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

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

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

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

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

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