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The competitive edge: How sustainability is shaping the legal sector
Read time: 4 mins Added date: 13/11/2024
As Lamp House publishes its latest Annual Report on 215 leading law firms, we take a look at the value of a clear sustainability strategy and purpose for a law firm’s success.
Sustainability performance is increasingly factored into clients’ decision-making to identify law firms with integrity. While the term ‘ESG’ has become more debated in business and society, the ‘S’ is most relevant in the legal sector given its people-driven nature.
Clients are assessing the degree to which firms are committed to social issues such as diversity, inclusion, and employee wellbeing. Observed best practice in the sector backs commitments up with measurable targets, such as pro bono hours, or the application of responsible business criteria when accepting new work.
Governance is also critical to ensure firms align with clients’ values, some of whom are building environmental sustainability commitments and performance into their legal procurement frameworks. Whether it’s for colleagues or clients, sustainability performance is playing a more significant role in shaping a law firm's brand – signalling reliability, expertise, and strong ethical standards.
“Companies with a clear purpose and a track record of positive actions for all stakeholders—clients, employees, communities, suppliers, and the environment—are better positioned to build a strong brand and facilitate long-term growth,” says Jessica Armstrong, Head of Professional Services at Lloyds. “Strong sustainability performance allows firms to differentiate themselves from competitors and attract and retain talent, ultimately boosting their bottom line. Those that overlook it risk their future.”
How to up your sustainability game
The Lamp House Annual Report tracks over 200 legal industry-specific metrics across three categories: people, planet, and governance.
Firms improve their rankings though transparency: setting public targets and openly sharing their progress, even when they fall short. “Leaders are comfortable sharing detailed information and backing it up with impact data and clear case studies that highlight the work they're doing,” says Lisa Hart Shepherd, CEO of Lamp House.
Wellbeing is one area where firms can make a significant impact. Firms need to tackle the root causes of stress – such as the ‘always-on’ culture – yet, only 7% of the 215 firms studied by Lamp House publicly communicate that they have specific strategies in place.
One way to reduce the burden is to offer financial coaching and wealth management services to help employees manage important transitions, such as becoming an equity partner, or planning for their retirement.
Accountability is also key to a firm’s sustainability performance and brand strength. Hart Shepherd says it’s important to ask whether the board is accountable, and targets are tied to department key performance indicators (KPIs) and compensation: “Tying responsible business initiatives to incentives increases their likelihood of success.”
Delivering tangible benefits
The Lamp House report’s findings can provide the catalyst for legal firms to take action. “Firms can use this data to reflect on their own strategic aspirations, and how they could use responsible business to strengthen their purpose and brand to differentiate themselves and win market share,” says Jessica Armstrong.
A benefit of strong ESG credentials for firms relates to borrowing. “Our product and proposition suite ranges from debt, such as loans or bonds either tied to sustainability goals or to fund activities like retrofitting office space,” says Alice Conway, Associate Director, Sustainability Advisory, Lloyds. “We provide support on sustainable finance frameworks, ESG and credit ratings, and market insights that can help facilitate successful borrowing whether sustainability labelled or not.”
Sustainability Advisory
Lloyds is dedicated to supporting clients with their sustainability strategies, including access to finance and structuring sustainable finance solutions.
Our team can share insights and education on upcoming policies and frameworks, evolving regulation and stakeholder expectations, and support the embedding of sustainability targets into finance.
Supporting legal firms beyond just finance, we can also help them develop a stronger responsible business strategy. “While finance is a crucial part of our support for the sector, we are working with clients on a more holistic level to support their sustainability objectives,” says David Willock, Managing Director, Sustainability Advisory at Lloyds.
We have 35 experts within our Sustainability Advisory business, and we are working with law firms to help stay on top of the evolving sustainability landscape. The reporting landscape can be complex and challenging for legal firms. We make it easier by helping clients to identify relevant areas and data to ensure robust, transparent disclosures. “The sector has a massive role to play in delivering societal outcomes but often we are finding that impact needs to start at home with the firm’s own strategy to have credibility with clients,” adds Willock.
As the Lamp House report identifies, “Wellbeing is one of the biggest areas where firms have the power to make an impact”. We can work with firms to create customised solutions that enhance their wellbeing strategy, like helping employees to manage their personal finances or plan for the future. Lloyds Private Banking and Cazenove Capital offer a tailored service that understands partners' unique circumstances, reward structures, and the relevant regulations. Additional employee benefits, such as electric vehicle salary sacrifice schemes and workplace pensions, are available through partnerships with Tusker and Scottish Widows.
Lloyds Bank is here to support your legal firm’s sustainability journey and help improve key metrics, such as transparency, to enhance your brand reputation, foster loyalty, and gain the sustainability ‘edge’ to drive success. For more details on our sustainability products and services, contact: Jessica Armstrong, Head of Professional Services; or Alice Conway, Associate Director, Sustainability Advisory.