World in Motion: Why the Legal Profession Cannot Stand Still

Foreword

People, environment and purpose – is it time to recast our legal ecosystem along these values?

I am delighted that Obelisk Support’s latest report – World in Motion: why the legal profession cannot stand still’ – is tackling this head-on and sets out to investigate how the next generation of lawyers is expecting the legal profession to shift to a business model that prioritises sustainability beyond profitability. We see the new legal system being supported by four key pillars that will help drive the change the profession needs to see: purpose and profit; environment; access to the profession; and ethics.

Having been one of the key strands to come out of our 2022 Legal Reset culture report, ethics returns this year, and we explore further its importance for the new generation of students, trainees, associates and in-house counsel. Aided by a fascinating roundtable we held, this report investigates culture more closely taking into account the voices – and expectations – of tomorrow’s legal leaders.

Legal sector organisations and in-house legal team seeking to attract and retain talented employees cannot simply up junior lawyers pay.

They need to consider the values of the organization and its purpose. That means implementing diversity initiatives, considering environmental and sustainability credentials, and looking at the suppliers they use. For law firms and other legal services providers, it means considering which clients they are prepared to act for and the pro-bono work they undertake.

This needs to be contextualised as part of the wider debate that has sprung up especially in the last year about the profession’s ethics. Last year, the Legal Services Board – the oversight regulator for the profession – expressed concerns about the ethics of in-house and commercial lawyers in particular, citing a host of topical issues, including: the role of lawyers in the Post Office scandal, governance failures at the Royal Institute of Chartered Surveyors for which a City law firm was in part blamed, the contentious use of nondisclosure agreements in employment disputes, the leaked Pandora and Panama papers, SLAPPs(strategic lawsuits against public participation),and weaknesses in sanctions and anti-money laundering compliance.

The next generation is clear in its assessment that the legal profession cannot avoid moving with the times and needs to evolve to match a changing world. As society shifts away from the one-eyed pursuit of profit, it must be underpinned by the law.

The next generation is aligned to this need to balance profit and purpose – an overwhelming number of respondents to our survey of junior lawyers (86%) conducted for this report showed that they are looking to effect positive change in society through their work as a lawyer.

A legal profession that matches these new priorities of purpose, equality and environmental awareness needs to be at the heart of this. And the legal businesses that reflect this will be the trusted partners of their clients.

Introduction

Is the pushback against profits per equity partner(PEP) finally starting? And does it have something to do with another acronym rapidly gaining ground in the City – ESG?

This stands for environmental, social and governance, a set of standards measuring a business’s impact on society, the environment, and how transparent and accountable it is.

The fixation on profits per equity partner as the definitive measure of law firm success has long ruled the City legal landscape but this year’s results season has witnessed the first cracks in its supremacy. Mishcon de Reya decided that it would no longer disclose PEP, describing the metrics as ‘unhelpful’, CMS revealed its turnover but not profit, while Freshfields Bruckhaus Deringer announced that, from next year, disclosure would be limited to the mandatory accounts filed several months after the year-end.

While law firms are businesses like any other and look to maximise profits, these moves suggest that there is a growing realisation that there are alternative ways to measure success.

ESG issues are increasingly on the lips of clients, staff and partners; it is no longer enough just to pump up salaries (although that obviously remains crucial) – law firms have to show that they are good businesses, as well as successful ones.

As with most things, more focus on sustainability in the round represents both an opportunity for law firms – ESG is a thriving new practice area for many – and a threat, as they have to show their own credentials both to clients and staff. A survey conducted in 2021 by the Law Firm Sustainability Network in the US found that 87% of responding law firms had received requests for proposals that included the firm’s environmental efforts.

Indeed, in 2023 BT Group renewed Addleshaw Goddard’s place on its legal panel because of the firm’s commitment to driving diversity and inclusion across all areas of its organisation. Microsoft’s longstanding law firm diversity program offers law firms a bonus of up to 3% of their annual fees if they meet the diversity targets set by the technology behemoth.

In this report, we will look at how sustainability has become a vital focus of the modern law firm and hear from junior lawyers working in law firms and in-house about the progress the legal profession is making in terms of its culture and ethics. What is really important to them? What are their priorities, and are those at the top of the profession listening? Who are the trailblazers leading the way and what can other firms and corporate teams learn from them?