A few weeks ago, I wrote about the concept of the OODA Loop, a decision-making framework where one analyzes how they Observe a situation, Orient to their observations, Decide what to do, and finally, take Action. In reality, the OODA Loop is a bit complex than that — rather than a linear progression, the steps impact each other and ultimately repeat ad infinitum.
Of all the phases and stages of the Loop, the Orient phase is considered to be the most influential and critical. How we orient ourselves to our surroundings impacts every other part of the Loop: what we observe, the decisions we make, and the actions we ultimately take.
How we orient ourselves is, itself, a complicated function. Ultimately, our orientation to a situation is a reflection of who we are as people or organizations. Factors such as cultural traditions and heritage have an impact, certainly, as do our own process of analysis and synthesis of information, facts, and observations that are new to us. Perhaps most critically, our previous experience, combines with all this to inform our orientation.
Considering these factors as they would apply to many if not most law firms in the legal market today gives us a deeper insight into why some law firms make the decisions they do. For the purposes of this discussion, let’s focus on the idea of previous experience as an influence on orientation.
Many decisions in law firms are made based on “how things have always been done” — indeed, there is perhaps no better definition of previous experience. Lawyers have experienced economic downturns before, and the cycle has been relatively predictable. The economy takes a dive, in-house counsel become concerned about the price of outside counsel so they staff up and bring work inside. Time elapses and cost sensitivities change, so in-house departments downsize, and work ultimately goes back to the law firms. Those firms who can keep enough work to stay afloat and maintain scale will come out the other side just fine. Thus has it always been.
Many decisions in law firms are made based on “how things have always been done” — indeed, there is perhaps no better definition of previous experience.
Law firms leaders who are not aware of the impact of their previous experience on their OODA Loop can easily be lulled into a false sense of security by thinking that what we’re experiencing is situation normal. Their previous experience tells them that they’ve been there, done that, and they’ll handle it fine again. They are failing to account for how they orient to the situation is impacting what they observe about what’s happening around them.
There is a critical difference between this downturn and those of the past. Yes, in-house counsel are bringing more work inside. But they aren’t necessarily staffing up to do it. According to the Thomson Reuters Legal Tracker LDO Index report issued last June, 53% of legal departments reported an increased volume of legal work handled in-house, but only 28% report increases in headcount. The increased volume of work is being handled not by adding heads to absorb capacity, but by creating solutions that increase the capacity of existing staff.
This is new information that law firm leaders should observe and which should influence how they orient to the current market. Yet some look past it based on their previous experience.
Lawyers are trained to act based on precedent. Their analysis and synthesis models are based on looking at what’s happened before and evaluating what seems most likely to happen now. Thus, previous experience trumps new information. But there’s risk in giving new information such short shrift.
It’s often said that those who don’t learn from history are doomed to repeat it. Law firm leaders might consider that a good thing; as in the past, the repetition worked out well for them. But I’m not sure the cliché holds true.
I would offer a slight variation: Those who learn from history alone may be blind to the present.