Adam Smith has commented on my article Are Law Firms Manageable?
I thought I would pick up the conversation and my reply with this new blog post.
In Adam's summary of my arguments, he asks me a direct question as to whether a group of like-minded people could create a more effective firm, and whether or not that would create a competitive advantage.
As anyone whoever took an economics class knows, you cannot always assume that virtue will triumph. Even if something confers a competitive advantage, that doesn't mean it will always emerge.
I seem to remember from my economics courses hearing about Gresham's Law of money, that the existence of counterfeit money will always drive out the value of good money. The bad guys can triumph by destroying confidence.
So, in a competition between trusting partners and untrusting partners, which will win -- within a firm and between firms?
My life experience is that, as often as not, disorder triumphs. A trusting partnership can and does exist, but it is a delicate flower, easily torn apart unless it is carefully nurtured.
Civilisation will, perhaps, eventually triumph, but in the short run the warlords can and do stamp out what appear to them to be weaknesses.
Trusting, collaborative firms can be sustained, but I am very cynical whether they can be created by transforming today's firms.
As Clayton Christianson reported in his book THE INNOVATOR'S DILEMMA, innovations almost always come from outside the existing order of things, not by getting established players to change.
If a truly collaborative, competitive firm would have an advantage (which I first suggested with my One-Firm Firm article), then why have collaborative firms not triumphed yet? Why are the internally competitive firms so much more common and getting all the press?
Can anyone show that the few collaborative are, in fact, more profitable or otherwise successful?
I can prove it with data outside law firms (Jim Collins has proved it with corporate entities, but could it be that, when it comes to law firms, I am completely wrong. Could it be that collaboration, trust, effective functioning as an organisation is, in fact, not a competitive advantage? I think it is, Mr. Smith, and I think that you think it is, Mr. Smith, it's just that the lawyers don't seem to think so! And they're our clients, right?
3 comments:
I very much enjoyed your recent article in THE AMERICAN LAWYER and also enjoyed Bruce MacEwen's thoughts on it in his post today on his blog.
I am looking forward to much more discussion on these topics.
I am particularly intrigued by two facets of the lawyer nature.
First, the high need for autonomy is something I have been studying for about 16 years now; in fact my last blog post was on lawyer autonomy here:
http://westallen.typepad.com/idealawg
At that post I link to an article I wrote many, many years ago for THE NATIONAL LAW JOURNAL on autonomy of lawyers.
In it I discuss why what works to promote collaboration in the corporate world can be a disaster in the legal arena -- the differences are measurable and have been for many decades.
What composes the majority in a law firm is the minority in the corporation.
The second facet of lawyer make-up I find compelling is the propensity to first find what is wrong in anything with which they are presented.
I know this is partly because lawyers typically test very high in inductive reasoning.
Looking for what is wrong is behaviour concomitant with that aptitude.
These kinds of differences make the process of change in law firms endlessly fascinating -- as are discussions provoked by your article.
Thanks.
Thanks to you, Stephanie.
It just goess to show that the thoughts I tried to express in my article are not unique or original only to me -- but they do need to be aired in open debate.
For those not yet in the know, the "Bruce" that Stephanie referred to is Bruce MacEwen whose blog goes under the name of "Adam Smith, Esq."
Thanks to Richard for continuing the conversation, and Stephanie as well.
Richard's surmise that I believe that a collaborative, trusting, environment could actually provide a competitive advantage is absolutely right -- and it is every bit as well-taken as is his allusion to Christiansen's "Innovator's Dilemma", with its thesis that disruptive changes to the established order rarely if ever come from incumbent firms.
In my post, I asked: Am I not assuming that a gifted clairvoyant would need a firm-size critical mass of like-minded ... lawyers?!
Indeed so.
With the implication that a New Kind of law firm based from the get-go on trust and deeply shared values would have to be founded from scratch -- and that the dysfunctional firms we know so well will, human nature being what it is, stand a vanishingly small chance of reform.
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