Getting 'Gig'gy with It: The New 'Gig Economy'

The New Reality

Unfortunately, all of this implicit loyalty flies in the face of today's so-called “Gig Economy.” If you are not familiar with the term, you should become better acquainted. Loosely defined, it is “an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.” http://bit.ly/2yLRTy3.

The U.S Department of Labor Statistics has tracked the contingent workers for decades and reported episodically on their status. But the new normal in employment, which has emerged post-recession, has swelled the ranks of independent workers so much so that now the department keeps and reports statistics on this group annually. The number of temporary workers is growing rapidly. It is estimated that by 2020, over 40% of the workforce in the United States will be independent. http://bit.ly/2zMDlhE.

Business organizations have long since revolved around a centralized leadership structure. It is how corporations have become so large, especially over the last 50 years. Yet, size is not an indication of success. Just look at General Electric's stock performance over the decade. Through the credit crisis, we all became familiar with the term “too big to fail,” referring to corporations that had grown so large that it would wreak havoc on the economy if their collective workforces would join the ranks of the unemployed.

That theory, however, was challenged by many politicians and activist citizens. It was a largely unpopular program. Given such vocal objections throughout society, it is unlikely. Government bailouts are simply not going to be doled out as readily in the next recession. It also may not be needed given the workforce trends.

What About Law Firms?

For the most part, law firms continue to structure themselves in a traditional operating and employment models with a dedicated workforce of talent arranged in an organizational hierarchy. In today's Gig Economy, this will unlikely hold. The need for strong management will not go away. Leadership cannot be outsourced. But the idea of legions of full-time employees continuously on the payroll will be difficult to sustain. Rather than enabling scalable models of operational efficiencies, having a larger and larger workforce can eventually impede an organization's nimbleness and its ability to create or simply adapt to new service delivery models.

Yet, the marketplace for legal services is demanding nimbleness and new delivery options often provided at a lower cost. Moreover, when economic woes slow demand, many larger organizations find it challenging to adjust.

Too often, law firms have been “overhired” and “overfired” to offset the ebb and flow of the economy. This is simply not an efficient way of running a business, especially with a workforce increasingly reluctant to hitch their wagon to just one train.

Just a few months ago, PwC announced the launch of its On Demand Flexible Legal Service, designed to provide staff augmentation for spikes in legal work. Many law firms have already utilized similar temporary employment models, employing contract attorneys over permanent hiring. They have utilized low-cost services centers located offshore or in tertiary cities throughout America's heartland. Many larger global law firms operate under a Swiss Verein model allowing for much more local agility.

These are very good models, but more needs to be done. Within these models, there needs to be a more resourceful flexible employment model, too. Despite the trend in other sectors, much of law firm operational personnel remain permanent employees.

Legal Marketing Departments

For years, I heard the collective lament of senior partners complaining about paying hundreds of thousands of dollars for a Chief Marketing Officer. In economic boom times, they perceived that the roles were not needed, as phones “rang off the hook.” In economic bust cycles, CMOs' efficacy was again questioned because the CMOs were seemingly unable to stave off a precipitous decline in revenues. That fodder has finally started to die down as the recognition of their value is recognized. It is widely accepted that CMOs are professionally needed in law firms. But, it has not stopped lawyers' tendency to scapegoat their own shortcomings on the marketing department at large.

In my role as a recruiter, I hear a rising refrain from partners about “empire building” and “out-of-control headcounts” as marketing teams have continued to grow, with some firms numbering over 100 Full Time Equivalents (FTEs) in their marketing organizations. As lawyers implement better project management prowess into their own matters, it will not be long before they ask senior marketing executives to do the same. Undoubtedly, there is more and more to do as legal marketers have experienced an accretive mandate to include business development responsibilities alongside traditional marketing communications roles. While these mandates grow, the correlation between demand and headcount will not increase in parallel. Legal marketers will simply need to do more with less.

I am not suggesting that a website can be revamped entirely by an internal IT department over the use of an outside agency or that a million-dollar rebranding campaign can be replaced by a $5 per hour freelance consultant working somewhere in Southeast Asia to reimage your logo. Yet, I am pointing out the exaggerated delta between those two price points. I am also pointing out that these projects, like any projects, have lifespans. They do not require permanent workers.

Benjamin Franklin famously stated, “Guests, like fish, start to smell after three days.” Law firms are not your homes, you are their guests. Your colleagues are not your family, they are your co-workers. We all work in a more nimble, fluid working environment. You do not want to be burdened with large workforces, one of the single largest costs associated with operating a business. Nor do many of today's younger workers want to dedicate themselves to one employer for their entire careers. Your law firm should reflect that.

*****
Michael DeCosta is a Partner with the international executive search firm, Caldwell Partners. He is a member of the firm's professional services and legal practices section, and focuses on search assignments for law, management, IT consulting, and accounting firms. Reach him at 203-348-9581 or [email protected].

Robert Frost once wrote, “Home is a place that when you have to go there, they have to take you in.” That prose speaks volumes to the level of loyalty family members feel toward one another. There is an implied familial contract that obliges parents, siblings and children to always find a place for family members. For years, there had been a similar implied social contract between employers and employees that suggested an inviolable relationship.

Law firms, perhaps more than most organizations, adhered to that principle. The level of convivial affinity runs deep. Some partners refer to themselves proudly as “lifers” of their respective firms. Their firms were perceived to be existential to their professional identity.

Perhaps only outpaced by Japanese corporations in connection with loyalty to their employees, law firms seek to nurture long-term relations in all of their connections. You see it in how they treat their former employees as well, referring to them as “alumni” or “friends” of the firm. Laudable, indeed, but no longer realistic.

The New Reality

Unfortunately, all of this implicit loyalty flies in the face of today's so-called “Gig Economy.” If you are not familiar with the term, you should become better acquainted. Loosely defined, it is “an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.” http://bit.ly/2yLRTy3.

The U.S Department of Labor Statistics has tracked the contingent workers for decades and reported episodically on their status. But the new normal in employment, which has emerged post-recession, has swelled the ranks of independent workers so much so that now the department keeps and reports statistics on this group annually. The number of temporary workers is growing rapidly. It is estimated that by 2020, over 40% of the workforce in the United States will be independent. http://bit.ly/2zMDlhE.

Business organizations have long since revolved around a centralized leadership structure. It is how corporations have become so large, especially over the last 50 years. Yet, size is not an indication of success. Just look at General Electric's stock performance over the decade. Through the credit crisis, we all became familiar with the term “too big to fail,” referring to corporations that had grown so large that it would wreak havoc on the economy if their collective workforces would join the ranks of the unemployed.

That theory, however, was challenged by many politicians and activist citizens. It was a largely unpopular program. Given such vocal objections throughout society, it is unlikely. Government bailouts are simply not going to be doled out as readily in the next recession. It also may not be needed given the workforce trends.

What About Law Firms?

For the most part, law firms continue to structure themselves in a traditional operating and employment models with a dedicated workforce of talent arranged in an organizational hierarchy. In today's Gig Economy, this will unlikely hold. The need for strong management will not go away. Leadership cannot be outsourced. But the idea of legions of full-time employees continuously on the payroll will be difficult to sustain. Rather than enabling scalable models of operational efficiencies, having a larger and larger workforce can eventually impede an organization's nimbleness and its ability to create or simply adapt to new service delivery models.

Yet, the marketplace for legal services is demanding nimbleness and new delivery options often provided at a lower cost. Moreover, when economic woes slow demand, many larger organizations find it challenging to adjust.

Too often, law firms have been “overhired” and “overfired” to offset the ebb and flow of the economy. This is simply not an efficient way of running a business, especially with a workforce increasingly reluctant to hitch their wagon to just one train.

Just a few months ago, PwC announced the launch of its On Demand Flexible Legal Service, designed to provide staff augmentation for spikes in legal work. Many law firms have already utilized similar temporary employment models, employing contract attorneys over permanent hiring. They have utilized low-cost services centers located offshore or in tertiary cities throughout America's heartland. Many larger global law firms operate under a Swiss Verein model allowing for much more local agility.

These are very good models, but more needs to be done. Within these models, there needs to be a more resourceful flexible employment model, too. Despite the trend in other sectors, much of law firm operational personnel remain permanent employees.

Legal Marketing Departments

For years, I heard the collective lament of senior partners complaining about paying hundreds of thousands of dollars for a Chief Marketing Officer. In economic boom times, they perceived that the roles were not needed, as phones “rang off the hook.” In economic bust cycles, CMOs' efficacy was again questioned because the CMOs were seemingly unable to stave off a precipitous decline in revenues. That fodder has finally started to die down as the recognition of their value is recognized. It is widely accepted that CMOs are professionally needed in law firms. But, it has not stopped lawyers' tendency to scapegoat their own shortcomings on the marketing department at large.

In my role as a recruiter, I hear a rising refrain from partners about “empire building” and “out-of-control headcounts” as marketing teams have continued to grow, with some firms numbering over 100 Full Time Equivalents (FTEs) in their marketing organizations. As lawyers implement better project management prowess into their own matters, it will not be long before they ask senior marketing executives to do the same. Undoubtedly, there is more and more to do as legal marketers have experienced an accretive mandate to include business development responsibilities alongside traditional marketing communications roles. While these mandates grow, the correlation between demand and headcount will not increase in parallel. Legal marketers will simply need to do more with less.

I am not suggesting that a website can be revamped entirely by an internal IT department over the use of an outside agency or that a million-dollar rebranding campaign can be replaced by a $5 per hour freelance consultant working somewhere in Southeast Asia to reimage your logo. Yet, I am pointing out the exaggerated delta between those two price points. I am also pointing out that these projects, like any projects, have lifespans. They do not require permanent workers.

Benjamin Franklin famously stated, “Guests, like fish, start to smell after three days.” Law firms are not your homes, you are their guests. Your colleagues are not your family, they are your co-workers. We all work in a more nimble, fluid working environment. You do not want to be burdened with large workforces, one of the single largest costs associated with operating a business. Nor do many of today's younger workers want to dedicate themselves to one employer for their entire careers. Your law firm should reflect that.

*****
Michael DeCosta is a Partner with the international executive search firm, Caldwell Partners. He is a member of the firm's professional services and legal practices section, and focuses on search assignments for law, management, IT consulting, and accounting firms. Reach him at 203-348-9581 or [email protected].