Trust is one of the most prevalent governance challenges facing growing professional services firms today.
This is not just a "feel-good" issue or a matter of preserving an artificial collegiality that might have been more characteristic of small law firms 100 years ago. The level of trust that exists among partners has a direct and measurable effect on the firm's business performance. Firms in which partners report a high degree of trust, and also act in ways that are consistent with trust, typically excel in almost every measurement of financial performance -- by individual partners, in practice groups, and firm-wide.
My colleagues in Walker Clark LLC are observing, perhaps more frequently now than in previous years, how the cultures of some previously successful and well-respected law firms are beginning to split apart because suspicion has replaced trust as the foundation of the relations among partners. Some of these partnerships are becoming so polarized that even relatively simple decisions can sometimes provoke an "us versus them" standoff.
The precipitating events might vary: a sudden shift in the economics of a firm's core practice area; the transition of leadership to a new generation of partners; or a sudden change in management. In some instances, the partners did not really trust each other beforehand, and the challenges fanned the smoldering embers of doubt and distrust that were already beneath the surface.
Nonetheless, we have found that a lack of basic trust among partners is frequently the largest and most resistent obstacle to a successful management of the issues and sustainable progress to the results that the firm is capable of achieving.
How can partners implement strategy, make business decisions, manage transitions and succession, and govern the firm in an environment in which suspicion has replaced trust? How can they build, or rebuild, the trust that the firm needs to survive?
The answers are not easy and they are often highly firm-specific. However there are three indispensible elements required for real trust to develop in any group of people, and especially in law firm partnerships.
- There must be a free exchange of information among partners about all of the significant decisions of the firm -- even if individual partners do not have a vote in every decision.
- There must be a free exchange of ideas. Partners must be able to provide their input to management before the decision is made, rather than react to a fait accompli.
- There must be an ability to exchange feelings about the issues, without fear of reprisal or being considered "emotional" or "not a team player."
In short, sometimes the most important thing that the leaders of a law firm can do is to examine their communications content and style to ensure that they build trust, not suspicion.
It often requires that a partnership unlearn some bad individual and group habits, such as a traditionally autocratic management style, or, at the other extreme, a tradition of "consensus" (that actually meant that each partner had a de facto veto).
It often demands that partners face issues of accountability. What should the partners expect of each other in terms of leadership, professionalism, and business performance? If most decisions are to be made by a management board, what should be the accountability of that board to the partnership in terms of consultation and communication?
It also requires that a partnership invest the time to conduct a thorough review of its documented governance system -- which might be decades old and consist only of the basic articles or agreement that were necessary to form and register the firm -- as well as the informal, undocumented system that has developed over the years. In many law firms, the latter has supplanted the former system. Lacking clear guidance on how to resolve issues, some partnerships try to rely on crisis-to-crisis improvisation to solve major problems. This wastes time and often results in poorly-informed decisions that are isolated in the specific factual context of the moment and fail to take into account their long-range impacts or precedential effects.
It is not easy to build or rebuild trust in a law firm partnership.
But it is essential to the firm's success.
Click here for information about how Walker Clark LLC can help your firm to ensure that your governance system and practices build the levels of trust that your partners need to succeed.
If you are a managing partner or other senior leader of a law firm, click here to learn about senior executive counseling services that are customized to your role and to your partners' expectations of your performance.