September 2010 | Practice Planning Tips for Success
Sustainability: How Values-driven Law Firms Are Surviving Tough Times and Prospering Over the Long Term
Firms are embracing a new model of governance to survive and prosper in good times and bad.
“It’s not your grandfather’s law firm any more,” observed Bryan Swartz, chairman of the 54-lawyer firm Levenfeld Pearlstein in Chicago. He was referring to the growing number of firms, including his, that are adopting a new model of governance to survive and prosper in good times and bad, one based on sustainability. No, this is not the narrow concept that some consider synonymous with green measures related to recycling, energy and climate change, but a broader concept about sustaining the long term well being of organizations through values-based management. It’s an approach framed around a strong ethical commitment to the so-called Triple Bottom Line of sustainability: economic, social and environmental responsibility. It is corporate social responsibility (CSR) –or environment, social and governance (ESG), as socially responsible investors put it—with financial responsibility added in. Financial responsibility is an essential piece of the concept, experts say, because, after all, employing people is a commercial business’s most important social obligation and without financial success, no other good works can be done.
Sustainability as a Governance Framework, Business Strategy
While the approach is new, its foundations are not. Some of the oldest firms in the country credit their values-based culture as a major contributor to their longevity. This includes Ballard Spahr (115 years), Pepper Hamilton (120 years), Nixon Peabody (135 years) and Porter Wright Morris & Arthur (165 years), among others. These firms have all taken their legacy seriously, demonstrating a strong sense of duty to community work and pro bono legal service over the decades. The new incarnation of this approach builds on this foundation to also embrace a more participative management style, greater work flexibility and demonstrated commitments to diversity and the environment. “Given our culture, it was a natural transition to add these initiatives over the years,” observed Karen Greenbaum, chief operating officer at Nixon Peabody, which has 800 lawyers across 17 cities.
Committed firms understand this is not just a collection of good practices. “Sustainability is not just about recycling,” said Mr. Schwartz. “You can’t recycle your way to longevity. No, it’s more a governance tool that gives us an organizational culture, identity and values.”
“The economic downturn has forced more firms to re-evaluate their business models and begin to undertake systematic change,” noted Angela Hickey, executive manager at Mr. Schwartz’s firm. “Like us, a number of them are turning to more modern models that have proven effective in the business world.”
“Sustainability is important to our brand,” adds Mr. Schwartz, whose firm carries the motto “Levenfeld Pearlstein—Unusually Good.” “You must live your brand; reputation is inside-out.”
Sustainability also supports brand at Ballard Spahr, a point made clear from its values statement called The Ballard Way: “…Humanity underpins our culture…We lead and manage with a sense of fair play… We believe and integrate the principles of sustainability in our work lives.”
Nixon Peabody has taken a similar approach, launching its Legally Green® initiative, and a web site devoted to it, to communicate its unique combination of experience, thought leadership and responsible citizenship.
“At Nixon, we want a culture of nice people, not just a hotel for lawyers,” adds Ms. Greenbaum, “and as we grow, institutionalizing sustainability into our organization is one way we try to keep a sense of caring, a sense of family at our firm.”
Indeed institutionalizing sustainability---integrating it into all aspects of the firm--- is the essence of the new approach. Notes Ms. Hickey: “We connect the sustainability dots in our strategic planning. It’s infused in everything—recruiting and retention, legal services, business growth, marketing, philanthropy.”
Clients as Drivers
While sustainability may be new to many firms, it has been a familiar theme among leading corporations for years. Companies like Aveda, Patagonia, Ben & Jerry’s and Seventh Generation were created by founders inspired with a social and environmental passion. Wal-Mart, realizing that environmental and social performance had a bottom line financial impact, hired a vice president of sustainability and strategy and has asked its suppliers to help them along the sustainability path. General Electric built a whole marketing campaign around Ecomagination, focused on everything from compact fluorescent light bulbs to energy efficient locomotives. Whole Foods has ridden the surge in demand for organic, safe and natural foods to over $8 billion in annual revenues. Some 5,000 businesses subscribe to the United Nations Global Compact, a statement of environmental and social principles. Thousands of companies, including two thirds of the top 100 U.S. businesses, report publically on their economic, social and environmental performance, many following the Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines. Sustainability has burst on the scene at campuses, too, with some 500 universities and colleges now supporting STARS—the Sustainability Tracking, Assessment and Rating System for schools. Likewise for cities: The 1000-member ICLEI-Local Governments for Sustainability has joined with the U.S. Green Building Council and others in proposing a new STAR Community Index defining economic, social and environmental responsibility for cities. These developments have not been lost on sustainability oriented law firms.
According to a study by The Conference Board, an association of large US businesses, the leading reason major companies have been moving toward sustainability is to respond to customer and other stakeholder demand. While activist stakeholders are not targeting the legal profession on social or environmental matters, corporate clients are inquiring about law firm sustainability programs, partly in response to stakeholders who want those corporations to influence their supply chains. Porter Wright, Nixon Peabody, Ballard Spahr, and Pepper Hamilton have all reported regularly receiving client surveys or questions about their firm’s sustainability initiatives and often cover them in service proposals. Periodic reports are also sometimes requested, such as the detailed semi-annual reports Pepper provides to a major client on its pro bono work.
Similar inquiries have also been made to Manko Gold Katcher & Fox, the 28-lawyer energy and environmental law firm based in Pennsylvania. “Many of our clients have European operations and bring their European concepts of sustainability with them,” observed Joseph Manko, a founding partner of the firm. “They take a great interest in this.” In Europe, sustainability is becoming a serious matter. A growing number of countries, including the UK, France, Denmark and Sweden, are requiring major corporations to include environmental and social performance information in their pubic financial reports. Freshfields Bruckhaus Deringer, headquartered in London and comprising 2500 lawyers in offices spread around the world, has followed the practices of leading businesses by endorsing the UN Global Compact and issuing its own extensive sustainability report prepared according to the GRI guidelines and verified by a third-party expert.
But it’s not just about responding to client inquiries. Client interests and relationships are served through values-based initiatives in a number of other ways. Take diversity, for example. Smart firms understand that it is not just a moral imperative, but essential to keep pace with shifting client demographics. White Americans represented nearly 90 percent of the population in 1970; by 2009 they were less than two thirds. The Census Bureau projects that by 2042 the US will be a “majority minority” country. Commenting on the diversity program at Holland & Knight, the firm’s director of personnel, Andrew Peterson, said “We want to be the firm most reflective of and responsive to our clients and communities. We believe our clients receive the highest quality service when their legal teams are drawn from professionals mirroring the increasing diversity of the marketplace.” Companies like DuPont and Microsoft have offered financial incentives for retained firms based on diversity results. The diversity partner at Nixon Peabody, Kendal Tyre, has a job responsibility focused not only on recruiting and retention, but business development. Ballard Spahr helped cement relationships with client DuPont by coordinating its minority lawyer job fair.
Pro bono services have also been undertaken with the client in mind. Nixon Peabody provided client Intel with in-house training on how to provide pro bono legal services to nonprofits. Notes Joseph Sullivan, special counsel and fulltime director of pro bono services at Pepper Hamilton: “Our pro bono program attracts recruits who are engaged in their communities, which helps with retention, but it also involves community networking and building solid client relations.”
Environmental lawyers have gained valuable insights from the development of internal green programs, which have been useful with clients too. Nixon Peabody has secured green building certifications for several of its offices under the Leadership in Energy and Environmental Design (LEED) program of the U.S. Green Building Council, and has been able to use that experience in counseling clients. It’s no surprise that internal environmental initiatives at Pepper Hamilton, Ballard Spahr and Porter Wright are all guided by partners who do environmental work.
Sustainability Organizational Structures
Like their corporate brethren, law organizations are creating structures and policies to institutionalize their values-based management. Freshfields named a senior partner as chair of its corporate social responsibility strategy group, community and pro bono committee and co-chair of its diversity working group. Nixon Peabody appointed a full time chief sustainability officer (CSO). “The fact that we created this position is a reflection of our steadfast commitment to implement sustainable principles at every opportunity in our firm,” said Richard Langan, CEO and managing partner at the firm. The CSO is primarily responsible for using sustainability to strengthen the firm’s brand for recruiting, retention and client development, and for improving efficiency through waste reduction and employee well-being.
Besides having someone to coordinate the multi-disciplinary, multi-functional sustainability initiative, key individuals are often identified to lead and coordinate the efforts on each of the major values-based programs. These programs commonly include the environment, pro bono services, diversity, and recruitment and personnel matters. As noted earlier, environmental partners often serve that role for environmental initiatives. Large firms typically have lawyers focusing full time on pro bono services and a lawyer or administrative person addressing diversity on a full-time basis too. An administrative director usually handles other personnel matters. Besides its CSO, Nixon Peabody also has a pro bono partner and both a diversity partner and a chief of learning, diversity and recruitment. At Holland & Knight, a partner heads its full time Public and Charitable Services (PCS) Department that coordinates the firm’s community, pro bono and charitable giving initiatives, including the firm’s own charitable foundation. Attorneys are appointed at each office to coordinate the local PCS programs.
Also following the lead of major corporations, a number of firms have recognized that the best way to deal with the multidimensional aspects of sustainability is through multi-functional, multi-specialty teams. In the business world, such teams generally oversee sustainability planning, coordination and implementation. Ballard Spahr’s sustainability committee comprises the chair of its climate change and sustainability practice, the director of diversity, the director of pro bono programs, and the building managers from each site. The committee develops proposed policies, goals and priorities for firm approval and coordinates communications on the firm’s collection of sustainability programs. At Levenfeld Pearlstein, the executive director, environmental counsel and office manager lead an annual evaluation process to suggest sustainability priorities for the year. At the smaller Manko Gold, sustainability programs are handled through the normal management structure.
Firm-wide teams are also used to plan and oversee environmental and diversity efforts. Nixon Peabody has a Green Operations Steering Committee consisting of the CSO, the chief administrative officer, and purchasing, office administration, IT and finance representatives, which is focused on green construction; procurement practices; paper, waste and energy reduction; travel reduction and other energy conservation; and education and outreach on these initiatives. Porter Wright also has a firm-wide green team co-chaired by two partners and aided by the firm’s IT and facilities managers.
Pepper Hamilton has a diversity team led by its full-time director of diversity. A diversity committee of 26 people operates at Ballard Spahr, which is also guided by a diversity director. The committee includes representatives from each office and from firm and administrative management. At Nixon Peabody, the diversity action team and recruiting teams work together.
Local teams are used for many values-based programs, too. Holland & Knights’ Chicago office formed a sustainability team among environmental counsel, marketing, human resources, pro bono and diversity leaders to pilot the firm’s sustainability initiative for eventual roll-out firm-wide. At Nixon Peabody, each office has its own voluntary local sustainability team of attorneys and staff, including representatives from IT, facilities and other relevant areas. These teams meet monthly under the coordination of the office manager. To assure good coordination, the office managers communicate directly with the firm-wide steering committee that oversees sustainability matters. Office green teams were formed at Porter Wright.
Again mirroring corporate practice, voluntary “affinity groups” of firm attorneys and staff are sometimes used at larger firms to aid in the recruiting, mentoring and retention of various categories of diverse people, and to evaluate related business opportunities. Nixon Peabody has five such groups: African American, Latin, Asian, Women, and Gay, Lesbian, Bisexual, Transgender (GLBT). Ballard Spahr also has five: women, female non-partners; minority associates, equality (GLBT and friends); and work-life balance.
Policies and Tools
Firms with values-based management often have policies on pro bono and community services, diversity and the environment. But more and more of these firms are issuing a concise sustainability policy covering all these areas and more, under a commit to economic, social and environmental responsibility. Freshfields has endorsed the U.N.’s Global Compact but the other firms mentioned above have all opted for policies more tailored to the legal profession. Altogether 13 firms representing 85 offices have adopted the model policy put forward by American Bar Association’s (ABA’s) Section of Environment, Energy & Resources, or a tailored variation of it. “We have had a long standing commitment to justice, diversity, and community service and are making significant strides in addressing our environmental impacts,” commented Robert (Buzz) Trafford, managing partner and Porter Wright. “We found the adoption of a formal policy to be an important foundation for continued progress on all these fronts.” Added Bryan Schwartz: “Our sustainability policy is our constitution; it is the set of values that guide us.” “This fit with our culture,” observed John Carroll of Pepper Hamilton. “It reflects concisely who we are.”
While a policy statement or commitment provides and good framework for moving forward, the question remains: What practices should be adopted to implement it? Fortunately for the legal profession, there is a wide range of resources aimed at law firms and other similar commercial, office-based businesses. The ABA itself offers a broad selection of tools for firms on management practices, business development, professional responsibility, lawyer assistance programs, work-life balance, pro bono legal services and law firm diversity. It also has a number of environmental programs for firms, including the popular ABA-EPA Climate Challenge initiative. State and local bars have also been active in developing tools and best practices, especially on the environmental and pro bono fronts. The California, Massachusetts and Columbus, OH Bars all have identified practices for green law offices, and the Texas and Oregon Bars are developing more. A number of firms and local bar associations have endorsed city green policies and initiatives, such as the Greater Philadelphia Green Business Commitment, the Chicago Green Office Challenge and the Columbus (OH) Green Spot Program. Nonprofit organizations like The Pro Bono Institute and Oregon Lawyers for a Sustainable Future are also good resources. A listing of these and other references is provided in the report on the Multistate Forum on Sustainable Law Practices and included with the Model Law Firm Sustainability Framework, both available at http://www.abanet.org/environ/committees/climatechange/ .
Participative Management, Transparency & Teamwork
Other characteristics of the new values-based management are workforce participation and empowerment, flexible work arrangements, transparency and teamwork. At Porter Wright, where many value-based initiatives are planned, implemented and managed through teams, partners elect the managing partner. The chairman and board are also elected at Ballard Spahr. There, many issues are put to a vote and the firm tries to act through consensus. Strategic planning is shared openly. Besides the routine meetings of each practice group, an annual state-of-the-firm meeting is held for everyone.
Levenfeld Pearlstein takes transparency a step farther than most firms: They require all attorneys to share their database of contacts with each other. “We want our lawyers competing as a team, not competing with each other,” said Angela Hickey. “We want to bring a whole set of solutions to the client in a collaborative way.” See added: “While new people sometimes have culture shock to the systems we use based on trust and sharing, new lawyers usually find this grows their business dramatically, which in turn helps us recruit others and adapt them to this approach.”
Freshfields brings considerable transparency to its public corporate social responsibility/sustainability report, where it not only presents details on its pro bono work, diversity and greenhouse gas emissions, but offers information on its safety record, client complaint procedures and revenues and profits.
Engagement of the workforce is another hallmark of sustainability oriented law firms. Attorneys and staff are surveyed annually at Levenfeld Pearlstein and Nixon Peabody. One result of a recent survey at Nixon was the creation of wellness rooms for working mothers with babies. In response to associates’ request for a clarification of the firm’s expectations, Nixon engaged 75 associates and partners to develop a set of core competencies. “The team embraced this challenge with great teamwork,” said Christine White, chief of Learning, Diversity and Recruitment who spearheaded the project. “The effort increased associate empowerment and morale while producing a valuable tool for us. The document not only defines our expectations in behavioral terms, but reflects our values.” The firm uses it for interviewing new recruits, for annual performance reviews and goal setting, and as a framework for training.
Of course, one of the biggest concerns of law firm employees is how to balance the demands of the workplace with those of the home. Manko Gold Katcher & Fox has gone as far as any firm in addressing this. The firm practices what they call “customized employment.” Four of the five female partners at the firm work part time, as does one of the five female associates, and nine of the firm’s 26 non-attorney staff. Professional staff have the option to work from home as part of their regular schedule, which not only adds flexibility for them, but with fewer trips to the office, the firm reduces its carbon footprint. “By working with our employees to achieve a mutually acceptable work-life balance in these and other ways, we believe we are best able to attract and retain top talent,” said Joseph Manko. “The approach is more feasible than most people think. And it works for us!”
Social and Environmental Successes
Indeed firms adopting sustainability-oriented values-based management often find they can accomplish great things on the social and environmental front while continuing to provide excellent service to their clients and good income for the firm. Pepper Hamilton now contributes over $1 million in pro bono services per year. This included the successful representation in the much acclaimed “Scopes II” Case against the Dover, PA School Board that wanted to inject Intelligent Design into the teaching on evolution.
Nixon Peabody has exceeded its goal of providing over 60 hours of pro bono services per year per attorney. Over two-thirds of its most recent summer associate class consisted of minorities and women. The firm provides benefits for green travel practices, including free Zipcar membership enabling all personnel to take advantage of business rates, and only pays for parking for those commuting employees who don’t have reasonable access to mass transit or other green travel alternatives. It developed the Pocket Change Challenge initiative to collect change from attorneys, office staff and visitors and donates it to an organization with a sustainability mission. “The Challenge is a mild reminder that sustainability is important, that we each have an individual role to play in pursuing it, and that together we can make a real difference,” said firm CSO Carolyn Kaplan.
Ballard Spahr performed more than 38,000 hours of pro bono services last year. It adopted an inner city school for job shadowing, mentoring, mock trials, and a scholarship program, and even hosted the school prom. Its Wilmington, DE office is managed by a minority woman and three-fourths of the partners there are female. Firm-wide, one of every four partners is a woman.
Porter Wright’s bike-to-work participants raised $60,000 for cancer research through a community biking event. The firm is now recycling 140% of the paper it buys, and it eliminated use of 165,000 Styrofoam cups per year. It altered its desktop monitors so they would all go into sleep mode when inactive for 15 minutes, which they claim saves enough electricity to light two seasons of Cleveland Browns home football games!
Levenfeld Pearlstein contributes a set percentage of its revenues to charity annually in good times and bad, which amounted to $83,000 for the small firm in 2009. It saved $18,000 per year at its two offices by merely replacing its incandescent light bulbs with compact fluorescents, and eliminating disposable cups and dinnerware and bottled water. The firm was the first to endorse carbon trading by joining the Chicago Climate Exchange as associate member.
Members of values-based firms often take a leadership role in promoting sustainability-related initiatives through bar associations and local organizations. An associate at Ballard Spahr helped form the climate change and sustainable development committee within the National Asian Pacific American Bar Association, and partner Robert McKinstry of the firm serves as vice chair of a comparable committee at the ABA. Robert Meyer at Porter Wright co-chairs the Columbus Bar Green Initiative, and a partner at the Manko firm co-chairs Philadelphia mayor’s Sustainability Advisory Board. Bryan Schwartz is corporate social responsibility officer for Chicagoland’s Young Presidents Organization.
Challenges in Implementation
Moving to a values-based sustainability framework and establishing internal programs to support it are not without challenges. “You need to assure attorney buy-in while maintaining a primary focus on client services,” notes Jonathan Furr, who helps lead the sustainability programs for Holland & Knight. “This means you must plan and prioritize and secure visible support and recognition from the top.”
According McKinstry, Ballard Spahr gained early backing for its environmental programs by focusing first on projects such as energy conservation, video conferencing, and waste and paper reduction that offered good financial savings.
Carolyn Kaplan, the CSO at Nixon Peabody, agrees that programs should be structured so people can volunteer without feeling stretched. To assure initiatives are implemented efficiently and smoothly, she carefully plans them and tests them locally before rolling them out firm-wide with top management’s support. Added Kaplan: “One of the biggest obstacles is changing behavior. While most people are receptive to our initiatives, habits can be difficult to break. You have to focus on education and re-education to be successful,” she said.
Meyer, who has helped drive environmental programs at Porter Wright, concurred that education is key. “It is essential to communicate about the how and why of these programs in a creative way to gain support,” he said. The novel Cleveland Browns example mentioned above was the handiwork of his team. Meyer also drew on the firm’s IT and facilities management staff to keep the time demands on professional staff at a reasonable level—a strategy other large firms also use. Meyer addressed another problem commonly faced by firms with environmental programs—the fact that landlords control many of the energy and waste handling activities. The firm collaborated with their local building management firm in Columbus to establish a building-wide program covering these activities. McKinstry acknowledged that Ballard had also faced the tenancy problem and found it important that environmental, energy and recycling issues be considered when the firm negotiated the leases for its office space.
Other challenges arise with pro bono and diversity programs. For one, how do you encourage participation in pro bono work at the same time you are pressing attorneys to hit and exceed billable-hour goals? Pepper Hamilton and Ballard Spahr have solved this by counting pro bono hours toward billable-hour targets and establishing efficient, focused programs under the oversight of pro bono experts. Both firms say the value of such programs in recruiting, retention, training, client relations, business development, and marketing make the investment in time and money worthwhile. Diversity programs have been viewed similarly, with client demands and expectations reinforcing their importance to business growth. As with pro bono, formal programs under the management of dedicated professionals have helped large firms promote diversity with the greatest efficiency and effectiveness.
Living Values in Tough Times
Of course one of the biggest challenges for values-based law firms is how to continue to express those values and support their social and environmental programs when the business economy is suffering. Bryan Schwartz acknowledged, “Keeping a firm true to its values day in and day out is like being a good parent: it’s hard work.”
Firms were definitely tested in 2009 when the nation’s top 250 firms shed over 5,000 attorneys and postponed the hiring of many associates. Joseph Manko’s environmental and energy law firm, one of the fortunate ones to escape layoffs during the downturn, not only worked collaboratively with clients on fee payments as did most firms, but also helped clients look ahead to opportunities concerning energy savings, government stimulus grants and incentives, the economic benefits of green buildings and green marketing, and other financial benefits from green initiatives. “Staying aware of sustainability trends and programs has positioned us well to weather this economy and grow with the recovery,” said Manko.
Pepper Hamilton responded by deferring the arrival of new associates by a few months and trimming back somewhat on the hours devoted to its initiatives, although the basic values-based programs and people leading them remained intact. The Wall Street Journal reported on six major firms that are managing through financial difficulty in a socially responsible way by offering newly hired lawyers a $60,000 to $100,000 a year stipend to serve nonprofit organizations or some other public interest until business picks up again.
But it is tough times that underscore the real value of sustainability in values-based management and the balance it demands. Says Mr. Schwartz, “We run a meritocracy based on individual responsibility, not seniority. We coach new recruits about what it takes to succeed here and focus them on all aspects of sustainability---economic responsibility to be sure, skills and business growth, but also cultural aspects tied to environmental responsibility and of course social responsibility, including relationships with firm members, clients and communities.” When the firm was forced to do some minor downsizing, these considerations guided them.
The firm’s sustainability policy also guided the downsizing process. A key to that was extensive, open and respectful communication with both the affected employees as well as the remaining staff. “In situations like these,” said Ms. Hickey, “we must remember we are in the people business. We can’t communicate enough.”
So what lies ahead for sustainability and values-based management at law firms? As Mr. Schwartz is quick to point out, sustainability is not a fad. Population growth and changing demographics will continue. Globalization will move ahead. Fossil fuel depletion and climate change will not be resolved anytime soon. A water crisis is not that far away in many places. Poverty and disease won’t be eradicated tomorrow. Good education will remain out of reach for many. Injustice will abound. And all of these trends will affect and be affected by economic conditions. These challenges will be increasingly filling the agendas of governments, activists, universities and businesses for the foreseeable future. And the law and lawyers will increasingly be expected by clients to help address these issues and to mirror the economic, social and environmental responsibility society needs to resolve them. The current pressure for more engagement and transparency in business will be felt in law firms too. And as firms grow and are driven to act more like businesses, more will come to appreciate the value of reputation, brand, and culture wrapped around these responsibilities. Indeed, values-based management framed around sustainability is the future for the legal profession.
William (Bill) Blackburn is a lawyer and president of William Blackburn Consulting, Ltd, and author of The Sustainability Handbook—the Complete Management Guide to Achieving Social, Economic and Environmental Responsibility. He is former vice president and chief counsel of environment, health and safety at Baxter International Inc. and former co-chair of the ABA’s Committee on Climate Change, Sustainable Development and Ecosystems.