For those of you who remember the documentary series “The Jetsons,” you will recall that we were promised flying cars. Certainly, I expected them by now.
Thus, when I first heard the news that Google was becoming part of Alphabet, my first reaction was not: “What can the legal sector learn from this?” Instead, my first reaction was: “Where is the flying car division?” I just assumed that Google would take care of that for us.
Others, however, began to ruminate on whys and wherefores behind the Alphabet creation — inevitably, the discussion turned to the lessons to be learned from the Alphabet restructure. (They must not share my bitter disappointment over the lack of a flying car company.)
Look forward instead of looking around
I was particularly struck by the thoughts shared by Ken Grady in his recent SeytLines post. Rather than examining the concrete mechanics behind the move from one corporate structure to another, Ken points to the underlying mindset: Google’s willingness to question fundamental assumptions underpinning a mature (and fabulously successful) business model.
For legal services organizations, he distills the lesson into a challenge: “To question their current structures and ask whether they really are designed to achieve their purposes.”
A bit existential, yes — but I think that is the correct statement of the challenge. Google is a hugely successful enterprise, but they are not resting on their laurels. From the outset, Google claimed, and lived up to, a willingness to make small (and smart) bets.
As they grew, they took calculated risks on bets of every size. This reorganization may seem like their biggest decision yet — but I think it’s consistent with their history. Their choices are designed to address the glimpsed challenges of the future rather those that loom large in the present.
To the extent we can learn something from Alphabet, it is simply this: we need a willingness to venture forward, even when the view isn’t crystal clear.
Yes, legal is “different”… but is it really?
Why is this so different — or so difficult — for lawyers? I hear the argument that the typical law firm structure does not allow for this type of mindset. While it is true that most law firms are structured as a partnership model, I do not believe that structure to be an insurmountable barrier. For reasons that have nothing to do with the underlying corporate structure, law firms are typically designed for internal purposes: largely knowledge sharing, among others. The vast majority of law firms are built around practice areas, with some consideration for geographic and industry coverage. In other words, law firms are generally designed on provider-centric, rather than buyer-centric, premises; these structures reflect an internally focused mindset rather than a market-facing mindset. It is the mindset of looking inside out rather than outside in.
Although this outcome is a typical result of a partnership structure, it is not the inevitable result. To the contrary, a partnership structure can be flexible enough to accommodate a variety of organizational constructs. Before continuing on that point, let me hasten to add that practice- or industry-based structures can have enormous value. They can be important structures for developing substantive expertise; they can enhance the overall brand of the firm and/or create specific industry knowledge that can provide value to the purchaser of legal services. The fact that these structures are designed to create internal value does not mean they should be abandoned.
I believe, however, that the traditional organizational construct does not go far enough.
The needs of the buyers of legal services continue to evolve, and we need organizational structures to keep up. That means thinking about organizational design through the two prisms that reflect the dual mandate of every for-profit enterprise: to create value for both the customer and the shareholder.
Delivering client-defined value requires organizing from a client-centric perspective
In many ways, it is a balancing act, one that requires a keen eye for emerging opportunities. In an increasingly competitive industry, legal organizations that can hear the voice of the market have a head start. This represents the challenge to locate external opportunities: unaddressed, underserved, or emerging needs of the market. Of these, an even smaller subset will prevail, especially in the long run. That subset will be those that answer a second — and in many ways, more arduous — challenge to locate and leverage internal opportunities: to organize nimbly so that the firm’s capabilities map directly to the needs of particular client segments. Simply put, market-driven organizations are better equipped to understand, create, and deliver client-defined value.
The effort to design a legal services firm to answer that dual mandate can wear many faces — ranging from separate subsidiaries operating under a parent umbrella (a la Alphabet) to different team structures within the firm itself. To echo Ken’s sentiment, however, the outward trappings are less important than the underlying mindset.
Corporate structures can help, but they’re not the silver bullet
Let’s start with a fairly typical law firm variant — the subsidiary structure. This is absolutely nothing new. A lot of firms have a variety of subsidiary businesses. At Seyfarth, we have several. Our two main subsidiaries are Seyfarth Shaw @ Work, which provides compliance solutions through training and communications services, and SeyfarthLean Consulting, which provides business and technology consulting services for the legal function.
So, why these subsidiaries?
First off, neither provide legal services, and the entity separation is designed first and foremost with the buyer of services in mind. Marketplace clarity is of chief importance, followed closely by the ease and simplicity of access afforded to the customer. Both businesses are able to map their service definitions and value proposition to specific and particular needs of the buyer. At the same time, the connection created by the overall brand is important to us. Most obviously, it creates more economic opportunities for the organization, but we also have strategic incentives.
We believe that operating within a family of brands serving more and different needs of our clients gives each of our businesses a deeper understanding of those clients’ needs and challenges. For instance, our training business provided key lessons for the firm proper. “Making the law come alive” is a critical mission for Seyfarth Shaw @ Work; it encapsulates their commitment to translating workplace policies into workplace behaviors. In turn, knowledge sharing across the family provides valuable reminders to the firm’s attorneys why legal advice needs to keep business realities front and center. This reinforces the brand promise made by every one of our entities — to deliver services that consider our client’s realities, solutions that are designed with the client’s experience in mind.
Second, each is in a slightly different business, which requires the organizational flexibility to grow and develop competencies to deliver on their respective mandates. SeyfarthLean Consulting has approximately 35 team members. While many hold J.D.s, none of them are practicing attorneys. Indeed, their promise to the marketplace is this:
“We don’t practice law. We improve the practice of law.”
If that team is to deliver on that promise, they need an organizational construct that differs from the traditional law firm model. Instead of the artificial construct of lawyers and non-lawyers, SeyfarthLean Consulting is a thriving ecosystem of professionals who bring multi-disciplinary perspectives to the issues that are relevant to the legal industry — today and in the future. Operating as a separate business allows for the flexibility for SeyfarthLean Consulting to grow and evolve to meet the more and different needs of our clients.
As I said, though, law firm subsidiaries have been around a long time. A more interesting — and difficult — challenge is to look across the traditional law firm service portfolio without getting stuck on traditional law firm structures. Here, the challenge is to look across the provider-centric distinctions and silos built around areas of legal expertise: to organize human capital around the business needs of the client in a way that drives both efficiency and quality.
The key is to build with the client’s perspective in mind
Ken uses contract management as an example that illustrates this very point. Contracts can cut across several areas of substantive legal expertise. Substantive expertise, therefore, is important. From the client’s viewpoint, however, their service needs are aligned to contract flow, which maps not to the types of substantive expertise of legal advisers but to the nature of the client’s business, the many different types of agreements required to conduct that particular business, and the many tasks necessary to manage those particular contracts. The critical factors in question are baked into the client’s use case — namely, the experience of managing the contracts at issue: handling of contract requests, the standardization of contractual terms wherever possible, the evaluation and tracking of contractual obligations. Lawyers, whether in-house or in outside firms, own many of the touch points in the company’s overall contract management processes. At the same time, the lawyers’ needs are not the only touch point. A truly strategic solution would answer the needs of the business — while considering the experience of all user groups.
Whatever the particular portfolio of work, however, the key is to view the needed services from the perspective of the market. Underlying every assignment for legal services is a business problem the client is trying to solve. Understanding it by getting beyond a myopic, self-centric view is a challenge for many lawyers. I am reminded of the story of the Black & Decker CEO who asked his board what the customer was buying, a drill or a hole in a board? The correct answer, of course, is that the customer was trying to buy the hole. The drill was simply the way to achieve that outcome.
Often, when we are able to define the problem from the perspective of the client, it does not fit neatly into the traditional law firm construct. Instead, it fits within the business construct of the client. If we can understand the market need from this perspective, it allows for the possibility of developing a service delivery model that is driven by process design and combines the right people skill and technology to have a consistent and superior work product for the client. This means, however, that we have to be open and willing to question our fundamental organizational constructs.
Do I know why Google reorganized itself under Alphabet? Not really. What it demonstrates, however, is a clear willingness to adapt and experiment, even when an organization that is already wildly successful. That willingness to adapt requires both audacity and agility — and it’s something we need more of in the legal industry.
In the meantime, I’m excited to see what Alphabet will bring to the market. I’ll keep my fingers crossed for that flying car.