners need the multi-disciplinary expertise of colleagues to serve clients, but value their autonomy. Practice groups, industry teams, and committees proliferate, and much time is devoted to group meetings and retreats. Not surprisingly, leaders in these firms often recognize the strategic need to develop more “common focus” among partners.

Silo Cultures (Low Friendliness, Low Common Focus)

Healthy

Individuals are left alone to do their work; there are few rules and fewer meetings; and lawyers are recognized and respected for their professional success.

Unhealthy

There's little sharing of work product, information, or clients (at least, not without an immediate quid pro quo); people avoid firm tasks such as recruiting; they often avoid each other by closing their doors or working from home; and there's little loyalty.

The Silo culture is ideal for lawyers who tend to find and do their own work, without the need for multi-disciplinary or multi-jurisdictional expertise. For these lawyers, autonomy means independence, which they like. The Silo culture tends to favor an “eat-what-you-kill” compensation system. Lawyers see a direct connection between working harder and earning more money, which can lead to highly profitable practices. Managing partners have a mandate to manage the overhead, not the lawyers. When they do turn to strategy, the leaders ruminate about the potential returns of greater collaboration and common focus, and then they get back to work.

Meritocracy Cultures (Low Friendliness, High Common Focus)

Healthy

Everyone is focused on getting results; performance is rewarded and criteria are clear and consistently applied; the strategy is understood; and decisions are made efficiently and objectively.

Unhealthy

Internally competitive; a sink-or-swim environment; people do only what's measured and only care about their own work; associates often feel like “cogs in a machine” and partners burn out.

The Meritocracy culture is ideal for hard-charging, ambitious lawyers who want to be the best and do the most sophisticated, high-profile work. That kind of work usually requires teams, and these Type A players play well together on client matters. There's no need for strong practice-group leaders in a Meritocracy culture because everyone knows what to do, and is doing it. The compensation system favors partners who bill the most. Healthy Meritocracies are usually very successful, but leaders sometimes recognize that more teamwork in business development and managing key client relationships could lead to even more success.'

Collaborative Cultures (High Friendliness, High Common Focus)

Healthy

People identify strongly with the firm and its values (“alumni forever”); they believe they are the best and the brightest; everyone shares ideas, knowledge, and opportunities; clients are “clients of the firm.”

Unhealthy

Partners are complacent and see no reason to change; there's no balance (life is work); and “clients of the firm” are underserved between engagements because individual partners are reluctant to take the lead.

The Collaborative firm tends to favor lockstep or modified lockstep compensation systems, or a subjective system that relies heavily on peer review. The most significant challenge for a Collaborative culture is maintaining the culture as the firm grows, faces major competitive threats, or undergoes other significant changes such as the departure of a revered founding leader.

Conclusion

Why is it worth focusing this intently on culture and its various flavors? When law-firm leaders create or modify a firm's strategic goals, they typically do not spend enough time thinking through the ways in which they may have to change the culture if the strategy is to succeed. That analysis should go hand-in-hand with the strategic analysis. And, just as managing strategy requires a framework for analyzing where you are and where you want to be, so managing culture requires a framework for thinking more clearly about your existing culture and the changes that your strategy requires. Part Two of this article will discuss the tricky process of changing a culture without destroying it.

Steve Armstrong and Tim Leishman are principals with Firm Leader Inc. They develop customized training programs in leadership, business development, and managerial skills for partners and associates. Reach them at [email protected] and [email protected], respectively.