Re-visioning the Law Firm as a Magnet for Entrepreneurship

The legal industry has long prospered by its traditional services-for-fees profit model. However, leaders in the legal industry are now spearheading initiatives to transform the landscape, and with it, rethink their established business strategies.

As Chairman and CEO of the prestigious Philadelphia law firm Dilworth Paxson, Ajay Raju sits at the forefront of transformation in the legal industry. Central to his vision is the distinction he makes between lawyers and counsel: lawyers provide legal services, but counsel exist to help people process moments of great opportunity. Raju aspires to radically change the relationships among law firms, entrepreneurs, and citizens, and in doing so, transform Dilworth Paxson into an “institution of counsel.” In the pursuit of this innovative change, the firm is launching numerous projects and business platforms designed to engage the region’s entrepreneurial community.

Raju spoke with Mack Institute Executive Director Saikat Chaudhuri at the inaugural South Asian Leadership Forum about these transformational forces in the legal industry and initiatives for further innovation.

An edited transcript of the conversation follows.

Listen to this interview as a podcast:

 

Saikat Chaudhuri: Ajay, thanks so much for taking the time to be with us today for this inaugural South Asian Leadership Forum. We want to profile South Asians who’ve made it across a number of different fields, and we see a lot of leaders in many different types of arenas but law is not so common.

Clearly you’re an innovator, you’re an entrepreneur, and you’re doing transformational things here at Dilworth as well, but I’m sure you had to make adjustments yourself to fit in, to get that ability to make these changes that you’re now talking about. I want to understand a little bit more about it too. But what adjustments did you have to make?

Ajay Raju: If you look at Dilworth and its history, it is not just a law firm. It’s an institution in Philadelphia. So Dilworth’s corporate identity and DNA and my personal DNA were absolutely aligned. So it made sense. So when I came in, we talked about the Parsi story: the way I describe it is that Dilworth was the cup of coffee. All I wanted to do was be the sugar that dissolved into the culture of the firm without changing the texture or the character of the coffee itself, but make the coffee sweeter. And that’s what I thought we should’ve done and would do.

Six months into my tenure at Dilworth Paxson, taking stock of both our strengths and our weaknesses as any company would look at it, I identified a new vision for the firm. I realized that we would have to radically transform as an institution, not in terms of a total revolution as much as an evolution of what we used to be. We had to be absolute change agents. Counsel, not just as a collection of lawyers, but counsel – to bring back that original idea of what made Dilworth so special – to transform in a context of a legal industry that hasn’t gone through evolution in terms of innovation for a long time.

I realized that we would have to radically transform as an institution, not in terms of a total revolution as much as an evolution of what we used to be.

So that’s when I realized I can’t just be the sugar that makes the coffee sweeter and dissolve into the culture. Instead I had to bring in the milk to radically transform the texture and the color of the coffee itself, and that had to be a shared journey. Now people have asked me, “How’s it going? You have adjusted, a handful of your senior leaders have adjusted to what that new radical vision of Dilworth 2.0 is going to be. Is that adopted by all of us?”

I would be lying if the answer is yes. It is very difficult to change culture so quickly. Is there a general understanding that we want to go there? Absolutely. We have a unanimous understanding that we want to go there. Is there fear and anxiety about the new world? Yes. I think what we have are the early adopters who have embraced the notion that we must change, and we will change, and we can actually lead the legal industry into innovation. Then you have a tipping point moment that happens typically.

We’re now passed the tipping point to full adoption. We’re in that awkward phase and the struggle that I can see internally – I’m speaking a little out of place here, because I’m airing dirty laundry from inside – is how do I, lawyer X, fit into this new vision? How do I become a soldier within this new world? And that’s where I think the past couple of weeks, I’ve been going through a real emotional roller coaster, where I’ve taken stock of my own leadership and am wondering whether or not am I doing enough to clearly articulate the vision and the pressing need for us to evolve. And then two: Is the vision not only clear but is it also inspirational enough where you are encouraging others to now run to the horizon and have the curiosity to look beyond? I think the answer is yes. Only time will tell.

Is the vision not only clear but is it also inspirational enough where you are encouraging others to now run to the horizon and have the curiosity to look beyond?

Chaudhuri: What I love about the answer you just gave and the introspection that you’ve made is that you clearly have struck a good balance between fitting into the environment that you’re a part of, and being true to yourself. I think that’s really an important trait: to be respected and yet be able to make the changes, and especially because you’re transforming not just a company but hoping to transform an entire industry with your innovative approach.

Raju: For me, there’s a difference between the word lawyer and counsel. Lawyer is technically sound. They know how to read a statute. They know how to read a case law and provide accurate pinpoint advice for a client. Counsel is more than that.

Every entrepreneur has a moment of Kairos in their life, that moment within the continuum of time that is pregnant with opportunity. And when they go through that kairotic moment of opportunity, they usually have somebody on their speed dial to process that kairotic moment and say, “Look, marijuana is being legalized. I think there’s an industry here. I want to set up a bank, or I want to set up a distillery.” Whatever their perceived opportunity is, they’re calling somebody to say, “How do I get there? What are the steps? What are the hurdles that I need to move?” Typically, they’re calling people like Joe Jacovini, Steve Harmelin, Larry McMichael, Jim Hennessey, Brett Wiltsey, their counsel. They’re the ones who get the phone calls to figure out, “How do I process it?” After they have created it, then they just call lawyers to memorialize documents.

Our new vision for the law firm can be summarized in one sentence: We are trying to be an institution of counsel that leverages the intersection among relationships, value, and judgment for the benefit of our clients, and the industries and the regions in which they operate. Now that’s a loaded sentence. An institution of counsel – I already talked about the distinction between counsel and lawyers. We want to be not just a collection of lawyers but an institution of counsel. Not just a handful of people, but the institution itself should remind people that that’s where you go for processing a kairotic moment. I explained how we went there.

We are trying to be an institution of counsel that leverages the intersection among relationships, value, and judgment for the benefit of our clients.

How do you become that magnet, the watering hole, where all innovators and entrepreneurs come together to seize their opportunity, and how can we be that institution that facilitates and dreams for them? How do we stare at a forest and imagine a city for many entrepreneurs? That’s the first aspect, the intersection of relationships, value, and judgment. Law firms, unlike any other business institution, touch every aspect of humanity. Even more than accounting firms, even more than consulting firms, because we touch from pro bono clients all the way to firms like ours: local, national, international clients.

So we have tentacles that reach everything. But if you think about law firms within the industry, the incentives, the carrots and sticks, are designed as such where even if we say in our marketing materials that we believe in cross-sell, etc., if you really look at the incentives, we’re focused on the tip of the iceberg. How do you extract legal fees by selling them units of time and in return getting fees or profits for the firm? A counsel thinks differently, but that’s what most lawyers think. But the clients’ needs, the rest of it which is submerged in the water underneath the tip of the iceberg, can also be monetized both for the clients’, industries’, and region’s benefits.

So the relationship to us is, how do you take those sets of relationships and create cross-connections that truly shape and reshape the contours of our client’s potential and the industries in which they serve or also the regions in which we operate? How can we really transform those things regardless of whether or not there’s a return for us from a profit motive? Because I’m a firm believer that in the long run, once you shape and proactively do these things, you will benefit anyway. You’ll benefit because of the “rising tide lifts all boats” mentality.

How do you take those sets of relationships and create cross-connections that truly shape and reshape the contours of our client’s potential?

The value that typical law firms can provide is not just discounts to legal fees or good advice. It’s also processing of kairotic moments, positioning people into that kairotic situation. Judgment, well, law firms are filled with people that have unique training that can navigate the regulatory landscape and the legal landscape but our judgment is bespoke – it’s different than a consultant. So our role as counsel can be transformative.

So what does that mean? How are we becoming a magnet? One, to create an advisory body called the CEO Counsel. It’s really a collection of local luminaries who have served as counsel to me in helping change a law firm and transform it into an innovative mode. They’re doing really well. But they’ve also been in many ways the apostles who have spread the gospel of innovation in the marketplace and lent more credibility to us because of their own stature within the industry as innovators and leaders in their segments.

Second is a concept called The Exchange. Dilworth Paxson has created what we call an Exchange, where we have invited other venture funds locally, private venture funds, to come together and syndicate deals with each other. So we have a one stop shop where venture funds can syndicate deals. If you’re a startup you apply through a proceed or software, and with one click you reach 13 venture funds that look at you. So it’s a place where a startup community can have ready access to capital without actually knocking on 13 extra doors.

And then what we’re really interested in is creating the third bucket, which are subscribers within the region who have access to private deals that are easily found in Silicon Valley and other markets, but harder to find in Philadelphia if you’re not really high net worth or affluent. We’re creating that bucket to grow. So we’ve created this moment where it’s a watering hole where various entrepreneurs come together and exchange entrepreneurial activities.

The third platform is called Dilworth Ventures. I’m convinced that law and the margins that we operate are only going to shrink each year. It’s getting ultracompetitive. Automation, artificial intelligence will absolutely disrupt our industry. Knowing that, we’re pivoting today, anticipating what’s going to happen ten years from now and creating alternative revenue models that not only provide supplemental income to us but also feed our current core business, which is law.

Michelle Eckert is Marketing and Communications Coordinator for the Mack Institute, where she works to engage students, researchers, and corporate partners in opportunities for collaboration. Michelle received her B.A. in Art from Valparaiso University in 2007. Her background includes two AmeriCorps terms of service working to teach mathematics, computer literacy, and job readiness skills to out-of-school youth in Philadelphia, focusing particularly on promoting access to post-secondary education.