Communication Problems in Law Firms
It does not much help that in good times and bad there are some significant structural barriers to good communication, even in firms that try hard to be transparent and open in their information sharing.    The use (or misuse) of email, and stilted discussions at formal meetings become a poor substitute for the easy interchange of ideas that often take place in a semi-social setting. Distributing large volumes of unexpurgated financial information can result in information overload or analysis paralysis.  That can drive teams, practice groups and offices into functional silos where they are only capable of absorbing information which immediately concerns them and ignoring what is going on elsewhere in the firm.  What is more, many firms have grown hugely in recent years with the result that fewer partners and employees know each other; whilst communication between friends is often difficult, communication between strangers can be fraught with problems and does not enjoy the benefit of doubt given to friends.
The truth is that the traditional structure and hierarchies of law firms do not lend themselves to a culture of easy and open communication.  A “them and us” tradition even within the ownership group leads to grapevines, rumour-mongering, suspicion, cynicism and muddled goals. In such an environment, many partners and professionals have difficulty in perceiving what their tasks and roles are, and the context in which they are expected to make decisions.

There are other distractions in the modern law firm.  The professionals of today tend to be skeptical of spin and cynical about what is increasingly seen as manipulative leadership attempts to inspire and motivate better performance.  They are in equal proportions both rebellious and more demanding.  They do not snap to attention or automatically do the bidding of their leaders.  They tend constantly to question or criticize the motives of managers; they frequently suspect political agendas for even the simplest of communications initiatives or the most open of information exchanges.

Communicating Bad News
We are seeing these issues today in many law firms as managing partners continue to attempt to introduce renewed transparency to their firms’ management and financial position.  Being candid about the firm’s financial performance was easy for the past few years — the biggest problem with communicating record revenue and profit growth is trying to keep from joyful giggling while speaking.  But recessions are more difficult, in part because no one likes to be the bearer of bad news, but mainly due to the risk of fearful reactions.

The issue of the impact of information with the wrong spin is not just a law firm problem.  We certainly saw it recently with the Obama administration’s comments about the US economy.  Being new to the job, the President, like most new managing partners, felt compelled to deliver to his constituents a clear and honest appraisal of the prospects for the U.S. economy.  But the Jack Nickelson line, “The truth… you can’t handle the truth!” apparently applied and the markets dropped 20+ percent during his first six weeks in office.  Then, the President and his Treasury Secretary began putting a more optimistic spin on their comments and several weeks of gains immediately followed.  The future will tell whether comments about the economy are candor or spin, but the impact of any communication of bad news is an immediate effect on the recipient’s view of the future.

The difficulty is, of course, the collision of aspirational values of integrity, truthfulness and transparency with the real life consequences of self-fulfilling prophesies and “letting the chips fall where they may.”  In truth, there is little room for debate here.  It is inconceivable that a leader would adopt a policy of purposeful deceit.  And the concept of “need to know” just doesn’t work well in most law firms.  It seems to us that the question here is not whether one should tell the truth — of course one should.  Instead, the issue is how to go about providing transparency while minimizing the fear and knee jerk reactions that often result from receiving negative information. As one of Nick’s former law firm partners used to say, “It’s important not to spook the troops!”

As we move forward with this economy over the next few years, we believe the ability to successfully communicate difficult news may be a core skill for managing partners, COOs and Chief Financial Officers.  The following are hard learned lessons by experienced law firm managers:
1.  Transparency without context is dangerous.  Becoming candid is not a throw the switch, overnight, option.  It requires the provision of a sufficient background of information to allow the recipient of information to process it on a rational basis.  Issues, situations and challenges develop over time and the factors which the managing partner has carefully been scrutinizing will not necessarily engage the attention of partners, either because they have not had all the information available to them in the period of development or because the provided information is still sitting largely unread in their in-tray.   Although – occasionally – shock tactics may be necessary to shake the foundations of complacency, dropping bombshell announcements without patient and applied preparation rarely works well.

2.  There is never a good time to communicate bad news.  A natural reaction of many leaders is “I can’t tell them how bad things are until I have a rock-solid plan for dealing with it.”  This becomes systemic under leaders who stress “bring me solutions, not problems,” in their management philosophy. The problem is the longer one waits the harder it is to communicate the news. The key is to get ready in good time, easing the blow by advance preparation and then getting to the meat of the message quickly.  It is also important to remember that after any announcement, the mission is not yet accomplished and it is important to check with each partner and team member to see how you can help them deal with the news. The message however should not be so circuitous and euphemistic that its full import fails to get through.  As Oscar Wilde once observed, “Whenever one has anything unpleasant to say, one should always be quite candid.”

3.  Leadership is by its nature an optimistic business.  It was Napoleon who once observed that leaders are dealers in hope.  It is difficult to get inspired by a pessimist.  Equally, if the leader tries to sugar-coat the message or minimizes negative news, credibility suffers.  Optimism does therefore require a full acceptance of reality, coupled with a belief that with hard work, focus and resilience, a positive outcome is always possible.  There is clearly a fine line between useful candor and negative pessimism, but one of the true tests of leadership is the ability to communicate difficult news in a way which maintains morale.  A key is to link difficult problems with a checklist of possible solutions even if a viable answer has not yet been identified.

4.  Transparency requires trust.  Most law firm leaders feel they have the trust of their partners.  Unfortunately, trust which was evident a year ago can dissipate quickly, especially in tough economic times when trusted institutions are shown to be vulnerable.  If the partners trust is shaken there can be a skepticism that causes partners to question a leader’s motivation behind every communication.  Experienced communicators don’t assume trust even if they have every right to.  Instead, they provide examples and comparisons that validate their message.  This serves to make the message more effective and rebuild any lost trust.

5.  Communication must fulfill the recipient’s needs.  When a leader communicates bad news there is usually a message he or she wants the recipients to take away from the communication.  It may be that “we need to work harder” or “cutting costs will require you to sacrifice.”  It can be as simple as “we’re going to be okay.”  Unfortunately, in the pursuit of transparency and factuality, leaders sometimes forget the needs of the people to whom they are speaking.  One of the main benefits of entrusting the management of a law firm to a managing partner and a management team is to allow the remaining partners to focus on what they are best at – the practice of law.  Partners want their management team to collect, analyse, sift and filter the detailed information and facts which they receive and to pass on their conclusions and reflections in a form and manner which the recipient will find helpful and relevant.  It is the leader’s job to absorb and synthesize the initial impact of bad news and predicaments and to turn data into insights.

6. Nice guys finish last.  Few people actively foster and encourage their own unpopularity.  Most managing partners want to be at least admired by the majority of their partners and over the past decade or so, some have found it somewhat hard to deliver unpleasant personal news to their underperforming partners.  It takes time and experience to realize that maintaining popularity with low achievers actually risks the preservation of credibility with higher performers.  However, when we look back at the period of recession through which we are now going, the law firm leaders who will command the most respect will, we suspect, be those who refused to pull their punches and who risked growing unpopularity by consistent and forthright candor which has been sensitively and sensibly delivered.  The failures will be those who either suppressed bad news until it was too late or who were too pusillanimous to be forthright with their partners.

It should be clear from these observations that a careful balance has to be achieved between blunt outspokenness at one extreme, and malicious information suppression at the other.  Both these extremes can prove disastrous in their effect.  We are not suggesting reduction in transparency so much as the exercise of care and caution over the proliferation of unabridged sensitive data which is not accompanied by the hope of solution.
The English novelist Samuel Butler famously observed 130 years ago, “It is far safer to know too little than too much.  People will condemn the one though they will resent being called upon to follow the other.”