When times get tough, will corporate social responsibility fall by the wayside, or do law firms truly see it as a long-term commercial necessity?
Cast back a couple of years, when the work and the profits were flowing, all things related to corporate social responsibility (CSR) were top of mind for law firms and professional services organisations.
Cut to 2009, with the economy more than waning, and the once headline-grabbing issues of climate change and pro bono work are at risk of being sidelined as cash flow concerns take centre stage.
As firms seek to reduce costs - and reduce them quickly - cutting CSR initiatives could be seen as a quick fix. While charitable partnerships, pro bono work and green power are all well and good when there are profits to spare, will law firms be prepared to put their money where their mouths are when times are tight?
Anton Hermann, the director of pro bono and community investment at Minter Ellison, believes the economic downturn will force firms to truly consider how serious they are about CSR.
"I'm confident that it will remain a priority for this firm, but I think there's a legitimate question across the whole Australian business landscape about whether CSR can hold its ground in these tough times," he says. "I think this really does become the acid test of whether CSR is truly embedded now in business plans, or whether it is more a temporary phenomenon within the business cycle."
The question of whether CSR will retain a high place on law firms' agendas will no doubt depend on whether it's viewed as merely an altruistic gesture that perhaps brings with it some marketing potential, or a long-term, commercial necessity.
Leeora Black, the managing director of Australian Centre of Corporate Social Responsibility (ACCSR), believes that law firms, and other professional services organisations in general, are behind the eight ball in recognising the commercial value of CSR.
"Because of the tradition of pro bono services in law firms, they have been very strong in recognising the community investment aspects of CSR, [but] it is less clear that they have fully understood it as a business strategy," she says.
"Most professional services organisations have also failed so far to develop deep understanding about the implications of CSR for their business strategy and behaviour. In our State of CSR in Australia: 2009 Annual Review professional services firms scored much lower than listed companies and government business enterprises in CSR capabilities."
However, in contrast to Black's view, the representatives of law firms Lawyers Weekly spoke to unanimously agreed that as well as their philanthropic appeal, there are strong commercial reasons for retaining and promoting CSR initiatives through ruts in the economic cycle.
The head of corporate social responsibility at Gilbert + Tobin, Jane Stratton, believes that being active in the CSR space is essential to attracting - and retaining - good clients.
"For a number of the key clients of this firm, it's something that is increasingly expected, even required, when tendering for ongoing work ... and I think our board has understood for quite a while that [CSR] is about smart business and being able to have a business that's going to be around for a long time," she says.
She adds that Gilbert + Tobin won't be putting CSR on the backburner. "I think it's very important in market conditions like this that the firm remains true to its values, otherwise how can we, in times of plenty, say that we really believe these things?"
Kelvin O'Connor, the head of corporate responsibility at Henry Davis York (HDY), agrees that CSR is an important commercial consideration because clients expect, albeit to differing degrees, that their legal providers will be genuinely pursuing meaningful CSR initiatives.
"Clients are always asking what we're doing in this area, so in most tenders you get asked about various areas of sustainability. Some just ask about your impact on the environment, or about health and wellbeing, but some go the whole hog," he says.
"I think particularly in today's world, clients are looking for their legal service providers to step outside the legal industry and see that they are part of the global community and have responsibilities that are commensurate with that."
Like Stratton, O'Connor says HDY has no intention of cutting back on its CSR agenda, despite the downturn. "Like any business decision, this needs to be monitored in the context of our operating environment. But right now there's certainly no indication of us changing our position on sustainability," he says.
Mallesons Stephen Jaques' chief executive partner, Robert Milliner, believes that even when clients don't specifically ask about the firm's CSR efforts, they are considered as part of the firm's overall package.
"I think the market is pretty widely informed about the standing and reputation, and therefore by inference, the CSR standing of the firm," he says. "A large number of our clients are aware of what we do in [CSR] and that goes to ... [their impression of] whether the firm is the type of supplier that the client would like to work with."
Milliner says that Mallesons' clients are particularly interested in knowing what strategies the firm is employing in the workplace arena, especially in regards to attracting and retaining talented staff.
"We get general counsel who take a real interest in what we're doing to make sure we retain the right capability of people to service them. So we'll talk about what we're doing in training and development, leadership development and staff benefits - the whole totality of that," he says.
Equally as important as attracting work, CSR is viewed by firms as an important tool for attracting and retaining both legal and support staff. According to Milliner, Mallesons originally implemented its community and pro bono program - Mallesons in the Community - at the request of staff.
"We introduced the program as a result of surveys of our staff who said they wanted us to be involved in the community," he says.
"I think in particular the younger generation is very community-focused and there's a real desire to see how they can get involved and help. Therefore, the values of the firm - and what the firm does and is seen to do externally - reflect the aspirations and values of the employees."
While CSR is often viewed as a financial cost to the firm, Peter Lovett, the managing director of environmental sustainability and CSR consultancy Greenpass, points out that there are many initiatives that will save firms money over the longer term.
He says that in the environmental sphere, initiatives to reduce electricity, water and paper consumption will cut costs, particularly with electricity prices tipped to rise. In addition, firms that implement effective workplace strategies which lead to increased staff satisfaction will benefit from higher retention rates (and reduced recruitment costs) and increased staff productivity - factors that will be increasingly significant when the market swings back.
"Managing these during quiet times is a great idea," Lovett says, "because firms can establish themselves and as things turn around, they're there, back on the market competing with the other firms but as an exciting, new, differentiated company."
Minter Ellison's Hermann says that taking a short-term perspective, and cutting the CSR budget when the economy is down, could come back to haunt the organisation when the market recovers.
"When the last recession gradually ended I think the Australian banks were left licking their wounds from having overlooked some of their community obligations, and they made a renewed commitment to connecting back to communities as the economic climate improved," he says. "I think organisations that do take that longer term perspective will see there are genuine benefits to be had by sticking with CSR in tough times."
- By Zoe Lyon
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