In April, Shearman & Sterling's entire Mannheim office packed up and reverted back to its original form, Schilling Zutt & Anschutz. What prompted the schism?
"There are some great lawyers at Shearman & Sterling," one former partner is reported to have said. "I just don't think they are particularly happy."
At a time of some idling in the legal industry, a good use of lawyer time may be to spiff up the old pro bono program. Davis Polk & Wardwell recently announced the addition of Ronnie Abrams, former Manhattan US Attorney's Office prosecutor and daughter of renowned First Amendment litigator Floyd Abrams, as its first Special Counsel for Pro Bono. She succeeds a former associate of the firm who oversaw the program and is being made a partner. For a firm with historically good standing on the American Lawyer's pro bono A-list, one might wonder what prompted the star power addition.
"[Pro bono] is becoming much more important in terms of client relations, recruitment and marketing," says Esther F. Larfent, president of the Pro Bono Institute, which, since 1995, has urged large law firms to commit 3-5% of lawyer hours to pro bono work. Hiring someone of stature to oversee the pro bono effort "is a very fast growing trend, there's no question." And having an inhouse partner can fill a talent void at firms that have historically relied on public organizations to oversee lawyer work.
As we all know, pro bono has been around for decades. Pro bono was what firms long offered to do for pet projects of friends and clients that could also fill young lawyers' time when real work got a little slow.
It has, however, become a much more complicated matter. Feeding into the equation are various factors: public perception (falling) of lawyers' civic mindedness; the motivation of many who enter law school to "do good" followed by those same graduates going to big, bad corporate firms and suffering the resultant identity crises; the escalating dissatisfaction of law practitioners and correspondingly escalating attrition rates (perhaps related in part to the previous observation); inspired in part by the expanded transparency that Sarbanes Oxley has imposed on corporations, the increasing client demand (often with teeth) for their law firms to also demonstrate their bone fides in social agenda areas, such as diversity and community service. There is even the prospect of using pro bono work as a marketing device to tether a firm to a new client or strengthen existing ties.
What Law Firms Are Doing
Some law firms have moved to adopt firm-wide programs that identify them with select non-profits or cause campaigns. Cravath, Swaine & Moore attracted widespread attention a few years ago when it became the primary sponsor of the Urban Assembly School for Law and Justice in Brooklyn, one of 200 small schools that Mayor Michael Bloomberg created to overhaul public education in New York City. Cravath took ownership of this visionary community program, vowing “hands-on” involvement on an “in-school” basis. Throughout the firm, partners, associates and administrative staff work to develop and build an initiative that they believe can lead to real, systemic social change.
Cravath’s community venture was sufficiently distinctive to merit feature news coverage. According to Stuart C. Ross, partner in ross+price communications, a public relations and marketing services agency that advises professional services firms, “What Cravath did, and how it was reported by the news media, represents an important shift... Clearly the press will cover effective and innovative corporate citizenship, but only if those efforts go well beyond simply writing a check or donating a few hours of legal expertise.”
Skadden had a 38% increase in pro bono hours in 2007 after it assigned Douglas Robinson, a longtime partner devoted to defenses in death penalty cases who was considering early retirement, to become its first pro bono partner.
What are the Benefits for Law Firms? In addition to the obvious good these programs do for the community and the favorable public relations they can generate, these programs also have a positive impact on a firm’s retention and recruitment effort, producing real bottom-line results. A study by the Center for Corporate Citizenship at Boston College revealed that 73% of employees involved in volunteering through work said their employers’ support of these initiatives had made them more committed to their jobs.
David Sirota, co-author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want (Wharton School Publishing), argues that employees, regardless of industry focus or experience, have three basic goals in their work. First, they want to be treated “equitably,” with competitive pay, benefits, job security and respect. Second, employees want a sense of achievement from work and to feel pride in both their own position and in the organization of which they are a part. And third, employees want to experience camaraderie. As a Cravath partner phrased it, “This [camaraderie] is not mentioned much in our field, but it's key – not only in the sense of having a friend, but working well together as a team. That is a tremendous source of satisfaction for people…. Working with the School for Law and Justice has been great for Cravath. Having one firm-wide project involving the entire staff builds office morale.”
WilmerHale committed both financial support and a broad range of administrative and in-kind assistance, including active volunteer service, to six community youth and education organizations in Washington D.C. and Boston, which it reports “has made our lawyers and staff part of the fabric of these community organizations.” The firm takes pride in the striking results produced by its Youth and Education Initiative in terms of student morale, student and staff retention, college acceptance rates, child literacy, improved communication skills and community building. And, it reports, “our non-profit partnerships are a rich source of fulfillment—an internal glue that unites lawyers and staff through their volunteer service to inner-city children.”
According to James H. Quigley, CEO of Deloitte & Touche USA, “What we have seen at Deloitte & Touche is that one of the benefits of contributing to the community is that it helps employees develop leadership skills and business acumen. A [recent external] survey [we conducted] revealed a strong link between volunteering and professional success. Among other findings, the data showed that 86% of employed Americans believe volunteering can have a positive impact on their careers and 78% see volunteering as an opportunity to develop business skills, including decision-making, problem-solving and negotiating. Community service matters.”
From a recruiting perspective, both established professionals and young people from Gen X and Y are seeking more than a paycheck. Candidates are increasingly concerned with work/life balance opportunities, the existence and influence of a diversity committee and the extent of a firm’s involvement in the community.
Fried, Frank, Harris, Shriver & Jacobson, the sole law firm sponsoring the inaugural conference in 2005 of the “Clinton Global Initiative," as the former president called it, had eleven associates participate in serving as personal aides to the heads of state, corporate chiefs and academics from around the world who attended. As one associate explained, "I wanted to do something with my life besides chasing greenbacks, and so I chose Fried Frank in order to have a balance between serving clients and doing pro bono work."
In terms of charitable giving and community good, law firms’ pro bono programs have long produced positive returns in the legal and broader community. However, most pro bono efforts are individual donations of time and expertise that don’t necessarily coalesce to make a major impact or project a firm identity, and therefore fail to provide not only the optimal amount of good but also the optimal public relations punch as well.
Shedding additional light on earlier explorations in this forum of the subject of happiness is a new book written by Arthur Brooks that distills mountains of data on the subject. For one thing, politics and happiness turn out to be clearly correlated. But the correlation may not be what you think.
For starters, conservatives are happier than liberals. Much happier. And they have been for over 35 years. Almost twice as many who describe themselves as "conservative" or "very conservative" say they are "very happy" (44%) as those who consider themselves "liberal" or "very liberal" (25%). Brooks ascribes that result to three factors: conservatives are twice as likely to be married, twice as likely to attend church every week, and more likely to have children. They are NOT, however, richer than their more liberal, more miserable cohorts.
In fact, when the religious and political data are combined, a fascinating continuum of happiness appears. Religious conservatives are ten times more likely to report being "very happy" than "not too happy" (50% to 5%). Secular conservatives and religious liberals are about equally happy in the middle. And secular liberals are as likely to say they are "not too happy" as to say they are "very happy" (22% vs. 22%).
In addition, extremists on both sides are happier than their more moderate cohorts. Of those "extremely liberal," 35% say they are very happy (vs. 22% of the ordinary liberals) compared to 48% of extreme conservatives (vs. 43% of their less extreme brethren). Brooks attributes the extremists' happiness to their conviction that they are right, which, he notes, often leads them to conclude that the other side is not merely wrong, but evil. Evidently two-thirds of America's far left and half of the far right say they dislike not only the other side's ideas, but also the people who hold them!
Brooks finds the determinant underlying happiness to be attitude. Conservatives are more optimistic, believing that if you work hard and play by the rules, you can succeed. Liberals, on the other hand, tend to focus on injustice and victimization, encouraging people to feel helpless and aggrieved.
So what does this mean for us hard-working lawyers? The striking correlation is with the well-established personality trait that lawyers exhibit en masse: pessimism, which, according to Brooks' analysis, should mean that we are also a less happy lot.
And indeed we are. It is now well-documented that lawyers are less happy in their work and their personal lives than nearly every other profession surveyed.
Maybe we should get hitched, join a church and start a brood?
For a full book review of "Gross National Happiness," go to The Economist.
The use of assessments worldwide is rapidly expanding and lawyers are still lagging at the back of the pack--way back.
An article by Lisa Belkin in yesterday's New York Times notes that there are 2,500 "profiling instruments" that companies rely on more every year when deciding whom to hire or promote. Sixty-five percent of companies surveyed reported using assessments in 2006, up almost double from the 34 percent reported a year earlier, according to Staffing Industry Report, a human-resources newsletter.
To paraphrase her article, the content of tests has stayed more or less constant for three decades. What has changed is the workplace. The cost of losing experienced employees now represents a tremendous lost of investment. "Employers want a guarantee that a new hire will stick — and the best way to do that is to make sure that job and candidate are a good fit in the first place."
Globalization that separates performance and accountability/review across continents has further complicated the process of finding and training the best person for the job. So offering on-line testing across those continents makes these assessments not only appealing but also fast.
I am often asked by potential clients, particularly those who have been in corporate settings, if we either offer or recommend simple, cost-effective assessments for them to use in attorney recruitment, training and development. While we can recommend and administer a number of good assessments that can be highly useful -- Myers Briggs Type Indicator (the most popular test in the country, used by 89 of the Fortune 100 and taken by 2.5 million Americans each year), Caliper's Personality Profile, Birkman Method, MayerSaloveyCaruso Emotional Intelligence Test, Thomas Kilmann Conflict Instrument, among others--they are not inexpensive and they are not targeted to lawyers.
A recent college graduate friend took a Johnson O'Connor aptitude assessment, a common test for teens and young adults to help determine career possibilities. Since her father and grandfather are lawyers and she is considering going to law school, she was surprised to find that "lawyer" was not one of her designated career possibilities. She was told that a few years ago Johnson O'Connor stopped offering "lawyer" as an option for any of their test-takers. The reason? They are no longer able to reliably correlate attributes or aptitudes with the successful practice of law.
And therein lies one of the problems with assessing attorneys. While research has indeed identified a number of attributes that lawyers exhibit to a greater degree than others-- for example, high pessimism, skepticism, urgency and autonomy, and low resilience, sociability and collaboration-- the problem lies in the data that shows the impact these characteristics are having on practitioners. These very attributes present in so many lawyers are also the attributes contributing to the dissatisfaction and distress that the legal profession exhibits: astonishingly high rates of depression and other mental illness, substance abuse, suicide, and divorce, for starters. High rates of dissatisfaction that are also contributing to the staggering drop-out and attrition rates.
In addition to the challenge of identifying what makes for a good (as well as well-adjusted lawyer), there is also the expense of doing that well. The testing often done at corporations is highly individualized, developed after an extensive review of what attributes in fact produce productive and satisfied employees at that particular company, and sometimes at that particular location. Google hires over 10,000 new employees each year and enjoys the amazingly low attrition rate of 4%, but to accomplish that.it invests in a highly detailed questionnaire and assessment that is developed from extensive employee data That process is not inexpensive.
Not only is it the individual lawyers who have complex and sometimes hard-to-read attributes. Law firms and law departments, often in spite of their studied denial, also have "personalities." Understanding those personalities is critical in determining the type of person who will thrive or fail there.
Our unique expertise in understanding the attributes of individual lawyers, as well as each legal workplace, makes us ideally suited to help you enter the challenging world of 21st century attorney assessment, development and retention.
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.
In the era of the global law firm comes (wisely, in our view) the introduction of the position of Global Chief People Officer into law firm senior management . Reed Smith announced last week that its creation of the position underscores the increasing importance the firm places on running itself as a business.
"You see more of this in global companies," said Gary Sokulski, Reed Smith's chief operating officer. "Since we're a people business, it's only natural to have someone who focuses on the people aspect. It's similar to a human resources officer, but focused more on employee concerns such as work-life balance, better managing and evaluating talent, and creating higher-level training programs."
Since 2001, Reed Smith has consolidated with firms from around the world, including in New York, California, Chicago, London, Abu Dhabi, Greece, Dubai, Paris, Hong Kong and Beijing, increasing in size from 600 attorneys based in the U.S. to more than 1,500 worldwide. Meeting the challenges of that much lateral integration alone would merit a full-time professional.
DLA Piper, with more than 3,600 lawyers over 64 offices in 25 countries, and arguably (depending on which moment you're counting) the second largest law firm in the world, has had a Global Chief People Officer for several years, Robert Halton, headquartered in London.
"Unlike other organizations, the cliche of people being the best asset is completely true in law firms. We don't have any machinery or stores, so it's the people providing the competitive edge in the market. Getting the right people is crucial to the success of a law firm, and keeping that pipeline of talent flowing is also crucial," Halton says.
Small and mid-size firms face equally critical people issues as do the new behemoths, but for them, adding a dedicated full-time professional to firm overhead in order to address those issues often is unrealistic.
We at RRR offer an Outside/Inside Consulting arrangement whereby we will spend a designated number of days per week or month as your Chief People Officer. Our experience brings efficient expertise to your people concerns in an affordable format.
Make way for a Global Chief People Officer at your firm, whatever the size.
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.
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.
A recent article in the New York Times on young 20-something Internet mega-millionaires quoted one as saying “You ask yourself, ‘Why am I not happier given how lucky I’ve been?’”
While we as lawyers, being supremely circumspect, would rarely verbalize this sort of “squishy” sentiment out in the open, given the levels of unhappiness in our profession, it is a question we should be asking ourselves.
So here are some of the findings about "happiness," which has exploded as a subject of research over the last few years. Let’s start with the data on the current state of happiness in the US.
Recent surveys point to a relatively high “happiness quotient” these days:
· 86% of Americans are content with their jobs (General Social Survey)
· 76% are satisfied with their family income (Pew Research Center Survey)
· 62% expect their personal situation to get better over the next five years vs. only 7% who expect it to get worse
· 65% of Americans are satisfied over all with their own lives—one of the highest personal satisfaction rates in the world.
As the query of that Internet mega-millionaire illustrates, happiness is not correlated with financial resources or even political stability: countries like Nigeria, El Salvador, Columbia, Mexico and Puerto Rico (along with Switzerland, Denmark and Canada) register higher rates of happiness than the US in the World Values Survey. Other countries, such as Romania, Russia and other former Soviet countries, consistently score at the bottom.
This fairly rosy picture in the US becomes decidedly darker when we factor in the “happiness” data on lawyers:
· Lawyers generally have one of the highest dissatisfaction rates with their work of all industries/professions, with 65% of young associates surveyed by the ABA last year intending to change professions within two years.
· Lawyers also have the highest “personal distress” rates of any industry, exhibiting dramatically higher incidences of suicide, mental illness, divorce and substance abuse than other industries.
Women lawyers seem particularly effected by these developments:
· Fewer women are seeking law degrees: from 1963 through 2001 female enrollment at law schools climbed nearly every year, from 3.7% to a peak of over 50%; since 2002, however, the percentage of women in law schools has declined each year, currently down to 46%.
· At a time of very high attorney turnover generally (over 20% leave their jobs every year), the highest drop-out-of-the-profession-entirely demographic is women.
· In spite of many years of women in the "pipeline," only a small proportion of women stay to become partners in law firms (17%) or senior legal counsel in corporations (18%).
The message seems to be that, in spite of Americans' general glee, few lawyers are happy living the lawyer's life.
What Makes Us Happy?
As it turns out, over the last few years a wave of books on happiness, primarily written by academics, have been published. Among them are:
The Pursuit of Happiness, by David G. Myers
Happiness, The Nature and Nurture of Joy and Contentment by David Lykken
Happiness, A History by Darrin M. McMahon
Authentic Happiness by Martin Seligman
The Art of Happiness by the Dalai Lama and Dr. Howard C. Cutler
The Happiness Hypothesis by Jonathan Haidt
Stumbling on Happiness by Daniel Gilbert
Happier: Learn the Secrets of Daily Joy and Lasting Fulfillment by Tal Ben Shahar
Most of these books are based on David Lykken's findings that there is an individual “set point” of happiness to which most people revert, regardless of their life circumstances—illness, financial concerns, family problems. Lottery winners and paraplegics, those both accepted and rejected as partners or general counsel, all on average return to their baseline levels of happiness within a year.
If health and other circumstances don't impact our happiness, what does? Jonathan Haidt compares our emotional life in The Happiness Hypothesis to a small, conscious monkey riding a large, unconscious elephant: in many ways we are estranged from the great bulk of our own inner feelings. The running commentary in our minds about what we feel and why is often simply wrong, he contends. For example, research subjects unknowingly hypnotized to react in a specific way to a cue quickly come up with rational, and in their mind truthful, “explanations” of why they acted that way, even though those explanations are causally entirely beside the point: their reaction was programmed in their unconscious by the hypnosis.
Not only are we not able to access a great part of our inner feelings, evidently we are not very good at analyzing the happiness data that we do have access to. Daniel Gilbert in Stumbling on Happiness explains that we are very bad at remembering what made us happy in the past and in predicting what will make us happy in the future, often overestimating the bang we will get and how long it will last. For example, people often list children as a source of happiness, yet the data indicates that children in fact are "extremely negative," "mildly negative" or have no effect on overall happiness. (More about this later.)
Could We Be Happier?
Continue Reading..."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.
There is no substitute for face time, as people in my business are wont to insist. But maybe there is.
During an interview with Mark Chandler, General Counsel of Cisco, to discuss the evolving legal marketplace, see Leaving Behind the Medieval Model, he demonstrated for me Cisco's newest entry (competing with Hewlett-Packard, Polycom and Tandberg, among others) into the web conference market— a small meeting room that boasts an IP (Internet Protocol) phone, three broadcast-quality cameras, three ultra-sensitive mikes, three 60-inch plasma screens, a crescent-shaped table that seats six and soft back-lighting. The result, as one satisfied client related, is that "you can literally see and hear a pin drop a continent away." The sensation is of simply being in a small conference room with well-lit colleagues across the table--I admit to the eerie feeling of being able to reach out and touch someone, only I couldn't.
At $300,000+ for each of these pods (and it takes two, of course) and monthly maintenance costs in the thousands, it would require a lot of deferred traveling to pay for the luxury of not having to sit on tarmacs. Nonetheless these systems seem to be enjoying brisk demand, with prices down from $550,000+ two years ago and double digit increases in sales annually.
There are a number of circumstances that might prompt law firms to take advantage of these technospheres. In light of how time-consuming air travel has become, the need for rapid decision-making and the globally far-flung nature of more and more law firms and their clients, they offer a reasonable and efficient tool in law firms' management and delivery arsenals.
But my interest in this product (in case you've been wondering why I, a techie manqué, am going on about this) relates to something one of the true techies touting this system remarked when I saw it. "The name of the game today is collaboration," he said, and went on to discuss the myriad tech tools now available that promote collaboration—web-conferencing, intranets, extranets, wikis, individual attorney blogs, etc.
Unfortunately, as we all know, the name of the game at many, if not most, law firms has not historically been collaboration, whether we are talking about firm management, practice group, committee or even client and document issues. Lawyers are notoriously independent and skeptical/untrusting of others. The impact of many firms' broad dispersal of offices and lawyers has not necessarily been to produce more of what wasn't much there in the first place. Compounded with the arrival almost daily of lateral lawyers from different work and culture environments, cities, and even countries, the tendency among lawyers towards isolation is often only magnified.
So here comes the possibility of virtual face time, whether you think you need it or not. While we can agree that what needs face time, and what that term means, is often subjective, the absolute necessity of it among lawyers, their staff and clients is indisputable. I concede that web conferencing still lacks a certain something—building a critical relationship, hiring and firing, and even congratulating might still best be done in person. Real person. Where a shoulder to cry on, a slap on the back or a firm handshake can make a difference.
But if a firm determines to include one of these technologies amongst its tools or toys, it should not forget to put introducing, acknowledging, appreciating, recapping, explaining, consolidating, networking, socializing, rewarding, giving feedback, even gossiping and complaining on the list of things they are used for. It is an efficient way to build rapport and community and the productivity associated with that cost assuredly drops to the bottom line faster than whatever productivity associated with paying for either lunches at everyone's desks or sitting on the tarmac does.
A grand old firm has gone through a rough patch recently—one of its associates not only sued for sexual orientation harassment and discrimination, but also proceeded to file partnership documents and communications that S&C certainly would prefer to not have circulating publicly. Further, an article in the legal press lampooned a memo S&C sent around to its partners exhorting them, among other things, to say "thank you," in case their mothers had forgotten to instill in them that finer point of social intercourse. The legal blogosphere enjoyed batting that one around.
But S&C may have gotten the last laugh. In the Midlevel Associates Review released last month by The American Lawyer, New York law firms (as defined there to mean firms with more than 45% of their lawyers in New York) were once again roundly denounced, with this year only 7 firms making it into the top half of the 162 firms surveyed. The New York associates registered their dissatisfaction particularly regarding relations with partners, training, communication about what it takes to make partner and openness about firm finances. While New York firms have always performed poorly in these ratings, several firms fell precipitously since last year's survey—Cravath Swaine slid 27 places, Paul Weiss was down 59, Debevoise Plimpton fell 64 slots and Wachtell Lipton plummeted 74 places.
Thumbing its nose at the rest of the straggling New York herd was Sullivan & Cromwell, which vaulted from number 153 on the list up to number 48.
So now that all the chortling has died down, was it the "thank yous" that worked? Perhaps. But also, for the first time this past year, S&C leaders gave associates a series of briefings about firm finances, business strategy and the road to partnership. Chairman H. Rodgin Cohen and vice-chair Joseph Shenker, among others, made in-person presentations and took questions.
On those two most damning survey questions for New York firms, "communication about what it takes to make partner" and "openness about finances," S&C's ratings this year were 3.48 and 3.64 respectively, out of the ballpark compared to their prior year's ratings of 2.14 and 2.13, and even much higher than this year's average New York firms' ratings of 2.59 and 2.94.
So it looks to me like Mom was right. Talking it out—even those tricky financial matters and partnership issues that several New York firms said, and continue to say, were either too confidential or essentially none of the associates' business—creates rapport, incentive and even, get this, trust in an environment that sorely needs all three. And it does so quickly—with the results showing up in the first survey!
Mom would be so pleased.
On Thursday, September 21, at 2:00 pm EST, Ronda Muir will lead an audio conference on Associate Compensation: Where Do We Go From Here? Included in the discussion will be a review of current trends and out-of-the-box ideas for dealing with the impact of escalating associate compensation, how to find the best strategy for your own law firm and overcoming the problems and pitfalls in making that strategy work.
The audio conference is sponsored by IOMA, which publishes Law Office Management & Administration Report, as well as other legal publications, and provides research, educational and training products to lawyers. To register, go to www.ioma.com/law_firm_management/.
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.
Should lawyers “do the right thing” in addition to “being right”?
A favorite cartoon depicts two lawyers at a desk evidently discussing strategy. One lawyer says to the other: “Is it right?… Is it fair? Get a grip, Carlton—we’re a law firm!”
In an interesting study issued recently, the Consortium for Research on Emotional Intelligence found that financial advisors who demonstrated high levels of “moral and emotional competency” nearly doubled the S&P 500 return on their client portfolios in the years 2001 through 2004, delivering an average return of 25%.
Of the various attributes studied, integrity had the single strongest impact on client returns. “Results showed that Integrity was the key behavioral competency which predicted the most positive returns for clients."
Integrity was defined as acting consistently with what one says is important, in other words “walking the talk.” An example was an advisor willing to give up a lucrative client rather than compromise his/her principles, such as ultimately recommending that a client seek advice from another advisor because the advisor could not in good conscience implement a plan believed to put the client at significant financial risk.
In the process of updating his 1996 book The Honest Hour: The Ethics of Time-Based Billing by Attorneys, William George Ross determined that lawyers in 2007 are significantly more likely than a decade ago to pad their bills with unnecessary hours or bill two clients for the same time. Almost 55% (up from 40%) of associates and partners surveyed report performing unnecessary work, and 35% (up from 23%) say they bill two clients for the same time. The number of lawyers who believe double billing is ethical also rose from 35% in 1996 to 48%, and more than two-thirds of lawyers say they have specific knowledge of bill-padding by others.
Morals
In a May 2, 2007 Law.com article entitled “From Moral Partners to a Moral Firm”, Gregory S. Gallopoulos, the managing partner of Jenner & Block, suggests that the integrated enterprise model that many successful law firms are adopting now, in which strategy and vision belong to the entity as a whole rather than to individual partners, risks producing a vacuum in the area of firm morals.
“Under the entity model, as individual attorneys cede decision-making authority to the firm, including authority for decisions regarding professional responsibility and ethical behavior, they tend to renounce (at least implicitly) personal responsibility for moral decision making. Law firms as entities, however, have no inherent mechanism for replacing personal moral responsibility with institutional moral responsibility. In consequence, morality can fall through the cracks, allowing corruption to ooze into the enterprise. “
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?
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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:
ARK Group also lauded Muir's participation: "Your involvement was pivotal to the success of the program… and brought a fresh perspective to the agenda."
Across the pond, the legal industry is addressing some of the same issues as US firms but with their own distinctive twist. Facing attrition rates similar to those in the US, UK law firms are re-jiggering what it means to be a partner and whether lawyers even need to be one in order to stay over the long haul. One-third of the UK 100 law firms have over the last few years introduced non-partner career tracks, based on associate feedback that partnership and its lifestyle has lost its allure.
On the legislative front, an NFO report in March 2001 on "Competition in Professions" recommended that unjustified restrictions on competition be removed. The government's report in response on competition and regulation in the legal services market concluded that "the current framework is out-dated, inflexible, over-complex and insufficiently accountable or transparent..."
Sir David Clementi, Chairman of Prudential pfc, one of Britain's largest insurance companies, was asked to do a wide-ranging independent review of the regulation of legal services in England and Wales, which is now known as the Clementi Report, was presented in December 2004 and was approved by British Prime Minister Tony Blair's government in October 2005. It recommended allowing nonlawyers to own, manage, and finance law firms for greater access to management expertise and capital markets.
The associated Legal Services Bill was introduced to Parliament on November 23, 2006 and is still pending. It proposes three key changes:
Surveys of UK law firms find them staunchly in favor of many of the proposed provisions. Ninety-two percent of surveyed law firms welcomed the introduction of multidisciplinary practices (MDPs), and found the most suitable prospective partners to be accountants (69 %), banks (19 %) and tax planners, IP agents and others. .
Fifty percent of UK law firms are considering external funding, while more than half are considering adopting alternative business structures (ABSs). Eighty-five per cent of firms questioned had discussed the issue of MDPs and ABSs at board level, while 56% were considering adopting an ABS.
The idea of multi-disciplinary practices has been bandied around in the US for years, and the growth of global law firms, and the prospect of competing with UK multi-disciplinary firms, may again suggest that model as a possible development of the future. What is interesting is the extent of support that UK firms are giving the idea.
Stay tuned.
See Muir's article for guidelines on making your law practice (and life) more innovative, creative and collegial.
An extraordinary and convincing vision of a revolution in big law's future was presented by Mark Chandler, SVP and General Counsel of Cisco, in a speech in January at Northwestern School of Law's 34th Annual Securities Regulation Institute. I would like to join other legal commentators in paraphrasing Chandler's comments and commending him on his far-sightedness.
Driven as are other GCs to realize productivity improvements in his department, Chandler is committed to reducing Cisco's legal expenses as Cisco gets bigger. Chandler points out that information, a law firm's stock in trade, will only get easier, and therefore cheaper, to access over time. Already standardized on-line legal data is available, with residential leases and individual tax returns now largely done by software.
But even Cisco's first tier corporate legal work is being drilled down to a cost-effective, accessible product. Contracts are drafted, executed and archived by employees using on-line software. Cisco pays a fixed fee for patent prosecution and intends to pay at least 5% less each year, requiring its firms to find ways to lower costs. It also pays a fixed fee for the review of license offers, which Baker & Botts has been able to make profitable by developing a more efficient systematic approach. In the corporate secretarial area, Cisco has replaced a group of outside firms with a one-firm solution that aims for a 20% reduction in legal expenses in part by using standardized forms and open interfaces.
In litigation, Cisco has a fixed fee arrangement with Morgan Lewis to manage all of its US commercial litigation, which has made litigation avoidance the firm's key goal, aligning perfectly with Cisco's interest.
Counseling will be the next frontier, Chandler believes, as online tools like tax counseling via www.taxalmanac spread to other legal areas, such as export regulations, human resources and employment and eventually securities law compliance. Cisco is already working with eight other Fortune 500 companies and a number of law firms on a site called Legal On Ramp to allow direct access to search law firms' knowledge management systems. See www.legalonramp.com.
And in each instance, what was novel in Cisco's legal management strategies five years ago has become more commonplace among its peers today and may well eventually become available for purchase as packaged software.
The current law firm business model, according to Chandler, reflects a fundamental misalignment of interest between clients who are driven to manage expenses and law firms compensated by the hour. Clients are not in the market of buying time, he points out, but value. The current system not only mis-serves clients, but also the lawyers themselves, particularly associates, who Chandler says are beating down his doors because they don't want to work for law firms any more--enslaved by a billable hour-based compensation system that is inefficient in producing a valuable product and that offers them little chance of making partner.
Chandler recognizes that law firms are currently profitable as structured. Clay Christensen of Harvard Business School calls large American law firms "the most profitable businesses in the world. Speedier information-gathering capabilities allow large law firms to increase utilization of less experienced lawyers without passing cost savings on to their customers." But Chandler is convinced that the very source of success for firms today--the ability to control client access to expertise, requiring 1:1 delivery--will be the source of their failure in the future. It is top quality boutiques that Chandler is betting will change and survive, and it is in Cisco's interest to help make them profitable while doing so. Chandler views slower-moving, cost-heavy large centralized firms to be at risk.
"If the economic system of law firms is frustrating to associates and even some partners, I can tell you that from the standpoint of a metric driven general counsel, it is more than incomprehensible. It looks like the last vestige of the medieval guild system to survive into the 21st century."
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?
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.
The Center for Work-Life Policy’s latest research, titled “Extreme Jobs: The Dangerous Allure of the 70-Hour Workweek,” published in the December 2006 Harvard Business Review, reports that 35% of high earners work more than 60 hours a week and 10 percent work more than 80 hours a week. Their conclusion is that 20% of high earners in the US have “extreme” jobs, that is: 60 hours or more of work a week that often includes unpredictable work flow, tight deadlines, work events outside of regular work hours, availability to clients 24/7 and/or a large amount of travel, among other things. And 48% of extreme workers say they’re working an average of 16.6 hours more per week than they did five hours ago.
Sound familiar?
The reasons for such long hours? Among the external drivers: globalization and the round-the-clock availability it requires; vastly improved technology, allowing same-day delivery everywhere around the world; enhanced communication; increasing competition; and decreasing job security. Among the internal motivators: stimulating work, high quality colleagues, high compensation, power and status.
Sound familiar?
Noted were the sacrifices that these schedules require in personal and family life. More than two-thirds (2/3) do not get enough sleep, half don’t get enough exercise, and a significant number use alcohol, drugs, or food to alleviate their stress. The sleep deprivation alone can work havoc on professional and personal lives: a week of sleeping 4-5 hours a night induces an impairment equivalent to a blood alcohol level of .1%, which is legally equal to being drunk. Forty-two percent (42%) of extreme workers take 10 or fewer vacation days a year and more than half regularly cancel vacations. This in spite of data that shows that regularly taking vacations lowers the risk of death by nearly 20% among men between the ages of 35 and 57, often your most valuable age-range.
More than half say their sex lives have suffered; and nearly half say their work has interfered with their ability to have a strong relationship. According to the report, it is physically impossible to have a meaningful conversation with your significant other after a 12-hour work day. The American Academy of Matrimonial Lawyers identifies a preoccupation with work as one of the top four causes of divorce.
Extreme workers also note the negative impact their work has on their children. The study pointed out that women, 20% of the extreme workers, are more likely to feel personal responsibility for these down-sides, particularly with respect to their children Three-quarters (3/4) of the women said their work interfered with their ability to maintain their homes (66% of men said the same thing),and 57% of women (and 48% of the men) do not want to continue their work pace for more than