The Global Legal Industry And Its Environment Commerce Essay

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The main purpose of a given report is to conduct a critical analysis of the possibility and success of establishing and implementing the professional development program called "The Development Framework" in Baker & McKenzie company. The main idea of this program is to strengthen the firm by improving the process of the hiring employees and their following retention, implementation an effective system of the motivation and professional development. For this purpose we divided our analysis into four parts. Three of each include a comprehensive analysis of the business environment of the legal market and characteristics of the proposed program and the last part includes our recommendations.

While analyzing the external environment we focused on its key factors and came to the conclusion that it is the right time to define a way of successful development and to obtain the competitive advantage by creating something new and innovative.

Baker & McKenzie has determined its priority by choosing the development of its people and have done right because the Development Framework is a key tool of firm in achieving its strategy objectives.

The internal environment we divided into five main components: strategy, organizational structure, organizational culture, managing motivation and change and got the following results.

New strategy set by the top managers meets the requirements of the rapidly changing environment.

The organizational structure however is becoming more centralized and mechanistic that goes against company's intention to act as "prospectors". So in our point of view it is essential to apply this shift of the organizational structure to only two issues: 1) implementation of the program and 2) recruitment process.

While analyzing the organizational culture we bear in mind that Baker & McKenzie is the international company with employees from around the world and from different cultures. That specifies a great variety of challenges for business and requires application of the non-standard decisions. However, the transition to a new organizational culture is possible even if it requires significant efforts.

The motivational factors that were found out are follows: achievement, recognition, promotion, responsibility, personal development and autonomy. And even multicultural aspect and wide geographical spread of the offices could play role in motivating people by giving them the opportunity of rotation and meeting new interesting people.

The analysis of managing change displayed the factors and processes that are needed in improvements: recruitment and following retention, investments in people and resistance.

The Development Program aims to create such environment that would become the competitive advantage of the firm across the global legal industry.

The aim of the program is displayed by the following main direction:

Recruitment that means identification and selection the right people in order to meet the challenges of the firm's strategic goals.

Retention that follows after the recruitment process and aim at holding talents that were chosen.

Definition of expectations by job level in the purpose of full understanding by employees of the way that lead toward successful performance.

Development that aims at growing the firm's people both professionally and personally.

Career management that expressed in coaching and supporting the firm's people throughout their careers to deliver the firm's strategy and provide challenging and rewarding careers for individuals.

Taking into account all the factors that was brought to light in our analysis we can conclude that this program is able to cover and minimize all gaps peculiar to the legal market and consequently get the competitive advantage. So we highly recommend its implementation as soon as possible.

The global legal industry and its environment

The main purpose of a given report is to conduct a critical analysis of the possibility and success of establishing and implementing the professional development program called "The Development Framework" in Baker & McKenzie company. The main idea of this program is to strengthen the firm by improving the process of the hiring employees and their following retention, implementation an effective system of the motivation and professional development. For this purpose it is essential to divide the report into four parts. Three of each include a comprehensive analysis of the business environment of the legal market (see Figure 1) [1] and proposed program and the last part includes our recommendations.

The external environment of the global legal industry. Markets are changing all the time and, consequently business needs to react to what happens outside quickly. Otherwise the consequences would be damaging. The external environment includes the following factors: political, economical, social, technological, legal, ethical. It is important to estimate these factors to get an understanding of opportunities and threats peculiar to the global legal industry.

The internal environment of Baker & McKenzie company. Baker & McKenzie being one of the leading law firms run its business in a challenging environment across many countries that imposes many difficulties the firm has faced to so far. That is why now the firm is looking for the tools not only to overcome these difficulties but to get a competitive advantage simultaneously.

Figure 1. Concentric Circles Framework

The Development Framework. This program aims at identifying the talent and its further development with the firm. This talent management strategy intends to guide the firm's lawyers through their career progression with the firm from recruitment to partnership and beyond.

Recommendations. It is our recommendation about what should be done to make future management and employees of Baker & McKenzie successful.

So in order, to get a full understanding of the reasons that caused the significant changes in running business within legal industry we need first to look at the external business environment and determine key factors.

The external environment

External environment defines as conditions, entities, events and factors surrounding an organization which influence its activities and choices and determine its opportunities and risks [2] .

It is absolutely clear that the organization can't be successful if it does not meet the external environmental requirements. By taking into account that there is a tendency within the legal industry to expand the businesses and be presented in new locations around the world we can say that the quantity of such requirements extends substantially (see Figure 2 [3] ). Therefore, in order to get a full picture it makes sense to carry out a thoroughly analysis of the main external factors that influence the global legal industry. For this purpose we used a well-known approach that is PEST analysis that uses in its turn a framework of external factors that affect the ability of the organization to survive and prosper.

Figure 2. Factors of the global external environment

The global legal industry is characterized by following external factors:

Political and legal. When entering new markets the firms should be aware of that they would face with another legislation system and political situation and consequently, be ready to integrate and adapt to the local traditions. Moreover to run the business the law companies and lawyers must have the license and act only in the best interests of clients. To avoid conflicts of interest only lawyers are permitted to hold an ownership stakes. In addition in many legal jurisdictions the firms are prohibited to generate capital through IPO.

Economical. The legal market is highly segmented with a few prestigious law firms. The services they provide with are quite similar. The key moment is that the legal industry is also characterized by high level of turn-over and one of the reason for that is the war for talent.

Social. The global legal industry characterized by its multinational culture that implies challenges in managing the business. Add this can be explained by Hofstede's theory that states the western and more developed nations tend to be more individualist with lower power distance while Eastern and less developed nations tend to be more collectivist with higher power distance [4] .

In addition it is worth to pay attention to an increasing of clients unhappiness and dissatisfaction with the services provided by the law firms. Clients complain against low quality of services and poor client services. Moreover the transition of clients toward viewing law firms as a "one-stop shop" for their legal needs occurred. That also makes the firms within industry to search for new approaches.

Technological. The global legal industry is characterized by lack of the technological innovations because the paper work prevails over other tasks. However, the tendency that began to show within the global legal industry toward direct communications with clients could in time change the situation.

Building our conclusion on what we have obtained so far through the analysis we can say that it is the right time to make something different, to improve performance, to define a way for the successful development.

The internal environment

When Baker & McKenzie was founded in 1949 it chose the aggressive expansion strategy that assisted the company to achieve the leading position within the global legal industry. However in the mid-1980s this began to change, services became too expensive, the company faced with lack of comparative growth and clients expectations changed dramatically. Estimating the current internal environment we came to a conclusion that the situation inside the company is not optimistic as well.

There are some gaps that needed to be filled such as lack of professional development, weak motivation system, inefficient organizational structure. So in order to identify all such gaps and the reasons that caused them and continue to pull the company in the wrong direction we analyzed the main internal factors and the analysis displayed that company deals with the following strong and weak points.

1.2.1. Strategy

First of all we need to consider firm strategy as its influence on the other business aspects is extremely significant. As we already mentioned Baker & McKenzie since the foundation got the leading position within the industry and the aggressive expansion strategy maintained by top managers played the main role in this achievement. As a result, in 2004 the global company is presented in 38 countries by 70 offices with 9000 employees, However, the unfortunate truth is that some location are characterized by excellence performance while others are not. To deal with this output the new strategy was established. It focuses on what the firm already has and what to do with it. In fact it aims at achieving market preeminence by deeper penetration of major clients, growth of core practices and greater industry specialization; developing systematic way for client support and strengthening the positions within local markets; aligning firm's organizational, financial and management structures more effectively with its strategic objectives; replication of high performance in some areas more broadly. The most critical fact is a big desire of top managers to implement a program called The Development Framework for a purpose of not only to improve the internal environment of the company but to win the competitive advantage and leave all competitors far behind.

In terms of aforesaid we have to outline that new strategy set by top managers meets the requirements of the rapidly changing environment. However, the one thing is to define strategy and other is to implement it with a great success.

1.2.2. Organizational structure

Organizational structure is a formal and informal framework of policies and rules, within which an organization arranges its lines of authority and communications, and allocates rights and duties [5] . It is a mainly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim [6] .

Our aim is to define whether the structure of Baker & McKenzie matches its strategy objectives.

For this purpose we need to look back into the past. When the company started its expansion and opened new offices in new countries many of the offices characterized by decentralized structure and operated as independent profit-and-loss centers. It occurred because they were run by partners who tended to operate their offices without interference from Chicago. However, this had some positive prospects as well such as these partners were more steeped in the techniques and traditions of their region law. But till then a long time had passed and now we can see an attempt of the top managers to construct the centralized structure for the purpose of strengthening the firm's collective performance.

This indicates that Baker & McKenzie's organizational structure also moves towards the mechanistic one. Based on Burns and Stalker concept [7] we can conclude that this would reflect in the following characteristics:

vertical communications channels

clearly defined tasks

obedience to superiors

rigid, inflexible.

But according to the new strategy Baker & McKenzie tends to act like "prospectors" by reference to Miles and Snow concepts of organizational type [8] . Which is characterized by continually search for market opportunities, experimenting with potential responses to emerging environmental trends, creating change and uncertainty to which their competitors must respond.

Consequently, we can conclude that in this point the strategy's objectives do not move along with its organizational structure. In our point of view it is essential to apply the change in the operational structure to only two things: 1. Implementation of the program and 2. Recruitment.

1.2.3. Organizational culture

Organizational culture is the collection of relatively uniform and enduring values, beliefs, customs, traditions and practices that are shared by an organization's members, learned by new recruits and transmitted from one generation of employees to another [9] .

First of all we need to bear in mind that Baker & McKenzie is the international company with employees from around the world and from different cultures. That specifies a great variety of challenges for business and requires application of the non-standard decisions.

What the company deals with at this period of time is better to describe by making reference to Robert A. Cooke concept (Approval, Conventional, Dependent, Avoidance) [10] . According to which the culture in Baker & McKenzie is close to passive or defensive. That means the employees feel pressured to think and behave in ways that are inconsistent with the way they believe they should in order to be effective. People are expected to please others (particularly superiors) and avoid interpersonal conflict. Rules, procedures, and orders are more important than personal beliefs, ideas, and judgment. Passive or defensive cultures experience a lot of unresolved conflict and turnover, and organizational members report lower levels of motivation and satisfaction.

However the proposed strategy of the company strives for absolutely opposite picture that can be explained by Arthur F Carmazzi concept (Leadership enriched culture) [11] and that characterized by following definition:

People view the organization as an extension of themselves, they feel good about what they personally achieve through the organization and have exceptional cooperation. Individual goals are aligned with the goals of the organization and people will do what it takes to make things happen. As a group, the organization is more like family providing personal fulfillment which often transcends ego so people are consistently bringing out the best in each other. In this culture, leaders do not develop followers, but develop other leaders. Most everyone in this culture is operating at the level of organization. While the idea of having a Leadership Enriched organization is inspirational, it would require substantial Leadership resources to develop.

So we can conclude that the transition to a new organizational culture requires to make significant efforts not only to conduct such a transition but to combine desirable culture with the specific features that inherent to the international business.

1.2.4. Managing motivation

Running business in the industry that characterized by war for talent it is undoubtedly necessary to build a system that would motivate people to stay within the company, to satisfy compensation expectations, to develop both personal and professional, to match with the company objectives.

It is becoming clear that in the global legal industry the only one thing that could differ one company from another is its employees. People are the key tool that could provide firm with the competitive advantage and assist in achieving the leading position in the market. Undoubtedly, the creation of such system is a hard task that in addition needs huge investments.

We conduct the analysis of specific factors that would motivate employees and that consequently, need to be considered by the top managers of Baker & McKenzie. And find out a very interesting fact that the salary does not play a significant role among motivational factors. Moreover the analysis revealed that obtained factor matches with motivators described by the concept of Herzberg [12] : achievement, recognition, promotion, responsibility, personal development and autonomy. And even multicultural aspect and wide geographical spread of the offices could play role in motivating people by giving them opportunity of rotation and meeting new interesting people.

1.2.5. Managing change

From the above analysis we can conclude that the company's internal environment needs the serious changes so that to fit the chosen strategy and reach competitive advantage.

First of all it is necessary to build a recruitment procedure focused on hiring right people. The main issue however relates with internationalism culture of Baker & McKenzie business. As we could observe the offices tends to hire local employees that creates differences in approaches to running business between the offices. Now the firm is focused on the hiring the right people. However, one deal is to define those and another one to hold him and be more than satisfied with their performance.

The second and very important issue is the retention. Because when investing in something (in this case in people) it is better to invest a little bit more but be confident in getting a return on such investment.

As we could discover any changes ever proposed and implemented by top managers during the whole history of Baker & McKenzie existence met a serious resistance across many different offices. And only with a lapse of time these offices accepted new rules and innovations and even considered them as something necessary for the further development of the company. However we expect a low level of resistance this time due to both awareness of the necessity of change and massive support of the majority of offices.

Taking into account all the factors that was brought to light in our analysis we can provide Baker & McKenzie with some recommendations.

The Development Framework

It is important to say that Baker & McKenzie has already used the development program in practice. In particular, there was a program called "Associate Training Program" that had been used for about twenty years. It was focused on the developing of individuals in the way to fit the firm strategy. The program provided its members with the outstanding opportunity to receive training, work directly with clients, learn, travel and get cross-border experience. Though, the main disadvantage was that the program was carried out at the initiative of some offices and consequently, wasn't spread widely and wasn't able to assist company's strategy.

In addition, there is still a tendency to staff the offices with lawyers who are nationals to the office locations. That express difference in approaches toward managing people. And this is a big issue as it complicates proliferation of common performance expectations across the firm.

In this case our aim is to define the success of new program called "The Development Framework" designed by top managers on the basis of psychological research within the company; to reveal all pros and cons of such innovation and to advice the top management of the firm on whether this program would satisfy the all expectations.

The psychological research conducted by two professional development specialist Daljit Singh and David Coleman provide us with sufficient data about employees' expectations in order, to carry out the analysis.

First of all, what associates consider as an important thing is to be provided with bread and deep feedback that covered all areas of performance so that to understand what are their strength and weakness, to define the ways of improvements and to aspire to excellence.

So the main idea of the program is to determine the common criteria of excellence performance for each level (senior associate, partner, etc.) regardless to the location. These criteria were divided into two groups: Personal Qualities (PQs) and Individual Activity Categories (IACs).

PQs group includes such factors as Intellect, dedication, Humanity and Gravitas. IACs group in its term consists of Legal knowledge and Expertise, Business Development, Client Service, Matter and People Management.

The received result within PQs group that put forward such feature as being "Nice" reveals the necessity of creation a friendly and polite atmosphere within the company. And proved ones again that it is time to change the current model of organizational culture and move forward the model described above by Arthur F Carmazzi.

The aim of the program is displayed by the following main directions:

Recruitment that means identification and selection the right people in order to meet the challenges of the firm's strategic goals.

Retention that follows after the recruitment process and aim at holding talents that were chosen.

Definition of expectations by job level in the purpose of full understanding by employees of the way that lead toward successful performance.

Development that aims at growing the firm's people both professionally and personally.

Career management that expressed in coaching and supporting the firm's people throughout their careers to deliver the firm's strategy and provide challenging and rewarding careers for individuals.

As we already have mentioned there definitely would be some offices that would try to resist the implementation of this program. However taking into account that the majority are ready for changes we can say with a high percent of confidence that it would not take a long time to persuade all offices in the necessity of such changes.

To be able to stand out from competitors and get the competitive advantage the firm needs to define the direction where to invest to. Nowadays the leading companies within the global legal industry have quite similar characteristics and the only one thing that really differs the companies is their people. That is why Baker & McKenzie has determined its priority by choosing the development of its people and have done right because the Development Framework is a key tool of Baker & McKenzie in achieving its strategy objectives.

So as we can see observe this program tend to cover and minimize all gaps peculiar to the global legal industry. And notwithstanding it is apparent that the establishment and further implementation of The Development Framework would cause a significant spending, we highly recommend it implementation because it feeds directly into all key elements of the firm's strategy.

Recommendations

For an effective implementation of The Development Framework it is necessary to follow the plan specified below:

Announcement of the implementation of The Development Framework

Employees recruitment and selection;

Staff training and development;

Retention

Work nature

Responsibility

Autonomy

Evaluation processes

Promotion

Now when the stages are defined we can consider them in detail.

To announce on the annual meeting the necessity of implementation of this program by emphasizing both the key factors within business environment that influence the company and aim of The Development Framework in order to reduce resistance of some offices due to massive support of others.

Identify and select the right people. People with the sound foundation, deep and wide knowledge, who are able to meet the challenges of the firm's strategic goals.

To provide employees with development opportunities in order they can develop both professionally and personally.

To get a return on investment it is necessary to motivate employees so that to secure retention. It could be reached if to:

Provide associates with the opportunity to work directly with partners and clients.

Give them responsibility for their part of work

Shift emphasis away from control of employees to autonomy and empowerment. [13] 

To implement the system of monthly quality feedback on the associates performance in order that they will be able to understand how they perform and in which direction to move to perform much better.

It needs to be clear what is expected of associates at the current job level and what will be expected at the next job level and what knowledge and skills are required to get there.

CONCLUSIONS

The aim of our analysis was to assist the top management of Baker & McKenzie with taking decisions with respect to the Development Program and answer the questions that are:

When is it better to announce the implementation of the program?

What reaction would be received?

What impact would it have on the firm's performance?

Would it be possible to apply a single professional development framework to lawyers across different countries and cultures?

In our analysis we tried to cover the main issues that characterize the global legal industry and Baker & McKenzie in particular that in their turn provided us with solid facts and let to answer the above questions.

While analyzing the external environment we focused on its key factors and came to the conclusion that it is the right time to define a way of successful development and to obtain the competitive advantage by creating something new and innovative.

Baker & McKenzie has determined its priority by choosing the development of its people and have done right because the Development Framework is a key tool of firm in achieving its strategy objectives.

The internal environment we divided into five main components: strategy, organizational structure, organizational culture, managing motivation and change. And on the basis of the estimation analysis of the internal factors featured to Baker & McKenzie we got the following results.

New strategy set by the top managers meets the requirements of the rapidly changing environment. It focuses on what the firm already has. In fact it aims at achieving market preeminence by deeper penetration of major clients, growth of core practices and greater industry specialization; developing systematic way for client support and strengthening the positions within local markets; aligning firm's organizational, financial and management structures more effectively with its strategic objectives; replication of high performance in some areas more broadly. The most critical fact is an intention of top managers to implement a program called The Development Framework for a purpose of not only to improve the internal environment of the company but to win the competitive advantage and leave all competitors far behind.

First of all we analyzed the organizational structure to check its main characteristics and its correspondence with the strategic objectives. And found out that the organizational structure does not move along with strategic objectives of the company. On the contrary, it's becoming more centralized and mechanistic that goes against company's intention to act as "prospectors" (defined by Miles and Snow concepts of organizational type). In our point of view it is essential to apply the change in the operational structure to only two issues: 1. Implementation of the program and 2. Recruitment.

While analyzing the organizational culture we bear in mind that Baker & McKenzie is the international company with employees from around the world and from different cultures. That specifies a great variety of challenges for business and requires application of the non-standard decisions. We came to a conclusion that the current organizational culture is to passive or defensive by the definition of Robert A. Cooke concept and the aim of the Development Framework is to bring it closer to Arthur F Carmazzi concept (Leadership enriched culture). The transition to a new organizational culture is possible even if it requires significant efforts.

The motivational factors that were find out close to the concept of Herzberg: achievement, recognition, promotion, responsibility, personal development and autonomy. And even multicultural aspect and wide geographical spread of the offices could play role in motivating people by giving them opportunity of rotation and meeting new interesting people.

The analysis of managing change displayed the factors and processes that are needed in improvements: recruitment and following retention, investments in people and resistance.

As we could observe the offices tends to hire local employees that creates differences in approaches to running business between the offices. Now the firm is focused on the hiring the right people. However, one deal is to define those and another one to hold him and be more than satisfied with their performance. As we could discover any changes ever proposed and implemented by top managers during the whole history of Baker & McKenzie existence met a serious resistance across many different offices. And only in time the resistance weakened. However we expect a low level of resistance this time due to both awareness of the necessity of change and massive support of the majority of offices.

The Development Program aims to create such environment that would become the competitive advantage of the firm across the global legal industry.

The aim of the program is displayed by the following main direction:

Recruitment that means identification and selection the right people in order to meet the challenges of the firm's strategic goals.

Retention that follows after the recruitment process and aim at holding talents that were chosen.

Definition of expectations by job level in the purpose of full understanding by employees of the way that lead toward successful performance.

Development that aims at growing the firm's people both professionally and personally.

Career management that expressed in coaching and supporting the firm's people throughout their careers to deliver the firm's strategy and provide challenging and rewarding careers for individuals.

Taking into account all the factors that was brought to light in our analysis we can conclude that this program is able to cover and minimize all gaps peculiar to the legal market and consequently get the competitive advantage. So we highly recommend its implementation as soon as possible.

REFERENCES

Edited by Christina Butler "Managing People and Organizations" [09.11.2009]

http://www.businessdictionary.com [09.11.2009]

http://en.wikipedia.org [09.11.2009]

http://www.kulzick.com/milesot.htm [12.11.2009]

http://www.credoreference.com [12.11.2009]

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