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

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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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."

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Firms of Endearment: How World-Class Companies Profit from Passion and Purpose
by Rajendra Sisodia, David Wolfe and Jagdish N. Sheth contends that companies with more emotionally intelligent employees have stronger bottom line performance than those who don't.  David Wolfe can be a controversial adviser, and some have suggested that being recognized as a good corporate citizen should be sufficient reward for conscientious organizations, without having to convince themselves that both their individual psyches are above par and that their bottom line improves as well.

Regardless of the sniping, the underlying research makes the FoE claims believable.  High EI clearly hits the bottom line. Ninety percent of top individual performers across industries have high EI whereas only 20% of low performers do. Those who raise their EI are roughly 25% more productive than before.   Insurance agents who score high on EI sell twice as much in policy premiums as agents who score lower. Managers at American Express Financial Advisors who complete a training program focusing on one's own and others' emotional reactions achieve significantly higher rates of growth in funds under management than their untrained peers.

Plus, data suggests that employees who are emotionally intelligent are more likely to access and profit from feedback, helping them achieve more over time.

So the logic of companies who have more emotionally intelligent employees out-performing their lower EI brethren (and sisters) certainly makes sense.

The application to law firms and law departments, where checking one's emotions at the door is standard procedure, is obvious-- more emotional intelligence--whether hired, trained, or promoted-- will not only improve culture but produce bottom-line results.

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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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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 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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In-House Counsel recently reported on the results of the Managing Outside Counsel Survey Report prepared by the Association of Corporate Counsel and Serengeti Law of Bellevue, Washington.  The study revealed, among other things, the four reasons that companies are firing outside counsel. In 2005, 55.6% of the General Counsel surveyed reported that they terminated the relationship with at least some of their outside firms, up almost ten percent (50.7%) from 2004. The reasons most cited for firing outside counsel were:

1.       poor quality of work

2.       lack of responsiveness

3.       high fees

4.       personality issues 

Note that, after the threshold issue of competent work, two of the three main reasons for firing an outside firm were for deficiencies in what some lawyers refer to as “soft” skills—lack of responsiveness and personality issues. 

How responsive are your lawyers?   Do they have well-developed client relationship skills?

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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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