Muir will participate in a webinar entitled “Think Like a Lateral—How to Hire and Retain Quality Lawyers” to be presented on Tuesday, March 9 for the members of the Attorneys' Liability Assurance Society (ALAS).
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?
Firms are placing their futures at risk if they cannot identify, develop and empower the next generation of leaders. So it is no surprise that more law firms are investing in leadership development. For example, according to PaLAW 2009's 14th annual Managing Partners Survey, cited in the November 23, 2009 issue of The Legal Intelligencer, the number of firms surveyed that provide leadership training at any level increased from 40.5% in 2008 to 67.7% in 2009, almost a 60% increase.
What does it take to be a good leader? And do we lawyers have what it takes?
There are numerous theories about the best style of leadership--see Primal Leadership (2002) by Goleman, Boyatzis and McKee for an informative evaluation of 6 major styles. Apart from style, Richard Daft, author of The Leadership Experience, cites numerous studies that have sifted out five recurring personal attributes of successful leaders: openness to experience, emotional stability, conscientiousness, agreeableness and extroversion.
If you look around for potential leaders in your firm, chances are few of your colleagues possess all five of those attributes. While conscientiousness is something lawyers tend to have in spades, openness to experience (also known as risk tolerance), emotional stability (or emotional intelligence) and agreeableness (aren't we hired NOT to be agreeable?) are all factors that in various studies lawyers tend to fall short on. Certainly, we have clear and robust data that most lawyers (over 70%) are introverts, rather than extroverts.
So can introverts lead? Successfully, that is?
There seems to be some hope. If the concern is that introverts tend not to be charismatic, outgoing personalities, Jim Collins's book Good to Great: Why Some Companies Make the Leap . . . And Others Don't provides some comfort. Collins discovered that glitzy, dynamic, high-profile CEOs are actually a hindrance to the long-term success of their corporations. Charismatic leaders are attractive to others, but they may be less effective in drawing people to the mission and values of the organization itself.
Collins contrasts Lee Iacocca, Chrysler's leader and spokesperson in the 1980s, with Colman Mockler, the CEO of Gillette from 1975 to 1991. While Iacocca almost single-handedly steered his car company away from disaster and put it on the road to prosperity, after his retirement Chrysler's profits faltered, and the company was sold to a German rival five years later. Apparently Iacocca had done little to invest in his successors or build a culture that would ensure the longevity of Chrysler.
In sharp contrast, Mockler made personal sacrifices and took substantial risks for the long-term success of the company and the profits of the shareholders, and he was so effective that $1 invested in Gillette in December 1976 was worth $95.68 in December 1996 and eventually earned a significant premium when the company was sold to P&G in 2005. Laconic and reserved, Mockler labored in relative anonymity for a big-time executive; he was a man who prioritized the success of his company over ego gratification.
Mockler and executives like him are examples of what Collins calls "level 5 leaders," those who are modest, self-effacing and understated, and display a workmanlike diligence—more plow horse than show horse, they set up their successors for even greater success in the next generation.
Leadership guru Peter Drucker goes further to say that "charisma becomes the undoing of leaders. It makes them inflexible, convinced of their own infallibility, unable to change."
So maybe we introverted lawyers, likely to be low on the charisma meter, may have some hope of mastering leadership. Certainly being people who think before we act and listen before we talk can be useful in leadership roles.
Successful leadership may also be enhanced by introspection--a natural for introverts. Leaders who scrutinize every aspect of their leadership and personality (and that of others) may be able to find internal motivations and assumptions that contribute to dysfunction and inefficiency.
Another way that introverts may be able to surpass the traditional leadership attributes is in their ability to "make sense." Wilfred Drath and Charles Palus at the Center for Creative Leadership explain that "most existing theories, models and definitions of leadership proceed from the assumption that somehow leadership is about getting people to do something." Essentially cheerleading. That is an effort that requires relish for and persistence in being extraverted.
But Drath and Palus reimagine leadership as "the process of making sense of what people are doing together so that people will understand and be committed." Leadership, in this view, is a matter of providing interpretation. Leaders can give people a lens and a language for understanding their work and experiences in light of larger purposes. They can help shape the mental frameworks of others so that those people see themselves as making contributions to the mission and direction of their organization, working in community for a common purpose. Here is an opportunity for the thoughtful introvert to make his or her mark.
In the corporate world over the past decades, leaders have produced greater organizational efficiencies by employing advanced analytics and defined metrics and systems. But most organizations that have successfully manipulated these resources are finding it difficult to extract even greater efficiencies from them over time. Many are turning to their human capital as the next source of growth. Yet many businesses are realizing the difficulty of identifying and developing leaders, particularly those who can lead this kind of productivity growth. For example, the 2008 IBM Leadership Survey found that over 75% of CEOs lamented their ability to identify and develop leaders to succeed them.
Law firms should take note.
Leadership involves not just leveraging the collective knowledge and expertise of an organization. Leadership is also about cultivating and nurturing human capital, particularly in such a talent-dependent industry as ours. Leaders who recognize the perennial needs of individuals to be appreciated, to be part of a community and to feel they are contributing to the greater good are more likely to be able to raise the productivity of their troops.
And even introverts can do that.
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.
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?
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.
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.
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.
Our host's email notification server has been down for several days and is only now operational, so you have not received notices of blog entries posted during that time. Rather than flood your inbox with notications, please browse the blog at your leisure to catch up on the latest entries--The Importance of Glue, Throwing out Consultants' Reports, and The People Factor Inherent in the Coming Reinvention.
Muir points out in her article What the New Law Firm Looks Like that building bigger firms does not necessarily produce better bottom lines. Of course for many firms long-term client development or other factors beside profitability fuel growth. And then there are some growing firms which in fact achieve greater profitability in spite of the odds.
K&L Gates is one of the firms that has managed to accomplish that. The product of a 2007 merger of Kirkpatrick & Lockhart with Preston Gates & Ellis, and then mergers with Nicholson Graham of London, Washington's Hill Christopher and Boston's Warner & Stackpole, the firm has completed since the beginning of 2008 three additional mergers -- one with Texas-based Hughes & Luce, a second with Charlotte, N.C.-based Kennedy Covington Lobdell & Hickman and the third with Bell Boyd, which took effect March 1, 2009, bringing together a total of over 1,800 lawyers. Over the same period, the firm opened offices in Paris, Shanghai, Frankfurt and most recently Dubai, among others, and established a relationship with Taiwanese firm J&J Attorneys at Law, for a total of 33 offices.
This astounding growth trajectory is true to Chairman and Global Managing Partner Peter Kalis's express intention to "grow aggressively," taking advantage of the firm's lack of short-term and long-term debt. Not only has growth been achieved but in this case the approach has so far proved profitable--revenues for 2008 were up 27% over 2007, while profits per partner for that year rose almost 7%, with first half 2009 continuing to show significant increases, again meeting Kalis's stated goal of increased profitability every year.
So if a firm like K&L Gates manages to do the difficult if not impossible by growing aggressively while increasing profits, what are the challenges?
Of course the firm has been through a few clouds, as there always are around silver linings. No firm, regardless of its size, can escape them. Microsoft Corp.'s list of preferred legal providers did not include Bill Gates's father's firm this year. While Microsoft GC Brad Smith had welcomed the original merger of the Gates firm and Kirkpatrick & Lockhart, former Microsoft GC William Neukom left K&L Gates last year, perhaps signaling something. Or perhaps it was simply time for a change. The firm did not add another DuPont "Meeting the Challenge" Award this year to those accumulated over the past few years. And K&L Gates has had its share of difficult client relations--MTV Networks noisily canned the firm as defense counsel a few months ago.
One insight into the challenges that the firm's success raises may be in a comment from K&L Gates' most senior trademark lawyer Mark Peroff, who left the firm last year for a smaller firm. "In my experience at K&L Gates," he was quoted as saying in explanation of the move, "the focus was entirely on making money. There was no glue among the partners." (Peroff also pointed out that in a smaller firm he could significantly lower his billing rate.)
There might be some who would question the importance of glue, both as to whether it significantly colors one's experience at a firm and also whether it adds to the bottom line, a discussion we will take up in a later entry. But Peroff 's comments raise the conundrum that many growing firms in fact face, and often without the benefit of rising profitability.
Every year the ranks of new hires, lateral hires, and various contract, counsel, income, equity and other lawyers shift, while there is simultaneous shifting among personnel at various offices. How to add so many bodies to various locations and still keep a sense of commonality if not collegiality among the players?
And similarly, if a firm hopes to improve profitabiliy, can it push bottom-line results persistently, making each person accountable for their own production, and still maintain strong relationships?
In other words, do our goals and policies bind us or divide us?
Sometimes glue is simply a commonality that keeps all the various firm systems running in decent working order. Sometimes glue produces real revenue through cross selling and enhanced relationship building. Sometimes glue is just that ineffable bond that keeps people from leaving.
It may sound pretty fuzzy, but it's important to consider the glue in your firm.
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.
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
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."
Not only do lawyers score very differently from the rest of the population on the Myers-Briggs Type Indicator (MBTI) (see Muir's article "The Unique Psychological World of Lawyers"), but it appears that a lawyer was responsible for the development of the assessment in the first place.
According to the Center for Applications of Psychological Types, Inc. (CAPT), the organization Isabel Briggs Myers established to research and maintain the assessment, the MBTI was developed by Katharine Cook Briggs and her daughter Isabel in the middle of the 20th century because of questions they had about Isabel's husband, who was a lawyer.
Katharine’s father (Isabel's grandfather) was on the faculty of Michigan Agricultural College (now Michigan State University) and her husband (Isabel's father) was a research physicist who became Director of the Bureau of Standards in Washington. Isabel had a bachelor’s degree in political science from Swarthmore College, where she met and later married Clarence Myers, who became a lawyer.
Katharine first became interested in types because her son-in-law Clarence was so different from the rest of the family, CAPT reports. To try to help them both better understand Clarence, Katharine introduced Isabel to Jung’s book, Psychological Types, which was published in1921.
As they worked on the indicator during World War II, Myers' and Briggs' goal became “to show how our differences... can be valuable rather than divisive, and can be used constructively . . . to promote personal development . . . manage conflict and . . . increase human understanding worldwide,” and specifically to help women who were entering the industrial workforce for the first time identify the sort of war-time jobs where they would be "most comfortable and effective."
The Myers' marriage was by all reports happy and long-lived, so Isabel's inquiry into types may have proved productive not only for the greater world--where over 50 million MBTI assessments have been given, making it the oldest and most widely used personal style instrument.
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.
Ronda Muir will be a featured panelist at the annual general meeting of the Attorneys' Liability Assurance Society (ALAS) in Quebec City, Quebec to be held June 25-26. ALAS is the premier provider of professional liability insurance for large law firms in the United States, currently insuring 237 firms. Muir will discuss lawyer personality, firm culture and other aspects that impact risk particularly in the context of mergers and lateral hires. Over 250 loss management and managing partners are expected to attend.
"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.
In the final tranche of a triad of bad news over the last few weeks, two recent reports--one about associates and another about partners--point out how, despite the current abysmal employment market, there are still lawyers of various stripes who, given the chance, would choose to jump overboard rather than hang on to their position.
In a recent New York Times article, it was reported that Skadden Arps had offered all of its 1300 associates worldwide the option of taking a year off for one-third pay, with no pro-bono obligation. One hundred twenty-five associates opted in, a number that a partner was quoted as describing as "in excess of our expectations."
The Lawyer reported April 14 that CMS Cameron McKenna, a large English firm, in a makeover termed a "Magic Roundabout" because of its spiral design [the English are into monikers: Linklaters calls its remake "New World" and Clifford Chance has settled on the term "size and shape review"], offered all of its 160+ equity partners the opportunity to move to non-equity status. Sixteen partners stepped forward, more than managing partner Duncan Weston said he had expected.
There is no denying that much is changing in the structuring of firms on both sides of the pond, and these two firms are among those riding that wave. The interesting note in both of these reports is that management remains surprised at the number of lawyers who, in spite of perilous times, would rather step away or down than stay at the helm. Unfortunately, it speaks to the still prevalent but now less obvious dissatisfaction that was manifest in the massive attrition rates of only 18 months ago.
When things get back to normal (yeah, right) and probably even before then, firms still have to tackle the issue of how to attract and keep the loyalty of their talent--since that is what in the end makes for a successful law firm. In spite of, and perhaps also particularly in the midst of, the rush to distribute pink-slips, let's not let that particularly item fall off our "to-do" list.
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.
In another blow to our already wilting sense of competence, the UK reports that according to research from the Centre for Market and Public Organisation, lawyers surveyed there who were born in 1970 (now climbing the legal ranks) have lower IQs than lawyers assessed in 1958 (and now either in very senior management or already out the door). Lawyers in the older group scored 11% better than the average, while the younger group were just 8% more intelligent.
The comparison to the average fell for most other vocations as well, with an average drop of 1%. Doctors, teachers, bankers and stock brokers all moved closer to average intelligence, while artists, engineers, scientists and journalists became more intelligent compared to average IQ scores, the research found.
One pauses over the long-term evolutionary implications.
Than again, surely there's a way to view this trend chauvinistically. These results are only for the UK, right? Without any official comparable data in the US, we can comfortably surmise that we in the US retain our IQ lead over the masses. On the other hand, with all the cross-Atlantic trafficking in lawyers that has gone on lately, the Brits might argue that this is just another example of the net brain drain of allowing Yanks to work there.
In any event, we hear the murmur of senior lawyers everywhere saying "I told you so."
Innovation may be coming to law firms the hard way—prompted by crippling economic conditions. As pointed out in our entry “Fearing Fear“ on February 9, a natural reaction to the downturn is fear, which often neurologically prompts “pencil counting,” or furiously holding on to whatever you still have. Fortunately, if you push through the fear, there is the possibility of another response, and that is creative innovation. So far there are not any major revisions to the business model, to be sure, but at least there are some spasms of change.
Law firms are notorious lemmings, hesitant to do anything everybody else isn't doing. But in this downturn firms are starting to take more individualized approaches to managing their businesses, particularly with respect to reducing their largest expense: compensation. Reducing compensation costs through across-the-board associate salary and bonus freezes, delays, or cuts, jettisoning practice groups that are not deemed profitable or imposing layoffs have been the most common steps taken. Another approach is a reduced hours work week--targeted, across-the-board, or by invitation to those who want a period of work-life balance that errs on the "life" side. Even “furlough,” a fancy corporate word for temporary unemployment, is appearing in the downturn vocabulary of law firms, with the promise of holding on to talent for when business returns.
Pillsbury, one of the firms whose layoffs were outed by Above the Law because of a partner's indiscreet cell phone conversation on a commuter train, has preempted those layoffs with a “voluntary departure plan” for lawyers who want to leave of their own accord.
But some firms are also paying new associates to arrive later, to work at public or non-profit organizations, or to be seconded to clients, a move that can cement wobbly client relationships.
Another approach is to manage compensation by changing or expanding tiers. A number of firms have de-equitized partners and quite a few are considering thinning their non-equity partner ranks by moving those attorneys into different tiers.
WilmerHale is putting more steps firm-wide on its attorney ladder. To the titles of associate, counsel and partner will be added senior associate, special counsel, senior partner (for those approaching retirement) and senior counsel (for partners practicing beyond normal retirement age). Co-managing partner Bill Perlstein hopes the move will increase flexibility and allow attorneys a greater choice for their career path. Given increasing attorney preferences, particularly among Gen Xers and Yers, for more personal control over their schedules, additional tiers, if announced and managed thoughtfully, can help create a more satisfied, productive team.
Partner compensation is often the “untouchable” at firms, but even there, change is in the offing. Chicago firm Much Shelist Denenberg has announced a temporary across-the-board 10% pay cut for all lawyers, partners as well as associates, through the end of its fiscal year. Sharing the pain can promote those firms that pride themselves on their egalitarian treatment of all lawyers.
Patton Boggs recently announced that it is replacing its “eat-what-you-kill” partner compensation system with one that also rewards cooperation and firm-wide business development, associate mentoring and training, and moving clients to the next generation of client managers. The compensation review will look back three years instead of two to give partners longer to realize on business development efforts. Under this system, a partner’s income cannot fall in any given year more than 25%. Over 90 percent of equity partners voted for the change, which managing partner Stuart Pape called an “incentive for doing things that are supportive, collaborative and productive…In bad times, a meritocratic system is absolutely the best model.”
On the other side of the pond, similar tactics, and innovation, prevail. Allen and Overy, when axing 450 attorneys and staff, announced that it was spinning off part of its practice, imposing a pay freeze and asking remaining partners to each contribute an average of about $50,000 in additional capital to the firm. That move is expected not only to boost the firm's coffers but to raise the commitment to the partnership and its success of those partners willing to put their dollars there.
Doing It Right
The way that these initiatives are both announced and carried out have a major impact on firm culture and morale. Latham & Watkins’ stunning announcement recently of layoffs of 12% of its associates was accompanied by very generous (six months compared to three months) separation payments and health insurance, as well as interim salaries for new associates who delay their entry a year. In spite of the severity of the layoffs and questions about what the firm will look like in the future, the street buzz on the firm's handling of the layoffs has been positive—“classy” is Bruce MacEwen’s assessment. Similarly, the Philadelphia District Attorney's Office rescinded offers to its incoming attorneys only after several attempts to cut costs, and, when the inevitable occurred, actively sought jobs at other DA offices for those dis-invited, hoping to preserve relationships with lawyers who they might one day want to extend offers to again.
Latham and others have also received kudos for making the cuts in one whack instead of dribbling them out, as Dechert, for example, seems intent on doing. Although the realities of the downturn may drive some firms to second and third whacks. In one of the largest cuts of this layoff season to date, Orrick sent home 12 percent of its nonpartner lawyers on Tuesday, the second cut after a November 2008 one that promised to be the one and only. Those laid off Tuesday didn't fare as well as those cut in November: they got three months' severance instead of five.
Sign of the Times or Window into the Future?
Are these fairly modest innovations we are seeing now simply a sign of these difficult times, or do they signal a growing snowball of changes that could well roll far into our future?
These changes are not in and of themselves going to make any major inroads on the broken business model that now exists, but hopefully they signal a greater willingness (ok, motivated by a gun to the head) to get out there and slog through the swamp of uncertainty until we find firmer ground.
Experimentation is what will drive innovation, and up till now law firms have been fat and sassy enough to be able to afford not to experiment. But the old "one size fits all" attitude about how firms should be run is beginning to fray. Unusually bad market conditions have freed firms to stop copying what everyone else is doing and look more carefully at and respond more creatively to who they specifically are, where they are headed and what resources and skills they need to get there.
Given the layoffs across the country, if a recovery is not in motion soon, the next issue for firms to grapple with creatively may well be the dissonance between recruitment and retention that the current structure produces. How long can firms withstand waves of painful and expensive "forced attrition" at the same time they are undertaking time-consuming and expensive recruitment and training of new incoming associates, who may well then be forced to move on in a few years?
After arrival dates, compensation, bonuses and tiers have been manipulated, we can then start facing the decisions that will direct innovation toward the very structure of our firms and the traditional lawyer life-cycles there.
How did women in the spotlight fare in 2008?
Here's a sweeping and eclectic review of women in business, politics and law--Senator Hillary Rodham Clinton, Governor Sarah Palin, Caroline Kennedy and Michelle Obama, among others--before the year is too far behind us. Plus an interesting commentary on how we perceive each other.
A New CEO Record. A January 4, 2009 article in USA Today by Del Jones entitled "Women Still Struggle to Get CEO Jobs" reviewed the current challenges for women. Starting off 2009, Ellen Kullman replaced Chad Holliday at DuPont, bringing the number of female CEOs running the nation's largest 500 publicly traded companies to a record 13, one more than 2008. As recently as 1996 there was only one female CEO of a Fortune 500 company, co-CEO Marion Sandler of Golden West Financial, acquired by Wachovia in 2006, in the news recently because of its high level of mortgage defaults.
Does the gender of the CEO make any real difference in performance? USA Today has evidently tracked the annual stock performance of Fortune 500 companies with female CEOs since 2003, when female CEOs so out-performed men that it looked like there might be a gender advantage, or at least the possibility that the glass ceiling was so difficult to crack, the women who made it to the top were more talented than their male counterparts.
Devastation for All. But 2008's devastation gave no advantages to anyone. The chaos in the financial markets claimed three of its highest-ranking female players—Sallie L. Krawcheck, head of Citigroup’s wealth management unit, Zoe Cruz, a co-president at Morgan Stanley, and Erin Callan, chief financial officer of Lehman Brothers.
And female corporate managers fared as badly as the males. With the S&P 500 falling 38.5%, its worst year since 1937, the average large company run by a woman CEO performed 4% worse. The best-performing of women-led companies was Kraft Foods, down 18% under Irene Rosenfeld. "Nine of those 12 companies have now lost money for any shareholder who invested on the day the women got the job,” Jones notes. “The only exceptions: Susan Ivey at Reynolds American and the two longest-tenured women, Andrea Jung at Avon and Anne Mulcahy at Xerox. Avon is up 65% during Jung's nine years, and Xerox is up 1% during Mulcahy's 6 1/2 years. Reynolds is up 21% since Ivey began in 2004."
The Glass Ceilinged Pay Scale. What is clear is that women are paid worse than men at the top. A 2008 survey of CEO pay at 3,242 North American companies by the Corporate Library found that female CEOs earned more in base pay, but when cash bonuses, perks and stock compensation were included, women made a median $1.7 million, or 85%, of what male CEOs made.
Women in the political arena seem assured of arousing strong reactions, reactions that often have little to do with where they stand on the issues. And Hillary Rodham Clinton is surely the woman of 2008 who raised the banner for women highest, with her long drive toward the White House, but also the one who took the most sustained barrage of counter fire--as to all matters both professional and personal, such as her experience (does being a first lady count?), her honesty and forthrightness (are tears the real test?), and her relationships with her husband (is she true to her man, unable to stand up for herself, or simply astute as to his political usefulness?).
As an example of the broad-based criticism, Caitlin Flanagan in No Girlfriend of Mine, in the November 2007 edition of The Atlantic, had little good to say about Clinton.
Her speaking style: "It’s cringe-inducing to watch her try to talk…there’s nothing more uncomfortable than witnessing someone straining to be natural.”
Her relationship with her husband and reaction to his philandering: "[A]t a La Raza conference… [Hillary] told her interviewer that they should talk like ‘two girlfriends…’ Hillary’s girlfriend-to-girlfriend moment was awkward because if she wanted to talk that way she would have to be willing to let us women in on the big, underlying struggle of her life that is front and center in our understanding of who she is as a woman. Her husband’s sexual behavior, quite apart from the private pain that it has caused her, has also sullied her deepest—and most womanly—ideals and convictions, for the Clintons’ political partnership has demanded that she defend actions she knows to be indefensible…In glossing over her husband’s actions and abetting his efforts to squirm away from the scrutiny and judgment they provoke, Hillary has too often lapsed into her customary hauteur and self-righteousness, and added to the pain delivered upon these women… she has of necessity made herself complicit.”
Even Hillary's treatment of Socks and other pets came under withering attack. According to Flanagan, as first lady Hillary had taken Socks with her on personal appearances, had retired servicemen and women at the U.S. Soldiers’ and Airmen’s Home in Washington, D.C. send out kitty-cat 'greetings' to Socks’s correspondents, and had written about her in Dear Socks, Dear Buddy: Kids’ Letters to the First Pets, which Flanagan calls "cloying, super-cute, and pun-riddled… and which Hillary, being Hillary, had to turn into a lecture on pet care…the person whose shining example we should all follow being Hilary herself."
In response to rumors that Socks would not make it to Chappaqua, entreaties from the official Socks the Cat Fan Club as to the fate of Socks were reportedly met with a message from Clinton’s office “at once chilly and patronizing… that they butt out,” Flanagan reports. The news came later that Socks had gone to live with a White House staffer. “In Dear Socks, Dear Buddy, we are hectored never to give away a pet, always to regard one as an ‘adoption instead of an acquisition’ and to be forever on guard for its physical safety (cold comfort to Buddy, who had barely sniffed his first Chappaqua crotch before the poor beast ran off and got killed by a car, as had the Clintons’ previous dog, the much-loved but equally ill-tended Zeke).” According to Flanagan, Hillary "should really be on Cat Fancy’s Most Wanted list.”
Then of course there was Governor Sarah Palin, who leapt on the scene, connecting with a large swath of middle America while enraging those further flung. Toward the end of the year, Caroline Kennedy appeared on the political stage in search of Senator Clinton's seat (before she awkwardly bowed out early this year), and, with Clinton and Palin, formed a veritable troika of controversy over a woman's place in government, and what qualifies her to get there.
In an article entitled When is it Sexism?, Elizabeth Wurzel claims to have an answer to the question of whether these women were treated unfairly because of their gender. "In Sarah Palin’s case, it was [sexism] (sorta). In Caroline Kennedy’s case, it isn’t. Here’s the difference," she asserts.
Continue Reading...On February 18, 2009 Muir will lecture students at Northwestern University's Business Institutions Program on how to improve management decision-making. Based in part on the article "Promoting an Effective Board or Management Group," the discussion will explore, among other subjects, optimal personality traits for good decision-making, constructing effective teams and avoiding extreme decisions.
A 2008 ABA Journal survey, with reponses from more than 1400 women lawyers, produced some interesting results as to who they prefer to work with. Of the 42% of women who expressed a preference in the gender of colleagues, that preference was different depending on the age of the respondent.
Female supervisors age 40 and over preferred working with women lawyers because they 1) take direction better (80%), 2) have more discretion (79%) and 3) take constructive criticism better (59%).
Yet younger female lawyers don’t have the same regard for their older female colleagues. Of those under 40 who thought gender matters, the majority preferred male supervisors for 1) keeping confidential information private (64%), 2) giving better direction (58%) and 3) giving more constructive criticism (56%).
Theories about the reasons for the difference abound. Some contend that younger women (and also some younger men) are not on the same wave length about the role of work in their lives, and are not willing to make the sacrifices that older women have made.
According to Lauren Stiller Rikleen, who advises law firms about workplace issues, “I'm concerned that more senior women don’t fully understand the profound demographic changes taking place,” demographic changes that affect all young lawyers and override issues of gender. As a practical matter, Arin Reeves, another lawyer who does diversity consulting, notes, the differing generational views of women can mean that women’s initiatives developed by female partners are often not useful to female associates.
The upshot is that there may no longer be “the woman’s situation,” but rather a growing diversity in what women lawyers want, and, given the luxury of having more role models to choose from, a growing diversity of what they can actually have. Perhaps it is worthwhile reminding ourselves that, as we have advocated for years, rather than placing judgment on women generally or on any particular choice, we as women lawyers can and must accept more diversity even among ourselves.
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.
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!
Results from two surveys show growth at the country’s largest law firms to be down significantly in 2008 although employment is generally still on the rise. The National Law Journal’s 31st annual survey of the NLJ 250 reports that those firms added 4.3% more attorneys in 2008, consistent with increases in 2006 and 2005 but at a lower rate than 2007’s 5.6%. Partner growth in 2008 averaged 3.5%, which was down from 4.6% in 2007 and 5.1% in 2006. Non-equity partners increased 9.2% compared to 2007, when their ranks increased 8.2% compared with 2006. The average number of women partners stayed stable.
The West Peer Monitor Index, a measure of legal market conditions, reported in late November that large law firms had the lowest productivity during the third quarter of 2008 since keeping records, on average down 4.5%. Productivity at the largest firms, the AMLaw 100, was down even more--6.5%, largely as a result of continued increases in hiring at a time when there is less (particularly transactional) work for those associates to do. Often it takes two years for large firms to respond to market conditions in their hiring practices.
According to the Index, average associate hiring at all firms declined 6% in the 3rd quarter of 2008 compared to 2007, with firms offering equity partnerships to half as many attorneys as they did last year (including mega-firm Mayer Brown, which recently announced making 27 partners worldwide compared to 43 last year). Average lateral growth remains comparable to 2007.
Billable hours for all firms dropped 2.5% in the 3rd quarter after declining 2% in the second quarter. Overhead expenses grew 6% compared to 8.3% in the 3rd quarter 2007 and direct expenses grew 8% compared to 9% last year.
The short-term tact many firms are taking now is to lay off lawyers. According to the U.S. Bureau of Labor Statistics, 7,300 lawyer jobs were lost nationally between June and October, with an expectation of far more shrinkage when November and December numbers are tallied.
Big firms, and particularly the big New York-based firms who draw much of their work from transactions for or financed by Wall Street financial institutions, have been particularly hard hit, and are responding accordingly. The tally of recent attorney layoffs from New York offices includes 96 lawyers dropped from Cadwalader, Wickersham & Taft, 20 from Clifford Chance, 40 from Orrick, Herrington & Sutcliffe, 35 from Proskauer Rose, and 70 from White & Case. Clifford Chance attorneys have been quoted questioning whether it's worth having a New York office at all. The fact that major transactional firms--Heller, Thelen, and now Thatcher, Profitt--have already folded this early in the recession may well presage more big firms collapsing in 2009.
Freezing salaries, as Latham & Watlkins has announced, and cutting bonuses in half and eliminating special bonuses, following the lead of Simpson Thacher, Davis Polk, Skadden Arps, Cravath and others in the US and Allen & Overy and Clifford Chance in the UK, are among the other responses to all this bad news, as well as cutting staff, reevaluating off-shore back office services, and trying to offer more flexible fee arrangements. The recent explosion of non-equity partners is also being scrutinized for its impact on firm finances during these difficult times.
Hard-pressed law departments are taking another look at the pros and cons of outsourcing, as well as insisting on more accommodation from their firms on staffing and pricing.
There are a few benefiting from the downturn. The work of outplacement firms has expanded exponentially and attorney recruitment firms have had an influx of talent. In recognition of this growing pool of lawyers, LegalOnRamp, among others, has added a legal positions component to its site. So those firms looking for talent are at an advantage now.
Is there any silver lining? Firms can take this time to experiment with different fee arrangements and also to shore up organizational fundamentals--enhancing performance evaluations, professional, leadership and business development training, and succession plans--so as to be better able to weather the continuing storm, and to be poised to take advantage of the economic improvements that will eventually come.
Although some pundits are claiming that the economic impact on the law business hasn't been as disastrous as first expected (which we may have to wait a while longer to fully evaluate), there is no denying even at this stage a sea change of sorts---if only that the current fear and trembling in the legal community, historically one of the most economically stable professions, will cast a long shadow over firms as they embark on 2009 and the years to come.
According to the “broken windows” theory of social science, addressing small concerns (like broken windows) that matter to individuals eventually produces major improvements in the overall sense of community and belonging, which in turn fuels a more committed, dedicated group. This theory was instrumental in rebuilding parts of Harlem, the South Bronx and other devastated areas.
In this difficult economic climate, there is a great temptation to do the reverse: delay until a better financial day fixing the broken windows that litter our organizational landscapes. Why not save the money for the bare necessities? Why not focus on growing business or collecting revenues, which have clear connections to the (ever-diminishing) bottom line?
While firms are laying off associates, reducing their non-equity troops, halving bonuses and freezing salaries, they would be advised to make sure that they are not neglecting the small things that make a firm a good place to come to work every day--courtesy, interest in each lawyer's work, willingness to spend time training, providing feedback, and whatever other individual strengths your firm prides itself on. Do the simple, doable things that make your lawyers feel someone is listening and responding: adjust heat or air-conditioning levels, extend night staff hours, upgrade the coffee. Small steps will make the difference in whether your lawyers have a sense of devastation or rebuilding.
At a time of roiling emotions in the legal and financial sectors, successfully charting a path to the future may be impacted by how we perceive and respond to those emotions in our organizations. A recent article entitled "Associates Should Keep Their Emotions in Check" advocates guarding the emotions associates experience in the law practice setting.
"We can't be distracted by crying about our recently fired colleagues when we have to depose the CEO of a multinational conglomerate," it explains. "Being in touch with--and in control of--your emotions is key to success at Biglaw."
Lawyers at all levels--not just associates--often score poorly on emotional intelligence assessments because of their reduced ability to do just that--be in touch with and in control of their emotions. So that advice looks good on first impression, but the body of the article, while often tongue-in-cheek, makes it clear that ignoring or suppressing emotions have historically been the real keys to law practice success. That advice, in black and white, is not only disarming but also not well suited to the trials lawyers and law firms have before them.
Historical Emotions and the Wave of the Future
Of those emotions historically expressed in law firms and law departments, certainly some have been much more prevalent, and welcome, than others. Joy, for example, is not an emotion that lawyers have exhibited readily. OK, it's all right to strut your stuff after a critical win: a big jury verdict, or the final go-ahead from the FTC. You should also be able to feign your way through an evident appreciation of your client's or supervising partner's adventure stories. But neither of these is really joy--more like pride and socially sanctioned deception, respectively.
Joy is what is felt when you're in that great limitless zone of both doing what you are good at and feeling there is value and meaning to what you do. Joy is in short supply in legal practice these days and when it arises, it is too often squelched by the pessimists who view it as evidence of not working hard enough (so as to be appropriately worn down) or not taking seriously the heavy risks associated with the job (so as to be appropriately worn down).
Sadness, joy's opposite, has not been very evident in law practice either, often viewed as a sign of weakness. Drag around about your spouse leaving you or your dog dying and, in this climate, you risk losing your job because of being perceived as not up to it. The irony is that sadness, in particularly the serious kind that develops into depression, is in fact up to ten times more prevalent among lawyers than any other profession--so even if you can't always see it, it is there. And the characteristic pessimism that puts lawyers in good stead in the courtroom and boardroom makes it harder in these difficult times for the sad to see the light at the end of the tunnel. So sadness in the office may be on the rise.
Fear is also one that we lawyers eschew to avoid looking weak. But fear may be an emotion that is more in evidence these days too: fear about everything from the global economy down to the mortgage payments no one is going to bail you out of. And those fears, the full range of them, may well be what is motivating strategy at a number of firms now. Combined with pessimism, fear is a motivator that can hijack the deliberative process, sacrificing long-term health for a short-term salve.
Perhaps the one emotion with which lawyers are openly familiar is anger. One of the few raw emotions long allowed to flow freely in law firms, it seems most accepted in senior lawyers. Screaming, slamming the door, cussing out opposing counsel on the phone--these are often taken as evidence of practicing hardball in a high-pressure, high-powered job. The anger that is not embraced is the one simmering among the stressed-out associates, who don't appreciate being taken from personal or family time to perform mind-dulling document reviews, or the anger among junior partners trying to maneuver the compensation and power game without turning irate senior partners against them. And senior partners are angry because, having jumped through all the hoops and put in their time, they are watching as the promised fruits evaporate before them. What can erupt is a conflagration of anger that can blow up the firm. Which is also on the rise.
Responding to Emotions
So how do we handle the emotions of these times? The massive changes in the financial climate and the likelihood of similarly massive changes in individual firms' fortunes have confronted some law firms and law departments with the same grieving process that individuals go through after a death or other personal tragedy. Dr. Elisabeth Kübler-Ross, the pioneer in grief theory, posited five sequential stages: denial, anger, bargaining, depression, and acceptance, which are commonly referred to as the "grief cycle". Only by getting to acceptance--finally realizing and accepting that many of our dreams and aspirations are no longer part of the current reality--are we able to move on to the possibilities that remain, and how best to achieve them.
Our advice to firms caught in this emotionally spiraling time is to create a climate that allows your lawyers to experience their feelings and individually arrive at the best method to cope with them. Allow the community to grieve--to deny, be angry, bargain and be depressed. Before acceptance, these stages must be navigated. For their part, management can regularly hold firm meetings that recognize the fear and anger and lost dreams, but that also point out the realistic dimensions of the situation. More, not less, information on the state of firm finances and what the firm intends to do, and specifically how each lawyer can help, can bring the firm together. Even honestly reporting that a strategy is still being decided on is better than deferring to the rumor mills.
Maintaining and even expanding measures that bring cohesion to the firm and reinforce its culture is also critical. More than one exiting Heller Ehrman lawyer said they would have stayed even with reduced compensation and prospects if the firm had held true to its culture, the culture that they had initially embraced and repeatedly committed to. The reason for staying with that particular firm, regardless of its financial condition, evaporated when it lost its defining culture.
There is no denying that Gen X and Y are most comfortable interacting via technology--IMing, texting, emailing--possibly to the detriment of their face-to-face skills, as some contend. Employees in large corporations have come to use this technology, particularly on line social sites, as a way to form community and communicate within vast, impersonal organizations. IMing with the Senior Vice President about favored jazz albums instantly creates up-and-down-the-ladder rapport and also an enhanced commitment to the organization.
Associates at most law firms are also making use of these technological avenues of communication. Most firms have official or unofficial firm social groups on MySpace, Facebook and other sites. Ning is a private interactive social networking site that several IT consultants recommend as a good site for law firms to use. It allows participants to chat real time and also post documents, and the software is free.
Some firms have banned these social groups while others have embraced them. On the positive side are the potential gains in networking, which Paul Lippe, CEO and co-founder of Legal OnRamp, claims "is the number one predictor of a lawyer's income," as well as an increased sense of community and therefore commitment. Curtis, Mallet-Prevost, Colt & Mosle uses Facebook as a recruiting tool and an "I'm in Love with MoFo" site probably hasn't hurt Morrison & Foerster's recruiting either. Of course, these sites, largely unsupervised and unsupervisable, also provide renegade employees with the perfect weapon to embarrass a firm. As do the multitudes of privately run, individual blogs that comment on particular firms or corporations. See, for example, our February 26, 2008 entry entitled Decorum, Virtue and Other Values in the Age of the Internet, which recounts Skadden Arps public shaming of two Skadden employees for their (unofficial) blog contest for the "Hottest Female Associate."
Microblogging offers an alternative to these social networking sites, with entries that can be relayed not only on line and by email, but also as text messages over cell phones. The degree of privacy varies as to both the individual's information and that of friends or followers.
Twitter, the leading microblogging network, has become a household name with its contribution to the Obama political campaign and its on-the-spot reports on tragedies like the Mumbai terrorist attack. Started in 2006 and with over 3 million people using its free service, Twitter has no revenue, even from ads. When you log on, the question that first appears and that you can use 140 characters to answer is "What are you doing?" Twitter boasts such regular "twitterers" as Benjamin Netanyahu, the leader of the Likud Party in Israel and Kevin Rudd, Prime Minister of Australia, as well as Shaquille O'Neal, Center for the Phoenix Suns and John Cleese, the actor and comedian.
Yammer is a new and smaller microblogging site aimed at business customers with the stated goal of making offices more productive--when a user logs on, the first question is “What are you working on?” Yammer charges $1 per user when a company joins, although anyone with a business email address can use Yammer free. Membership gives the business administrator the decided advantage of some control over security and how the site is used.
Apart from the networking, communication and recruiting advantages, these constant technological interchanges among a growing group of contacts offer a glimpse into the business model that is likely to become more and more the norm for lawyers and their clients. In a global age that threatens individual anonymity, social sites and microblogging permit personal, even intimate relationships to form and thrive around the world, regardless of where the individual IPs or mobile devices are geographically located. And it is relationships, however they are formed, both within law firms and with their clients, that will drive the future of the legal business.
In a recent article in The New York Times entitled “Girl Power at School, But Not at the Office,” Hannah Seligson gives some good advice to all working women, even those of the “post women’s right movement” generation in which she grew up.
After feeling self-assured and equal to men in academia, Hannah found the workplace to be different: women undermining other women, men not taking women seriously--focusing on their appearance and “assistantizing” them.
But she also recognizes that women can get in their own way in the workforce. Work skills women must develop, in her opinion, are a thick skin, the ability to promote oneself, and the ability to negotiate. She also recommends that women dump the perfectionism and create a professional network.
Here are some jewels to consider:
Rather than getting rattled by their feminine “sensitivity,” women have to “become impervious to the daily gruffness that’s a part of any job.”
Seeking perfection can lead to paralysis and keep women from speaking up or taking risks.
“Soliciting feedback… demystifies what your boss thinks about you and it also gives you the data to become a more valuable employee.”
“Reprogram your brain to think that girls do brag. Your job is a two-part process: one is actually doing the work and the second is talking about it in bottom-line terms.”
Since “women don’t have as much of a tradition of business networking (‘Do you want to go grab a beer?’ doesn’t quite roll off our tongues),” learning to ask colleagues specific questions about how to advance can be the organic approach to mentoring.
Finally, women need to “speak salary.” Women often think they will be paid what they deserve, as long as they do the work. Follow the example of men who fearlessly ask for a raise over and over again, regardless of the response. As a Harvard Business School faculty member explained: ‘By and large women believe that the workplace is a meritocracy, and it isn’t.”
Sonja Lyubomirsky, Professor of Psychology at the University of California, Riverside, admits being surprised by the results of the research she conducted on how to permanently increase happiness, funded by a 5-year million-dollar grant from the National Institute of Mental Health. She conducted a meta-analysis (a "study of studies"), along with Ed Diener and Laura King, two well-known names in positive psychology, of 225 studies and concluded by writing The How of Happiness (Penguin Press, 2008).
Lyubomirsky expected, consistent with a number of previous, more limited studies, that relationships would emerge as the over-arching key to well-being. Contrary to those expectations, she found that, more than any other variable, including relationships, work was both a cause and consequence of happiness.
"The evidence demonstrates that people who have jobs distinguished by autonomy, meaning and variety - and who show superior performance, creativity, and productivity - are significantly happier than those who do not," she concludes.
"Why does our work make us happy? Because it provides us a sense of identity, structure to our days, and important and meaningful life goals to pursue. Perhaps even more important, it furnishes us with close colleagues, friends and even marriage partners." So the relationship piece is not lost, but plays a supplemental role to work itself.
The story doesn’t end there, however. Her studies reveal that the causal direction between happiness and work runs both ways. Not only do creativity and productivity at the office make people happier, but happier people have been found to be more creative and productive. They are better “organizational citizens” (going above and beyond their job duties), better negotiators, and are less likely to take sick days, quit or burn out.
One interesting finding was that people who express more positive emotions on the job receive more favorable evaluations from their supervisors as much as 3.5 years later.
"The more successful we are at our jobs, the higher income we make, and the better work environment we have, then the happier we will be. This increased happiness will foster greater success, more money, and an improved work environment, which will further enhance happiness, and so on and so on and so on."
What does this have to do with our legal business? Of autonomy, variety and meaning, autonomy is the one we have nailed. Autonomy is often an attribute of the legal job, one that research shows lawyers embrace, sometimes to the detriment of collaboration. Variety is worth noting, given the rush to specialization. In light of high salaries, many firms have retreated from the first-year rotations through departments and later year department-wide assignment systems that used to give young lawyers some claim to it. Carefully reinstating some opportunities for variety may be greatly appreciated.
Meaning can be harder to come by, being the trickier piece to consciously engineer. Information we have on why young people, particularly Gen X and Yers, go to law school, and what they hope to achieve in their careers, reinforces the importance of meaningfulness. As a practical matter, that is often assumed to be measured by the amount of public or pro-bono work available to them. Reinvigorating your pro bono program, and involving young lawyers in the process, is a good first step but also articulating and reaffirming the firm's values vis-a-vis those within the organization (for example, "we provide premier training and career support") and its clients ("we build long-term relationships based on superior industry expertise and unparalleled service") helps young lawyers place themselves in a framework of meaning.
Creativity is a skill not as often singled out for recognition by law firms, and even productivity is usually rewarded only on a single level minimum-billed-hours-required-for-the-bonus formula. Fine-tuning both salaries and bonuses so as to reward specific behaviors, such as business development activities or developing a specific expertise, offers eager Type As the opportunity to both increase their compensation and distinguish themselves from the pack, while achieving firm goals.
Providing positive feedback is an important part of evaluations that firms often overlook, so set in their problem-solving mode that they forget to reinforce what's working. This study points out the importance of encouraging evaluees to crow or compliment too, for the firm's sake as well as theirs.
In short, this meta-study flags as important some of the same things we hear from lawyers going out the door: provide a more meaningful, personally relevant work experience with supportive personal relationships in order to increase satisfaction and earn loyalty.
Now, back to work...
The keynote speaker at the opening of the 2008 International Conference on Emotional Intelligence this week was Jim Kouzes, coauthor of the award-winning best-seller The Leadership Challenge, executive fellow at the Center for Innovation and Entrepreneurship, Leavey School of Business, Santa Clara University, and, according to The Wall Street Journal, one of the twelve best executive educators in the U.S.
What did he have to say that is of interest to the legal world? At a time when we are struggling, in spite of the economy, to retain both young lawyers and more senior attorneys with books of business, Kouzes revealed what makes people committed to their organizations: values.
According to Kouzes, the first step in earning employees' commitment is the clarification of organizational values. His research indicates that people who are clear about their organization's values (and also their personal values) are significantly more committed to the organization than those individuals who are clear about their personal values but unclear about the organization’s values.
All leaders must, therefore, he contends, be crystal clear about what they stand for. The lynch pin for making this approach effective, however, is that leaders must be credible—the troops have to sincerely believe that their leaders not only say their values, but also do what they say.
Tony O'Reilly, CEO of H.J. Heinz, said it this way: "Nothing energizes an individual or a company more than clear goals and a grand purpose. Nothing demoralizes more than confusion and lack of content."
The concept of "organizational values" are often viewed with suspicion by lawyers, who smell something akin to partisanship or other lack of objectivity. Values are not one of those protected statuses under Title VII. You can legally proselytize (and hire and fire) "what we believe in." But you have to start out knowing what that is. And living it.
Ahhh. There's the rub.
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.
In April, Shearman & Sterling's entire Mannheim office packed up and reverted back to its original form, Schilling Zutt & Anschutz. What prompted the schism?
"There are some great lawyers at Shearman & Sterling," one former partner is reported to have said. "I just don't think they are particularly happy."
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.
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.
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.
Now that the British are doing it, maybe even law firms should consider giving it a try. Articulating an identity, that is. According to an article in the New York Times last month, Prime Minister Gordon Brown's new government has announced an effort to formulate a British "statement of values" defining what it means to be British, much as the Declaration of Independence sets out what Americans stand for. But it is an undertaking that has produced exasperation in a number of corners.
In a fitting tribute to British independence (or recalcitrance, depending on your point of view), the winning entry in a contest sponsored by The Times of London, inspired, if somewhat cynically, by the identity campaign, is: "No Motto Please, We're British." Pity that so many law firms come to a similar conclusion.
While the British are looking to articulate their Britishness, law firms should consider figuring out who they are as well. Establishing an identity has long been implicit (though often short-changed) in the process of strategic planning. Strategic planning involves the projection of a firm forward into new (hopefully better) circumstances based on assumptions about existing and future conditions.
While the vagaries of accurately assessing current and (certainly) future conditions are evident, the ingredient that law firms often neglect is the "who." Who is this firm? What is the firm like that is moving through these assumed conditions? What are its values and goals? Whom would it like to become? Because the "who" will be in many cases the determining factor in the outcome of strategic planning. Is the firm a nimble, highly technological, thinly leveraged outfit that offers its attorneys immediate responsibility or one that enjoys great depth of expertise, long-standing client connections and is a well-respected resume-builder? Does the firm pride itself on collaboration or aggressiveness? Does it offer its lawyers a premier training ground or a sustainable life style?
Lawyers often look askance at these types of evaluations. As a million websites point out, firms aim to be "responsive to our clients' need" and "highly experienced in ..." and be done with it. But those are not the things that young applicants in the competitive recruiting and retention bullpen are saying about firms. They are finding ways to distinguish firms, whether we like it or not.
A recent entry referred to an unauthorized Skadden blog that was terrorizing the firm with its "most attractive associate" contests. Management made it clear that "the 'contests' on one of these blogs is (sic) inappropriate and does not reflect our values and standards of behavior." It is the "insider" response that seems to us fairly shocking: "We're not quite sure what Skadden's 'values' are (or, for that matter, the Firm's 'standards of behavior')." It's the "we're not quite sure..." part that should send chills down management's spine. Not just because of the likelihood of errant contests in poor taste, but because of the wide spectrum of activities-- ill-considered to illegal--that a lack of common values invites.
In an increasingly stratified marketplace, it is more and more important for each law firm to make sure it knows what it stands for and why, and to thoroughly communicate those values from top to bottom. There are few forces as powerful as smart, ambitious Type A personalities committed to a cause. And the only way your law firm can become your lawyers' cause, particularly for your Gen Xers and Yers, is for the firm to stake out itself in the law firm firmament.
A law firm's values, evident in how it functions on a daily basis, not only in what it talks about, are what associates and laterals will come for and what they will stay for. Those values are what will keep your partners from being plundered and your staff loyal. And they are what will make your firm most productive.
One of the reasons this British identity search is necessary, according to Vernon Bogdanor, professor of government at Oxford, is that "Britain was something that just happened. No one's ever sat down and thought about what it means to be British." He points out that having an identity bespeaks a confidence that there is a place in the global realm for the British. Without a common identity that links its members into a community, he says, the country becomes a hotel, where individuals check in and out but don't have a common connection. Sound familiar?
From the historically great gray uniformity of law firms has blossomed a broad range of attitudes and actualities on many subjects-- gender and minority diversity, life-balance, training, client service, management involvement, even whether the practice of law is done from dedicated real estate or virtually.
No longer is the slogan "We're Lawyers" sufficient.
Law firms are often bedeviled by the on-line shenanigans of their young (and sometimes not so young), who can carelessly leave a footprint permanently in cyberspace. While these irritations don't often rise to the level in titillation value or PR devastation as some of the old-tech crimes perpetuated by errant employees/partners, like the Cravath tax lawyer who solicited children for sexual favors, those types of cases are (thankfully) fairly rare and have a limited media shelf life. Blogs and social networks, on the other hand, seem to just keep on giving and giving, although often an unwelcome PR black eye.
Here's some recent developments for law firms in the cyberspace sandbox.
Allen & Overy's London office recently issued a ban on accessing the social networking website Facebook in light of concerns that the impact of downloading videos from the site could compromise the firm's IT performance. Within days, complaints forced a turn-around by management, nominally on the grounds that the site is used for business as well as social reasons. Currently there are 932 members on the A&O network on Facebook, a nice bump over the 600+ when the firm tried to shut it down. Internet comments related to the episode ran the gamut from condemnation of the firm's leadership for being so easily swayed to one person's plea for more such bans so that work could get done.
Arguments for/against law firm blogs/social networks usually include claims that they are useful/extraneous for business development in the internet age, that other businesses do/don't (investment banks often don't, for example) allow workers to access them, that social/work boundaries should/should not be imposed, that the sites are time-wasters/efficiency drivers.
Reflecting these mixed feelings, evidently approximately one-third of law firms have Facebook networks, and two-thirds of law firms have blocked them. Big firms with networks on Facebook include at least eight of the largest: Skadden, Arps (with 379 members), Baker & McKenzie (728), Jones Day (286), Latham & Watkins (291), Sidley Austin (199), White & Case (370), Shearman & Sterling (225), and Kirkland & Ellis (192). While Mayer Brown and Weil, Gotschal, among others, have apparently banned them.
As a cultural matter, these kinds of social networks can be a very useful tool in building community and connection at firms that have long been known for neither. Their availability resonates with Gen Xers and Yers, who are most comfortable with an open technological stance. And there are at least nascent efforts to truly use these types of networks for business development purposes.
LegalOnRamp, a relatively new site being developed in conjunction with Cisco, envisions an interactive brainstorming locale involving in-house and outside lawyers, who can meet and discuss substantive legal topics, as well as management and personnel issues. Mark Chandler, GC at Cisco, touts this type of technological meeting ground as the model for how law will be conducted in the future. Instant access to not only profiles, expert articles and form provisions, but also substantive issue forums and interactive document building certainly make it a useful tool. Another feature, being able to see who each party is connected with-- their "friends," in Facebook parlance, also efficiently builds reliable connections and makes for more informed referrals.
As to independently run "insider" blogs, most firms have no ability to influence what is on them other than by using their bully pulpit. The latest controversy involves a blog run by two unnamed Skadden Arps employees-- with admittedly no authority to speak for the firm-- that held a "Hottest Female Associate" contest, with photos of the candidates included. The contestants were neither notified nor asked for permission to post their names/photos and a few photos were of an obviously personal nature (don't rush to Google it now--the photos have been taken down).
Much to the apparent surprise of the blog-minders--"Damn, we feel like we were called to the Vice Principal's office today and had our knuckles wrapped (sic)."-- Henry Baer, chairman of Skadden, wrote an email to the firm recognizing the prevalence of blogs but weighing in on the inappropriateness of the contests, which "does (sic) not reflect our values and standards of behavior... We urge the authors of the blog to consider both the privacy and feelings of the affected attorneys and to discontinue the contests."
Several points seem worth noting regarding this particular standoff. While the female contest had already been decided, the still outstanding "Hottest Male Associate" contest was promptly cancelled by our erstwhile bloggers. Also, it is interesting that Baer's objections were confined to the impact of the contest on the attorneys involved and other attorneys at the firm, who were concerned and embarrassed. No doubt he had good counsel on the necessity to counter any appearance of a hostile workplace. But several comments on the blog make it clear that there is potentially another kind of financial downside: the bloggers risked turning off clients and employment candidates as well.
A retort to Baer's letter by the bloggers--"We're not quite sure what Skadden's "values" are (or, for that matter, the Firm's "standards of behavior")"--is perhaps the most troubling aspect of this little imbroglio. See our upcoming entry Joining the British in Hunting for an Identity on the importance on both sides of the pond of knowing who you are and what you stand for as a firm, and effectively inculcating that into the culture.
A corporate real estate lawyer at Jenner & Block, Jennifer Sara Levin, recently founded Legal Intelligence, an online platform connecting law school students with top-tier firms. A pilot program involving three law firms and her alma mater, Northwestern University School of Law, is running online at http://www.legalintelllc.com. The idea is to help students find the law firm that fits them best, partly through online video conferences.
"It's like a Match.com for law students," Levin said of her start-up.
Law firms pay to participate, Levin said, because they want to find law school graduates who aren't just qualified but who also share their firm's values. Often, Levin said, top-tier law firms end up with graduates who don't fit their culture. "There's no way to do it in a 20-minute interview. You can't get enough information to know if this person is the right cultural fit," she said.
There's that "v" word again.
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.
Lawyers have been making it into the big-time news lately. That is, not just into the AmLaw publications, where spots about closely-argued decisions vie for those on the merger of the month, but onto the front page of the New York Times SundayStyles section in early January ("The Falling Down Professions") and more recently the front page of the NYT ThursdayStyles section ("Who's Cuddly Now?"). And they're not talking about what celebrity lawyers are wearing, or about those errant lawyers taking their clothes off in the conference room or screaming obscenities at the judge.
What's making the news these days are regular law firms and the vast universe of everyday lawyers--and the bedeviling challenges that they face: declining law school applications over the last few years, plummeting retention rates, rising dissatisfaction among lawyers and clients. But while some law firms have been bemoaning how hard it is to get lawyers to stay in place, just doing their job, servicing their clients, it is occurring to a number of other firms that--drum roll--some tweaking of the business model might be in order.
So it is, as persistently promoted here, and now even trumpeted in the style sections of the news, that law firms, they are a'changin'.
Why are they changing? Richard Florida, the author of “The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life” (Basic Books, 2003) says the old grand professions have “lost their allure, their status. And it isn’t about money.” The money, as firms contemplate a $200,000 salary for a brand new law school graduate, is still pretty good. But especially among young people, according to Mr. Florida, professional status is now inextricably linked to ideas of flexibility and creativity, values not traditionally nurtured by the legal industry.
But exactly how are law firms changing? They are experimenting with different fee structures for their clients, and experimenting with different compensation and engagement arrangements with their associates and even partners (see our The Fracturing World of Lockstep Compensation). They are contracting, out-sourcing and e-commuting. They are introducing sensitivity, transparency and flexibility not only into their vocabulary (see our entry Sullivan & Cromwell Proves Mom Right?) but also into their culture, providing professional development that promotes leadership skills and career planning in addition to CLE mastery, and reworking their retirement, work sharing and required billable hours policies. In fact, there are so many changes afoot, that there is a good chance that not only will law firms of the mid-21st century look very different from their 20th-century antecedents, but they may also not look much like each other. See our Leaving Behind the Medieval Model.
Lawyers are well-known for their risk aversion, and personality assessments bear out that propensity on the individual level. But ruminating over these forays in experimentation brings one to the conclusion that the biggest change amongst us lawyers is that we are becoming demonstrably capable of, and willing to, change. Ok, maybe only after a short walk past the gangplank, but still, at least when prodded, able to change. Or at least willing to try to change.
And that's how we are going to get better at this business.
Baby-boomers are making their mark on the demographic frontier again--this time valiantly fending off the mandatory retirement that generations of law firm partners before them submitted to.
The Sidley Austin age-discrimination case, which arose when 32 partners lost their full partner status, ended last fall after two-and-a-half years and seven court decisions (all lost by Sidley Austin) without a decision on the merits. It did end with a large payment of cash, $27.5 million to be precise, to the aged-50-something+ lawyers, and an uneasy feeling in the pit of many legal bellies. Left unanswered was the question of whether and when law partners are employers or employees for purposes of the EEOC, a determination which may be even thornier with the proliferating partner tiers in partnerships.
Even if they don't sue, baby boomers don't have to take being put out to pasture lying down--they can usually find a firm that will appreciate their talents. Barry Bryer left Wachtell, Lipton for Latham & Watlkins in 2005 to escape a mandatory retirement policy, and antitrust specialist A. Paul Victor left Weil, Gotshal for Dewey & LeBoeuf for the same reason.
So what's the right tact for law firms to take today? Over half of law firms have age-mandated retirement policies on the books, with a majority of those requiring retirement at 70. An Altman Weil study found that only 38% of lawyers in management roles agree with having age-mandated retirement policies, although given that nearly 60% of law partners are now over 55 years of age, there's a good possibility that the disapproving 62% may have their own self-interest in mind.
Many firms argue that these policies are necessary for the transitioning of client relationships, firm leadership and firm profits to more productive, younger partners. The policies also, of course, automatically trigger firm action, avoiding the firm having to find the will and the muscle to individually evaluate older partners and confront those who are not productive.
Advocates for dropping these age-driven policies point out that, at a time when firms have been bemoaning recruitment and retention challenges, 80% of the growth in the U.S. workforce over the next 15 years will be in the "over 50" age bracket. And nearly 80% of all baby boomers, according to the US Census Bureau, want to continue to work during retirement. Why isn't retaining lawyers who are healthier at their ages than earlier generations, who have proven capable and dedicated, and whose experience makes them highly valuable in a global market, a win-win solution for all involved?
But even without the impetus of a court declaring such a retirement policy illegal, the trend toward dropping aged-mandated policies is clear. The American Bar Association House of Delegates passed a resolution in August 2007 calling for law firms to end age-based retirement policies. A special committee of the New York State Bar Association concluded that mandatory retirement within law firms at an arbitrary age is not an accepted practice and sent a letter to major law firms in New York asking them to pledge to end those plans, which a number of firms have signed.
Last year Pillsbury Winthrop announced the abandonment of its mandatory retirement policy and instead supports partners in developing an individual approach to transition. Senior partners build three-to-five year career transition plans, receive financial planning services to make sure financials don't drive the decisions and consult professional career consultants for additional support and advice.
According to Holland & Knight, "We do not have a mandatory retirement policy, although our partnership agreement now requires a conversion from equity or nonequity partner to senior partner status at age 70. We have many active senior partners in their 70s and 80s and greatly value their contributions."
So are we ever going to get rid of them?
In the era of the global law firm comes (wisely, in our view) the introduction of the position of Global Chief People Officer into law firm senior management . Reed Smith announced last week that its creation of the position underscores the increasing importance the firm places on running itself as a business.
"You see more of this in global companies," said Gary Sokulski, Reed Smith's chief operating officer. "Since we're a people business, it's only natural to have someone who focuses on the people aspect. It's similar to a human resources officer, but focused more on employee concerns such as work-life balance, better managing and evaluating talent, and creating higher-level training programs."
Since 2001, Reed Smith has consolidated with firms from around the world, including in New York, California, Chicago, London, Abu Dhabi, Greece, Dubai, Paris, Hong Kong and Beijing, increasing in size from 600 attorneys based in the U.S. to more than 1,500 worldwide. Meeting the challenges of that much lateral integration alone would merit a full-time professional.
DLA Piper, with more than 3,600 lawyers over 64 offices in 25 countries, and arguably (depending on which moment you're counting) the second largest law firm in the world, has had a Global Chief People Officer for several years, Robert Halton, headquartered in London.
"Unlike other organizations, the cliche of people being the best asset is completely true in law firms. We don't have any machinery or stores, so it's the people providing the competitive edge in the market. Getting the right people is crucial to the success of a law firm, and keeping that pipeline of talent flowing is also crucial," Halton says.
Small and mid-size firms face equally critical people issues as do the new behemoths, but for them, adding a dedicated full-time professional to firm overhead in order to address those issues often is unrealistic.
We at RRR offer an Outside/Inside Consulting arrangement whereby we will spend a designated number of days per week or month as your Chief People Officer. Our experience brings efficient expertise to your people concerns in an affordable format.
Make way for a Global Chief People Officer at your firm, whatever the size.
It is a scenario we in the legal field have come to expect--announcements of associate compensation increases are responded to in waves. First the largest firms rush to match them, then the mid-size firms determine how much they are going to raise compensation, often not in a dollar-for-dollar match, and then there is the soul-seeking by the smaller firms. Can they afford to raise compensation at all?
In the aftermath of Cravath's recent announcement of special bonuses this year--bonuses ranging from $10,000 to $50,000 on top of the normal annual bonuses ranging from $35,000 to $65,000--a number of large firms have, as expected, followed suit: Davis Polk & Wardwell, Debevoise & Plimpton, Sullivan & Cromwell, Milbank Tweed, Paul Weiss and Simpson Thacher & Bartlett.
Presumably the mid-size firms are weighing their options and the smallest firms are shaking their heads.
LOWERING COMPENSATION
What is interesting at this juncture is that there are significant developments at the other end of the compensation continuum as well, particularly among mid-size and small firms.
Chapman and Cutler, a 220-attorney firm in Chicago, this fall started offering second-year associates the opportunity to choose between two pay plans-- one with lower hourly billing requirements and less pay and the other with higher billing requirements and more pay. Based on both associate and client feedback, Dallas-based Strasburger & Price has replaced over 400 of its required 1900 annual billable hours for first-year lawyers with training hours devoted to associate development--mentoring, leadership development and pro bono projects, while keeping compensation at the same level.
Boston-based Lowrie, Lando & Anastasi, an intellectual property boutique launched in 2003, has grown to 27 attorneys in part by requiring just 1,600 hours from associates while starting them at $130,000, $30,000 below what large firms in the area offer. And Ford & Harrison completely abandoned billable-hour minimums for new attorneys, shocking the legal world that views billable hours as the bedrock of the business model, while also earning it some good publicity with potential clients.
In a particularly dramatic development, McDermott Will, a 1,000-attorney firm, has announced that it is hiring a cadre of attorneys to populate a new track the firm is creating-- one that is not en route to partnership, works less hours (30-40 @ week), is paid less (@25% less) and is evidently billed out at lower rates. With the escalating volume and cost of e-discovery, contract attorneys have become fairly common, flying mostly below the firm/client radar. These McDermott Will attorneys, however, are being given a permanent, formal position in the structure of the firm. "The cost of document review has become intolerable for everyone," according to David Balabanian, head of Bingham McCutchen's litigation group. In the world of full service firms, adding this track allows McDermott Will to retain both the quality control and the profit margin of work that might otherwise go elsewhere-- to lower-cost attorneys, such as SQ Global Solutions in India, or to outside document review firms.
The coup de grace goes to Washington's Howrey, with 618 attorneys, who earlier this year dropped lockstep completely in favor of a performance-based associate compensation system. We noted in our entry A Small but Important Step in Associate Compensation? DLA Piper's distinction in paying associates differently based on practice area, and the potential that that raised for other types of compensation distinctions. Howrey has taken that to its logical extreme. It hasn't been easy. Modifying evaluation forms, adding training programs and hiring personnel to implement the system has been a "tremendous amount of work," according to Edward Han, hiring and development partner. But the proof will be in the pudding.
THE IMPACT ON NIMBLENESS
Continue Reading...A recent article in the New York Times on young 20-something Internet mega-millionaires quoted one as saying “You ask yourself, ‘Why am I not happier given how lucky I’ve been?’”
While we as lawyers, being supremely circumspect, would rarely verbalize this sort of “squishy” sentiment out in the open, given the levels of unhappiness in our profession, it is a question we should be asking ourselves.
So here are some of the findings about "happiness," which has exploded as a subject of research over the last few years. Let’s start with the data on the current state of happiness in the US.
Recent surveys point to a relatively high “happiness quotient” these days:
· 86% of Americans are content with their jobs (General Social Survey)
· 76% are satisfied with their family income (Pew Research Center Survey)
· 62% expect their personal situation to get better over the next five years vs. only 7% who expect it to get worse
· 65% of Americans are satisfied over all with their own lives—one of the highest personal satisfaction rates in the world.
As the query of that Internet mega-millionaire illustrates, happiness is not correlated with financial resources or even political stability: countries like Nigeria, El Salvador, Columbia, Mexico and Puerto Rico (along with Switzerland, Denmark and Canada) register higher rates of happiness than the US in the World Values Survey. Other countries, such as Romania, Russia and other former Soviet countries, consistently score at the bottom.
This fairly rosy picture in the US becomes decidedly darker when we factor in the “happiness” data on lawyers:
· Lawyers generally have one of the highest dissatisfaction rates with their work of all industries/professions, with 65% of young associates surveyed by the ABA last year intending to change professions within two years.
· Lawyers also have the highest “personal distress” rates of any industry, exhibiting dramatically higher incidences of suicide, mental illness, divorce and substance abuse than other industries.
Women lawyers seem particularly effected by these developments:
· Fewer women are seeking law degrees: from 1963 through 2001 female enrollment at law schools climbed nearly every year, from 3.7% to a peak of over 50%; since 2002, however, the percentage of women in law schools has declined each year, currently down to 46%.
· At a time of very high attorney turnover generally (over 20% leave their jobs every year), the highest drop-out-of-the-profession-entirely demographic is women.
· In spite of many years of women in the "pipeline," only a small proportion of women stay to become partners in law firms (17%) or senior legal counsel in corporations (18%).
The message seems to be that, in spite of Americans' general glee, few lawyers are happy living the lawyer's life.
What Makes Us Happy?
As it turns out, over the last few years a wave of books on happiness, primarily written by academics, have been published. Among them are:
The Pursuit of Happiness, by David G. Myers
Happiness, The Nature and Nurture of Joy and Contentment by David Lykken
Happiness, A History by Darrin M. McMahon
Authentic Happiness by Martin Seligman
The Art of Happiness by the Dalai Lama and Dr. Howard C. Cutler
The Happiness Hypothesis by Jonathan Haidt
Stumbling on Happiness by Daniel Gilbert
Happier: Learn the Secrets of Daily Joy and Lasting Fulfillment by Tal Ben Shahar
Most of these books are based on David Lykken's findings that there is an individual “set point” of happiness to which most people revert, regardless of their life circumstances—illness, financial concerns, family problems. Lottery winners and paraplegics, those both accepted and rejected as partners or general counsel, all on average return to their baseline levels of happiness within a year.
If health and other circumstances don't impact our happiness, what does? Jonathan Haidt compares our emotional life in The Happiness Hypothesis to a small, conscious monkey riding a large, unconscious elephant: in many ways we are estranged from the great bulk of our own inner feelings. The running commentary in our minds about what we feel and why is often simply wrong, he contends. For example, research subjects unknowingly hypnotized to react in a specific way to a cue quickly come up with rational, and in their mind truthful, “explanations” of why they acted that way, even though those explanations are causally entirely beside the point: their reaction was programmed in their unconscious by the hypnosis.
Not only are we not able to access a great part of our inner feelings, evidently we are not very good at analyzing the happiness data that we do have access to. Daniel Gilbert in Stumbling on Happiness explains that we are very bad at remembering what made us happy in the past and in predicting what will make us happy in the future, often overestimating the bang we will get and how long it will last. For example, people often list children as a source of happiness, yet the data indicates that children in fact are "extremely negative," "mildly negative" or have no effect on overall happiness. (More about this later.)
Could We Be Happier?
Continue Reading...What is the most important attribute to be looking for as you groom your young lawyers for management?
A 2006 study reviewed in the Leadership and Organization Development Journal assessed the relationship between emotional intelligence and managerial effectiveness, confirming what you might expect. A total of 38 supervisors (37 males and 1 female) and 1,258 subordinates from a large manufacturing organization participated. Data analysis found that the total MSCEIT score (an emotional intelligence assessment that I consider most reliable) displayed a strong positive correlation with supervisor ratings; that is, the more emotionally intelligent the supervisor, the more effective and productive s/he was rated by others in the organization.
First, I would point out that this study doesn't tell us whether these emotionally intelligent supervisors who were rated more effective actually were more effective than their lower EI colleagues. All we know is that they were perceived to be more effective. The implication being that even if those high EI supervisors weren't quite so great in the accomplishments department as advertised, their loyal team still saw them in the best possible light.
This distinction is particularly important in environments such as law firms and law departments, where dramatically high skepticism (averaging in the top 10% of the American population) creates hurdles that make it hard for managers to establish rapport and trust, much less garner appreciation for a job reasonably well done. Second- and third-guessing is often standard procedure, regardless of how demonstrable the accomplishment might be. While emotionally intelligent managers may be in fact most effective, this and other studies demonstrate that they are in any event going to have the interpersonal skills to align legal staff and professionals on the same side. Given the challenge of creating supportive cultures for growth and accomplishment in law organizations, identifying these kinds of leaders becomes imperative.
Two major subscores make up the MSCEIT total score. In the study above, Experiential EI, which includes perceiving and using emotions, was found to be very highly correlated with high supervisor ratings, whereas the Reasoning EI subscore, which includes understanding and managing emotions, displayed no significant correlation.
Our study of emotional intelligence and lawyers (also using the MSCEIT) indicates that lawyers' scores in EI are generally a standard deviation below the general population (that is, 85 compared to 100). In addition, lawyers score significantly lower on the Experiential subgroup than on the Reasoning one. Their ability to "read" their own and others' emotions is notably low compared to the general population, and they also are not facile at "using" emotions, i.e., moving from a less appropriate emotion to a more appropriate one. Their Reasoning scores are usually significantly higher than the Experiential ones, lawyers being evidently well-suited to logically analyze even the emotional realm. The problem is that weakness in reading emotions creates a garbage-in, garbage-out result when that reasoning horsepower is applied to inaccurate information. So lawyers often get blind-sided by what they hadn't originally correctly perceived .
This finding as to the importance of Experiential EI to effective management can be critical in the case of managing lawyers. Not only should we be grooming our young lawyers to be emotionally intelligent managers, but we should also be specifically rewarding those who are expert at recognizing and using emotions, an item I would bet is not currently on any evaluation form.
"We evaluate 'courage' as a behavioral characteristic of our lawyers, and we link this evaluation to compensation," says John P. Donahue, Senior Vice President, General Counsel and Secretary of Rhodia Inc., in the July 2007 issue of InsideCounsel. Rhodia has "embraced professional objectivity of its in-house lawyers as a core value" and Donahue wants to make sure that "our lawyers can deliver bad news to clients," with whom they are often closely aligned.
Valuing Courage
Given the data we have about the strong tendency of lawyers to avoid rather than confront conflicts (yes, even those feisty litigators, oddly enough) (see my article "The Unique Psychological World of Lawyers"), Donahue's goal is one that can't be lauded enough. Hospital administrators contend that a ratio of 1 conflict avoider in 4 employees results in a "dangerous workplace"--think: "I don't want to get so&so in trouble over reusing needles" or "Maybe she'll start writing down dosages after she gets used to our procedures".
Left to their own proclivities, lawyers' much higher rate of avoidance than hospital workers risks being just as dangerous. Avoidance not only fails to resolve firm and client issues, but at the extreme, failure to report and confront violations of Sarbanes-Oxley, insider trading and discrimination laws, to name a few, can not only crater a career, but also a firm or a company. Add in malpractice, fraud and the range of criminal possibilities (see, for example, Enron and other corporate demises and the unfolding saga of Milberg Weiss Bershad & Schulman) and silence should never be considered golden.
Hence Donahue's laudable efforts to support and promote courage.
Which is where our thought for today could end.
Evaluating Courage
But Donahue goes further than suggesting putting in place environmental supports like "constantly talking" about maintaining objectivity, creating a culture that embraces bearers of bad news and rotating lawyers among client departments. He wants his lawyers' courage to be evaluated and then to compensate them accordingly.
Evaluating courage or any other personal characteristic as it relates to their work is a radical idea to many lawyers. Basing compensation on that evaluation is outlandish. They don't know what a "behavioral characteristic" actually means, don't trust the evaluation process, and certainly don't think their compensation should be linked to so un-rigorous a process. They are, after all, good lawyers, and good lawyers average in the top 10% on the characteristic "skepticism" in personality assessments (see again my article "The Unique Psychological World of Lawyers").
In this case, they should get over it. Whether Donahue is using structured assessments or more unstructured evaluation techniques, these behavioral and personality evaluations are likely to be the key for law firms and law departments to break their recruitment and retention quandaries and, as icing on the cake, help solve the diversity dilemma. (See my January 5, 2007 blog entry "KPMG Model Delivers Risk Management, Teamwork, Client Satisfaction and Diversity Too," reporting on KPMG's use of the Birkman Method assessment to revamp its business model and achieve retention and diversity goals.)
This is not a new position, at least for me. (See my article "The Case for Assessment: Using Discrimination for Better Hiring," which outlines all the uses of assessments in the non-law firm world and how law firms might profit from them.) And now the tipping point is in sight as more law departments and law firms inch towards greater use of evaluations and assessments-- and trumpet the benefits.
General Counsel Scott Terrillion, of Boehringer Ingelheim Pharmaceuticals Inc, uses an "evaluative selection method" to find the best attorneys for his company, with diversity being a natural consequence. Roland Dumas, director of diversity for the legal recruiting firm Major, Lindsey & Africa, points out that "if a law firm screens candidates based on what law school they went to and how well they did there, it won't achieve much diversity. There simply are not enough African-American and Latino law students in the top law schools who would survive the 'top quarter' cut." Instead, Dumas recommends "capabilities" interviews, which use rich conversations to probe candidates to find those who have the talents the firm values.
Struggling to complete with bigger firms, Kansas City, Mo.-based Blackwell Sanders developed a system for selecting and assessing associates that is more behaviorally evaluative than most firms use, and it found that using these behavioral evaluations, starting with the initial interview, enabled the firm to spot talent it might otherwise miss. The firm has documented its efforts in a handbook, From Classes to Competencies, Lockstep To Levels, which, according to the foreword by Ida Abbott, is "an act of remarkable candor and leadership ... [that] will enable law firms to expedite the design and implementation of competency-based evaluations and performance-based advancement."
The proof, as they say, is in the pudding. Blackwell Sanders doubled the total number of minority associates, tripled the number in recent incoming classes, and increased by 22% the number of females associates. Perhaps even more notable, a "high" minority attrition rate declined to "0" within four years.
Jeffrey N. Berman, managing partner at Berman Fink Van Horn, says that for the last 10 years his firm has taken an even more radical step--using individually administered psychological assessments as part of their hiring process. Determining assessment traits important to the firm has given the firm "a handle on the type of attorney that is going to be happy and successful here," Berman says.
The firm tells all prospective hires, lawyers and staff, that they will be required to take a personality test if an offer is made. Contrary to the fear of many hiring partners, Berman reports that no one has ever objected to the assessment or refused to proceed, in part, he believes, because everyone in the firm has participated and also because it has been so accurate in predicting success. "It never ceases to amaze me how accurate the testing is," he adds, noting that it has never proved inaccurate with anyone they've hired, even when the results contravene the impression of interviewers.
So diversity is not the only benefit firms can expect from the targeted use of evaluations and assessments--law turnover and high satisfaction and performance result as well.
Our firm offers law departments and law firms state-of-the-art advice on identifying the characteristics that produce happy, productive lawyers in your environment and designing evaluations and assessments to use in hiring and promoting those candidates. Don't be left in the backwash. This is a wave that can do much to move you forward.
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...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.
A grand old firm has gone through a rough patch recently—one of its associates not only sued for sexual orientation harassment and discrimination, but also proceeded to file partnership documents and communications that S&C certainly would prefer to not have circulating publicly. Further, an article in the legal press lampooned a memo S&C sent around to its partners exhorting them, among other things, to say "thank you," in case their mothers had forgotten to instill in them that finer point of social intercourse. The legal blogosphere enjoyed batting that one around.
But S&C may have gotten the last laugh. In the Midlevel Associates Review released last month by The American Lawyer, New York law firms (as defined there to mean firms with more than 45% of their lawyers in New York) were once again roundly denounced, with this year only 7 firms making it into the top half of the 162 firms surveyed. The New York associates registered their dissatisfaction particularly regarding relations with partners, training, communication about what it takes to make partner and openness about firm finances. While New York firms have always performed poorly in these ratings, several firms fell precipitously since last year's survey—Cravath Swaine slid 27 places, Paul Weiss was down 59, Debevoise Plimpton fell 64 slots and Wachtell Lipton plummeted 74 places.
Thumbing its nose at the rest of the straggling New York herd was Sullivan & Cromwell, which vaulted from number 153 on the list up to number 48.
So now that all the chortling has died down, was it the "thank yous" that worked? Perhaps. But also, for the first time this past year, S&C leaders gave associates a series of briefings about firm finances, business strategy and the road to partnership. Chairman H. Rodgin Cohen and vice-chair Joseph Shenker, among others, made in-person presentations and took questions.
On those two most damning survey questions for New York firms, "communication about what it takes to make partner" and "openness about finances," S&C's ratings this year were 3.48 and 3.64 respectively, out of the ballpark compared to their prior year's ratings of 2.14 and 2.13, and even much higher than this year's average New York firms' ratings of 2.59 and 2.94.
So it looks to me like Mom was right. Talking it out—even those tricky financial matters and partnership issues that several New York firms said, and continue to say, were either too confidential or essentially none of the associates' business—creates rapport, incentive and even, get this, trust in an environment that sorely needs all three. And it does so quickly—with the results showing up in the first survey!
Mom would be so pleased.
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/.
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."
As a woman, a lawyer and a consultant who specializes in emotional intelligence among arguably one of the most challenged professions of our species-- lawyers-- I cringe every time I see articles such as "Brilliant Women Last in Love," published August 18, 2007 in Australia's Herald Sun. The premise-- leave it to self-critical, self-effacing women to propagate it about their own kind-- is that lower long-term marriage statistics for women who are smart, well-educated and/or successful in their work are evidence that these women are more likely than other women to be emotionally deficient in some way.
Of course, demanding work, of whatever kind, can create stress for both genders, including vis-a-vis their partners and families. And so can over-reliance in personal relationships on any professional strength, no matter how valuable that strength may be professionally.
In addition to those challenges, women have traditionally born the brunt of supporting families-- housework, food preparation, social connections, child and parent care, etc. So those women who also have demanding careers are often more challenged/stressed than their male counterparts, who are more likely to enjoy minimal expectations in these areas. Compounded stress, as we all know, can wear down even the best of relationships.
However, there is no evidence that professional women are less likely to have good emotional skills than other women or than the men they are working with. What the research is absolutely clear about, consistent for years, is that married men are the happiest in our population and married women are the LEAST HAPPY, with single women and single men, in that order, in between.
Therefore, it is just as likely, and I believe probably more likely, that the statistics about smart, successful women and marriage reflect the fact that these women are smart enough to realize and acknowledge the unequal and unhappy role marriage often plays in their lives and are also empowered enough personally, and successful enough financially, to do something about it. In the process they are likely to propel themselves up from last to second in the "happiness" stakes.
There is ABSOLUTELY NO REASON TO BELIEVE that the less smart, less educated, less successful women are glued to their marriages because they are so happy or so adept at relationship building. The female depression rate, highest among married women, should easily dispense that myth. Nor is there reason to believe that professional men, less burdened by family obligations and often enjoying the career and personal support of their spouse, are any better equipped to deal with the kinds of stress that professional women cope with.
I study emotional intelligence in both men and women, using the Myers Salovey Caruso Emotional Intelligence Test (MSCEIT), the only EI assessment that is abilities-based, i.e. does not rely on self-reports ("Why, yes, I am indeed emotionally intelligent.") but rather requires participants to react to scenarios.
The results of that assessment show very little difference (women enjoying a slightly higher average score) in emotional intelligence between the sexes--a result many women find surprising. There are a number of other assessments, however, that show clear gender differences, including the Myers Briggs Type Indicator, which reveals women to be much more likely to base their decisions on what is good for relationships than on logic.
But emotional intelligence is in fact fairly gender neutral. If the theory of this and other stories is that leading with your head can negatively impact your personal life, it is a problem that bedevils both sexes-- brilliant men ever as likely as brilliant women.
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:
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.
Ronda Muir's article "The Looming Associate Crisis" leads the July 2007 ALM Law Firm Partnership & Benefits Report, Volume 13, Number 6.
After reviewing statistics that show an ever-tightening supply, and potentially less qualified pool, of associates who are paid more yet leaving earlier than in years past, Muir recounts some of the tried (and perhaps less currently true) strategies for coping, and also identifies some more radical solutions that innovative, forward-looking firms can benefit from.
Ronda Muir will be making a presentation on managing the people risks that arise in law firms at a conference for Managing Partners in Chicago on Thursday, June 21. Sponsored by ARK Group, the conference, entitled “Developing a Risk Conscious Culture in Your Firm,” explores the relationship and interdependence of ethics, risk management and legal compliance.
Herewith a short but concise history of the twisted path that has led to billing by the legal hour, and the consequences of its tyranny.
During the 1800s, US legal fees were capped "per service" by state law, and litigation fees were usually paid by the losing party. Some lawyers were able to collect "bonuses" or charge retainers to circumvent the limitations of capped fees.
In 1908, the ABA declared contingency fees to be ethical, which opened a new source of revenue at least for litigation matters.
By the 1930s and 40s, however, the nature of legal fees was set on its head: what had been a capped system turned into a base system. State bars began publishing minimum fees, in most cases providing that those lawyers charging less than the minimums were to be punished. Similarly, the ABA Model Code, which stayed in effect until 1969, declared it unethical to "undervalue services."
Helping fuel this change in attitude was the expansion in 1938 of the Federal (and many states) Rules of Civil Procedure, which made litigation potentially more complicated and therefore also less amenable to flat fees.
Over time lawyers complained that dentists and doctors were out-earning them. A 1958 ABA pamphlet contended that lawyers were bad businessmen in comparison to other professionals, the remedy being to better track time and to keep more detailed records. That pamphlet also suggested that lawyers work 1300 hours a year-- or 5-6 hours @ day, five days @ week in a 48-week year.
In 1975, the Supreme Court, outlawing both the capped 1800s practice and the base system from the 40s, held that set fees for legal services constituted price-fixing, and was a violation of the antitrust laws. In response, by the late 1970s, most lawyers charged for their services based purely on hourly billing.
In 2001, the ABA asserted that too much emphasis was being placed by firms on billable hour requirements, which was leading to bill padding and general inefficiency, as well as damaging firm culture. This time, the ABA recommended billing expectations of 2300 hours annually, composed of 1900 hours billable to clients plus a total of 400 additional hours for: firm service (100 hours), pro bono (100 hours), client development (75 hours), training and professional development (75 hours) and professional service (50 hours).
Those expectations translate into a total 9-10 client and other hours @ day, five days @ week, 48 weeks @ year. The standard guideline for billable hours is that it takes approximately 10-12 hours to bill 8 hours. In which case, to achieve the ABA expectations, lawyers would be expected to work 12-15 hours daily.
In April of this year, a group of more than 100 law students from several of the nation's most prominent law schools--Yale, Stanford, NYU, Berkeley-- sent an open letter to law firms on the AmLaw 100 requesting that they improve working conditions at law firms. Students Building A Better Legal Profession called for law firms to reduce billable hour requirements and to make their billing expectations of attorneys clear. The group offered to exchange lower salaries for fewer hours.
The group also promised that prior to the fall recruiting season it would post a list of firms that have and have not agreed to these principles.
Touche.
Ronda Muir, Senior Consultant, led a two and a half day retreat at the end of May for UNICEF's 22-person Armenia office to help them better serve the country's children. She was engaged to improve teamwork, communication and conflict resolution and to assist in the office's preparation for upcoming reviews and its transitioning to potential structural and policy changes.
Through the use of individual and team MBTI work style reports, personal conflict style assessments, emotional intelligence tests and a confidential office-wide survey, Muir assisted the team in identifying personal and office strengths and challenges and in determining strategies for improved communication, conflict management and change management.
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!”
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.
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.
“Under the entity model, as individual attorneys cede decision-making authority to the firm, including authority for decisions regarding professional responsibility and ethical behavior, they tend to renounce (at least implicitly) personal responsibility for moral decision making. Law firms as entities, however, have no inherent mechanism for replacing personal moral responsibility with institutional moral responsibility. In consequence, morality can fall through the cracks, allowing corruption to ooze into the enterprise. “
Ronda Muir, Senior Consultant, has been asked by UNICEF's Armenia office to lead a two and a half day retreat at the end of May to help improve teamwork, communication and conflict resolution. Through the use of individual and team MBTI reports and emotional intelligence assessments, Muir will help the team identify personal and office strengths and challenges and determine strategies for improved communication and conflict management in order to better serve the country's children.
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.
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:
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."
Across the pond, the legal industry is addressing some of the same issues as US firms but with their own distinctive twist. Facing attrition rates similar to those in the US, UK law firms are re-jiggering what it means to be a partner and whether lawyers even need to be one in order to stay over the long haul. One-third of the UK 100 law firms have over the last few years introduced non-partner career tracks, based on associate feedback that partnership and its lifestyle has lost its allure.
On the legislative front, an NFO report in March 2001 on "Competition in Professions" recommended that unjustified restrictions on competition be removed. The government's report in response on competition and regulation in the legal services market concluded that "the current framework is out-dated, inflexible, over-complex and insufficiently accountable or transparent..."
Sir David Clementi, Chairman of Prudential pfc, one of Britain's largest insurance companies, was asked to do a wide-ranging independent review of the regulation of legal services in England and Wales, which is now known as the Clementi Report, was presented in December 2004 and was approved by British Prime Minister Tony Blair's government in October 2005. It recommended allowing nonlawyers to own, manage, and finance law firms for greater access to management expertise and capital markets.
The associated Legal Services Bill was introduced to Parliament on November 23, 2006 and is still pending. It proposes three key changes:
Surveys of UK law firms find them staunchly in favor of many of the proposed provisions. Ninety-two percent of surveyed law firms welcomed the introduction of multidisciplinary practices (MDPs), and found the most suitable prospective partners to be accountants (69 %), banks (19 %) and tax planners, IP agents and others. .
Fifty percent of UK law firms are considering external funding, while more than half are considering adopting alternative business structures (ABSs). Eighty-five per cent of firms questioned had discussed the issue of MDPs and ABSs at board level, while 56% were considering adopting an ABS.
The idea of multi-disciplinary practices has been bandied around in the US for years, and the growth of global law firms, and the prospect of competing with UK multi-disciplinary firms, may again suggest that model as a possible development of the future. What is interesting is the extent of support that UK firms are giving the idea.
Stay tuned.
The Center for Work-Life Policy’s latest research, titled “Extreme Jobs: The Dangerous Allure of the 70-Hour Workweek,” published in the December 2006 Harvard Business Review, reports that 35% of high earners work more than 60 hours a week and 10 percent work more than 80 hours a week. Their conclusion is that 20% of high earners in the US have “extreme” jobs, that is: 60 hours or more of work a week that often includes unpredictable work flow, tight deadlines, work events outside of regular work hours, availability to clients 24/7 and/or a large amount of travel, among other things. And 48% of extreme workers say they’re working an average of 16.6 hours more per week than they did five hours ago.
Sound familiar?
The reasons for such long hours? Among the external drivers: globalization and the round-the-clock availability it requires; vastly improved technology, allowing same-day delivery everywhere around the world; enhanced communication; increasing competition; and decreasing job security. Among the internal motivators: stimulating work, high quality colleagues, high compensation, power and status.
Sound familiar?
Noted were the sacrifices that these schedules require in personal and family life. More than two-thirds (2/3) do not get enough sleep, half don’t get enough exercise, and a significant number use alcohol, drugs, or food to alleviate their stress. The sleep deprivation alone can work havoc on professional and personal lives: a week of sleeping 4-5 hours a night induces an impairment equivalent to a blood alcohol level of .1%, which is legally equal to being drunk. Forty-two percent (42%) of extreme workers take 10 or fewer vacation days a year and more than half regularly cancel vacations. This in spite of data that shows that regularly taking vacations lowers the risk of death by nearly 20% among men between the ages of 35 and 57, often your most valuable age-range.
More than half say their sex lives have suffered; and nearly half say their work has interfered with their ability to have a strong relationship. According to the report, it is physically impossible to have a meaningful conversation with your significant other after a 12-hour work day. The American Academy of Matrimonial Lawyers identifies a preoccupation with work as one of the top four causes of divorce.
Extreme workers also note the negative impact their work has on their children. The study pointed out that women, 20% of the extreme workers, are more likely to feel personal responsibility for these down-sides, particularly with respect to their children Three-quarters (3/4) of the women said their work interfered with their ability to maintain their homes (66% of men said the same thing),and 57% of women (and 48% of the men) do not want to continue their work pace for more than one year.
The part that doesn’t sound familiar is that two-thirds (2/3) of high earners in a range of professions and three-quarters (3/4) of top managers in multinational corporations say they love their jobs. “The big surprise of the data was just how much these extreme professionals love their work,” said Sylvia Ann Hewlett, president and founder of the Center.
Surprise, indeed.
Many doctors, lawyers and candlestick manufacturers may fall into the extreme category based on many of these standards but one thing is for sure: loving their jobs is not usually part of the extreme lawyer package. Attrition rates and simple "expressed dissatisfaction"--whether in surveys or on-line-- that have reached astronomical levels attest to that.
The take-home is that we can not blame the hours alone on lawyer dissatisfaction. There could be such a thing as an extreme lawyer who loves his/her job. And there are steps that can be taken to move your extreme lawyers towards that happier (and ultimately more profitable) place. Are you taking them?
One difference in Dewey and Orrick, and perhaps the biggest one, that may lie behind their inability to get in bed together is their management structures. Adhering to the old school, white-shoe model, Dewey management is accomplished by a rotating "good lawyer" who is engaged primarily in what (s)he wants to do and, one might argue, does best—lawyering. According to a January 22, 2007 Wall Street Journal article, Dewey Managing Partner Morton Pierce spent 3,300 hours last year on billable client work, or an average of 12.6 hours every weekday, raising the obvious question of how much time, if any, he spent on management. "Management is not my passion," Pierce admitted.
Orrick, on the other hand, is managed by Ralph Baxter, Jr., who hasn't practiced law since 1992, and who spends his annual 3,300 hours-plus on firm-wide town-hall meetings, informational web casts, and on-site and in-person office and partner meetings, exhibiting what David Wilkins, director of Harvard Law School's Program on the Legal Profession, calls "the epitome of 21st century law-firm leadership."
While those in academia may have easily come to that conclusion, in the industry trenches what constitutes the best firm leadership is still very much open to debate. There are plenty of issues raised by the 3-5 year rotating model vs. the long-term model, including the impact on long-term vision and strategy and succession planning, that we won’t go into here. But the even narrower discussion about whether firms should have full-time or part-time managers, regardless of their length of tenure, can start to sound positively moral, with both sides claiming rectitude.
The word that crops up is "professional." One of the Dewey partners supports the part-time manager concept because someone "who practices is more tuned into the professional philosophy." And if that's not clear, Cravath's managing partner, Evan Chesler, also a part-timer, points out that "the law is a profession—not merely a business." (Note the "merely.")
Of course, managing partners who enjoy only short terms would be foolish to give up their clients and cutting edge expertise for what might be a short round in management hell. Their “professionalism” is another word for survival. On the other hand, they are right that lawyers respect no one as much as another lawyer: what managers lack in management skills they may be able to make up for with sheer lawyer-to-lawyer hubris: my book beats your book.
Continue Reading...Carol S. Dweck, a Stanford University psychology professor, is the author of the recently published "Mindset: The New Psychology of Success," which documents how people with a "growth" mind-set who believe they can improve themselves out-perform those with a "fixed" mind-set who believe their capabilities are fixed. "The growth mind-set person recognizes that you're not good at something before you're good at it," Dweck points out.
In one instance, Dweck found that when people experience a blow to their self-esteem, those in a fixed mindset repair their self-image by trying to feel that they are better than others, which n a business setting might take the form of blaming or taking things out on a colleague. Those in a growth mindset recover their self-esteem by trying to improve themselves and correct their deficiencies.
While it's gratifying to see the impact of personal belief documented so clearly, parts of this thesis are hardly new-- optimists outperform pessimists across all industries and job descriptions (except in law), in part simply because they believe they are capable of effecting change. And the success that this sense of empowerment generates in any arena leads to the expectation of and achievement of success in others. Optimists are also more resilient--understanding that specific setbacks are just that, and not a referendum on their personal worth, which makes them more likely to persevere.
Which brings us to lawyers, the least optimistic of any career, for whom Dr. Seligman has documented that pessimism is in fact a career enhancer, and who consistently score low on resilience. For lawyers, the new psychology of success begins with systematically training themselves to confine their pessimism to their legal analysis and to bolster their resilience and optimism in the rest of their lives, including management.
In any event, Dweck's overall assertion that rigid thinking benefits no one, least of all yourself, and that a change of mind is always possible, is welcome.
The Dewey-Orrick merger that was supposed to have closed this month has fallen through, and for reasons that seem to reverberate repeatedly over the law business landscape: retention and culture. Leading up to the announcement, at least ten Dewey partners left the firm, including rainmakers in the coveted M&A department. This is Orrick's fourth failed attempt at merger over the last few years.
It looked like a good match--both venerable firms with complimentary specialities, similar per partner profits and each with rising revenues. They had successfully negotiated the details at the top-- the name would be Dewey Orrick, the two chairmen would serve as the combined firm's co-chairs, with Orrick's chairman also named as presiding partner. But, as the New York Times noted the obvious, "law firm consolidation involves combining two organizations whose main assets are their people"-- tricky assets to nail down on the balance sheet.
With their particular personality traits, lawyer buy-in can be an extra challenge to obtain, and then to keep. Perceptions in the ranks as to the new firm details, such as heirarchy-- Orrick appeared to be retaining management control over crucial matters, compensation--Orrick partners would end up funding Dewey's unfunded pension system, and culture can undo the best efforts of leadership.
It takes not only economic due diligence, but diligently assessing and closing the deal up and down each firm's ranks before a merger can successfully occur. And then it takes a well-planned and well-executed integration to keep that success over time. Shouldn't we know that by now?
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Muir Lectures on Improving Management Decision-Making
On Wednesday, February 17, 2009 Muir will lecture students at Northwestern University's Business Institutions Program on improving management decision-making, using law firm management committees as a case study. Based in part on the article "Promoting an Effective Board or Management Group," the discussion will explore, among other subjects, optimal personality traits for good decision-making, how to construct effective teams and the challenge of avoiding extreme decisions.
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