When I talk with firms and new partners about what leadership coaching looks like, I often talk about exploring and defining our values as a lens through which to undertake the day to day of managing their practice. And during an amazing conversation I had this week with Sasha Berson on the Grow Law Firm podcast (link forthcoming), a similar discussion developed. We talked about the role leadership has in the business of growing a law firm, and we circled around an issue that many business-minded lawyers have about investing in their values and their leadership. Whether that investment is time, money, or energy, they often have a question about what they're going to get out of that investment. What's the ROI on leading with values? I thought I'd break it down a little.
"Leadership" is a pretty broad concept, so let's talk first about what values-based leadership looks like. Values-based leadership is grounded in the idea that working from a common set of values improves team cohesion, engagement, and motivation. As a framework for decision-making, values-based leadership increases consistency of decisions, especially within larger organizations where similar questions are faced by multiple leaders.
When it comes to cultivating a healthy work environment, investing in values-driven leadership has been demonstrated to be an effective and profitable strategy. One of the more tangible benefits is on employee morale because consistency in decision-making also leads to predictability of experience. Predictability, in turn, is an element of trust. Higher trust gives employees the freedom to be more creative and operate with more autonomy. The long-term benefit is greater efficiency, improved client service, and more rapid employee development.
Well-defined organizational values are important in any business, but they are especially important for law firms. They help create a clearly defined sense of purpose and direction that employees can unite behind, and they can be a market differentiator for clients. When the firm's values are clear, operational choices in the face of uncertainty are more easily discerned. Even better (from a management perspective), hard decisions (e.g, about return to the office; disfavored work assignments; etc.) are more easily accepted because employees know that decisions were made with a focus on ideals and principles they understand and to which they have all agreed. A firm that operates from a clear set of values is one that can be trusted and one that inspires more loyalty from its employees.
While having well-defined values is a necessary starting point, it is not, alone, sufficient to reach the goals of loyalty. Another necessary component of trust here is action in conformity with values. It should go without saying, but simply having values is not enough. Leaders have to actually take the sorts of action they say they will, the kind that are consistent with the things that are important to them and the firm. Constant action in conformity with values, couples with regular reminders of the centrality of the organization's values to its operations is the recipe for creating an environment of trust and a cadre of employees who also act with these values in mind.
Leaders at all levels in a law firm -- but partners, in particular -- have a significant responsibility to act as the foundation of the organization's values. They are responsible for leading by example and generating an atmosphere of integrity and consistency throughout their firm. Partners demonstrate devotion to these fundamental values, which lets clients, associates, and staff know what to expect and sets milestones for staff and associate development.
Lawyers (and firms) become known by the values they live by. Making a deliberate choice about what values you want to be known by makes it more likely that you'll live up to those values than building a new framework for decision-making every time the need arises. Your consistency benefits your reputation as much as it does trust within the firm.
That internal trust, though, can be a key to increasing the intrinsic motivation of your associates and staff. Through values-based leadership, you offer staff and associates an opportunity to 'buy-in' to what the firm stands for. That can create a powerful sense of intention and responsibility, and it can increase the satisfaction they find in their work. Even the most corporate of organizations can identify meaningful values to inspire their teams. (If you need some help nailing down your legal organization's values, let's talk.) Give your team a reason to love and be inspired by what they do, even if it's hard, and you can what engagement go up and turnover go down.
But let's get more granular about return on your leadership investment. To start, consider these key metrics:
Internal facing:
Engagement rate
Turnover rate
Job satisfaction
Rate of sick leave
Length of hire/employment
Tenure at promotion to partner
Billable hours
External and client-facing
Client satisfaction
Client retention rate
Rate of referrals
Realization rate
Net promoter score
If you're already tracking these KPIs (or any number of similar data), you have what you need to pilot an investment in leadership. As I noted before, "A 2017 NALP Update on Associate Attrition pegged the cost of replacing an associate between $200,000 and $500,000." (citing Above the Law, May 2022) For small firms, the cost of replacing one of a handful of associates can put extraordinary strain on the firm. And even large firms, that might otherwise absorb the workload redistribution, can still tally up huge losses in revenue as the number of vacancies rises.
Obviously, client satisfaction scores are a great way to gain an understanding of how clients feel about working with your law firm. By monitoring these ratings over time, you can see the impact that emphasizing values has had on your clients and on your brand. Firms ignore data at their own peril, but not having relevant data is just as dangerous. At the end of the day, measuring ROI when dealing with values and leadership is essential for any firm looking for long-term success.
Are you ready to refine your leadership skills and becomes a catalyst for values-based leadership within your firm? If so, let's talk. We can discuss any obstacles that might be keeping you from reaching your goals and come up with a plan that will give you the skills and the confidence to manage your team and your calendar, to delegate better and give better feedback, and to inspire trust, collaboration, and loyalty on your team. Shoot me an email or schedule a call to get started today.
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