The Lean Law Firm – Above the LawAbove the Law


Hacker typing on a laptopAs most of us wind down the year and start preparing to face 2023, law firm leadership teams are contemplating how to stay strong and relevant in the coming uncertain economic times. Past performance is famously not a guarantee of future results, and most businesses ultimately fall flat or flame out entirely given enough time.

Consider the fact that of the companies listed on the Fortune 500 in 1955, at least 87% no longer exist today. The vast majority of the world’s biggest movers and shakers at a time still in living memory just aren’t around anymore, and the rate of change and turnover in the business world is only going to continue to increase. Simply treading water in the marketplace is hard, and treading water isn’t good enough. As William S. Burroughs said, “When you stop growing, you start dying.”

Part of the problem, paradoxically, is that a firm’s success can sow the seeds of its own failure. As businesses succeed, their leadership teams are (hopefully) acutely aware of the decisions, strategies, and actions that got them to where they are. So when the time comes to keep succeeding and keep growing, leadership teams are prone to looking at their old strategies and simply double down on the plan that’s already proven it can work. It’s a totally understandable and rational thought process, but it’s also one that can result in ossified business plans that aren’t prepared to adjust to changing economics, trends, and competition.

How Success Works

As I’ve mentioned before, I’ve spent much of the past two years studying entrepreneurship through a master’s program at the University of Cambridge Business School, with the goal of better understanding how the world’s most successful enterprises find lasting, durable success, and how to apply those lessons to running the firm I help manage. As part of my thesis, I interviewed 25 legal heavyweights, including Biglaw managing partners, LegalTech CEOs, academics, and others to learn how established firms can use entrepreneurial strategies to drive innovation, rather than falling into a trap of complacently rehashing past successes.

Going into those interviews, I assumed that great entrepreneurship was driven by wild ideas formulated in stylish team meetings. Informed by the legends of garage-founded startups like Apple and Meta, I was imagining that great entrepreneurial ideas came out of a horde of young hoodie-wearing professionals sitting in a circle of bean bags, excitedly scribbling out concepts on dry-erase boards. It’s an alluring, dynamic concept to build a company around, one centered on rogue geniuses reshaping the world one algorithm at a time.

Reality, as always, turned out to be a lot less sexy. Successful entrepreneurship isn’t a series of blazing bright ideas implemented cleanly. It’s a process, and often it’s a grind. It’s all about identifying looming challenges and opportunities, brainstorming solutions, and then designing controlled, measurable ways to experiment with those solutions. Those experiments will often fail. If you’re lucky, they’ll fail quickly and cheaply. Don’t count on being lucky.

Once the experiment is over, it’s all about figuring out what worked, what didn’t, and what deserves further testing. Then it’s back to experimenting, and analyzing, and experimenting again. The cycle never ends, the work is never done. Today’s work is all about making tomorrow’s work hopefully better.

There are a number of formulations and names for this process. I’m partial to Eric Ries’ book “The Lean Startup,” where he calls it the Build-Measure-Learn cycle, but you may have read about or experienced the iterative feedback loop concept in any number of contexts. It’s increasingly endemic in the broader business world, even if adoption in the legal space remains, as usual, lagging behind. It’s a proven model for innovation and optimization, but more importantly it’s a way of thinking that can be taught, one that can become baked into a business’ systems and culture. Most law firms don’t employ eccentric rogue geniuses who can reshape an entire industry with their ideas, but all law firms can work positively toward creating a culture of experimentation and iterative refinement.

So Why Do So Few Firms Do It?

Many of the problems with law firms come down to the fact they’re populated by lawyers. The challenge of developing an entrepreneurial culture in a law firm is no different. The Build-Measure-Learn cycle is all about constant change, and lawyers tend to resist change. Trevor Faure’s excellent resource Smarter Law goes into depth on this topic, and I won’t quote here his entire “Maleficent Seven” reasons that lawyers resist change, but given our profession is one that is based on precedent, insulated from the full weight of the competitive marketplace, and that has historically done well enough by being reactive rather than proactive, it’s not that surprising that many law firms are allergic to experimentation, especially given the high likelihood that some of those experiments will abjectly fail.

But our industry’s historically reactive mindset doesn’t mean the future has to look the same. Those firms looking to develop that entrepreneurial edge have some strategies at their disposal.

How To Overcome Being Lawyers

First, firm leadership needs to constantly communicate that experimentation and change are crucial to the firm’s continued success. Team meetings need to regularly include surveys of new economic trends, market competitors, and potential disruptions and opportunities. Leadership should make a point of considering structured experiments proposed by anyone in the firm, from the managing partner to the mail room attendant. And leadership needs to commit to the iterative learning model, normalizing the failure inherent in that process. Experiments that don’t pan out as expected still teach us something, informing the next round of experiments that hopefully end more productively.

Second, firm leaders should implement programs designed to reinforce the feedback loop, rather than letting the experiment die on the vine. Next year, for example, Fennemore is launching an R&D incubator known as Fennemore Labs that provides a formal mechanism for partners, associates, and other legal professionals to systematically identify and pursue novel solutions that will position the firm for success. The ideas will be tested, and most will fail. But based on evaluation and measurement, the Fennemore Labs concept ensures that ideas that didn’t work but still have potential will be iterated and tried again. We’re committing resources and time to the basic concept of experimentation, learning, and growth.

Lastly, firm leaders must foster an environment of psychological safety for the above processes to thrive. Lawyers are trained to seek and destroy ideas. We’re taught from our first days in law school how to prove our value by dismantling others’ thoughts. That may arguably work in some legal contexts, but it doesn’t work when ideating and working with coworkers. When it comes to innovation, leaders must learn to scale down how much we praise successful results and begin praising successes in the process. It’s only by creating a positive, collaborative environment where constructive failure is welcomed that we’ll be able to break ourselves of those bad law school habits and open up the floodgates of creativity.

Past performance isn’t an indicator of future results, but today’s performance absolutely is. If you want your firm to have a prosperous 2023 and beyond, embrace the entrepreneurial model. It’s scary, disruptive, and often doesn’t work out as expected. And that’s exactly why your firm needs to do it.

GoodnowJames Goodnow is the CEO and managing partner of NLJ 250 firm Fennemore Craig. At age 36, he became the youngest known chief executive of a large law firm in the U.S. He holds his JD from Harvard Law School and dual business management certificates from MIT. He’s currently attending the Cambridge University Judge Business School (U.K.), where he’s working toward a master’s degree in entrepreneurship. James is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. As a practitioner, he and his colleagues created and run a tech-based plaintiffs’ practice and business model. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at [email protected].

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