Monday, March 8, is International Women's Day. So how are we doing?

Bain and Company recently released results of a survey, reported in the Harvard Business Review, of 1,800 business people worldwide. 80% believed that companies benefit from a gender diverse workforce; 75% reported having initiatives in their workplace to improve gender parity; but less than 25% felt those initiatives were effective.

When it comes to the law, women have been in the law practice “pipeline” for over three decades now; there are currently more women than men graduating from law school, where women have for some time made better grades than their male counterparts, which has resulted in women joining the ranks of prestigious firms in large numbers over the years. Whether for culture or client reasons, women's initiatives abound.

Yet women leave the practice of law  (not just change jobs) much faster than men—although not because of low performance—and constitute a mere 16% of partners in major law firms. 

How have women done in the current recession?  Better than might have been predicted.  According to a National Law Journal article entitled "Bad Times Could Have Been Worse for Women," "women lawyers have not suffered more in the current recession than their male counterparts. At least not when it comes to headcount at NLJ 250 firms."  According to The National Law Journal's 2009 survey of the nation's 250 largest law firms, the number of women lawyers at those firms decreased overall by 2% during 2009, compared to an overall headcount loss of 4%. And while the average number of female associates fell to 112, compared with 124.7 in 2008, the average number of women partners went up slightly, to 41 from 39.4.

Nonetheless, the National Association of Women Lawyers’ November 2008 report "The Third Annual National Survey On Retention And Promotion Of Women In Law Firms" reveals an alarming difference between the amount of power and money men and women have in large law firms: “At every stage of practice, men out-earn women lawyers… Male equity partners earn on average over $87,000 a year more than female equity partners. In 99% of large firms, the most highly compensated partner is a man.” The report also notes that women have no presence at all on 15 per cent of the nation’s largest firms’ governing committees.

And to further complicate things, one managing partner of a large firm claims that in spite of beefing up its diversity credentials and trotting them out in response to every RFP a socially conscious potential client has submitted, he believes that those credentials have not gotten the firm one piece of business.

What's going on here? Are women not up to the heavy lifting that firms require?  Are we as firms doing a poor job of delivering and following through on those diversity initiatives?  Or are the initiatives out of touch with want women are looking for? Are law firms, clients and others paying lip service to a bigger umbrella that in fact they don't put their money (and matters) behind?  If clients and firms resolve to be gender blind, shouldn't all this work out fairly to both genders in the end?

Or, in other words, what do women want?

A lot of ink has been spilled over that question. In and out of the arena of practicing law.

The authors of the Bain and Co. survey mentioned above urged firms to develop "less rigid promotion processes and career paths" in order to better accommodate women.

“If companies want to help more women climb the corporate ladder, they have to go beyond flex jobs or flex hours. Instead, they need to develop less rigid promotion processes and career paths — and actively promote and ‘de-stigmatize’ flexible career arcs within the organization. For companies, the pay-off can be huge: not only will they double their talent pool of leaders as more women return to the workforce in senior positions; they will also retain more male and female employees in the long-run and slash retraining costs.”

In a study conducted by Rutgers’ Center for Women and Work, more than 70% of the women lawyers who had left their jobs during the previous five years said their previous employer was not supportive of full-time flexible alternatives, while only 30% described their current employer as unsupportive of such arrangements. 

“An important new finding of this study is that women lawyers often choose an exit strategy when faced with the dilemma of choosing between work and family obligations,” the study said. “The business case for more family-friendly approaches to the practice of law could not be more clear.”

A study of thousands of associates using Westlaw throws some interesting light on the question. 80% of the associates worked in AmLaw200 firms and  the remainder worked at firms with more than 80 attorneys. The gender split was 50/50.

Four types of associates emerged.  The group dubbed Career Practitioners, who are driven, aspire to partnership, and will take on as much work as a firm gives them, constitute 23% of the associates and are 60% male.  Flexibility Seekers, about 23% of the associates and 60% female, are looking for a satisfying career that allows work-life balance and become less interested in partnership over time.

The 3rd group, Called Lawyers, 24% of the total, have the highest percentage of females (63%) and the highest percentage of non-Caucasians (35%). This group is the most satisfied with compensation and the most passionate about the practice of law. Called Lawyers are as willing as the Career Practitioners to volunteer for committees or other firm work, but for different reasons. They also significantly value their personal and family time, and in this are more closely aligned with the Flexibility Seekers than with Career Practitioners. The 4th group, the Willing Workers, representing about 30% of the associates, have no particular passion for the law, but are willing to work hard and follow directions – unusual for attorneys who are typically highly autonomous. Willing Workers will become partners as a means to higher income, but they are loath to sacrifice quality of life. Their motto is: "Work hard, play hard, retire early." 

Note that three of these four groups place a high value on lifestyle or family obligations.  And that women are most populous in those groups.  Doesn't that support the sneaking suspicion more than a few have had that women aren't really in it for the long and hard haul, like the grizzly senior partners they are meant to succeed?  Doesn't that kind of information make a myth out of the vaunted value of diversity?

A critical finding here is that according to survey respondents, the same proportion of lawyers in all of these groups are rated satisfactory or above on performance reviews.  That is, no one group is more likely to be better lawyers than the others.

If performance is – and it should be – the primary criteria, there is essentially no difference among the four groups. Therefore, if firms promote the first and familiar group (with a larger male population) over the second and third groups (with larger female populations) or even the fourth group in the hope that they will be the best associates and partners, firms would be unnecessarily reducing their pool of candidates by up to 75% for no good reason.

Yet in fact Career Practitioners tend to hire other Career Practitioners, whether they are men or women, black or white, just as MBTI "Thinkers" tend to hire other Thinkers, resulting in law firm environments that are extraordinarily well suited for only one stripe of lawyer, forestalling every advantage that real diversity might bring.  

The real diversity challenge becomes accepting that excellence can be achieved in (and should be expected of) a truly diverse workforce--not only diverse in terms of gender and race, but diverse in attitudes and expectations about their practice and lifestyle.  In other words, excellence doesn't just come in the "driven" package--that package looks dedicated and workaholic and even macho--but that's not what is necessary to get the job done...well, very well. 

One challenge may be to offer our firms as a home to all lawyers, regardless of any attribute other than excellence.

And this might be the ideal time to start experimenting with different approaches to law practice.  Larissa Glubb made these observations in my "Women In Law--For Us and By Us" blog on LegalOnRamp:

"Most women are prevented from reaching partnership or management positions because the organisations they work for value time, not results. Female lawyers, especially those with family responsibilities, desire and require control over their work and their work choices, which is very difficult to achieve if 'time' is the main measure of success... Lawyer’s bonuses and opportunities for promotion are more often than not linked to meeting or exceeding a set number of billable hours per year, rather than the quality of the work performed or the results achieved for the clients."

In his book Drive: The Surprising Truth about What Motivates Us, Daniel H. Pink challenges traditional assumptions about what motivates us to achieve at work. In a chapter on the benefits of self-direction in the work place, Mr. Pink has this to say about lawyers and the traditional legal workplace:

“…at the heart of private legal practice is perhaps the most autonomy-crushing mechanism imaginable: the billable hour. Most lawyers – and nearly all lawyers in large, prestigious firms – must keep scrupulous track, often in six-minute increments, of their time…As a result, their focus inevitably veers from the output of their work (solving a client’s problem) to its input (piling up as many hours as possible). If the rewards come from time, then time is what firms will get. These sorts of high-stakes, measurable goals can drain intrinsic motivation, sap individual initiative, and even encourage unethical behavior”.

According to Ms. Glubb, "If legal organisations were to trust that the professionals they have hired can get the work done to the satisfaction of the client, it should not matter whether this work is done at home or in the office, in the morning, before the school run or in the evening once kids are in bed. These legal professionals have years of experience and are being trusted to complete transactions worth millions, yet are not trusted to balance their commitments."

A Results-Only Work Environment (ROWE), advocated by Cali Ressler and Jody Thompson in their book Why Work Sucks and How to Fix It, is how Best Buy successfuly changed from an hours to outcomes work environment. The message Best Buy promoted is: “It doesn’t matter where you work, or when you work, as long as the work gets done.”

“There’s a misperception out there that just because a manager lets an employee go to a dentist appointment, that’s flexible working. That’s not flexible working at all. ROWE is really putting the freedom and the power back in the employee’s hands to determine what and how and when they work best. A Results-Only Work Environment is about recognizing and acting on people’s need to have more control over their lives to meet all the demands in their lives.”

Glubb says that Latitude-South, a legal outsourcing company she works for, has built a business model around this concept. "Many detractors will say that client demands preclude such a significant organisational change. We disagree. Our experience has been that our clients value expertise and experience and recognise that it is these inputs that produce the results they require. The work must still be done, yes, but it does not always need to be performed between the industrial age hours of 9am – 5pm, in the traditional setting and in a traditional way."

Whether it is legal outsourcing or more women in high places that you are after, an attitude less fixated on comparing accrued billable hours might be the place to start, and now might be the time.

So what women want may well be what over 75% of the legal workforce wants: control over how they get the results that are expected of them.

 

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Back in 1998 management guru Peter Drucker suggested that the capability to operate productively when change is the norm would be critical in the 21st century. Much has been said of late on this issue of managing change when change is the norm, including articles in the Harvard Business Review and from McKinsey.

There are big differences in approach and execution between, on the one hand, bringing about a change and making it stick and, on the other, embedding into an organization the capability to grow in a business environment where change is constant. The first attempts to bring about a single change in an organization that is sluggish and resistant. The second is about developing within an organization a comfort with ongoing change and the ability to leverage that comfort for its own ends. The suggestion from Drucker and all those that have commented since on this subject is that this ‘agile and preemptive organization’ is the future--a place where a change management program, at least as we use that term today, is not necessary.

There are challenging aspects in attempting to change an operation to an agile and preemptive organization. Many conventional values and beliefs about what is, or is not, best practice must change. These two bear mention: The underlying acceptance of hiding or burying bad news and/or spinning accountability to avoid blame must be seen as entirely unacceptable, even if things ultimately turn out for the best. Defensiveness and avoidance of conflict are both attributes that are central to many lawyers’ work style. The logical consequences of those attributes are self-and-other deceiving and justifying behavior, and in the old paradigm often produced a negative result—blind spots in client service, lack of responsiveness to colleague and client feedback, and ultimately exposure to malpractice claims. These behaviors now must be seen as a greater sin than not achieving expected base-line performance. Although frustrating to senior management in stable times, this behavior can have a disastrous impact in times of turbulence. This change is very difficult to bring about in real terms, and the solution is not just a no-blame culture, because people justify and deceive not just to avoid blame.

Another example relates to the conventional view of planning. Making long term plans in times of change is forecasting in fog. Visions are fine as long as they remain visions. The kind of planning that is now required is the type that adapts, flexes and is capable of responding to new opportunities on a continual basis. The fact that only 12% of strategies are ever executed may help in a perverse way, but this change requires a whole new attitude to feedback and accountability.

Peter Senge, author of The Fifth Discipline: The Art & Practice of the Learning Organization, also contends that in a rapid-fire, information-driven, technology-powered world, success is contingent on our individual and corporate abilities to adjust, adapt and learn. The organization, therefore, must incorporate processes of reflection and evaluation into its organizational systems, he says. Leaders must commit to their own personal learning as well as fostering an environment of learning in their organizations. We lawyers are often on a “drive to closure” escalator that makes it hard to step aside and undertake that sort of reflection.

Chris Argyris, emeritus professor at the Harvard Business School, advocates "double-loop learning." He takes the position that most people define learning too narrowly as mere "problem solving," so they focus on identifying and correcting errors in the external environment.  If learning is to persist, managers and employees must also look inward to reflect critically on their own behavior, he says, identifying the ways they often inadvertently contribute to the organization's problems, and then change how they act. In particular, they must learn how the very way they go about defining and solving problems can be a source of problems in its own right.

There is much of this accommodation to a new constant-change climate that falls into what is essentially an emotional category—how to appeal to and acclimate people who are not by their natures or histories comfortable with change. For example, lawyers are notoriously risk-resistant. Change is therefore anathema because it is by definition taking a risk. How do we effect a change in so fundamental a trait? A trait that is useful when advising our clients yet perilous if allowed to shape our practices? And not only must our approach understand and appeal to our deepest inclinations but it also demands that we put into place more objective, operational changes in the shape of a whole new set of specific working practices.

The problem is that so much of the solution to achieving this new business model of accommodating, no, even encouraging and celebrating, change will not be found in our practices of the past. 

It is a brave new world--one which we would prefer to avoid.  But can we afford to?

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The partner smack down has begun.

Here’s the most recent tally for equity partner announcements: Skadden, Arps named 8 new partners, down from 25; Debevoise & Plimpton named 2, down from 6; Weil, Gotshal promoted 3, down from 7; Cleary Gottlieb elected 4 new partners, half as many as in 2008; Ropes & Gray named one-third fewer with 8 new partners; Latham & Watkins cut promotions 25% to 23; Davis Polk & Wardwell named 4 partners compared to 6 a year earlier; Proskauer Rose named 4 to partnership, 1 less than in 2008; Gibson, Dunn & Crutcher named 11 new partners, compared to 13 in 2008; and Wachtell, Lipton, the most profitable firm in the country, named 2 new partners, down from 6 last year. The grand finale is that Cravath is making no new partners this year. Zero.

And it’s not just the firms based in New York and LA that are promoting fewer associates: Mayer Brown named almost half the number of partners compared to 2008, or 14 partners, down from 27, as did Paul, Hastings, naming 6 new partners, down from 11 the prior year. Kirkland and Ellis in October promoted 51 lawyers to non-equity partner (which all partners start out as), constituting a 27% drop from last year.

Clearly part of the reason for the recoil at making new partners is that law firm net income through the third quarter of 2009 was down 6.1 percent industry-wide, according to a survey by Wachovia Legal Specialty Group, part of Wells Fargo Corp, with top-tier firms experiencing a 4.3% decrease.

In reaction, firms have cut expenses, summer and associate ranks, delayed starts, reduced salaries and bonuses and have even cut the compensation of non-equity partners, in some cases clawing back additional capital contributions.

According to The American Lawyer, the number of layoffs stands at more than 2,900 associates since the start of 2008. The average summer class size was 20% smaller this year than last, and of those summers who got offers from Am Law 100 firms, all but a handful are looking at delayed start dates. Most firms have cut back sharply on recruiting for next summer; with at least nine firms, including Morgan, Lewis, Pillsbury Winthrop and Milbank Tweed, having canceled their 2010 summer programs in all or some offices.

Many associates still working have seen their compensation frozen or cut, typically by about 10%, or from $160,000 to $145,000 for first-year associates in major cities.

 For example, Pittsburgh-based Reed Smith is reducing by 20% annual salaries and hourly billing rates for first-year associates and slicing all other associate salaries by 10%. The firm also has introduced merit-based promotion and has had two rounds of layoffs of more than 200 people over the past year. Reed Smith also recently told non-equity partners that they would have to contribute 15% of their base pay to the firm as capital or relinquish their partner status — a move estimated to save the firm $18 million.

Drinker Biddle & Reath has lowered salaries and enhanced training for first-year associates, replaced lockstep promotion with a merit-based program for associates and gone through two rounds of layoffs. Chairman Alfred Putnam notes partners will have made less in 2009 than they did in 2008 and that there will be continued downward pressure on compensation.

But Putnam says firms are loathe to cut partner compensation across the board. “You might have two or three practice groups doing well, and they might say they are not going to take a cut and if the firm makes them, they will just walk across the street [to a competitor].”

So what we have now is the perfect storm for producing class (law class, that is) warfare. Having made all the other conceivable cuts and reductions and clawbacks that partnerships can think of, a number of them are staring at nonetheless reduced partner profits. And those reduced profits look so bad, partners are not willing to cut them further by sharing with additional partners.

The implications of making fewer partners are not pretty, however. Boomers are going to be hanging on longer because of their career-centered lives and their reduced portfolios. Rumbling among the troops will escalate, young turks are likely to go elsewhere because of the uncertainty, new lawyers will have to carefully assess partnership portential before joining a firm and ever-younger clients will find themselves with aging service partners.

Of course, not all firms are cutting the number of partners they are making. Sullivan & Cromwell in October elected 5 new partners, the same as a year earlier. "We're obviously not going to stop making partners because of the financial conditions," said H. Rodgin Cohen, chairman of the firm. Obviously.

And a few brave firms are actually making more partners. Milbank, Tweed recently elected 5 attorneys to partner, up from 4 in 2008. "We certainly pay attention to the economy in making new partner decisions, but we also pay attention to the fact that we're strong enough that we should mostly be focusing on long-term investments," said Mel Immergut, Milbank's chairman.

Fried, Frank named 7 new partners, up from 5 a year earlier. The promotions followed a year where Fried Frank shrank firmwide more than any other law firm, according to data collected by The National Law Journal, with the number of lawyers falling 26.4% to 468 attorneys.

Partners may be tempted to wait out this “downturn” thinking it is a recession and not a reset, but eventually the prospect of lower profitability and therefore lower compensation for partners will have to be confronted and firms are at hazard if they do not deal with the implications. 

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While no one in his or her right mind yet concedes it, let's just assume that the tides have turned and the billable hour is a thing of the past.  What becomes of all the firm procedures and evaluation and promotion and compensation systems triggered or run by billable hours?

How do you tell your associates how much you expect them to work?  What do you do about all those compensation systems--some affecting associate salaries and bonuses, but certainly many determining partner takehome--that require the input of some measure of billable hours--pro bono hours, firm management hours, marketing hours, hours of originated work, hours of work serviced, etc.? 

As a Hildebrandt entry points out: "One thing is for certain... Bonuses based on the number of billable hours will have some unpleasant consequences in a fixed fee environment."  In effect, firms will be caught paying their lawyers for the same inefficiencies that clients are complaining about.  The efficient lawyers, with lower hours, will be the losers.

But changing incentives in an environment where there is no history of change can be challenging.  Author Jim Collins suggests asking this question: "'What is the economic denominator that best drives our economic engine?"  Every firm should be asking itself that question. Is it number of hours? Profit per matter? Profit per lawyer? Profit per dollar spent on labor?

So when that fateful time comes, what will the hour be worth?  Frankly, given the jeers from the client galleries, what's an hour worth now?  

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From Mitt Regan, Professor of Law and Co-Director of the Center for the Study of the Legal Profession at Georgetown University Law Center: "I’m using your piece on 'What the New Law Firm Looks Like' for the Law Firms course that I will be teaching at Harvard Law School this spring. It does the best job I’ve seen of succinctly describing in one place the various trends that are likely to be transforming law firm practice." 

So reassuring to see your offspring make it to Harvard! 

You too can have the benefit of Ivy League-worthy insight. Now is the time to arrange for your managing partner, executive committee, general counsel or partnership to dialogue with Ronda Muir on what the new law firm looks like and where on that continuum your firm is headed. 

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My sincere thanks to all of you who subscribe to LawPeopleBlog. I hope you have found useful information here this past year. May we prosper from the challenges that the new year brings and remember to be grateful for those opportunities.  Healthy and happy holidays!

 

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If you stay with it long enough, a practice that goes out of fashion will often come back around again.  Those of us of a certain age remember when the first year or more at a big law firm was spent "rotating" around departments to get a good feel for the full range of legal practice.  That quaint practice was drilled out of most firms with the arrival of big ticket associate salaries and the push for faster and higher realization of revenues on their time. 

Now we hear from across the pond that Linklaters is proposing countering  "damaging over-specialisation" by having junior associates spend time in different practice areas in their first few years, a practice that Allen & Overy is also considering and Slaughter and May has already adopted.

“There was an awareness that people are specialising too early and there’s a desire to see people get a more rounded experience in their early years,” a senior partner at Linklaters was quoted as saying. However, it was noted that the move "should not be seen as a reaction to the economic climate."

With due regard to that  Linklaters partner's opinion, whenever this "new" practice is discussed at the law firms we advise stateside, it is raised expressly in the context of the current economic climate--one of the reasons being to position associates to be able to move more quickly out of and into practice areas depending on the firm's needs.

Non-equity partnership tiers have been the fastest growing population segment of law firms during the past decade, but those partners are sometimes specialists in areas where firms can no longer reliably provide sufficient work.  And, like specialized associates, those non-equity partners are often difficult to re-deploy quickly to where the firm's work is.  Many firms are therefore considering limiting or eliminating entirely that tier, moving to an all-equity partnership like back in the old days. Addleshaw Goddard intends to put that reversion in place next year. And a similar noise is being made as DLA Piper reviews its entire firm structure, with unattributed partners saying that the firm could move toward a single tier of partners, eliminating both tiers of income partners in its current model.

The wheel goes round and round.

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Following up on our November 1 entry "The Importance of Glue" is an article by Patricia Gillette, a partner at Orrick, Herrington & Sutcliffe, published December 9 in The American Lawyer, and reproduced below in its entirety.

"The Message That Will Seal Law Firms' Doom: 'It's Nothing Personal'

It's not personal.

This is the current mantra of law firms with regard to their staff members, associates and partners.

"Sorry, first-year associate, you won't be starting work when we said you would. Come back in a year."

"After careful consideration, tenth-year associate, we just can't make you partner yet. Maybe next year."

"We're sorry to do this, twenty-year legal secretary, but we have to cut back on costs and so we're letting you go."

The messages all inevitably are followed by the exculpatory: "It's not personal, it's business."

There is no question that change is coming to the legal profession -- in the way firms are structured for advancement, in the career expectations of associates and in how work gets done. But law firms have yet to come to terms with the fact that these changes might also impact profits, in the same way that changes to the medical profession affected the profit margins of physicians. As such, in many law firms, change is embraced as long as equity partners can continue to earn salaries that will be reflected positively in the almighty profits per partner competition. (And make no mistake that it is a competition, as are most things with lawyers. Thus, we see firms stretching the definitional limits of "profits per partner" as they vie for the top spots on the "list.")

In the resulting wreckage, personal connections are lost. Because what these firms fail to realize is that managing only to the bottom line is a short-term strategy. And while that might be OK with the megafirms that want to see their shadows cast further into the global market and higher up on The Am Law 100, it is not strategic and it ignores the reality of the changing market. Still, large law firms continue to march down this path. And that is the path that has led to the depersonalization of large law firms.

Depersonalization is what allows big-firm associates to come and go freely (no question, when the economy comes back, they'll start moving again). It allows powerful partners to take large books of business to competitors so they can make more money. And, in many of these firms, depersonalization means that quality work plays second fiddle to realization, and good citizenship and mentoring are trumped by profitability.

This phenomenon doesn't stop at the entrance to the law firm. It has spilled over to the clients. The lack of a relationship-driven business model permits clients to be arbitrary and fickle. Historical relationships are traded for "what have you done for me lately" and "how much did it cost." Years of good work and great results are thrown out for the low-cost leader, or a change in the general counsel. Because it's not personal ... not for you, not for anyone, not anymore.

Law firms used to be about relationships. Relationships between partners and partners, associates and partners, clients and lawyers. Law firms used to be about retention and growth of lawyers and client relationships, mentoring and development, loyalty to the institution and to each other and respect for those who came before. Law firms used to be about trust.

That trust, however, has been broken. Witness the demise of giant firms like Heller Ehrman, Thelen and Brobeck -- all big firms that appear to have traded their culture for currency. As a former partner of Heller, I saw our firm, with its rich culture of consensus and collegiality, collapse in part because some partners thought it would be OK to trade core values and firm identity for a moment at the top of a list; because some partners favored the elusive "global reach" over more realistic ambitions; and because some partners chose more immediate returns over the history and tradition of the firm. In big firms that have survived, loyalty is too often defined by the portability of a partner's business, associates are seen (and see themselves) as fungible commodities in whom no one has a stake, and fudging numbers of women and minority associates and partners is justified, if it gets the firm to its rightful place on yet another list.

Is this bottom line/list-driven model sustainable? The answer has to be "No." Because, it ignores what law firms need to fuel their engines: associates who are invested in the firm and the future of the institution. There is no question that the new generation of lawyers is relationship-driven -- social networks define their reality; connecting with others and sharing experiences is their passion. Money is important, but community is more important. Loyalty from young associates cannot be bought with law firm logo-emblazoned swag and big pay checks. It must be earned by good and meaningful work assignments, team approaches and a feeling of being an integral part of the firm.

If Big Law wants to have a sustainable and renewable model, these law firms will have to re-engineer their models. Some law firms are making efforts to do just that by:

Reconnecting with clients for the broader and longer relationship.

Looking at associates as valuable assets that have to be mentored, developed and retained by the firm incentivizing firms to deepen their relationships with associates through active mentoring programs, investing in training and instituting career development programs that recognize and support a nonlinear path to partnership.

Developing a skills-based evaluation and compensation system that rewards teamwork, productivity, quality work, loyalty and competence.

Valuing institutional maturity, diversity and historical contributions along with immediate returns by crediting nonbillable hours spent on broadening client relationships, rewarding partners for retaining associates and increasing diversity, recognizing the need to pass the baton through institutionalized succession planning on client relationships.

Finding ways to truly partner with clients so that law firms and clients have shared risks and rewards by encouraging and supporting alternative billing arrangements, knowing the client's business and recognizing its needs and seconding associates when needed.

Big law firms simply cannot continue to trade relationships with their associates and clients for the prospect of raising profits. In fact, firms that ignore this do so at their own peril. Firm leaders need to recognize that it is relationships and culture that bind people to their firms -- because, for the best and the brightest lawyers in big firms and for the clients who want quality legal work, it is personal."

 

Thanks, Patricia.  Couldn't have said it better.

  

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Muir has been selected by Patrick McKenna (co-author of First Among Equals and Herding Cats) as one of a select group of law firm consultants available to advise law firm leaders under McKenna's ENABLE program--Executive Network of Advisory Boards for Leadership Excellence, which McKenna describes below. 

"Now, more than ever, being a Firm Chair or Managing Partner and leading a professional service firm is a monumental task. Even more critical, how do you handle sensitive or strategic challenges when your previous experience has not adequately prepared you?

Corporate CEO’s who have used Advisory Boards rate them as "very effective" as sounding boards and sources of management mentoring. They also give these boards high ratings for offering ideas, influencing strategy, sharing business contacts, and providing business or industry intelligence.

The primary challenge to making Advisory Boards work for professional service firm leaders lies in recruiting and assembling a group of talented confidants willing to serve on these boards and then having an experienced resource available to help firm leaders get their Advisory Boards up-and-running effectively. The ENABLE program is dedicated to those two objectives."

For additional information, contact Muir at RMuir@RobinRolfeResources or McKenna at patrick@patrickmckenna.com.

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The IOMA Law Firm Leadership Alert on November 19, 2009 calls Ronda Muir this month's Thought Leader, saying she "...presents as cogent an expression of what the future of law firms and law practice will look like as we have yet found." Her article is published in the December issue of the IOMA Partner's Report - a Monthly Brief for Law Firm Owners and will be the featured cover-page article in December's Compensation & Benefits for Law Offices newsletter.

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One of the important implications of Muir's article "What the New Law Firm Looks Like: The Reinvention of a Reluctant Industry" is that going forward firms will require the close involvement of sophisticated management professionals who are not necessarily or even preferably lawyers to help design and manage change.  These critical players will not only assist in initially envisioning the goals of the firm and its related programs and in easing the various players toward them through the transition period, but will also remain important in ongoing firm management in order to make those initiatives fully operational and successful over the long term.

In the past many law firms have often taken a pass when it comes to building the depth and quality of their non-lawyer professional staff.  For the most part we aren't that focused on these "unseen" professionals--there are going to be complaints about them within the firm anyway and rarely does a client interact with them.  So the firm librarian could be a dud, and the head of recruitment simply cheerful. 

We seem to realize marketing and technology advisers (and at the bigger firms, the professional development directors) have some importance, but still we often opt for less sophisticated, less expensive personnel who act more as placeholders than change agents, undercutting their potential effectiveness from the start. We tend to hire them young and tell them what to do and even sometimes how to do it.  After all, lawyers are the ones who really head all of these areas: the non-legal staff are simply assistants and overhead to boot.

The problem is that lawyers are no longer the experts in all the areas that law firms need expertise in. 

For example, Muir notes that firms will develop "serious project management skills that focus on evaluating and reviewing client goals (both fee-related and outcome-related) and managing matters to reach them."  Such skills include the technological capacity and human expertise to analyze, bid on and track client matters, including producing interim progress analyses to manage staffing and expenses and keep the client up to date.  Lawyers working on those projects need to be spending their time doing what they do best--providing legal services, and should rely on non-legal professionals to fine tune the timing and extent of those services. 

Similarly, "staff managers" acting like purchasing managers are likely to be responsible for engaging and managing a complex and highly changeable array of lawyers and services for specific and often fixed-term projects.  They will need the technology and expertise to manage a large database of information on individual lawyers, temp providers and outsourcers, produce contracts, evaluate performance and follow up complaints and contract violations.

Making "frequent and accurate evaluations of lawyers and staff and effectively using targeted training" are not only complex processes in themselves requiring careful analysis but become critical to morale and retention as these evaluations and trainings impact compensation in the new merit and competency models (see, for example, "The Issues in Moving From Law Firm Lockstep to 'Levels' Compensation").  And those charged with determining compensation based on multiple indices and complex formulas applied across numerous parties similarly need to have reliably sophisticated expertise.  The mid-level partner who doesn't have a lot of client work these days isn't the best choice to run with these valuable, exacting tasks.

Finally, "building relationships, which is key to exerting leadership influence, will be more challenging," and firms are likely to require more leadership time from their leaders--whether firm-wide or practice group leaders--which implies more time diverted from practice to firm management and more reliance on professional assistance.  Work assignment evaluation and management, leadership development, diversity compliance, client succession planning--these tasks can be taken on or assisted by non-lawyer professionals with the appropriate skills.

Of course, these professionals mean a rise in overhead--whether you obtain your expertise by in-house personnel or from outside consultants, another reason profits are likely to be diluted going forward.

But we lawyers can't effectively do all these jobs.  We can't because we are not diverse enough in our approaches and talents (see "The Unique Psychological World of Lawyers").  We not only haven't been trained in the relevant areas--project management, talent  evaluation, competency testing--but we also aren't likely to be naturally inclined toward or good at the process, patience and attention to the types of details that are required. Or if per chance there are lawyers among us who are so inclined or talented, we are not likely to know who they are.

There is the problem of overcoming the legal ego--it's not important if we can't do it well, and conversely, if it's important, then we can do it--but don't let that attitude be what keeps your firm from moving ahead.  Good management these days lies in identifying and locating needed expertise, not in attempting to be it.

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Yes, Virginia, there is a future for law firms, but it is a strikingly different one from the law firm of the past. 

Not Your Grandfather's Firm

What would have been bombshells ten years ago, and maybe even five years ago, continue to drop from the legal firmament: Double digit reductions in revenues and profits; big shops--Bingham McCutchen, Howrey, Orrick, DLA Piper, Morgan Lewis--shelve or reduce their reliance on lock-step promotions; many firms cut back or eliminate summer programs; salaries are frozen or reduced; behavioral interviewing becomes the newest buzzword in recruitment at Vinson & Elkins and elsewhere; old-line English firms Slaughters, Linklaters and Clifford Chance all acknowledge engaging outsourcers for their clients' low-level legal work, in some cases after years of deriding the practice; and English firms Addleshaws and Linklaters take steps to convert to all equity partnerships, while a number of American firms secretly consider it.

What the New Law Firm Looks Like

Muir's article What the New Law Firm Looks Like: the Necessary Reinvention of a Reluctant Industry reviews some of the areas where changes are sure to appear, and are often already in motion: the rise of merit compensation, multisourcing, non-lawyer stakeholders and the demands made on leadership generally and practice group management specifically; the decline of mergers, hourly billings, big real estate holdings, compensation generally, and fixed levels of staffing. 

In other words, transition is the keyword.  Your competitors are leaving no stone unturned in their search for an edge in a difficult market--neither should you. 

Let us know what steps your firm or your outside counsel are taking to better position themselves for the road ahead.  We will compile these results and pass on the best to you.

 

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One of the more interesting developments in the law industry over the last couple of decades is the emergence of the mega-firm.  Or what might be called the strange case of the temporary triumph of the delusion of efficiency.

"Convergence," the short-hand name of the corporate model for managing outside legal fees by reducing the number of preferred firms, was developed originally in the early 1990s by DuPont and then trumpeted by interested advocates--primarily consultants--who benefited from advising both sides of the aisle. Law departments needed to know how to evaluate firms for their preferred list, and law firms needed to know how to get on those lists.

The theory was that dealing with fewer law firms meant that a company would have more leverage in negotiating fees and conditions with those few that they did hire, that the company would no longer pay repeatedly for bringing firms up to speed on its business, and that this more holistic global legal approach would benefit the company in both concrete and intangible ways. 

Leading the way, DuPont reduced its 350 outside law firms to 41 and its 150 legal vendors to 4.  Five years after the program's introduction DuPont reported that

• Legal service expenses were reduced 39 percent from 1994 to 1997.
• Litigation savings amounted to over $30 million in the last four years of the program.
• Cycle time dropped from 39 to 22 months in two years and the docket was cut in half.
• Legal staff requirements can be forecast accurately.
• Purchasing power was leveraged.
• More women and minorities are employed in the PLF and supplier firms.
• True partnering was achieved: work is usually performed so seamlessly that outsiders have trouble distinguishing between DuPont's outside attorneys and in-house counsel.                     

Over 200 other major companies followed suit--General Electric's hundreds of outside firms were reduced to 140.  Pfizer slashed its outside litigation counsel from 200 to 52.  Pfizer eventually designated only 1 outside law firm to advise them nationally in some practice areas, a bold step again followed by others, such as Tyco and Honeywell.

Law firms were told that more types of business from a single client would guarantee a more consistent flow of work, again reduce the embedded cost of getting up to speed repeatedly and, with the more rounded view of a company's issues, ultimately make better lawyers of us all. 

So law firms geared up to offer companies a broad range of legal services and it was only a short step from there  to offering those services at locations all around the world.  Whatever you need, we can do.  Wherever you are, we are there.

Law firms started acquiring IP, land use and employment departments and boutiques to supplement their usual expertise. They opened offices in Hong Kong, Abu Dhabi and Omaha.  

In 1992, an admittedly lean year because of a financial downturn, there were 9 law firm mergers, which accelerated into a record high of 75 mergers in 2001.  By 2008, also a year of financial downturn, there were 70 mergers.  And those numbers don't reflect the many acquisitions by firms that don't count as a "merger"-- acquisitions of groups of lawyers, practice groups or other pieces of firms. A 2007 Law Firm Inc. survey of AmLaw 200 COOs found that evaluating merger possibilities was the single matter on which COOs collectively spent most of their time. 

Top US-based firms (NYLJ 250) grew from an average of 100 lawyers in 1985 to today's behemoths, topped by DLA Piper's 3,785 lawyers with 2008 revenue of $2.26 billion. As to profitability, before the current downturn, law firm revenues (along with expenses) had been ticking upward for years at double digit rates, fueled by pass-along billing practices that also rose without fail each year, resulting in compounded average growth in profitability of over 9%. 

Corporations and big law firms seemed to be on to something.  Consultants were in hog heaven. 

But the economic slowdown has hit big firms particularly hard. Clients are turning increasingly to small and mid-sized firms who charge hourly rates 20-50% lower for large swaths of work that don't require legions of associates, firms which are also less likely to dump them because of the complicated conflicts arising from a global presence.  

So where is the mega-firm now?

More than half of the 50 largest US firms have fired associates and staff in anticipation of or reaction to revenue declines and some firms, such as DLA Piper and Dewey & LeBoeuf, have cut year-end payouts to partners as well.  Star partners at the country's biggest firms--DLA Piper, Skadden Arps--are leaving for smaller firms in order to offer clients more reasonable rates and avoid the thicket of conflicts. Regardless of the economy, the promise of cross-selling did not materialize and no one's sure if they are better lawyers for the mega-firm experience, or just poorer ones.

So did the DuPont Legal Model of convergence and its virtues fail? 

If you ask DuPont, "the keys to the legal model’s success have been its ability to streamline legal representation through its designation of primary law firms (PLFs) and its commitment to the utilization of paralegals."  And you should note that DuPont's current roster of Preferred Law Firms includes eight of the 100 biggest U.S. law firms but four times as many smaller firms, which General Counsel Thomas L. Sager says he prizes for their “flexibility and creativity” in billing.

Perhaps the real bottom line is, as was clearly stated in an analysis of law firm mergers done by Vanderbilt Law School back in 2005: “There are no obvious economies of scale or scope for law firms in a merger, where productivity is largely a result of billings by individual professionals.”

That conclusion has been born out by the financial statistics kept by Dan DiPietro of Citibank’s Law Firm Group, who said flatly at a recent conference forecasting future growth that "bigger has not yet proved to be more profitable."

 

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Here's some more data that puts into question our reliance on high scores and law school credentials in determining which lawyers we want to populate our firms with.

LSAT Scores

According to a chart prepared by the Tax Prof Blog, math or physics majors are likely to score the highest on their LSATs, theoretically making them the best candidates for law school and the best lawyers.

Or maybe not. As one blogger commented, "At a prior AmLaw 100 firm, I was chastised for not getting the chair of the IP department 'out there more,' writing, doing press. My response, 'The guy has an undergrad in chemistry, then went off to law school. I’m lucky if he opens his door.'

But this blogger goes further: "The BUSINESS of law, and the success of any given individual lawyer, is becoming more dependent on the development of personal relationships, the ability to reach out and promote one’s self, and SALES, [so] we need to remove the barriers that keep those who are so predisposed out of law school."  Or, as one article recently proclaimed: "Emotional Intelligence a New Hiring Criterion."

Following that prescription--matriculating and then hiring candidates based on something other than hard scores or law school credentials--would require a much more sophisticated method of discriminating, such as personality testing, as part of law school entry requirements or firm recruitment considerations.  Are we ready for that? 

We know that rainmakers and managing partners show a different array of personality traits than most lawyers--they are more social, more extroverted, more resilient, more empathic and more persistent--in total, more emotionally intelligent.  Should we be populating our firms from the bottom up with more of those traits?  Particularly now that one of the survival strategies for practicing law requires successful marketing, business closing and relationship building? And if so, what are the best procedures to insure that we identify a high percentage of the kinds of lawyers we want to hire?

Screening for these rarer combinations of traits might also require firms to look at a broader range of law schools than they typically have--at the very time that the pendulum appears to be swinging back to hiring only from the most prestigious schools. 

Premier Law Schools

A recent study entitled "After the JD" by the American Bar Foundation points out some of the benefits of broader recruiting.  The study concludes that graduates of non-elite law schools who work at the top 200 firms are happier than their colleagues from top-tier schools and also last longer in their jobs.

Why would that be?  It makes sense that lower-tier law school grads would work harder to nail the few BigLaw positions available to them, and, as a result, would be both more grateful for their jobs and also likely to have fewer opportunities to leave.  Other pundits have suggested that student who opt for regional law schools are more likely to have stronger family and community relationships that they want to maintain.  And that they are also more likely to have financial considerations that militate in favor of attending a less expensive law school with the possibility of working part or even full time.  Strong relationships, financial savvy, self-regulating drive--maybe our kind of candidates?

But regardless of how good it is for us, recent market pressures may in any event make firms drop the broad-barreled recruiting approach.

As Aric Press in The American Lawyer points out: "I fear that we will look back at the exuberant spree of the last few years as the high-water mark of non-elite law school hiring. There simply weren't enough bodies to go around, so the Big Law machine was willing to expand its recruiting pool. The fact that some of those hired performed well, or were happier with their lots, or possessed the drive and emotional intelligence that clients crave will not be enough to change old habits. When it comes to preserving the prestige patina, sometimes the rules of cognitive dissonance are suspended."
 

Press also reminds us of the opportunity these kinds of findings afford those firms who are thinking about their future and trying to insure its success--"an opportunity for the firms wise enough to seek first-class talent no matter what brand is on a diploma. Putting that attitude into practice would be an important part of an effort to take hiring more seriously, of not relying on admissions officers to do the work of hiring committees, to actually define attributes that firms and their customers need--and then try to recruit for them. Rather than retrench, this is a moment to put your partners to work on the future of your firm. As it happens, they have plenty of time to devote to the project."

Informal Survey

Let us know what you and your firm are doing in two areas of recruiting: 

1. Have your target law schools broadened or narrowed and why?

2. Have the attributes you are looking for changed?   In which ways?  And how do you identify those attributes in candidates? 

Stay tuned.

 

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An article this summer in the New York Times Magazine describes the launch by Hyatt Hotels of a customer relations program that CEO Mark Hoplamazian describes as "random acts of generosity."  Prompted by years of behavioral science research and months of consumer research, the program charges Hyatt employees with occasionally picking up bar tabs and other obligations of customers free of charge. The point?  To generate gratitude.  Which ultimately "increases... sales growth," as the Journal of Marketing quite bluntly puts it. 

Unlike frequent stay programs with specific qualifications that reward customers with an extra night or an upgrade, these Hyatt freebies are not "earned," and are therefore theoretically more likely to be truly appreciated.  Although there is a risk.  There is, after all, as the Times article points out, a thin line between promoting gratitude among the favored and creating resentment among those left out. 

So is this a viable relationship-building model for us in the legal business?  Is there any possibility that some sort of generosity extended to our clients could engender the type of gratitude that would fall to the bottom line?  And even if it were possible, how specifically are we supposed to be generous in the context of what sometimes amounts to cut-throat dances with resentful clients who are convinced they are being taken advantage of ?

While a young associate at a big firm, I was charged with the closing of a deal that had been a nightmare from beginning to its not-too-soon end.  The client had originally chosen another firm that had been conflicted out, hiring us begrudgingly and making sure we knew through the entire timeline that we were not their first choice.  The General Counsel was young--an interim replacement for the GC who had taken a better position--and afraid of losing his job.  Aggressive questioning of our strategy and reasoning was a daily event, followed by further questions rechecking the initial explanations, followed by very obviously running past us the reasons unnamed others (lawyers from the favored firm?) thought we were making an error.  It wasn't a major transaction we could boast about, we were certain not to be able to recoup the time we were investing, it was a client we obviously were unlikely to hold onto--we all longed for the closing to put us out of our collective misery.

The closing followed of course, as night the day, the same pattern of dysfunction.  Late in the night the GC called to complain about our printing of a report, which was commencing as we spoke, to be distributed with a collection of other documents--an important Senior Vice President had that day located sufficient copies of that very report boxed away in the corporate basement.  Had we no concern for expense?  Canceling the new run would have involved a lengthy and not inexpensive transition, of course--but.  I was looking for some small way to connect with this company.  We got the printer, the SVP and the GC on the line and as the most senior lawyer left standing, I     negotiated what we all knew would be a cumbersome and more time-consuming but ultimately somewhat less expensive solution using the found reports.

The partner in charge questioned my judgment after I straggled in the next day--primarily on the grounds of throwing more good time after bad.  My only defense was that our two main company contacts--the GC and the SVP--really wanted the face-saving, if nothing else, and, with primarily the investment of a few more hours, we could accommodate them.

There is, of course, a happy and relevant ending.  The matter closed.  The interim GC quickly announced that he was moving to a GC slot at another company.  The SVP became the one responsible for approving our bill and recommended that the company use us instead of the other firm as its ongoing counsel.  The GC, in his new position, brought us his next major deal, evidently with the intent to use our firm on a consistent basis.  The partner called me back into his office and praised the judgment he had earlier found wanting.  All because we figured out how to use the reports in the basement.

So sometimes the incidental gesture produces a gratitude that rewards.  Particularly in this economy, I would say it is worth the try.

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Now is the time to really get to know your clients. What are their budgetary constrictions?  What are their priorities for the next two years?   What do they want more of and less of from their outside counsel?  What keeps them awake at night? 

Do you not only know the answers to all of these and other questions but are also proactively doing something about each of them?

In a recent article in The Legal Intelligencer entitled "Firms, GCs Starting to Talk the Talk," Gina Passarella reports on the growing awareness of law firms of the necessity to dialogue with their clients about their delivery of legal services. 

As Lorraine Koc, general counsel of Deb Shoppes, notes, "the idea of communicating with clients is something that virtually every business does except for law firms."

Some firms realize the importance of addressing that, particularly in the context of this economy.  "If you don't have communication and [clients] can't tell you what they like and dislike, then you're leaving them one choice and that's to leave," Flaster Greenberg managing partner Peter Spirgel says of the reasoning behind their hosting client panel presentations.

Reed Smith has held a client panel at every one of its firmwide meetings since at least 2000. The firm also surveys clients at the conclusion of large matters and survey its largest clients regularly. Managing partner Gregory Jordan also meets with clients regularly to learn more about their businesses and get feedback on the firm's work.

What is the best approach to determining client feedback and where do you start?  Which clients do you include?  How do you format the inquiry? In a forum or with each client individually?  Who inquires and what questions do you ask?  What technology best assists the inquiry?  And, most importantly, how do you translate the information you get into substantive improvements in client delivery?

Our firm provides unparalleled expertise in assessing and cementing relationships between law firms and their clients.  Now is the time.  Let us help.

 

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In the current stressful marketplace, the rate of lawyers' incidence of impairment has been ratcheting up from high (see, for example, our September 5, 2008 entry "The Depression Demon Coming Out of the Legal Closet") to even higher.  See "Employment Woes Fuel Uptick in Lawyer Depression."  Firms suffer losses in productivity, morale and recruitment because of impaired lawyers, and also risk client desertions, losses to their reputations and malpractice liability. 

Firms can take several approaches to both assist their lawyers and protect their bottom line.  Thomas & Knight attorney Peter Riley, as managing partner, instituted an extensive program to address lawyer stress caused from depression, substance abuse, anxiety, etc. in order to provide help fast, without worrying about insurance authorization or long waits for appointments, and with complete confidentiality.  Even with the costs of the program, Riley finds it cost-effective to the firm.  "When a lawyer or lawyer's child or spouse is in crisis, that is going to be the focus of their attention," he says.  "If we can provide assistance for them quickly, we have not only done the right thing for our lawyers, we have done the most economic thing.  It's the perfect intersection of what is right and what is profitable."

Let us draw from our extensive experience in this area to help you spot and support critical talent confronting personal distress.  We can assist on an individual-by-individual basis or by helping you set up a confidential, effective program attuned to your goals and budget.

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Muir's September 5, 2008 entry on "The Depression Demon Coming Out of the Legal Closet" has been published in the Spring2009 newsletter of Virginia's Lawyers Helping Lawyers, a 20-year old non-stock corporation endorsed by the Virginia State Bar, The Virginia Bar Association, the Virginia Trial Lawyers Association and the Virginia Board of Bar Examiners.

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"In times of drastic change, it is the learners who will inherit the earth.  The learned will be perfectly positioned for a world that no longer exists."  Swarthmore College's 2009 Lax Conference's keynote speaker Richard Teerlink started his presentation with this quote from Eric Hoffer.  

Teerlink led Harley-Davidson's fabled turnaround, fueled in part by his belief that people are the most important resource in any company.  Teerlink was CFO, CEO, and Chairman of the Board of Harley-Davidson during the time it went from the stepchild of a public company to private ownership by 13 managers carrying $40 million of debt to its reemergence as a public darling again.

How did they do it?  At the time of HD's privatization, the Japanese dominated the motorcycle industry, and HD's board had to make some tough decisions: they laid off 40% of the workforce--all at once, Teerlink points out, so that fear would not weaken the remaining group; cut compensation of the rest of the employees; killed an expensive new development project; reduced their dealer network; asked suppliers for reductions; eliminated all the Senior Vice-Presidents so that responsibility would be pushed down further in the ranks, with more direct reporting to top management and fewer silos; and collaborated with employees, dealers and customers to enhance the HOG experience. 

Teerlink says that as with all major shakeups HD made some dumb decisions but learned to reverse course quickly.  An advertising campaign was launched that honestly acknowledged past weaknesses and promised owners a different experience.  And the company delivered. 

Teerlink emphasized to HD employees that they were not selling machinery, but an emotional experience, one that offered entertainment and a community.  Thus the HOGS--Harley Owners Group--was born, with networking, social events and riding support (fly and ride, for example) offered nationwide. 

The premise that "people are an organization's only sustainable competitive advantage" drove Teerlink's transformation of HD.  His book, "More Than a Motorcycle: The Leadership Journey of Harley-Davidson," chronicles how he brought that premise into reality.

At a time when law firms are facing some of the most challenging marketing conditions of all time, we might do well to learn a few things from the people who brought us the HOGS.

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Collaboration in the form of teamwork may be the 21st Century's technology, in that it promises strides in greater productivity--but only when done well.  It can also veer from chaos to constipation. David Maister's famous article Are Law Firms Manageable? questions whether lawyers can make the transition from "a managerial approach based on partner autonomy to new approaches that can create a well-coordinated set of team players." Well, can we?

After seeing double digit increases in firms that have implemented team systems--management, marketing,  industry and client teams--and an increase in work satisfaction among team members, an initial question many interested law firms have is how to go about setting up and managing teams.  Luckily, research provides some guidance that can help firms successfully achieve productive teamwork.  The following is a summary of Muir's presentation on effective teamwork at Swarthmore College's 2009 Lax Conference.

In 1965 Bruce Tuckman, an organizational psychologist, established modern team theory, refined most recently by Dr. Susan Wheelan, professor of Psychological Studies and Faculty Director of the Training and Development Center at Temple University.

The stages of teamwork, according to these models, are 1) forming, 2) storming, 3) norming, and 4) performing.  The forming stage, even among lawyers, can be marked by tentative and polite accommodation.  Unsure of their roles and the leader's competence, team participants need the leader to be clear, directive and highly structured during this first stage. This is not the time for a consensual  "Well, what do you think we should do?" approach.  Also, if you have the luxury of choosing team members, choosing those who are different from each other in their attitudes and skills and who are able to articulate and, when appropriate, stick by their opinions produces the best mix for a team. See our entry Promoting an Effective Board or Management Group for additional discussion of what attributes to look for in team members and how to promote their best contribution.

During the second, storming stage, the politeness wears thin and team members, particularly lawyers, will test the leader and stake out their positions with each other to determine what their authority and parameters will be.  Conflict is often a result.  This is a positive development.  Handled well, the team will learn from experience that it is safe to engage in conflict, and that issues can be settled without lasting acrimony or division, even if it requires agreeing to disagree.  This is the basis on which trust and respect is established.  Leaders are often criticized during this stage (and sometimes asked to step down) as much because of their role as because of their personal attributes or performance.  Leaders who can keep from reacting defensively will avoid exacerbating and prolonging this stage, which, being awkward and uncomfortable, helps propel the group to resolve their differences and move forward into the next stage.  Leaders should emphasize during this stage the importance of keeping debate, which is useful, focused on the issues and not the personalities involved.

During the third, norming stage, based on the higher level of trust achieved during the 2nd stage, the group's goals are revised and a division of labor, with clear roles, is determined. The problem in law firms is that often lawyers don't make it out of stage 2.  Tenacious about protecting their authority and unwilling to trust those in a leadership role or those to whom work must be delegated, these lawyers can keep the team locked in unnecessary meetings and conflict, which may feel to them more like sport than discomfort.  Yet it is only in stage 3 that delegation becomes effective and the individuals are freed up to do their part of the team's work.

Stage 4 is performing, which is the highly productive stage that teams are made for.  At this point, if members are added or removed, or the goals or delegation changes significantly, the team may regress back to an earlier stage and have to work its way through the process again.

Goals that are most amenable to team accomplishment are ones that require collective action, i.e. those which no one person could accomplish on his/her own, and that are meaningful, even inspiring.  The most effective teams have an emotional commitment to the goal, so framing goals as being in the individual team members' interests is vital. 

Team goals should be specific, measurable and attainable, with a real deadline that allows the team's work to culminate in a completed project.  Ongoing timeframes make it difficult to maintain team motivation and momentum.

Ideally, team members spend about 75% of the team time on accomplishing their tasks and 25% on participating in the team process, i.e. attending status meetings, maintaining group relations and performing housekeeping tasks. Procedure can be important.  For example, lawyers are largely introverts who need time to formulate their opinions, so distributing an agenda in advance of a meeting and not requiring decisions to be made at the meeting allows them to both prepare for discussion and come to a reasoned conclusion afterward.

OK everyone, team up!

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A well-known investment banker confided recently that lawyers are partly to blame for the financial meltdown.  Why, apart from wanting to deflect the responsibility to someone other than bankers? 

The reasoning was that, particularly with the advent of Sarbanes-Oxley, lawyers have become such an integral part of the business process that their bias toward risk-aversion has seeped into the bones of corporate decision-making, making those decisions technically compliant but shortsighted from a policy and business standpoint.  Life without lawyers, or at least life with fewer lawyers, according to this highly-respected viewpoint, would improve business and the economy.

Covington & Burling partner Philip Howard arrives at a similar conclusion for somewhat different reasons.  He contends in his new book "Life Without Lawyers" that a fear of litigation has stricken many of America's industries, including both health care and education, paralyzing doctors and teachers, among others. "It's as if everyone has a little lawyer on their shoulder whispering in their ear all day long," he says. Howard argues that the economic crisis presents a needed opportunity to overhaul the legal system. With an activist president and a Congress controlled by Democrats, he sees major structural changes on the horizon.

"An essential component to making anything work that's broken is rebuilding the legal infrastructure," Howard says. It's harder to change the rules in times of prosperity, he says, but the challenging times ahead could initiate just such a reset.

A recent series of front-page New York Times articles reports that worker-compensation programs, designed to fairly and efficiently compensate workers for workplace injuries, is neither: bureaucratic gridlock and expense have resulted in a high-cost system for employers that is slow and inefficient in compensating deserving employees.  Who is to blame for these problems?  Lawyers.  Both those working inside these programs and those on the outside who made a "fair and efficient" alternate system necessary in the first place.

Finally, if you are not already doubled over from guilt, a Talk of the Town entry by Jane Mayer in the April 13, 2009 issue of The New Yorker recounts the research of English barrister Philippe Sands into the activities of the six Bush Administration officials, including William J. Haynes II, former Pentagon general counsel, who are being sued this week in Spain for the torture of Spanish citizens at Abu Ghraib. Sands' conclusion: "I've got a particular bugbear about lawyers.  If not for lawyers, none of these abuses would have ever occurred."

So there you have it.  Not only are our finances in disarray but our reputations and future prospects are sinking faster than a rock.  

There is no doubt that data shows that lawyers are more risk-averse, analytical, pessimistic, short-sighted and zero-sum out-to-win-oriented than their business contemporaries/clients.  Those same attributes often are what makes them good lawyers--able to see and remedy highly technical compliance and other problems that others cannot and win verdicts for their clients in a zero-sum justice system.  But, as with all good things, there are also downsides.

One challenge that lawyers are going to have in the new age dawning is to refashion in a major way at least the perception and probably also the reality of their impact on business and the economy.  The (very) old perception of lawyers as trusted advisors has given way to something closer to that of self-interested leeches who manage to rain on everyone's parade while siphoning off a percentage of GNP. 

As always, it is the balance that is key.  Lawyers can genuinely assert expertise in a number of areas that business people need and lack.  And lawyers should be compensated for that expertise.  And certainly lawyers are obligated to take stands to protect their clients and to avoid allegations against themselves of malpractice or furthering crime.  However, maintaining respect for the business process, even when it differs from how lawyers would do it, structuring your practice (and your fees) so that reaching the goals the client sets is the driving force, remaining cognizant of the lawyer's role of delivering services rather than achieving dominance-- these are changes of attitudes easier advocated than done. 

How to accomplish those changes is not found in any class any of us took in law school. A careful look at each firm's practice, its values and its strategic plan--and how those influence client service and associate and leadership development on the ground, rather than just in classrooms--is a critical first step to finding the appropriate balance.

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An article by psychologist Amy J.C.Cuddy in the February 2009 issue of the Harvard Business Review reports that we make fast assessments of people on two bases:  their intentions and their competence.  And more importantly, we assume one is related to the other.  This response is evolutionarily linked, she argues, to the advantage of quickly determining whether an unknown person 1) is friendly or hostile and 2) can follow through on their threats or promises. 

Unfortunately our assessments are often marred by biases that produce faulty judgments.  For example, we have a bias towards the elderly as being incompetent but non-threatening.

In the business world jungle, these instant assessments can carry long-term consequences, particularly if they are inaccurate because of poor perception skills (a common problem area for lawyers) or individual biases.  Inaccurate assessments can lead managers to trust untrustworthy associates or undervalue potentially important people.  They can also undermine efforts to build effective teams and retain valuable employees. 

Which One Are You?

For our work with lawyers, the more important finding of the research is that people see "warmth" and "competence" as inversely related:  a surfeit of one ("She's SO nice") is believed to imply a deficit in the other ("She probably can't stand up to a board").  For example, employees who are  consistently perceived as "warmer" are also viewed as less competent, with the practical result that employees who are mothers are often demonstrably underpaid and under-promoted.

While lawyers as a group are not usually at risk for being rated high on the warmth scale, leaders who know the importance of interpersonal relationships, and particularly women, often struggle with portraying to clients and colleagues the "right mix" of warmth and competence, fearing, just as the research tends to show, that too much of the former undercuts the perception of the latter. 

There is some trepidation in telling lawyers not to be too warm--certainly there are those who would argue there is little risk there.  Yet, particularly at a time when, rightfully, the legal world is exhorted to value and praise and build relationships, knowing how to do that practically without impairing the legal product produced, either in actuality or in the perception, is important.

Our advice has long been to bifurcate these two parts of leadership:  warmth is important and should be directed toward individuals, while critical analysis should be directed toward issues, not people.  

Whether with clients or colleagues, inquire about the kids, rib them about their  diet and praise them for their recent efforts, but when you review the business product, do not stint on hard analysis.  In both conflict resolution and decision-making research, similar findings make it clear that too pervasive an effort to build cohesion can overwhelm the validity and productivity of the underlying endeavor. The hard but important work of critical give-and-take can be mortally blunted by attempts to be "nice."

In order to improve our judgments and others' perceptions of us, Cuddy suggests that we also spend time working to reeducate ourselves and our employees away from the savannah influence:  don't be too quick to make judgments in these two areas, and do not assume that kindness and competence are mutually exclusive.

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The news is out:  "Law is becoming more of a business."  That was the headlights line by David Lat, founding editor of AboveTheLaw.com, in a January 25, 2009 New York Times article about the salary freezes, layoffs and dropping profits in the legal marketplace. Lat adds, "And you will see more of an emphasis on results than in the past."

Surprisingly enough, that realization seems to be downright radical, and a gathering consensus to that effect may mark a tipping point, pushing the conception of legal practice into a brave new future.

Certainly some firm managers will respond by taking out their calculators and trying to quantify their way to results--slashing salaries, reducing pencil-count.  Jones Day partner Mickey Pohl advocates refocusing legal services on providing "business-focused solutions." The job of a law firm is not to solve "a legal problem," he contends. "It's to approach a client's legal situation with an eye toward the overall health and strategy of an ongoing business, a business that has to worry about remaining in existence; satisfying customers, shareholders, and stakeholders; staying acceptably profitable; protecting its reputation; and resolving litigation disputes in a cost-effective manner." In short, brilliant legal strategy, at least in isolation, can make for poor business solutions for a client.

We counsel both our law firms and individual lawyers that "getting the right answer" is only a small factor in the successful practice of law.  Getting it right in a timely manner, getting it right in a way that best serves the client from a holistic viewpoint, getting it right so that the client understands and appreciates the answer, and getting it right in the method of delivery and followup are other critical parts of providing valuable professional services.

According to a pundit at Law and More, "there is a downside to recognizing that law is a business and that it should be focused on the business of its clients. For one thing, the specialness of this profession ends... it loses its protective aura... Instead, it stands out there like, well, any other brand, competing for attention...In addition, lawyers, even the most legally adept, will be called upon to put a human face on new business development, ongoing client interaction, and being influential with all other constituencies, be they judges or government agencies."

"Yet, this [skill] remains alien to many prominent lawyers...They address me in legalspeak or, worse, in the top-down tone and content of those who know far more than I but are patiently taking the time to bring me along. They lack more than a conversational mindset. They are downright deficient in Emotional Intelligence [EI].  Boosting EI of the individual lawyers, the law firm, and the classes in law schools seems like it's job-one in the business of law." 

The data demonstrating the challenge most attorneys face in emotional intelligence is already in. Fortunately, emotional intelligence, unlike IQ, can be improved through training, but most law firms have not considered it worth the investment.  But not only will the type of interpersonal style described above fail to obtain, keep and develop business, we also know that it clearly risks alienating the client to the point of litigation. Research shows that more than 80% of malpractice lawsuits against doctors can be predicted by examining not the doctor's education or skills, but simply the tone of the doctor's interchange with his/her patient:  a tone of "dominance" places the doctor at extremely high risk for a lawsuit.  And who but lawyers know how to pitch dominance to an off-the-charts level.

We are being pushed to explore taking bold new steps on every front that has historically defined our profession.  Compensation is being overhauled, partnership structure is adapting to the demands of the times, the billable hour is under siege, real estate is being reevaluated and leverage is under scrutiny.  But perhaps one of the most radical steps that may come from considering legal practice to be, after all, a business is the one that pushes us to educate ourselves and our attorneys in the fine, perhaps once known but now lost art of providing service.

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This is the time of year when many of us take stock of our direction and goals and make plans to step up our effectiveness.  This particular year, 2009, many lawyers are facing an extremely difficult once-in-a-century marketplace for which no one has been truly prepared.  So we may also find ourselves questioning our ability to successfully grapple with the challenges ahead.  

How to acquire the skills that will improve your practice and advance your leadership in such a disorienting environment?

The old adage of two heads being better than one is born out by the data available on the results of coaching.  According to a January 13, 2009 article by Susan Letterman White in The Legal Intelligencer, "a research report by Diane Coutu and Carol Kauffman in the January Harvard Business Review found that coaching is a business tool most often used to develop the capabilities of high-potential performers or facilitate leadership transitions," and one which produces quantifiable benefits. "The Journal of Occupational and Organizational Psychology has reported that coaching leads to higher interview ratings for individuals. Telecommunications Weekly reported in November that a change program, which included coaching, improved customer satisfaction by 10 percent and call resolution rates by 56 percent at Motorola. And according to a 2008 article in The Chronicle of Higher Education, coaching of university faculty improved the writing process of professors who were under pressure to publish."

As Ms. White states, "coaching is to a lawyer what organizational development is to a law firm; they both foster intentional change toward particular goals through a collaborative process. The goals are those that move the client to a higher level of professional effectiveness...Most importantly, a good coach is paid to ask the right questions."

In addition, a good coach is one who listens.

Sheryl Axelrod of Hepburn Axelrod & White, a Philadelphia firm, was quoted in the article as extolling the benefits of coaching in a law firm context. "We worked with a coach who had an uncanny ability to not only listen to our needs, fears and desires for our firm, but our own internal dilemmas and concerns about each other."

Of course, after listening, a coach must also be able to help coachees arrive at and implement beneficial changes.  And those changes are sometimes unexpected.  In the Hepburn Axelrod case, "one of our partners...reach[ed] the difficult decision to leave the partnership."

But the proof is in the pudding.  "The result of the coaching is that our firm, on our own, and our former partner, on his own, are each thriving in a market in which most firms are doing worse, not better, than the year before, " Axelrod said.

Quantitative evaluations of coaching are rare, but those that have been done demonstrate conclusively its effectiveness and bottom-line contribution.  In an evaluation by MetrixGlobal of an executive coaching program provided by the Center for Performance Excellence in 2004 to Booz Allen partners and principals, results indicated that "all leaders readily applied what they gained from their coaching experiences to make significant strides in self-development, while over half (53%) made significant improvements in their relationships with peers and team members and some  leaders (19%) went on to significantly improve client relationships; gaining greater clarity about how their behavior impacted clients and being better able to respond to client issues."

Of eight business areas senior leaders expected executive coaching to impact, "two were found to be positively impacted by at least half of the leaders who were coached: teamwork (58%) and team member satisfaction (54%). Three other areas were selected by 31% of the leaders as having been impacted: quality of consulting, retention and productivity."

Monetary benefits were rigorously documented in this evaluation. "The total monetary benefits were $3,268,325 with four impact areas each producing at least a half million dollars of annualized benefit to the business: improved teamwork ($981,980), quality of consulting ($863,625), retention ($626,456) and team member satisfaction ($541,250). Given a total, fully loaded cost of the coaching of $414,310, the ROI was 689%."

Coaching can provide to all lawyers the simple but valuable assistance of a supportive yet out-of-the-law-firm-box perspective that can be critical when steering through dangerous waters--and that can positively impact the bottom line. That perspective can help you become a more effective  partner, develop individual business, expand your expertise, master management responsibilities and otherwise plan and implement the next step in your career (whether you are motivated to do so proactively or reactively).

At RRR, we offer confidential high-performance coaching programs of six to eighteen months that are tailored to your objectives and your schedule.  Contact us for a consultation on how we can help you achieve your goals in 2009.

Happy new year!

 

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At the meeting of the American Bar Association's Law Practice Management section today in Tucson, Arizona, Muir was presented with the 2007-2008 Law Practice Magazine Edge Award for Bronze Feature Article for her article in the July/August 2007 issue of the magazine entitled "The Importance of Emotional Intelligence in Law Firm Partners." The Edge Awards are sponsored by Edge International, and each year recognize excellence in writing for the magazine.

 

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It isn't a tardy response to Dick the Butcher's rallying call in Shakespeare's King Henry VI to "kill all the lawyers" that may end it for us, according to the forthcoming book The End of Lawyers? Rethinking the Nature of Legal Services.  Richard Susskind, Emeritus Professor of Law at Gresham College, England, IT adviser to Britain's Lord Chief Justice, recipient of an Order of the British Empire award, and consultant to a number of leading law firms in Great Britain and abroad, contends it is rather our own stubborn resistance to the metamorphosis of the business and technological world that will do us in.

"I write not to bury lawyers but to investigate their future...in the face of challenging trends in the legal marketplace,"  Susskind assures.

Let me paraphrase a few of his points from excerpts of his book.

Ignoring The Future and Its Technology

Susskind, also author of The Future of Law (1996), says that during the more than 15 years he was Executive Editor of the International Journal of Law and Information Technology, not once did he receive a submission of an article on the nature of legal practice in the long term.  Governments, managing committees and law schools are not worrying about the fate of the profession for the next generation, in his opinion.  The assumption is that the profession will continue to look like it does today-- skilled professionals dispensing consultative advisory services on a one-to-one basis. While major oil companies have strategic plans in place for the next 50 years, very few lawyers look beyond the next five. 

But the profession is on the brink of a fundamental transformation, in Susskind's opinion.  Within the next 10 years, he contends, all manner of legal guidance and resources, barely imaginable 10 years ago, will be at everyone's fingertips.  The last 10 years intimates the kind of progression that can be expected in the next 10.   Technology today already makes the expanding web of hyper-regulation--vast interconnections of complex regulations--manageable.  They become search-able, reportable and the questions raised resolvable in microseconds compared to the old system of researching and reviewing regulations and case law. Commoditization and technology will likewise reshape 21st century legal services, making conventional legal advisers less prominent, even to some extent invisible. 

The market is increasingly unwilling to tolerate legal expenses born out of inefficiency. So the challenge is to identify lawyers' distinctive skills and replace the rest by advanced systems or less costly workers.  The already apparent tendency of lawyers now to point to their negotiating, deal-making, counseling, risk management, even therapeutic skills, over their mastery of black letter law shows the great tide of recognition of the sinking value of black letter lawyering, which can be increasingly standardized, systematized, packaged and even commoditized without the bespoke handling of an expensive lawyer.  New age lawyers will combine law with some other substantive expertise (like IP, for example) and there will be a new cadre of legal knowledge engineers, whose specialty will be to access, manipulate and package relevant law.

The Potential Impact of Non-Lawyer Investors

For the first time in England, non-lawyers will soon be able to invest in law firms. Delivery of legal services will be a very different business when financed and managed by non-lawyers.  It is improbable that investors would put money into the traditional law firm business model, with its hourly billing, expensive premises, pyramidic organizational structure, etc. 

Savvy business people will surely find that traditional law firms are over-resourced, with enormous duplication of effort, and with too many smart lawyers and too few smart systems.  A revolution in delivery will quickly take advantage of the most profits to be rung from high-volume, low-margin consumer legal work. It has been determined that of 10 billion pounds of consumer-based legal services business in Britain, 6 billion could easily be captured by common consumer outlets, like supermarkets and banks. 

Companies are starting to decompose the components of their spending into high value, big ticket and other matters.  With $40 billion currently being spent on engaging the top 100 US law firms alone, there is likely to be some potential for savings.  Big law firms feel smugly secure in their bet-the-ranch niche, but among general counsel it is clear that if new legal businesses emerge offering quicker, more convenient, less costly alternatives, their companies will embrace them.  And the incentive is there for those businesses to emerge.

Confident In Our Naivete

Lawyers' confidence that "disruptive legal technologies," such as document assembly and review, personalized alerting, on-line dispute resolution and open-sourcing, will not impact their practice is only matched by their lack of familiarity with these trends and their naivete.

 

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Lawyers are introverts, big time.  According to Myers Briggs Type Indicator (MBTI) results, almost 3/4th of lawyers, compared to only 1/4th of the general public, are introverts.  That means they go inward to charge their batteries-- preferring internal introspection to external interaction. 

On the Caliper Profile personality test, lawyers also rank astonishingly low in the sociability trait--which measures how comfortable a person is initiating and building close relationships. Low sociability scorers are less inclined to enjoy interacting with others, preferring to spend more time with information. 

Of course, we know that lawyers are thinkers--they think, analyze documents and deals, edit and write, all loner tasks.  In a recent study, lawyers ranked sixth overall on a list of the 200 best jobs for introverts, just behind the loner braniacs who work as computer software engineers and accountants. 

The question for management becomes how to integrate these loners not only into a coherent, committed organization but also into the 21st century vision of service delivery:  coherent, committed teams.  How do you overcome/compensate for the introverted nature of lawyers in day-to-day management, business development endeavors, client service?

Slowly.  Start by using the strengths of introverts--such as their tendency to (appear to) listen and to deliver well-thought-out opinions-- and proceed from there logically to the overwhelming consensus from research that collaboration improves productivity and satisfaction. 

 

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At a time of some idling in the legal industry, a good use of lawyer time may be to spiff up the old pro bono program.  Davis Polk & Wardwell recently announced the addition of Ronnie Abrams, former Manhattan US Attorney's Office prosecutor and daughter of renowned First Amendment litigator Floyd Abrams, as its first Special Counsel for Pro Bono.  She succeeds a former associate of the firm who oversaw the program and is being made a partner.  For a firm with historically good standing on the American Lawyer's pro bono A-list, one might wonder what prompted the star power addition.

"[Pro bono] is becoming much more important in terms of client relations, recruitment and marketing," says Esther F. Larfent, president of the Pro Bono Institute, which, since 1995, has urged large law firms to commit 3-5% of lawyer hours to pro bono work.  Hiring someone of stature to oversee the pro bono effort "is a very fast growing trend, there's no question."  And having an inhouse partner can fill a talent void at firms that have historically relied on public organizations to oversee lawyer work.

As we all know, pro bono has been around for decades.  Pro bono was what firms long offered to do for pet projects of friends and clients that could also fill young lawyers' time when real work got a little slow.

It has, however, become a much more complicated matter.  Feeding into the equation are various factors:  public perception (falling) of lawyers' civic mindedness; the motivation of many who enter law school to "do good" followed by those same graduates going to big, bad corporate firms and suffering the resultant identity crises; the escalating dissatisfaction of law practitioners and correspondingly escalating attrition rates (perhaps related in part to the previous observation); inspired in part by the expanded transparency that Sarbanes Oxley has imposed on corporations, the increasing client demand (often with teeth) for their law firms to also demonstrate their bone fides in social agenda areas, such as diversity and community service.  There is even the prospect of using pro bono work as a marketing device to tether a firm to a new client or strengthen existing ties.

What Law Firms Are Doing

Some law firms have moved to adopt firm-wide programs that identify them with select non-profits or cause campaigns. Cravath, Swaine & Moore attracted widespread attention a few years ago when it became the primary sponsor of the Urban Assembly School for Law and Justice in Brooklyn, one of 200 small schools that Mayor Michael Bloomberg created to overhaul public education in New York City. Cravath took ownership of this visionary community program, vowing “hands-on” involvement on an “in-school” basis. Throughout the firm, partners, associates and administrative staff work to develop and build an initiative that they believe can lead to real, systemic social change. 

Cravath’s community venture was sufficiently distinctive to merit feature news coverage. According to Stuart C. Ross, partner in ross+price communications, a public relations and marketing services agency that advises professional services firms, “What Cravath did, and how it was reported by the news media, represents an important shift... Clearly the press will cover effective and innovative corporate citizenship, but only if those efforts go well beyond simply writing a check or donating a few hours of legal expertise.”

Skadden had a 38% increase in pro bono hours in 2007 after it assigned Douglas Robinson, a longtime partner devoted to defenses in death penalty cases who was considering early retirement, to become its first pro bono partner. 

What are the Benefits for Law Firms? In addition to the obvious good these programs do for the community and the favorable public relations they can generate, these programs also have a positive impact on a firm’s retention and recruitment effort, producing real bottom-line results.  A study by the Center for Corporate Citizenship at Boston College revealed that 73% of employees involved in volunteering through work said their employers’ support of these initiatives had made them more committed to their jobs.

David Sirota, co-author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want (Wharton School Publishing), argues that employees, regardless of industry focus or experience, have three basic goals in their work. First, they want to be treated “equitably,” with competitive pay, benefits, job security and respect. Second, employees want a sense of achievement from work and to feel pride in both their own position and in the organization of which they are a part. And third, employees want to experience camaraderie. As a Cravath partner phrased it, “This [camaraderie] is not mentioned much in our field, but it's key – not only in the sense of having a friend, but working well together as a team. That is a tremendous source of satisfaction for people…. Working with the School for Law and Justice has been great for Cravath. Having one firm-wide project involving the entire staff builds office morale.” 

WilmerHale committed both financial support and a broad range of administrative and in-kind assistance, including active volunteer service, to six community youth and education organizations in Washington D.C. and Boston, which it reports “has made our lawyers and staff part of the fabric of these community organizations.” The firm takes pride in the striking results produced by its Youth and Education Initiative in terms of student morale, student and staff retention, college acceptance rates, child literacy, improved communication skills and community building. And, it reports, “our non-profit partnerships are a rich source of fulfillment—an internal glue that unites lawyers and staff through their volunteer service to inner-city children.”

According to James H. Quigley, CEO of Deloitte & Touche USA, “What we have seen at Deloitte & Touche is that one of the benefits of contributing to the community is that it helps employees develop leadership skills and business acumen. A [recent external] survey [we conducted] revealed a strong link between volunteering and professional success. Among other findings, the data showed that 86% of employed Americans believe volunteering can have a positive impact on their careers and 78% see volunteering as an opportunity to develop business skills, including decision-making, problem-solving and negotiating. Community service matters.”

From a recruiting perspective, both established professionals and young people from Gen X and Y are seeking more than a paycheck. Candidates are increasingly concerned with work/life balance opportunities, the existence and influence of a diversity committee and the extent of a firm’s involvement in the community. 

Fried, Frank, Harris, Shriver & Jacobson, the sole law firm sponsoring the inaugural conference in 2005 of the “Clinton Global Initiative," as the former president called it, had eleven associates participate in serving as personal aides to the heads of state, corporate chiefs and academics from around the world who attended.  As one associate explained, "I wanted to do something with my life besides chasing greenbacks, and so I chose Fried Frank in order to have a balance between serving clients and doing pro bono work." 

In terms of charitable giving and community good, law firms’ pro bono programs have long produced positive returns in the legal and broader community. However, most pro bono efforts are individual donations of time and expertise that don’t necessarily coalesce to make a major impact or project a firm identity, and therefore fail to provide not only the optimal amount of good but also the optimal public relations punch as well. 

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Shedding additional light on earlier explorations in this forum of the subject of happiness is a new book written by Arthur Brooks that distills mountains of data on the subject.  For one thing, politics and happiness turn out to be clearly correlated.  But the correlation may not be what you think.

For starters, conservatives are happier than liberals.  Much happier.  And they have been for over 35 years.  Almost twice as many who describe themselves as "conservative" or "very conservative" say they are "very happy" (44%) as those who consider themselves "liberal" or "very liberal" (25%).  Brooks ascribes that result to three factors:  conservatives are twice as likely to be married, twice as likely to attend church every week, and more likely to have children.  They are NOT, however, richer than their more liberal, more miserable cohorts.

In fact, when the religious and political data are combined, a fascinating continuum of happiness appears.  Religious conservatives are ten times more likely to report being "very happy" than "not too happy" (50% to 5%).  Secular conservatives and religious liberals are about equally happy in the middle. And secular liberals are as likely to say they are "not too happy" as to say they are "very happy" (22% vs. 22%).  

In addition, extremists on both sides are happier than their more moderate cohorts.  Of those "extremely liberal," 35% say they are very happy (vs. 22% of the ordinary liberals) compared to 48% of extreme conservatives (vs. 43% of their less extreme brethren). Brooks attributes the extremists' happiness to their conviction that they are right, which, he notes, often leads them to conclude that the other side is not merely wrong, but evil.  Evidently two-thirds of America's far left and half of the far right say they dislike not only the other side's ideas, but also the people who hold them!

Brooks finds the determinant underlying happiness to be attitude.  Conservatives are more optimistic, believing that if you work hard and play by the rules, you can succeed.  Liberals, on the other hand, tend to focus on injustice and victimization, encouraging people to feel helpless and aggrieved.

So what does this mean for us hard-working lawyers?  The striking correlation is with the well-established personality trait that lawyers exhibit en masse:  pessimism, which, according to Brooks' analysis, should mean that we are also a less happy lot. 

And indeed we are.  It is now well-documented that lawyers are less happy in their work and their personal lives than nearly every other profession surveyed.

Maybe we should get hitched, join a church and start a brood? 

For a full book review of "Gross National Happiness," go to The Economist.

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The use of assessments worldwide is rapidly expanding and lawyers are still lagging at the back of the pack--way back. 

An article by Lisa Belkin in yesterday's New York Times notes that there are 2,500 "profiling instruments" that companies rely on more every year when deciding whom to hire or promote. Sixty-five percent of companies surveyed reported using assessments in 2006, up almost double from the 34 percent reported a year earlier, according to Staffing Industry Report, a human-resources newsletter.

To paraphrase her article, the content of tests has stayed more or less constant for three decades. What has changed is the workplace. The cost of losing experienced employees now represents a tremendous lost of investment.  "Employers want a guarantee that a new hire will stick — and the best way to do that is to make sure that job and candidate are a good fit in the first place."

Globalization that separates performance and accountability/review across continents has further complicated the process of finding and training the best person for the job. So offering on-line testing across those continents makes these assessments not only appealing but also fast.  

I am often asked by potential clients, particularly those who have been in corporate settings, if we either offer or recommend simple, cost-effective assessments for them to use in attorney recruitment, training and development.  While we can recommend and administer a number of good assessments that can be highly useful -- Myers Briggs Type Indicator (the most popular test in the country, used by 89 of the Fortune 100 and taken by 2.5 million Americans each year), Caliper's Personality Profile, Birkman Method, MayerSaloveyCaruso Emotional Intelligence Test, Thomas Kilmann Conflict Instrument, among others--they are not inexpensive and they are not targeted to lawyers. 

A recent college graduate friend took a Johnson O'Connor aptitude assessment, a common test for teens and young adults to help determine career possibilities.  Since her father and grandfather are lawyers and she is considering going to law school, she was surprised to find that "lawyer" was not one of her designated career possibilities.  She was told that a few years ago Johnson O'Connor stopped offering "lawyer" as an option for any of their test-takers.  The reason?  They are no longer able to reliably correlate attributes or aptitudes with the successful practice of law.

And therein lies one of the problems with assessing attorneys.  While research has indeed identified a number of attributes that lawyers exhibit to a greater degree than others-- for example, high pessimism, skepticism, urgency and autonomy, and low resilience, sociability and collaboration-- the problem lies in the data that shows the impact these characteristics are having on practitioners.  These very attributes present in so many lawyers are also the attributes contributing to the dissatisfaction and distress that the legal profession exhibits:  astonishingly high rates of depression and other mental illness, substance abuse, suicide, and divorce, for starters. High rates of dissatisfaction that are also contributing to the staggering drop-out and attrition rates.

In addition to the challenge of identifying what makes for a good (as well as well-adjusted lawyer), there is also the expense of doing that well.  The testing often done at corporations is highly individualized, developed after an extensive review of what attributes in fact produce productive and satisfied employees at that particular company, and sometimes at that particular location.  Google hires over 10,000 new employees each year and enjoys the amazingly low attrition rate of 4%, but to accomplish that.it invests in a highly detailed questionnaire and assessment that is developed from extensive employee data   That process is not inexpensive. 

Not only is it the individual lawyers who have complex and sometimes hard-to-read attributes.  Law firms and law departments, often in spite of their studied denial, also have "personalities."  Understanding those personalities is critical in determining the type of person who will thrive or fail there. 

Our unique expertise in understanding the attributes of individual lawyers, as well as each legal workplace, makes us ideally suited to help you enter the challenging world of 21st century attorney assessment, development and retention.

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Washington and Lee University School of Law has announced a plan to replace all third-year academic classes with hands-on "experiential" learning.  Recently approved unanimously by faculty, the new curriculum will be phased in over 3-4 years and teach practical skills by using simulations and real-client interactions.  It will also emphasize non-traditional topics like attorney-client communication, working in teams, problem-solving and civil leadership. 

The revised program is in response to firms, corporations and judges urging greater law school emphasis on professionalism and learning in context.  Following the March 2007 Carnegie Foundation for the Advancement of Teaching report on inadequacies in law schools, a network of 10 law school launched a project that aims to improve how law schools operate and teach.

Another relevant area that law schools would be wise to teach is leadership and management.  Leadership and management skills are increasingly important to both the individual lawyer's career and to the success of his/her law firm/law department.  Orrick, Goodwin Proctor and a number of other law firms send their young partners to Harvard  or other business school leadership courses, and/or hold off-site workshops for junior partners on leadership and law firm economics, management and team-building.  But partnership is often late to be grooming those skills.  The next bold step will be for law schools to introduce these critical subjects, and start identifying and honing associated skills, while lawyer students are mastering legal subject matter.

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What's the route to higher efficacy and productivity?  Might that be by staffing with "messy" groups?  So suggests a recent book entitled The Difference:  How the Power of Diversity Creates Better Groups, Firms, Schools and Societies by Scott E. Page, professor of complex systems, political science and economics at the University of Michigan. 

Using mathematical modeling, Dr. Page shows how variety in staffing produces organizational strength-- and bottom line results.  In his models, diverse groups of problem-solvers outperformed groups made up of similar individuals with high problem-solving ability.  The diverse groups got stuck less often that did the smart individuals, who tended to think similarly.

According to Dr. Page, different talents and perspectives, which he calls "tools," bring more and different ways of seeing a problem and result in faster/better ways of solving it.  Diverse cities are more productive, diverse boards of directors make better decisions, diverse companies are more innovative.  Interdisciplinary work is the biggest trend in scientific research, he says, and should be the route that business and the professions pursue.

So what does this have to do with lawyers?  Law departments that stretch across many countries are often diverse by necessity.  And by going global, many firms are diversifying by circumstance.  In both cases different cultural, personality and economic perspectives come into the mix.  While trying to preserve the benefits of diversity, these departments and firms are also confronted with the morass of confusion that many different people doing things differently can make.  Molding those differing perspectives into the "BigLaw" firm or department way of doing things--either purposefully, by circulating the administrative memo or lecturing the new recruits, or inadvertently, perhaps by unconsciously discouraging lawyers from ringing an alarm when they spot missteps, can leave you with unintended consequences. 

KPMG's program to test all US partners (see our KPMG Model Delivers Risk Management, Teamwork, Client Satisfaction and Diversity Too) and then use that information to balance various teams--marketing, client, industry and management, to name a few--is a shining example of the usefulness of diverse approaches to every type of issue facing professional services firms.  KPMG is affirmatively pursuing and integrating diversity in their business model to great benefit.

Finding the right balance to both capitalize on the benefits of diversity and to minimize the administrative and management fallout produced by those differences is a modern law firm's challenge.  There is every reason to believe that getting it right is worth the effort.

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Muir is participating in a business development program for new partners of a global law firm.  The program involves small group training and individual coaching to produce individual business development plans that can help put new partners' careers on a productive course. 

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According to Steve Davis, it all went pretty smoothly and quickly: negotiations in July and August, a preliminary agreement the last week of August, votes last Wednesday, September 26, and on Monday of this week, he became chairman of Dewey & LeBoeuf, the newest megafirm in the global law firm firmament, with 1300 lawyers, 26 offices in 12 countries, and a billion dollars in revenue.

So what accounts for this dramatically better outcome, compared to the Dewey/Orrick debacle-in-the-making that first hit the press last year this time? 

For starters, Davis credits the two firms’ long-standing familiarity with each other. No East Coast/West Coast mystique to decipher and reconcile in this case: the two firms were only two floors apart at 140 Broadway for years and had dealt with each other on myriad matters. With good relationships long established, people at both firms, Davis contends, “quickly understood the underlying strategic rationale” for a combination. 

Davis also believes Dewey & LeBoeuf enjoys another advantage that other recent megamergers did not. Both Dewey and LeBoeuf had high concentrations of lawyers in the same key markets—New York, London and Washington D.C. That’s an advantage? The beauty of the Dewey/Orrick merger was thought to have been little overlap, promising to produce that far-flung “globalness” instantly. Overlap, Davis contends, works in the firm’s favor. Unlike the “Noah’s Ark” that some combinations are left with—two of everything, with 1 in LA and 1 in Boston--Dewey & LeBoeuf’s geography is more likely to force the people and cultures at each key location to mesh.

D&L's executive committee of 22 is composed of 11 partners from each firm, and includes Morton Pierce, Dewey’s Managing Partner, with Davis in the chairman’s seat. After the Dewey/Orrick talks failed, Pierce’s management style was the subject of some bruising commentary, with particular notice given to the fact that he billed 3300 hours that year. See our February 7, 2007 entry “Talking to the Troops.” 

So what will management at Dewey & LeBoeuf be like? Davis is often described as managing “like a CEO,” a role which, perhaps in a reflection on the famous independence of lawyers, one LeBoeuf partner characterized as an “elected dictator.” 

Continue Reading...

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There is no substitute for face time, as people in my business are wont to insist. But maybe there is.

During an interview with Mark Chandler, General Counsel of Cisco, to discuss the evolving legal marketplace, see Leaving Behind the Medieval Model, he demonstrated for me Cisco's newest entry (competing with Hewlett-Packard, Polycom and Tandberg, among others) into the web conference market— a small meeting room that boasts an IP (Internet Protocol) phone, three broadcast-quality cameras, three ultra-sensitive mikes, three 60-inch plasma screens, a crescent-shaped table that seats six and soft back-lighting. The result, as one satisfied client related, is that "you can literally see and hear a pin drop a continent away."  The sensation is of simply being in a small conference room with well-lit colleagues across the table--I admit to the eerie feeling of being able to reach out and touch someone, only I couldn't. 

At $300,000+ for each of these pods (and it takes two, of course) and monthly maintenance costs in the thousands, it would require a lot of deferred traveling to pay for the luxury of not having to sit on tarmacs. Nonetheless these systems seem to be enjoying brisk demand, with prices down from $550,000+ two years ago and double digit increases in sales annually. 

There are a number of circumstances that might prompt law firms to take advantage of these technospheres. In light of how time-consuming air travel has become, the need for rapid decision-making and the globally far-flung nature of more and more law firms and their clients, they offer a reasonable and efficient tool in law firms' management and delivery arsenals.

But my interest in this product (in case you've been wondering why I, a techie manqué, am going on about this) relates to something one of the true techies touting this system remarked when I saw it. "The name of the game today is collaboration," he said, and went on to discuss the myriad tech tools now available that promote collaboration—web-conferencing, intranets, extranets, wikis, individual attorney blogs, etc.

Unfortunately, as we all know, the name of the game at many, if not most, law firms has not historically been collaboration, whether we are talking about firm management, practice group, committee or even client and document issues. Lawyers are notoriously independent and skeptical/untrusting of others. The impact of many firms' broad dispersal of offices and lawyers has not necessarily been to produce more of what wasn't much there in the first place. Compounded with the arrival almost daily of lateral lawyers from different work and culture environments, cities, and even countries, the tendency among lawyers towards isolation is often only magnified.

So here comes the possibility of virtual face time, whether you think you need it or not. While we can agree that what needs face time, and what that term means, is often subjective, the absolute necessity of it among lawyers, their staff and clients is indisputable. I concede that web conferencing still lacks a certain something—building a critical relationship, hiring and firing, and even congratulating might still best be done in person. Real person. Where a shoulder to cry on, a slap on the back or a firm handshake can make a difference.

But if a firm determines to include one of these technologies amongst its tools or toys, it should not forget to put introducing, acknowledging, appreciating, recapping, explaining, consolidating, networking, socializing, rewarding, giving feedback, even gossiping and complaining on the list of things they are used for. It is an efficient way to build rapport and community and the productivity associated with that cost assuredly drops to the bottom line faster than whatever productivity associated with paying for either lunches at everyone's desks or sitting on the tarmac does.

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On Thursday, September 21, at 2:00 pm EST, Ronda Muir will lead an audio conference on Associate Compensation: Where Do We Go From Here?  Included in the discussion will be a review of current trends and out-of-the-box ideas for dealing with the impact of escalating associate compensation, how to find the best strategy for your own law firm and overcoming the problems and pitfalls in making that strategy work. 

The audio conference is sponsored by IOMA, which publishes Law Office Management & Administration Report, as well as other legal publications, and provides research, educational and training products to lawyers.  To register, go to www.ioma.com/law_firm_management/. 

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One of the requirements of the Sarbanes-Oxley rules for publicly traded companies is that they demonstrate that they are promoting an "ethical culture" in the workplace.  What does that mean?

"The Manager's Book of Decencies:  How Small Gestures Build Great Companies" by Steve Harrison, chairman of Woodcliff Lake, N.J.-based Lee Hecht Harrison, the employee outplacement arm of Adecco Human Capital Solutions, a division of Adecco SA of Glattbrugg, Switzerland, is an attempt to answer that question.

Mr. Harrison's contends that an ethical culture is the result of many small, and sometimes large, gestures made over a long period of time, with the driving force coming from the top.

"Being decent isn't about being nice... or spending more money-- it's about treating people fairly," Harrison claims. He also believes that good role models at the top have certain common traits. Those Harrison acknowledges as outstanding role models are Colgate-Palmolive Co. chairman Reuben Mark, Nucor Corp.'s former CEO Kenneth Iverson (who died in 2002), Campbell Soup Co. president and CEO Douglas R. Conant, Southwest Airlines Co. chairman Herbert Kelleher, and Dial Corp.'s former president and CEO, Herbert Baum. 

These five leaders exhibit what Harrison calls a high level of "moral intelligence," which is marked by humility and honesty during both good times and bad.

If employers can pay attention to the issues that matter to their employees, "like finding some kind of fulfillment in the job they come in to day after day...then they're on their way to creating a culture of decency which is critical to attracting, retaining and engaging employees."

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Behavioral science is not often invoked in the halls of law departments, but maybe it should be.  Two recent articles highlight the importance to a GC's success of understanding why people think and act as they do.

General counsel are in the position of having to reconcile two jobs: being both a business partner in the management of the company's business and the guardian of the company's integrity.  One aspect of their work requires creativity, risk-taking and far-sightedness.  The other requires careful scrutiny of every corporate action in the short and long term for potential regulatory, liability and just plain reputation pitfalls.  Achieving high productivity with high integrity might strain even Superman's talents.

An article in Corporate Counsel by Ben W. Heineman Jr, former GE senior vice president-general counsel, entitled "How GCs Can Avoid Being Caught in the Middle" recites some of the recent scandals that attest to how difficult that balancing act can be:  the fraudulent financial practices at Enron, the pretexting at Hewlett-Packard Corp, and the wave of options backdating.

Perhaps what chilled GCs to the bone most recently were the guilty pleas by Purdue Pharma L.P., its president, GC and former chief medical officer to misleading the public about the drug OxyContin's risk of addiction.  They have agreed to pay a total of $634.5 million in fines.  Rather than relaying focus group concern about potential for abuse, Purdue Pharma gave false information to its sales representatives that the drug was less addictive than other painkillers.

Heineman mentions a number of attributes that can help GCs successfully straddle their two roles.   Vis-a-vis the other corporate managers, the GC must have the ability to stand his/her ground on clear illegalities and to make sure he/she has enough time to assess those situations that are not clear cut.  And GCs must be able to take those stands in the pressure-filled environment of a board meeting where the CEO is likely to be a ferocious skeptic and many board members will side with the CEO.  See our July 18, 2007 entry on Promoting an Effective Board about the importance of personal attributes in good decision-making.

The Texas Lawyer article "It's All in Your Head:  Cognitive Theory Can Help GCs Lead Organizations to Better Decisions" by Michael Maslanka, a managing partner at Ford & Harrison in Dallas, contends that a GC's real power--the ability to influence decisions-- comes from understanding the way people think, which requires tapping into cognitive science.

Maslanka lists a number of biases that people in general and managers specifically can suffer from if they aren't on the alert: 

• The bias that there is only one cause when something bad happens
• The tendency to focus on conclusions and generalities instead of specifics
• Hardwiring that makes it easy to believe accusations and hard to disbelieve them
•  A confirmation bias, which only admits facts that support our beliefs (and further reinforces our belief bias)
• Overreliance on what is first heard
• Resistance to change that can only be overcome with practice, practice, practice

Maslanka encourages GCs to be open to all possibilities and to question rather than dictate.  Heineman also points out the importance of maintaining within the law department a culture that welcomes, even requires, lawyers to raise concerns about financial, legal, ethical or reputational issues.  We refer to this as a "culture of dissent"-- one that invites concerns, follows up on them and does not punish anyone for raising them, but rather praises them.  See our March 16, 2007 entry on the article Handling Conflict and Dissent in Law Practice (and Life).

While it may not be mind reading, being cognitively aware of your own personal attributes and biases, as well as others', can help steer you toward that Superman performance to which all GCs aspire.

 

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Burnishing an image that is bankable is what every professional tries to do--both for him/herself individually and for the profession as well.  Doctors take bed-side manners lessons, the NYPD are being instructed on common courtesies.  What about lawyers?  What do they do to bring out the gold?

From the looks of things, not much.

A Harris Poll annually asks the question “Who would you trust?” about various professions.   Doctors, teachers, scientists, police officers, professors, clergymen and military officers routinely end up at the top of the trust chart, garnering more than 70% of the votes. 

Lawyers are usually found settled at the bottom, where members of Congress, pollsters, trade union leaders and stockbrokers rank above them with 35% or less of the vote. There, in next-to-last place in 2006, lawyers sport 27% trustworthiness, one notch above the bottom-feeding actors, over whom lawyers are able to boast a one percentile advantage.

The recent portrayals of lawyers in mass media are evidence of how low the reputations of lawyers are sinking. Long gone is Perry Mason reassuring the wronged and bringing evildoers to justice.   Last season’s TV series about a lawyer was titled “The Shark,” which pretty much says it all from an image standpoint.  That series has been one-upped by this summer’s arrival of a lawyer drama entitled “Damages,” starring Glenn Close, who will always be remembered as one of our generation’s scariest persona—the man-eating, marriage-dashing, family unfriendly “Fatal Attraction” psycho.  Legal advice, anyone?

Then there are the real-life reports that manage to make these fictional scenarios look reasonable:  the senior partner who throws law books at associates, the criminal defense attorney found naked with an adolescent in the court's conference room, the litigator who admitted to altering documents in a consumer class action, the tax lawyer who bribed IRS officials to accept tax positions, the partner whose language in court was so egregious the head of the firm flew in to apologize. 

Into this combustible scenario comes the question of whether law firms should be able to advertise in mass media, as do other professions, and if so, what they should be able to say. 

The recent back and forth in New York, New Jersey and other states about whether law firms should be allowed to tout their "Super Lawyers" or other commercially recognized stars on their websites, use testimonials from prior or existing clients in their marketing materials, use unidentified actors in their ad campaigns or even send emails that don't clearly identify themselves as "soliciting" are no doubt reflections of the growing role that image marketing is likely to play for lawyers. 

A recent article in the New York Times heralded the arrival of professional-looking canned law firm television commercials that are affordable to "the smaller, more local firms for whom the most important thing is the message to their communities," according to Spot Runner, who is working together with Martindale-Hubbell to market the commercials.  While that approach may benefit a local firm whose clients and potential clients are individuals in the community, as the article notes, it is unlikely to be useful to large corporate firms.  And the unseemly associations with ambulance chasing still prevail.

So, other than mass advertising, how do we burnish our image in this modern era? 

Perhaps in the most old-fashioned of ways:  by building relationships, one at a time.  It does not produce a quick fix or an instant cache.  It takes time-- both immediately and over the long run, so it's not very efficient.  But building individual relationships is effective.

Clients say repeatedly that the quality they most want in their counsel is trustworthiness.  Not just someone who gets the answer right.  Or gets the answer right enough for the price.  But someone who the client can count on to look out for their best interests, provide honest feedback and reliably follow through. 

It's an image worth the investment.

 

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An article by Ronda Muir entitled "The Importance of Emotional Intelligence in Law Firm Partners" appears in the July/August 2007 issue of the ABA Law Practice Management Section's Law Practice Magazine. 

Among the attributes that emotionally intelligent partners bring are better judgment, higher productivity, enhanced business development skills and better client relationship management.  Most importantly, high emotional intelligence fuels the kind of leadership-- one which promotes collaboration and teamwork-- that is critical to excellence in the 21st Century, and that can provide firms with a competitive edge.

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Should lawyers “do the right thing” in addition to “being right”?  

A favorite cartoon depicts two lawyers at a desk evidently discussing strategy. One lawyer says to the other: “Is it right?… Is it fair?  Get a grip, Carlton—we’re a law firm!”

Integrity

In an interesting study issued recently, the Consortium for Research on Emotional Intelligence found that financial advisors who demonstrated high levels of “moral and emotional competency” nearly doubled the S&P 500 return on their client portfolios in the years 2001 through 2004, delivering an average return of 25%. 

Of the various attributes studied, integrity had the single strongest impact on client returns. “Results showed that Integrity was the key behavioral competency which predicted the most positive returns for clients." 

Integrity was defined as acting consistently with what one says is important, in other words “walking the talk.”  An example was an advisor willing to give up a lucrative client rather than compromise his/her principles, such as ultimately recommending that a client seek advice from another advisor because the advisor could not in good conscience implement a plan believed to put the client at significant financial risk.

Ethics

In the process of updating his 1996 book The Honest Hour: The Ethics of Time-Based Billing by Attorneys, William George Ross determined that lawyers in 2007 are significantly more likely than a decade ago to pad their bills with unnecessary hours or bill two clients for the same time. Almost 55% (up from 40%) of associates and partners surveyed report performing unnecessary work, and 35% (up from 23%) say they bill two clients for the same time. The number of lawyers who believe double billing is ethical also rose from 35% in 1996 to 48%, and more than two-thirds of lawyers say they have specific knowledge of bill-padding by others.   

Morals

In a May 2, 2007 Law.com article entitled “From Moral Partners to a Moral Firm”, Gregory S. Gallopoulos, the managing partner of Jenner & Block, suggests that the integrated enterprise model that many successful law firms are adopting now, in which strategy and vision belong to the entity as a whole rather than to individual partners, risks producing a vacuum in the area of firm morals. 

Continue Reading...

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In connection with the 129th annual International Tradmark Association meeting in Chicago, Ronda Muir, Senior Consultant, presented a program on Wednesday, May 2, at Robin Rolfe Resource's Women's Power Breakfast for seventy senior corporate and law firm women in intellectual property.   Her presentation focused on what makes lawyers, and women lawyers, different from other professions and how to use those differences to make good lawyers better.  This year INTA welcomed over 8,500 registrants from around the world.

 

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Give yourself the advantages that insights from sophisticated behavioral science tools and informed collaboration can produce.  Out of ideas for how to motivate your team?  Can't take another day with a difficult boss or colleague?  Strung out from too many committments and not enough time?  Looking for a meaningful way to both practice law and live your life?

Achieve improvements in your professional and personal life, including progress in leadership and management skills, work/life balance, conflict management, business development and time and resources management. 

Our experienced lawyer coaches use their expertise and assessments to give you the tools to maximize your strengths, raise your emotional intelligence and social IQ, as well as benefit your bottom-line results.  You choose the program that best suits your needs and schedule.

For further information, contact RMuir@RobinRolfeResources.com. 

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Do we have a deal?  An easily-missed recent entry in the legal press noted that DLA Piper had decided to award the latest round in starting salary increases to entering associates in only one practice area--patent litigation.  The article noted that patent litigators often have science and engineering degrees and that clients are willing to pay premium billing rates for these services.  DLA's co-managing partner for the US, J. Terence O'Malley, said the move was in response to "listening to the marketplace."

Partner compensation at law firms usually differs depending on seniority, origination, productivity and whatever else goes into the formula, and individual compensation arrangements, at least for a trial period, are often negotiated with lateral hires, including associates.  According to an Altman Weil Survey, however, nearly 2/3rds of firms with more than 100 lawyers have some sort of lock-step feature by class for associate compensation, and that proportion must approach 100% when it comes to first-year associate entering salaries. 

DLA's small step is remarkable in several respects.  Given the traditional associate compensation structure, hiring entering associates at varying salaries, particularly in this competitive recruiting environment, is a real departure.   This proposal must have provoked lengthy discussion at DLA about whether, regardless of its usefulness in snagging more patent types, the move would also turn off high-quality associates not interested in patent litigation.  Isn't DLA saying that some associates are more valuable to them than (most) others? 

But if there is premium billing to be had, why not pay premium compensation?  There is something to be said for sharing the wealth with the associates who are doing that work.  It's just that that is not how law firms have reasoned in the past.  Call it a "professionalism ethic," or maybe something else, but there has been a widely-recognized premise that at least all young lawyers in any given firm are created, and paid, equal. 

Further, for a law firm to have gone through the process of officially determining that some corporate legal services--in this case, bet-the-ranch patent cases-- are more valuable in the marketplace than others, and that they are going to pursue those, is notable, the critical word being "officially."  Firms have long been able to bulk up bills in areas where they own the field, using an implicit what-the-market-can-bear standard.   What is the client's alternative? 

But this announcement publicly acknowledges parsing the demand for legal services in a way that law firms have traditionally not owned up to--we intend to take advantage of the demand for a specific type of particularly profitable work.

The correlation drawn in the article between premium billing and the associates' salaries makes it look like DLA's analysis was based on the old-line cost-of-production concept--since we will charge a higher hourly rate for this work,  we can afford to pay these associates more as well and still retain our profitability margins.  But in fact, these facts can also support a newer type of value pricing-- we can pay these associates more because this work is worth more to the client, regardless of how much time it takes to perform. 

This announcement may also be part of a shifting in the wind away from the convergence rage. There has been much made of the convergence trend among corporations, no doubt the brain-child of a legal consultant hoping to reap the law firm M&A bonanza that the announcement of such a trend has in fact put in motion.  But this bit of DLA's market analysis, if true, may put the lie to the contention that  firms should do it all.  IP boutiques have in part managed to ratchet up hourly rates because of the uniform nature of their hotly-demanded business.  In short, they are the antithesis of the general service law firm and they are profiting from that status.  Large law firms, burdened with years of the convergence message, currently sport a blended, averaged or standard-per-class billing rate that applies to both more and less profitable work.  

According to last year's survey, 28 of the AMLaw 100 law firms shrank in size.  All but two of those also improved their RPL.  For example, Akin Gump shed 25-30 lawyers as they found asbestos defense work to be increasingly commoditized and price-sensitive.  That  move raised RPL nearly 5% for 2005.  Managing Partner R. Bruce McLean noted that  "In the 1990s we tried to build a national firm, and we grew from 450 lawyers to 1,000 lawyers."  The firm now has 794 lawyers.  "Since 2000 we have tried to focus on doing what we do well, so we can compete at the top of the market in those practices."  In other words, they are no longer trying to be all things to all clients.

DLA's move looks to be in response to clients who, at least in this particular patent litigation area, want the best in the business, wherever that is, and further, whatever that costs. 

Where this type of reasoning could take law firms is wide open:  carefully drawn billing rates (and salaries) that differ among practice groups, and possibly even among types of work within practice groups, as well as over time, all based on the latest market analysis.

Regardless of whether DLA's analysis is right, the important step taken may be in their acknowledging publicly, however quietly, that engaging in this process, "listening to the marketplace" and then attuning your firm's economics to what you hear, is a respectable way to run a law firm.

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Ronda Muir, Esq., Senior Consultant at Robin Rolfe Resources, was featured as a speaker at a conference on Risk Management for the Modern Law Firm, sponsored by ARK Group. The conference was held in Chicago on April 17 and 18, 2007. 

Muir's presentation was on the risks that arise in managing a law firm's greatest asset: its people. She pointed out the ways in which lawyers are different from all other professionals, the challenges and risks that those differences pose to management, and how to use those differences to make good lawyers better. 

Participants raved:

• "Innovative, new information!"
• "Excellent, new material of real value.  I would love even more detail and time on this topic."
• "Great presentation!" 
• "Great speaker!  Knowledgeable and forward thinking."

ARK Group also lauded Muir's participation: "Your involvement was pivotal to the success of the program… and brought a fresh perspective to the agenda."  

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Women lawyers are not serving in appropriate numbers on corporate boards, bemoans an April 6, 2007 article in the New York Times Business Section.  Evidently only 14.6% of Fortune 500 companies counted a woman among their directors in 2006.

That same year women accounted for 17% of law firm partners (presumably equity partners), 16% of law school deans, 14% of chief legal officers at the Fortune 500 companies, and only 7 of the Fortune 500 CEOs.  So even though some of these statistics are arguably comparing apples and oranges, that board participation percentage doesn't look so out of whack with the rest of US business.

The thrust of the article is that due to the "shortage of qualified candidates for directors," it is a good time for women lawyers to spruce up their board skills, which should include, evidently, how to deal with an "overbearing, pompous and unctuous C.E.O" who rules by intimidation.

Over a year ago there was a well-publicized study finding that the more intelligent (actually, educated) a woman in the US is, the less likely she is to be married.  In response to that study, reporters across the country exerted themselves by castigating those men for not taking smart women as their wives. 

No one interpreted the data to mean that the smarter the woman, the less likely she is to agree to enter into that particular union.

The Times' take on these board room statistics has that same one-sided press spin.  Yes, women could and probably should play a more visible and pervasive role in corporate management, and yes, women lawyers are as smart as those other guys.

But any lawyer with their eyes open over the last few years has seen the publicity, economic and/or legal debacles that perfectly respectable, financially successful corporations have walked into.  From Enron to Morgan Stanley to Hewlett Packard, boards have been unveiled as little more than back-scratching yes men (by a very large margin, we now see) happily unfamiliar with what goes into the sausage, their major qualification for board membership often suspiciously looking like their golf handicap.  

We also all know that Sarbanes-Oxley was passed primarily to get board members such as these to put their John Henrys on many a line that they would much rather not, and for the express purpose to make them personally liable--financially and sometimes also criminally-- for whatever fallout later occurs. 

So yes, there are a "shortage of qualified candidates."  But is this one of those times when being smart means knowing when to say no?

As Marlene Alva, recently retired from Davis Polk, pointed out:  "It is a big-time commitment, and it's liability-fraught...Lawyers are in a better position than others to judge the perils." 

Precisely.

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In what may be a first, Intel Corp. issued an RFP last fall to find law firms to partner with their attorneys on community service projects in Silicon Valley.  This year it is expanding the request to three other offices.  The firms it chose in the first round were Baker & McKenzie, which had done work for Intel before, and Nixon Peabody, which had not.  The projects include providing legal services to entrepreneurs, resolving child guardianship disputes and assisting special education students.

This is a win/win situation for everyone.   Working with corporations on specific community service projects can cement law firm relationships with clients and sometimes forge new ones.  The experiences give firms a well  of positive, common accomplishment to draw on and generally improves communications between the two groups.  

Such programs also help satisfy those altruist urges that prompted a large percentage of lawyers to go to law school in the first place.  A recent ABA Young Lawyers survey made it clear how critical the altruistic piece is to Gen X and Y associates.  Almost 65% of those lawyers said they were considering changing careers within the next two years, primarily because of the failure of law to offer ways to make a meaningful social contribution.

In addition, for the corporation, the favorable public relations from these sorts of efforts are invaluable, particularly for those who recruit from the communities involved.  Company employees also benefit from getting to know specific lawyers (and possibly other professionals and staff) in such a positive, us-against-the-world way.

A further enhancement would be for law firms and companies to identify projects that engage not only the lawyers, but other professionals and staff at each organization as well.  Law firms could also be that ones that initiate these joint undertakings, taking on some of the startup burden and sending invitations to specific clients for whom the program is tailored.

 "There's a unique bond that's formed when people team up to make a difference in their community," says Lisa Ellis, founder of Benedict Advisers, a corporate citizenship consultancy in Greenwich, Ct., which also advises law firms and law departments.  "And using the RFP process supports community service through the normal business practices."

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An extraordinary and convincing vision of a revolution in big law's future was presented by Mark Chandler, SVP and General Counsel of Cisco, in a speech in January at Northwestern School of Law's 34th Annual Securities Regulation Institute.  I would like to join other legal commentators in paraphrasing Chandler's comments and commending him on his far-sightedness.

Driven as are other GCs to realize productivity improvements in his department, Chandler is committed to reducing Cisco's legal expenses as Cisco gets bigger.  Chandler points out that information, a law firm's stock in trade, will only get easier, and therefore cheaper, to access over time.  Already standardized on-line legal data is available, with residential leases and individual tax returns now largely done by software.

But even Cisco's first tier corporate legal work is being drilled down to a cost-effective, accessible product.  Contracts are drafted, executed and archived by employees using on-line software. Cisco pays a fixed fee for patent prosecution and intends to pay at least 5% less each year, requiring its firms to find ways to lower costs.  It also pays a fixed fee for the review of license offers, which Baker & Botts has been able to make profitable by developing a more efficient systematic approach.   In the corporate secretarial area, Cisco has replaced a group of outside firms with a one-firm solution that aims for a 20% reduction in legal expenses in part by using standardized forms and open interfaces. 

In litigation, Cisco has a fixed fee arrangement with Morgan Lewis to manage all of its US commercial litigation, which has made litigation avoidance the firm's key goal, aligning perfectly with Cisco's interest.

Counseling will be the next frontier, Chandler believes, as online tools like tax counseling via www.taxalmanac spread to other legal areas, such as export regulations, human resources and employment and eventually securities law compliance.  Cisco is already working with eight other Fortune 500 companies and a number of law firms on a site called Legal On Ramp to allow direct access to search law firms' knowledge management systems.  See www.legalonramp.com.

And in each instance, what was novel in Cisco's legal management strategies five years ago has become more commonplace among its peers today and may well eventually become available for purchase as packaged software.

The current law firm business model, according to Chandler, reflects a fundamental misalignment of interest between clients who are driven to manage expenses and law firms compensated by the hour.  Clients are not in the market of buying time, he points out, but value.  The current system not only mis-serves clients, but also the lawyers themselves, particularly associates, who Chandler says are beating down his doors because they don't want to work for law firms any more--enslaved by a billable hour-based compensation system that is inefficient in producing a valuable product and that offers them little chance of making partner.

Chandler recognizes that law firms are currently profitable as structured.  Clay Christensen of Harvard Business School calls large American law firms "the most profitable businesses in the world.  Speedier information-gathering capabilities allow large law firms to increase utilization of less experienced lawyers without passing cost savings on to their customers."  But Chandler is convinced that the very source of success for firms today--the ability to control client access to expertise, requiring 1:1 delivery--will be the source of their failure in the future.  It is top quality boutiques that Chandler is betting will change and survive, and it is in Cisco's interest to help make them profitable while doing so.  Chandler views slower-moving, cost-heavy large centralized firms to be at risk. 

"If the economic system of law firms is frustrating to associates and even some partners, I can tell you that from the standpoint of a metric driven general counsel, it is more than incomprehensible.  It looks like the last vestige of the medieval guild system to survive into the 21st century."

 

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Firms of Endearment: How World-Class Companies Profit from Passion and Purpose
by Rajendra Sisodia, David Wolfe and Jagdish N. Sheth contends that companies with more emotionally intelligent employees have stronger bottom line performance than those who don't.  David Wolfe can be a controversial adviser, and some have suggested that being recognized as a good corporate citizen should be sufficient reward for conscientious organizations, without having to convince themselves that both their individual psyches are above par and that their bottom line improves as well.

Regardless of the sniping, the underlying research makes the FoE claims believable.  High EI clearly hits the bottom line. Ninety percent of top individual performers across industries have high EI whereas only 20% of low performers do. Those who raise their EI are roughly 25% more productive than before.   Insurance agents who score high on EI sell twice as much in policy premiums as agents who score lower. Managers at American Express Financial Advisors who complete a training program focusing on one's own and others' emotional reactions achieve significantly higher rates of growth in funds under management than their untrained peers.

Plus, data suggests that employees who are emotionally intelligent are more likely to access and profit from feedback, helping them achieve more over time.

So the logic of companies who have more emotionally intelligent employees out-performing their lower EI brethren (and sisters) certainly makes sense.

The application to law firms and law departments, where checking one's emotions at the door is standard procedure, is obvious-- more emotional intelligence--whether hired, trained, or promoted-- will not only improve culture but produce bottom-line results.

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The Carnegie Foundation for the Advancement of Teaching summarizes its two-year study of the North American legal education system by concluding that "law school provides the beginning, not the full development, of students' professional competence and identity.  At present, what most students get as a beginning is insufficient."

The report recommends "a dynamic curriculum that moves [students] back and forth between understanding and enactment, experience and analysis," integrating traditional classes with clinical approaches to legal education.  Yale Law School, City University of New York School of Law and NYU were recognized for having balanced curricula.

Given the recent changes in a number of law schools' curricula, one commentator asked whether this "problem" wasn't already on its way to being solved.  Others asked why the Foundation had not addressed the perennial questions of improved ethics and relationship training and whether law school could be shortened to two years.

In an essay in the January 8, 2007 edition of the National Law Journal, Stephen J. Friedman, dean of Pace University School of Law, and formerly commissioner of the SEC, general counsel of The Equitable and E.F. Hutton, and co-chairman of the corporate department at Debevoise & Plimpton, finds law graduates to be "ill-equipped to be effective beginning lawyers" and wants curriculum at law schools to be "more purposeful, more focused and more integrated."  He notes that rising legal fees discourage over-the-shoulder training and rising salaries push young lawyers towards early specialization in order to be more productive.  He advocates a third year of broad and interrelated training that heps students learn how to function, as well as think, like lawyers.

Shortening law school to two years would produce a larger number of graduates to feed the maws of Wall Street and perhaps reduce tensions in the retention wars.  But more "personal relations" and "client management" types of course targeted to raising the emotional intelligence and relationship skills of law graduates would be the most direct and dramatic route to both increased attorney productivity and increased attorney and client satisfaction. 

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BTI Consulting Group recently announced the results of its sixth annual client service survey, with the conclusion that corporate America is not very happy with their law firms.  Of the more than 250 corporate counsel and top executives interviewed over the past year, only 32% said that they would recommend a firm that worked for them.

Of those firms who were in the top 30 for client service, Sidley Austin topped the list.  In a separate list of the most arrogant law firms, Skadden, Arps, Slate, Meagher & Flom took top honors.  It was notable that California and other West Coast firms were well-represented on the former list and New York and other East Coast  firms seemed to dominate the latter.  Several firms are clearly working their way up the service list, including Morrison & Foerster and Reed Smith.

While the survey provides useful data for most firms for understanding their public persona and marketing themselves to prospective clients, those who didn't do well or who figured prominently in the arrogant and other undesirable lists should do their own risk management review and come up with strategies to address their shortfalls.  Understanding the firm's values and how the culture reflects them, possibly reevaluating and redirecting either or both, educating both associates and partners in client service, raising the firm's emotional intelligence, and setting a timeline to confirm by marketplace and client surveys the effectiveness of the firm's new policies are possible strategies.  In a competitive marketplace where clients are king, doing nothing is not a reasonable course.

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Harvard Law School’s goal in its revised curriculum this year is to teach young lawyers how to “resolve client dilemmas.” How exactly is that done successfully in the modern practice of law? By calculating dollars won in the final judgment, for example? By assessing the investment of time and energy versus the payoff? 

Everyone has by now heard of the prevailing sentiment that no one wins in litigation any more. If that statement is even somewhat true, what is the course to resolving a client’s dilemma in a way that will be viewed as successful? 

The mediation industry has arisen almost entirely as a reaction to the mistrust of lawyers and what is perceived as their conflict-escalating processes. Even arbitration is becoming viewed as saddled with some of the time-consuming, rigid aspects of litigation, and in-house counsel are moving towards mediation, or at least including mediation in their bag of tools. Paul Adams, Associate General Counsel at the Gap, finds mediation “a very, very powerful process with a strong emotional component. It’s informal and the plaintiff feels like he’s controlling what’s happening.” He also notes that it allows for more creative resolutions.

Thane Rosenbaum argues in his book The Myth of Moral Justice: Why Our Legal System Fails to Do What’s Right (HarperCollins) that what clients want most is an emotional relief--to feel that their position has been understood and acknowledged. "Clients of all stripes walk out of the courtroom saying 'That’s it? I didn’t even get to say what I think?'" Lawyers, he argues, are limited by their legal vision—rather than just channeling their clients’ anger through a legal claim, such as breach of contract, which may not really address the client’s underlying grievance, lawyers should be listening to and acknowledging the hurt, and be able to offer nontraditional ways for that hurt to be addressed. While Rosenbaum’s claim that our current system of justice is morally deficient does not seem to have been challenged, his suggestions as to how to change it have been met with charges of being naive and impractical.

Web.com’s Corporate Counsel Jonathan B. Wilson’s book Out of Balance: Prescriptions for Reforming the American Litigation System takes a less radical approach to reforming how we address our clients’ dilemmas, including advocating for arbitration, mediation and a number of other alternatives.

Thomas Barton, who teaches creative problem solving and preventive law at The Center for Creative Problem Solving at California Western School of Law in San Diego, extols creative legal problem solving not only for the satisfaction it gives the client, but also for the effect it has on the lawyer involved: it feels great to do creative work that really resolves the dilemma. See www.cwsl.edu/cps According to Barton, there are two major steps involved: expanding the context of the problem so that all the dimensions are exposed, and building a larger repertoire for resolution, which includes being open to whatever constitutes “success” in the client’s mind.

Malcolm Gladwell’s book Blink cites research that shows that doctors who are viewed as a valued resource and are able to build a trusted relationship with their patients are not sued –even if they have committed malpractice. While admittedly a subjective standard, shouldn’t lawyers be aiming for that same type of relationship with their clients? The one that makes them “right” no matter what their advice is?

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In-House Counsel recently reported on the results of the Managing Outside Counsel Survey Report prepared by the Association of Corporate Counsel and Serengeti Law of Bellevue, Washington.  The study revealed, among other things, the four reasons that companies are firing outside counsel. In 2005, 55.6% of the General Counsel surveyed reported that they terminated the relationship with at least some of their outside firms, up almost ten percent (50.7%) from 2004. The reasons most cited for firing outside counsel were:

1.       poor quality of work

2.       lack of responsiveness

3.       high fees

4.       personality issues 

Note that, after the threshold issue of competent work, two of the three main reasons for firing an outside firm were for deficiencies in what some lawyers refer to as “soft” skills—lack of responsiveness and personality issues. 

How responsive are your lawyers?   Do they have well-developed client relationship skills?

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