Law People : Law Practice Management, Organizational and Personal Dynamics; Talent Management : Ronda Muir of Law People Management, Inc.

This past August a court dismissed an EEOC discrimination suit against Bloomberg contending that the company had systematically discriminated against pregnant women or those who recently returned to work from maternity leave. The judge, New York district court judge Loretta Preska, saw the EEOC's essential charge to be that  Bloomberg, as a company policy, did not provide work/life balance for its employees, which policy disproportionately discriminated against women employees.

The judge found insufficient evidence of such discrimination, but went further: the law, she opined, "does not mandate work/life balance"--"balance" is not a corporate obligation. A company like Bloomberg, she adds, explicitly states that it expects "all-out dedication" from its employees in return for a hefty paycheck. Indeed, the company Code of Standards states that Bloomberg “is your livelihood and your first obligation.” And she noted that both men and women have complained about work-life balance there. Thus, "making a decision that preferences family over work comes with consequences. But those consequences occur for anyone who takes significant time away from Bloomberg, not just for pregnant women and mothers.”

"The law does not require companies to ignore or stop valuing ultimate dedication, however unhealthy that might be for family life,” she wrote. “Whether an individual in any family wishes to make that commitment is an intensely personal decision that must account for the tradeoffs involved, and it is not the role of the courts to dictate a healthy balance for all.”

As may have been expected, a firestorm of controversy erupted over this decision, evidenced by the comments not only on the ABA Journal site above but also on the Careerist, NY Times, Wall Street Journal and Ms. sites.

And it didn't help that Judge Preska quoted Jack Welch, the long-retired chairman of GE, on his take on work/life balance:  “There’s no such thing as work-life balance.” This is the same Jack Welch who in a book titled Winning, co-written with his third wife, gives this advice:

There’s lip service about work-life balance, and then there’s reality….  You need to understand that reality:  your boss’s top priority is competitiveness. Of course he wants you to be happy, but only inasmuch as it helps the company win.

An article in the Wall Street Journal today, noting that the number of women in corporate leadership positions in New York State has not appreciably increased over the last few years, brought this Bloomberg decision to mind. A report conducted by Columbia Business School and the Women's Executive Circle of New York, the third in a series of biannual surveys tracking the number of women executives and board members at the state's largest 100 publicly traded companies, found that women held 15.9% of high-level leadership positions in 2010, up from 14.7% in 2006--a little more than a 1% increase.

Back in 2006, our entry "Five New Studies on Diversity in Law" pointed out the disadvantages that women, particularly those trying to have families, experience in legal practice, effectively limiting the number of women partners to approximately 17% at that time, a number that is not much changed today.

Also in 2006, an article published in The New York Times entitled "Why Do So Few Women Reach the Top of Big Law Firms?" similarly elicited a barrage of comments.  But Karen M .Lockwood, a senior female partner in Howrey, a Washington D.C. firm, who was the president of the D.C. Women's Bar Association, was quoted as making a distinction, saying that "Law firms are way beyond discrimination—this is about advancement and retention. Problems with advancement and retention are grounded in biases, not discrimination." 

Ms. Lockwood correctly identified a distinction. Discrimination is overt, explicit and legally actionable--not what Bloomberg is guilty of, while bias is implicit and often unconscious, covertly undermining the actions and opinions of some of the most overtly committed supporters of women. 

Most experts agree that the Bloomberg decision is correct on the law.  Everyone, women included, is entitled to trade leisure or family time for a bigger paycheck.  And this of course is particularly likely to happen in industries such as law where, still, time is considered the currency of value: the more time you spend on work, the more valuable you are.  Perhaps, in the end, that is the key to the "glass ceiling" problem that persists:  women are simply less willing to make that tradeoff. 

But there is another issue that the Bloomberg decision raises.  Few lawyers and law firms today would admit to outright discrimination against women, and even fewer could be convicted of it.  But unconscious bias is another matter.  Has the Bloomberg decision fueled unconscious bias against women? 

Ranier Kuchl, the concertmaster of the Vienna Philharmonic, expressed a commonly held opinion when he said that he could instantly tell the difference with his eyes closed between the sounds produced by male and female musicians, particularly those playing "male" instruments, such as tubas, trombones and French horns, which, the theory went, required the greater lung power of a man.

Nonetheless, over the past thirty years the use of screens and rules to assure anonymity have become standard in music auditioning. During the same time, the number of women in the top US orchestras has increased fivefold. The first time new audition rules were in place at the Metropolitan Opera in New York, all of the four new positions were awarded to women, more than doubling the number of women at that time in the entire orchestra.

What the classical music world thought was a pure experience—listening to someone play—was demonstrated in fact to be biased by conscious and unconscious gender cues. Another lawyer, Jennifer L. Bluestein, head of professional development for Baker & McKenzie, was quoted in the above New York Times article as saying that "Some of this is left over from the sexual harassment cases from the 90's, but I think that it's more because of the fact that we don't look like men." The evidence from the classical music industry seems to support Ms. Bluestein's comment--those visual cues can obviously undermine a purportedly unbiased person's perceptions of actual performance.

Similarly, in identical speeches delivered by equally talented speakers, the male is invariably judged to be the more persuasive speaker, even by women in the audience.  And men who excuse themselves from work to go to a soccer game or relieve a babysitter are consistently viewed positively for being involved with their families, while women who do the same thing with the same regularity are viewed negatively, as being not fully committed to their work.  And so it goes.

What is evident is how important gender is in shaping our unconscious biases. Company policies that reinforce those traditional biases are likely to breed--even stronger biases.  And as a result even fewer women will be afforded the opportunity to turn over their lives to their work.  If women are the ones who are opting out of an industry's or company's workforce because of work/life balance concerns, it will be all women, whether they will also eventually make the same choice or not, who will suffer from the bias that those experiences reinforce. 

Today the number of lawyers, both men and women, and particularly those stalwarts of Gen X and Gen Y, who are adamant about the importance of work/life balance are greater than ever.  Which makes the likelihood of peopling with the best talent any business that devalues balance much more challenging. 

Plus, there are substantive advantages realized by a business that affords employees a healthy lifestyle--as a recent New York Times article on “decision fatigue” reports, those who’ve made too many judgment calls in a day “take illogical shortcuts and tend to favor short-term gains and delayed costs. … [T]hey become inclined to take the safer, easier option even when that option hurts someone else.”

Or as psychologist Roy F. Baumeister puts it: “Even the wisest people won’t make good choices when they’re not rested…”

A recent article on the Bloomberg decision concluded: "Allowing people to have full lives, in short, isn’t a favor to women—it’s a better way to run a business."

Or as Jack Welch has also said: “If there was ever a case of ‘Do as I say, not as I did,’ this is it. No one, myself included, would ever call me an authority on work-life balance.”

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The following entry won the BlawgWorld Pick of the Week. BlawgWorld is a free weekly email newsletter that links to the best articles on the Web for lawyers and law firm administrators.

 

                                                     

House Speaker John Boehner teared up when introducing two newly elected Republican congressmen during a closed party meeting on September 15th, not the first time Boehner has choked up in public. A lengthy list of public cries just over the last few years include tears at a commencement speech, while thanking colleagues for their support during budget negotiations, during a talk about schools, discussing at various times his wife and his 11 brothers and sisters, celebrating election night, singing "America the Beautiful," talking about American security and American families who are suffering economically and simply upon taking the speaker's gavel, many of which sobs are commemorated on YouTube.

 

While Boehner seems to get away with it, The New York Times columnist Gail Collins contends women particularly must avoid tears in order to maintain their credibility:

One of the best-remembered moments in the Obama/Clinton campaign — Hillary Clinton cries in New Hampshire — is an excellent example of the difference between what men and women can get away with, tear-wise...With her back to the wall and the presidency on the line, Clinton approached the edge of a sniffle and we are still talking about it. Boehner is driven to great, noisy sobs when he contemplates the fact that as a youth, he mopped the floor at his father’s tavern...

[Nancy] Pelosi, of course, does not cry in public. We will stop here briefly to contemplate what would happen if she, or any female lawmaker, broke into loud, nose-running sobs while discussing Iraq troop funding or giving a TV interview.

Vivien Chen, of the Careerist, concludes that women can cry to diffuse a bully, but, otherwise, crying's probably not so cool.

According to the Harvard Business Review, Boehner can get away with crying "because of three key differences between John Boehner and the rest of us above-average professionals looking to progress in our careers: first, he's the boss, second he's not crying about workplace issues, and third, he's old (or older, depending on where you sit)."

The unwritten corporate rule is simple, according to HBR: "It is never okay to cry in your office, with your colleagues, or, god forbid, in front of your boss." So if you feel tears coming on, HBR advises that you either excuse yourself and "then get the hell out of your office...And if you can't keep it together to excuse yourself, simply exit the building quickly and worry about explaining later."

Does it surprise you, then, to learn that a study conducted by recruitment consultants Michael Page International found that mounting stress of all sorts leads one in three lawyers to cry?

Probably most lawyers would be loathe to admit to crying, so such a statistic looms rather large. If there are behind-the-door sobs, the question becomes whether tears are ever a good response during your working day, public or not.

Human beings are the only species that cries emotional tears, so there isn't any animal data available, but there's some interesting research about the differences in the crying habits of men and women.

Evidently women are biologically wired to shed tears more than men. Cells of female tear glands look different than men's and her tear ducts are smaller, so if a man and a woman both tear up, the woman's tears will spill onto her cheeks more quickly.  A hormone in tears called prolactin, a lactation catalyst, also aids in tear production. By the time women reach 18, they have 50% to 60% higher levels of prolactin in their bloodstream than men do.  Age is also a factor.  In an extensive study, researchers found that women under 45 are 10 times more likely to cry at work as men 45 and older.

A study of 37 countries determined that women in developed Western economies not only cry much more than men, but also much more than women in societies where women have fewer rights.

The male reticence to tear up seems to be related to testosterone levels.  As men age, and their testosterone levels decrease, they cry more. There are also powerful cultural inhibitions that make men less likely to cry, although those are relatively new, according to Tom Lutz, a University of California, Riverside professor. In the context of centuries and millennia, "male tears are the norm and males not crying is a recent historical aberration," he says, traceable to the late 19th century, when factory workers—mostly men—were discouraged from indulging in emotion lest it interfere with their productivity.

Which brings us again to lawyers in modern offices, wary of demonstrations of vulnerability, weakness or failing to spend time productively.  Yet evidently still shedding tears, even if behind closed doors.

What is one to do with those exasperating feelings of frustration and anger that would like to express themselves fluidly?

We have reason to believe that not only do men and women have different crying profiles but that they experience strong emotion differently--men have a stronger and longer-lasting physical response to emotion than women do, with higher heart rates and blood pressure, and it is more debilitating to their cognitive functioning--they aren't able to think as clearly and they remember fewer details of what happened during the emotional experience than women do. 

So what looks like a ban against emotional displays in the office for fear of reducing productivity more likely reflects the male experience of debilitation.  It is the male experience that may in fact give some justification to keeping one's emotional experience at the office more serene--let's not impair our functioning with this kind of stuff.  That attitude becomes the cultural norm, and women are often branded as the ones who breach it.  But women, unlike men, can move through their emotional experience more quickly and with less impairment, making their aversion to an office episode less likely, at least for reasons of reduced productivity. 

The alternative is to suppress emotions, and the adverse impact of suppression is much more dramatic for both sexes. Cognitive functioning declines significantly when the required energy is devoted to choking off emotional expression, leaving little energy for rational thought. And suppression means the cause of the emotion is not being dealt with--the culprit is not being confronted--and therefore there is no relief in sight.  So suppression both traumatizes more significantly and lengthens the period of damage.

What can we as practitioners conclude from all of this?  If you are a Boehner and feel those tears start to flow, go ahead and find a place to let them flow.  Preferably one that is not immediately in sight of your clients, colleagues or staff.  Wring out all the emotion--anger and hurt-- from those tears and then, when the storm has passed, sit down and analyze what brought on those emotions.  Are you frustrated with your situation?  Angry at someone's words?  Worried about the impression you made?

Once you have a handle on what feelings prompted the tears, go directly to the source and articulate those feelings.  "When the client told me how dissatisfied she was with my brief, I was devastated since I  had worked so hard on it." 

Then come up with a plan to get you back on the road forward.  "I would like to have a conference call where we go over each complaint so I can produce a second draft that suits us both."

And if you find your tears flowing because you're so proud of your team, just let them go wherever you are.

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In a new CareerBuilder survey of more than 2600 hiring managers and human resource professionals nationwide, 71% said they value emotional intelligence in an employee more than IQ and 34% said they are placing even greater emphasis on emotional intelligence when hiring and promoting employees post-recession.  And 59% said they would not hire someone who has a high IQ but low EI, while 75% said they would promote a high EI worker over a high IQ candidate.

Why do these hiring managers value EI so much?  Because, they said, the high EI employees:

• are more likely to stay calm under pressure
• know how to resolve conflict effectively
• are empathetic to their team members and react accordingly
• lead by example
• make more thoughtful business decisions

What behaviors do these managers look for that indicate high EI?  Employees who:

• admit to and learn from mistakes
• keep emotions in check
• have thoughtful discussions on tough issues
• listen as much or more than they talk
• take criticism well
• show grace under pressure

Another recent announcement was the inauguration of the USF SELECT program, in which a small group of incoming University of South Florida medical students are being admitted into an elite program based on an evaluation of their emotional intelligence.  The SELECT program is based on the expectation that "students with higher emotional intelligence can become more engaged, compassionate physicians who work effectively with teams and can lead change in health care organizations." Although this is the first time USF has used emotional intelligence as a gauge of leadership potential, the goal is to eventually incorporate EI training into the curriculum for all medical students, a trend in medical school education that is spreading rapidly.  

The SELECT program will include peer and faculty "coaching" groups intended "to help them cultivate this skill set of emotional competence," according to the USF Vice Dean Dr. Alicia Monroe. 

In order to choose the incoming SELECT class, faculty submitted applicants to a 90-minute "behavioral event interview," a method of interviewing that is often used in the business world and is starting to be used by some law firms, but is rarely part of academic medicine applications. Students were asked to recall how they reacted to specific quandaries or important events in their lives and what they learned from each situation. Teleos Leadership Institute staff trained the SELECT faculty to look for "a grounded explanation in students’ lived experiences," Dr. Monroe said. "To see, through this, how the students articulated the way in which they reason, problem-solve and use self-awareness to interact effectively with others, to communicate empathy and to manage relationships.."

In asking how he viewed the relevance of the EI screening, one of the successful candidates stated that "Once we become more aware of how we interact on an individual level, we will be prepared to collectively lead efforts for systemic changes in healthcare delivery. This is the big picture and it is still abstract, but I hope this program sets us up to do just that."

Halfway around the world, the new Australian Prime Minister Julia Gillard's department is providing emotional training workshops and personal coaching to her cabinet and staff.  "The fundamental purpose...is to foster enlightened and responsible leadership," according to one of the providers.

What is the common thread here?  Emotional intelligence is no longer a "squishy" concept that starry-eyed granola eaters and new agers proselytize.  We lawyers are about to be set back in our perennial competition with doctors by their realization that EI conveys real advantages, something corporate managers are already well aware of.

Will lawyers get the message?  Or are we too smug in how enlightened we are already?

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Perhaps your mother's adage about what makes for beautiful is not entirely correct.  It was recently announced that economists at the University of Texas-Austin analyzed data from five large surveys of more than 25,000 people conducted between 1971 and 2009 in the US, Canada, Germany and Britain and came up with what may or may not be a surprising conclusion:

Physical beauty gets you both money and happiness.

Participants in the top 15% of people ranked by looks were more than 10% happier than those in the bottom 10% of looks and the extra economic benefit that resulted from beauty accounted for at least half of that extra happiness--evidently better-looking people generally earn more money and marry people both better-looking and also higher-earning.

Another economist at the University of Texas-Austin, Daniel Hamermesh, a leading researcher of beauty and success,  presided over a series of surveys in the United States and Canada just over a decade ago which showed that for men the ugliness “penalty” was -9% in earnings while the beauty premium was +5%.  For women, perhaps surprisingly, the effect was less marked: the ugliness penalty in earnings was -6% while the beauty premium was +4%.

An article in the Economist a few years ago entitled "To Those That Have Shall Be Given" reported on research finding that as a general matter physical attributes associated with beauty also "give clues about intelligence, and that such clues are picked up by other people."

So where do we lawyers stand on the good looks=happiness/earnings/intelligence calculation?

Fortunately, Dr. Hamermesh has looked into that question also.  In his paper  "Beauty, Productivity and Discrimination: Lawyers' Looks and Lucre," examining the careers of graduates of a large, unnamed American law school (University of Michigan), he found that

• Those rated attractive on the basis of their matriculation photographs went on to earn higher salaries than their less attractive classmates.
• Better-looking attorneys who graduated in the 1970s earned more after 5 years of practice than their worse- looking classmates, other things equal, an effect that grew even larger by the 15h year of practice. There was, however, interestingly enough, no impact of beauty on earnings among 1980s graduates.  
• Women who graduated from law school in the 1970s were better looking overall than women in the 1980s.
• Attorneys in the private sector were judged better-looking than those in the public sector.
• Attractiveness may determine which practice group you are in--regulatory lawyers were the worst looking and litigators the best looking.
• Male attorneys' probability of attaining an early partnership rose with beauty, which was not true for female attorneys.  

Or, as the question was posed by Above the Law: Are Attractive People Better Lawyers? According to that entry, quoting Hamermesh: “They’re not necessarily better lawyers. They just get paid more.”

Hamermesh also found evidence that beautiful people bring more revenue to their employers than the less-beautiful, at least in the advertising industry.  Among Dutch advertising firms, those with the most beautiful executives had the largest size-adjusted revenues—a difference that exceeded the salary differentials of the firms in question.

Hamermesh conceded that he could not determine from the data whether the beauty effect occurred because clients discriminated in favor of the good-looking or because better-looking lawyers were able to obtain greater financial gain for their clients.

Even more recent research seems to support these findings--such as the role that beauty at a young age may play in making people extroverted, and therefore more likely to have higher earnings and enjoy more happiness-producing relationships, and the advantage that physically attractive children of both sexes have in being seen by their peers as socially skilled (Vaillancourt & Hymel, 2006).

There may also be some anecdotal support for these findings. The looks of attorneys at DavisPolk, one of the more profitable firms in the country, have long been lauded, and started getting extra attention when photos began appearing on the firm website.

However, not everyone is convinced of the reliability of Hamermesh's and others' data--for a sampling of the responses ranging from dismissal to skepticism to giving the benefit of the doubt, see comments at the ABA report.

In sum, as the Economist article points out, "sadly reminiscent of the biblical quotation to which the title of this article refers... there is a feedback loop between biology and the social environment that gives to those who have, and takes from those who have not."

By the way, are there any odds in investing in the improvement of our looks?

In Shanghai, where the difference between the ugliness penalty and the beauty bonus was greatest, Dr. Hamermesh looked at the relationship between women's spending on their cosmetics and clothes and their income.Higher beauty expenditures did correlate with a small increase in earnings, but not enough to pay for them in a strictly financial sense--the beauty premium generated earnings worth only 15% of the money expended.

What about the benefits of plastic surgery? Soohyung Lee, an assistant professor of economics at the University of Maryland in College Park, found by studying before and after photos of members on a dating website “that plastic surgery is not profitable in a monetary sense.” “I can’t comment on the happiness,” she added.

So what do we do with this information?  Hamermesh points out that it is not illegal to discriminate on the basis of looks, and, all else being equal, it might be a perfectly legitimate business strategy to hire the more beautiful candidate.  In these times of continuing economic pressure on law firms, being attractive may be more important than ever for gaining employment and hiring attractive lawyers may be just the kind of hedge that law firms can live with--at no cost added.

 

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The words being thrown around were trust, intimacy, empathy, vulnerability, honesty, transparency, communication, emotional intelligence, teamwork, forgiveness, feedback, collaboration, connectedness, courage, relationship-building.  It would be understandable if you thought that you had walked into a marital counseling conference or some new-age event.  

In fact, the setting was Georgetown University Law Center’s March 9th conference entitled "Welcome to the Future: Trends in the Delivery of Corporate Legal Services," led by Co-Director Mitt Regan.

After presentations on survey data showing how firms attract and keep potential clients (more on this in later entries), the attributes that were identified as being most conducive to outstanding client service were those listed above that make all types of relationships good and better.  And it was acknowledged that it can take only a few individual lawyer behaviors to destroy a client's trust, and in a startlingly short time.

Jeff Emelt, GC at GE, was quoted as saying that empathy is the quality he wants in his lawyers, which is particularly important when he gets legal advice he doesn't like.  While his predecessor valued his favored lawyer for being the best listener he'd ever met. 

Susan Hackett of the ACC Value Challenge said all the metrics used by firms and clients to capture data and set and meet goals need to be discussed with a lot of transparency and vulnerability--so clients can see how firms make their profits and even what those profits are.

Lisa Damon, member of the Executive Committee at Seyfarth Shaw, was instrumental five years ago in designing and promoting a firm culture that emphasizes "standing in the shoes of the clients," relying on transparency, communication and collaboration to weld strong bonds. While only into the first year of that program, Damon says that they already have delighted clients who are more engaged in the entire client/lawyer process.

Amy Schulman, Executive Vice President and General Counsel at Pfizer, was the featured speaker, discussing the Pfizer Legal Alliance, a program in its 3rd year that limits the number of firms that Pfizer uses to 20 for the bulk of its work. Pfizer requires that the firms use another value device other than the billable hour to determine fees ("If what you use to anchor the relationship is money, you’re going to lose, because it's not motivational at some point," according to Schulman), that they help Pfizer achieve an overall 15% reduction in legal spend, and that they work cooperatively with each other, as needed, to staff and manage projects. 

Each firm has an in-house relationship partner at Pfizer and Pfizer encourages secondments and sharing associates, even recruiting at law schools together with some firms. Twice a year Pfizer grades each law firm on performance issues ranging from substantive knowledge to responsiveness to willingness to collaborate, as well as how well they take the feedback they are given. This is, of course, a challenge for most lawyers--they are often highly defensive to anything that smells of criticism.

"We learned a lot about firms," Schulman says, "by whether they welcomed the feedback or responded by saying, 'You got it wrong.'" 

According to Schulman, making the PLA work is like developing other intimate relationships--it takes hard work, vulnerability and bravery--and ultimately requires a leap of faith. "Relationship-building requires a certain kind of emotional courage and confidence."

Most speakers acknowledged that feedback from clients is necessary to improve relationships--proactively asking for and acting on client evaluations should be the starting point of sophisticated client service.  But once the feedback is received, understanding how to respond at the time and in the future requires a panoply of skills that firms must identify, develop and support from the top down.  Inculcating these skills and values into the DNA of a firm becomes geometrically more difficult as the size of the firm increases.

As J. Warren Gorrell, Co-CEO of Hogan Lovells, pointed out, there is "a lot to be learned by firms from organizational behavior theory."

There were a couple of provocative questions.  Are women lawyers more likely to have some of these skills and therefore be able to deliver better service?  And if so, why aren't they being recognized and rewarded for those abilities?

And in the end does expertise always trump empathy or any of these other touchy, feely skills?  The conclusion seemed to be that regardless of the legal arena or degree of subject matter difficulty, quality of advice is considered a given from all firms, with clients repeatedly going to the qualified law firm that provides them with the better relationship as well.

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Muir will speak on Law Practice in the 21^st Century:  What It Means for You at the Women Lawyers Alliance annual meeting in Chicago on Friday, May 20.  Muir will review the massive changes that law practice is undergoing globally in this new century and what it means to individual lawyers and their law departments and firms in terms of competition, recruitment, staffing, client development, compensation, professional training and personal career management.  Join the Women Lawyer's Alliance and register for the annual meeting here.

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Will Meyerhofer is a lawyer who worked at Sullivan & Cromwell before chucking it and getting his MSW to become a therapist. He is also gay. He writes the blog The People's Therapist and occasionally ties in issues relating to the legal community. His latest entry is about a recent podcast he did with the American Bar Association Journal on "Work/Life Balance." The only male among the panelists and the moderator, Meyerhofer clearly resented that the work/life topic got turned into a gender issue. Here's a sampling of his points:

"The unspoken “women’s lib” angle on the “work/life balance” at law firms is this: women give birth to children, and it’s impossible to raise a kid if you are a partner at a law firm, so women are less likely to become partners. If they did, they wouldn’t have time to raise a kid. It’s also impossible to meet anyone you want to have a kid with when you’re working 70-hour weeks...

Plenty of male partners have kids. They become absentee fathers, and their kids never see them. Nothing new there. But a social stigma kicks in when your kid tells his friends he only sees mommy an hour a week.

You also have to find time to be pregnant. If you put it off until you make partner, you face fertility problems. That’s a fundamental bummer about being a woman who wants a kid – when you’re mentally prepared your body gives out. At sixteen, anyone can get pregnant. At 39, you can only get pregnant if you don’t want to...

The solution to all this is obvious – have a kid while you still can, and let your husband do the raising.

That’s more or less where the other panelists ended up, but only after spouting “women can have it all” slogans and fabricating visions of “part-time partners.” The law professors on the panel had no concept of law firm reality. The young lawyer running an internet-based T&E firm receded politely when I pointed out the obvious: plenty of women would rather stay at home with the kids than work at a firm. Hell, I’ve worked with couples where the husband and wife fight over who has to do law for a living. They’d both rather stay home and play with junior. Wouldn’t you?

A second yawning gulf between me and the other panelists came with their determination to defend law as a profession. They were “pro-law” and I was “anti-law.” That’s understandable, since the ABA Journal represents the official propaganda ministry for Law, Inc. Law professors need to herd eager young things into school – that’s how they earn big bucks. And the internet lady was trying to drum up business, too – she has loans to pay.

I’m not from that world. I’m a psychotherapist who cleans up the wreckage of young lives decimated by the law school/law firm machine."

Meyerhofer's conclusion? "Homo or hetero, male or female we are all in the same boat... Humanophobia is the issue."

According to Meyerhofer, at least the last 10 minutes of the podcast were deleted from the ABA Journal recording made available to the public. What went missing?

"Work/life balance is impossible so long as the billable hour remains the holy grail of law firm life. Working “only 2200 hours per year” makes it impossible to have a family or any sort of personal life.

Sorry. That’s the truth.

And that’s what I was saying in those missing 10 minutes of tape that got cut.

In years to come, you’ll be treated to a few hundred fresh hours of Richard Nixon’s disquisitions on the racial inferiority of blacks and Jews – but if the ABA Journal has its way, you’re never going to hear those last 10 minutes of why it sucks to be a lawyer."

As Meyerhofer embodies, more men are claiming that the quality of law firm life is not an issue just for women or even for those raising families. In the 2010 AmLaw 200 Midlevel Associate Survey, the number of associates planning on leaving their jobs in the near or mid-term rose again. Nearly 45% said if they left, it would be for a better work/life balance, a 5% increase from the prior year. It's apparent that many feel that during the economic crunch their workload has been ratcheted up while their salaries and benefits have been put on hold or reduced. One Morrison & Foerster associate wrote, “Work/life balance is important to more people than . . . [just] mothers and lazy people.”

One might also question the sustainability of giving well-reasoned legal judgments through an endless series of caffeine-fueled, sleep-deprived 70+ hour work weeks, regardless of which gender you are. As well as the meaning of living such a life.

I will let you decide how legitimate these observations are -- whether, as Meyerhofer claims, work/life balance is nonexistent in firms and that its absence creates an issue not just for women.

But is there a female perspective on work/life balance that is unique to women?

Let me hear your view.
 

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Further to our earlier entry on diversity and the recession, here is some additional data.

The New York Law Journal reported that the percentage of women partners and associates working at NLJ 250 law firms this year fell to its lowest point since 2006, accounting for 29.2% of all attorneys at NLJ 250 firms, compared to 32% of attorneys at those firms 5 years ago.  That is the lowest percentage since the NLJ began reporting gender breakdowns in 2006. Since 2006, the percentage of women partners and associates has declined slightly each year even as firms got bigger in each of those years.

The results have prompted a number of attempts at explanations.

Stephanie Scharf, president of the National Association of Women Lawyers Foundation, attributes the decline to a number of factors, such as structural changes in law firms, the increased use of staff attorneys and more lateral hiring, as well as the overall reduction in.associate ranks,where women are more highly represented.

Jessie Kornberg, executive director of Ms. JD, an online resource for women attorneys, contends that practicing law is simply becoming less attractive to women, particularly in light of the discouraging lack of improvement in hiring and work/life balance.

That opinion is supported by the reduction in the number of women admitted to law schools. According to the Law School Admission Council, in 2009 the number of women admitted was up by 3.9%, while the number of men rose by 5.7%.

Student group Building a Better Legal Profession, which is based at Stanford Law School and advocates for lawyer diversity, cautions that the data it has compiled indicates that much of the decline in diversity can be attributed to a small group of firms that have lost an outsize percentage of minorities.
 
Their diversity results varied greatly among firms, and even among different offices within the same firm, with the attrition rate among white associates in DLA Piper's New York office, for example, much higher than the attrition rate among minority associates there, putting it near the top of the list of New York offices that retained minority associates, while the minority attrition rate in the firm's Washington office was higher than the white attrition rate during the same period. 

The group  intends to present these findings in a searchable online database for the use of law students and clients looking for firms committed to diversity. 

The upshot seems to be (apart from the usual "if you torture statistics enough, you can make them say most anything") that some firms are showing what looks like at least even-handedness (to the extent they choose who is leaving), if not downright determination to keep their workforce diverse.  And some clearly aren't.

Diversity is what firms do.
 

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Just a heads up on those initial reports that the recession has not impacted minorities and women in the legal profession.  The most recent data from a survey done by the Minority Corporate Counsel Association shows that fewer minority candidates are being hired and promoted, and they are leaving their jobs at a faster clip, while women seem to be holding their own.

The number of summer associates hired in 2009 dropped by 20%, and the past year's summer class had the lowest percentage of minority students in three years. The percentage of minorities hired by law firms at all levels in 2009 was 19%, compared to nearly 22% in 2008.

And for the first time in seven years, the percentage of minority equity partners did not increase but remained virtually flat, nudging up from 6.05% in 2008 to 6.06% in 2009 at the 263 law firms surveyed.  Meanwhile, minority attorneys left their firms at higher numbers in 2009. They represented 13.4% of the attorneys at the firms surveyed, but accounted for nearly 21% of those leaving during 2009.

The survey did find a little good news on the diversity front: there was a small increase in minority non-equity partners — from 8.5% in 2008 to 9% in 2009, and the percentage of minorities serving on management committees and in executive positions inched up to 5.5%.

Women evidently came through the year with a small gain, constituting 16.8% of equity partners in 2009, compared to 16.5% in 2008. Their numbers also grew in the non-equity ranks and on management committees. 

Of course the concern is that in a continuing hunkering down mode, firms will not return to pre-recession diversity levels any time soon, presenting the danger that what is for now a one-time drop in minority recruitment, promotion and retention could have a long-term impact on overall law firm populations. And thus on the integrity and effectiveness of client service and therefore on the future growth of revenue.
 

P.S. As a follow-up, NALP just published their own survey data with substantially similar conclusions. Nationally, the proportion of women and minority associates in law firms dropped slightly for the first time since NALP began collecting statistics in 1993. The percentage of women associates slipped from 45.66% to 45.41%. The percent of minority associates dipped from 19.67% to 19.53%. Partner ranks showed gains nationally for women and minorities, though the drop in associates meant law firms as a whole became less diverse.  

In New York, minority associates dropped to 23.25% this year from 23.95% in 2009, and minority partners dipped to 6.29% from 6.38%.  The proportion of women associates was relatively flat at 44.97%, and women partners increased to 16.99% from 16.85%.

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Over the last few weeks, GCs have used the opportunity to speak out from lecterns at various  events about what they expect from their outside lawyers.  Here's a short collection with more to come.

Diversity

"No corporate law department ever hired or fired an outside firm because of their diversity despite all the noise about corporate diversity objectives."  Or so one pundit out there contends. 

At a recent NAWL conference, Walmart's Associate General Counsel Kerry Kotouc gave a name and face to the retort to that contention.  Walmart's legal department asks candidates for outside counsel extensive questions about diversity in their firms and on their proposed Walmart teams, according to Kotouc. 

More importantly, the department also looks into the underlying truth behind the answers.  Are these diverse lawyers only showing up at pitches and on team lists or are they really an important laboring oar on Walmart's matters? 

In particular, Walmart wants to know that their lead lawyer is the one getting compensation credit for their role--origination credit or relationship credit, as appropriate, says Kotouc.  Which has resulted in some frank discussions with firm managers about firm compensation structure generally and who is getting what when it comes to compensation with respect to Walmart's matters specifically. 

Bottom line, Kotouc assures us that Walmart has hired or fired a number of firms based on that diversity information.

Compatibility

Sabine Chalmers, Chief Legal and Corporate Affairs Officer at AB InBev, the largest global brewer and one of the world’s top 5 consumer product companies, pleaded with outside counsel this past week to do something they might not have heard before:  choose lawyers for her matters who are compatible with her inhouse team. 

Of course, to do that, firms must know the client well-- its business, culture and even the individual lawyers working there. Chalmers is already more than annoyed when outside candidates or even engaged counsel order Coors instead of Bud, or Coke instead of Pepsi. But of course knowing your client goes further than knowing its products--Chalmers wants firms to understand the tone and style and objectives of the legal departments AND individual lawyers well enough to identify compatible outside lawyers to work with them. 

Lest this seem an odd or ultimately irrelevant request, note that BTI found in a not-too-distant survey that personality issues were one of the top 4 reasons cited by inhouse counsel for firing outside counsel.

The initial obstacle in doing what Ms. Chalmers wants is that we lawyers aren't always so good at assessing our own or others' personal styles.  Additionally, we aren't always so great at the old-fashioned relationship building skills that should ensue. 

How to identify differences in style? While there is no hard data, there is good evidence that many lawyers who leave law firm practice to go in-house are doing so at least in part because they are uncomfortable with their current law firm culture.  So in-housers as a general matter may in fact have a different style or prefer a different culture than their out-house brethren, particularly those at the firms they came from. Some inquiry as to the inside counsel's professional history might be a place to start. 

What Ms. Chalmers hopefully didn't intend to request is that outside and inside lawyers' personal styles be the same. There is always an advantage for working groups to include different strengths and approaches.  In this case, seeing both the big picture and the practical details, attending to both risk awareness and support for innovation, and a myriad other complimentary strengths are necessary to forge the best strategy. It would be a mistake to stack teams too heavily on one approach in an effort to reach compatibility.  

But even if teams have this "substantive" balance, the devil is often in the interpersonal styles that may keep those strategies from being effectively implemented--such as competitiveness, defensiveness, non-responsiveness and other communication problems, and dominance. The shorthand in the corporate counsel world for these tendancies in outside counsel is "arrogance."

The Scope and Purpose of Assignments

Marty Candiello, formerly General Counsel at Sunoco Chemicals, also emphasizes the importance of outside counsel really knowing their client--such as knowing the stock price, since the legal spend figures directly into shareholder value.  Knowing what kind of answer she expects to an assignment and what resources to throw at that answer is another priority for Candiello's outside counsel.  Candiello became known as "the 80% lady" because in many cases she wanted only the answer likely to be 80% right, to be achieved without throwing all the troops at the issue.

And if you're up for physical mutilation in the name of client service, Jeff Carr, Vice President, General Counsel & Secretary at FMC Technologies, suggests that outside counsel cut off one of those hands--"Don't give me on the one hand, on the other hand, just give me the bottom line advice."

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The American Lawyer recently published its A-List, AmLaw's "look beyond pure dollars to quantify the 20 most successful law firms."  What it "looks" at to make that assessment is revenue per lawyer, pro bono commitment, diversity and associate satisfaction. 

AmLaw tips its hand about the continuing importance of dollars by double weighting revenue per lawyer, but also double weights, interestingly enough, pro bono commitment. The latter almost single-handedly accounts for the two new arrivals -- Paul, Hastings, Janofsky & Walker and Finnegan, Henderson, Farabow, Garrett & Dunner. 

But the biggest movement in the A-List this year compared to last is in the widening range among these firms in rates of associate satisfaction--an average 23% swing--and the impact that has on which firms are designated most successful. 

Lower associate satisfaction scores contributed to the exit of four firms from last year's A-List: Howrey, Irell & Manella, Kirkland & Ellis, and Sullivan & Cromwell.  And a 44% increase in its associate satisfaction score, reflecting a commitment to lockstep pay and communication, according to AmLaw, propelled Debevoise & Plimpton up to number three.

Of course this is the first list to emerge since the 2009 layoff/furlough/delayed entry debacle, so perhaps some volatility should be expected. 

AmLaw concludes its roll-out of the A-List with the statement that "Associates' power may have diminished during the recession, but not when it comes to the A-List." 

The question is:  Why not?

During a period of short-term cost cutting and expectations of long-term reduced growth, when law schools continue to churn out the same number of graduates, many of whom are competing with the lawyers already axed for a smaller number of law firm jobs, why does associate satisfaction really matter much any more?  Aren't there enough junior lawyers out there who will knuckle under and produce results sufficient to fuel the chugging machinery of our law firms without law firms expending the money and effort needed to prop up associate satisfaction rates?  Aren't law firms, in a long-awaited pendulum swing, back in a buyer's market?

The short answer is yes and no.

Yes, there are plenty of bodies for sale.  While law school applications fell for awhile (prompting concern that the quality of graduates must be going down), they have most recently gone up again. In any event law schools continue to produce the same number of new lawyers, and many of those grads continue to prefer to join larger practices (instead of joining the ranks of solo practitioners, for example, which account for over 70% of lawyers in the United States).  All of which puts law firms that boast nothing more than jobs to fill in an enviable position.

So can't a firm ease up on its satisfaction efforts?  Where else, exactly, are these lawyers going to go?

Contrary to that recently spreading, though often unspoken, line of thinking, associate satisfaction is still important--firms should shoot for the competitive advantage that higher satisfaction produces. 

Getting the right answer to a client is not what distinguishes a firm from the rest of the pack these days.  Senior partners at good firms across the country are able to deliver spot-on expertise and client service.  What distinguishes top-tier firms from the rest is the depth of their teams--allowing them to truly leverage their partner skills through the use of competent junior lawyers. Educating and keeping the "keepers"--the young lawyers who are able to do more than just warm the bench, who can bring real value to a firm and its clients--is still the big challenge for firms that want to be at the top, regardless of the drop in industry attrition rates.  

Gen Yers in particular, in search of a portable career, are often going to firms to build their resume, pay off loans and get some substantive training.  Not necessarily to stay, regardless of their credentials.  A recent study indicated that 3/4 of the best reviewed associates are not interested in a biglaw practice. In the UK, the percentage of associates wanting to stay for partnership has dropped from 50% to 38% just in the last 2 years.  Whatever these statistics mean in terms of attrition, they do not bode well for firms who want to provide the best client service.

Nor is this just an issue for today. Fewer associates will be going through most firm pipelines, making the value of each of them even greater and the importance of a high rate of retention more critical.  So we must recruit carefully, train well, and provide reasonable support --to deepen the bench, yes, but also to be in a position to nimbly address opportunities to expand and to replace retiring partners. 

So looks like AmLaw may be right.  There is power in having bright associates interested in and well suited to firm life who are committed to their firms and enjoy what they do.

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In addition to the factors we pointed out as relevant in evaluating the Sotomayor Supreme Court nomination, recent studies provide some additional insight into the impact of minority judges just in time for consideration of Kagan’s SCOTUS nomination.

The ABA Judicial Division reported this spring on two studies conducted by the University of Pittsburgh School of Law and Carnegie Mellon University’s Tepper School of Business, one of which examined 40% of reported racial harassment cases from six federal circuits from 1981 to 2003 while the other reviewed over 500 Title VII sexual harassment and sex discrimination cases. In the second study, plaintiffs were at least twice as likely to win if a female judge was on the appellate panel.

 

In the racial harassment cases, African-American judges were significantly more likely to find for plaintiffs (46%), compared to Hispanic (19%), white (21%) and Asian American (33%) judges, a finding which both supports and refutes the idea that those who have experienced being a racial minority may be more sympathetic to minority plaintiffs. While Kagan is Jewish and results for that ethnicity were not reported, the general conclusion remains that diversity breeds diverse trends.

 

Does this mean that the law is so variably applied as to preclude justice? 

 

One of the authors of the study, Professor Pat Chew, takes the position that the rule of law in these cases remains intact—all judges, regardless of their own profile, took the same procedural steps to reach their decisions, while taking different approaches to interpreting the facts. She compared these disparate results to those obtained when controlling for judges’ political affiliation—a factor that also significantly affects outcomes.

 

In a federal court system where 20% of judges are women and 15% are members of minorities, the decisions currently being made are obviously more reflective of those of white males than the spectrum of American ethnicity and gender. But in an increasingly diverse world, that is likely to change.

 

These kinds of studies always segue into an examination of the feeder systems for the judicial system—law firms across the country. The stats there, particularly as a result of the Great Recession of 2009, are not encouraging for the future. While large firms lost about 6% of their total lawyers in 2009, 9% of Asian-Americans, 9.7% of Hispanics and an astounding 13% of African-Americans (and 16% of African-American non-partners, or roughly 1 in 6), lost their lawyering jobs there. While some firms have been able to register gains (see “Diversity Scorecard 2010”), these statistics on overall loss of diversity show what a major setback has occurred in those firms where the resolve to improve law firm diversity is fragile. See “Law Firms Must Act to Offset Diversity Setbacks.”

 

At a time when the number of non-whites in the workplace will start to outstrip whites, building an environment that acknowledges and addresses the challenges that diversity presents is a priority for all firms. Understanding differences in the “interpretation of facts,” as the studies above noted, is an important part of understanding diverse perspectives—and succeeding in court. 

 

Another factor that invariably impacts the rise of minority lawyers is a firm’s compensation system, and specifically origination credit. We already are documenting the difficulty that women partners have in capturing their share of origination. See “Female Partners Bullied Over Compensation.” Helping minorities and women realize their share of law firm success in the increasing diverse world where firms will be forced to operate should be on every firm’s agenda.

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Steve Brill, the initial publisher of The American Lawyer, some 30 years ago invented the AmLaw 100 and began reporting comparative financial figures for that group of firms. Surprisingly enough, firms submitted that information for him to publish, showing definitively how much money lawyers make on the backs of their clients.

Unclear Payoff

Why do private law partnerships, who are under no regulatory or other compunction to do so, publicize their personal financial information?  Is it just sheer competitive cussedness? Does the “status” of being in the AmLaw 100, primarily a gross revenues barometer, actually improve marketing success?  Does a client check who has the highest Profits Per Partner (PPP) before hiring a firm? Or is the “market” firms are courting primarily new law school graduates and potential lateral hires, whom they can point toward “data” that shows “Here is where you make the biggest bucks.” Perhaps it is just another example of herd mentality: once a group of law firms signed on to report, other firms couldn’t abide being left out.

Yet this disclosure practice seems as likely to backfire as help, particularly in this climate.  It used to be that high end real estate and flashy interior decorating were thought to be the indicators of a firm that made too much money and therefore must be charging clients too much.  These days, touting the highest industry profits is rarely applauded—see the response to the profitability of Goldman Sachs. Why would those announcing the highest law firm profits get a different reception? A recent Lexis/Nexus survey found that 58% of in-house general corporate counsel believe their outside lawyers are simply making too much money--no doubt further emboldening them in their demands for reduced hourly rates and alternative fee arrangements.

Suspect Data

Whatever the reasons firms decided to publish this information, the data itself is usually highly suspect. Firms often manipulate their finances in order to report the best possible numbers. There are no GAAPs on this unmandated reporting, no audited statements, no footnotes or explanations, no requirements to disclose material information, so in determining PPP, for example, income is moved, equity partners are de-equitized, accounting years are redefined, and PPP magically rises, all without changing the reality of profits.

Which has produced some interesting results.  For example, the difficult year of 2009 saw generally decreased revenues and wholesale elimination of timekeepers, yet many firms nonetheless reported increased profits, and without any note of their having significantly ramped down their operations, a negative indicator for future performance. Further, results reported in one media outlet for a number of firms do not always correspond with the results reported in others.

"No More PPP"

So it is of great interest that Ralph Baxter, chairman of Orrick, Herrington & Sutcliff, announced on May 12, 2010 that Orrick will no longer publicly report Profits Per Partner. According to the announcement:

"When law firms first started reporting the Profits Per Equity Partner metric in the 1980's, partnership structures were more traditional; partner roles and contributions were less varied, and the legal business much simpler. Today, firms have made significant changes to their partnerships and business models. These changes, among others, mean that Profit Per Equity Partner data actually provides little insight while maintaining an aura of undeserved transparency."

The American Lawyer's A-List, which measures the top 20 firms based on a mix of associate satisfaction, diversity and pro bono contribution, and revenue per lawyer, exemplifies the direction in which Orrick is moving its law firm scorecard.

"Today, more than ever, the Profit Per Equity Partner metric simply does not tell the market how profitable a firm is, how efficiently it is run, how well it serves its clients, how well it treats its people, or how committed a firm is to pro bono work, its community, and diversity," said Baxter. "Clients and others have made it clear that the metric actually creates the impression that firms manage to the metric to make themselves look good, rather than managing for their clients, their people, and a sound long-term strategy. "

While many firms have been wary of Orrick's decision, most consultants' reactions, as recently reported, have been uniformly favorable:

•  “In a rational world, firms would either keep their financial numbers private or would disclose information according to a uniform and regulated set of accounting guidelines, backed up by an accountant’s certification.” Jerry Kowalski, founder of legal consulting firm Kowalski & Associates
•  “1 think one of the most misleading of all public financial figures of law firms is in fact PPP.” Gary Klein, founder of legal recruiting firm Klein Landau & Romm Inc.
•  “The weaknesses of the profits per partner model ‘hit home’ during the recession, when law firms in the midst of unprecedented layoffs also posted excellent PPP results.” Toni Whittier of Whittier Legal Consulting

Of course, the next question is what, if any, metric should replace PPP.  Evidently Orrick is working on a law firm equivalent of “earnings per share.” One easy alternative that is already being calculated at many firms is Revenue Per Lawyer (RPL), a figure that takes into account gross revenue minus expenses, divided by the number of full-time lawyers at a firm.

Considering the changes in the legal industry, additional metrics like rates of growth in revenue, operational efficiency, lateral hires, major representations, alternative fees and, especially, client satisfaction could all be informative.  But assigning numerical values to these “soft” measures can be a challenge.

Client Satisfaction

We expect that rates of client satisfaction, an index that attests to the overall ultimate value of legal services, will become a more touted metric. Checking in with your clients offers the additional advantage of simply being good business—something 80% of corporate general counsel say they expect and only 20% of law firms do.  

We have the technical and interpersonal capability to help you design and implement a protocol for insuring that clients are contacted at the appropriate time via an appropriate method with expert followup and analysis to produce high client satisfaction ratings, as well as high client satisfaction.

 

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An article based on Muir's blog entry "What do Women Want? Challenging the Diversity Myth" has been published in the ABA's April 2010 webzine Law Practice Today. The issue focuses on effective diversity strategies in law practice management.
 

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From 2:00 pm to 3:15 EST on Thursday April 29, 2010 Muir will lead an audio conference discussion hosted by the Center for Ccompetitive Management (CCM) entitled "Lateral Partner Hires: Selecting and Integrating the Best Fit for the Firm," centering on the issues associated with hiring and integrating lateral partners. A record number of lateral partner moves were made in 2009 and 2010 is shaping up to be another record year.  Don't miss this chance to maximize your firm's efforts to grow while avoiding the expensive pitfalls of lateral partner attrition.

For further information and to register, go to http://www.c4cm.com/lawfirm/lateral-partner-hires.htm. 

 

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It was my great pleasure--something I don't often say about a conference-- to attend this invitation-only gathering last week, March 21-23, of both august and up-and-coming law industry professionals as they prognosticated the future of our practice and what that might in fact look like up close for a broad array of providers and clients. 

While I will digest and relay over the next few weeks a number of interesting findings and tantalizing predictions that were discussed, let me summarize a few currents that are of particular interest to me.

One, notable is the influx and rising success of non-lawyer services in this emerging marketplace, whether those services are provided by in-house specialists in law firms, wholly-owned subsidiaries of firms, or independent companies.

Two, changes making their way into law firms are both reducing incoming associate classes and also raising the ante for efficiently training and promoting those associates, with the result being that firms are experimenting with more discriminating approaches to hiring and more sophisticated methods of providing professional development.

Three, perhaps as a corollary of at least the first point above and probably the second point as well, law firms are becoming truly more diverse workplaces that respect and rely on the contributions of non-lawyer sociologists, MBAs, IT specialists, project managers, psychologists, accountants and other professionals to more efficiently analyze, structure and deliver services responsive to client needs.

Stay tuned for the  review of this conference's exciting topics.

 

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Muir will be a panelist at the Women Lawyers Alliance's (WLA) Inaugural Spring 2010 Conference: Rainmaking Equals Influence to be held May 13 and 14, 2010 at the Wyndham Hotel in Chicago, Illinois. The conference is designed to help women achieve their full potential and will focus on equipping them with the skills to help them reach their individual rainmaking goals.

Muir will participate in the panel entitled "Is It All in My Head?" with two other experts discussing how gender and gender differences affect women and their aptitude for developing business and becoming successful leaders in their firms.

For more information, visit WLA’s website at http://www.wlalliance.org/conference.html.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The recent 5-4 Supreme Court ruling on the New Haven Fire Department vocational advancement exam in Ricci v. DeStefano once again stirs the waters on the question of how to choose the best from among a crowd. (See our entry "The Outliers of Law--Embracing Heresy".) The "best" in this case was determined to be simply the highest scorers, even if those scores seem to imply discrimination against a particular group. 

What's Sonia Got to Do With It?

A lot of press has been devoted to parsing whether Sonia Sotomayor's vote with the majority at the appeals court, which affirmed throwing out the test results, implies her personal position on affirmative action.   

A look at Sotomayor's own test scores gives an interesting gloss to the discussion.  She was, by her own admission, an "affirmative-action baby" who did not do well on her SATs  and LSATS, or at least not as well as her fellow students at Princeton and Yale.  Yet she went on to graduate from Princeton with highest academic honors and has reached the upper echelons of law practice.  As Walter Kirn said in a recent New York Times article about his own experience at Princeton, "the poorer and browner of my classmates — particularly the women — seemed to study twice as hard as I did, clocking endless hours in the library and forgoing weekend parties for late-night cram sessions. Maybe their SAT scores were lower than mine, but they ranked higher than I did on the effort scale. And on the bravery scale too." 

So was this a case of retrospective justice-making by Ms. Sotomayor? 

Regardless of what Sotomayor was doing in the public sector, the glaring lesson to be taken from her own story is that aptitude assessments are not the last word on potential for achievement.

The Texas Experiment

In 1997, Texas House Bill 588, better known as the "Top 10 Percent Law," was passed, guaranteeing high school graduates who ranked in the top 10% of their senior class, regardless of their SAT or ACT scores, admission to a state institution.  While hotly contested at the time as risking the influx of less able students, it is a law that school administrators and legislators agree "by any measure of public policy is a success."

Not only did the 10% plan in Texas get more minority students into top public universities with race-neutral criteria, it spawned similar programs in California and Florida and the consideration of many other states. (Due to its immense popularity, last month the Texas Legislature agreed to limit to 75% of its freshman slots the number from the program that their flagship school, the University of Texas at Austin, had to admit.)  According to the most recent issue of Inside Higher Ed, "every internal study that... the UT system conducted and every external study has shown that the 10 percent students, relative to others, have done better by any measure -- lower attrition rates, graduate in shorter time periods," etc.

As Malcolm Gladwell wrote in his 2001 New Yorker article "Examined Life": "Critics of the policy said that it would open the door to students from marginal schools whose SAT scores would normally have been too low for admission to the University of Texas—and that is exactly what happened. But so what? The 'top ten percenters,' as they are known, may have lower SAT scores, but they get excellent grades. In fact, their college GPAs are the equal of students who scored two hundred to three hundred points higher on the SAT [emphasis added]. In other words, the determination and hard work that propel someone to the top of his high-school class—even in cases where that high school is impoverished—are more important to succeeding in college (and, for that matter, in life) than whatever abstract quality the SAT purports to measure. The importance of the Texas experience cannot be overstated."

Predicting the Best Lawyers

A number of studies have looked for what might predict eventual success as a practicing lawyer. Evidently LSAT scores, and not undergraduate grade point averages, are the best indicators of academic performance in the first year of law school, and academic performance in the first year of law school appears to be the best predictor of whether the new graduate will pass his/her state bar exam on the first attempt. There is also a very strong correlation between the personality attribute of pessimism and law school grades, i.e., the higher the pessimism, the higher the grades.

But none of these factors--undergraduate grades, LSAT scores, law school grades--gives us the key to determining who is likely to be at the top of the lawyering heap. 

A New Kind of Test

Continue Reading...

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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. 

 

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Regardless of what you think of Sonia Sotomayor's politics, President Obama has touted his Supreme Court nominee as having two distinct qualities that he implies our judges don't always have:  practicality and empathy. 

What is the likelihood that any such description of her is correct?  And on what basis can we make such judgments?

A look at what we know about lawyers' personal styles as shown on various assessments indicates that, indeed, lawyers are most likely to be "high concept" thinkers, or "Intuitors" according to the Myers-Briggs Type Indicator (MBTI).  Over half of lawyers are Intuitors, while only 1/4th of the general public are. That type of thinker stands in contrast to those who are more concrete and thus better able to see practical implications--the MBTI type called "Sensors." Almost 3/4th of the general public but less than half of lawyers are Sensors. Perhaps Sotomayor's reputation for being practical arises from her being in that smaller group of more concrete lawyers.

Lawyers are also more likely than the general public to be MBTI "Thinkers" instead of "Feelers," a distinction that recognizes how people make decisions.  Thinkers rely more heavily on objectivity--stepping away from the issue, while Feelers are more likely to make decisions using empathy--putting themselves into the scenario to see what it feels like.  More than three-quarters of lawyers are Thinkers, while less than half of the general public is.  This decision-making style is also the one MBTI type where gender plays a role--about half of men in the general population are Feelers, as are 2/3rds of women.  Among lawyers, 4/5ths of male lawyers and 2/3rds of female lawyers are Thinkers.  As a woman, Sotomayor has a statistically better chance of being more inclined to empathic decision making.

Armchair psychologizing obviously has its risks, but simply looking at the MBTI odds makes it likely that there is in fact a basis for thinking that practicality and empathy are in shorter supply among lawyers, and therefore among judges, than out in the rest of the world.  So regardless of her various policy and political leanings, Ms. Sotomayor might in fact be able to bring those very attributes to the Supreme Court bench.

 

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

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

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

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

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

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

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

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

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

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

OK everyone, team up!

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

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

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

Which One Are You?

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

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

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

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

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

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

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In a February 8, 2009 New York Times op ed column entitled "Mistresses of the Universe," Nicholas Kristof notes that senior staff meetings of Wall Street types resemble “a urologist’s waiting room” and suggests that "Wall Street could use an infusion of women as well as cash." 

Having more women in financial services might counter some of the risk-taking and competitive urges fostered by high levels of testosterone and would improve decision-making, according to the research Kristof cites.  In addition to suffering from testosterone-overload, men are also found in the studies he cites to be “particularly likely to make high-risk bets when under financial pressure and surrounded by other males of similar status. Women’s risk-taking was unaffected by this kind of peer pressure.” 

Of course, women managers also have their Achilles heels. The January 2009 Harvard Business Review includes a 360-degree feedback study by Herminia Ibarra and Otilia Obodaru that finds that female leaders are perceived to be strong in traits such as tenacity and emotional intelligence, but trail men in one important aspect: their superiors, peers and subordinates say that women leaders lack vision.

Better Performance in Diversity. Regardless of our specific gender strengths and weaknesses, the data on the advantages of having diverse management is piling up. Two separate studies in 2008, one by Catalyst, an organization that supports expanded opportunities for women at work, and the other by management consultant McKinsey & Co., looked at gender in management and found that companies with more female executives perform better. 

Why would that be?  University of California-Irvine professor emeritus Judy Rosener says brain scans prove that men and women think differently. Rosener says she's concluded that a company with a mix of male and female leaders, with their differing attitudes regarding risk, collaboration and ambiguity, will outperform a competitor who relies on the leadership of a single sex.

Women aren't better, Rosener says, but they bring to the table something that men don't.

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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.

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

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

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

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

In addition, a good coach is one who listens.

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

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

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

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

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

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

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

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

Happy new year!

 

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Norton Rose, a 200 year old UK firm with over 1000 lawyers in 20 offices around the world, is considering scrapping its academic requirements for new hires in order to increase diversity.  How then to decide who to bring on board? 

Like a number of leading UK law firms, it will rely on aptitude and psychometric testing instead.  Lovells, CMS Cameron McKenna, Linklaters and Clifford Chance all already use some form of testing as part of their selection process. The approach is expected to be particularly effective in efforts to recruit international students who may not meet UK academic guidelines. 

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Regardless of your politics, the last year has been a fabulous display of woman-power in the political arena. For the first time in American history, a woman was a major contender for her party's presidential nomination, and came damned close to winning it.

Without Monday morning quarterbacking her entire campaign, there are some interesting nuggets to retrieve from her run, perhaps telling us something about the future of women in politics and in power generally.

As someone who assists women lawyers in developing good business producing skills, I was interested to see the following note about Senator Clinton in the Sunday, June 8 New York Times:

"Unlike her opponents, Mrs. Clinton refused to make solicitation calls to donors and had to be talked into calling the party officials known as superdelegates."

Sound familiar?  Hesitation to make direct appeals for support is a recurring theme in the work I do with women. Results should speak for themselves, they say. I shouldn't have to ask. Who wants to be a squeaky wheel? Men, on the other hand, I find, tend to take the attitude that if they don't ask, how can someone say yes, and that if they are not the ones to champion their own cause, why expect others to?

What seems to underlie the hesitation on women's part to "ask" is a fear of having to deal with rejection and also an uneasiness about putting the relationship at risk.  What if they say no? What do I do/feel? And what happens to our relationship then?

There is an argument that this kind of sensitivity makes women better in the relationship building department, a critical part of developing business.  So is this a tendency that should be overcome or preserved? The answer is both.  The sensitivity should be protected but the kind of fear that immobilizes should be allayed.   Good relationship builders know how to keep the relationship even if there are disagreements.  Good relationship builders survive rejection and help the relationship survive as well. 

Learning and believing the self-talk and attitudes that help overcome the hesitation is one way to start coping with the fear. Taking the risk and then seeing that the results are not as scary as anticipated also helps.  It is a matter of venturing into the unknown, or what has been projected to be a distasteful known, with good intentions and a willingness to listen.  So you get the benefit of both high sensitivity and, hey, if you don't ask, how can they say yes?

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

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

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

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

What Law Firms Are Doing

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

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

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

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

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

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

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

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

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

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

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On February 12, 2008 Muir is scheduled to discuss with students at Northwestern University's Business Institutions Program how to improve decision-making.  Based in large part on the information contained in "Promoting an Effective Board or Management Group," the discussion will explore, among other subjects, optimal personality traits for good decision-making and how to avoid extreme decisions.

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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.

 

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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?

 

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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.

 

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In a report released October 1^st, Catalyst, a New York consultancy, found that Fortune 500 companies with at least three women on their boards strongly outperformed those companies with fewer or no women. Based on a study of four years of corporate results, the correlation was found to be so direct that the more women who serve on a board, the better the bottom line. 

The companies with the highest percentage of women on their boards had equity returns 53% higher, returns on sales 42% higher and returns on invested capital at least 66% higher than those companies with the least number of women board members. Higher returns kicked in once at least three women served on the corporation’s board, the study found, with companies having only three women board members raising each of those returns an average of 5% over corporations with fewer women.

Why would female board participation produce such concrete financial results? Various consultants and academics speculate that women are better able to understand the customer base, particularly of consumer goods companies, and that showcasing women on the board helps attract and retain women employees throughout the company. 

Another reason may well be women’s often strong collaboration skills, empowering them to better resolve conflict and move boards through the thorny discussions necessary to make and carry through critical decisions.

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"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.

 

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

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

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

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

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

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

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

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

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

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

 

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

 

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

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

Participants raved:

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

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

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The linchpin to forging a solution to the associate recruitment/retention/compensation issue may be getting partners to acknowledge that partner profits, hotly negotiated, carefully calculated and closely compared, have to take a hit.  Accounting firms have managed to significantly lower their attrition rates and achieve strikingly higher diversity than their law firm cousins in part by sacrificing some portion of partner profits.

The Logic of Lower Partner Profits

Lower partner profits seem almost logical when today's associate pay is compared to historical ratios of partner profits, according to a recent National Law Journal article.  As a percentage of average profits per partner, the starting salary at top law firms is at its lowest level in a decade.  In 2005 new associates at 500+ lawyer firms made 11.7% of the amount partners earned, the smallest proportion over the last 10 years.  By contrast, new associate salaries at the AmLaw 100 were 15.4%of partner profits in 2001, the highest percentage over that same time.  While new lawyers at smaller firms earned a higher proportion of profits, their percentages have declined in recent years as well.  (The article notes, however, the methodological challenges posed by combining different sources of data to reach these conclusions.)

Surely no one is arguing that some set ratio should be rigorously maintained regardless of the larger economic scenario.  Or even if they are, that it could be.  Associate salaries are set for the year ahead, and are paid regardless of the legal industry's or the individual firm's profitability that year.   Partners, on the other hand, ride the wave of  what could be a banner year, like 2005, or a financial dog, like 2001.  No one asks associates for money back when the firm's economic projections have turned out to be too rosy, and few would argue that associates should be entitled to the same degree of additional compensation that partners realize in an unexpectedly good year.  So the variations cited above may well be left as just that-- the vagaries of profitability.

The general consensus is, anyway, that without any further ado the gap between associate salaries and profits per partner will narrow over the next few years as a result of an anticipated plateau in overall law firm profitability, which is being negatively impacted by the escalating race for qualified law school graduates, among other things.  See our February 20, 2007 entry "The Looming Associate Crisis and What It Means For Your Firm."  Salaries will have to rise for firms to stay competitive and partners will be the ones who finance them.  Simpson Thatcher, for example, the firm that started this latest round of raises, will, because of those raises, reshuffle approximately 2% of the firm's anticipated net profits for 2007, or at least $8 million, to its 520 associates, for a minimum contribution of $50,000 per equity partner.  And there is no anticipated increase in demand for legal services.  In fact, there are credible arguments that the legal business, like nearly every other industry, may well see a concentration of demand and streamlining of delivery over the next decade or so.

The Necessity of Lower Partner Profits

But still firms may have to contemplate even lower partner profits.  Hiring associates and keeping them are two different matters.  After high salaries have landed associates, it might be that only rejiggering the traditional law firm business model can make them stay for what seems to be the increasingly unattractive partnership prize.  Higher associate salaries put more pressure on productivity and hours, exacerbating precisely the quality-of-life issues that apparently make junior lawyers so unhappy.  See our February 14, 2007 entry "What All That Money Is Buying You."  Particularly for Generation Xers, Yers and beyond, the benefits and lifestyle that are their stated priorities may not only be a matter of steadily higher (and expensive) compensation, but, just as intrusive to partners' pockets, also require hiring more bodies to accomplish the same amount of associate work.

Leverage statistics often get bandied around in the discussion of associate salaries and partner profits.  Leverage has always been a two-edged sword: both an engine for producing more revenue when business is plentiful and an albatross around the neck when business turns south.  Interestingly enough, according to the (possibly skewed) NLJ statistics, over the last decade, law firms of all sizes turned out to be the most highly leveraged in some of the least profitable years-- 2001 and 2002.  But the kind of leverage we are talking about possibly evolving is the worst of both worlds-- leverage that produces no more additional revenue and, once again, higher expenses.

So it is partner profits that will suffer.  This is a difficult pill to swallow.  No one likes to see their compensation heading south, least of all the lawyers in your firm making the most money, i.e., those with the most seniority, the highest productivity and the strongest ties to clients:  the very ones who may well be billing more hours than the associates whose salaries they are being asked to subsidize.  The pundits say that firms will continue to raise either associate hours or hourly rates before they ask partners to pony up.  The alternative is too risky.

Firms are Already Lowering Partner Profits

Continue Reading...

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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?

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In a study conducted last fall of managing partners, general counsel, and other legal leaders, Altman Weil identified five key market trends and critical concerns.  It noted that people management was one of the highest priorities on everyone's list, with one partner saying that he goes to sleep "never knowing who might be leaving tomorrow."  The limited pool of quality law graduates, the "free-agent mentality" of lawyers from new associates to rainmakers, Gen-Xers emphasizing work-life balance and achieving diversity were all cited as challenges to people management by this august group. 

To my mind, the other four critical areas identified-- growth, competition, client service and even pricing-- are also each dependent on achieving effective people management.  Growth requires wrestling with "cultural, office and practice integration," competition is felt most dramatically in the "war for talent," with quality people, superior client service skills and strong training and development programs giving firms the competitive edge.   Client service requires superior communication and relationship, among other, skills, and "improved project staffing." (See our entry today on KPMG's success with their staffing model.)  Even pricing is acknowledged as a function of the quality of a firm's work and service-- which general counsel have consistently linked to people skills.  (See our entries Do You Know Why You Were Fired? dated November 8, 2005 and Companies Unhappy with Their Law Firms dated December 20, 2006.)

So why do law firms and law departments not take advantage of the extensive body of expertise available on hiring, retaining, developing and motivating people?  Maybe, as David Maister has suggested, it is the herd instinct that keeps them from going for the glory-- rather go down as a group than risk a "new-fangled" approach.  Interestingly enough, that is what our psychological profiles of lawyers tell us-- that they are risk-averse, often low in resilience, optimism, and emotional intelligence, all of which has helped mire them in an 18th-century business model. 

Here's the question-- which firms will be the real leaders, the ones who actually take the out-of-the-legal-box steps toward addressing these critical people management areas?  Because there seems to be a consensus that that is the only effective way forward.

 

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Accounting firms have long been ahead of law firms in innovative management strategies for personal service firms-- and as law firms head toward numbering thousands instead of hundreds of lawyers, there is much we can learn from how accounting firms manage people.

At a two-day ARK Group conference in December on Women in Professional Service Firms, Sandra Bushby, KPMG's national director of Women's Initiatives and other Workplace Solutions, recounted how KPMG uses workstyle assessments, particularly the "color-coded" Birkman Method, to put together successful client and project teams.  The firm-wide assessments were undertaken primarily as a risk management strategy-- to build teams that have the varied talents to insure that everything from technical details to interpersonal skills to long-term visionary considerations are fully dealt with.  But by balancing teams with accountants with red, green, yellow and blue workstyles, KPMG is finding that it is also achieving an unexpected bonus:solving the diversity puzzle-- creating culturally, gender and racially diverse teams.

Law firms, whether big or small, have a world of insight available to them from the use of assessments, which they often do not take advantage of.  Lawyers will contend that law is too "technical" or "expert' a service for personal or work styles to have any impact on success.  Yet accounting is no less technical, and accounting firms have had to become expert in drilling down to the most effective risk management tools available-- which style assessments unquestionably are.  To have the additional bonus of effectively producing diverse teams without resorting to "affirmative action" add-ons is ground-breaking-- a one-assessment-for-all-purposes bonanza.

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Women have suddenly become scarce among the Supreme Court Justices’ clerks, the New York Times reported August 30, 2006. While 50% of law school graduates in 2005 were women, only 7 of the 37 Supreme Court law clerkships are women, the first time since 1994 that the number has been in the single digits. Justices Breyer, Ginsburg, O’Connor and Stevens have cumulatively had the most women clerks from 2000 to 2006, with each averaging 44% women or more.

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The National Law Journal has carried stories on several firms or regions where diversity has taken a front seat. On July 2, 2006, it reported that several Chicago firms had announced their intention to build their diversity numbers, responding to the Chicago Bar Association’s initiative, the “Alliance for Women.” So far, the firms involved are outperforming both their old diversity percentages and the national averages, climbing to as many as 27% female partners. The key, they report, is not in their hiring, which has long been attentive to females, but in creating better environments for female advancement. 

Similarly, the NLJ reported on July 10, 2006 that firms in Texas are making a concerted push to raise diversity levels, hiring internal diversity directors, moving women into leadership roles, and creating scholarship and other support programs. Their efforts have resulted in increased women and minority percentages.

California’s new law that requires managers in businesses with 50 or more employees to undergo two hours of training on sexually harassment each year has been applied to law firms, possibly both partners and associates. Connecticut and Maine also require mandatory harassment training. 

The California State Bar is also working to improve diversity by trying to set up a support network that would help guide poor kids of all races into a legal career, as well as crack down on not only harassment, but simply rude, uncivilized behavior from attorneys.

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Sexual harassment came to the legal profession in 1994, when a secretary at Baker & McKenzie filed a discrimination case against the firm and a partner. In 1998, a California Superior Court jury awarded her $7 million and the landscape of law firm conduct was trumpeted as being in the midst of a major change.  Last spring the news broke that a male partner at Holland & Knight’s Tampa office had been given the job of chief operating partner, prompting a number of complaints about his history of sexual harassment, which had, interestingly enough, not been brought to the attention of the firm’s administrators earlier. After extensive local and national news coverage, he resigned from his management position. 

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The Fifth International Positive Psychology Summit 2006 was held October 5-7 in Washington DC.  Dr. Martin Seligman, the Fox Leadership Professor of Psychology at the University of Pennsylvania, founded the school of Positive Psychology, which focuses on factors that make for professional and personal success, rather than following the traditional diagnostic model of addressing weaknesses.  There were a number of presentations of interest to lawyers.

Richard Florida, an economist, Hirst Professor in the School of Public Policy at George Mason University, author of the bestseller The Rise of the Creative Class (Basic Books, 2002) and The Flight of the Creative Class (HarperCollins, 2005), was the keynote speaker.  The dramatic results of his research found that highly talented people will overcome financial disincentives to join communities and businesses that promote subjective well-being, such as supporting diversity and encouraging tolerance.  His astonishing findings are that it is the people, the "soul of the city," that drives the production of jobs and financial success, rather than the other way around, as classic economics theory maintained.

These findings fit nicely with the results of David Maister's survey on the factors that drive financial success in personal services businesses.  Maister asked simply "Are employee attitudes correlated with financial success?"  In his book Practice What You Preach:  What Managers Must Do To Create A High-Achievement Culture, he expands on the results of that survey.  Not only is the answer "yes", but, more importantly, Maister found that it is attitudes that drive financial results and not the other way around.

The message for law firms and law departments is that, in a world of escalating pay raises but ever-increasing movement, the soul of the firm-- and how it influences employee attitudes and their sense of well-being-- cana be the key to achieving financial success.

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