By Joel Barolsky, Director, Barolsky Advisors
A vast majority of law firms are highly collegiate. Only a few are deeply collaborative.
A collegiate firm is one where the partners and legal staff enjoy each other’s company and are happy to cross-sell when opportunities arise. A deeply collaborative firm is where all practitioners and business service staff are committed to win and deliver ntegrated cross-team solutions to solve clients' problems.
Recent research from Harvard and elsewhere points to 10 key reasons why better collaboration in law firms is a good idea.
#1 Collaboration helps reconcile the tension between provider specialisation and breadth of client problems
There are two megatrends in the world of professional services that are moving at 90 degrees to each other.
In the pursuit of differentiation, advisers are becoming more and more specialised and focused on narrower areas of expertise. At the same time, many client problems are getting broader and more complex. For example, a client issue like cyber-security may require expertise from legal, technology, change management, marketing and risk perspectives.
Better intra- and inter-firm collaboration is one of the few strategic options available to reconcile these two trends.
#2 Collaboration helps make the whole more than the sum of the parts
The past decade has seen a massive growth in the number of specialist freelance lawyers in Australia and New Zealand. Many freelancers are Tier 1 refugees or experienced practitioners seeking more flexible lifestyles. Their ability to set up shop has been enabled by new inexpensive and powerful cloud-based software.
In the battle between a ‘solo specialist’ in a high fixed overhead law firm and independent freelancer, the latter will almost always win. They simply have far greater price-setting discretion.
Conversely, a collaborative firm that pools its capabilities will usually outmuscle the one-(wo)man-band. In this instance, the whole is more than the sum of the parts.
#3 Collaboration fosters cognitive diversity which yields more creative solutions and better client outcomes
There is a saying that ‘two brains are better than one’. The truth is, if the two brains think in very similar ways and/or have very similar knowledge, then the benefits are marginal. In contrast, research shows that cognitive diversity yields far better results than cognitive similarity, as measured by the speed of problem-solving and the creativity/quality of the solutions.
A collaborative firm that brings diverse perspectives to solve client problems will outperform its peers over time. This collaboration includes involving business service professionals from HR, IT, marketing and finance.
#4 Collaboration is strongly correlated with higher client loyalty
There is far greater client ‘stickiness’ when you have three or more practice groups collaborating to service a particular client organisation. This multi-practice glue is based on:
The firm’s knowledge of the client leading to better understanding of needs and more opportunities to add value;
Lower transactions costs; and
More hooks or connections with ‘many-to-many’ personal relationships, as compared to one-to-many or one-to-one models.
#5 Collaboration yields higher revenue for individual partners
A recent Harvard study indicated highly collaborative partners out-performed comparable solo-specialists in the same firm by a factor of four – see Exhibit 1. While the study is limited by not being able to identify and compare two identical practitioners, it does point to the benefits of those willing to span boundaries and network widely across the firm.
Source: Smart Collaboration, Heidi Gardner, Harvard Business School Press, 2017
#6 Collaboration means higher margins
Complex multi-disciplinary problems are at the other end of the commodity continuum. Clients are far more likely to pay a premium when they’re getting a highly tailored solution to address a critical issue in their organisation. What’s more, an integrated bespoke solution cannot be easily compared to offers from other firms.
#7 Collaboration means better lateral hire integration
When a lateral hire joins a firm, they typically face two types of journeys:  they are invited onto incumbent clients’ matters and they share their clients with their new colleagues, or  they’re not.
Recent research indicates that those that experience journey #1 tend to remain within the firm and become highly successful partners within three years. Those that experience journey #2 become isolated, unproductive and often leave.
#8 Collaboration facilitates higher employee engagement
Generally, professionals will jump out of bed and rush to work if they feel like their work matters and they’re mastering their craft.
Working on complex multi-disciplinary client problems is messy but fun. Ask any lawyer in your property team if they’d prefer to process another simple lease agreement or join a cross-practice team exploring rental yield optimisation across a large industrial park portfolio?
#9 Collaboration can improve utilisation
It is common practice in many firms that mid-level and junior practitioners stick almost exclusively to one practice team. Resources are tightly held and protected within a practice.
In highly collaborative firms, resources are shared more flexibly to optimise overall firm capacity utilisation, to even out workloads and to lower cost-to-serve.
While allocating solicitors to specific practices helps with building specialist skills and experience, some resource fluidity could have enormous benefits for the firm and the individuals involved.
#10 Collaboration is key in a legal world moving towards open networks and ecosystems
Working collaboratively can be thought of as a strategic capability or an organisational ‘muscle’. In most firms, the collaboration muscle starts out weak and with little stamina. Collaboration is clunky and takes effort. It goes against the grain of most lawyers who place a premium on their autonomy. It’s often easier to get things done when there are far fewer people involved.
However, building the muscle or capability to collaborate within a firm will often result in a greater ability to partner with others outside the firm.
There is much evidence that the legal world is moving to open networks and ‘ecosystems’ involving multiple parties. These include competing law firms, in-house teams, legal process providers, law companies, legal technology providers, multi-disciplinary firms, consultants, freelance networks, the bar, the judiciary, legal educators and regulators, to name just a few.
It is now not uncommon to have up to seven different entities collaborating on a project to solve a client problem or to realise an opportunity.
There is little doubt that strengthening and conditioning your firm’s collaboration muscle will become a critical success factor. It’s time to hit the gym.
Meet the author, Joel Barolsky at the ALPMA Summit in September
Joel Barolsky; Director of Barolsky Advisors, Senior Fellow of the University of Melbourne and Creator of the Price High or Low app
Being collegiate is just not enough these days. In order to grow, firms need to break down internal silos and become deeply collaborative with everyone working seamlessly to solve clients’ problems.
Professor Heidi Gardner of Harvard Business School recently completed a 10-year study into collaboration in professional firms. Her findings indicated a 7-fold revenue difference between a collaborative approach and a cross-selling collegiate model.
This presentation will define ‘smart collaboration’, share the results of Gardner’s study, identify the common barriers to collaboration, outline various strategies and tactics firms can adopt to become more collaborative and provide pointers for successful implementation.
About our Guest Blogger
Joel Barolsky is Managing Director of Barolsky Advisors, Senior Fellow of the University of Melbourne and Creator of the Price High or Low smartphone app designed to help you with pricing your projects.
Twitter: https://twitter.com/Barolsky (@barolsky)