Law People : Law Practice Management, Law Firm Coaching : Ronda Muir of Robin Rolfe Resources : Law People Blog

Back when we were all focused on raising our retention rate of associates, I also waved the flag about the poor retention rate we have with the lateral partners we hire--a musical chair game that has been in full swing for a number of years and seems to have survived or at least is being revived after the downturn. 

What data we have implies that, while only about 40% of new hire associates last longer than 3 years, an even lower percentage of lateral partners do.  Anecdotally, one can find rates that are astoundingly low--in some firms only one in 4 or more lateral partners work out.  

These are particularly humiliating statistics because, in spite of the ethical constrictions on gaining client and current firm information, we still have MUCH more information about lateral partner candidates than we have about law school graduates: if we haven't personally practiced law across from these lawyers or on the same side of the table with them, we usually have friends, clients or colleagues who have.

I was recently in a roundtable discussion with lawyers addressing this issue.  One managing partner said that both the spectacular successes and the miserable failures of lateral hires seem like random events--how is one to guess? Another managing partner answered that he found that the reasons for a lawyer not working out are often right there in the pre-hire information--but no one paid adequate attention at the time.

Here are a few tips for improving your lateral partner hiring outcomes:

1.  Don't bother to proceed with lateral candidates who want to discuss compensation during the first conversations.  Very few successful lateral changes are made on the basis of a step-up in compensation--those who make a move for that reason will find a reason to move again.

2.  In making your financial calculations, don't assume that the lateral's book will materialize.  Yes, that means you are primarily hiring the person for their expertise and not their client list.

3.  Look for candidates who want a better platform and more support than they currently have, and make sure you can provide it.  The primary reason for laterals leaving these days is failure to find the level of firm support for their practice that they expected.

4.  Be careful of lawyers coming from an entirely different background--small firms, government or corporate counsel if, for example, yours is a big firm.  There are many administrative and procedural differences in these environments, as well as substantive differences (conflicts are not something most of those lawyers have had to think about) that can wreck havoc.

5.  Avoid the institutional drive to hire.  Set up some roadblocks that require a stop and re-think or the momentum of the hunt will result in a hire whether it ultimately makes sense or not.

6.  Plan carefully all aspects of a lengthy, detailed integration.  Think summer associate program, but more substantive.  Where the lateral sits, who the mentor(s) are, how your clients are introduced to the lateral, how the lateral's clients are introduced to the firm, how the lateral will meet other firm attorneys and visit other firm offices, who will work for the lateral, which committees s/he will sit on, what type of specific training the lateral will need and when and by whom it will be provided--these are just the beginning of the long list of considerations. Feeling like an outsider is the second major reason that laterals leave firms.

7.  Make someone accountable for the lateral's success.  This should be a partner of significant rank; it should not be a young partner or someone in the HR department.  Make sure that this person also gets support and recognition, including having their role taken into consideration in the determination of their compensation.  If you don't pay for it, you don't value it.

 

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There are only two bases on which most legal services are ultimately judged: 1) outcome and 2) interpersonal interaction.  Of course, price is important but a wide range in price is tolerated as a function of 1 and 2.

It can be very difficult for a client to judge outcome -- what part of the results in a particular trial or deal was achieved due to one's own lawyer's competence and what might be due to weak or strong witnesses or deal terms, the client's role, poor or great opposing counsel, a sympathetic or simply mistaken judge or just pure luck? Even, perhaps particularly, lawyer clients are not particularly good at determining the interplay of those factors.

Add to that complex situation that lawyers often sabotage themselves. As we noted in the last entry, there is good data indicating that lawyers as a general matter do not themselves judge well the likelihood of success in matters--usually (and increasingly) conveying unrealistically high expectations to their clients. Thus, clients may in fact be disappointed because of their over-enthusiastic lawyers setting too high a bar, rather than because of any real incompetence of those lawyers in conducting the matter.  But how's a client to know?

So let's stipulate that judging the quality of counsel by outcome is difficult.

The other most common basis for evaluating legal counsel is their interpersonal skills. While we are notorious among the lay public for our abilities in that area being held in low regard, even lawyers don't see much to applaud in many of their brethren.  According to a study by BTI, "personality issues" is one of the four main reasons general counsel fire outside counsel. Surprised? The same survey found that general counsel often keep an "arrogant" list--lawyers who, no matter how appropriate they might otherwise be, the GCs wouldn't be caught dead hiring just because interacting with them is so maddening.  Of course that doesn't say anything about those particular lawyers' skills.  But if those lawyers are in fact arrogant because they are very, very good, as more than one lawyer has contended, my bet is they are not getting the result in terms of new business that they were looking for. 

In a fascinating study recounted in Malcolm Gladwell's book Blink, the way doctors talked to their patients predicted which doctors were most likely to be sued.  A very short verbal interaction between doctors and their patients were recorded.  The doctor's actual words were obliterated, but the tone, cadence, and pitch were retained.  When participants rated these doctors for various attributes, one attribute was highly accurate in predicting the likelihood of a doctor being sued.  The attribute was dominance, which easily translates into the arrogance, or I-know-better-than-you, that those general counsel in the BTI study, and many other clients, complain about.

Why do we come off so poorly in this area?  Data from the Meyers Briggs Type Indicator gives some insight. The majority of the American public works to create harmony in relationships, while most lawyers are bent on demonstrating that they are right.  Americans are largely concrete thinkers, while most lawyers are conceptual, which can come across as "head in the clouds".  Lawyers have a lower tolerance for "process" than most Americans, wanting to get to the bottom line as quickly as possible, and as a group they tend to talk less and listen less as well.  Other trait data reinforces that picture--we are likely to be combative if a conflict arises or otherwise simply walk away to avoid it.  We don't rebound easily from a mistake and therefore both project our "rightness" and become highly defensive if questioned.  In short, as a group, we are not naturally gifted relationship builders.

Personalities are not easily if ever changed.  What can be improved, however, are specific behaviors. We can teach our young lawyers to manage client expectations carefully, to help the client understand the complex interactions at work which affect the outcome of matters, and to replace some of those "lawyerly" interaction styles with more client-friendly ones.  And your professional development, performance evaluation, promotion and compensation systems should all recognize and reinforce the importance of those behaviors. 

 

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Loftus suggests that many of the most overconfident lawyers are likely to be senior partners who may not typically seek out review or feedback.  She recommends that law firms take affirmative steps to insure third-party feedback in all their case management systems.

She also suggests that lawyers regularly obtain feedback by sending their clients anonymous survey questionnaires at the close of every case, including questions that target the issues surrounding the management of client expectations about the achievement of goals in a particular case.

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David Brooks’ editorial in the Friday, July 23^rd New York Times was on morality, in particular the type which naturalists view as another outcome of evolution. The naturalist position is that, much as we have over time developed receptors for sweetness and saltiness, we have also developed receptors that recognize fairness and cruelty. 

At a recent conference organized by the Edge Foundation, researchers attested to the evidence for that inborn moral sense. Paul Bloom of Yale reported on experiments in which babies were shown a figure struggling to climb a hill, another figure trying to help it, a third trying to hinder it and then the hindering figure being either punished or rewarded. Babies as young as six months clearly preferred the helping figure over the hinderer and by eight months preferred the punishing of the hinderer over rewarding her. While Bloom doesn’t pretend that this implies that people are born “good,” he does claim that it shows we are all born with an ability to distinguish basic right and wrong. 

But since we homo sapiens as a group don’t seem to suffer from a surfeit of morality, how do we each arrive on our moral path? 

There was some disagreement at this conference over how much we rationally control our moral behavior. The role of emotion has recently been emphasized as a critical part of decision-making (see our upcoming entry on decision-making).  Some have even suggested that emotion is the real basis for a decision with moral reasoning following simply to justify the decision, much like the proverbial man on the elephant who tells himself that he is the one moving the beast but is in fact only along for the ride. 

Studies done during the last couple of decades, which Brooks doesn’t mention, inquired as to why some gentiles, under no external compulsion, risked their and their families’ lives to protect Jews during the holocaust. The studies found that the gentiles in question viewed themselves as “just that kind of person,” people who had been raised with the sense of obligation to do whatever they could to help others in need, a morality which they practiced without a whole lot of forethought. That is, they performed those heroic acts essentially out of habit.

With the pressure of the economic downturn, the temptation to bypass ethical constraints is evident.  Bill-padding and double-billing have increased dramatically this decade over last, as have frauds and conversions of trust and other third-party funds.

Is there also a laxity in morals, as opposed to ethics?  Professional lapses not expressly prohibited but simple failures to be fair and straightforward?

Perhaps there is no mandate for lawyers to act morally or even room for moral considerations in our profession.  We are, after all, supposed to be zealous advocates, and no doubt many (possibly emotion-based) ethically close calls are strenuously defended as being in clients' best interest. 

But  it is also possible that high standards of morality may be a obligation owed to our clients in the interest of providing them with the best result.  As reported in our entry "What's Morals Got to Do With It?,"  a study by the Consortium for Research on Emotional Intelligence found that financial advisors who demonstrated high levels of “moral and emotional competency” nearly doubled the return on their client portfolios over the S&P 500 average. “Results showed that Integrity was the key behavioral competency which predicted the most positive returns for clients."  Integrity was seen as someone who "walked the talk."

If morality can change a financial advisor's returns, might not a lawyer armed with morality sway judges and opposing counsel? 

Then there is the matter of how we treat each other in our law firms and law departments, where we are less burdened by the goad of zealous advocacy. The Project for Attorney Retention and the Minority Corporate Counsel Association recently reported that nearly one- third of the 700 women partners surveyed had been “bullied, threatened, or intimidated out of origination credit.” This is not a backwoods phenomenon--three-fourths of these women are in firms of over 250 lawyers.  A frequent complaint is that their partners trot out women for client pitches and then exclude them from the work (and of course the origination credit).   "Clients will be surprised that the attorney that they think [is working on the matter] is not getting the credit," says Roberta Liebenberg, chair of the ABA Commission on Women in the Profession.

One of the more interesting points made at the Edge conference is that “people who behave morally don’t generally do it because they have greater knowledge; they do it because they have a greater sensitivity to other people’s points of view,” otherwise known as empathy.  Marc Hauser of Harvard reported that bullies—people clearly not acting morally-- are surprisingly sophisticated in the ways of interpersonal commerce, particularly in reading others’ intentions, but they are not able to "feel their pain." Which makes them good manipulators and strategic operators for their own benefit without the drag on their trajectory of caring about the impact of their actions on others.

Empathy is one of the traits that lawyers often score low on--all the better to not deter us from surging onward on behalf of our clients, certainly some would say.  But firms might consider steps to counter that tendency by adopting compensation and other encouragements to "feel each others' pain."

As Brooks says, it is good to ground virtue in the day to day. 

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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 a recent interview about her book, Mindset: The New Psychology of Success, Dr. Carol Dweck, the Lewis and Virginia Eaton Professor of Psychology at Stanford University, explained how a person's mindset can account for success. 

She identifies two major mindsets--fixed and growth.  In a fixed mindset, we think we know our strengths and weaknesses, believe that they are "fixed" and think we should only attempt undertakings that use those strengths.  This type of person often cites genetics or background as limiting factors to their productivity.

With a growth mindset, we believe that we can grow into the skills needed for success. That is, we have the attitude that with analysis and persistence and feedback, we can stretch and extend our abilities over time.  The basis of these differences in mindset lie in one's sense of control and optimism--attitudes that have long been associated with greater success and sense of well-being.

Dr. Dweck's research on athletic performance is intriguing--the more athletes believe that their success is a function of effort and practice (as opposed to "natural talent"), the better they do.  Even more importantly, the more they believe that their coach thinks their success is a function of effort and practice, the better the athletes do.  

She also points out that in India and Asia, the common belief that children are blank slates at birth who can learn anything help people there succeed.

Her research also has relevance to those of us practicing law.  As measured by various assessments, lawyers are highly pessimistic and also have low resilience to setbacks (an indication of low sense of control). When gauging ourselves, and particularly in mentoring others, it is important to focus on the process--how much time and energy is being put into the effort and how persistent the person is.  Encouraging those traits will pay off with better performance over time than praising how "smart" someone is or how "natural" they are at something.  In fact, that type of praise is shown by Dr. Dweck's research to actually lower productivity--trapping the person in the narrow range of their perceived ability and making them fearful that they can't always live up to that talent or go beyond it.

Lawyers are also not inclined to take risks and therefore are less likely to proceed, whether personally or as a firm, when they are not certain they are likely to succeed.  In this time of fast-paced changes, however, Dr. Dweck points out  the disadvantage of such a fixed mindset.  With law practice undergoing tremendous transition, that reluctance can put both a person and a firm at the back of the evolutionary process that will produce better services. 

Dr. Dweck has developed an assessment to determine one's mindset and strategies for changing a mindset from a fixed one to one of growth, both of which we can offer as a part of your complete professional development plan, whether for one attorney or a large group.

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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 are making 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, who 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 likes 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 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 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,” said 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,” said 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,” said 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 Revenues Per Lawyer (RPL), a figure that takes into account gross revenues, 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 the best results for your client satisfaction ratings, as well as your clients’ satisfaction.

 

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Muir recently led an Introduction to the Business of Law seminar for junior associates at an AmLaw 100 firm. The presentation is customized to the firm and is gauged to bolster associates'  engagement and loyalty and to improve their productivity. 

Topics include a definition of terms, such as utilization, realization and cash management, and a discussion of what drives the economics of law firms, the impact of current marketplace trends, as well as how all these factors influence every associate's career, and what they can do to benefit themselves and their firm.

Director of Professional Development: "Associates called me specifically to thank me for setting this up; others said that the topic answered a lot of questions they wanted to know about (but probably wouldn't have asked). Several who didn't make it called to ask if I had recorded it because everyone said it was a good presentation...plus I appreciate that you were great to work with."

Partner in charge: "This was a very helpful presentation--a number of associates came up to me afterward to say how thought -provoking it was. It is difficult at times, particularly with the most junior associates, to get them to ask the questions they want to ask. You answered many of them in your presentation. We look forward to doing this again."

Firm Consultant: "The presentation was excellent. Law is a business like any other business. Every attorney, particularly at these large firms, should know about what you discussed in your presentation."
 

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The recent upsurge in the financial well-being of small and mid-sized firms, and their lower hourly rates, has left some wondering if the Age of Convergence is waning.  The eponymous DuPont Model, developed in the 1990s, started a consultant-fed surge of mergers and consolidations of firms in pursuit of making or remaining on the preferred provider lists that major corporations were furiously winnowing. Only by offering a broad range of expertise could firms hope to produce the economies of scale--efficiency, cross-pollination, etc--that corporations were after, or so the party line went. 

Never mind that not a single metric showed that bigger firms produced any such economies for the corporations.  The burgeoning size of those firms, and the costs of supporting them, meant that hourly rates kept going up. 

Nor did the hoped-for economic wins for the firms themselves come through.  "Cross-selling" says Mark Chandler, innovative and outspoken GC of Cisco, "is my enemy."

It is then somewhat surprising to see the 2009 ACC/Serengeti Managing Outside Counsel Survey report a record number of inside counsel citing their commitment, in the interest of reducing legal fees, to implementing... convergence. 

Perhaps we have overlooked the biggest advantage to corporations of having fewer law firms in the bullpen--the ease of leveraging them into lower fees.  Take away a $20,000 contract review and few firms would flinch.  Threaten to take away a cross-firm client generating millions in revenue and even the sassiest firm would sit down at the negotiating table.

So put one in the clients' column--sure, fewer law firms to deal with, so inside counsel may achieve some modicum of efficiency, but the real coup is in putting themselves in a position to dictate fees. As the report  "Law Firm of the 21st Century: The Clients' Revolution," prepared by Eversheds, concludes, the economic recession has shifted the balance of power in the legal marketplace toward general counsel (according to 3/4th of those surveyed).  And the shift is here to stay, 78% believe.

Oh, by the way, the 2009 ACC/Serengeti Survey reports that, for the first time in nine years, inside counsel anticipate no rise in billable rates in 2010.  They should know.

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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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As our entry Barbarians at the Partnership Gate? on January 10 predicted, the great partner smack down is getting under way, and the first out of the box is Howrey's announcement last month that it was dismissing up to 10% of its partners. Mayer Brown's recent firing of 28 lawyers included counsel, another tier of long-term lawyers, in addition to associates.

Howrey's Managing Partner Robert Ruyak was a panelist at the Georgetown Center for the Study of the Legal Profession's conference entitled "Law Firm Evolution: Brave New World or Business as Usual?" last month.  He and other managing partners there acknowledged that, in addition to pruning partner ranks, lower compensation expectations are likely part of the longer-term fallout of the recent downturn.  Those lower levels will put partner compensation, Ruyak pointed out, closer in line with the historical pace of increases that existed before the irrational exuberance that we all enjoyed over the last decade.

Managing your partners' expectations regarding compensation over the next few years will be a monumental task.  Partners are going to be expecting, impatiently, for compensation to rise and will look to push out older partners, drastically reduce expenses, and advocate for anything else, short of scorching the very earth they occupy, that will help drive up compensation. Firms must be well-equipped to deal with the conflict, attrition and problematic morale that compensation issues will generate.

Now is the time to start that process of managing expectations.  The first step is to reassure partners that the firm has a strategy for stability and and even growth over the next years ahead. Are you prepared for the first step?

  

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Should we be identifying and spotlighting our superstar associates? Recent research may be pointing to an unexpected answer. 

Economic tournament theory addresses competitive situations where success is based on relative rather than absolute performance (think sports games vs. standardized test results).  While competitive situations can often lead to motivated employees who work hard for top spots, recent research has found that the presence of a "superstar" can reverse that dynamic, making the competitors give up in the face of likely defeat.

Jonah Lehrer's article in the April 3-4 weekend edition of The Wall Street Journal specifically raises the question as to whether these recent findings in tournament theory about the disabling effect of superstars might account for, among other things, lackluster performance of associates in law firms. Given that this particular tournament often ends in an up-or-out decision (particularly given the recent trends), and that the number of lawyers who make partner will be even fewer than the historical few, the supposition is made that once associates recognize they are not up to a superstar level, they may actually lower than performance. 

As further ammunition for that concern, we note that the recent trend toward merit-based promotion and compensation systems will make the superstars more apparent to everyone in the firm and also earlier than under the old lock-step system.  So what do we do now?

Lehrer's article implies that hiring the "best" candidate, if it means someone who will leave the others in the dust, might not be the best approach.  Should firms really consider such a "not the best" approach?

We would make a more pointed recommendation--hiring only those candidates who can truly compete will keep the tournament in a healthy realm.  Firms can start by hiring a smaller class that they heavily invest in (in terms of assessing initial strengths and weaknesses, providing professional development and supporting personal morale).  Couple that increased "glue" with the possibility of a larger proportion of the smaller group being likely to make partner, and firms are likely to be well on the way to a harder working associate group.  And that scenario is consistent with other trends encouraging lower leverage.

A win/win all around.

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

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

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

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

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

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

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

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

In other words, what do women want?

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

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

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

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

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

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

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

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

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

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

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

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

And let there be no question about the value of true diversity--diversity of perspectives, of styles, of strengths--to the quality of problem-solving, decision-making and ultimately the product provided.

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

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

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

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

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

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

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

And this attitude would also make for a more hospitable workplace not only for women and lawyers but also for all the male flexibility seekers, called lawyers and willing workers as well.

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

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

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

Whether it is more legal outsourcing or more women in high places that you are after, an attitude less fixated on comparing accrued billable hours might be the place to start, and now might be the time, given the hue and cry from clients about the conflict the billable hours approach creates between client and lawyer.  Here is a chance to align with client goals and also align with the goals of a major portion of your potential workforce.

In the end, making the "how long you worked at it" no longer the critical yardstick may be very good for women. A new emphasis on creative thinking, efficiency and good client management draws on what women often have a great knack for.

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

 

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Muir will participate in a webinar entitled “Think Like a Lateral—How to Hire and Retain Quality Lawyers” to be presented on Tuesday, March 9 for the members of the Attorneys' Liability Assurance Society (ALAS). 

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

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

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

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

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

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

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

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

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

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On Wednesday, February 17, 2009 Muir will lecture students at Northwestern University's Business Institutions Program on improving management decision-making, using law firm management committees as a case study. Based in part on the article "Promoting an Effective Board or Management Group," the discussion will explore, among other subjects, optimal personality traits for good decision-making, how to construct effective teams and the challenge of avoiding extreme decisions.

 

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Firms are placing their futures at risk if they cannot identify, develop and empower the next generation of leaders.  So it is no surprise that more law firms are investing in leadership development.  For example, according to PaLAW 2009's 14th annual Managing Partners Survey, cited in the November 23, 2009 issue of The Legal Intelligencer, the number of firms surveyed that provide leadership training at any level increased from 40.5% in 2008 to 67.7% in 2009, almost a 60% increase. 

What does it take to be a good leader?  And do we lawyers have what it takes?

There are numerous theories about the best style of leadership--see  Primal Leadership (2002) by Goleman, Boyatzis and McKee for an informative evaluation of 6 major styles. Apart from style, Richard Daft, author of The Leadership Experience, cites numerous studies that have sifted out five recurring personal attributes of successful leaders: openness to experience, emotional stability, conscientiousness, agreeableness and extroversion.

If you look around for potential leaders in your firm, chances are few of your colleagues possess all five of those attributes.  While conscientiousness is something lawyers tend to have in spades, openness to experience (also known as risk tolerance), emotional stability (or emotional intelligence) and agreeableness (aren't we hired NOT to be agreeable?) are all factors that in various studies lawyers tend to fall short on. Certainly, we have clear and robust data that most lawyers (over 70%) are introverts, rather than extroverts. 

So can introverts lead?  Successfully, that is?

There seems to be some hope.  If the concern is that introverts tend not to be charismatic, outgoing personalities, Jim Collins's book Good to Great: Why Some Companies Make the Leap . . . And Others Don't provides some comfort. Collins discovered that glitzy, dynamic, high-profile CEOs are actually a hindrance to the long-term success of their corporations. Charismatic leaders are attractive to others, but they may be less effective in drawing people to the mission and values of the organization itself.

Collins contrasts Lee Iacocca, Chrysler's leader and spokesperson in the 1980s, with Colman Mockler, the CEO of Gillette from 1975 to 1991. While Iacocca almost single-handedly steered his car company away from disaster and put it on the road to prosperity, after his retirement Chrysler's profits faltered, and the company was sold to a German rival five years later. Apparently Iacocca had done little to invest in his successors or build a culture that would ensure the longevity of Chrysler.

In sharp contrast, Mockler made personal sacrifices and took substantial risks for the long-term success of the company and the profits of the shareholders, and he was so effective that $1 invested in Gillette in December 1976 was worth $95.68 in December 1996 and eventually earned a significant premium when the company was sold to P&G in 2005. Laconic and reserved, Mockler labored in relative anonymity for a big-time executive; he was a man who prioritized the success of his company over ego gratification.

Mockler and executives like him are examples of what Collins calls "level 5 leaders," those who are modest, self-effacing and understated, and display a workmanlike diligence—more plow horse than show horse, they set up their successors for even greater success in the next generation.

Leadership guru Peter Drucker goes further to say that "charisma becomes the undoing of leaders. It makes them inflexible, convinced of their own infallibility, unable to change."

So maybe we introverted lawyers, likely to be low on the charisma meter, may have some hope of mastering leadership. Certainly being people who think before we act and listen before we talk can be useful in leadership roles.

Successful leadership may also be enhanced by introspection--a natural for introverts. Leaders who scrutinize every aspect of their leadership and personality (and that of others) may be able to find internal motivations and assumptions that contribute to dysfunction and inefficiency.

Another way that introverts may be able to surpass the traditional leadership attributes is in their ability to "make sense." Wilfred Drath and Charles Palus at the Center for Creative Leadership explain that "most existing theories, models and definitions of leadership proceed from the assumption that somehow leadership is about getting people to do something."  Essentially cheerleading.  That is an effort that requires relish for and persistence in being extraverted.

But Drath and Palus reimagine leadership as "the process of making sense of what people are doing together so that people will understand and be committed." Leadership, in this view, is a matter of providing interpretation. Leaders can give people a lens and a language for understanding their work and experiences in light of larger purposes. They can help shape the mental frameworks of others so that those people see themselves as making contributions to the mission and direction of their organization, working in community for a common purpose.  Here is an opportunity for the thoughtful introvert to make his or her mark.

In the corporate world over the past decades, leaders have produced greater organizational efficiencies by employing advanced analytics and defined metrics and systems. But most organizations that have successfully manipulated these resources are finding it difficult to extract even greater efficiencies from them over time. Many are turning to their human capital as the next source of growth.  Yet many businesses are realizing the difficulty of identifying and developing leaders, particularly those who can lead this kind of productivity growth.  For example, the 2008 IBM Leadership Survey found that over 75% of CEOs lamented their ability to identify and develop leaders to succeed them.

Law firms should take note. 

Leadership involves not just leveraging the collective knowledge and expertise of an organization. Leadership is also about cultivating and nurturing human capital, particularly in such a talent-dependent industry as ours.  Leaders who recognize the perennial needs of individuals to be appreciated, to be part of a community and to feel they are contributing to the greater good are more likely to be able to raise the productivity of their troops.

And even introverts can do that.
 

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Ronda Muir is participating as a panelist in CCM's audio conference on "Compensation for Client Development: Tracking, Measuring and Rewarding for New Business Origination" being held at 2pm on Thursday, February 18, 2010. To register, please go to http://www.c4cm.com/lawfirm/compensation_client_development.htm.

 

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The partner smack down has begun.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So reassuring to see your offspring make it to Harvard! 

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

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

 

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

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

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

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

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

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

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Our host's email notification server has been down for several days and is only now operational, so you have not received notices of blog entries posted during that time.  Rather than flood your inbox with notications, please browse the blog at your leisure to catch up on the latest entries--The Importance of Glue, Throwing out Consultants' Reports, and The People Factor Inherent in the Coming Reinvention.

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We spend our days advising law firms and law departments about the changing landscape for their professional services.  But just as the legal industry is in a state of transition, so is the industry that consults with the legal industry. 

We at Robin Rolfe Resources are retuning our services in order to offer you cost-effective updates on the fast-paced corrections and counter-corrections occurring daily in the legal world.  And we are going to do so without killing a lot of trees or landing in your bottom file drawer.

We can meet with your general counsel or managing parter, executive committee, planning committee, a practice group or the whole department or partnership to discuss trends and innovations--both successes and bloopers--in many realms of practice management: governance, client service, compensation, recruitment, lateral integration, retention, performance evaluation, motivation, promotion, training and development, leadership, morale, diversity, and succession, among others. Our own years of experience in practicing law and then advising practices of all sizes, coupled with an expertise in lawyer psychology, make us uniquely capable of providing sophisticated, up-to-date and practical advice.

We can meet for a morning, a day or regularly on a quarterly or other basis.  If you need more extensive research or written advice, we can provide it.  Regardless of the extent of our role, we are on your side of the table when you are analyzing the tough calls.

A much-heralded business author is working on a new book about reinvention and has concluded that both law and consulting fall into the category of needing to be reinvented.  In both of our businesses, tomes on best practices should be relegated to the last century.  Ours certainly are.

 

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Muir points out in her article What the New Law Firm Looks Like that building bigger firms does not necessarily produce better bottom lines.  Of course for many firms long-term client development or other factors beside profitability fuel growth.  And then there are some growing firms which in fact achieve greater profitability in spite of the odds.

K&L Gates is one of the firms that has managed to accomplish that.  The product of a 2007 merger of Kirkpatrick & Lockhart with Preston Gates & Ellis, and then mergers with Nicholson Graham of London, Washington's Hill Christopher and Boston's Warner & Stackpole, the firm has completed since the beginning of 2008 three additional mergers -- one with Texas-based Hughes & Luce, a second with Charlotte, N.C.-based Kennedy Covington Lobdell & Hickman and the third with Bell Boyd, which took effect March 1, 2009, bringing together a total of over 1,800 lawyers. Over the same period, the firm opened offices in Paris, Shanghai, Frankfurt and most recently Dubai, among others, and established a relationship with Taiwanese firm J&J Attorneys at Law, for a total of 33 offices.

This astounding growth trajectory is true to Chairman and Global Managing Partner Peter Kalis's express intention to "grow aggressively," taking advantage of the firm's lack of short-term and long-term debt. Not only has growth been achieved but in this case the approach has so far proved profitable--revenues for 2008 were up 27% over 2007, while profits per partner for that year rose almost 7%, with first half 2009 continuing to show significant increases, again meeting Kalis's stated goal of increased profitability every year. 

So if a firm like K&L Gates manages to do the difficult if not impossible by growing aggressively while increasing profits, what are the challenges?

Of course the firm has been through a few clouds, as there always are around silver linings.  No firm, regardless of its size, can escape them.  Microsoft Corp.'s list of preferred legal providers did not include Bill Gates's father's firm this year. While Microsoft GC Brad Smith had welcomed the original merger of the Gates firm and Kirkpatrick & Lockhart, former Microsoft GC William Neukom left K&L Gates last year, perhaps signaling something. Or perhaps it was simply time for a change.  The firm did not add another DuPont "Meeting the Challenge" Award this year to those accumulated over the past few years.  And K&L Gates has had its share of difficult client relations--MTV Networks noisily canned the firm as defense counsel a few months ago.

One insight into the challenges that the firm's success raises may be in a comment from K&L Gates' most senior trademark lawyer Mark Peroff, who left the firm last year for a smaller firm.  "In my experience at K&L Gates," he was quoted as saying in explanation of the move, "the focus was entirely on making money.  There was no glue among the partners."  (Peroff also pointed out that in a smaller firm he could significantly lower his billing rate.)

There might be some who would question the importance of glue, both as to whether it significantly colors one's experience at a firm and also whether it adds to the bottom line, a discussion we will take up in a later entry. But Peroff 's comments raise the conundrum that many growing firms in fact face, and often without the benefit of rising profitability. 

Every year the ranks of new hires, lateral hires, and various contract, counsel, income, equity and other lawyers shift, while there is simultaneous shifting among personnel at various offices. How to add so many bodies to various locations and still keep a sense of commonality if not collegiality among the players?  

And similarly, if a firm hopes to improve profitabiliy, can it push bottom-line results persistently, making each person accountable for their own production, and still maintain strong relationships?

In other words, do our goals and policies bind us or divide us?

Sometimes glue is simply a commonality that keeps all the various firm systems running in decent working order.  Sometimes glue produces real revenue through cross selling and enhanced relationship building.  Sometimes glue is just that ineffable bond that keeps people from leaving.

It may sound pretty fuzzy, but it's important to consider the glue in your firm.

 

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Muir led an inter-active limited-attendance roundtable on Law Practice Management for Current and Prospective Law Firm Leaders at the 12th Annual Meeting of the Association of Patent Law Firms (APLF) in Chicago, Illinois on Thursday, September 17, 2009.  Topics discussed included the distinction between managers and leaders, the importance of values-driven firm identity, the role of practice group leaders in moving the firm forward, and transitioning from consensus-led management to more executive approaches.

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

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

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

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

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

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

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

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

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

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

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

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

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

So where is the mega-firm now?

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

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

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

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

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

 

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Muir is leading an inter-active limited-attendance roundtable on Law Practice Management for Current and Prospective Law Firm Leaders at the 12th Annual Meeting of the Association of Patent Law Firms (APLF) in Chicago, Illinois on Thursday, September 17, 2009.  For more information or to register, go to http://www.aplf.org.

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

LSAT Scores

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

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

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

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

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

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

Premier Law Schools

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

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

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

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

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

Informal Survey

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

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

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

Stay tuned.

 

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

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

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

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

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

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

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

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

 

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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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The Grant Study is an extraordinary longitudinal study undertaken in the late 1930s to shed light on "the urgent question of how to live well."  As participants, a group of 268 (male) Harvard College sophomores, including John F. Kennedy and Ben Bradlee, were chosen for showing particular promise.

An article interestingly entitled "What Makes Us Happy?" in the June 2009 issue of the Atlantic explores what we might learn from 72 years of following that gifted group.

The biggest surprise may be how unreliable those evaluations at a formative age turned out to be for purposes of predicting future success and happiness. Or perhaps, that in spite of those evaluations, how inevitable stumbling is.

As David Brooks, in his May 11, 2009 editorial "They Had It Made" in The New York Times relates: "Their lives played out in ways that would defy any imagination save Dostoevsky's.  A third of the men would suffer at least one bout of mental illness.  Alcoholism would be a running plague.  The most mundane personalities often produced the most solid success."

Almost as interesting as the study is the man who has been overseeing it for more than four decades, George Vaillant.  Vaillant doesn't hesitate to arrive at a familiar yet profound conclusion:  relationships are the key to happiness. 

Yet the difficulty of putting that dictum into practice is evident in Vaillant's own life.  At work, he has proved to be a valued colleague and mentor.  On the personal front, things are much more challenging.  His father committed suicide, which his mother never acknowledged, his three marriages all ended in divorce and his children describe their home as being a "civil war" and their father as having a problem with intimacy.

There are some other interesting takeaways from the study, which Brooks points out.  All the men tended to cope better as they aged.  Those who suffered from depression by age 50 were much more likely to die by age 63.  Those with close sibling relationships proved much healthier in old age than those without them.

What is not clear is why these particular young men were chosen to participate in the study in the first place.  All we really know about them is that their admission to Harvard College at that time meant they were at least reasonably bright and probably the sons of influential and wealthy families. And that someone at  Harvard College had a high opinion of them. 

Of course, in the 1930s they didn't have access to the bundle of assessments available to us in the 21st century.  The "science" of head size and phrenology (the study of bumps on the head) had had its heyday during the prior century. The concept of an assessable intelligence quotient had only recently been introduced; the Wechsler Intelligence Scale would appear a few years later.  

What did the Grant Study originators think success in "living well" meant?  And what did they think it took to accomplish that?   In other words, what specific attributes were they looking for?  Might the many different paths that the participants eventually took reflect a lack of a clear vision on the part of the originators as to their concept either of success or its antecedents?

Perhaps Brooks' note that "the most mundane personalities often produced the most solid success"  informed another editorial, "In Praise of Dullness," that appeared a week later.  There he cited a recent study that seems to point to "relentless and somewhat mind-numbing commitment to incremental efficiency gains" as the critical attribute of successful CEOs.  Even if that correlation is in fact relevant (see the comments on Richard Edelman's "Dull Advice," which question its relevance as a broad-based indicator), it seems unlikely that it was young men with that attribute whom the Grant Study originators sought to identify.

Knowing what you are looking for in any selection process is critical.  Organizations around the world use sophisticated assessments to choose candidates for employment and advancement based on the competencies, attributes and traits that they have found predict success in their organizations.

Yet we recruiters of legal talent often don't know what we are looking for.  At a roundtable two weeks ago on legal hiring, David Van Zandt, Dean of Northwestern University School of Law, entreated law firms to develop a better model for selecting their summer associates.  "I've long advocated that firms really need to look at their data... and identify the characteristics that they're looking for in their candidates," Van Zandt said. Now, "you just go out and throw a wide net and pull people in." 

In fact, as we've suggested (see our entry "The Outliers of Law--Embracing Heresy "), the single attribute--high class standing--that firms do look for may be the one that could well be jettisoned--or at least modified--with little impact on the quality of legal services.

What the Grant Study does show is that predicting the future course of even a bright young person with a shiny veneer of promise can be difficult.  And that regardless of their credentials or intelligence, many are likely to fall to the various vicissitudes of man--mental illness, addiction, relationship breakdown. 

So then, what can one do to be happy?

Valiant knows: "Happiness is love, full stop." 

Now it's just a matter of implementation.

 

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

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

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

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Ronda Muir will be a featured panelist at the annual general meeting of the Attorneys' Liability Assurance Society (ALAS) in Quebec City, Quebec to be held June 25-26.   ALAS is the premier provider of professional liability insurance for large law firms in the United States, currently insuring 237 firms.  Muir will discuss lawyer personality, firm culture and other aspects that impact risk particularly in the context of mergers and lateral hires. Over 250 loss management and managing partners are expected to attend. 

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

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

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

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

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

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

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

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

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In the April 20, 2009 issue of The New Yorker, James Surowiecki recalls that during the Depression (the one in the 1930s) Kellogg and Post, but primarily Post, dominated the cereal market. In response to uncertainty, Post reined in expenses and cut back on advertising. Kellogg, on the other hand, doubled its marketing budget. “By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty percent and it had become what it remains today: the industry’s dominant player.”

 

During hard times, Surowiecki points out, most businesses act like Post in order to preserve what they have. “But there’s a trade-off: numerous studies have shown that companies that keep spending on acquisition, advertising, and R. & D. during recessions do significantly better than those which make big cuts.” They also maintain those gains well into recovery. “[R]ecessions create more opportunity for challengers, not less.” 

 

Why do most businesses insist, then, on pulling back? Surowiecki suggests the uncertainty that so dominates recessions makes any business outcome calculations unlikely to be reliable. Unable to gauge risk, managers forego the gamble.

 

Certainly there are managers who risk “sinking the boat” by boldly forging ahead, but there are others who “miss the boat” by failing to do so.

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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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In the final tranche of a triad of bad news over the last few weeks, two recent reports--one about associates and another about partners--point out how, despite the current abysmal employment market, there are still lawyers of various stripes who, given the chance, would choose to jump overboard rather than hang on to their position.

In a recent New York Times article, it was reported that Skadden Arps had offered all of its 1300 associates worldwide the option of taking a year off for one-third pay, with no pro-bono obligation.  One hundred twenty-five associates opted in, a number that a partner was quoted as describing as "in excess of our expectations."

The Lawyer reported April 14 that CMS Cameron McKenna, a large English firm, in a makeover termed a "Magic Roundabout" because of its spiral design [the English are into monikers: Linklaters calls its remake "New World" and Clifford Chance has settled on the term "size and shape review"], offered all of its 160+ equity partners the opportunity to move to non-equity status.  Sixteen partners stepped forward, more than managing partner Duncan Weston said he had expected.

There is no denying that much is changing in the structuring of firms on both sides of the pond, and these two firms are among those riding that wave.  The interesting note in both of these reports is that management remains surprised at the number of lawyers who, in spite of perilous times, would rather step away or down than stay at the helm.  Unfortunately, it speaks to the still prevalent but now less obvious dissatisfaction that was manifest in the massive attrition rates of only 18 months ago.

When things get back to normal (yeah, right) and probably even before then, firms still have to tackle the issue of how to attract and keep the loyalty of their talent--since that is what in the end makes for a successful law firm.  In spite of, and perhaps also particularly in the midst of, the rush to distribute pink-slips, let's not let that particularly item fall off our "to-do" list.

 

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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 another blow to our already wilting sense of competence, the UK reports that according to research from the Centre for Market and Public Organisation, lawyers surveyed there who were born in 1970 (now climbing the legal ranks) have lower IQs than lawyers assessed in 1958 (and now either in very senior management or already out the door). Lawyers in the older group scored 11% better than the average, while the younger group were just 8% more intelligent.

The comparison to the average fell for most other vocations as well, with an average drop of 1%. Doctors, teachers, bankers and stock brokers all moved closer to average intelligence, while artists, engineers, scientists and journalists became more intelligent compared to average IQ scores, the research found. 

One pauses over the long-term evolutionary implications.

Than again, surely there's a way to view this trend chauvinistically.  These results are only for the UK, right?  Without any official comparable data in the US, we can comfortably surmise that we in the US retain our IQ lead over the masses.  On the other hand, with all the cross-Atlantic trafficking in lawyers that has gone on lately, the Brits might argue that this is just another example of the net brain drain of allowing Yanks to work there.

In any event, we hear the murmur of senior lawyers everywhere saying "I told you so."

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Ronda Muir will participate as a panelist and breakout leader in the Jonathan R. Lax Conference on Entrepreneurship on Sunday, March 29, 2009 at Swarthmore College in Philadelphia.  The topic of the conference is "Building a Strong Enterprise: Critical Skills for Successful Entrepreneurs."

Keynote speaker Richard Teerlink led Harley-Davidson's fabled turnaround, fueled in part by his belief that people are the most important resource in any company. Muir will address "Developing High Performance Teams: understanding the dynamics and characteristics of high performance teams and the critical success factors needed to take teams from forming to performing status."
 

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On Thursday, March 26, at 2:00 pm EST, Ronda Muir will lead an audio conference sponsored by the Center for Competitive Management entitled "Turning Lawyers Into Leaders: How to Survive the Economic Slide."  The discussion will cover who leaders are, what skills and attributes they should have in this economic climate and how to develop them.  For more information and to register. 

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On Wednesday, March 25, at 12:30 pm EDST, Ronda Muir and Robin Rolfe will lead a round table discussion of  "How Progressively Managed and Adaptive IP Firms Can Gain an Advantage in a Down Economy."  Sponsored by the Association of Patent Law Firms (APLF) as part of its Brand of Excellence series, this program is offered at no charge and to members only. Additional information can be obtained by contacting admin@plf.org.

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How did women in the spotlight fare in 2008?

Here's a sweeping and eclectic review of women in business, politics and law--Senator Hillary Rodham Clinton, Governor Sarah Palin, Caroline Kennedy and Michelle Obama, among others--before the year is too far behind us.  Plus an interesting commentary on how we perceive each other.

Women in Business

A New CEO Record. A January 4, 2009 article in USA Today by Del Jones entitled "Women Still Struggle to Get CEO Jobs" reviewed the current challenges for women. Starting off 2009, Ellen Kullman replaced Chad Holliday at DuPont, bringing the number of female CEOs running the nation's largest 500 publicly traded companies to a record 13, one more than 2008. As recently as 1996 there was only one female CEO of a Fortune 500 company, co-CEO Marion Sandler of Golden West Financial, acquired by Wachovia in 2006, in the news recently because of its high level of mortgage defaults.

Does the gender of the CEO make any real difference in performance?  USA Today has evidently tracked the annual stock performance of Fortune 500 companies with female CEOs since 2003, when female CEOs so out-performed men that it looked like there might be a gender advantage, or at least the possibility that the glass ceiling was so difficult to crack, the women who made it to the top were more talented than their male counterparts.

Devastation for All.  But 2008's devastation gave no advantages to anyone.  The chaos in the financial markets claimed three of its highest-ranking female players—Sallie L. Krawcheck, head of Citigroup’s wealth management unit, Zoe Cruz, a co-president at Morgan Stanley, and Erin Callan, chief financial officer of Lehman Brothers.

And female corporate managers fared as badly as the males. With the S&P 500 falling 38.5%, its worst year since 1937, the average large company run by a woman CEO performed 4% worse. The best-performing of women-led companies was Kraft Foods, down 18% under Irene Rosenfeld. "Nine of those 12 companies have now lost money for any shareholder who invested on the day the women got the job,” Jones notes. “The only exceptions: Susan Ivey at Reynolds American and the two longest-tenured women, Andrea Jung at Avon and Anne Mulcahy at Xerox. Avon is up 65% during Jung's nine years, and Xerox is up 1% during Mulcahy's 6 1/2 years. Reynolds is up 21% since Ivey began in 2004." 

The Glass Ceilinged Pay Scale.  What is clear is that women are paid worse than men at the top. A 2008 survey of CEO pay at 3,242 North American companies by the Corporate Library found that female CEOs earned more in base pay, but when cash bonuses, perks and stock compensation were included, women made a median $1.7 million, or 85%, of what male CEOs made.

Women in Politics

Women in the political arena seem assured of arousing strong reactions, reactions that often have little to do with where they stand on the issues.  And Hillary Rodham Clinton is surely the woman of 2008 who raised the banner for women highest, with her long drive toward the White House, but also the one who took the most sustained barrage of counter fire--as to all matters both professional and personal, such as her experience (does being a first lady count?), her honesty and forthrightness (are tears the real test?), and her relationships with her husband (is she true to her man, unable to stand up for herself, or simply astute as to his political usefulness?).

As an example of the broad-based criticism, Caitlin Flanagan in No Girlfriend of Mine, in the November 2007 edition of The Atlantic, had little good to say about Clinton.

Her speaking style: "It’s cringe-inducing to watch her try to talk…there’s nothing more uncomfortable than witnessing someone straining to be natural.”

Her relationship with her husband and reaction to his philandering: "[A]t a La Raza conference… [Hillary] told her interviewer that they should talk like ‘two girlfriends…’ Hillary’s girlfriend-to-girlfriend moment was awkward because if she wanted to talk that way she would have to be willing to let us women in on the big, underlying struggle of her life that is front and center in our understanding of who she is as a woman. Her husband’s sexual behavior, quite apart from the private pain that it has caused her, has also sullied her deepest—and most womanly—ideals and convictions, for the Clintons’ political partnership has demanded that she defend actions she knows to be indefensible…In glossing over her husband’s actions and abetting his efforts to squirm away from the scrutiny and judgment they provoke, Hillary has too often lapsed into her customary hauteur and self-righteousness, and added to the pain delivered upon these women… she has of necessity made herself complicit.”

Even Hillary's treatment of Socks and other pets came under withering attack.  According to Flanagan, as first lady Hillary had taken Socks with her on personal appearances, had retired servicemen and women at the U.S. Soldiers’ and Airmen’s Home in Washington, D.C. send out kitty-cat 'greetings' to Socks’s correspondents, and had written about her in Dear Socks, Dear Buddy: Kids’ Letters to the First Pets, which Flanagan calls "cloying, super-cute, and pun-riddled… and which Hillary, being Hillary, had to turn into a lecture on pet care…the person whose shining example we should all follow being Hilary herself."

In response to rumors that Socks would not make it to Chappaqua, entreaties from the official Socks the Cat Fan Club as to the fate of Socks were reportedly met with a message from Clinton’s office “at once chilly and patronizing… that they butt out,” Flanagan reports. The news came later that Socks had gone to live with a White House staffer. “In Dear Socks, Dear Buddy, we are hectored never to give away a pet, always to regard one as an ‘adoption instead of an acquisition’ and to be forever on guard for its physical safety (cold comfort to Buddy, who had barely sniffed his first Chappaqua crotch before the poor beast ran off and got killed by a car, as had the Clintons’ previous dog, the much-loved but equally ill-tended Zeke).”  According to Flanagan, Hillary "should really be on Cat Fancy’s Most Wanted list.”

Then of course there was Governor Sarah Palin, who leapt on the scene, connecting with a large swath of middle America while enraging those further flung. Toward the end of the year, Caroline Kennedy appeared on the political stage in search of Senator Clinton's seat (before she awkwardly bowed out early this year), and, with Clinton and Palin, formed a veritable troika of controversy over a woman's place in government, and what qualifies her to get there. 

In an article entitled When is it Sexism?, Elizabeth Wurzel claims to have an answer to the question of whether these women were treated unfairly because of their gender. "In Sarah Palin’s case, it was [sexism] (sorta). In Caroline Kennedy’s case, it isn’t. Here’s the difference," she asserts.

Continue Reading...

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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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A 2008 ABA Journal survey, with reponses from more than 1400 women lawyers, produced some interesting results as to who they prefer to work with.  Of the 42% of women who expressed a preference in the gender of colleagues, that preference was different depending on the age of the respondent. 

Female supervisors age 40 and over preferred working with women lawyers because they 1) take direction better (80%), 2) have more discretion (79%) and 3) take constructive criticism better (59%).  

Yet younger female lawyers don’t have the same regard for their older female colleagues. Of those under 40 who thought gender matters, the majority preferred male supervisors for 1) keeping confidential information private (64%), 2) giving better direction (58%) and 3) giving more constructive criticism (56%). 

Theories about the reasons for the difference abound. Some contend that younger women (and also some younger men) are not on the same wave length about the role of work in their lives, and are not willing to make the sacrifices that older women have made.

According to Lauren Stiller Rikleen, who advises law firms about workplace issues, “I'm concerned that more senior women don’t fully understand the profound demographic changes taking place,” demographic changes that affect all young lawyers and override issues of gender. As a practical matter, Arin Reeves, another lawyer who does diversity consulting, notes, the differing generational views of women can mean that women’s initiatives developed by female partners are often not useful to female associates.

The upshot is that there may no longer be “the woman’s situation,” but rather a growing diversity in what women lawyers want, and, given the luxury of having more role models to choose from, a growing diversity of what they can actually have. Perhaps it is worthwhile reminding ourselves that, as we have advocated for years, rather than placing judgment on women generally or on any particular choice, we as women lawyers can and must accept more diversity even among ourselves.

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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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Results from two surveys show growth at the country’s largest law firms to be down significantly in 2008 although employment is generally still on the rise. The National Law Journal’s 31^st annual survey of the NLJ 250 reports that those firms added 4.3% more attorneys in 2008, consistent with increases in 2006 and 2005 but at a lower rate than 2007’s 5.6%.  Partner growth in 2008 averaged 3.5%, which was down from 4.6% in 2007 and 5.1% in 2006. Non-equity partners increased 9.2% compared to 2007, when their ranks increased 8.2% compared with 2006. The average number of women partners stayed stable.

The West Peer Monitor Index, a measure of legal market conditions, reported in late November that large law firms had the lowest productivity during the third quarter of 2008 since keeping records, on average down 4.5%. Productivity at the largest firms, the AMLaw 100, was down even more--6.5%, largely as a result of continued increases in hiring at a time when there is less (particularly transactional) work for those associates to do. Often it takes two years for large firms to respond to market conditions in their hiring practices.

According to the Index, average associate hiring at all firms declined 6% in the 3rd quarter of 2008 compared to 2007, with firms offering equity partnerships to half as many attorneys as they did last year (including mega-firm Mayer Brown, which recently announced making 27 partners worldwide compared to 43 last year). Average lateral growth remains comparable to 2007.

Billable hours for all firms dropped 2.5% in the 3^rd quarter after declining 2% in the second quarter. Overhead expenses grew 6% compared to 8.3% in the 3rd quarter 2007 and direct expenses grew 8% compared to 9% last year. 

The short-term tact many firms are taking now is to lay off lawyers. According to the U.S. Bureau of Labor Statistics, 7,300 lawyer jobs were lost nationally between June and October, with an expectation of far more shrinkage when November and December numbers are tallied.       

                                                                                                       

Big firms, and particularly the big New York-based firms who draw much of their work from transactions for or financed by Wall Street financial institutions, have been particularly hard hit, and are responding accordingly.  The tally of recent attorney layoffs from New York offices includes 96 lawyers dropped from Cadwalader, Wickersham & Taft, 20 from Clifford Chance, 40 from Orrick, Herrington & Sutcliffe, 35 from Proskauer Rose, and 70 from White & Case.  Clifford Chance attorneys have been quoted questioning whether it's worth having a New York office at all. The fact that major transactional firms--Heller, Thelen, and now Thatcher, Profitt--have already folded this early in the recession may well presage more big firms collapsing in 2009.

                                 

Freezing salaries, as Latham & Watlkins has announced, and cutting bonuses in half and eliminating special bonuses, following the lead of Simpson Thacher, Davis Polk, Skadden Arps, Cravath and others in the US and Allen & Overy and Clifford Chance in the UK, are among the other responses to all this bad news, as well as cutting staff, reevaluating off-shore back office services, and trying to offer more flexible fee arrangements.  The recent explosion of non-equity partners is also being scrutinized for its impact on firm finances during these difficult times.  

Hard-pressed law departments are taking another look at the pros and cons of outsourcing, as well as insisting on more accommodation from their firms on staffing and pricing. 

There are a few benefiting from the downturn. The work of outplacement firms has expanded exponentially and attorney recruitment firms have had an influx of talent.  In recognition of this growing pool of lawyers, LegalOnRamp, among others, has added a legal positions component to its site. So those firms looking for talent are at an advantage now.   

Is there any silver lining?  Firms can take this time to experiment with different fee arrangements and also to shore up organizational fundamentals--enhancing performance evaluations, professional, leadership and business development training, and succession plans--so as to be better able to weather the continuing storm, and to be poised to take advantage of the economic improvements that will eventually come.  

Although some pundits are claiming that the economic impact on the law business hasn't been as disastrous as first expected (which we may have to wait a while longer to fully evaluate), there is no denying even at this stage a sea change of sorts---if only that the current fear and trembling in the legal community, historically one of the most economically stable professions, will cast a long shadow over firms as they embark on 2009 and the years to come.

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There is no denying that Gen X and Y are most comfortable interacting via technology--IMing, texting, emailing--possibly to the detriment of their face-to-face skills, as some contend.  Employees in large corporations have come to use this technology, particularly on line social sites, as a way to form community and communicate within vast, impersonal organizations.  IMing with the Senior Vice President about favored jazz albums instantly creates up-and-down-the-ladder rapport and also an enhanced commitment to the organization. 

Associates at most law firms are also making use of these technological avenues of communication.  Most firms have official or unofficial firm social groups on MySpace, Facebook and other sites. Ning is a private interactive social networking site that several IT consultants recommend as a good site for law firms to use.  It allows participants to chat real time and also post documents, and the software is free. 

Some firms have banned these social groups while others have embraced them.  On the positive side are the potential gains in networking, which Paul Lippe, CEO and co-founder of Legal OnRamp, claims "is the number one predictor of a lawyer's income," as well as an increased sense of community and therefore commitment.  Curtis, Mallet-Prevost, Colt & Mosle uses Facebook as a recruiting tool and an "I'm in Love with MoFo" site probably hasn't hurt Morrison & Foerster's recruiting either.  Of course, these sites, largely unsupervised and unsupervisable, also provide renegade employees with the perfect weapon to embarrass a firm.  As do the multitudes of privately run, individual blogs that comment on particular firms or corporations.  See, for example, our February 26, 2008 entry entitled Decorum, Virtue and Other Values in the Age of the Internet, which recounts Skadden Arps public shaming of two Skadden employees for their (unofficial) blog contest for the "Hottest Female Associate."

Microblogging offers an alternative to these social networking sites, with entries that can be relayed not only on line and by email, but also as text messages over cell phones. The degree of privacy varies as to both the individual's information and that of friends or followers.

Twitter, the leading microblogging network, has become a household name with its contribution to the Obama political campaign and its on-the-spot reports on tragedies like the Mumbai terrorist attack.  Started in 2006 and with over 3 million people using its free service, Twitter has no revenue, even from ads.  When you log on, the question that first appears and that you can use 140 characters to answer is "What are you doing?"  Twitter boasts such regular "twitterers" as Benjamin Netanyahu, the leader of the Likud Party in Israel and Kevin Rudd, Prime Minister of Australia, as well as Shaquille O'Neal, Center for the Phoenix Suns and John Cleese, the actor and comedian.

Yammer is a new and smaller microblogging site aimed at business customers with the stated goal of making offices more productive--when a user logs on, the first question is “What are you working on?”  Yammer charges $1 per user when a company joins, although anyone with a business email address can use Yammer free.  Membership gives the business administrator the decided advantage of some control over security and how the site is used. 

Apart from the networking, communication and recruiting advantages, these constant technological interchanges among a growing group of contacts offer a glimpse into the business model that is likely to become more and more the norm for lawyers and their clients.  In a global age that threatens individual anonymity, social sites and microblogging permit personal, even intimate relationships to form and thrive around the world, regardless of where the individual IPs or mobile devices are geographically located.  And it is relationships, however they are formed, both within law firms and with their clients, that will drive the future of the legal business.

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Teamwork may be the 21st Century's technology, in that it promises greater productivity--but only when used well.  After seeing double digit increases in firms that have implemented team systems--management, marketing,  industry and client teams--an initial question many interested law firms have is how to go about achieving teamwork.  Luckily, research provides a clear "life cycle" of teams that can help firms successfully reach team goals.

The stages of teamwork, according to the established 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.

During the second, storming stage, team members, particularly lawyers, will stake out their positions to test what their authority 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, 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.

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 others to whom work must be delegated, these lawyers keep the team in unnecessary meetings and conflict.  Yet it is only in stage 3 that delegation becomes effective and the individuals are freed up to do their 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 changed significantly, the team may regress back to an earlier stage and have to work their way up again.

Ideally, team members spend about 75% of the team time on accomplishing their tasks and 25% on participating in the team process, i.e. on maintaining group relations. Goals that are most amenable to team accomplishment are ones that require collective action, i.e. that 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. 

Finally, 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 goals make it difficult to maintain team motivation and momentum.

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

 

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The depression demon attacks lawyers with particular vengeance, and denial and secrecy have long been the response. The recent loss to suicide of prominent lawyers from across the country, and the near loss of others, has inspired the courageous to speak out, a first step toward turning the professional spotlight on a condition that is rampant, but also treatable.

Evidence of the problem is long-standing. A landmark 1991 study by Johns Hopkins University ranked lawyers first, among 105 professions surveyed, in the rate of clinical depression.  A 1992 OSHA report found that male lawyers in the US are two times more likely to commit suicide than men in the general population. Lawrence Krieger, a clinical professor at Florida State University College of law, who focuses on work-life issues for lawyers, has research showing that practicing lawyers exhibit clinical anxiety, hostility and depression at rates ranging from 8 to 15 times that in the general population. Research in North Carolina indicates that 11% of lawyers in that state think of taking their own life at least once a month.

After the suicide of several prominent Texas lawyers, including Kenneth Malcolm “Mack” Kidd, a justice on the 3^rd Court of Appeals in Austin, and Hermes Villarreal, a lawyer who had a loving marriage, three happy children, a successful personal-injury practice and was chairman of a community mental health facility, Texas State Bar Association president Martha Dickie commissioned a task force and video on depression last year as part of her focus on lawyer mental health issues. Over 1500 videos have been distributed. “Lawyers and suicide—it’s rampant,” says Dickie. “I am absolutely convinced that this video is saving lives.”

Daniel Lukasik, managing partner of a Buffalo, New York personal injury firm, became a courageous advocate of treating depression in lawyers after his therapist told him that one-quarter of his clients were, like Lukasik, lawyers suffering from the illness, yet there were no peer support groups. 

On a mission, Lukasik helped create the Committee to Assist Lawyers with Depression for his county bar association, which was recognized with a Certificate of Merit during the New York State Bar association annual meeting this year. He also created the web site www.lawyerswithdepression.com to offer lawyers information on the disorder. Further, he organized  in Buffalo this year what may be the first national seminar on attorney depression. 

The problem of depression is starting to be addressed at the law school level.  This year the 51,500-member American Bar Association Law Student Division launched a mental health initiative to help law students battling depression and anxiety. A mental health on-line toolkit is being offered to student bar organizations and law schools around the country. 

Complicating all these efforts to assist lawyers is the individual's fear of being stigmatized should their condition be known.  This year the ABA adopted a model rule that would grant conditional admission to practice law to applicants who have substance abuse or mental health conditions, for which in many jurisdictions applicants are deemed unfit to practice law. Applicants must demonstrate recent rehabilitation or successful treatment.

These and other initiatives to recognize and provide assistance for depression seem to be starting to have an effect.  Patricia Spataro, director of the New York State Bar’s Lawyers Assistance Program says that now 30-40% of their calls are related to depression, compared to almost zero only a few years ago. The New York City Bar’s Lawyer Assistance Program reports similar increases. “When I started with this program nine years ago, I actually had a lawyer with depression tell me that he wished he was an alcoholic because it would have been easier to deal with,” said Ms. Travis, director of that program.

In England, the Solicitors Benevolent Association, Solicitors’ Assistance Scheme and Law Care have all resolved to work more closely in helping solicitors cope with the pressures of modern practice. Lawyers in the UK, as in the US, spend so much time solving other people’s problems, they believe they should be able to handle their own problems as well, even though they have no expertise in this area, notes LawCare CEO Hilary Tilby. “Our joint aim is to help them recognize they have a problem and offer a solution for dealing with it.”

Why does such a debilitating illness strike the legal community so fiercely? Pessimism is an attitude that has been demonstrated to be highly correlated with success in the practice of law, but it is also a trait that is strongly associated with depression, particularly when coupled with ambitious, high-achieving, perfectionist, type-A personalities who put tremendous pressure on themselves.

The key is making sure lawyers know that there is assistance available that can make life and work more rewarding.

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In a recent article in The New York Times entitled “Girl Power at School, But Not at the Office,” Hannah Seligson gives some good advice to all working women, even those of the “post women’s right movement” generation in which she grew up. 

After feeling self-assured and equal to men in academia, Hannah found the workplace to be different: women undermining other women, men not taking women seriously--focusing on their appearance and “assistantizing” them.  

But she also recognizes that women can get in their own way in the workforce. Work skills women must develop, in her opinion, are a thick skin, the ability to promote oneself, and the ability to negotiate. She also recommends that women dump the perfectionism and create a professional network.

Here are some jewels to consider:

Rather than getting rattled by their feminine “sensitivity,” women have to “become impervious to the daily gruffness that’s a part of any job.”  

Seeking perfection can lead to paralysis and keep women from speaking up or taking risks. 

“Soliciting feedback… demystifies what your boss thinks about you and it also gives you the data to become a more valuable employee.”

“Reprogram your brain to think that girls do brag. Your job is a two-part process: one is actually doing the work and the second is talking about it in bottom-line terms.”

Since “women don’t have as much of a tradition of business networking (‘Do you want to go grab a beer?’ doesn’t quite roll off our tongues),” learning to ask colleagues specific questions about how to advance can be the organic approach to mentoring. 

Finally, women need to “speak salary.” Women often think they will be paid what they deserve, as long as they do the work. Follow the example of men who fearlessly ask for a raise over and over again, regardless of the response. As a Harvard Business School faculty member explained: ‘By and large women believe that the workplace is a meritocracy, and it isn’t.”

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Sonja Lyubomirsky, Professor of Psychology at the University of California, Riverside, admits being surprised by the results of the research she conducted on how to permanently increase happiness, funded by a 5-year million-dollar grant from the National Institute of Mental Health.  She conducted a meta-analysis (a "study of studies"), along with Ed Diener and Laura King, two well-known names in positive psychology, of 225 studies and concluded by writing The How of Happiness (Penguin Press, 2008).  

Lyubomirsky expected, consistent with a number of previous, more limited studies, that relationships would emerge as the over-arching key to well-being.  Contrary to those expectations, she found that, more than any other variable, including relationships, work was both a cause and consequence of happiness.  

"The evidence demonstrates that people who have jobs distinguished by autonomy, meaning and variety - and who show superior performance, creativity, and productivity - are significantly happier than those who do not," she concludes.

"Why does our work make us happy? Because it provides us a sense of identity, structure to our days, and important and meaningful life goals to pursue. Perhaps even more important, it furnishes us with close colleagues, friends and even marriage partners."  So the relationship piece is not lost, but plays a supplemental role to work itself.

The story doesn’t end there, however. Her studies reveal that the causal direction between happiness and work runs both ways. Not only do creativity and productivity at the office make people happier, but happier people have been found to be more creative and productive. They are better “organizational citizens” (going above and beyond their job duties), better negotiators, and are less likely to take sick days, quit or burn out.

One interesting finding was that people who express more positive emotions on the job receive more favorable evaluations from their supervisors as much as 3.5 years later.

"The more successful we are at our jobs, the higher income we make, and the better work environment we have, then the happier we will be. This increased happiness will foster greater success, more money, and an improved work environment, which will further enhance happiness, and so on and so on and so on."

What does this have to do with our legal business?  Of autonomy, variety and meaning, autonomy is the one we have nailed.  Autonomy is often an attribute of the legal job, one that research shows lawyers embrace, sometimes to the detriment of collaboration.  Variety is worth noting, given the rush to specialization.  In light of high salaries, many firms have retreated from the first-year rotations through departments and later year department-wide assignment systems that used to give young lawyers some claim to it.  Carefully reinstating some opportunities for variety may be greatly appreciated.

Meaning can be harder to come by, being the trickier piece to consciously engineer.  Information we have on why young people, particularly Gen X and Yers, go to law school, and what they hope to achieve in their careers, reinforces the importance of meaningfulness.  As a practical matter, that is often assumed to be measured by the amount of public or pro-bono work available to them.  Reinvigorating your pro bono program, and involving young lawyers in the process, is a good first step but also articulating and reaffirming the firm's values vis-a-vis those within the organization (for example, "we provide premier training and career support") and its clients ("we build long-term relationships based on superior industry expertise and unparalleled service") helps young lawyers place themselves in a framework of meaning.

Creativity is a skill not as often singled out for recognition by law firms, and even productivity is usually rewarded only on a single level minimum-billed-hours-required-for-the-bonus formula.  Fine-tuning both salaries and bonuses so as to reward specific behaviors, such as business development activities or developing a specific expertise, offers eager Type As the opportunity to both increase their compensation and distinguish themselves from the pack, while achieving firm goals.

Providing positive feedback is an important part of evaluations that firms often overlook, so set in their problem-solving mode that they forget to reinforce what's working.  This study points out the importance of encouraging evaluees to crow or compliment too, for the firm's sake as well as theirs.

In short, this meta-study flags as important some of the same things we hear from lawyers going out the door:  provide a more meaningful, personally relevant work experience with supportive personal relationships in order to increase satisfaction and earn loyalty.

Now, back to work...

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Linklaters is reported having decreed, in a fit of concern for work/life balance, that lawyers leave their Blackberrys at home while on holiday (vacation to us). The order is designed to insulate associates, in particular, from the relentless rat race for a few sweet weeks a year, according to management. "Sometimes it's the small things that count," one partner averred. While another lawyer confessed that "I feel naked without my Blackberry and there are times when you just have to be reachable." Whether the firm is successful in enforcing this edict is not yet clear.

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The American Bar Association has announced that Ronda Muir's cover article in the July/August 2007 issue of Law Practice magazine, entitled "The Importance of Emotional Intelligence in Law Firm Partners,"  has been awarded the 2007-2008 Law Practice Magazine Edge Award for Bronze Feature Article. 

The Edge Awards are sponsored by Edge International, and each year the awards recognize excellence in writing for the magazine.

Muir will be presented with the award at the Tucson, Arizona October 16-18, 2008 meeting of the Law Practice Management section.
 

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Muir will be participating in an IOMA audio conference presentation entitled "Associate Compensation: New Alternatives for a Difficult Economy" on July 22, 2-3:30 pm EST.  For more information or to register, go to www.ioma.com/audioconferences/1053.html. 

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Is a four-foot tall robotic standin the next step in telecommuting?  And what use would such a fellow be in a law firm or law department? 

Currently telecommuting is often an adjunct to an employee's presence in the home office-- three days in, two days telecommuting, or three weeks in, one week telecommuting--and poses its own challenges:  how to condense complicated discussions into an email, how to make sure everyone gets enough face-time.  Some telecommuters supplement their emails with Skype-type individual cameras at their remote desks and/or interact via sophisticated video conference equipment housed in the main office.

A new alternative is becoming available, if you don't mind stubbing your virtual shins on very real brick and mortar wall.

The robot looks like a coatrack on a four-wheeled box, with a tablet computer that exhibits the telecommuter's face halfway up the central metal pole, two speakers below, and a webcam and microphone above.  An attached digital camera  takes photos of critical documents or board presentations.  With the ability to move the robot at will, the telecommuter can participate in discussions and meetings throughout the office, even those that are closed-door to others.

Developed by California-based Sybase Inc., a prototype costing $9,000 is roaming the halls of its subsidiary SybaseiAnywhere in Waterloo, Ontario as the representative of a valued employee whose wife was transferred thousands of miles away.  Sybase notes that expertise is becoming so valuable and recruiting and training so lengthy and expensive, that extraordinary measures to keep talent pay off.

Minneapolis-based company PowerObjects uses robots to bring into the home office those in their Islamabad office.  "With offices halfway around the world, you have to to take advantage of whatever can help the team work together.  We no longer have to fly them back and forth or meet in a specific conference room or office for the remote person to hear all parts of the discussion --that person can move from office to office as if he/she were here," a representative explains.

With more companies and firms locating outposts in Asia and the Middle East (such as Latham & Watkin's recent announcement it was expanding its Dubai office and establishing Abu Dhabi and Doha offices), the challenges of maintaining law department / firm and team cohesion will compound. 

There are shortcomings in the prototype, of course:  a time lag in conversations and the inability of the person on the tablet to look like s/he is looking his/her companion in the eye--the webcam position scews that. 

And of course there are those times when the robot crashes into a wall and has to be rebooted.  But I assume there are days when we can all relate to that.

Robots, anyone?

 

 

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The keynote speaker at the opening of the 2008 International Conference on Emotional Intelligence this week was Jim Kouzes, coauthor of the award-winning best-seller The Leadership Challenge, executive fellow at the Center for Innovation and Entrepreneurship, Leavey School of Business, Santa Clara University, and, according to The Wall Street Journal, one of the twelve best executive educators in the U.S.

What did he have to say that is of interest to the legal world? At a time when we are struggling, in spite of the economy, to retain both young lawyers and more senior attorneys with books of business, Kouzes revealed what makes people committed to their organizations: values.

According to Kouzes, the first step in earning employees' commitment is the clarification of organizational values. His research indicates that people who are clear about their organization's values (and also their personal values) are significantly more committed to the organization than those individuals who are clear about their personal values but unclear about the organization’s values.

All leaders must, therefore, he contends, be crystal clear about what they stand for.  The lynch pin for making this approach effective, however, is that leaders must be credible—the troops have to sincerely believe that their leaders not only say their values, but also do what they say.

Tony O'Reilly, CEO of H.J. Heinz, said it this way:  "Nothing energizes an individual or a company more than clear goals and a grand purpose. Nothing demoralizes more than confusion and lack of content."

The concept of "organizational values" are often viewed with suspicion by lawyers, who smell something akin to partisanship or other lack of objectivity.  Values are not one of those protected statuses under Title VII.  You can legally proselytize (and hire and fire) "what we believe in."  But you have to start out knowing what that is.  And living it. 

Ahhh.  There's the rub.

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In April, Shearman & Sterling's entire Mannheim office packed up and reverted back to its original form, Schilling Zutt & Anschutz.  What prompted the schism?

"There are some great lawyers at Shearman & Sterling," one former partner is reported to have said.  "I just don't think they are particularly happy."

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

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

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

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

What Law Firms Are Doing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Of the gallons of ink dedicated to analyzing the eye-popping follies of Eliot Spitzer, by far the most trenchant view is contained in the March 14 New York Times OpEd piece by David Brooks. Permit me to quote whole sections of his article.

"Our social structure seems to produce significant numbers of people with rank-link imbalances. That is to say, they have all of the social skills required to improve their social rank, but none of the social skills that lead to genuine bonding. They are good at vertical relationships with mentors and bosses, but bad at horizontal relationships with friends and lovers.

[In school,] they rack up great grades and develop that coating of arrogance that forms on those who know that in the long run they will be more successful than the beauties and jocks who get dates.

Then they go into one of those fields like law, medicine or politics, where a person’s identity is defined by career rank. They develop the specific social skills that are useful on the climb up the greasy pole: the capacity to imply false intimacy; the ability to remember first names; the subtle skills of effective deference; the willingness to stand too close to other men while talking and touching them in a manly way.

And, of course, these people succeed and enjoy their success.

They treat their conversational partners the way the Nazis treated Poland. They crush initial resistance, and the onslaught of accumulated narcissism is finally too much to bear.

[But] then, gradually, some cruel cosmic joke gets played on them. They realize in middle age that their grandeur is not enough and that they are lonely. The ordinariness of their intimate lives is made more painful by the exhilaration of their public success. If they were used to limits in public life, maybe it would be easier to accept the everydayness of middle-aged passion. But, of course, they are not.

And so the crisis comes...

These Type A men are just not equipped to have normal relationships. All their lives they’ve been a walking Asperger’s Convention, the kings of the emotionally avoidant. Because of disuse, their sensitivity synapses are still performing at preschool levels.

So when they decide that they do in fact have an inner soul and it’s time to take it out for a romp ... . Well, let’s just say they’ve just bought a ticket on the self-immolation express. Some desperate lunge toward intimacy is sure to follow, some sad attempt at bonding. Welcome to the land of the wide stance."

 

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On Wednesday, March 12, 2-3:15 pm EST, Muir will be conducting an audioconference for the Center for Competitive Management on Associate Compensation: Remain Competitive Without Breaking the Bank.  Included in the discussion will be a review of current trends and out-of-the-box ideas for dealing with the impact of escalating associate compensation, how to find the best strategy for your own law firm and overcoming the problems and pitfalls in making that strategy work.

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Law firms are often bedeviled by the on-line shenanigans of their young (and sometimes not so young), who can carelessly leave a footprint permanently in cyberspace.  While these irritations don't often rise to the level in titillation value or PR devastation as some of the old-tech crimes perpetuated by errant employees/partners, like the Cravath tax lawyer who solicited children for sexual favors, those types of cases are (thankfully) fairly rare and have a limited media shelf life.  Blogs and social networks, on the other hand, seem to just keep on giving and giving, although often an unwelcome PR black eye. 

Here's some recent developments for law firms in the cyberspace sandbox. 

Allen & Overy's London office recently issued a ban on accessing the social networking website Facebook in light of concerns that the impact of downloading videos from the site could compromise the firm's IT performance.  Within days, complaints forced a turn-around by management, nominally on the grounds that the site is used for business as well as social reasons.  Currently there are 932 members on the A&O network on Facebook, a nice bump over the 600+ when the firm tried to shut it down. Internet comments related to the episode ran the gamut from condemnation of the firm's leadership for being so easily swayed to one person's plea for more such bans so that work could get done.  

Arguments for/against law firm blogs/social networks usually include claims that they are useful/extraneous for business development in the internet age, that other businesses do/don't (investment banks often don't, for example) allow workers to access them, that social/work boundaries should/should not be imposed, that the sites are time-wasters/efficiency drivers.

Reflecting these mixed feelings, evidently approximately one-third of law firms have Facebook networks, and two-thirds of law firms have blocked them.  Big firms with networks on Facebook include at least eight of the largest: Skadden, Arps (with 379 members), Baker & McKenzie (728), Jones Day (286), Latham & Watkins (291), Sidley Austin (199), White & Case (370), Shearman & Sterling (225), and Kirkland & Ellis (192).  While Mayer Brown and Weil, Gotschal, among others, have apparently banned them.

As a cultural matter, these kinds of social networks can be a very useful tool in building community and connection at firms that have long been known for neither.  Their availability resonates with Gen Xers and Yers, who are most comfortable with an open technological stance.  And there are at least nascent efforts to truly use these types of networks for business development purposes.

LegalOnRamp, a relatively new site being developed in conjunction with Cisco, envisions an  interactive brainstorming locale involving in-house and outside lawyers, who can meet and discuss substantive legal topics, as well as management and personnel issues.  Mark Chandler, GC at Cisco, touts this type of technological meeting ground as the model for how law will be conducted in the future.  Instant access to not only profiles, expert articles and form provisions, but also substantive issue forums and interactive document building certainly make it a useful tool.  Another feature, being able to see who each party is connected with-- their "friends," in Facebook parlance, also efficiently builds reliable connections and makes for more informed referrals.

As to independently run "insider" blogs, most firms have no ability to influence what is on them other than by using their bully pulpit.  The latest controversy involves a blog run by two unnamed Skadden Arps employees-- with admittedly no authority to speak for the firm-- that held a "Hottest Female Associate" contest, with photos of the candidates included.  The contestants were neither notified nor asked for permission to post their names/photos and a few photos were of an obviously personal nature (don't rush to Google it now--the photos have been taken down). 

Much to the apparent surprise of the blog-minders--"Damn, we feel like we were called to the Vice Principal's office today and had our knuckles wrapped (sic)."-- Henry Baer, chairman of Skadden, wrote an email to the firm recognizing the prevalence of blogs but weighing in on the inappropriateness of the contests, which "does (sic) not reflect our values and standards of behavior... We urge the authors of the blog to consider both the privacy and feelings of the affected attorneys and to discontinue the contests." 

Several points seem worth noting regarding this particular standoff.  While the female contest had already been decided, the still outstanding "Hottest Male Associate" contest was promptly cancelled by our erstwhile bloggers. Also, it is interesting that Baer's objections were confined to the impact of the contest on the attorneys involved and other attorneys at the firm, who were concerned and embarrassed.  No doubt he had good counsel on the necessity to counter any appearance of a hostile workplace.  But several comments on the blog make it clear that there is potentially another kind of  financial downside:  the bloggers risked turning off clients and employment candidates as well.

A retort to Baer's letter by the bloggers--"We're not quite sure what Skadden's "values" are (or, for that matter, the Firm's "standards of behavior")"--is perhaps the most troubling aspect of this little imbroglio.  See our upcoming entry Joining the British in Hunting for an Identity on the importance on both sides of the pond of knowing who you are and what you stand for as a firm, and effectively inculcating that into the culture.

A corporate real estate lawyer at Jenner & Block, Jennifer Sara Levin, recently founded  Legal Intelligence, an online platform connecting law school students with top-tier firms.  A pilot program involving three law firms and her alma mater, Northwestern University School of Law, is running online at http://www.legalintelllc.com. The idea is to help students find the law firm that fits them best, partly through online video conferences.

"It's like a Match.com for law students," Levin said of her start-up.

Law firms pay to participate, Levin said, because they want to find law school graduates who aren't just qualified but who also share their firm's values. Often, Levin said, top-tier law firms end up with graduates who don't fit their culture. "There's no way to do it in a 20-minute interview. You can't get enough information to know if this person is the right cultural fit," she said.

There's that "v" word again.

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

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

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

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

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

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

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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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Is living a life filled with distrust and deception the price of achieving professional success?  As we head into another year, it is a query worth pursuing.

Steve Katz, adjunct professor at Northwestern University's Business Institutions Program, points out a bestseller published in 1998 that purportedly draws from centuries of powerful leaders (on the order of Machiavelli, Talleyrand, Bismarck, Catherine the Great, Mao, Kissinger, Haile Selassie, etc.) for the best strategies for achieving business success. 

The problem with The 48 Laws of Power by Robert Greene (designed by Joost Elffers) is that virtually every one of these "laws" are counter to most current notions of business ethics and best leadership practices, and in some cases contravene a number of other generally accepted precepts as well.  Which doesn't mean that there aren't plenty of people out there who nonetheless following these "laws."

Mastering one's emotions and perfecting the arts of deception and indirection are, the author asserts, the essential keys to success. Here are some examples:

•   Law 3:    Conceal your Intentions
•   Law 7:    Get others to do the work for you, but always take the credit
•   Law 11:  Keep people dependent on you
•   Law 21:  Play a sucker to catch a sucker-- seem dumber than your mark
•   Law 27:  Play on people's need to believe to create a cult-like following
•   Law 33:  Use each person's weakness as a thumbscrew you can turn to your advantage
•   Law 44:  Disarm and infuriate your enemies by mirroring their values and their actions

While mastering one's emotions is a worthy and productive goal that few fully attain, recent research shows that using that skill to suppress emotion at the workplace will not produce much success.  Lack of effective use and conveyance of emotion, particularly by the leader, is most likely to produce a working group that is not cohesive and not satisfied. 

Perfecting deception and indirection would hardly seem to be what would distinguish anyone from the crowd these days.  And in a post-Sarbanes Oxley world, wielding deception and indirection as tools of management could possibly lead to the wrong side of the bars .

What is not particularly surprising is that the books that Amazon.com identifies as most often bought along with 48 Laws of Power are Get Anyone to Do Anything; Never Feel Powerless Again by David J. Lieberman and The Mystery Method: How to Get Beautiful Women Into Bed by "Mystery" and "Lovedrop."  (Was that a collective rush to Amazon?)

The point is that these kinds of  "power" plays are most likely the province of people who feel they lack influence, allure, value.  The sorry result of resorting to these tactics is that, whatever success is achieved in the short run (and I'm not assuming there usually is much), in the long run not only is there no success, but the journey to that unsucessful end will have been quite an unpleasant one for both the "power player" and his/her team.   

A better stance would be to do the opposite of what each of these rules suggest: 

• Make your intentions clear
• Give credit to others even when you have done some of the work
• Provide the support that can set your team free
• Be a source of information and inspiration to those working with you
• Give others the gift that you believe in them
• Show how each person's strengths can help them and their team work better and happier
• Take a stand for your values and make sure your actions follow suit

So, let us take the opposite of another of these "power laws", Law 20 (which advises not to commit to anyone or anything), and commit to a new year of achieving the kind of power that results from using both emotions and intellect to effectively and honestly build trust and respect at work.

Happy new year!

 

 

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For the first time in six years, law firm expenses in the US and the UK are growing faster than revenues, according to a recent article in The American Lawyer.  For the first six months of 2007, gross revenue grew at a strong 13.1%, well above the compound annual growth rate of 10.5% of the prior three years, while productivity (average hours per lawyer) was flat.  Rate increases were in line with the six-year average increase of 7% and, continuing an upward trend, there was an increase in leverage-- total lawyers rose by 7.4%, significantly above the increase in equity partners.

But there were also big increases on the expense side, with the expense growth rate of 13.7% much greater than the average 9.2% of the last three years and outstripping the increase in revenues (13.1%) for the first time in six years. 

The reasons are pretty obvious.  A 17% rise in compensation costs accounted for the bulk of the increase in expenses.  This last year has seen not only big jumps in associate compensation and bonuses but also the announcement of special additional bonuses yet to come.  Equity partner growth in the first half of 2007 was also up 1.5 percent, over .5% from the prior year, although still not up to the average six-year rate of 2.6%.  Operating costs (occupancy and overhead) also grew close to 12%, in many cases driven by additional new hires.  And poor currency conversions rates relating to foreign office expenses have driven those costs up dramatically.

So what does the crystal ball tell about the future?  With the drop off in transactional work caused by the credit crunch and no up-tick in bankruptcy and litigation, productivity in the second half of 2007 is likely to slow, and those higher salaries and bonuses on top of bonuses will fully hit the books.  Revenue for the entire year is likely to be cushioned by the strong inventory accumulated during the first half of 2007, resulting in still decent increases in profits per equity partner of 6-8%.

But 2008 may be another matter altogether.  If transactions don't come back and other practices don't take up the slack, reduced revenues and even layoffs may be in the offing. 

It's a new year coming.  Let's hope the party hats stay on.

 

 

 

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It is a scenario we in the legal field have come to expect--announcements of associate compensation increases are responded to in waves. First the largest firms rush to match them, then the mid-size firms determine how much they are going to raise compensation, often not in a dollar-for-dollar match, and then there is the soul-seeking by the smaller firms.  Can they afford to raise compensation at all? 

In the aftermath of Cravath's recent announcement of special bonuses this year--bonuses ranging from $10,000 to $50,000 on top of the normal annual bonuses ranging from $35,000 to $65,000--a number of large firms have, as expected, followed suit:  Davis Polk & Wardwell, Debevoise & Plimpton, Sullivan & Cromwell, Milbank Tweed, Paul Weiss and Simpson Thacher & Bartlett.

Presumably the mid-size firms are weighing their options and the smallest firms are shaking their heads.

LOWERING COMPENSATION

What is interesting at this juncture is that there are significant developments at the other end of the compensation continuum as well, particularly among mid-size and small firms. 

Chapman and Cutler, a 220-attorney firm in Chicago, this fall started offering second-year associates the opportunity to choose between two pay plans-- one with lower hourly billing requirements and less pay and the other with higher billing requirements and more pay.  Based on both associate and client feedback, Dallas-based Strasburger & Price has replaced over 400 of its required 1900 annual billable hours for first-year lawyers with training hours devoted to associate development--mentoring, leadership development and pro bono projects, while keeping compensation at the same level. 

Boston-based Lowrie, Lando & Anastasi, an intellectual property boutique launched in 2003, has grown to 27 attorneys in part by requiring just 1,600 hours from associates while starting them at $130,000, $30,000 below what large firms in the area offer.  And Ford & Harrison completely abandoned billable-hour minimums for new attorneys, shocking the legal world that views billable hours as the bedrock of the business model, while also earning it some good publicity with potential clients.

In a particularly dramatic development, McDermott Will, a 1,000-attorney firm, has announced that it is hiring a cadre of attorneys to populate a new track the firm is creating-- one that is not en route to partnership, works less hours (30-40 @ week), is paid less (@25% less) and is evidently billed out at lower rates.  With the escalating volume and cost of e-discovery, contract attorneys have become fairly common, flying mostly below the firm/client radar.  These McDermott Will attorneys, however, are being given a permanent, formal position in the structure of the firm.  "The cost of document review has become intolerable for everyone," according to David Balabanian, head of Bingham McCutchen's litigation group.  In the world of full service firms, adding this track allows McDermott Will to retain both the quality control and the profit margin of work that might otherwise go elsewhere-- to lower-cost attorneys, such as SQ Global Solutions in India, or to outside document review firms.

The coup de grace goes to Washington's Howrey, with 618 attorneys, who earlier this year dropped lockstep completely in favor of a performance-based associate compensation system.  We noted in our entry A Small but Important Step in Associate Compensation? DLA Piper's distinction in paying associates differently based on practice area, and the potential that that raised for other types of compensation distinctions. Howrey has taken that to its logical extreme.  It hasn't been easy.  Modifying evaluation forms, adding training programs and hiring personnel to implement the system has been a "tremendous amount of work," according to Edward Han, hiring and development partner.  But the proof will be in the pudding.

THE IMPACT ON NIMBLENESS

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As many of the biggest law firms are concluding, “professional development” has become the preferred vehicle for addressing diversity attrition. Professional development encompasses enhanced orientation, mentoring, assignment and delegation processes, leadership training, career planning, diversity training, management skills, feedback training, business-development training, affinity groups and other tactics aimed at recruiting and keeping a diverse associate group.

The concept of professional development or talent management did not exist in law firms 20 years ago, and the data shows a clear pattern of women and minorities historically reporting less assistance with professional development, as well as lower job satisfaction, compared with white males.

Now most large law firms have some sort of professional development program and recent data from the NALP Foundation shows that this trend toward formalized programs is paying off. In 1998, 20% of associates left their positions at or near the end of their second year of employment. This year, entry-level lawyers are more likely to make their first move at the end of their third year of employment, staying 30% longer. 

The ABA Commission on Women engaged the National Opinion Research Center at the University of Chicago to examine why retention rates for white men are so much higher than those for women of color, and women of color retention rates are higher than those for men of color and white women. Consistent with the NALP’s data, the study found specifically that women of color felt excluded from networking opportunities, felt they were denied desirable assignments, and had limited access to client development opportunities, thereby making their billable hours targets harder to achieve.   

The NALP found that white men are more likely to report a consistent workload, regular feedback and intellectual challenge in their work, and they also report the intention of staying longer at their firms.

A consistent workload, regular feedback and intellectual growth are matters within the control of each firm, and are geometrically enhanced with the involvement of a person charged with professional development.

What specifically can firms incorporate into their processes to improve diversity retention? For starters, here is a short list.

• Exit interviews
• Coaching for partners to improve associate management and feedback techniques
• Formal mentoring program
• Color-blind assignment program
• Sophisticated evaluation and feedback forms and procedures

But the best way for firms to systematically enhance diversity retention is to establish a professional development department/person/consultant who can provide benchmarks to identify areas for improvement, formulate goals and then work with the diversity committee, the associate recruitment committee and associate managers to realize those goals. 

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Growing future leaders at our best business schools increasingly involves teaching "softer" skills, and often using personal style assessments. One of the more rigorous and long-standing low-residence courses at Harvard Business School is the nine-week Owner President Management Course (OPM), which spans three years.  Roughly 120 business owners, only half of whom are usually from the US, are enrolled in this course.

Last year, one of the course professors, Dr. Linda Doyle, included The Birkman Method in her "Leadership and Organizational Effectiveness" classes for the OPM, a class that examines leadership styles through case studies.  The Birkman Method is a personal style assessment that identifies a number of traits, and also how those traits manifest in an organization and morph under stress.  Using the Birkman assessment, OPM participants are able to identify and analyze their own authority styles, and the strengths and problems that might develop from those styles.  Harvard has decided to continue the use of the Birkman in this course and is considering including it in other MBA courses.

Yale School of Management has also introduced personal style assessments into its curriculum.  All MBA candidates are now required to take an assessment to help identify leadership styles, strengths and potential problems.

Heidi Brooks, Director of the Leadership Development Program at YSOM and a lecturer in Organizational Behavior, is convinced that these assessments are avenues to self awareness and interactional intelligence that can only improve management effectiveness.  Since most major corporations hire and promote at least in part on the basis of similar types of assessments, having MBA candidates familiarize themselves with the testing process and the information it provides also gives them an early advantage. 

Besides Harvard and Yale, Dartmouth University's Tuck School of Business, University of Southern California's Marshall School of Business, Massachusetts Institute of Technology's Sloan School and Stanford's Graduate School of Business are among the business schools that have heard from alums and companies across the country that it is the softer skills--communication, brokering compromises, managing conflict, developing relationships and leading groups--rather than strategy or financial analysis that are missing in MBA graduates.  And are doing something to address those weaknesses. 

Stamford's B School revamped its leadership-training curriculum this fall, now requiring all first-year students to take personality tests, participate in teamwork and management-simulation exercises and critiques of their people skills.  Professional executive coaches will watch the simulations and offer advice.

At Tuck, the leadership-development program, modeled on corporate programs, that was launched in 2004, puts all first year students in teams of five.  The groups complete coursework together, help each other with assignments and then rate themselves and each other on how well they operate in a team, including how well each of them "solicits feedback and acts on it" or helps "manage conflict."  Reports on their performance are used to inform the coaching sessions the students attend and to design personal development plans.

Says Warren Bennis, professor at USC's Marshall School:  "It isn't just nice--these interpersonal skills.  It's the stuff that's necessary to lead a complex organization."

It is only a matter of time, as they say, before law schools recognize the impact of "people skills training" and follow suit.  Not only are lawyers less educated both in school and in the workplace on the importance of developing these skills and the methods of doing so, the data shows that they are as a group psychologically and behaviorally more challenged  in achieving results.  Which makes this sort of training--whether at law school or on the job-- even more critical.

 

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A recent article in the New York Times on young 20-something Internet mega-millionaires quoted one as saying “You ask yourself, ‘Why am I not happier given how lucky I’ve been?’”

While we as lawyers, being supremely circumspect, would rarely verbalize this sort of “squishy” sentiment out in the open, given the levels of unhappiness in our profession, it is a question we should be asking ourselves. 

So here are some of the findings about "happiness," which has exploded as a subject of research over the last few years. Let’s start with the data on the current state of happiness in the US.

Recent surveys point to a relatively high “happiness quotient” these days:

·             86% of Americans are content with their jobs (General Social Survey)

·             76% are satisfied with their family income (Pew Research Center Survey)

·             62% expect their personal situation to get better over the next five years vs. only 7% who expect it to get worse

·             65% of Americans are satisfied over all with their own lives—one of the highest personal satisfaction rates in the world.

As the query of that Internet mega-millionaire illustrates, happiness is not correlated with financial resources or even political stability: countries like Nigeria, El Salvador, Columbia, Mexico and Puerto Rico (along with Switzerland, Denmark and Canada) register higher rates of happiness than the US in the World Values Survey. Other countries, such as Romania, Russia and other former Soviet countries, consistently score at the bottom.

This fairly rosy picture in the US becomes decidedly darker when we factor in the “happiness” data on lawyers:

·             Lawyers generally have one of the highest dissatisfaction rates with their work of all industries/professions, with 65% of young associates surveyed by the ABA last year intending to change professions within two years.

·             Lawyers also have the highest “personal distress” rates of any industry, exhibiting dramatically higher incidences of suicide, mental illness, divorce and substance abuse than other industries. 

Women lawyers seem particularly effected by these developments:

·             Fewer women are seeking law degrees: from 1963 through 2001 female enrollment at law schools climbed nearly every year, from 3.7% to a peak of over 50%; since 2002, however, the percentage of women in law schools has declined each year, currently down to 46%.

·             At a time of very high attorney turnover generally (over 20% leave their jobs every year), the highest drop-out-of-the-profession-entirely demographic is women.

·             In spite of many years of women in the "pipeline," only a small proportion of women stay to become partners in law firms (17%) or senior legal counsel in corporations (18%).

The message seems to be that, in spite of Americans' general glee, few lawyers are happy living the lawyer's life.

What Makes Us Happy?

As it turns out, over the last few years a wave of books on happiness, primarily written by academics, have been published. Among them are:

The Pursuit of Happiness, by David G. Myers

Happiness, The Nature and Nurture of Joy and Contentment by David Lykken

Happiness, A History by Darrin M. McMahon

Authentic Happiness by Martin Seligman

The Art of Happiness by the Dalai Lama and Dr. Howard C. Cutler

The Happiness Hypothesis by Jonathan Haidt

Stumbling on Happiness by Daniel Gilbert

Happier: Learn the Secrets of Daily Joy and Lasting Fulfillment by Tal Ben Shahar

Most of these books are based on David Lykken's findings that there is an individual “set point” of happiness to which most people revert, regardless of their life circumstances—illness, financial concerns, family problems. Lottery winners and paraplegics, those both accepted and rejected as partners or general counsel, all on average return to their baseline levels of happiness within a year.

If health and other circumstances don't impact our happiness, what does? Jonathan Haidt compares our emotional life in The Happiness Hypothesis to a small, conscious monkey riding a large, unconscious elephant: in many ways we are estranged from the great bulk of our own inner feelings. The running commentary in our minds about what we feel and why is often simply wrong, he contends. For example, research subjects unknowingly hypnotized to react in a specific way to a cue quickly come up with rational, and in their mind truthful, “explanations” of why they acted that way, even though those explanations are causally entirely beside the point: their reaction was programmed in their unconscious by the hypnosis. 

Not only are we not able to access a great part of our inner feelings, evidently we are not very good at analyzing the happiness data that we do have access to. Daniel Gilbert in Stumbling on Happiness explains that we are very bad at remembering what made us happy in the past and in predicting what will make us happy in the future, often overestimating the bang we will get and how long it will last. For example, people often list children as a source of happiness, yet the data indicates that children in fact are "extremely negative," "mildly negative" or have no effect on overall happiness. (More about this later.)

Could We Be Happier?

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What is the most important attribute to be looking for as you groom your young lawyers for management? 

A 2006 study reviewed in the Leadership and Organization Development Journal assessed the relationship between emotional intelligence and managerial effectiveness, confirming what you might expect.  A total of 38 supervisors (37 males and 1 female) and 1,258 subordinates from a large manufacturing organization participated. Data analysis found that the total MSCEIT score (an emotional intelligence assessment that I consider most reliable) displayed a strong positive correlation with supervisor ratings; that is, the more emotionally intelligent the supervisor, the more effective and productive s/he was rated by others in the organization.

First, I would point out that this study doesn't tell us whether these emotionally intelligent supervisors who were rated more effective actually were more effective than their lower EI colleagues.  All we know is that they were perceived to be more effective.  The implication being that even if those high EI supervisors weren't quite so great in the accomplishments department as advertised, their loyal team still saw them in the best possible light.

This distinction is particularly important in environments such as law firms and law departments, where dramatically high skepticism (averaging in the top 10% of the American population) creates hurdles that make it hard for managers to establish rapport and trust, much less garner appreciation for a job reasonably well done.  Second- and third-guessing is often standard procedure, regardless of how demonstrable  the accomplishment might be.  While emotionally intelligent managers may be in fact most effective, this and other studies demonstrate that they are in any event going to have the interpersonal skills to align legal staff and professionals on the same side.  Given the challenge of creating supportive cultures for growth and accomplishment in law organizations, identifying these kinds of leaders becomes imperative.

Two major subscores make up the MSCEIT total score.  In the study above, Experiential EI, which includes perceiving and using emotions, was found to be very highly correlated with high supervisor ratings, whereas the Reasoning EI subscore, which includes understanding and managing emotions, displayed no significant correlation.

Our study of emotional intelligence and lawyers (also using the MSCEIT) indicates that lawyers' scores in EI are generally a standard deviation below the general population (that is, 85 compared to 100).  In addition, lawyers score significantly lower on the Experiential subgroup than on the Reasoning one.  Their ability to "read" their own and others' emotions is notably low compared to the general population, and they also are not facile at "using" emotions, i.e., moving from a less appropriate emotion to a more appropriate one.  Their Reasoning scores are usually significantly higher than the Experiential ones, lawyers being evidently well-suited to logically analyze even the emotional realm.  The problem is that weakness in reading emotions creates a garbage-in, garbage-out result when that reasoning horsepower is applied to inaccurate information.  So lawyers often get blind-sided by what they hadn't originally correctly perceived .

This finding as to the importance of Experiential EI to effective management can be critical in the case of managing lawyers.  Not only should we be grooming our young lawyers to be emotionally intelligent managers, but we should also be specifically rewarding those who are expert at recognizing and using emotions, an item I would bet is not currently on any evaluation form.

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

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

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

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

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

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

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

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

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A grand old firm has gone through a rough patch recently—one of its associates not only sued for sexual orientation harassment and discrimination, but also proceeded to file partnership documents and communications that S&C certainly would prefer to not have circulating publicly. Further, an article in the legal press lampooned a memo S&C sent around to its partners exhorting them, among other things, to say "thank you," in case their mothers had forgotten to instill in them that finer point of social intercourse. The legal blogosphere enjoyed batting that one around.

But S&C may have gotten the last laugh. In the Midlevel Associates Review released last month by The American Lawyer, New York law firms (as defined there to mean firms with more than 45% of their lawyers in New York) were once again roundly denounced, with this year only 7 firms making it into the top half of the 162 firms surveyed. The New York associates registered their dissatisfaction particularly regarding relations with partners, training, communication about what it takes to make partner and openness about firm finances. While New York firms have always performed poorly in these ratings, several firms fell precipitously since last year's survey—Cravath Swaine slid 27 places, Paul Weiss was down 59, Debevoise Plimpton fell 64 slots and Wachtell Lipton plummeted 74 places.

Thumbing its nose at the rest of the straggling New York herd was Sullivan & Cromwell, which vaulted from number 153 on the list up to number 48. 

So now that all the chortling has died down, was it the "thank yous" that worked? Perhaps. But also, for the first time this past year, S&C leaders gave associates a series of briefings about firm finances, business strategy and the road to partnership.  Chairman H. Rodgin Cohen and vice-chair Joseph Shenker, among others, made in-person presentations and took questions. 

On those two most damning survey questions for New York firms, "communication about what it takes to make partner" and "openness about finances," S&C's ratings this year were 3.48 and 3.64 respectively, out of the ballpark compared to their prior year's ratings of 2.14 and 2.13, and even much higher than this year's average New York firms' ratings of 2.59 and 2.94. 

So it looks to me like Mom was right. Talking it out—even those tricky financial matters and partnership issues that several New York firms said, and continue to say, were either too confidential or essentially none of the associates' business—creates rapport, incentive and even, get this, trust in an environment that sorely needs all three. And it does so quickly—with the results showing up in the first survey! 

Mom would be so pleased.

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

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

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

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

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

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

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

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

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"Think of a succession plan as life insurance for a law firm." 

An article in the August 24-30 issue of the Puget Sound Business Journal entitled "Firms Make Plans to Carry on When Leaders Go" quotes Ronda Muir on the subject of succession planning and describes the services that she and Robin Rolfe Resources performed for a Seattle law firm.

"Senior Attorney Jay Derr of Seattle firm GordonDerr said that nearly three years ago his firm decided to hire Muir and company to put together a succession plan... Thus, the preparations were in place when founding attorney Peter Buck decided to leave... to start his own firm...' We felt no economic blip from it at all,' said Derr."

"Succession is especially critical to the survival of so-called first generation 'founder firms,'"said consultant Muir.  'It involves finding a dynamic leader who can transition into a new role... and moving the founder to a different level...'"

 

 

 

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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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Ronda Muir's article "The Looming Associate Crisis" leads the July 2007 ALM Law Firm Partnership & Benefits Report, Volume 13, Number 6.   

After reviewing statistics that show an ever-tightening supply, and potentially less qualified pool, of associates who are paid more yet leaving earlier than in years past, Muir recounts some of the tried (and perhaps less currently true) strategies for coping, and also identifies some more radical solutions that innovative, forward-looking firms can benefit from.

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

From the looks of things, not much.

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

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

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

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

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

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

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

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

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

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

It's an image worth the investment.

 

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

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

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Oddly enough, where it is most needed, Boards and other management groups may be the last frontier for achieving enhanced performance management. 

Historically, the perceived advantages of relying on a managing group, instead of one individual, include access to the group's collective wisdom –"several heads are better than one"–as well as the ability to spread an increasing management workload over a number of people. 

A recent Center for Creative Leadership study identified an additional advantage. Effective management these days requires the resources of several people, rather than the lone hero, in order to meet the global challenges of collaboratively connecting across boundaries of all kinds—geography, language, culture and expertise.

Avoiding "Extreme" Group Decision-Making

Yet there is a well-documented propensity for groups to drift toward "extreme" decisions, that is, a committee often makes a decision that none of the individual members of the committee, acting alone, would make. These group decisions can be extreme by being either extremely risky or extremely conservative, and you see lone Directors routinely disavowing their cohorts’ actions after the fact. There seem to be a number of reasons for this tendency:          

Diffusion of Responsibility. An individual's part in a group's decision evidently weighs less heavily on him/her than an individual decision would, the implication being that not as thorough an evaluation of the issues is made when the decision is attributed to the group.

Ignoring the Lone Voice. Often groups do not properly take into account the most relevant expertise in the room.   Most small groups tend to make decisions based on the information all members share about a topic, overlooking important facts that one or several people bring. Although management committees are usually looking for creative, out-of-the-box strategies, a solitary opinion is often taken lightly or ignored in the flow of debate within the group.

Social Pressure. The more bonded the group, the more committed they are likely to be to reaching a decision, particularly one that pleases most of the members, even if a decision should be delayed or a less pleasing one would in fact be best. 

Competition. When committee members agree on the parameters of an issue, individuals may try to one-up each other by suggesting more and more extreme solutions, then promoting their solution as the best.

Stress. Groups under pressure act very much like individuals under stress, only more so. They often procrastinate, calling for further information, or become committed to bad decisions primarily to protect themselves and each other against criticism. This effect may account for the popular notion that committees tend to "split the baby," resulting in a less controversial solution that does not in fact work very well.

Seeing What Others Say

The impact of psychological factors on group decision making may go even further, to actually alter each person’s perceptions. A study using advanced brain-scanning technology shows that, in effect, group members often in fact see what the group tells them they see. In an exercise involving mentally rotating images of three-dimensional objects to determine if the objects were the same or different, subjects were assured of an incorrect conclusion by confederates and then agreed with those wrong answers 41% of the time. The brain activity of those who went along with the group was markedly different from those who took independent positions. When subjects concurred with wrong answers, activity increased in the area of the brain devoted to spatial awareness, meaning that their actual perceptions were being influenced. Those who made independent judgments showed activity in the region of the brain associated with conflict management, signifying an emotional toll for going against the group's perception.

Based on the results of this study, one of the potential major advantages of a group decision—"several heads are better than one"—can disappear if the group successfully, even if unintentionally, co-opts individual insights. The most problematic aspect of these results is that not only does the group lose the "lone voices," but also the lone voices lose their very awareness of their differing perspectives. The change in their perception makes them incapable of raising their idiosyncratic flags.

Continue Reading...

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Why Feedback?

Effective leadership in lawyers is achieved by using some of the same strategies that work with other high-performing professionals, while also requiring an appreciation of the nuances that are particular to the legal personality.  Awareness is the standard starting point for most leadership assessment and improvement programs.  Studies have clearly shown that the higher your self-awareness, the better a manager and performer you are, and, as an added carrot, the more you actually enjoy your work. 

Unfortunately, studies also clearly show that the higher you rise in the ranks of an organization, the less likely you are to be accurately aware of your impact.  Thus, oddly enough, in any given business the CEO is probably less informed about how she and her work are perceived by her colleagues--below, across and above her-- than is the night typist.  This turn of events is often attributed to the fact that the higher up most organizations one goes, the less systematic, extensive and honest is the feedback. 

Feedback and Lawyer-Leaders

Lawyers, and certainly general counsels and firm partners, often function like the CEOs of their own small businesses, and therefore risk suffering from that same top-of-the-heap lack of awareness that other senior management executives experience.  As to the younger lawyers, while run-of-the-mill annual associate reviews are often standard, most of these reviews are still not successful in effectively giving meaningful feedback . And once those lawyers become senior managers or partners themselves, there is usually no system at all for them to get feedback-- from the associates who work for them, from other partners or senior managers or from clients. 

There are well-established ways to produce effective feedback in an organization: professional assessments of individual working styles using Myers-Briggs and other testing instruments, regular feedback-targeted personal reviews, mentoring programs that include in-depth feedback, and department, practice group or firm-wide meetings or retreats. Bottom-up (from associates) and cross (from other partners or colleagues) reviews are recent additions to the array of law firm/law department feedback systems that try to provide senior lawyers with that critical awareness.  Other tools are practice group, partnership and client surveys, particularly if the surveys are followed up with face-to-face discussions. 

Unfortunately, giving and receiving written and person-to-person feedback strikes many lawyers as bordering on, if not squarely in, the realm of useless touchy/feely psycho-babble. Yet it is a skill that should come easily to lawyers.  Rigorous analysis and clear communication, particularly in identifying issues and crafting resolutions, are the stock-in-trade of what we do.  Why then is it that lawyers so resist using these potentially powerful tools in their own practices?

Feedback and the Half-Empty Glass

The wrinkle here may well lie in other personality attributes that lawyers often possess.  First, as a group, lawyers score high on resistance to feedback-- they get defensive and don't listen, or lash out with their point-by-point answers.  Part of this response derives no doubt from years of advocacy thinking-- every point deserves a good counter-point.  The high esteem that lawyers tend to hold themselves in-- another trait that serves them well when under attack from opposing counsel-- also feeds the inability to hear "criticism." 

A further attribute that may well contribute to lawyers' disinterest in feedback is their inherent pessimism. Martin Seligman, a University of Pennsylvania psychology professor who has been a leader in the development of the field of positive psychology over the last ten years, identified lawyers, in a survey of 104 careers, as the most pessimistic.  While researchers can argue whether that attribute makes lawyers likely to be more or less accurate in their assessments of legal situations, it does make them, as a group, more resistant to "new" policies or procedures, and more likely to think that remedial steps are of dubious value. 

"Peanuts" and You:  Cashing in on a Valuable Commodity

I was recently in the student center of a large suburban high school.  In a deja vu from a "Peanuts" cartoon strip, a teenage boy sat behind a hand-written sign that said "5 cents -- I'll tell you what I think of you."  Beside the sign was a very large pile of nickels.  An enterprising kid was demonstrating what a valuable commodity honest feedback is. 

Lawyers have the skills and the opportunity to cash in on that valuable commodity.  As lawyers, we can begin our leadership effectiveness program right there:  by simply learning something about ourselves, we can start accessing a whole new array of potentially useful tools for enhancing our practices and our lives. 

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Ronda Muir will be making a presentation on managing the people risks that arise in law firms at a conference for Managing Partners in Chicago on Thursday, June 21. Sponsored by ARK Group, the conference, entitled “Developing a Risk Conscious Culture in Your Firm,” explores the relationship and interdependence of ethics, risk management and legal compliance.

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Herewith a short but concise history of the twisted path that has led to billing by the legal hour, and the consequences of its tyranny.

During the 1800s, US legal fees were capped "per service" by state law, and litigation fees were usually paid by the losing party.  Some lawyers were able to collect "bonuses" or charge retainers to circumvent the limitations of capped fees. 

In 1908, the ABA declared contingency fees to be ethical, which opened a new source of revenue at least for litigation matters.

By the 1930s and 40s, however, the nature of legal fees was set on its head: what had been a capped system turned into a base system.  State bars began publishing minimum fees, in most cases providing that those lawyers charging less than the minimums were to be punished.  Similarly, the ABA Model Code, which stayed in effect until 1969, declared it unethical to "undervalue services."

Helping fuel this change in attitude was the expansion in 1938 of the Federal (and many states) Rules of Civil Procedure, which made litigation potentially more complicated and therefore also less amenable to flat fees.

Over time lawyers complained that dentists and doctors were out-earning them.  A 1958 ABA pamphlet contended that lawyers were bad businessmen in comparison to other professionals, the remedy being to better track time and to keep more detailed records.  That pamphlet also suggested that lawyers work 1300 hours a year-- or 5-6 hours @ day, five days @ week in a 48-week year.

In 1975, the Supreme Court, outlawing both the capped 1800s practice and the base system from the 40s, held that set fees for legal services constituted price-fixing, and was a violation of the antitrust laws.  In response, by the late 1970s, most lawyers charged for their services based purely on hourly billing.

In 2001, the ABA asserted that too much emphasis was being placed by firms on billable hour requirements, which was leading to bill padding and general inefficiency, as well as damaging firm culture.  This time, the ABA recommended billing expectations of 2300 hours annually, composed of 1900 hours billable to clients plus a total of 400 additional hours for: firm service (100 hours), pro bono (100 hours), client development (75 hours), training and professional development (75 hours) and professional service (50 hours).

Those expectations translate into a total 9-10 client and other hours @ day, five days @ week, 48 weeks @ year.  The standard guideline for billable hours is that it takes approximately 10-12 hours to bill 8 hours.  In which case, to achieve the ABA expectations, lawyers would be expected to work 12-15 hours daily.

In April of this year, a group of more than 100 law students from several of the nation's most prominent law schools--Yale, Stanford, NYU, Berkeley-- sent an open letter to law firms on the AmLaw 100 requesting that they improve working conditions at law firms.  Students Building A Better Legal Profession called for law firms to reduce billable hour requirements and to make their billing expectations of attorneys clear.  The group offered to exchange lower salaries for fewer hours. 

The group also promised that prior to the fall recruiting season it would post a list of firms that have and have not agreed to these principles.

Touche.

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Ronda Muir, Senior Consultant, led a two and a half day retreat at the end of May for UNICEF's 22-person Armenia office to help them better serve the country's children.  She was engaged to improve teamwork, communication and conflict resolution and to assist in the office's preparation for upcoming reviews and its transitioning to potential structural and policy changes. 

Through the use of individual and team MBTI work style reports, personal conflict style assessments, emotional intelligence tests and a confidential office-wide survey, Muir assisted the team in identifying personal and office strengths and challenges and in determining strategies for improved communication, conflict management and change management.

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Ronda Muir, Senior Consultant, has been asked by UNICEF's Armenia office to lead a two and a half day retreat at the end of May to help improve teamwork, communication and conflict resolution. Through the use of individual and team MBTI reports and emotional intelligence assessments, Muir will help the team identify personal and office strengths and challenges and determine strategies for improved communication and conflict management in order to better serve the country's children.

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

 

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

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

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

For further information, contact RMuir@RobinRolfeResources.com. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Participants raved:

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

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

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Across the pond, the legal industry is addressing some of the same issues as US firms but with their own distinctive twist.  Facing attrition rates similar to those in the US, UK law firms are re-jiggering what it means to be a partner and whether lawyers even need to be one in order to stay over the long haul. One-third of the UK 100 law firms have over the last few years introduced non-partner career tracks, based on associate feedback that partnership and its lifestyle has lost its allure. 

On the legislative front, an NFO report in March 2001 on "Competition in Professions" recommended that unjustified restrictions on competition be removed. The government's report in response on competition and regulation in the legal services market concluded that "the current framework is out-dated, inflexible, over-complex and insufficiently accountable or transparent..."

Sir David Clementi, Chairman of Prudential pfc, one of Britain's largest insurance companies, was asked to do a wide-ranging independent review of the regulation of legal services in England and Wales, which is now known as the Clementi Report, was presented in December 2004 and was approved by British Prime Minister Tony Blair's government in October 2005.  It recommended allowing nonlawyers to own, manage, and finance law firms for greater access to management expertise and capital markets. 

The associated Legal Services Bill was introduced to Parliament on November  23, 2006 and is still pending.   It  proposes three key changes: 

•      creation of a new oversight regulator, the Legal Services board; 
•      a new Office for Legal Complaints; and 
•      new models of practice through alternative business structures.

Surveys of UK law firms find them staunchly in favor of many of the proposed provisions.  Ninety-two percent of surveyed law firms welcomed the introduction of multidisciplinary practices (MDPs), and found the most suitable prospective partners to be accountants (69 %), banks (19 %) and tax planners, IP agents and others.                                                             .

Fifty percent of UK law  firms are considering external funding, while more than half are considering adopting alternative business structures (ABSs).   Eighty-five per cent of firms questioned had discussed the issue of MDPs and  ABSs at board level, while 56% were considering adopting an ABS.

The idea of multi-disciplinary practices has been bandied around in the US for years, and the growth of global law firms, and the prospect of competing with UK multi-disciplinary firms, may again suggest that model as a possible development of the future.  What is interesting is the extent of support that UK firms are giving the idea. 

Stay tuned.

                                         

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Ronda Muir will be making a presentation on the risks that arise when managing people in law firms.  The conference on Risk Management for Managing Partners, sponsored by ARK Group, is being held in Chicago on April 17 and 18.

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

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

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

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

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

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

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Ronda Muir has been asked by Yale Law School to conduct a seminar in April for law students on the economics of law firm practice and how associates can add to the bottom line. 

In the highly competitive legal market, associates benefit from understanding the underlying financial considerations that shape law practices and their policies, and how to quickly become a productive contributor to their firms' financial success.  

Yale Law School was acknowledged in the Carnegie Foundation's Advancement of Teaching two-year study of the North American legal education system, published in 2006, as one of only three law schools offering a balanced curriculum.

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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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A number of corporations are taking steps to restrict which of the associates at their outside firms work for them, according to the Managing Outside Counsel Survey Report prepared by the Association of Corporate Counsel and Serengeti Law of Bellevue, Washington in late 2006.  In some cases, corporations specify that only attorneys with at least five years of experience be assigned to their matters.

Given the billable-hour fee structure that most firms retain, if such requests become a trend, it could play havoc with the traditional law firm business model. Currently, firms hire three times or more the number of associates that the firm expects to stay, immediately putting those young associates on clients matters in order to push down less complicated work, provide training and make a proving ground to determine who should stay and who shouldn't.  OK, let's admit it:  and also maybe sometimes to plump up some of those thinner bills.

If clients start demanding only more senior lawyers on their matters, the high cost of young associates would immediately become much higher, since it would be even longer before they could reasonably be expected to produce a return on the firm's investment in them.

Of course, one way to counter such a trend would be to use a more carefully calibrated hiring process that relies less on "where ever the outstanding offer chips may fall," and more on knowing the best fit for the firm.  We at RRR advocate the use of culture and personal style inventories as a way to fully understand your firm's prevailing attitudes, values and attributes and also to identify the areas where it needs to grow or broaden.  

Aggressively pursuing those candidates who meet that profile not only results in spot-on hires more likely to contribute from day one, but also produces a mountain of "I'm special-- you really-really-like-me" feelings in your incoming class that could make even Sally Field shed a tear, and also produce the kind of we're-made-for-each-other associate loyalty that not many firms currently enjoy.

Targeted hiring should then be followed by an equally targeted training program of the sort that few firms currently offer.   Information gleaned from the inventories would make this training much more efficient, so as not to necessarily require more time.   We at RRR also offer targeted associate training in the areas of understanding the business of law, professional performance and career development, business development, client relationship management and communication, among others.   

Together, these two strategies--targeted hiring and targeting training-- are likely to produce young lawyers who are valuable to clients and profitable to their firm.

 

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Temple University’s Beasley School of Law is including a course on law firm management in its curriculum for third–year law students starting this past month.

Called "Legal, Professional and Business Aspects of Law Practice," the class is divided into four sections:  law firm economics, time management, client development, and ethics related to the business of firms.  Some of the topics included are fee structures, accounting, partnership and tax law as related to firms, firm organization, and referrals.

The textbook for the course was written by a professor who teaches a similar course at Pace University. Stephen J. Friedman, dean of Pace University School of Law, and formerly commissioner of the SEC, general counsel of The Equitable and E.F. Hutton, and co-chairman of the corporate department at Debevoise & Plimpton, finds law graduates to be "ill-equipped to be effective beginning lawyers" and wants curriculum at law schools to be "more purposeful, more focused and more integrated." 

And evidently particularly more attuned to the challenges of effective legal practice and good law firm management.

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There is an associate recruitment and retention crisis looming for which there are no easy solutions.

Supply and Demand

Law schools continue to graduate 40,000 students a year, as they have for the last 20 plus years. The AmLaw 200 law firms have been steadily hiring an average of 4%+ more associates each year, resulting last year in an average incoming associate class of 50. That means that AmLaw 200 firms now hire about 10,000 new associates a year, or about 50% of the graduates from the top 100 (hardly the Ivy League elite) of the nation's 200 law schools.  

Every year the number of associates those firms will be trying to hire will be higher.  And the competition from hedge funds and investment banks offering attractive alternatives will increase.  Not far along the horizon is a point when nearly every associate in the top half of every law school, whatever the law school, is likely to have several high-dollar offers to choose from.  Which means many firms will be left with fewer incoming associates than they want, or certainly fewer of the caliber they are seeking.

The Starting Salary Piece

As day follows night, associate salaries are rising.  Entering associates are now earning $160,000 before bonuses at the largest law firms across the country (essentially the same that federal district judges make), thanks to Simpson Thatcher’s opening volley. Starting salaries (not including bonuses) at firms of 500+ lawyers are thus up 130% since 1994, with the annual rate of increase averaging more than 10%--significantly above both the rates at firms of other sizes and the average for all firms (6%). And with each new class's salary increase, the salaries of associate classes up the ladder must also be increased.

The Profitability Piece

One estimate is that this year's salary bump will result in an average hit to partners in big firms in the range of $40-70,000 per partner. But that is hardly where the impact on profitability stops.  Until this year, associates were usually not profitable until their third or fourth year.  Higher salaries stretch that time out even further.  With average associate attrition rates at big firms pushing above 20% annually, culminating in 78% of associates leaving by their fifth year, firms have less and less time to recoup their initial recruiting/training/salary/overhead investments in associates, let alone realize a significant profit.  

The graph showing the curves of how long it takes to realize a profit on associates and how long they are likely to stay make it clear that these two lines are coming perilously close.  What used to make for good document review/bill plumping fodder may start looking more like loss leaders in the business of looking for good lawyers who will actually stay.  It has already been noted that we have reached a state where partners often bill more hours than their associates.  How does it  feel to be working for those you supervise?

What's to Be Done?

The traditional solutions are few and running out of steam.

As always, billable rates can be raised, banking on good evidence that at least some clients will pay whatever they have to to get the best legal advice.  But there will be some clients insisting that their rates be reduced or hours written off while others may simply leave. 

You can try to recoup salary increases by raising billable hour requirements. But given the current associate sentiment about billing, ratcheting requirements up runs the risk of ratcheting up attrition rates as well. See our February 14, 2007 entry "What All That Money Is Buying You."

Recruiters may have to become modern conjurers, ranging broader among law schools and deeper down classes, looking for the proverbial gem in the rough.  Medium and smaller law firms may have to change recruitment strategies altogether.  Some have already publicly declared themselves to be out of the business of hiring first-year associates, like Philadelphia's Kleinbard Bell & Brecker, or recruiting at national law schools, like Pittsburgh-based Tucker Arensberg.  Instead, they will wait for those associates to come to their firms after they've spent a few years at larger firms willing to bear the cost of training them. 

The dire truth is that what ultimately may have to change is the current law firm structure, and possibly in several respects.  See our upcoming entry "Leaving Behind the Medieval Model."   And the fallout may include the hardest pill to swallow:  a reduction in the high profitability that partners have long enjoyed.  See our upcoming entry "The End of Profitability As We Know It?"

There are ways to read your firm's tea leaves and then progress toward a new vision, cognizant of the prevailing hiring and retention realities.  Is your firm taking the steps necessary to survive the looming associate crisis?

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The legal industry's current strategy for hiring and keeping lawyers seems to be to throw more and more money at them, a strategy which has succeeded to date in producing unprecedented attrition and dissatisfaction rates.

Major law firms around the country just upped the ante for hiring a baby lawyer to $160,000 @ year, before bonuses, or roughly what seasoned federal judges in our country make.

Why more money?

Jack Nusbaum, Chairman of Willkie Farr & Gallagher, says "We expect our associates to work hard… maybe this will make them feel better about the Saturdays and Sundays."  

Has anyone taken note of the American Bar Association survey conducted just this past November?   Of the 2,377 respondents (most of whom were between 26 and 35 and had been practicing law for five years or less), 84.2 percent said they'd prefer to work fewer hours for less money.  More than 30 percent would like to work 20 percent less and said they'd give up between 25 and 30 percent of their pay in exchange.  The next largest group-- 27.8%--would settle for a 10% cut in hours.  Did you get that?  Associates would prefer to give up proportionally more money for incrementally less work.

So are we paying these high salaries--surprise!--for the clients? To show them that our firm can attract the best players?  

"When I saw the announcement about the raises, I said ‘Oh God,” says Michael Roster, executive vice president of World Savings, a subsidiary of Wachovia Corp.  But maybe not for the reasons you would expect.  Salary raises mean law firms will put more pressure on associates to bill, but paying more for legal services, Roster says, is less bothersome to him than associate turnover.  He says he and other general counsel prefer to work with associates with whom he has a history and who know his business well.  "It hurts when firms can’t keep qualified people.”

“From my standpoint, I would view [lowering billable hour requirements] as a creative and enlightened way to reduce associate turnover and keep the best and brightest young lawyers,” says Barry Nagler, who chaired in 2006 the Association of Corporate Counsel’s board of directors.

Susan C. Robinson, associate dean for career services at Stanford Law School, also thinks that lowering billable-hour requirements could be a great recruiting tool, particularly for attracting lateral associates.

There is no question that firms are struggling with the phenomenon of associates not wanting to work as hard as generations past.  Many studies indicate, in fact, that partners often bill more hours than their associates, turning the law firm pyramid model topsy-turvy. 

And attracting and retaining associates over the next decade may be even harder. The standard characterization of “millennials”—those who graduated from high school after 2000 and will be graduating from law school starting in 2008--is that they are unwilling to compromise life and family for work.

The obvious hit from reducing billable hour requirements would be to partners' bottom lines.  See our upcoming entry "The End of Profitability as We Know It?"  But there are some countervailing tactics that can help improve profitability.  Ida O. Abbott, former partner at Heller Ehrman White and McAuliffe, contends that billable-hour requirements could be lowered without cutting partner profits if the change involved more planning and better management.  And law firms have not yet even begun to explore the types of management strategies that have produced the super-sized profits recounted in the newly released Firms of Endearment: How World-Class Companies Profit from Passion and Purpose by Rajendra Sisodia, David Wolfe and Jagdish N. Sheth.  See our January 31, 2007 entry "Firms of Endearment."

Steve Susman, whose 85-lawyer Houston/New York litigation firm Susman Godfrey gave 2006 associate bonuses of up to $125,000, contends that "Any lawyer who is unhappy with their compensation should check into a mental institution."

Based on the adage about the mental state of people who keep doing the same thing but expecting a different result, there may be a few managing partners who should be joining those associates there.

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Carol S. Dweck, a Stanford University psychology professor, is the author of the recently published "Mindset: The New Psychology of Success," which documents how people with a "growth" mind-set who believe they can improve themselves out-perform those with a "fixed" mind-set who believe their capabilities are fixed.  "The growth mind-set person recognizes that you're not good at something before you're good at it," Dweck points out. 

In one instance, Dweck found that when people experience a blow to their self-esteem, those in a fixed mindset repair their self-image by trying to feel that they are better than others, which n a business setting might take the form of blaming or taking things out on a colleague. Those in a growth mindset recover their self-esteem by trying to improve themselves and correct their deficiencies.

While it's gratifying to see the impact of personal belief documented so clearly, parts of this thesis are hardly new-- optimists outperform pessimists across all industries and job descriptions (except in law), in part simply because they believe they are capable of effecting change.  And the success that this sense of empowerment generates in any arena leads to the expectation of and achievement of success in others.  Optimists are also more resilient--understanding that specific setbacks are just that, and not a referendum on their personal worth, which makes them more likely to persevere.

Which brings us to lawyers, the least optimistic of any career, for whom Dr. Seligman has documented that pessimism is in fact a career enhancer, and who consistently score low on resilience.  For lawyers, the new psychology of success begins with systematically training themselves to confine their pessimism to their legal analysis and to bolster their resilience and optimism in the rest of their lives, including management.

In any event, Dweck's overall assertion that rigid thinking benefits no one, least of all yourself, and that a change of mind is always possible, is welcome.

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A recent study conducted by the Center for Creative Leadership found that effective leadership has changed over the last five years. Eighty-four percent (84%) of those polled said leaders today are valued for collaboration skills, such as building and mending relationships, rather than solitary heroics, the standard five years ago. Specifically important is being able to "enhance co-worker relationships." This change is due, according to those surveyed, to the more far-flung demands of leadership, which often go beyond an individual's capability, creating a need to work interdependently with others across boundaries—geographic, language, cultural, and expertise.

Law firm and law departments would do well to take note of this study-- "leader" is often a designation born out of unrelated circumstances-- a lawyer has extra time, was good at revenue production so will maybe be good at this too, or is simply senior, none of which relates to his or her ability to build a collaborative organization that supports individuals and teams. 

In a recent interview, Daniel Goleman, author of Emotional Intelligence: Why It Can Matter More than IQ and more recently Social Intelligence, commented on the error many make in choosing leadership:  "Too many organizations are rather naive about the ingredients of leadership and make the classic mistake of assuming that someone who is an outstanding individual contributor would therefore be an outstanding leader. If they're an outstanding individual contributor, keep them as an individual contributor. Give them a raise," he says emphatically.

This study brings that point home in spades.

 

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The Dewey-Orrick merger that was supposed to have closed this month has fallen through, and for reasons that seem to reverberate repeatedly over the law business landscape:  retention and culture.  Leading up to the announcement, at least ten Dewey partners left the firm, including rainmakers in the coveted M&A department.  This is Orrick's fourth failed attempt at merger over the last few years.

It looked like a good match--both venerable firms with complimentary specialities, similar per partner profits and each with rising revenues.  They had successfully negotiated the details at the top-- the name would be Dewey Orrick, the two chairmen would serve as the combined firm's co-chairs, with Orrick's chairman also named as presiding partner.  But, as the New York Times noted the obvious, "law firm consolidation involves combining two organizations whose main assets are their people"-- tricky assets to nail down on the balance sheet. 

With their particular personality traits, lawyer buy-in can be an extra challenge to obtain, and then to keep.  Perceptions in the ranks as to the new firm details, such as heirarchy-- Orrick appeared to be retaining management control over crucial matters, compensation--Orrick partners would end up funding Dewey's unfunded pension system, and culture can undo the best efforts of leadership.

It takes not only economic due diligence, but diligently assessing and closing the deal up and down each firm's ranks before a merger can successfully occur.  And then it takes a well-planned and well-executed integration to keep that success over time.  Shouldn't we know that by now?

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The 100 Best Employers

From over 400 organizations surveyed, five law firms, down one from last year and with most of the survivors heading down the list, made Fortune magazine’s 2007 list of the best 100 employers to work for: Alston & Bird, Arnold & Porter, Nixon Peabody, Perkins Coie and Bingham McCutchen, with Morrison & Foerster having dropped off.

The list is based on two criteria: an evaluation of the policies and culture of each organization, and the opinions of the employees, which is given more weight. Two-thirds of the total score comes from responses to a 57-question survey, on attitudes towards management, job satisfaction, and camaraderie, sent to at least 400 employees from each company. The remaining one-third of the score is based on demographic makeup, pay and benefits programs, and culture.

It's a tough competition, with No. 1-rated Google providing employees free gourmet meals, a swimming spa and free doctors on site.

But apart from offering outsized bennies, there are some lessons Google may be able to offer us legals.

Hiring for the Right Reasons

Google has doubled the number of employees in each of the last three years, and now with 10,000 employees, expects to double in size again this year, resulting in about 200 hires a week. It also enjoys an attrition rate of 4%, low by Silicon Valley standards. Historically, much like law firms, Google has relied on grade requirements and interviews to make hiring decisions. The challenge is to continue to find valuable employees at such an astounding rate of growth.

A recent review of over 2 million data points made it clear that Google's hiring criteria were not necessarily correlated with success at the company. So Google has revamped its hiring process, using assessments of existing personnel to produce a more quantitative measurement of success in terms of skills, intelligence, personality and integrity. All incoming applicants will now take a personal survey, which Google is already finding produces better matches for its work and culture.

Lessons for Law Firms

Law firms with spiraling growth requirements are competing to hire from the same number of law graduates with good grades from the same number of top-rung law schools as 20 years ago. The lesson from Google, the best company to work for and possibly the hiringest company as well, is that grades and an interview don't do it anymore. Now is the time to identify your real indicators of success and hire candidates with those.

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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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Between 1986 and 2005, the number of lawyers employed by the nation’s 100 largest law firms nearly tripled, from roughly 25,000 to more than 70,000, and the most recent report is that the Am Law 100 gained 4% in numbers of lawyers this past year. During this time the number of top students at top law schools has not increased measurably.

In the last two years, firm attrition rates have gone up dramatically. According to NALP reports, in 2003 53% of fifth-year associates had changed firms. In 2005, that percentage rose to 78%, more than three-fourths of associates, and 81% for women of color. According to The American Lawyer, in 2005 2,429 partners left their firms for other attorney jobs, compared with 2,081 in 2004, up more than 20%.

More and more law firms are trying to land a limited number of top-tier associates, who will, once bagged, nonetheless leave their firms—most while still associates, but others as partners. Therein lies the recruiting challenge.

Some firms are looking to alums to fatten their recruiting pool. On October 16 2006, The National Law Journal highlighted how firms are working harder to maintain ties to alums, sometimes succeeding in bringing that talent back to the firm. Vinson & Elkins partner Veronica Lewis, who left to go in-house for more flexibility, was courted personally by V&E’s managing partner, and returned as a partner after 18 months. Gibson Dunn was cited as viewing rehires as a growing component of its recruiting program. 

The National Law Journal’s Sept 25, 2006 special section on the Business of Law included a lead article on the hunt for talent. It suggests that top students at less prestigious schools be carefully considered and that summer programs should more accurately reflect real legal practice, both to educate the associate and to test the students’ interest in and commitment to the practice of law. Third, it advocates that firms “integrate, integrate” to bolster retention generally and diversity specifically. However, the assertion that attorneys envision their law firm as not merely a job, but a professional home base that they return to after government or academic stints, is out of touch with the realities of modern legal practice. As ideal as that goal may be, given the turnover in attorney ranks, both associate and partner, loyalty to a firm looks fast to becoming an outdated concept. 

Another alternative is to make sweeping changes in the way you hire and care for your associates.  Assessments that corporations have used for decades more accurately pinpoint those candidates who are likely to flourish in the practice of law as you practice it and who can add a healthy mix to your current team.  Refining your culture by addressing the most important concerns of your hires will go much further towards raising retention rates than throwing another wad of money at them. 

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While Emotional Intelligence has become a popular buzzword, the researchers on whose work Daniel Goleman based his bestselling Emotional Intelligence: Why It Can Matter More Than IQ, only formulated an assessment to test EI in 2002. Called the MSCEIT (Mayer-Salovey-Caruso Emotional Intelligence Test), it is the only EI assessment based on abilities instead of self-reports, i.e., it gauges your actual EI performance instead of asking how good you are at EI. 

Does it make any difference whether a lawyer is emotionally intelligent or not? To determine whether there is a correlation between emotional intelligence and excellence in lawyering, we undertook a study. 

We began with lawyers listed in The Best Lawyers in America as our "excellent" lawyers. Those willing to participate were given the MSCEIT and follow-up feed-back free of charge. 

Our participating lawyers practice across the country: Seattle, San Francisco, Chicago, Houston, Columbia, SC and New York. Their firms range from a small, 15 lawyer boutique to regional powerhouses to global behemoths. And the results are interesting.

• This group of excellent lawyers performed 20% higher on average than lawyers generally.
• This group's highest score was in Understanding Emotions, the most cerebral of the four branches of EI, and the branch that most lawyers perform best in.
• Also like most lawyers, this group's lowest score was in the Perceiving Emotions branch. Although notably higher than the average lawyer score in this area, even excellent lawyers barely score the national average.
• Excellent lawyers score significantly higher than lawyers generally on the sub-branch Managing Emotional Relationships. 

While these excellent lawyers, like lawyers in general, are better at analyzing emotions than recognizing them, they are operating on a higher EI plane than their colleagues. The excellent lawyers' significantly higher average total results and significantly higher ability to manage emotional relationships may account for at least a part of their excellence: they are generally more emotionally intelligent and they are better in relationships with clients and colleagues.

Stay tuned for some of the (non-identifying) specifics on the best performing individuals.

CALL TO BEST LAWYERS TO PARTICIPATE

While we have a good start, we want even more results to produce a more reliable study. We invite any lawyers now listed in The Best Lawyers in America to take the MSCEIT—a 40-minute confidential on-line survey-- at our expense. We will provide you with individual feed-back, a written report, and the opportunity to have your firm identified as high performing.

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In a December 13, 2006 Legal Times article extolling the energy and talents of Pamela Rothenberg, the managing partner of Womble Carlyle Sandridge & Rice’s Washington D.C. office, Rothenberg stressed how much she relies on The Gallup Organization strengths, an assessment that is described in the book First, Break All the Rules: What the World's Greatest Managers Do Differently, in managing the firm. 

Martin Seligman, the Fox Leadership Professor of Positive Psychology at the University of Pennsylvania, has worked with The Gallup Organization to expand and refine their strengths assessment to make it particularly relevant to lawyers. Seligman is so certain of the usefulness of the Gallup strengths assessment in raising productivity, that he has issued a challenge to assess free of charge the members of any firm willing to participate, on the condition that he be paid 10% of their increased profits. 

We have used the Gallup strengths assessment in a number of client projects for law firms and law departments. If you are interested in participating in Seligman’s challenge, or simply want to know more about these strengths and how they could be useful to improving productivity in your firm, contact us.

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

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

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

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Two recent books highlight some of the challenges in building strong practices:  retaining and promoting women and balancing life and work.

Ending the Gauntlet: Removing Barriers to Women's Success in the Law (Thomson/Legalworks, 2006) by Lauren Stiller Rikleen, a partner at the Massachusetts law firm Bowditch & Dewey, reviews the lack of professional fulfillment and the unsustainable personal sacrifice that the current law firm structure engenders in its lawyers, and identifies how these struggles are even more acute for women trying to succeed. While Ms. Rikleen suggests that leaving behind the billable hour fee structure, improved mentoring and other changes within firms can start a transition, it is her opinion that clients and law schools are the ones who have the power to make radical changes in the legal profession and its treatment of lawyers, particularly women.

The ABA's "The Lawyer's Guide to Balancing Life & Work: Taking the Stress Out of Success" by George W. Kaufman (2006) explores the ways that legal practice supports or undermines all lawyers' quest for success, advocating a personal self-assessment to gauge expectations, values and goals and the use of an individual action plan to realize a future more attuned to those issues.

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Two recently published books by female doctors highlight some of the differences between the genders in brain development and differentiation, and give insights as to how to best use our diverse legal talent pool.

The Female Brain by Dr. Louann Brizendine explores the differences in the way women process thoughts compared with the way men do.  For example, women use 20,000 words a day compared to 7,000 for men. Evidently everyone starts out with a female brain. Until eight (8) weeks after conception (when testosterone is introduced), all brains are female. When the testosterone surge arrives, cells in the communication and emotion centers are killed off and more cells in the sex and aggression centers are born. As a result, females can hear a broader range of sound frequency and tones in the human voice, are better able to observe facial and other emotional cues, and display greater interest in getting another’s attention.   Female newborns less than twenty-four hours old respond more to the distressed cries of another baby and to the human face than do male newborns. Four year olds that have the highest quality social relationships also registered the lowest doses of testosterone level in utero. Pre-adolescent girls take turns twenty times more often than boys. Girls use language to get consensus, influencing others without telling them directly what to do. They make joint decisions, often agreeing to others’ suggestions, or setting forth their ideas in a form of questions, such as “I’ll be the teacher, okay?” The disorders that inhibit people from picking up on social nuance, such as autism spectrum disorders and Asperger’s syndrome, are 8 times more common in boys than in girls.

Dr. Marianne J. Legato's new book, Why Men Never Remember and Women Never Forget (Rodale, 2005), points out some significant differences in the male and female brains:

·        Female brains produce a hormone called oxytocin that motivates making and preserving connections with other people.

·        Women have a higher rate of blood flow to their brains, making them potentially more efficient.

·        While men have on average 10% heavier brains, women have more gray matter in the frontal cortex of their brains than do men, which is the executive center of the brain and controls complex behaviors.

·        Women also have more connections between the two sides of their brains, allowing the processing of several different streams of information at once. This difference results both in more linear problem-solving approach in men, analyzing and solving one issue at a time, and increased multitasking in women, which some research suggests is less efficient than the linear route. 

·        The amygdala, the primitive part of the brain that responds quickly to stress, has extensive connections in women to the parts that control blood pressure and heart rate, while men have fewer connections, resulting in a greater ability in men to be untouched physiologically by stress.

·        The female brain has higher levels of the hormone estrogen than men, which prolongs the production of cortisol, so a women feels more stressed for a longer period of time than a man in the same situation, and estrogen also activates a larger field of neurons, giving women a more detailed and vivid memory of the stressful event.

·        Regarding communication, women have more gray matter in the left brain, which processes language, and women use both sides of their brains for speech, unlike men, who use only one. Women have more dopamine in the language parts of their brains than men do, allowing more fluid and efficient processing of language. In addition, women usually are much more able to reading subtle or nuanced expression, probably as an evolutionary aide to caring for pre-verbal infants. The net results give women a decidedly increased capacity for, and interest in, communicating. 

·        Higher levels of testosterone have been correlated with enhanced spatial imaging ability (such as manipulating three-dimensional concepts) but with a diminished ability for verbal expression.

·        Others' expectations play a big role in girls' performance. Girls told that the math test they are taking has a gender bias do much worse on the same test than if they are not told that.

·        There are some researchers who believe that the detachment and difficulties in communicating relating emotionally that autistics exhibit are the results of an "extreme male brain," potentially caused by exposure to high levels of testosterone in utero. There are much higher rates of autism among boys than girls.

·        Men's brains atrophy more with aging than do women's—it begins earlier and is more pronounced on the left, language-based side.

·        A study published in Science on what made working women happy reported that homework and commuting ranked the lowest, but watching TV alone ranked very high, above shopping and talking on the phone. Interestingly enough, taking care of children ranked below cooking and just above housework. The amount of sleeplessness and tight work deadlines decreased enjoyment of all pleasurable activities.

·        Women are more stressed than men. A major National Consumer's League study in 2003 found that younger people were more stressed than older generations, and women were significantly more stressed (84%) than men (76%). Men were worried about their work, women about their family, although women who work and have a family seem to get less stressed out when something goes wrong in either place. In addition, women are 2/3 more likely to be depressed than men.

·        Chronic anxiety is associated with reduced brain mass and impaired memory structures in the brain.

·        Stress enhances the speed at which male rats learn,  while female rats' ability was impaired. Nonetheless, women are more resilient after stress than men are: they recover more quickly and more fully, most often from bonding with others.

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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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The last few months have seen five new studies relating to diversity and the practice of law:

1.  A new study by the ABA’s Commission on Women in the Professions entitled “Visible Invisibility: Women of Color in Law Firms” found that few women of color are offered equal opportunity and most choose to leave their firms rather than stay and fight for equality.   One of the study’s promoters decried how similar the results are to the results in the studies her committee conducted on the same issues in the 1990s. While, largely in response to client demands, more law firms are attempting to hire for more racial diversity, few pay attention to what happens once these women actually start working at the firm. The attrition rate for these lawyers, according to NALP, reaches nearly 100 % within eight years. At least one reason for their lack of success is laid to the lack of like-situated mentors. While there is a tendency to believe we are past the overt discrimination, 49% of women and 34% of men of color reported harassment or discrimination, compared to 47% of white women and 2.5% of white men. However, the primary reason women of colored reported for leaving legal practice was to obtain greater work-life balance, which is also the most frequently reported reason for all other groups surveyed to leave.

2.  The Inside Counsel/Dickstein Shapiro Diversity Survey, published October, 2006, focused on the diversity progress in corporate law departments based on 377 in-house counsel responses, including 19% participation from general counsel, with respondents being 70% white,14% black; 7% Hispanic and 7% Asian. 

The primary findings of that study are consistent with the ABA report above that looked at law firms, including: 

§         Legal departments lack racial diversity.  "The average legal department that responded had 46 attorneys of which 3.5% are non-Caucasian;  the median department employs 11 attorneys of which 1 is non-white."

§         Less than 9% of legal departments are headed by non-Caucasian general counsel

§         Senior leadership fails to set goals--only 32% of companies surveyed had formal diversity polices.

§         Commitment from the GC and CEO is essential, although often leadership compensation is not tied to meeting diversity goals.

3.  “Presumed Equal: What America’s Top Women Lawyers Really Think About Their Firms” surveyed 16,000 lawyers to report on what women attorneys experience in law firms, updating a 1993 report and its 1998 followup. The report found that many women believe their firms don’t provide opportunities to make partner or foster an environment that values diversity and family.  The survey looks to general trends in disparate treatment that women experience at various law firms and highlights specific weaknesses of 105 individual firms ("most prestigious law firms in the US"). It scores the firms based on responses and ranks them nationally and by geographic location.

Since it was initially created to assist law students in their consideration of job opportunities, this survey attempts to provide a discourse about what it is like to be a woman at a top law US law firm and evaluates environment for women to achieve personal goals such as (i) making partner, (ii) finding a mentor, and (iii) life balance.

The report concludes, "Objective indicators still show a disparity between the relative power held by men and women in the legal field and indicate that gender is still relevant to women's success." 

The report also finds "that long-term professional satisfaction for women is not based on the quality of a woman's work. At present, the reluctance of male dominated partnerships to mentor female attorneys, the persistance of gender biases regarding women's roles, and the tacit penalties that women endure for taking advantage of maternity leave, to name only a few dynamics at play, still profoundly shape women's experience within the legal profession."

4.  "Creating Pathways to Success: Advancing and Retaining Women in Today's Law Firms, " issued by the Women's Bar of DC in May 2006, examined better ways to stem the departure of women from law practice.  While the report includes many specific actions, the findings generally are that there are more stumbling blocks to the success of women in law practice than are currently being addressed by the commonly used methods of supporting and promoting women.  The most common current practices focus on specific programs in specific business areas in a silo-like approach.  The stumbling blocks, however, cross broad issues and fields but unite on the key issues of  how women can achieve the level of business success they expect of themselves consistent with societal demands and personal creativity.  

5.  In October 2006, the National Association of Women Lawyers (NAWL) reported on its survey of the American Lawyer Media's 200 largest firms, measuring the comparative role of female lawyers at different levels of seniority, types of partnership opportunities, where women stand in relation to men in firm governance and comparative compensation at the same levels of seniority.  According to NAWL, the survey findings reflect the situation at law deparatments as well.

With responses from 103 of the 200 firms (and against the background that women have been 50% of law school graduates for each of the past 15 years), women constitute:

§         16% percent of equity partners

§         26% of non-equity partners

§         28% of "of counsel" or other special counsel positions

§         45% of associates

Looking at the 16% representation among equity partners, in an era when partnerships are made within 7-10 years, many of us would have expected greater gender parity at all but the most senior levels of law firm partnership. 

The statistics also reveal that of the 16% percent of all equity partners, women are more heavily represented among the more junior classes of equity partners, constituting 21% of equity partners who graduated law school between 1990 and 1995, and 24% of those who graduated in 1996 or later.

But NAWL warned that the trend emerging from such figures is unclear, noting that women who have recently become equity partners could yet leave the profession, and that even at 24 percent of equity partners, women are substantially under-represented relative to their 45 percent of the total number of associates.  

In terms of leadership positions:

§         16% of the members of law firm governance committees are women. 

§         15% of the firms reported that up to 25% of the members of the highest governing committee were women

§         10% of responding firms reported that there were no women on the highest governing committee

§         5% of managing partners are women.

As to compensation, of 62 firms responding, 92% said that the highest paid lawyer was male.  Of the 35 firms that provided compensation breakdowns, male equity partners were paid an average of $510,000 whereas female equity partners averaged compensation was $429,000.  The survey recognized that the higher number of men at senior partnership levels could account for the significant difference in compensation.

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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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Mayer, Brown’s New York office opened in 1978, was one of the most profitable in the Mayer, Brown orbit over many years, and from 1995 to 2003 grew by more than 100 lawyers.

Since January 1, at least eight partners have left for other firms - including litigator Dennis Orr, one of Mayer, Brown's top rainmakers. Reports are that revenue in the New York office is flat this year, and the relationship with the home office in Chicago is tense.

So what happened?

The New Yorkers contend they have little say in the firm's decision-making process and that the financial reporting system that breaks down profits and losses by location has created an office-versus-office dynamic, inciting Mayer lawyers from Chicago to fly to New York to meet with Morgan Stanley's general counsel without inviting anyone in the New York office.

Firm managers lay the blame on the compensation system, where origination was everything. Under a new regime, they promise less emphasis on the performance of a partner's practice group or office and more on a partner's potential contributions.

Compensation is a powerful motivator, and lawyers shrewdly respond to explicit and implicit incentives in the system. But it is almost impossible to eliminate gamesmanship from compensation. The only chance of elevating firm dynamics above the compensation games is to raise the level of trust among the partners, a daunting challenge, but one that pays off enormous effort with firm harmony and productivity.

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In April 1955, Dean of Harvard Law School Erwin Griswold noted, "Many lawyers never seem to understand they’re dealing with people and not solely with impersonal law” -- a comment that unfortunately continues to ring true today, when the legal profession’s reputation suffers from an image characterized by a lack of interpersonal sensibilities. 

One of the first law school courses in the nation to apply human relations training to law was taught by Professor Howard Sacks at Northwestern Law School during the 1957-58 school year. The two-week course, entitled "Professional Relations," was offered without credit. Professor Sacks appealed to other law teachers to join in his experiment, both by offering stand-alone courses and integrating human relations training into the regular law curriculum. But a law review article written by Harvard Law Professor Alan Stone in 1971 noted that "law schools . . . have largely ignored the responsibility of teaching interviewing, counseling, negotiating, and other human relations skills." 

Legal academics continue to take the position that lawyers must learn to be more effective interpersonally. As Vanderbilt University Law Professor Chris Guthrie summarizes it, "Lawyers are analytically oriented, [and] emotionally and interpersonally underdeveloped."

It’s more than just a matter of being “nice.” Our survey of Emotional Intelligence and Excellence in Lawyering shows lawyers who are listed in Best Lawyers in America score significantly higher in emotional intelligence than the average lawyer. There’s excellence in that intelligence.

To participate in our study, see our entry “Emotional Intelligence and Excellence in Lawyering” under the topic Emotional Intelligence.

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

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

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

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

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

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

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

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Another message that the increase in associate departures may be sending is that our attempts at mentoring are failing. Mentoring has become a favored buzzword recently that many law firms at least pay lip service to.  Most of these programs tend to fairly arbitrarily assign new associates to mentors, dictate a certain number of meetings annually, and require reams of paperwork. They are, in short, more a product of lawyers’ natural tendency to be “thinkers” (78% of lawyers) instead of “feelers” (22%), using the Myers-Briggs personality trait descriptions. Mentoring is business shorthand for “someone to watch over me,” a skill that does not come naturally to attorneys. 

Sullivan & Cromwell has recently announced a revamping of its mentoring program for its general practice group in New York and Washington. There are separate programs for junior associates—paired with mid-level associates who focus on acclimation and socializing—and more senior associates, who are paired with two partners to help develop skills. 

Why are law firms and law departments providing this “soft” support for young attorneys? There is, of course, always the “herd mentality” argument, that if other firms are doing it in this competitive talent market, so must we. But that begs the bigger issue. Why, after generations of no such official “coddling,” have associates begun to need this sort of assistance, and, more astonishingly, firms have been providing it? 

Why firms provide mentoring is partly in response to what firms view as ill-prepared and poorly motivated young associates, coupled with the exodus of those associates when they are throw in to sink or swim.  Add to this the growing bigness of law firms, with more extensive policies, rules and procedures, and mentoring becomes a formalized, lengthy orientation process. 

But I would wager that an even bigger reason behind the need for mentoring originates in the personal lives of the Gen Xers, Yers and Zers themselves. These young people are more likely to have been supported financially and academically up to and through college and law school, so they expect continued support. They have also grown up in a more generally “therapized” culture, where identifying needs and asking for them to be met is a sign of mental health. Finally, the continued breakdown of the nuclear American family and its broad geographical dispersion may mean that, as their careers progress, these young adults need to replace or supplement lagging or distant family support with relationships at work.   If they're not getting that support from your firm or department, they will go elsewhere.

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