Power In Networks, Not Numbers: The Importance of Social Capital To Law Firms

“It’s not what you know but who you know,” is a common axiom in the marketplace.

Social capital can increase your firm revenue, efficiency, and loyalty of your employees and clients. But, you cannot own social capital, or buy it.

Social capital requires an investment of time and effort to instill trust, expectations, norms, and opportunity at your firm. Social capital has existed as long as small communities formed and people interacted with the expectation of reciprocation and trust.

According to James Coleman’s seminal 1988 work, Social Capital in the Creation of Human Capital, social capital is “not a single entity but a variety of different entities, with two elements in common: they all consist of some aspect of social structures, and they facilitate certain actions of actors—whether persons or corporate actors—within the structure.”

Less tangible than human capital, social capital consists of (1) obligations and expectations; (2) information channels; and (3) social norms. In law firms, these three items form between peers as a result of social capital networks and relationships.

In a public school district in the United States, for example, school authorities noticed that numerous Asian immigrant families purchased two copies of each single required textbook for students.

After pursuing the matter, school authorities found that these families were purchasing one textbook for the child and one textbook for the mother, who was charged by the family with helping her child succeed in class.

So, where the human capital of the parent may have been low, the mother’s lack of familiarity with the course material or inherent intellect, the social capital of the child, a willing mother to assimilate the same course material to help her child study, was shown to be quite high.

High social capital leads to success, especially in cases where people or companies are looking to make up for a lacking human capital. For associates, recent research from the University of Iowa reveal the significance of professional social capital networks in obtaining a higher salaries for attorneys in private firms, as well as in bolstering mentor-protégé relationships.

For firms, these same research results show that social capital plays a role in acquiring new clients in small private firms.

To attract new clients, researchers conclude that attorneys in small firms should focus on increasing the size and status range of their overall social networks including, professional, non-professional, family, and volunteer organizations. By expanding the size of their social networks, firms will increase their attorneys’ ability to obtain clients, particularly attorneys with less experience.

However, attorneys in large firms, according to this research, should focus predominantly on the status range of their professional social capital networks—attracting higher-status employees and clients in terms of experience, reputation, or pedigree—in order to gain access to the “important” partners.

So how can your firm increase its social capital?

First, your firm can promote formal networks of trust. Your firm can create value statements that include trust and mutual promotion. Organize a mentor-mentee program. Offer free lunches in the office to encourage social interaction among departments and ranks. Don’t reward the blame game when you lose cases and praise teams for case matter success.

Formal social capital networks include friends from professional organizations or legal associates, former classmates, neighbors, or friends. Make sure your employees have adequate time to cultivate these relationships.

Second, your firm can promote informal networks of trust. Organic and natural formation of networks of trust—for example, inter-office friendships—are stronger than ones that are forced. So, encourage those after-office happy hours. Give your employees time off to attend weddings and family events. These are all occasions where your employee expand and solidify their social capital.

Social capital relies highly on information channels, or communication.

To more effectively master communication methods in the workplace, attend C4CM’s audio conference (or purchase their informational CD) Delivering Highly Effective Feedback: Tips, Techniques, and Best Practice Strategies to Communicate More Effectively on Wednesday, April 16, 2014 from 2:00 Pm to 3:15 Pm Eastern time.

You’ll explore the key skills of delivering and receiving effective feedback:

  • Specific methods to communicate in a more personal and interactive manner
  • Crucial communication steps to take before and after every employee interaction
  • How to make sure an employee understands the feedback you have delivered
  • Rules for feedback frequency, specificity and follow up
  • Listening skills to help you receive as much feedback as you give


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