Trade for prosperity

Christopher Saul, Christopher Saul Associates

Commercial law firms are not generally in the business of being noisy. Discretion is a quality that would often be seen as desirable and it is not a good day at the office for the managing partner when the firm becomes the story. 

But are law firms too willing, in 2022, to be a bit grey, to fight shy of primary colours? The remote working driven by the pandemic has tugged at culture and loosened bonds of friendship and loyalty. With a return to (at least some) office working and in-person meetings, might now be a good moment for law firm leaders think hard about culture and challenge themselves to articulate and drive the personality of the firm? 

A few strands to this thought: 

  • purpose;
  • ESG and sustainability;
  • having a view; and
  • distinctiveness. 

Purpose 

It has been striking to see how corporates which have set out a clear and inspiring purpose, and then been led by that purpose, have made progress over the last couple of years. Examples include Anglo American, NatWest and Reckitt – “We exist to protect, heal and nurture in the relentless pursuit of a cleaner and healthier world. We fearlessly innovate in this pursuit across our Hygiene, Health and Nutrition businesses”. Commentary from internal and external stakeholders suggests that purpose has driven real cultural change at Reckitt. 

In these businesses, purpose is shaping strategy and capital allocation, motivating employees to stretch, engaging customers and suppliers and resonating with investors. 

Many law firms have, of course, appreciated the importance of purpose both to clients and to employees and have worked (with surveys and focus groups) to articulate values and give authentic expression to them. There must be more to purpose than maximising profits – right? 

You do see law firm leaders talking more about values and there are increasingly punchy purpose-style statements on websites. For example, there is “Navigate uncertainty with authority” at one Wall Street firm and “Delivering legal certainty in a changing world” at a member of the Magic Circle. 

This is good stuff, but is it enough? Themes of integrity, excellence, innovation and collegiality are key of course but can firms go the extra yard and express a purpose that is genuinely distinctive and then be led by that purpose? Meaning that the conduct and development of the business, and its interaction with key stakeholders, is really seen through that prism. 

Particularly in a Covid world where an adrenaline shot to culture could be of real value, it is worth asking the hard questions – “What is our firm for?” “Does it have soul?” 

ESG and Sustainability 

Talk of purpose naturally leads us to ESG. Although altered somewhat by the tragedy in Ukraine which drives a rethink around defence and, to some extent, energy, it is a vital topic for many clients and will be front of mind for law firm leaders. But how should a law firm’s approach to ESG – essentially sustainability – be framed so that it is resonant, coherent and (ideally) exciting? 

Core building blocks might be: 

(i) the client advisory proposition. Clients can really benefit from sage and proportionate advice about how to bring order to reporting against differing ESG standards and frameworks and how to think most creatively about, for example, sustainable financing structures. This area can, of course, yield consultancy opportunities outside the purely legal. More and more firms are thinking about this but the proposition has to have shape and edge; 

(ii) sustainability of, and within, the firm. What are the fundamentals that will attract and retain talent, be important to clients (who are increasingly focussing on the ESG credentials of their external lawyers) and have genuine social impact? How are these fundamentals articulated and communicated and how is progress to be tested? 

Many law firms describe on their websites their progress in reducing carbon footprint, their commitment to diversity and inclusion and employee well-being and their social and charitable work. Few, however, undertake and describe a formal materiality process to identify the issues most important to their business and their stakeholders or set targets or report on KPIs beyond basic environmental issues; and 

(iii) tone set by leaders. Law firm leaders are very visible – within the firm, with clients and in the legal press. So, the way they “show up” is vitally important and their messages around diversity, inclusion, wellbeing and other ESG themes need to be authentic and carefully judged. 

Having a view 

Law firms, and their leaders, are naturally wary of expressing a view on big issues of the day, particularly where there is a political dimension. Inevitably not all partners would subscribe to the same view and nor would all clients. You hesitate to pin your colours to a mast that would offend some part of the client base. 

But we must wonder whether times have changed and whether law firms should be more willing to get off the fence. Law and regulation keep getting more complicated as globalisation cedes ground to nationalism (USA/China, Brexit, Russia), the business of law continues to grow in success and influence and ESG themes are ever-more resonant. Many law firm leaders spoke out in relation to the Black Lives Matter movement and the terrible events in Ukraine. Does this signal the beginning of a step change in law firm engagement? 

Surely it does. Particularly against a backdrop of much greater focus by business on ESG and on the interests and needs of stakeholders other than shareholders and owners, it will be increasingly hard for law firms and their leaders to say “no comment” when asked about environmental, social and governance issues of moment. 

Distinctiveness 

You are the managing partner meeting a prospective client for the first time. How do you explain in three crisp points how the firm is different? 

It might be best to go easy on expressions like “high quality” and “solutions-driven” and reflect on the DNA of the organisation. How has it been built up, what does its legacy say about its future, how is it structured, what do clients 

say when they meet the team on reception, “what three words?” would your spouse or partner use to describe the firm? 

Which takes you back to purpose.

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