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Published in the inaugural edition of Modern Lawyer – November 2020. To subscribe, click here.


The recent Covid-19 pandemic has unified firms across the globe. Whether large or small, multi-disciplinary or niche, law firms might have experienced things differently but disruption was felt by all. Now, as we start to consider how the future might look, we are all aware of heightened personal feelings and emotions motivating the choices and changes being made – even at the most corporate level. Across the world law firms are reappraising how they operate and, in many cases, challenging what is really important to their lawyers and support staff.

One does not need to look far to see that the crisis has accentuated social inequality at a global, national, regional and local level. Economic fears seek only to widen this gap. For many the crisis has changed how we live and consume, whom we support and purchase from as well as the sorts of relationships we want with suppliers and work colleagues.

Let’s be clear, lawyers don’t have the best reputation for being ‘nice people’. There are endless jokes about sharks, arguments and hatchets that pop up with even the simplest Google search. Yet, as consumers question, increasingly, the role that business has in shaping society – in contributing to a systemic inequality – law firms are being forced to consider their approach at two levels: first, as businesses themselves and second as advisers to countless organisations and professionals.

 

But doesn’t Corporate Social Responsibility do the job?

Before we can answer this question we need to understand the difference between three crucial terms: Corporate Social Responsibility (CSR), Responsibility and Purpose. There are multiple definitions for each that cross over, blur and confuse. It’s little wonder that the legal profession – a system that is grounded in fact, clarity and absolute terms – struggles to know what to do for the best.

For this reason this article seeks to establish not only three clear definitions but an understandable link – a pathway – through from CSR to Purpose that firms can follow.

CSR is a good starting point in all this. It acknowledges that a firm has a responsibility to society. It sets out “aims for the organisation to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices”.[1] However, it is limited in its impact. CSR is often a separate, siloed discipline more closely aligned with marketing, brand management and PR than organisational strategy.[2]

For example, even a law firm that only works for tobacco companies and oil companies could engage in CSR, if it donates some of its profits to charity. In India, the government forces companies to donate 2% of their profits to CSR but, again, even this law firm could do that.

But CSR is limited. Many consider CSR to be ‘greenwashing’ and simply absolving the organisation of socially or environmentally questionable activity. Indeed, a 2015 report published by Harvard Business Review[3] sets out clearly that CSR is not designed to impact on business performance.

This is where Responsibility comes in. Responsibility is different and goes further. A responsible firm aims to conduct itself in such a way that it serves society through its core activity and the ways in which it manages itself. A firm that only works for tobacco and oil companies cannot be responsible, no matter how much it engages in CSR.

Responsibility is best understood in terms of ‘what we do’. A responsible law firm acts in the clients’ interests, rather than generating unnecessary work to earn more fees. It would not advise a client on a legal, but immoral tax-dodging scheme. A responsible law firm would seek to proactively recruit from an ethical and diverse pool of applicants, rather than stipulating a requirement for a 2:1 from a Russell Group university. A responsible law firm would publish Gender Pay Gap reporting alongside extended diversity reporting, including equity partners, so as to show true figures, rather than sticking to the limits of regulatory requirements. They would invest in technology to reduce paper use and printing, identify ways to implement energy efficiency and consider schemes for more environmentally-friendly travel. While CSR focuses on ‘redressing the balance’ through planting trees or sponsoring internships from an inner-city school, Responsibility seeks to change the way things are actually ‘done’.

Purpose takes Responsibility and turns the light outwards. While Responsibility is the general idea that a company should serve society through its core activity, Purpose is the specific way through which it will do that and effect change.

In practical terms, a purposeful law firm would seek out ways to change how the legal sector recruits and retains professionals, working in partnership with other firms and law schools to develop skills and qualifications to increase opportunities, access to jobs and training opportunities – not just within their own firm but across the sector. A purposeful law firm would deliver genuine excellence in every aspect of their work, seeking out ways to support their clients in being more responsible and purposeful themselves. This might mean delivering innovative commercial advice that promotes and develops impact investment, establishing a niche expertise in supporting organisations that are changing the way healthcare or education are delivered, or by working for oil and gas companies (shock-horror) in such a way as to help them be more ethical in their dealings.

When we break the definitions down in this way it is easy to understand the different levels of impact each can have over strategic performance. While CSR might have a moderate impact in terms of brand reputation and recognition, Responsibility can have a notable impact on organisational efficiency. Purpose, however, is the only one to have a true strategic impact on growth, bottom line and social value.

Alex Edmans, Professor of Finance at London Business School and author of the acclaimed book Grow the Pie: How Great Companies Deliver Both Purpose and Profit,[4] defines Purpose as the answer to the question ‘how is the world a better place by my [law firm] being here?’ He argues that by focusing on all social value (across profits, colleagues, clients, suppliers, environmental, community and government) the firm will see success that goes beyond (but not excluding) shareholder return on investment. CSR, however, is often viewed as an ‘expense’ with Responsibility focusing more on cost-saving than revenue-generation.

 

Understanding silos

Those of us who have worked in law firms for decades will be unsurprised to hear that silos present one of the biggest challenges to developing a Purpose culture.

To understand this fully we need to start at the beginning of the Purpose Pathway, with CSR. CSR is usually contained within the marketing team (for smaller firms) and a dedicated employee (for larger firms). CSR is afforded a budget for philanthropic and social contributions (often as part of the marketing budget). In many cases there is little link between strategic objectives and measurements and the ways in which CSR spends this money. In short, CSR is a discipline that all too often makes decisions on its own, operates on its own and reports to few, because partners don’t see the value. Unfortunately, because the majority of firms have at least started with CSR, many partnerships struggle to see Responsibility and Purpose as different, thereby exacerbating the silo mentality.

In reviewing the Top 100 UK firms we were able to see some interesting trends about the importance of and silo nature connected to CSR, Responsibility and Purpose. Although all of the Top 100 made some reference to CSR or Responsibility on their website, only 28 named a specific contact responsible for this area of focus. Of these only five were dedicated specialists as opposed to PR/marketing professionals or fee-earners/operational directors with committee responsibility. This sends a clear message about how the majority of Top 100 firms view CSR and Responsibility.

What was particularly interesting, however, is that in reviewing each of their policies and website reporting, it could be seen that although the majority termed their work CSR or Responsibility there was widespread confusion and blurring of boundaries as to where they were on The Pathway. In applying the terminology set out in this article, we could see that, in fact, the Top 100 list contained only 11 Purposeful law firms, with 33 being Responsible and the remaining 66 delivering only CSR (however they might term their activities). It was interesting to note, however, that there were just as many firms stopping at CSR in the Top 50 as Bottom 50 (33 firms), although 26 of the 28 identified as Purposeful were in the Top 50. It was also interesting to note that although a handful of firms had signed up to the United Nations Global Compact or made reference to the Sustainable Development Goals, this appeared to have little impact on whether they were actually performing at a Responsibility or Purpose level, as opposed to CSR.

The responsibility for this must surely lie within the silo mentality so prevalent in law firms. This simple, somewhat anecdotal study, highlights how the majority of Top 100 firms consider CSR and Responsibility as separate from any strategic decision-making. Even those that do focus on Responsibility list charitable activities (marketing team), equality/diversity and recruitment (HR team) and environmental (operations team) actions separately, demonstrating a lack of any joined-up strategic focus on this subject. Marketing teams get on with their bits, as do HR and Opps teams. By separating it out in this way the subject remains a tactical one, eroding its importance with client-facing professionals. Because of this it is understandably hard for firms to see the contribution it might make and why, therefore, practices should be moved on from being an expense (CSR) to a strategic investment (Purpose).

Only 11 firms made any reference to materially changing how their clients operate, transforming the world of business and creating a sustainable future within core areas (Purpose). Only these 11 firms were able to demonstrate a top-level strategic understanding of Purpose and how it should impact on all areas of the organisation. Sadly, though, of these 11 firms, only two were able to report on performance in such a way as to show how their commitment to purposeful business had added value not only to all stakeholders but had supported the firm’s growth and overall success.

Let’s think about that again. Only two out of 100 firms appear to have realised that moving to a purposeful way of working makes more money. There is clearly much work to be done in the legal sector.

 

An example of Purpose in action

Mishcon de Reya is one of few firms that appears – at least through their website communications[5] – to understand the strategic relevance of Purpose as opposed to Responsibility and CSR.

They start out by establishing a clear statement of what they understand by a purposeful way of working:

Managing risk, building resilience, transitioning to sustainability.

They then go on:

Our own core values and stated purpose, ‘to enable our clients and our people to shape the world’s possibilities’ give us a clear-eyed view of the risks and opportunities presented by a rapidly changing world. With a reputation for taking a position, for having a wider view, and for backing our clients fearlessly at times of change, we view sustainability and Environmental, Social and Governance (ESG) issues as indispensable board-level considerations for responsible, resilient and successful businesses and families.

In this way they establish, clearly, that Purpose isn’t about donating money to charity or recycling paper (although, as we’ll see, they do this) but about the fundamental way in which they deliver legal excellence.

But, the eagle-eyed among you might note that this is within a service-provision context. What about the things they’re doing internally to ‘walk the walk’?[6] They set out a manifesto not dissimilar to many firms:

… being socially responsible [is] a corporate responsibility, we believe in the importance of having a positive impact on both our local community and the wider world.

Although there are many firms engaging in pro-bono work, Mishcon de Reya has been purposeful in its choice of project. For example, in working with B Lab they have supported a number of companies moving towards B Corp certification (including ProperCorn, The Big Issue, Finisterre and Abel & Cole).

Similarly, although there are many firms that encourage employees to take time each year for volunteering, Mishcon has built on this to include a purposeful element. They are one of 10 founding members of the Social Mobility Business Partnership, a unique and award-winning social mobility programme. The SMBP promotes social mobility in business, with a focus on the legal and accountancy professions.

This is echoed across their other core areas of activity: Sustainability and Diversity. Although as a partner of B Lab it is interesting to note that they are, themselves, not yet a B Corp, they are: 

… undertaking a participatory review of [their] own business at the same time as [they] advise other businesses on their journey to sustainability.

They are also committed to being a net carbon zero business, supported by the firm’s policy, which has progressively driven emissions down year on year while offsetting any unavoidable emissions. They are also a member of The Chancery Lane Project – the code name for the focused and collaborative effort of lawyers from around the world to develop new contracts and model laws to help fight climate change.

Mishcon de Reya is included here for a reason. They might not have the flashiest marketing communications about their CSR activities. They might not even have any really great reporting on much of their Responsibility work (and maybe they want to think about how to do this). What they do well, however, is show how Purpose runs through their firm like letters in a stick of rock (the Holy Grail of branding). Their internal ethos, operational tactics, marketing and client messaging all say the same thing … as a firm, they’re committed to delivering the very best, most excellent legal advice that is designed to make the world a better place.

 

Let’s talk about Purpose in a bit more detail

Professor Alex Edmans tweeted a few weeks ago that:

76% of investors expect companies to have defined their purpose, and 93% believe that purpose is necessary to set a long-term strategy that creates value.

This was a response to a survey conducted by SquareWell Partners, for which he wrote the foreword. An article on Harvard Law School Forum on Corporate Governance explained his views:

… there is increasing evidence that there is a business case for Purpose and that it is in investor’s interest to hold companies accountable for Purpose, rather than viewing it as an unnecessary distraction. Indeed, Professor Edmans argues that while business reformers have argued that Purpose can only become a reality if shareholder primacy is challenged, investors are not the enemy but partners in the repurposing of business. Professor Edmans points to the rigorous evidence that shareholder engagement doesn’t simply change the division of the pie, extracting profit at the expense of society, but instead grows the pie, making companies more productive and innovative, benefiting both shareholders and stakeholders alike.[7]

In preparing for this article I discussed the current Covid-19 crisis and the path which economic and commercial recovery might take, within the context of Purpose. Professor Edmans was of the view that we’re at a crossroads in terms of whether we use the recent crisis as an opportunity to create long-term social value or stay with the old way of doing things:

If no action is taken [to grow the pie] then the economic recovery will be the same – with most of the gains going to bosses and shareholders. In particular, the fact that we are now doing increasing amounts of business online means that there is even greater opportunity for a ‘winner takes all’ mentality and economy because there aren’t any capacity constraints.

Law firms are at a critical stage and occupy a unique position. Professor Edmans argues for an approach that considers a shared, increasing value across both shareholders and other stakeholders. In the majority of law firms, however, the shareholders are also those delivering the service, supported by a wider stakeholder community. Once again, the concept of silos presenting a barrier to success, when it comes to Purpose, is important here. The ‘them and us’ mentality of partners as opposed to other fee-earners, as well as of fee-earners as opposed to non-fee-earning employees is still alive and well in many firms. Maximising the strategic benefits of Purpose, for all involved, will require significant work to break down both operational and cultural barriers and silos.

 

Understanding what they’re trying to achieve is critical

For firms to understand how CSR and Responsibility can benefit them and society is relatively straightforward. Similarly, reporting on what you’re doing as well as some of its impact can be straightforward. While it might take cultural change as well as expense to move to a Responsible way of working, there are frameworks (such as the United Nations Global Compact or the Sustainable Development Goals) that can be followed. Similarly, the Impact Assessment process used to become a Certified B Corp (as only two UK firms have done – Radiant Law and Bates Wells) provides a solid foundation for integrating a responsible way of working across all areas of the organisation, as well as for reporting on performance.

Moving to a truly purposeful way of working, however, presents challenges for the vast majority of law firms.

First, it requires a move from focusing on the tactical to considering the strategic. Purposeful law firms establish their Purpose and filter it down through every element of their activity.

Second, it requires a unified culture where the value of all stakeholders (internal and external) is recognised and their views listened to.

Third, it requires complete integration of purpose within all areas of the firm, rather than it being siloed within the marketing team or a dedicated CSR team. It needs to be considered across all areas of strategic planning and budget.

Fourth it requires a clear understanding of how you want to make the world a better place. This is a fundamental element that even the most progressive firms appear to be struggling with at the moment. There is a growing voice among both firms and trade associations that for the business world to become more purposeful – for clients to be helped to be more responsible and purposeful, by their legal advisers – laws and regulations need to change. Many so-called purposeful law firms see themselves as champions of these legislative changes and view this as their purpose. While there is no denying that, in some cases, legal changes are long overdue and essential (similarly regulatory and taxation changes) this can smack of CSR for the 21st century, rather than actually being about making a positive, material difference. The cynic could question whether they’re doing it because they believe in the difference it will make or actually because they see it as an opportunity for good PR (rather like the sponsored cake bake of old-style CSR), thereby positioning themselves as ‘thought leaders’ and experts.

The most effective way to create systemic change, within the legal sector has to be, surely, for lawyers to be excellent at what they do, helping their clients to be better and passing on best practice. It may appear controversial but perhaps firms don’t only have to work for social enterprises and charities to be truly purposeful. Perhaps it isn’t necessarily bad to work for oil and gas companies, or technology monopolies, as long as you are using your expertise to help them to be better. As Alex Edmans put it: “It’s not the healthy that need a doctor, but the sick”.

 

So, what’s next?

As we enter a post-Covid economy there will be plenty of law firms planning to slash CSR budgets in a bid to recover from financial losses. Indeed, we may see several of those working on CSR within marketing teams top of the list for redundancy. In its purest form I might well argue that this is a correct course of action. Limiting the firm to just a CSR policy and programme is unlikely to ever be more than an expense. But slashing this and failing to respond to the bigger picture would be catastrophic in more ways than one. Moving through Responsibility to Purpose isn’t about ‘giving back’, it’s about fundamentally changing the ways a firm operates, advises its clients and contributes to society (both internally and externally). Done properly – and with experts leading the charge – it spans all areas of work and focus, from HR and finance to client relationships and even legal service provision. Done properly, moving to a Purpose business model should increase value, not just in terms of the firm’s bottom line but to our recovering society as a whole.

Investor Larry Fink, of BlackRock, has over $6.3 trillion of assets under management. He wrote to US CEOs in 2018:

With governments failing to prepare for the future people are looking to companies to deliver not only financial performance, but a positive contribution to society, benefiting customers and communities as well as shareholders.

Without a social purpose companies fail to make the investments in employees, innovation and capital expenditures needed for long-term growth – and above-par returns to the likes of BlackRock.[8]

Further evidence to support this theory came from DDI’s 2018 Global Leadership Forecast results, which highlighted several financial advantages to organisations that define their purpose and act on it.

In a survey of 1,500 global C-Suite executives, DDI found that those companies who both define and act with a sense of purpose outperformed the financial markets by a whopping 42 percent.

Those companies who talk a good game – that is, they have defined their purpose but don’t do anything about it – performed at the mean of all organizations. 

And those without a purpose statement and who obviously do not act or behave with a sense of purpose underperformed by 42 percent.[9]

This has a direct relevance to the ways in which the legal sector should plan its recovery from Covid-19 and future growth. Rather than cutting CSR budgets and forgetting about ‘giving back’ until good times, now is the time to invest in those very professionals partners are considering making redundant. But instead of limiting them to managing marketing and PR activities, firms should consider opening the door to a wider, strategically relevant conversation.

Our case study firm, Mishcon de Reya, sums this up as:

The Covid-19 pandemic has highlighted the transformative changes of which we are capable through individual and collective action for the common good. The world of business will never be the same and there has never been a more important time to re-evaluate our values and purpose.

Post-Covid the very best ways that law firms can support their clients is in being truly excellent at providing the best, most relevant advice. I would argue that this means not only looking at internal Responsibility (which may in and of itself generate cost savings, economies and more effective productivity) but also Purpose. If the recent crisis has shown us anything it must surely be that the current way of working cannot continue. Six months ago the majority of law firms considered homeworking unsustainable. Now look at us all! Perhaps, therefore, now is the time to recognise that CSR is dead and Purpose holds the key to widespread recovery, transformation and success.

Helen Foord is founder of ELE Global and is a multi-award winning, global, strategic marketing and business development consultant passionate about empowering people to make a commercial and professional difference, in a socially, environmentally, financially and communicationally responsible way. Specialising in the legal sector, she has over 20 years’ experience, across a number of in-house and agency roles, supporting organisations towards achieving their business objectives.

[1] Nancy Lee and Philip Kotler, Corporate Social Responsibility Doing the Most Good for Your Company and Your Cause (Hoboken, NJ: Wiley, 2013).

[2] Zachary Johnson, et al, “Good Guys Can Finish First: How Brand Reputation Affects Extension Evaluations”. 29(4) JCP 565–583.

[3] https://hbr.org/2015/01/the-truth-about-csr.

[4] https://alexedmans.com/book/.

[5] https://www.mishcon.com/services/mishcon-purpose.

[6] https://www.mishcon.com/about/social-impact.

[7] https://corpgov.law.harvard.edu/2020/06/19/making-corporate-purpose-tangible-a-survey-of-investors/.

[8] https://www.ft.com/content/a84647f8-0d0b-11e9-a3aa-118c761d2745.

[9] https://www.forbes.com/sites/danpontefract/2019/02/25/purpose-pads-the-bottom-line-so-why-isnt-your-company-thinking-about-it/#5359b1573e92.