“A lot of companies think their employees are so smart they require no training.”
— Ben Horowitz, The Hard Thing About Hard Things (2014) at 105.
This two-part series is focused on a persistent feature of the legal services market: Clients are underwhelmed with lawyers’ ability to work together as a team. See Post 188 (quoting publisher of Legal 500).
In Part I (188), which was focused on lawyer motivation, I argued that part of the solution is a retooling of compensation systems so they track the performance of teams rather than individuals. To support this position, I described the team-based approach at Goldman Sachs in the mid-1960s, which supplanted the individual rainmaker model and coincided with the firm rise to utter dominance on Wall Street.
This is not an easy strategy to implement, however, primarily because so many lawyers have prospered for so long without sharing financial (or emotional) risk with their partners. As noted in Part I (188), David Maister ended his career acknowledging that law firms were different than other professional service firms, albeit holding out hope that one day clients would demand change. Likewise, the individualistic ethos of law firms has caused a great data-driven researcher like Heidi Gardner to pitch collaboration as a strategy that works for individual partners, thus avoiding the third rail of law firm compensation.
In Part II, my core claim is that a law firm can excel at teamwork if team-based metrics are combined with the right types of training. Like so much of strategy, it’s difficult but not complicated.
Part II. Training
“Training is, quite simply, one of the highest leverage activities a manager can perform.”
— Andy Grove, High Output Management (1983) at 223.
Part I began with a quote from Ben Horowitz: “There are only two ways for a manager to improve the output of an employee: motivation and training.” Yet, as Horowitz acknowledges in The Hard Thing About Hard Things, the motivation/training duality comes from Andy Grove, the former CEO of Intel, whom he credits with much of his success as a manager and entrepreneur.
Regarding training, Horowitz tells the story of being a skeptic until reading Chapter 16 of Grove’s book, High Output Management (1983), titled “Why Training is the Boss’s Job.” At the time, circa 1996, Horowitz had just been promoted to director of product management at Netscape and was feeling frustrated by how little most product managers were adding to the business. Having nothing to lose, Horowitz decided to apply Grove’s advice. Thus, he created a short document, titled “Good Product Manager/Bad Product Manager,” to train his team on his basic expectations. Horowitz writes:
I was shocked by what happened next. The performance of my team instantly improved. Product managers whom I had almost written off as hopeless became effective. Pretty soon I was managing the highest-performing team in the company. Based on this experience, after starting Loudcloud, I heavily invested in training. I credit that investment with much of our eventual success. And the whole thing started with a simple decision to train my people and an even simpler training document.
Like Horowitz before he read and applied Grove’s management principles, most lawyers are training skeptics. Thus, I have my work cut out for me. Part II is organized into three sections.
- Section A provides historical context on training in law firms, recounting what most lawyers either forgot or never learned. Indeed, long ago, we took the difficult road to a beautiful place; it can happen again.
- Section B makes the case that if teamwork is the end goal, lawyers need foundational training in a handful of management principles. This is very much connected to the discussion of motivation in Part I.
- Section C provides an example of the “how” of teamwork, summarizing the Belbin team role theory, which is an example of a low-cost/high-ROI teamwork training program that works well for any group of knowledge workers, including lawyers.
A. Training in law firms
I’ve told the story of the associate-partner training model many times. See, e.g., Henderson, “Talent Systems for Law Firms,” PD Quarterly (Feb. 2017); Henderson, “Three Generations of U.S. Lawyers: Generalist, Specialist, Project Manager,” 70 Md. L. Rev. 374 (2011); Henderson, “How most law firms misapply the ‘Cravath System,’” Empirical Legal Studies, July 29, 2008. Yet, I am forced to continuously retell it because so few lawyers realize that, four generations later, a large portion of the bar is still collecting the model’s late-stage financial rewards.
In brief, in the late 19th century, there were precious few business lawyers who were up to the task of counseling large industrial and financial clients. Because the demand for sophisticated legal services far outstripped the available supply, these lawyers needed a reliable mechanism for scaling their expertise. This pressing business need caused many US law firms to invent the associate-partner model within a few years of one another (e.g., Brandeis Dunbar & Nutter in Boston, Jones Day in Cleveland). Yet, as Professor Marc Galanter has quipped, “We call it the Cravath System because Cravath had the best historian,” referring to name partner Robert Swaine, who wrote the firm’s history shortly after Paul Cravath died. See Robert T. Swaine, The Cravath Firm and Its Predecessors 1819-1948 (1948) (three-volume set).
The first 12 pages of Volume II of the firm Cravath history lay out the economic logic of the Cravath System. In effect, it provides the specifications for a lawyer development machine. First, pay the junior lawyers a full-time salary so you have their undivided attention and loyalty. Second, hire them directly out of law school before they learn bad habits in other law offices. Third, rotate them through every area of practice, enabling them to observe and learn not only substantive law, but also how to delegate, supervise, and manage client relations. Although such an approach was time-consuming and expensive, it was justified by the result, which was “a better lawyer faster” (p. 5).
Yet, there is a related aspect of the Cravath System that bears on the topic of this two-part series on lawyers and teamwork. The lawyer development machine was but a subpart of a larger effort to attract and institutionalize clients. Further, the firm’s management was strong enough to enforce uniform standards across the entire partnership. Swaine writes:
All the business in the office must be firm business. … The problem of the firm is to do effectively the business that comes to it; by so doing that business, more comes in. …
Every partner is expected to cooperate with every other in the firm’s business, through whichever partner originating, and to contribute to all the work of the firm to the maximum of his ability. The formation among the partners of cliques practicing independently of each other, which developed under Guthrie [a partner who left the firm in 1906], would not be allowed today. (Vol. II, pp. 9-10) (emphasis added)
Because the Cravath System benefitted all stakeholders—clients, junior lawyers, and owners—it was widely replicated by other business law firms, eventually becoming a ubiquitous feature of a highly prosperous and influential segment of the bar. So ubiquitous, in fact, that we’ve lost sight of its significance and power. The cartoon to the right, made famous in a commencement speech by David Foster Wallace, captures the familiar plotline.
In summary, training skeptics have an ahistorical view of the legal services market. If we want a large group of lawyers to do something very difficult, such as work together as a team for the good of clients, themselves, and the organization, we need to make the requisite investment in training.
B. Foundational management concepts
Lawyers could benefit from more business training, but that’s not my point here. Rather, lawyers need foundational training in a handful of management concepts in order to create a counterweight to decades of learned behavior.
As discussed in Part I, corporate law firms have enjoyed several decades of a lucrative business model in which the risk of cost overruns is borne by the client. Cf. Post 185 (partners in AmLaw 20 firm having “no idea” how to estimate the cost of a case). Yet, at most firms, the problems run much deeper, as compensation systems also reduce the amount of risk that partners need to share with each other. For example, if Partner A has a bad year because, for example, he lost two clients due to a change in general counsel and his biggest case had a surprise early settlement, this is of little consequence to Partner B, who managed to grow her practice. Thus, the following year, Partner A becomes laser-focused on generating sufficient working receipts to maintain his partnership status in the firm.
Eat-what-you-kill compensation enables lawyers to share a brand, overhead, and a pool of capable associates and professional staff while eliminating the nontrivial risk of free-rider partners. If this has been your lived experience as a lawyer, and you’ve managed to build a practice from a mix of internal and external clients, it is far from obvious how a team-based approach makes you better off. This is the “hotel for lawyers” model. See Bruce MacEwen, “A One-Firm Firm or Legal Co-op?,” Adam Smith, Esq., July 19, 2013 (coining and defining term). Further, the robust market for lateral talent suggests it’s more the rule than the exception.
That said, as an empirical matter, partners who share risk make significantly higher incomes and have the additional psychic pleasure of playing for the winning team. This is the One-Firm Firm model made famous more than three decades ago in a business school article written by David Maister. See “The One-Firm Firm: What Makes It Successful,” MIT Sloan Mgmt Rev (Oct. 1985) (focusing on Latham & Watkins in law along with Goldman Sachs in investment banking, Arthur Anderson in accounting, McKinsey in management consulting, and Hewitt & Associates in compensation and benefits consulting).
In essence, the firm leadership and its partners make a decision to do a few things very well—what Maister calls “selective business pursuits”—and say no to everything else. In service of this goal, they:
- Make large investments in training because of its impact on client service as well as firm culture and loyalty.
- Put in place compensation systems “designed to encourage intra-firm cooperation.”
- Downplay stardom and create a sense of mission based on shared values.
- Are transparent in communication, including financial matters.
Per Maister, the one-firm firm is the product of a “one-firm system.” Further, as it comes to dominant in its chosen market niche, the rewards are shared throughout the firm, with the size of pie significantly reducing the acrimony over how it gets divided.
35 years later, it is remarkable to read the now-retired David Maister reviewing the potential weaknesses of the one-firm firm. Ironically, the biggest risk factor is the deleterious effects of sustained, long-term success. Maister writes, “Above all else, there is the danger of self-congratulatory complacency: a firm that has an integrated system that works may, if it is not careful, become insensitive to shifts in its environment that demand changes in the system.” See also David Maister & Jack Walker, “The One-Firm Firm Revisited,” in Strategy and the Fat Smoker ch. 15 (2008) (discussing fragility of principles, as there’s a strong temptation to live off what’s already been built).
Here, let me explicitly connect Part I of this two-part series with Part II. Lawyers need foundational business training in order to see and understand the vast historical arch of their own business model and to locate themselves along that four-generation continuum—a continuum that has a beginning, middle, and end. Without a clear-eyed view of the market, busy partners who have unknowingly descended into the hoteling model have zero chance of comprehending the possibility that their hallowed business model needs to be retooled. Cf. Post 154 (quoting Marc Andressen, “It’s time to build”). This entails sophisticated market analysis, risk sharing, discipline, investments in people and processes, and governance that cultivates and preserves a team-based ethos.
How is any of this possible without foundational training akin to Ben Horowitz’s “Good Product Manager/Bad Product Manager”? Yes, it’s difficult, but it starts off simple. “Training is … one of the highest leverage activities a manager can perform.” The quote is from Andy Grove, but Paul Cravath put it into practice 80 years earlier.
One more point on the actual substance of business training as it connects to the lived experience of lawyers. As discussed many times on Legal Evolution, the legal industry is gradually transitioning from one-to-one consultative services to a mix of one-to-many services, products, and solutions. See, e.g., Post 160, Post 126, Post 075, Post 066, Post 055, Post 035. By their very nature, one-to-many offerings require multidisciplinary teams. Unfortunately, lawyers whose lived experience is the need hustle work in a cost-plus billable hour model will struggle to comprehend (a) the economic potential of one-to-many and (b) why, in the end, clients will demand it.
In the graphic below, ask yourself which group of knowledge workers is most likely to efficiently create and deliver elegant solutions that delight clients: Model 1 on the left, where everyone is evaluated as an individual fee-earner, or Model 2 on the right, where the team is judged solely based upon its collective performance?
The primary challenge of Model 1 is that it’s difficult to incentivize individuals to create and maintain shared resources. Thus, in the language of former FMC and Univar General Counsel, Jeff Carr, everyone proves their value through their metrics as an operator. Likewise, no one has the incentive or authority to step into the role of full-time manager or leader. See Post 112 (discussing Carr’s framework). In contrast, in Model 2, which is akin to the Goldman Sachs going “joint” approach discussed in Part I, the team has a single threshold goal—maximizing the size of the pie, leaving to another day the task of how to divide it. Thus, the group is likely to want someone in the manager role (green) to coordinate efforts and someone in the leader role (red) to bring in new opportunities and resources.
If lawyers are exposed to well-designed, contextual training materials that connect these types of fundamental management concepts to their lived experience, a significant number would prefer a Model 2 world, partially out of economic self-interest and partially because team-based work tends to be much more professionally satisfying. Of course, transitioning to a “joint” model requires pilots designed and staffed by coalitions of the willing. When these innovators and early adopters achieve success, as they did at Goldman Sachs in the mid-1960s, the early majority, late majority, and laggards reliably follow.
C. Training on teamwork
One of the first principles of adult education is not to exhaust the limited attention span of your audience. Thus, in this final section, I’ll get right to the point.
The core purpose of teamwork training is to create an environment where team members can learn about each other’s strengths, weaknesses, special skills, values, and preferences and, in turn, use this information to make intra-group communication more efficient, respectful, and productive. Fortunately, with proper training, this is not as difficult as it sounds.
As discussed in Part I, I have been teaching teamwork at Indiana Law for more than ten years. To date, the lowest-cost/highest-ROI tool in my toolbox is the Belbin Team Roles. Belbin was created in the 1970s by Meredith Belbin, an organizational theorist in the UK who was asked by Henley Management College to unravel the mystery of why some teams achieved magnificent results while others quickly descended into chaos. After theories based on IQ and personality failed to produce results, Belbin constructed a new theory by observing successful and unsuccessful teams in action. The guiding principle that emerged from Belbin’s research is that high-performing teams have members that are, as a group, balanced across nine distinct team roles.
Those roles are summarized in the chart below.
To identify each team member’s role preferences, Belbin developed a simple 20-minute assessment tool. According to Belbin, teams perform best when each member’s work is closely aligned with their role preferences. For example, I score very high on Plant (PL) and Resource Investigator (RE) and, without a doubt, prefer to operate in these lanes. Conversely, I am a very poor fit for a pure Implementer (IMP) role.
Under the Belbin methodology, team dysfunction comes in three flavors:
- Surpluses. The team has too many members who prefer the same role. In my experience, lawyers disproportionately cluster in the Monitor Evaluator, Implementer, and Shaper roles, resulting in group dynamics that result in (i) paralysis by analysis (too many MEs), (ii) rigid adherence to past practices (too many IMPs), or (iii) too much blunt, inconsiderate straight talk (too many SHs). This is usually managed by one or more team members agreeing to back off one of their preferred roles.
- Voids. No one on the team prefers one or more of the nine roles, thus creating a void. Among lawyers, Team Workers, Resource Investigators, and Plants tend to be in the shortest supply. Fortunately, the group can adjust by having a team member agree to take on a role that is within their manageable range (typically third, fourth, or fifth preferred role), sometimes giving up their first or second preference.
- Disallowable weaknesses. Every role preference comes with weaknesses that the team is willing to accept because they are the flipside of a team member’s corresponding strengths. But when a role is overplayed, the weaknesses slip into the disallowable territory. The easy way to fix this is through a Belbin 360 analysis, which reveals where you might be overswinging your hammer, or through team dialogue, gently chiding a member to back off.
The primary value of Belbin is that it provides a simple framework to identify, depersonalize, and resolve interpersonal conflict within groups. Further, after a 20-minute assessment and roughly two hours of training, which of course is done in lively groups, the ROI starts immediately.
Remarkably, at an enormous number of law firms, two hours of firmwide training for all lawyers and professional staff would be viewed as a bridge too far, even when teamwork is listed as one of the firm’s most important strategic objectives. This is because so few partners see a clear connection between training that consumes their scarce, limited time and individual metrics used to evaluate their performance. Cf. Steven Kerr, “On the folly of rewarding for A, while hoping for B,” 9 Acad. Mgmt. Exec. 7 (1995). This is a very hard pattern to break and likely near impossible without enlightened leadership combined with exceptional communication skills.
Clients give law firms low marks for teamwork. This two-part series pulled together theory, data, and cross-industry comparisons to better understand the problem and to forge a potential solution. Although compensation structures are key to this analysis, several decades of success with a conservative billable-hours model have wedded partners to compensation systems that enabled them to make a comfortable living with every little business risk, including shared risk among partners.
Nonetheless, the sun is starting to set on the traditional law firm model, and the most promising future opportunities entail intense commitments to multidisciplinary teams. Thus, the way forward requires significant investment in training. Ironically, although many law firm partners are bound to resist these efforts, their heritage is deeply rooted in a training model, a fact they’re now too busy to remember.