Rex Schlaybaugh focuses on change management at Dykema Gossett Featured

8:00pm EDT August 26, 2010

Rex Schlaybaugh says lawyers are skeptics by nature. So when the chairman and CEO of Dykema Gossett PLLC tried to drive a systemwide change in their mindset, he was faced with overcoming a great deal of established inertia in order to make it happen.

“Large law has never been a fast-paced, fast-changing industry,” Schlaybaugh says. “Changes come slowly, are often resisted, and as the economy changes, we have found that we are subject to business cycles just like any other industry. Therefore, the way we’ve been operating for the past 100 years can’t be the way we operate in the future.”

Dykema Gossett is a national law firm with 700 employees that generated $175 million in revenue last year. Schlaybaugh had to figure out a way to overcome the momentum generated by an organization of that size and drive home a message that is simple to state but far more difficult to internalize and implement.

“I needed to drive home the recognition that we are a business,” he says. “Though we are legal professionals, we are a business, and our clients are looking to us like they look at any other business in a supply relationship. Are we efficient? Are we cost-effective? Are we producing value? Do we understand their business? And above all, we needed to realize that we aren’t entitled to any portion of their business, but we have to earn their business every day. It’s really a fundamental change in the way many lawyers approach the profession.”

To get the lawyers and legal staff at Dykema Gossett to think like businesspeople, Schlaybaugh needed to get out of the office, communicate and educate. He needed to make a nationwide force of attorneys aware of the business that makes a large law firm run. He needed to get his employees to think in terms of supply and demand without sacrificing any of the legal specialization and expertise that had built the firm’s reputation over the years.

Start a training program

Schlaybaugh needed to begin drilling his employees on the fundamental economic principles that drive successful law firms, and then link those principles to the demands that purchasers of legal services are making in the marketplace.

With the need identified, Schlaybaugh and his leadership team organized a series of training sessions that dealt with topics such as price, profitability and how a top-line dollar finds its way to bottom-line revenue.

“We significantly invested in our finance area to help our lawyers become better businesspeople,” he says. “We have a lot of partners and lawyers in the business, many of whom have significant client relationships and are involved in taking on work every single day. That is who we needed to take the time to educate on becoming smarter, better businesspeople, because they really become the sales, marketing, pricing and finance department for that piece of business. So the more we can help them understand the economics of a big law firm, the better they’re going to be as businesspeople.”

In addition, Schlaybaugh and his leadership team developed a partnership with the Stephen M. Ross School of Business at the University of Michigan.

“We worked with their business school to develop a proprietary program where we took our young, up-and-coming lawyers, as well as a group of the people who serve our largest clients and run our practice departments, and ran them through a leadership management program,” Schlaybaugh says. “It’s all part of our view that, overall, we need to be more sensitive about what our clients are wanting and more sophisticated in the way we manage our business.”

But training programs are only the beginning. You need to reinforce your focus on foundational business principles through consistent communication that continues to drive home the core message that you want your people to hear.

At Dykema Gossett, Schlaybaugh reinforced the firm’s focus on solid business practices by repeatedly placing emphasis on client services. Schlaybaugh wanted every lawyer and staffer to realize that whatever is good for the client will be good for the firm in the long run.

“It’s about the commitment of the organization on the matter of communication,” he says. “Constantly communicating and sharing information is critical. That means you need to share information from the top. In our case, it all comes back to the fact that these are changes to the historical model of law firm management. We need to understand what our clients want. In the past, law firms didn’t really do that. They’d say ‘We have a real estate department, and if you have a real estate problem, come to us and we’ll take a look at it.’”

Cross-functionality has become an issue of increasing importance in law as it has just about everywhere in the world of business. It is a major aspect to effective client and customer service, and as part of his ongoing communication strategy, Schlaybaugh wanted all of the leaders at the firm to examine the organizational structure for opportunities to provide cross-functional services — and as part of that, to build familiarity among various practices within the firm by developing opportunities for lateral communication and team building.

“We realize that we need to invest in everybody who works on a particular client,” Schlaybaugh says. “We need everyone who works on a particular client to know what is going on in the firm. Who is providing services and what services are we providing? That type of communication, information sharing and knowledge building among the people who are serving a particular client or customer is extremely important if you’re going to be as efficient as possible in providing services and achieving your desired outcome.”

Build for adaptability

If you want your employees to be ready for change, the preparation has to start long before you shift course. You need to build adaptability into how you do business. Your market might not change, depending on your industry. Your philosophy on leadership might not change all that much. But you still want a business and work force that can change with the times, move with shifts in the industry and, perhaps most important, remain able to quickly react to new business opportunities.

As part of thinking like businesspeople, Schlaybaugh wants his attorneys to react like businesspeople. If a potential client presents a new service opportunity that might create the possibility of additional business, Schlaybaugh wants his legal experts to recognize the opportunity and feel empowered to capitalize on it.

The way he makes it happen is by continually driving home the idea that what was good for the firm in decades past isn’t necessarily good now. Momentum should propel you forward, not keep you in a circular flight pattern.

“In today’s environment for leaders, with the challenges that are out there, you need to be able to start out fast and keep picking up speed,” Schlaybaugh says. “We have kept trying to break the rule that says we’ve been doing something a certain way for so long, and we can’t do it any other way. Obviously, you don’t want to just change for change’s sake, but you do want to remain nimble and agile. I don’t think a ponderous organization that is slow to change or afraid to change will necessarily be as successful as organizations that are more nimble.”

In some cases, making a change means making a decision that is unpopular, but the numbers, measurements and insight of your experienced team members have given enough evidence to make you believe it is the right call.

The decisions in which you are cast as the lone wolf awash in a sea of doubters can be difficult to make. Far easier are the decisions over which you can build consensus in advance of pulling the trigger.

There is a time and place for both, but as often as you can, you should try to make the rounds, build your case and cement the idea with your people. Your employees will develop a much stronger tolerance for change if they feel like you are making a good faith effort to solicit, consider and implement their input.

As you keep driving a forward-thinking mindset to your employees, and as the decisions you make begin to deliver positive results, your employees will start to develop more and more confidence in your ability to make a judgment call. If you’ve done your job correctly in the early stages of change management, building a consensus should be a less arduous task over the ensuing months and years.

“In any business, the management team continues to build credibility through the outcomes they have achieved,” Schlaybaugh says. “So we measure ourselves by how we have grown the business, how we have improved earnings, how satisfied our people are with their jobs.”

Dykema Gossett has an internal scoreboard that measures the job that management has done in communicating with employees. Employee confidence is reflected in job satisfaction, workplace satisfaction and the financial success of the business, among other categories.

“Our partners are entitled to expect that our management team will make progress on all fronts every year,” Schlaybaugh says. “We have a number of things that most businesses measure, both on financial and nonfinancial aspects of the operation. Obviously, you’re aware of the financial ones. What is our revenue, our growth rate, our revenue per lawyer, profits per partner? We have a whole series of financial metrics that we measure ourselves against.”

Financial metrics can give you an accurate gauge on how well positioned your business is to grow and change. But it’s the employee feedback that will show you how well your business will be able to capitalize on the opportunities presented to it. It’s your employees who are going to man the throttle and steering wheel.

You need to encourage employee feedback through multiple channels. Feedback channels give employees an ongoing opportunity to interface with management and help retain their involvement and interest once you’ve initially engaged them.

It might be cliché to say that you have an open-door policy, but Schlaybaugh says the concept is still worthwhile. You need to be accessible on a day-to-day basis if you want employees to be engaged and willing to change with the company.

“You have an open door in the sense that you are willing to listen to different opinions and views,” he says. “Even if you do have to make a decision and move on at some point, I think most people appreciate that a decision was made — even if it wasn’t necessarily the one they were advocating — as long as they were provided with the opportunity to be heard, to be able to advance their position. It goes back to the larger communication issue and how important it is within the whole organization.

“When we get a piece of feedback, we hand it to whatever department of the law firm has responsibility for that area. Obviously, not all ideas are adopted. But you go out of your way to thank people for their ideas and time. I think people appreciate the willingness on the part of management to listen, and then they are very happy to see the changes that come from the ideas within the organization.”

How to reach: Dykema Gossett PLLC, (313) 568-6800 or http://www.dykema.com/