As we enter 2022 there has never been more focus on sustainability. Increasingly, I am speaking with lawyers who ask about a firm’s environmental credentials and I am sure this will only increase (a recent article in the Financial Times listed employee activism as one of their essential Environmental Social and Corporate Governance topics for 2022). A law firm is less obviously unsustainable than an oil drilling and exploration business however, inevitably, they can and must improve. I believe there are three essential elements to design a sustainable future for a law firm: environmental and energy concerns, the way they treat their people, and the firm’s business model.
Law firms and lawyers have a long history of using and wasting resources. From the person who leaves their office light on accidentally, or prefers to review a printed contract, to the old strategy of burying and overwhelming the other side with paper discovery, there has been a historic lack of sustainability. These elements are, however, improving. Office lights are on timers or motion sensors, unnecessary printing is actively discouraged, and electronic data rooms avoid the need to waste printing resources. More improvements can be made though; law firms must examine their travel, buildings, and energy in more detail.
Regarding travel, some meetings may always need to be done in person, but the Covid pandemic has shown how much can be achieved without physically being in the same place. Flights, in particular, have a huge impact. One business class return flight between London and Hong Kong results in roughly 10 tonnes of CO2e – for scale, this is the equivalent of producing nearly 350,000 plastic carrier bags. In a sustainable law firm, the question must always be asked ‘could our objectives be achieved without travel?’.
Moving to consider buildings, there is an embodied carbon cost to all the building materials, fixtures, fittings, and office furnishings. A sustainable law firm would think carefully about the benefits of an office move or refit, considering whether it is necessary, as well as assessing design and material choice not just for aesthetic appeal but also for the environmental cost. As an example, every square metre of replaced carpet has a carbon footprint of between 5 and 20kg of CO2e. Linklaters’ new office is nearly 28,000 sqm which, even at only the bottom end of the estimate, could involve nearly 140 tonnes of CO2e to recarpet. At the top end, it would be over 500 tonnes – more than 50 of those bad business class flights between London and Hong Kong!
Energy usage, including on heating, would also be a major consideration. A lot of leading firms are already signed up to the Legal Sustainability Alliance, which encourages a target of 100% energy from renewable energy sources by 2025. There are many ways to achieve this, including through strategic choice of energy provider and installing local green energy generation systems such as solar panels. A truly sustainable law firm would reduce their energy consumption through insulation, design and removing unnecessary usage; they would maximise their renewable energy generation and they would also ensure that any energy demands which they could not satisfy themselves were obtained from solely renewable sources. Perhaps a sustainable law firm based in the Gherkin would cover the skyscraper in solar panels!
A sustainable law firm would also be concerned with managing the demands placed on their employees and partners, including the mental health pressure. Promoting a burn out culture is no longer seen as acceptable, and many firms have made great progress in caring for the long-term health of their people.
Firms are aware of the financial cost of losing people and replacing them but nobody, at least who I have come across, has talked about the carbon cost of the recruitment process. The energy, resources and travel involved in meeting with agents, potential candidates, and prospective employers will all add up in that process. At the moment, there isn’t data available to quantify this – it would involve estimating, for example, how many lawyers a recruiter has coffee with in order to provide a suitable shortlist to their client law firm. A sustainable law firm, however, would appreciate that the costs of placing unsustainable demands on your people and then replacing them go far beyond monetary considerations.
The legal industry has been undergoing a technological transformation over the last few years as new tools and products, including integration of AI into processes, encourages a departure from the traditional business models. This has helped with the transition away from seeing junior lawyers as ‘cash cows’ to build up huge numbers of billable hours on low level exercises as there are now much more efficient ways to carry out the work. The sustainable law firm would be taking full advantage of the efficient use of AI and legal technology to both provide immediate reductions in resource use and to provide a better environment to retain their people.
Firms’ clients are aware of this and want to feel they are getting value for their legal fees. Notably, Deutsche Bank was reported as refusing to pay for work done by trainees and NQs. Client demands can be one of the fastest ways to drive change in a law firm so, even if it was not their original intention, decisions like this could help accelerate progress towards sustainable operation. Whilst Deutsche Bank has refused to pay for work, Microsoft has felt that the carrot, or cash, was more effective than the stick. I read recently that the tech titan will pay a 3% premium for panel firms who hit its diversity targets. Perhaps something similar will soon introduced for sustainability goals.
Client and partner retention is also an essential part of a sustainable firm’s business model. This involves looking at the remuneration structure and how services are delivered, looking critically at the old pillars of a pyramid model and multiple driven remuneration structure.
There is a loss of efficiency every time a client is lost and a new client has to be won in, with energy spent on identifying and attracting new targets. Partner retention is a vital component of client retention as well, and examining remuneration structures to ensure they feel genuinely rewarding is something a sustainable law firm would prioritise. Many firms are already looking at these structures including, recently, Linklaters being reported in the press as shaking up their partner remuneration structure to reward top talent. Fee-sharing law firm models have become more popular, offering up to 75% of fees for the partner on an ‘eat what you kill’ basis, and traditional model firms have become more competitive, offering extra incentives and rewards for top performers. A sustainable law firm of the future is unlikely to demand a partner generates 4 or 5 times their remuneration. They will want to avoid the risk of burnout and they will know that their high performers will, and already do, have access to potentially more lucrative opportunities.
Tightening these multiples will most likely require a departure from the pyramid model law firm as well. The advances in legal technology and AI have already started this, and the old benefits of a pyramid would quickly be eroded if more clients copied Deutsche Bank’s stance. I believe a sustainable law firm would aim closer to a steep trapezium model, with less wasted talent from their starting position. This would be driven by a focus on retaining and rewarding their people and might involve a reduced intake at junior levels, instead using the resources saved to retain and provide opportunities to their smaller cohort.
We can make a sustainable law firm, and a number of firms are already changing and starting to address these issues. There are positive signs in the number of Legal Sustainability Alliance members, whilst both waste reduction and legal technology implementation are already helping to drive efficiency. Firms must not, however, be complacent and taking things further will require an open mind about their travel, energy usage and office requirements, headcount structures, retention strategies and remuneration. Specific data would help add teeth to these areas but there is no doubt that they currently all lead to avoidable waste.
For the firms who move effectively, guided by the sustainability principle, there is the potential triple benefit of reduced environmental impact, improved wellbeing amongst their people, and greater profitability.
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