Sustainable profitability is nevertheless an essential pre-requisite for the long term health and independence of the legal profession as a whole, but that sustainable profitability will only be found in an environment which seeks satisfied clients and motivated people.
In this article I suggest that, in seeking to create the conditions necessary to motivate our people, we must answer the question: “What kind of firm do we want to be?”
The context
The legal profession was historically renowned for its conservatism and secrecy and these characteristics used to be reflected in the way in which it defined success.
The preferred measures were subjective and not quantifiable: personalised client service, technical excellence, mutual esteem within a partnership.
The last 10 years have seen an inexorable movement towards transparency and competitiveness and this sudden change of environment has resulted in a profession which appears to have selected profit per equity partner as its pre-eminent goal and measure.
The adoption of profit per equity partner as a key metric has led many firms to concentrate on their internal partnership structures and to subordinate the elements which will determine sustainable success.
One of those elements is the ability of the firm to attract high calibre recruits from diverse backgrounds and to satisfy their aspirations. It is clear that a competitive remuneration structure plays an important part in this process; it is equally clear, however, that the most significant feature of a successful and highly motivated firm is that it attends to the broader needs and aspirations of its people.
In essence, this means finding an answer to the question: "What kind of firm do we want to be?"
What kind of firm do we want to be?
We sought the answer to this question through surveys put to all our staff in both 2004 and 2006 and received confirmation of the general proposition that staff wish to be paid at the upper end of market rates but that they seek a working environment which satisfies a broad range of criteria which are unrelated to pay.
92 per cent of respondents in the firm last year said that working for a firm which is socially responsible is important to them. 87 per cent also put a premium on the firm being environmentally friendly.
A cynic may say that no-one is likely to answer questions on these topics in the negative; but there is no denying that people now wish to feel good about their working environment and are no longer willing to put up with feeling alienated from it.
To whom do we owe responsibilities?
If we accept the basic premise that there is an overwhelming wish to be part of a firm which behaves responsibly, we are then faced with the task of translating this general aspiration into everyday life.
I think that the starting point must be an attempt to identify the nature of the responsibilities that we should assume and the people to whom they are owed.
At Allen & Overy, we have identified the following four broad areas in which to do this. It would be quite possible to adopt different categories but these categories emerge from the views expressed by our staff and so reflect their views on the kind of firm we want to be.
The four categories are:
- our people
- our marketplace
- our communities
- our environment
Self interest and public interest
Why should we accept these responsibilities? The reason is simply that in each of the four areas we have chosen there is a convergence of self interest and public interest.
It would be heartening to believe that businesses would act ethically without regard to their own interests but it is exceptionally rare to find individuals who do this, let alone businesses.
We have express ethical constraints placed upon us professionally to uphold the rule of law and to protect access to justice.
There are, however, (perhaps wrongly) no such clearly articulated ethical constraints when it comes to the general working environment we create and we therefore require some element of self interest to motivate us.
The element of self interest is supplied by the mobility of the modern workplace. In the last few decades all professional firms have been forced to compete for talent which is mobile and has choices open to it.
This transformation has given a voice to that talent which the talent is using. We are now listening to that voice and it asserts wider duties and responsibilities.
It would be wrong, however, to characterise the response as being solely self-interested. Decision takers also have moral imperatives and we now see a business environment where it is possible to advance arguments based on broad ethical responsibilities without having to seek charitable status.
The result is that self interest (derived from a need to attract and retain talent) and public interest (derived from broader ethical responsibilities) are now converging in the business world.
The convergence of self-interest and public interest provides a new framework in which business has to operate. It is worth noting that less favourable economic circumstances will undoubtedly change that framework and it would therefore be naive to believe that the convergence of interests will remain exactly as it is today. It is unlikely, however, that the convergence could now be wholly reversed.
Integrating corporate responsibility
In the past, the responsible law firm tended to view its responsibilities in narrow terms: access to justice for the under-privileged led to pro bono work and participation in the process of law-making and professional development led to membership of law committees and bar associations.
These activities were extraneous, rather than integral, to the daily operation of the firm.
The convergence of self-interest and public interest now creates opportunities for us to articulate our wider responsibilities in ways which are integral to the work of the firm and which touch directly the lives of everyone affected by the firm. We are not doing this to the exclusion of running an efficient and profitable practice; it is complimentary to the pursuit of such a practice.
Looking at each of the categories in turn, what do these responsibilities entail?
Our people
Firms have always owed contractual obligations to their staff. We believe, however, that we must now accept wider responsibilities to our staff which go beyond the normal contractual requirements.
What sort of actions are likely to flow from these wider responsibilities? We believe that the challenges of providing greater flexibility in the way we work and of devising alternative career paths, particularly for female lawyers with families, will be amongst them.
We also believe that we need to provide a working environment which is much more sensitive to the diversity of our staff and that this is a challenge for all of us.
Our duties here extend to future generations of staff and we need, therefore, to assume broader responsibilities for widening access to the profession in the future.
We see further progress being necessary in our career development and performance review structures for all our staff.
We see a need to provide an inclusive environment for all our people and one which bridges gaps between fee earning and non-fee earning staff.
There are many other areas that we will need to consider but the underlying point is that the firm must take responsibility for meeting a broader duty to try to provide a fulfilling working environment for its people now and in the future. That is the sort of firm you want us to be.
We recognise we have shortcomings, but we must strive to achieve this goal.
Our marketplace
The second area in which we recognise broader duties is our marketplace. This covers everything from our suppliers to the global market for legal services .
Again, we see here a convergence of public interest and self interest which leads us to broaden the scope of our activities. In this case, the self interest derives from pressure exerted by a combination of our people, our clients and governmental bodies.
What steps are we taking in identifying our wider duties?
In relation to our suppliers, we have adopted a new global procurement policy which introduces new non-financial criteria into our decision processes. We have also recognised the need to engage and support local suppliers more proactively in order to stimulate the local economy and build the capacity of suppliers to compete in a changing market.
We have also accepted that we should play a constructive role in the wider development of our profession rather than concentrating solely on our own affairs.
This means participating in wider debates on the role of law in society as well as seeking to engage pro-actively with global Bar associations, regulatory bodies and Government departments as well as multi-jurisdictional bodies.
We try to take seriously the special role of the law and access to justice in the modern world and we believe that we have a wider duty to devote resources to maintaining the rule of law for future generations.
The rationale for this stance is twofold: first, our staff tell us that the rule of law and access to justice are important to them (lawyers and non-lawyers alike); and second, if we do not devote resource to this issue, it is hard to see how we can expect anyone else to do so. It should be acknowledged that major law firms in the United States contribute more to public affairs than is the case in Europe.
We should try to follow the U.S. example in this respect.
Our communities
Our rapid growth in many cities around the world has led us to think more about the effect we have on the wider communities in which we live and work. It is clear that our partners and staff want the firm to acknowledge a responsibility towards these wider communities.
Encouragingly, it is also clear that many of our people recognise a similar personal responsibility but look to the firm to provide opportunities for them to meet that responsibility.
This response is widespread in many organisations and has resulted in a broad acceptance that the modern employer has a duty to provide opportunities for its staff to engage voluntarily with their own communities.
The result for us is a series of projects and activities around the world which offer our people the opportunity to volunteer their services to the wider community.
Some of these projects involve pro bono legal services (a recent high profile example being the representation by our New York office of Guantanamo Bay detainees ) but many of them do not involve provision of legal advice. For example, lawyers and non-lawyers in our Bangkok office donate food, clothes, equipment and, most importantly, their time to a local orphanage.
We have sought to link our broader duties to the community with our broader duties to our people and to the legal marketplace in a London programme which is aimed at broadening access to the legal profession.
This involves a range of initiatives beginning with reading schemes in primary schools and culminating in bursaries for university students.
We hope that this provides staff with the volunteering platform they seek whilst also satisfying the public interest in a more diverse legal profession.
Our environment
The fourth area of broader responsibility in which our people have shown a keen interest is the natural environment and our ability, individually and collectively, to affect it. A passive approach is now seen as an active decision to tolerate behaviour which will damage the natural environment over time.
This is therefore an area where our business behaviour may adversely impact our private lives – which has led to a clear consensus that business activities should be conducted in a way that takes account of a wider responsibility for preserving the natural environment.
We have initially set ourselves the task of understanding and measuring our environmental impact with a view to setting achievable goals for reducing that impact.
We have identified some relatively simple ways of doing this and have, for example, already reached agreement to switch our electricity supplies in London to renewable sources.
We are assessing the level of carbon for which we are responsible and will, once we have obtained reliable data, try to achieve real reductions in our carbon footprint from year to year.
Whilst we will offset a substantial part of our unavoidable emissions through reputable, independently audited schemes, we have decided as a matter of principle that achieving real carbon reductions should be our primary focus. We see a risk that simply offsetting may take the emphasis away from carbon reduction and believe that offsetting should not be available as an easy alternative to reduction.
This is a more challenging approach but we think it is the right one.
Our clients
Our starting point was to determine what sort of firm we wish to be. In this article I have reflected on the aspirations of our people.
It is clear, however, that any answer to this question will also need to consider what sort of firm our clients wish us to be and that analysis provides a further set of interesting challenges which I will consider shortly in my final article.
It is equally clear that we need to respond to the wishes and aspirations articulated by our people and that a central part of our identity will be as a firm which acknowledges and tries to meet the broader responsibilities that I have described.
It would be unrealistic to expect any firm to conquer all of the resulting challenges but success will be measured by the degree to which we actively engage in the struggle to meet these challenges in the years ahead.
For those who may be worried about a concentration on non-financial issues, rest assured that anyone smart enough to meet these broader challenges will certainly be smart enough to prosper financially.
Further information
Read Guy Beringer's previous articles:
Find out more about pro bono and community work at Allen & Overy.