Systems Thinking in a Legal Practice

Systems Thinking in a Legal Practice

I heard a story of a young partner, we’ll call him Steve, who has an annoyance in the form of secretary chatter outside of his office. These two offending secretaries sat near each other and their chatter distracted poor Steve. Of course, the solution for Steve was to have one of them moved. This angered much of the secretarial pool as those who weren’t moved had to go to further lengths for their down time chit chat. It also angered Jon, another young partner, who now had the idle chit chat taking place in front of his office.  So looking at the whole system, the problem of a distracted partner still exists in addition to several perturbed staff members. However, this doesn’t bother Steve since it’s not his problem anymore.

This is a basic, but great, example of the lack of systems thinking in a firm setting. It’s easy to solve a problem for an individual, but the consequences on the system, or whole firm, must be taken into account.

The way law firms are currently modeled, all thoughts and incentives are based on improving the situation among individuals, not the entire firm. Each lawyer has one incentive: work as many hours as possible to get clients under his name. That can cause lawyers to sabotage one another in order to achieve those goals. There are plenty of stories (some more believable than others) of partners snatching clients from each other or poaching credit from younger associates. The market is bad enough without internal competition.

To adapt to the “new normal,” we need to change our thinking from the short-term, individualistic thinking to long-term, system-based thinking. Even process improvement is limited if the entire system is leading to the collapse of major law firms.  This short term thinking that focuses on cost cutting, firing, and outsourcing cannot help a firm last. Systems thinking, however, will help law firms restructure business models for success,  as well as create a culture where attorneys work toward the benefit of the whole firm, not just themselves.

The primary method of removing the individualistic thinking is changing compensation structure. All compensation packages should start with a base level of pay, which is what the market will bear. However, the current model of giving a bonus for grinding out an obtuse number of billable hours de-incentivizes and decreases productivity, even if unintentional. Even overall output is not increased by much, if anything, because of such a reduction in productivity.

Shifting to a long-term, systems-based method comes with a better work culture and reduced turnover.  Because of the individualistic culture of law firms, there is no real reason to stay as soon as there is a job that pays better. However, we also know that turnover is a real expense to the bottom line which should be enough of a reason to want to reduce turnover through better culture and systems thinking.

Featured image: “rowing team race” from Shutterstock.

About Micah Ascano

Micah Ascano
Micah Ascano is a Six Sigma Black Belt and has studied quality and efficiency at Villanova University and South Dakota State University. He holds Bachelor Degrees in both Industrial Management and Manufacturing Engineering Technology. He graduated from the University of New Hampshire School of Law with a J.D. and LL.M in Intellectual Property.
  • Anonymous

    What’s the better alternative? It seems like your points are valid, but you offer no other way to incentivize attorneys or structure the business model.

  • http://www.artifexlegalconsulting.com/ Micah Ascano

    Great question. It already has me thinking about another article to write. I assume you are an attorney so you will appreciate it when I tell you that it depends. Compensation models should be modeled to assist with whatever the vision for the firm is and not simply copied so without details of a particular firm I can’t say too much. However, I do believe bonus compensation, if any at all, should be team based to some extent so that no one attorney tries to claim all of the success is owed only to themselves and to create cross functional efficiencies.

    Here is some more food for thought: http://www.smallfirminnovation.com/2013/08/metrics-with-meaning-and-incentives-with-feeling/

    This is a complicated issue and one that isn’t going to be solved in 700 words or less. But I would be happy to talk offline.