We were delighted to speak with Lamp House CEO, Lisa Hart Shepherd, who shares her insights on how can leadership teams ensure that ESG is top of the agenda for 2024.
Lisa Hart Shepherd is the CEO and leads on strategy and product development for Lamp House Strategy. By leveraging empirical research with clients, talent and responsible business experts across the legal industry, she helps firms to devise strategies that create greater value for their stakeholders and, in turn, sustain their success for the long term.
Lisa, after 25 years of researching legal and broader professional services, what prompted you to set up your new business Lamp House Strategy? What does it do?
I was driven by a desire to explore a hypothesis that key challenges relating to talent attraction were inextricably linked with culture and diversity. It appeared to me that they were actually working against the ESG agenda. My previous business, Acritas, focussed on what drove positive and negative engagement: it highlighted the impact that roles in the legal sector had on people’s lives, and the sacrifices they were required to make on a daily basis. The challenges associated with these roles, the unpredictable hours, excessive hours, and sometimes the not so pleasant cultural aspects with which they were dealing, prompted me to question whether there was in fact another, better way of doing business.
At the same time, we can’t ignore what’s happening with the planet: lawyers in particular have a role in influencing their clients, whilst also doing right thing in their own organisation.
I set up Lamp House with the goal of creating a data set that would highlight the strategic priorities for the management teams of law firms. I wanted to put ESG firmly on their strategic agendas. My intention was to apply a bit of healthy pressure by creating the evidence to show why ESG matters, and in so doing to enable more progress in this field.
ESG is constantly maturing and evolving. What do you see moving up the ESG agenda in 2024, specifically in the legal sector?
A high proportion of firms don’t have the necessary foundations in place. It’s essential to have agreement around the board table as to what the firm is trying to achieve, what it stands for and how this aligns with its core strategy. It’s important to get feedback from the wider firm to understand what the most material issues from an ESG perspective are, and to measure current performance against these so as to ascertain a clear baseline. Only then, can one create a comprehensive strategy. Having the right resources in place is key; there is no point in developing a strategy and setting ambitious targets if you starve it of the people and the budgets required to implement and make those changes.
One has, for example, to align these goals and priorities with partner compensation and performance reviews. Many firms haven’t cracked that.
While an increasing number of leaders are thoughtful about their legacy and impact, impending regulations in the EU and California will mean even greater focus on compliance, particularly around emissions. The requirement to be watertight on emission disclosure will spur firms into action. While that is positive, it will likely result in a short-term channelling of resource in a single area, rather than a more strategic approach that addresses the broader ESG field for the longer term. There is a risk that some regulatory intervention will take attention away from the more innovative sort of bleeding edge changes that might otherwise happen.
The younger workforce generations won’t put up with greenwashing or tokenism: they expect greater transparency from leaders and are prepared to be more vocal when it comes to this agenda. It’s clear that firms’ ESG strategies, and performance are already playing a much stronger role in driving the choice that potential recruits make in selecting their employer. As a result firms will need to be much more authentic : they can’t just talk the talk – they need to walk it too.
We are seeing new guidelines from the Law Society, who want firms to start thinking about the impact of the clients they act for and the work that they are advising on. But it’s naïve to think of clients in binary terms. Working for a “dirty client”, but helping them get cleaner and aiding their transition to a post-carbon business model arguably is more in tune with the objectives of an ESG strategy than not working for them at all.
What are the main risks and dangers in 2024 for firms that fail to embrace these requirements?
At the moment, the biggest risk is becoming less relevant to clients. Most clients are on the same journey, whether they are being forced by regulation or trying to be a market leader in their respective sector. As a result, most general counsel will be focussed on ensuring that they are partnering with lawyers that are knowledgeable and fully up to date on the risks and opportunities associated with this agenda.
And on the flip side, what would you say are the main rewards for law firms that are really ahead of the curve and leading in this space?
This is a significant and growing area, so the financial rewards for firms that can offer market leading advice will be considerable. We have already seen a concerted focus from the Big Four accountancy firms who are using thought leadership content to broaden and drive client relationships. Law firms are increasingly following this path.
Offering ESG advice, and doing so in an authentic way to position your firm as being on the same journey as the client, has potentially huge commercial return. The ability to talk from a position of shared experience when you’re helping them to make the required changes is very powerful.
However, it is also worth noting that there are some risks as well in embracing this belief. As we all know, there are still some loud voices that are anti-ESG; you will have a few in each firm, and similarly a handful of clients who take a counter position.
Despite this, it is clear that the direction of travel for the younger generation and for clients is to embrace the ESG agenda. And increasingly, whether they like it or not, clients will be forced into following this path as a result of legislation and tax regulation. So while you might alienate a few team members and clients to begin with, ultimately the vast majority will be sitting in the believers’ box. To be more sustainable and prosperous for the future, law firms need to invest resource and time now.
What does “good” look like for a law firm in this context?
Real transparency: admitting openly where the flaws and gaps are. I love that the more advanced firms are releasing responsible business reports that state openly what their main problems are, with a clear action plan and a progress report against each item. Genuine transparency puts pressure on everybody to perform, to really move and drive things forward. It declares openly to the world “we know we’ve got issues and we’re trying to fix them” rather than presenting a polished but inauthentic front.
Board level executive sponsorship is absolutely necessary. For firms that can afford it, having experienced ESG professionals, rather than delegating responsibility to a partner is extremely helpful. Dedicated talent brings the necessary expertise to deliver a firm’s ESG programme, particularly when responding to the challenges of multi-jurisdictional operations.
Is it important from your perspective that they sit at the top table?
If they don’t sit there themselves, it’s important that there is someone at the top table, sponsored by the leadership team and whose unambiguous remit is to be driving the ESG agenda.
How will Lamp House support firms in addressing the unknown challenges that will arrive over the next few years?
We can support firms on their journey in a whole range of ways. We’ll help them to know where the gaps are so that they can create a clear road map, giving them the evidence to get their partnerships on board. Often, firms can get into that sticky place where there’s so much disagreement and debate, that it’s hard to move forward. We aim to give them the evidence to enable them to glide through that stage, shining light on best practice and celebrating success.
The big data sets we have built enable us to identify and demonstrate what sorts of activities have the greatest impact This allows us to distinguish between what the true accelerators are and what’s purely window dressing. For example, there has been a lot of academic work done to show that some Diversity and Inclusion initiatives might in actual fact be counterproductive.
We aim to use really rich data to unpick and explore these points further, so that firms can focus all their efforts on the things that will move them the furthest forward.
Biography
Lisa is a graduate of Mathematics and Management Science and has built up a twenty-five-year career in market research within the professions. In 2002, she founded Acritas, which became the global leader for insights in the legal industry, with particular emphasis on market trends, brand, client relationships and talent. She sold that business to Thomson Reuters in 2019. Conscious of the environment in which successful professional service firms require to operate, Lisa was keen to develop her research into sustainability. In 2022, she successfully completed the Sustainability Leadership Programme at Imperial College Business School, London.
Lisa teaches periodically at the Centre for the Legal Profession at Harvard Law School and has led extensive research to find levers to achieve greater equity, wellbeing, diversity and inclusion within the professions. Lisa is part of the Advisory Board for Barbri International.
Find out more about Saxton Bampfylde’s Legal Practice
A unique approach to law firm recruitment
Saxton Bampfylde has been finding and placing executive and non-executive talent across the professional services environment for over 30 years.
Unlike our competitors, we don’t just have a black book of lawyers who are unhappy elsewhere. Nor do we take a one size fits all approach to our clients. Our starting point is to properly understand your culture and strategic objectives and ensure that candidates are suitably aligned.
Our rigorous data driven approach and a sector leading 98% success rate, puts us in pole position to identify and recruit outstanding partners.
Our methodology is rooted in rigorous research, not market gossip. We pride ourselves in looking beyond the obvious in creating a target list.
Uniquely, our team is complemented by an adviser with 20 years’ experience of law firm leadership. Understanding what it’s like to sit on your side of the table provides an added dimension, enabling us to look beyond the theoretical in identifying top talent.
For more information contact Kate Ludlow, Partner and Consultant at Saxton Bampfylde