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Episode 126 Buy Episode

Legal Brains with Business Brawn: How Lawyers Can Adopt a CEO Mindset

Law as stated: 2 August 2024 What is this? This episode was published and is accurate as at this date.
Patrick Hanrahan, Legal Practitioner Director at JHK Legal, sits down with David to discuss the benefits of adopting a CEO mindset within the legal profession. With his unique experience both practising the law and acting as CEO of a legal practice, Patrick offers insightful strategies for lawyers to integrate business acumen into their practice and contribute to their firm's strategic goals.
Practice Management and Business Skills Practice Management and Business Skills
2 August 2024
Patrick Hanrahan
JHK Legal
1 hour = 1 CPD point
How does it work?
What area(s) of law does this episode consider?Business skills.
Why is this topic relevant?In today’s fast-paced legal industry, lawyers are increasingly required to think beyond traditional legal practice and consider the broader business implications of their work. This shift necessitates a mindset that aligns more closely with that of a CEO, focusing on strategic decision-making, business development, and operational efficiency. By adopting this perspective, lawyers can enhance both their own and their firm’s overall performance and contribute more significantly to its success.

Understanding the nuances of corporate governance, risk management, and financial planning can not only equip lawyers with the tools needed to provide more comprehensive and strategic advice to their clients, but can also open up new opportunities for lawyers in their career advancement and professional growth. It encourages a proactive approach to problem-solving and innovation, fostering a culture of continuous improvement within the firm.

What are the main points?
  • Thinking like a CEO involves looking at the broader picture, asking questions, and being curious about different aspects of a client’s business. This approach can help practitioners better serve their clients by offering more comprehensive and tailored solutions.
  • Leadership plays a crucial role in fostering and maintaining a strong organisational culture that is ingrained in every aspect of the business, from management to junior employees.
  • It is important to foster an organisational culture where staff feel comfortable providing feedback. Initially, it may require effort to encourage employees to share their thoughts and feedback , but the ultimate goal is to establish an environment where all team members feel empowered to freely offer insights on improving technology and processes.
  • Efficiency and time management are crucial in providing better services to clients and being effective leaders in the legal profession. By maximising one’s time, understanding the operational side of a law firm, and collaborating effectively with support staff, lawyers can streamline processes, improve productivity, and enhance overall performance within the firm.
What are the practical takeaways?
  • When determining key performance indicators (KPIs) for different roles, it is important to consider individual responsibilities and goals to effectively measure performance. A one-size-fits-all approach to KPIs may not be suitable due to both the diverse needs and responsibilities of employees within an  organisation.
  • It is essential to consider clients’ needs holistically to strengthen relationships. By asking insightful questions and exploring various solutions, one can offer services beyond the scope of their own specialisation, such as recommending other specialists such as accountants. This approach demonstrates genuine care and commitment to a client’s overall business success.
  • Effective employee motivation is not solely tied to financial rewards like money and bonuses. Simple recognition can also be a powerful motivator. Acknowledging and appreciating employees for their efforts can be just as impactful in boosting morale and performance.
  • Starting with curiosity and questioning how things are done in the firm can lead to understanding different areas of the business. Implementing small changes, like setting up feedback sessions within your team, can have a positive impact on both your team and the firm as a whole.

DT = David Turner; PH = Patrick Hanrahan

00:00:00DT:Hello and welcome to Hearsay the Legal Podcast, a CPD podcast that allows Australian lawyers to earn their CPD points on the go and at a time that suits them. I’m your host, David Turner. Hearsay the Legal Podcast is proudly supported by Lext Australia. Lext’s mission is to improve user experiences in the law and legal services, and Hearsay the Legal Podcast is how we’re improving the experience of CPD.

In today’s rapidly changing and fast paced legal services industry, lawyers are increasingly required to think beyond traditional legal practice and consider the broader business implications of their work. They need to shift their mindset to align more with that of maybe a CEO focusing on strategic decision making, business development and operational efficiency, and by adopting this perspective, lawyers can not only enhance their firm’s overall performance and contribute more significantly to its success, but better understand their corporate clients and their objectives as well. 

Now, understanding the nuances of corporate governance, risk management, financial planning can not only equip lawyers with the tools they need to provide more comprehensive and strategic advice to their clients, they can also open up new opportunities for lawyers in their career advancement, professional growth, and in this episode, we’ll be delving into practical strategies and insights that can help lawyers to develop this mindset and integrate it into their daily practice. 

And joining us today in the recording room to help us do that is Patrick Hanrahan, a seasoned legal practitioner director at JHK Legal. With a wealth of experience advising large corporate clients, ASX listed entities, Patrick has a unique perspective having transitioned from Legal Practitioner Director to CEO and back again. 

Pat, thank you so much for joining me on Hearsay.

00:01:47PH:Excellent. Thanks for having me on board, David. Really excited to be here today.
00:01:52DT:Now, as I said in the intro to the episode, you’ve had an interesting career journey into the legal profession, out of it, back in. Tell us a little bit about how you got to where you are.
00:01:58PH:Sure, so I suppose my journey starts in a fairly standard way. I went to university up in Brisbane and studied accounting and law up there, so straight away I had that drive to have that business sense by studying not just law, but the business and accounting side as well. From there, fairly normal trajectory in that while I was at university, took a job at a relatively large firm in Brisbane at the time, working as a legal admin assistant, bit of a gopher, bit of a do everything, get experience in the firm, and that sort of headed towards the back end of my degree. And at that point in time, I was working out what I wanted to do. The firm I was working with at the time, I was in quite a specialised area dealing with insurance litigation, and traditional big type firm, I could already feel the wheels turning and that I was a very, very small fish in a, you know, very large pond. And it was sort of around 2009, 2010, I’m coming out of uni. I thought that my trajectory would be simply to come out, be a graduate in this big firm, climb through the ranks and go about specialising in insurance and paving my way of my career through there. I was strung with a bit of a curveball in that the market was tightening a little bit and the firm that I was working with was going through a bit of a merge, and as such, grad positions became extremely rare, and I found myself staring down the barrel of going “uh oh, what’s next?” So I finished university and I didn’t end up taking a grad job with that firm, and so I went into the pool of trying to find graduate jobs at a number of different firms across Brisbane at the time.
00:03:34DT:And this is 2009, 2010? Yeah, so we’re still talking, sort of aftermath of the GFC, financial services not really investing a huge amount in growth at the time.
00:03:44PH:Absolutely spot on, and so it was a really different market in that the employer had all the power, any firms had all the power at that stage and everyone was fighting to keep spots and stay there. I think it’s a little bit different today. There’s a lot more need for hands on deck at all levels and so that power shifted a little bit now, but it was certainly one that tested everyone at that point in time, and so what came to me at that point was an opportunity to quickly step out of the traditional legal model, and I went directly in house working for a music company in their in house legal department down in Byron Bay actually.
00:04:19DT:Yeah, wow.
00:04:20PH:So a bit of a change of scenery straight off the bat.
00:04:22DT:Yeah, to say the least.
00:04:23PH:It was exciting and it was fast paced, but it quickly made it clear to me that it was professional legal services and I wanted to get back into that firm life. So, stayed there for a couple of years…
00:04:33DT:Sorry, you were a lawyer in a music business in Byron Bay, and you thought “I’ve really got to get back into a law firm.” Are you okay, Pat?
00:04:43PH:I know, David, I know. I don’t know what it was, but it was this sense that I needed to still tick off some boxes to round out my knowledge, experience, and I felt that I was probably a little bit undercooked in that role that I held and so I had to go back to making sure I, yeah, got a few of the basics down pat.
00:05:01DT:To have that level of self awareness about your career goals and what you need to grow when you’re in a role that, as I alluded to, I think there’s a lot of listeners who think “that sounds like my dream life, right?”
Working for a cool company in an amazing place as a young lawyer. I mean, that takes a level of self awareness that’s really rare.
00:05:20PH:Yeah, it was scary at the time. That’s definitely the case. But I think it also highlighted the importance of making sure that you’ve got good mentors around you and good leaders, and as I said, I think I needed that through the traditional legal type of leader going into a more seasoned lawyer who’s going to sit over the top of me, show me their ways.
00:05:38DT:Okay. So for reasons that are your own back into the law firm, what came next?
00:05:42PH:Yeah, so I joined up with a small firm up in Brisbane and through a number of different things it ultimately became JHK Legal. So I started with the partner Rick Jones up there, he took me on as a junior solicitor and that was when I was back into the fold running the day to day aspects of being a junior lawyer. What I quickly realised is that I really enjoyed all aspects of the business and not just focusing on doing the legal part. I was really interested in the business development side of things. I had a keen eye in terms of how the operations of it worked and efficiency in the business, and I really just love connecting with people. So. I love seeing those relationships get built across different aspects of the business.
00:06:24DT:You’re preaching to the choir here, Pat. I’ve always been someone who I feel I’m very interested in the business of law as much as. probably more than. the practice of it, so I absolutely hear that.
00:06:34PH:Yeah, excellent. And so my journey continued with that firm in Brisbane and I was once again heading down that path of fine tuning the skills and really making sure that I was across the practical nuances of being a good lawyer, but I had this desire to take a bit further and I really enjoyed that people connection piece, that leadership piece, if you will, being not just your traditional practitioner, but having a broader set of skills as well. It was at that time, I should say that once again, I had that not sure of what’s coming next sort of vibe. I was in there for about two years as a junior lawyer, and ultimately I was thinking about what’s next. And at that point in time, I had a number of friends in the industry who were looking to jump in over to London and do the UK aspect, and once again, the timing of everything’s crucial. It was once again, a time when the market over there was quite difficult. So, I had a lot of friends going over there who were same level of study and working experience as I had, ultimately working in bars and whatnot over there and going about it that way. But I was still chasing something new in that next exciting challenge for me, and the partners at the time at the firm were starting to grow the practice, work across different states in Australia, and so instead of me trying to tick off that London box, I got an opportunity to come down and start up JHK Sydney office. We were giving a lot of work down to Sydney at the time, and I saw it as a really good opportunity for me to take that next step in building my skills, not just as a lawyer, but ultimately in helping drive the business forward, and Sydney was the next platform for us to have a crack at that.
00:08:13DT:Fantastic, and here you are.
00:08:14PH:Yeah, here I am 10 years later, I think, or 12 years later now we’ve been in Sydney. So yeah, that was my big opportunity and breakthrough, start really getting into leading a team, looking at the overarching picture of what it takes to run law firm.
00:08:27DT:Now, you and I are both very interested in the business of law, but not every practitioner is like us. A lot of people enter the profession to be experts in their field and because they love the law and they love what they do and they love what they do for their clients, and sometimes that means that people end up in a position of leadership in a practice, maybe even owning a practice without having a lot of training or a lot of conscious thought about the business strategy for that practice or the strategic planning for the direction and growth of that practice. Now, you and I are persuaded on why we might want to do that, but imagine I’m not. Persuade me for a minute on why it makes sense to spend some time thinking about those things.
00:09:08PH:Yeah, for sure. And David, you’re right, I think the aspects of doing the law, being passionate about the law itself, and really becoming an expert in certain fields, is everything that we practise at university and in all our training. That’s a traditional training type mentality. Something that we don’t get taught when we’re learning these skills is then how to go in and actually apply it across business and how, yes, that’s an absolutely fundamental aspect of what we deliver. However, there’s a lot more to it if you are going to be in a position of responsibility of having responsibilities larger than just that and we don’t get trained for that, and so you’re right, it can become quite scary because there are a lot of unknowns about different skills that you have to build up outside of what we’re traditionally trained for. And so you asked me the question about “what’s the incentive for it for other people looking to probably expand their skills out of just that specialised aspect of the law?” I think it’s the reward of coming with tackling something that’s unknown and the scary aspect around that. But also, I think it’s the ability of seeing the work and the reward come from the hard work you put in. It’s something that you can’t see immediately, but when you look back over time and it’s been an effective exercise, you can really see it, and it’s an amazing feeling in being able to go “hang on a second, not only have I obviously mastered my area and I know this area of the law, but I’ve also built a tool belt that I can dip into into the future to help me in different circumstances that come up.”
00:10:41DT:Yeah, absolutely.
00:10:42PH:That’s something for me that I really enjoy. I like to constantly keep being challenged and I like to keep broadening my experience and skill sets.
00:10:52DT:And strategy is one side of the coin. That’s the sexier side of things, I guess. We like being considered strategic advisors, right? That’s a mark of prestige, but business operations is an important thing to think about as well. The engine room, getting things done. In traditional large firms like the ones that you and I have worked in, operations is often abstracted away from the practice. Even senior partners are often left at some distance from the operational aspects of the firm. They might sit on a separate level. They run as a separate business unit. Many of the partners, the notional owners and operators of the business, might not have a great deal of information about what’s going on there. So talk to me for a minute about why we should care about that, right? Strategy is one thing, but persuade me that as a lawyer, I should have a deep, keen interest in the operational aspects of my business. Why don’t I just let a CFO and a COO run that for me?
00:11:48PH:Great question, David. I think what we do and what we provide all centres around time, and time is how we measure pretty much everything in our world, and so I think it all sort of links down to time and the best use of your time and what comes with that is to make it the most efficient use of time, best use of time and really that ultimately will lead to being able to provide better services to our clients and be better leaders in our space. And what I mean by that is, if you start to think about the mechanics of how a law firm operates and you start to think about the operational side of things, you start to gain an awareness of how important it is that you use your time efficiently and how you deliver your services in conjunction with the wider operations of the firm. So it’s really important to start thinking about how the billing process works in your firm and how you can maximise your time to make sure that you’re efficient and quick at moving through your part of the billing process you need to do, but also making sure that it’s an efficient and effective for the person who’s assisting you in the billing process or the wider finance team. If you’re in litigation, for example, in our litigation processes, there’s a lot of aspects of the process that require administrative support or different hands that are not necessarily the lawyer’s hands on the file. And so having an understanding of how that works allows you to then start thinking about how we can make that process better, or “how I can help people become better at certain aspects that are not necessarily in my purview, which are ultimately going to help me in my role?” And so I think it’s when you start thinking about it at that broader level and start thinking about, little things that you can do in your time to help out in the overall process of the business or the overall roles of other people in that process, you’re going to start to see benefits for how you go about your job.
00:13:50DT:Absolutely.
00:13:51PH:“Help me, help you, help me, help us” almost.
00:13:54DT:Yeah, you’re absolutely right. There’s almost two aspects to it, isn’t there? There’s one, just the kind of financial aspect to it as an owner of the business. As lawyers, we sometimes take it for granted what the margins on our work is, right? There’s the traditional leverage model, there’s a third for the employees, there’s a third for the fixed costs or the overheads, and there’s a third for the owners, but it doesn’t have to be that way. There’s a whole range of efficiencies we can realise to improve the margin on our business, and it’s not just about getting more work in and keeping everyone utilised. The margin on that work can be really transformative for your own personal financial outcomes, but then even if you’re not particularly interested in that, and I don’t know who isn’t, but even if you’re not particularly interested in that, as you say, there’s really an inescapable link between the work of getting the practice work done of the lawyer’s role and all of these operational aspects. One example of that I often think of is, I think sometimes we struggle to quote for clients or offer clients alternative billing structures because we don’t understand how we bill or record time or measure performance and if we don’t have a really clear understanding of the inputs to our work, if we don’t understand our costs, if we don’t understand our financial performance, it’s very hard to think about pricing our services without just a hourly rate due and charge sort of approach. So that’s one way in which having an understanding of your operational performance is really intrinsically linked to what you can offer your clients as a practitioner.
00:15:22PH:Yeah, absolutely spot on. I think that’s really important. I think that goes to something else as well, which is just because it’s always been done some way doesn’t necessarily mean that’s still the best way to keep doing something, and I know I’m talking about a bit of a high level here, but ultimately, our industry has been built off traditions and the way things that have been done, and it’s quite an old fashioned type process and model, if you go back to the old school way of doing things, and in this day and age, with changing technologies, with more tools to be more efficient, I think there’s really some value in allowing people to come forward with ideas about how to improve things or other ways that we could be doing things to make things more efficient, and so what I’m getting onto there is more about if someone starts thinking about the bigger piece rather than just the “here’s my hourly rate, here’s how many hours I have to do in a day.” And they start thinking about it a little bit more widely and thinking about how things are actually done or how things are brought together, the billing process, how letters are sent out on files, how time’s even recorded or whatever it might be… If we start thinking about “well, why are we doing it this way? Is it just because we’ve always done it that way? Is that the answer?” And if we start thinking about it and going “well, actually, there could be a better way to do it.” Things change, technologies change, and if someone’s in that mindset of thinking a little bit more broadly about the why, and why we’re doing stuff, you can find that people can come to you in the business at different levels with great ideas and opportunities, so we really try and foster that. We want people to come forward and think on a bigger scale and think about ways that we can improve as a business.
00:17:06DT:And the title of this episode is how to think like a CEO, and a CEO is not an omniscient person who understands everything about their business and comes up with all of the ideas isn’t this sort of messianic leader figure. although sometimes CEOs in our media and popular culture seem to come off that way. Good CEOs listen to the advice and ideas of the brilliant teams they build around them, and what you’ve described there is a great example of thinking like a CEO, which is to listen to your people and be discerning about the ideas they bring to you and empower people to act on them.
00:17:38PH:You’re absolutely right, David. I was, once again, very fortunate in my career and the way that it’s transpired that once I moved to Sydney and got the ability to, as a starting point, start driving our Sydney business unit, and I had some other people come down, Sarah Jones and Nick Cervetto come down in my office as well from Brisbane and also help with that, but what came next for me was a wider role in the business then from not just Sydney business leader to then overall CEO and business owner of JHK as a whole. So as part of that, I found that what helped me in that role was to be able to really, I’ve referenced it before, is to build a tool belt so that you can have different tools to be able to equip you to handle different situations which come up as a CEO.
00:18:23DT:And how do we collect those tools, I guess? Because we’ve talked about how important it is to think strategically about your business, and we’ve had some other episodes of the show recently about that. We’ve talked about how important it is to have a curious and inquisitive eye on the operations of your business and what that can offer both for your value proposition as a practitioner, but also for the good running of your own business. But as we said, this isn’t training you get at law school. It’s not necessarily training you’re going to get anywhere else. Often in our profession, like many other professional services, engineers, accountants, you can end up in a position of leadership without getting any of this training. You know, you get to the position of leadership because of your expertise in your chosen field, not necessarily because of your business acumen. So how do you collect this tool belt? How do we develop our skills and mindset around business operations?
00:19:12PH:Yeah, great question, David, and you’re spot on. It’s one of those things that our training is centred around being a good lawyer, and this is completely outside of that. I’ve been lucky enough in that the firm that I work for has spent a lot of money on leadership training for me, and put a lot of time and resources into training to allow me to develop my skills in this space. So first of all, that’s been really advantageous for me. However, what I’ve found is that it’s then important for me to go back to the business and provide a mechanism that allows for what I’m learning to be put forward as a resource to others in the business, so I think that comes across a number of different things. I’ve really been an advocate of creating an environment that allows for resources that are collected to be made available to others in the firm as a starting point. So we really work hard in driving leadership programs within our business itself, so we spend a lot of time collating those materials that others in higher leadership positions within the firm receive and bring on board and we make them available to our junior staff and up and coming leaders. That’s the first piece. It’s important to collate, bring it and make sure we’re passing that on.
00:20:21DT:Can you give me an example of how you might do that? So you go out there to do a piece of leadership training, you learn something interesting about the operational management of the firm. How do you share that with the rest of the firm?
00:20:31PH:Yeah, absolutely. So there’s a few things we do there. We bring it back and what I try and do is I try and summarise what I’ve learned, the general principles of it, and then I try and find a way to bring it back and make it relatable to what we’re doing here at JHK or the business as a whole. And so what I’ll then do is if it’s a piece of theory or something like that from someone who’s really well versed in leadership, we bring that back into the firm. I look at it, I put it in a model that’s presentable to the rest of the firm that they can understand it, so I’ll pull out maybe five or six principles from it and go “here is the general nature of what that’s describing here.” And then I bring it back and talk about “okay, how can we apply this in our own business?” And so from there, it’s interesting because then we get a lot of people who may not necessarily be natural leaders or enjoy that concept, but just the thought of getting a bit of exposure to this sort of piques their interest a little bit, and so we’ve had some great sessions where we’ve been able to go to outside resources and get recordings of really good presentations from leaders. We’ve had people in our firm attend offsite leadership sessions. To name one, about five or six of us got to go and see Barack Obama speak last year, and that was through pushing our leadership and getting exposure to up and coming leaders in the firm. So that’s certainly one thing, and then we get it all and hold it there because it’s really valuable information and we want to make it available to everyone in the firm.
00:21:56DT:I was going to ask you, what sort of reception does that get from the younger lawyers in the firm who, maybe they’re just starting their legal career, they’re not really thinking about business leadership, they’re not maybe especially interested in it? Having this real passion for the law that hasn’t been beaten out of them by years of practice like us. It sounds like they are really receptive to it.
00:22:15PH:Yeah, you’re absolutely right, David. They actually are, and it came as a really nice surprise when we started getting that reception from people in our firm because I think that even if you are heading down that path on your own path, which is quite a solo path, you still ultimately are going to be a leader in some sense. You’re going to be a leader if it’s leading your clients. You’re going to be a leader even if you’ve got one junior staff member underneath you, you need to be able to lead them and demonstrate a form of leadership. So, I think that whilst this material can seem quite daunting and overwhelming, there are bits that you can pull out that can apply to any role regardless of what role you’re in. And so we really tried to focus on that, and it can be small stuff that we pulled out to apply to certain aspects. I was pushing hard on a leadership session that I went to run by Patrick Lencioni, who’s absolutely world recognised in terms of his position on leadership in business and organisations, and he’s got huge amounts of material. And I was able to bring that back to the firm, and I really focused on three or four things to pull out of his material to go “okay, guys. How about we start addressing these things?” And one of the key concepts was talking about dysfunctions of a team and inability of looking at a common goal, and so that’s just an example of one that I pulled out and brought back to the team and said “here’s something that they say is a dysfunctional team when there’s not a focus on the common goal of that team.” And so we pulled that back and went “well, guys, in our small little team here…” I think it was dealing with a small little litigation team of about three or four people, and I said “this is something that we can focus on for our team right now and address. Do we have a common goal? It’s our small little team right here, right now. And that common goal, if we don’t have one, let’s come up with one, and it doesn’t necessarily just have to be a financial goal.”
00:24:09DT:Yeah, no.
00:24:09PH:We want to bring it back so that it applies because our paralegal there may not necessarily care or have any input into how we operate in that small team of financial performance, but they do from an efficiency performance goal or they do from a systems or technology type way. So that was something as an example that we took out of our leadership piece, brought it back and said, how does this now relate to what we’re doing in our business?
00:24:32DT:That leads in excellently to what I was about to ask you, which is one of the earliest kind of exposures to the operational aspects of running a law firm for most lawyers, and even before you reach the level of partner or principal or business owner, you’re interacting with this and you’re often responsible for reviewing This is key performance indicators, usually utilisation, time build, time recovered… That seems to be the way most firms continue to measure performance. Key performance indicators can drive good behaviours. They can drive bad behaviours and what you described around having a common goal… If key performance indicators are too individual, if they promote the goals of the individual over the goals of the team, they can often lead to dysfunction. Tell me a little bit about how you think about key performance indicators and thinking like a CEO, how do you set good KPIs to help your teams operate better?
00:25:26PH:Yeah. Once again, that’s an awesome question, David. It’s something that we grapple with all the time in our business because what we find is that you can’t necessarily just apply one or two KPIs that are going to apply to everyone. People in different roles in your business are going to have different KPIs that affect them.
00:25:42DT:Yep.
00:25:43PH:And so you are absolutely right. We look at the things that we can measure from an indicator perspective across different aspects of the role. So, for example, in our business, yes, we’ve got our traditional financial KPIs, but then we go a little bit further than that, and we’ve got KPI’s around approachability and you say “well, how do we measure approachability?” And our approachability all stems around that we want to be absolutely approachable both internal and external within our business. And we set things like that, like “okay, well, we know that we have to respond to an email both internally and externally within 24 hours.” Now you can set that and you can make that a measurable piece of data that you can measure and that can apply to anyone in your firm.
You can send an email to your receptionist about a phone call that may have come in and you want to set a KPI for when they respond to you. It’s something like that, that you can build a KPI around. That’s not necessarily just legal focused or financial billing type focus.
00:26:46DT:Yeah.
00:26:46PH:We also, and we sort of call it “the 1 percenters, as a 1%, as a sort of a little KPI for us that we drive in our business that also applies to everyone in our firm, and that 1% is all the little things that we encourage people to do in their roles. And once again, it applies to everyone who holds a role in our business, and the 1% is of the little things that people do over and above their day to day responsibilities that contribute and go towards making our business better. It might be someone organising some coffees for a group, or organising a learning session at lunchtime for a group, or getting the guys together for mixed netball at lunchtime, or putting on some drinks for some clients, or whatever it might be. These are things that you can’t really measure, but you can in that you know someone is going about organising them, or just being involved in them, and that’s a great example of something that you can measure against. You know when people are going above and beyond by just doing these small things that you wouldn’t ordinarily measure, but it makes all the difference.
00:27:53DT:Yeah. That’s the thing, isn’t it? A KPI, the important thing about it is that it’s specific, measurable and achievable. Not that it’s measurable by a dollar value or by a big number, but just the fact that it is measurable and it can be quantitative or it can be qualitative.
What you described, that rings really true to me at Lext. We use a balanced scorecard to measure performance, which has both qualitative KPIs and quantitative KPIs. Qualitative ones that might be closely related to a staff member’s functional role. So for sales, that might be a sales target. For engineering, that might be project deliverables… But then other ones that are about “how you help the rest of the team to meet their goals. How do you demonstrate the values of the company?” And we’ve used a similar balanced scorecard approach in practices that I’ve worked in and run as well. So I absolutely agree with that, and you know, that’s something that you can, again, think like a CEO around KPIs before you’re in a partnership or practice management role, can’t you? Because even in a very early stage, you’re looking at your own KPIs, looking at the KPIs of the junior lawyers that might report to you or assist you and you can start to think about how you might drive the right behaviours through the right incentives and KPIs. What are some of the risks of having a less fully faceted approach to performance? One I think of often is, I’ve seen plenty of firms that just measure billing and utilisation and they pay a bonus for how high above 100% you are and I’ve seen some terrible behaviour come out of that.
00:29:19PH:Yeah, you’re spot on. I’ve seen the same stuff. I’ve said it a couple of times today, I think it’s about that traditional way of how we operate continuing on without properly being questioned, but I think that what we’ve found as time’s gone on, and especially in this day and age, people value different things now and what we strive for and making our business the best that it can be in our market, and that’s what you want to be. You ultimately want to make your business the best, and it comes from everyone involved in that business, and so I think that it’s really important if you want to have the best business where staff are engaged and really feel like they’re a part of that business, to feel like their importance matters as well. And that’s why it’s really important to recognise the achievements of everyone in the organisation, rather than just our most important, the lawyers that make all the money and bill the money. Well, really, if you want to build an organisation that’s high performing and that is something where everyone buys into and feels that they have a part to play in, that’s where it’s about building up awareness, everyone in the organisation to be able to have their KPIs, be involved in what we do and feel like they’ve got a say and can put forward things that we can focus on to improve on. I think that’s really important, and that’s what builds what we believe to be a strong culture and what we think will set us up many years to come with a successful business.
00:30:51DT:That’s a great point, and a great example of thinking like a CEO is to respect the contributions of all of your business functions and business units. You know, in professional services businesses, you do sometimes have this first class second class citizen phenomenon of the professional staff sitting at a tier above the rest. That’s obviously a recipe for poor engagement and retention for all of those critical staff members who aren’t lawyers or accountants or engineers. But as you say, we can try to be as close to the detail around our operations as we can be, but it can be easy for us to get lost in the detail of daily practice. Our paralegals, our legal assistants, our finance team, our HR team, everyone who has an operational role in the business can have insights into the way the firm runs that we just aren’t aware of, that we don’t have time to notice, and there can be some great ideas coming out of those parts of the business if you empower them to speak up. Now, so far we’ve been talking about thinking like a CEO from the perspective of running the firm, and I guess that means that we’re talking about people who are, in one way or another, in the role of a CEO, even if they don’t think of themselves that way. But something I’m really interested in talking about is this idea of thinking like a CEO in the way you advise clients, how thinking like a CEO can improve the advice you give, because that applies to everyone in the business, doesn’t it? From the graduate lawyer, who’s got a handful of small contact points with a client all the way through to your senior associates who are getting ready to join a partnership. Tell me what you mean by thinking like a CEO when it comes to advising clients.
00:32:27PH:Yeah, awesome. Something that I think is once again overlooked as a concept, but it’s there and it’s ingrained and it actually really does provide a platform to better service our clients… I think the first part of when you start thinking like a CEO, is you start looking at that broader picture and you start asking questions or looking under the hood a little bit and you really start becoming curious about what’s going on and why things are done that way. That then allows us as practitioners to be able to go to our clients and start using that same approach. Think a little bit more broadly, think a little bit more widely, start getting a little bit curious about different aspects of our client’s business to be able to work out how we can help them or how we can service them, really important and I think it gives you a really good relationship with your client to start going in and being a bit more curious and not just being narrowly focused on delivering that one legal service you’re delivering to that client. It can really open up opportunities for ways that we can help our clients further, but more than that, it starts putting together things, and we talked about the tool belt and that kind of stuff… You’ve got skills that you build along the way, and liaising with clients and getting exposure to clients’ business helps you build that skill set and put into the tool belt, but ultimately, it allows you to work out the best way to advise your client. It might be that your client’s going through a situation where the type of advice that you’re giving to them might not be as black and white as “here is what the law says.” Yes, that’s part of advising the client, but if we’re thinking a little bit more broadly, it then goes, “here’s what the law says, here’s how this could impact your business, but not just in this one little part. It could impact it over here, or it could impact it over here, or I know that you’ve got a really large employment workforce over here. This advice is limited to this area, but guess what? I’ve got a guy in my firm over here. He’s really up to speed with in depth HR type stuff. I’d love to bring him along and have a coffee with you to talk about this.” You start opening that up because you start thinking a bit more broadly about the client’s business and what they’re doing.
00:34:50DT:Yeah.
00:34:50PH:And it’s the same as what we’re doing here at the law firm, we’re running a business, and so think a little bit more broadly, start applying that concept and you’ll start getting a better overview of your client, what they do and what they need.
00:35:04DT:I couldn’t agree more. And there’s something I’ve observed in firms large and small, around the way lawyers go to market in commercial fields of practice, and there’s a good way to do it and a bad way to do it. A lot of lawyers like to say “well, we’re commercial.” Right? And a lot of lawyers also like to say “well, we have industry expertise. We understand your business.” And I think sometimes that results in this really flawed way of thinking about that value proposition by saying “I don’t need to ask any questions about your business. I don’t need to be curious about it. I just need to demonstrate that I already know it all.” Right? And so you go into this meeting and you, try to speak the lingo of that client’s industry and you show how much you already know about what they do. And you probably show how little you know, first of all, but you don’t really get a good appreciation for the unique issues that that client’s facing, whereas I think the best and the most “commercial lawyers” I know are curious about their client’s businesses. They don’t show how much they already know. They ask a lot of questions. “What do you do? Why do you do it that way? And how do you measure that? And what about this?” And by asking questions about the client’s business, you do come to understand their business and their industry and what they do in a more authentic way than you claimed to before, and you can actually deliver on that promise. But if you start from the position of “well, I’m an industry expert because that’s what I’m going to market and telling people to win work”, but you’re not really curious about the individual client’s business, then it’s very hard for you to make good on that promise.
00:36:32PH:Yeah, I couldn’t agree more with that position. Really, if you do go in there with that curious approach, start thinking about asking questions and diving in to properly understand your clients business, what they do and who they’re about, then I think you really trap yourself. If you go in there and ask questions, you just start to build on, first of all, strengthening the relationship you’ve got with the client, which is really important given how competitive our industry is. But second, as I alluded to before, you start thinking about it a little bit more holistically and you start thinking about that client’s business and what they actually need, and if you tie it back to trying to strengthen that relationship, it then becomes a little bit more than thinking about what you can deliver to that client. Think about it a little bit broadly, a little bit more holistically, and you start asking those questions, you start getting answers and you start looking into it and realising that there are different solutions your client needs, and so what comes from that is the ability to utilise your own services, and it might be different departments in your own firm that can provide services to the client, but it’s a little bit more than that as well. If you go the next step up and it’s about thinking about other solutions, even outside of us, that we can provide to the client. And some examples in there might be that you can see that there’s some issues with the accounting services that have been provided to a client. Now you’ve realised that through asking some questions around tax planning and how tax has been dealt with in your client’s business, and there might be some alarming stuff that comes up where you could go “you know what? That just doesn’t seem like you’re getting the right service in that space.” Or what’s often common is “oh no, I’m having all kinds of problems with my accountant” or something like that. If we’re thinking holistically and we’re thinking more so from a business mindset. The answer for the client might not be “well, we can help them providing them with a legal solution”, but it might be “hey, why don’t you think about going to see an accountant? I’ve got a couple that I can refer to that might strengthen your business.” And that is just such a powerful tool whereby you can demonstrate to your client that you’re actually thinking about them and their business as a whole, rather than just what you can provide to them.
00:38:48DT:Yeah, rather than what you can bill for.
00:38:51PH:There’s that saying in sales, “your clients are mildly interested in what you do, but they’re absolutely engrossed in what they do.” So talk to them about what they do, get to know them, which will lead to a stronger relationship, and I absolutely agree with diving in, absolutely getting to know your clients and working out what they need and how they operate.
00:39:09DT:Yeah. I think sometimes that value add of finding the right accountant, finding the right financial advisor, finding the right lawyer in another field that you don’t work in can sometimes be the thing that actually cements the relationship because if you approach that engagement as “well, they’re here to see me about a shareholder’s agreement. That’s what I’m going to talk about, and I’m going to leave it at that.” You might do a good job for them, and they’ve got no real reason to come back to you. You did that job well, but that’s the extent of the impression you made on them, but providing those other services, yeah, maybe they don’t go on the invoice, maybe they’re not generating any revenue this month but they mean the world to them when they’re thinking about a trusted advisor they need for something else. And I think just, again, referrals to other lawyers… Again, a good CEO knows the value proposition of their business, and they know what the value proposition of their business isn’t. They know their position in the competitive landscape, and where they have something unique to add. If you try to do everything for the client, then you risk really disappointing them on something that you maybe aren’t a specialist in, but giving them the referral to the right specialist means that they’ll come back to you again.
00:40:16PH:Absolutely, and I think one more point to add in this piece is that what we’re just describing here, it can often be the case that when lawyers come through and think about how they win clients, it’s all about selling and dragging in good clients for the firm, but what we’re talking about here is a really simple way of, it’s not really selling, it’s building a relationship which will lead to more work down the track, and this is something that we’re talking about, which doesn’t need to be done just at a partnership level. Any junior lawyers can start asking questions of clients when they’re liaising with them. It’s a really simple tool of building a stronger relationship to help you and also to help your firm to help your clients. Anyone of all levels can do it. It’s simply asking questions and properly listening and getting to know clients.
00:41:08DT:Absolutely, and not just that they can do it, but it’s crucial, isn’t it? Because look, it’s great if the partner on the file has this presence in meetings and asks lots of questions and a super commercial, but if they’re not seeing that from the person they actually deal with every day on their matter, then the experience, there’s a disconnect there, but if they’re seeing that from everyone in the firm, the overall impression of the service, they’re getting changes immensely. Now we can’t really talk about leadership in a law firm without talking about technology, and that feeds into a lot of things we’ve talked about today… operational efficiencies, competitive advantage… How do you go about making sure that JHK has the technology that it needs to stay competitive, to stay up to date, and I suppose in the context of what we’ve been talking about today, the role that lawyers who aren’t principles of the practice can play in the operational and strategic aspects of the firm… Is there a bottom up role for lawyers in seeking out these technology solutions, bringing them to the firm and getting them adopted?
00:42:09PH:Yeah, absolutely. We’ve actually just been through quite a journey on our systems and technology front. About 18 months ago, we made the call to shift our document management system provider, and that was driven largely off transparency in our firm, and we listened to feedback from not just lawyers, but admin staff and everyone in terms of what they were going through on a day to day basis and what they needed to help them improve how they go about stuff at JHK. And so through that transparency and getting feedback from staff, we were able to identify that the system that we were using was probably a little bit outdated, a little bit clunky and required a lot of manual intervention through different processes, and so through our feedback and getting input from our staff, we were able to go “okay, we’ve got a problem here, and the system’s not really working for us.” Saving emails took a significantly large amount of steps to do that or getting large bulk documents brought into the file was quite burdensome and took time and so we had a lot of feedback on that and we took it away and went “okay, we need to find a solution here now moving forward that’s going to adapt for what we do. Our business has changed, our client base has changed. The people coming into our practice have changed, and so we need now to question whether the service offering coming from our tech platform is what we need.” And so we took that, brought it on board, went to market, got a new system provider to come in and help us, and over the past 12 months, once again, we’ve identified some issues with our new platform and system that’s come on board through feedback from our staff, through testing it, through diving into it, and we’ve continuously made tweaks to it to try and get it to the right spot of enhancing the efficiency and the ultimate value for everyone who uses it in our organisation. So the first piece was actually going and listening to staff’s feedback and saying “oh, you know what? How do you save emails through the system?” “It’s really hard, really clunky.” And so it was something like that to go “okay, well, maybe we can go and test whether there’s a better system or piece of technology out to help with that.” Another great example is we do a lot of volume based work and a lot of data entry into legal documents at quite a large volume type base, and so we are constantly looking at new technologies to be able to utilise the input of that data, identifying errors in the data, and streamlining how we basically draft documents. Huge front, we’ve worked that out from taking feedback from our clients, from our staff, and saying “oh, you know what, the way we go about this is a little bit old fashioned. There’s got to be some tech pieces out there that are going to help us.” And so we’ve dived into that. So I think to answer your question, it’s really important because technology is now the glue for what we do and how we go about it. And it’s really important that I think people in the organisation, especially at the leadership level, are aware of the significance and impact of the technology and systems in the business. And then secondly, making it transparent to staff members that they’ve got a say and they’ve got the opportunity to give feedback on our systems and our technology. I think that’s really important and it helps your firm to continue to evolve for the better.
00:45:34DT:Do you find that you get that feedback just by creating an environment and a culture in which it can be given or do you have to go out and look for it?
00:45:40PH:The ideal scenario is that you’ve built an organisation where staff feel that level of comfort that they can just come off the bat and provide that and provide it up the chain. I think it takes a bit of time to get that comfort and get that feeling of buy-in from the staff that they feel comfortable to do that. So it starts off by really having to try and force it out of people and giving them platforms to do that. Anonymous surveys, we found a really, really good tool if people really didn’t feel comfortable coming forward, but our goal as a leadership group was to create an environment where anyone in our organisation can give feedback on how our technology and our systems work or how we could do things better. Now, it doesn’t necessarily mean that we’re going to utilise every idea that comes forward or adopt every idea, but it’s important that we listen to it, we take it on board, and we work out whether it’s for us or not. And if it’s not for us, we actually look into the why and go, “here’s why this probably won’t work for us.” Or, “hey, it sounds like a really good idea. Let’s look into it and see if we can put a form of this into practice.”
00:46:42DT:Well, that leads nicely into my last question for you today. And it’s a question we could probably spend another hour talking about so we’ll have to restrain ourselves, which is culture. Now the old saying, maybe it’s a little trite these days is that “culture eats strategy for breakfast.” It’s very important to a successful business and CEOs think a lot about culture because it’s an enabler for so much of what we’ve been talking about. It determines whether or not people are comfortable giving feedback. It determines whether or not people are invested in the business to the extent that they’re delivering on their KPIs or being curious about their customers and clients or working towards a common goal. So what’s your view of culture? What’s the culture that you’re trying to create at JHK and give us a little bit of a flavour about how you do it.
00:47:27PH:Yeah, you nailed it on the head in terms of how important culture is, not just in law firms, but in any business. It’s really about the unwritten way of who we are and how we go about things, and I know that we definitely try and identify culture by outlining what our values are as a business and putting a lot of effort into trying to make it clear as to what our culture stands for and things like that. But at the end of the day, culture is I think best reflected in how the firm actually goes about what it does, and so I know that if I am away or step out of the business, I know that the way that we operate and continue to do things is going to be the same, and that’s because it’s not just me who’s driving the culture of the business or driving how we go about things, but it’s probably been, It’s adapted and embraced by everyone in the business. And so if everyone embraces it and understands what we’re doing and why, then it’s almost like it’s the behaviour about how we go about things at JHK. And you don’t necessarily have to define it or put it on some paper, but it’s built into everyone that they know this is how we do it because of X, Y, Z, and at the end of the day, what we’re trying to build here is something that everyone in our organisation feels they’re a part of. They absolutely are aware of their contribution to the firm, and they’re aware of where we’re going as a firm, and we really work hard on making sure we’re transparent in our business and that comes in from our leadership and that really comes down to not just our leadership, but our next level of leaders coming through. So I think it’s really important that it’s been carried throughout the whole firm, and it doesn’t just lie to one or two people to drive the culture of the business, but it really comes from everyone. And that’s why I think anyone coming through a law firm as a junior or in whatever role it might be, you may not know it or think about it directly, but you’ve got an input into the culture of the place. You’ve got an input into the way the place operates and you can affect culture. And it’s small little things that people often overlook, which are really important to help drive that culture. It’s the one percenters.
00:49:51DT:Yeah, and on that topic, a lot of people say that the really observable, intentional aspects of corporate culture, things like articulated values, those sorts of artefacts are really just the tip of the iceberg of culture and where the culture really is in and all is in all the unspoken, unwritten stuff, the way people interact with one another, the values that they have when they’re making decisions, the kind of deeply ingrained cultural artefacts that you don’t even really think of as a conscious business decision, but that really do make up the culture of the place. Can you give me an example of what one of those might be for you and your business?
00:50:28PH:Yeah, absolutely. So we call the JHK bus as sort of our analogy for how our culture sort of works and we want everyone on that bus. And so first of all, what we really foster through that is in all of our business units, every Monday morning, we have a Monday morning meeting and everyone is involved in that meeting, and everyone has a say in that meeting. Now, we try and keep it away from direct file related or legal type based aspects that are covered in that meeting. It’s more about firm life and what’s going on, and who’s doing what, and who’s contributing what and we really get behind those Monday mornings in making it a showcase for acknowledging the hard work and the achievements of the people in the organisation. I think that’s one thing that we took away that we found, once again, through transparency, through getting staff feedback, is that sometimes it’s not just about how you reward someone financially, money and bonuses and things, but it can be just simple recognition that can make such an impact in your overall culture.
So we took that away and we went “okay, this is actually something that’s valued by our staff members.” And we created a monthly all star award across all our different business units where peers get to nominate and put up other people in the business up for the monthly award and a panel’s chosen and they choose those awards. Each month through the business, and it can be absolutely anyone in the office, so it’s not tailored towards any specific just lawyers or anything like that. And it’s really simple, and their prizes and things like that and there’s a shout out to those winners and there’s a shout out to some of the other nominations where people are just showcasing their appreciation to others in the firm. Something really small, but it’s been valued really highly by our team because people like to feel recognition, and it can come in different ways. That’s just a small example where we’ve found that it’s had a good impact in building our culture through something like that.
00:52:24DT:We were just talking about how culture is often apparent, not just in the things that you do and the things that you say about your culture, but the underlying assumptions that people hold, even if they’re not articulated.
Just based on everything we’ve been talking about from the technology conversation to your Monday meeting to that award that you were describing, would I be right in saying that one of the underlying assumptions of the JHK culture is as a member of the firm, “I’ll be consulted about decisions that affect me and I have a right to speak up about them?”
00:52:55PH:Yeah, absolutely. I think that’s such a strong platform to build employee buy-in.
00:53:01DT:Because it sounds like it’s that that sits underneath a lot of these practices of consulting people and giving people a chance to talk about the issues that affect them. Underlying that is the assumption that “well, I have a say, I have a seat at the table.”
00:53:15PH:And I think what comes away from that, and what we’ve found constantly through different examples, and through what other staff have said, is that they feel proud about the business they’re involved in, and they feel a level of excitement about coming to work and being involved in this, because they actually feel like they’re contributing to it and what they do has meaning.
00:53:34DT:Yeah, absolutely. Well, Pat, we’re nearly out of time. Before you go, I’d like to finish each episode with a question for some of our younger listeners, newer graduates, young lawyers, maybe those who are yet to join the profession. You said that you had really benefited from having access to a whole range of leadership resources and training to help you think like a CEO in your role. For a younger lawyer who’s heard this episode, wants to get started on that early, can you tell us some simple ways they could do that?
00:54:02PH:Yeah, absolutely. I think right from the get go, start looking at the way things are done in the firm and start getting a little bit curious about processes, how things are set up, start asking some questions and start looking at that and thinking a little bit more broadly outside of your day to day responsibilities. And if you start to do that, you can start to getting a little bit of an understanding of different areas of the business and that will ultimately lead you to potentially asking some questions or implementing some really small stuff as a starting piece. You may sit there and go “oh, hang on a sec. Why don’t we have a little feedback session within my team that I’m in right now?” That might be three or four people that you’re involved in and you could put a little feedback mechanism together, which could help your team as a starting point and overall for the firm as a whole down the track. So it could be small things like that. I think it’s about taking a step back or what we like to say stepping out onto the ledge and looking in and try and do that and look in and take in the whole of what’s going on, not just in your role, but in your team, in your wider team, in the wider business. Now, obviously you can’t look at everything and how everything’s done in the firm, but that could be a starting point to sit there and go “hang on a sec, how is this process actually done? And why is it done that way? And okay, now I’ve got an understanding of that, is there a way that we could do it a little bit better?” I think that’s a great starting point is taking a step back, surveying the landscape of everything that you do and get a bit of an understanding of all the things that link it together. I think that’s a great starting piece.
00:55:37DT:Absolutely. Patrick Hanrahan, thank you so much for joining me today on Hearsay.
00:55:40PH:Thanks David.
00:55:37DT:As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank my guest today, Patrick Hanrahan, for coming on the show. Now, if you’re looking for more practice management and business skills content, I recommend checking out episode 106 with Andrew Whittingham. His episode is called ‘The Valuation Game: How, Exactly, Should You Value a Law Firm? and it touches on the importance of financial literacy for lawyers, the way law firms are valued, and importantly, the way personal goodwill contributes to that valuation.

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