A guest blogger for JDBliss writes on March 20th about a 3L law student at Standford Law School who has built a new organization trying to influence how Big Law firms treat their associates.  The law student

"was disturbed by the stories he heard from lawyer friends about 60-hour weeks poring over mind-numbing documents, young associates getting little feedback on their performance, and the small percentage of associates who made partner after years of toil."

Instead of accepting the "status quo", he started an organization focused on reforming law firms.  According to the post, the group has already made an impact on firms as many have started to:

• provide more flexibility for lawyers who are parents,
• offer mentorship programs for newer attorneys,
• change or eliminate the billable hour in favor of fee and compensation arrangements that reduce pressures on associates,
• evaluate newer lawyers based on the skills they have developed rather than their longevity at the firm, and
• give employees credit for pro bono service and other firm-related work such as recruiting.

Wait a second.  Something is missing from the above.  Where is the "reduction of obnoxiously high starting salaries for graduating law school students"?  Must have been an oversight.  I have little worry, though.  Through the commitment of this brave group, I am certain law firms will respond by lowering associate salaries from their current ridiculous levels through the group's "influenc[ing] the employment practices of law firms by highlighting firms' commitment to their lawyers' work-life balance, to diversity, and to professional development during the lawyers' careers."

If this too is not a goal of the group, the membership of "more than 1,000 students" may have unwittingly given firms a reason to do so.   

One of the above bullet points does appear, in principle at least, to validate findings in a recent Harvard Business Review article about which I wrote on March 14th.  The desire to move away from billable hour requirements in exchange for other arrangments that are more task oriented fits into the HBR argument of "Gen Y"'s focus on results rather than method.

I also can't argue with the need for mentorship programs and merit-based promotion.  Both of these needs help the firm increase revenue and value not only to clients but firm professionals as well. 

If the group wants others to take it seriously, though, it may want to consider a few things:

• If you want a work-life balance, you have to understand that your salary will not be as high.  There are costs to balancing your life.  Make the same argument for reducing pay for associates.
• Clean up the site.  I can't take seriously a movement to drive down work standards written with such a lazy approach.  No capital letters starting sentences?  The grammar is so bad that it reads like a rambling manifesto rather than a reasoned argument.
• Highlight your pro bono initiatives and how it has affected the life of the members who participate. 

I can't help but think of what those in other industries would think reading that site (besides the poor drafting).   Imagine a coal miner or construction worker or any other type of industry where long hours are required reading it.  Attorneys who get paid upwards to hundreds of thousands of dollars a year starting pay complaining about their plight.  

As they say in the south, "bless your heart".

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I have suggested utilizing a non-equity partnership tier as a way to reward attorneys who are not yet ready for firm ownership.  Jim Cotterman has made an argument against it.  In my assessment, non-equity partnership can be a tier to place attorneys who excel in some things, such as working files, but don't have the skills to bring in new clients or matters or don't have the requisite discipline to be a firm owner.  Cotterman, however argues that non-equity partner tiers can end up being dumping grounds for the mediocre.

Cotterman cites a May 2006 study, An Empirical Study of Single-tier Vs. Two-tier Partnerships in the AmLaw 200, by Professor William Henderson at the Indiana School of Law.  The study documents that average per equity partner income in single tiered partnerships are significantly higher than two-tiered partnership firms.  The study noted:

The higher profitability of single-tier firms appears to be a function of higher levels of prestige, which enable single-tier firms to (a) attract and retain a more lucrative client base, and (b) run a more rigorous promotion-to-partnership tournament in which associates work longer hours and are less secure in their futures with the firm. 

Cotterman does believe there are certain situations where establishing income partners could be a good idea, including the reasons I mention above.  How do you feel about this?  In the 2008 Law Firm Economic Survey, we are asking respondents if they have a non-equity partnership system in place.  With this information, we will be able to determine whether equity partners in two-tiered partnership firms make more or less than those in one-tier firms.  It will be interesting to see if our results, which focus on small and mid-size law firms, mimic or contrast the findings in the Amlaw 200.

We have begun taking submissions for the 2008 Law Firm Economic Survey.  If your firm is interested in participating, please contact Brian by clicking here.

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A method of increasing performance is based on the Hawthorne Effect.  Although several of the experiments have been downplayed by social psychologists, the effect that attention has to performance is as true today as it was when recorded at the Hawthorne Plant in the 1920's.

 

Basically, when attention is given to the performance of an employee, the employee's performance increases.  Simply put, measurement improves performance.  If you set goals for your timekeepers and don't measure them against the goals, the incentive to succeed is left to trusting individuals to meet their goals. 

How well suited is your firm for a loss of a client such as Bear Stearns (or, perhaps, Lehman Brothers)?  Gerry Riskin wrote in January to make your firm recession-proof.  Some of the factors listed in recession-proofing the firm:

• Ramp up frequency of financial reporting (monitor the firm's key finanacial metrics);
• Make hard decisions humanely and fast (monitor under-performing timekeepers);
• Manage internal expectations (monitor expectations to keep staff motivated and avoid "business as usual");

 Each of the above requires attention.   Trust alone that the individual timekeepers will respond to economic crises is a recipe for disaster.  A better management model is the Hawthorne Effect.   Everyone needs to be accountable for results.  Let the effect of attention to performance help the firm during difficult times. 

The effect of measuring performance brings other benefits.  Beyond improving results, keeping attention on profit drivers has the added benefit of opening opportunities - even in bad economic times.   As Riskin notes, [w]hile strategy may be more challenging during recessions, if you grasp the nettle, opportunities will arise to enhance your client mix and your talent base.

We have begun taking submissions towards the 2008 Law Firm Economic Survey.  If your firm is interested in participating or if you would like more information, please contact Brian by clicking here.

 

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 While sitting on a plane on the way to the ABA Techshow, I was reading the February 2008 issue of the Harvard Business Review.  An article titled, Task, Not Time:  Profile of a Gen Y Job, caught my eye.  I often hear managing attorneys lament the lack of motivation of associates.  The article in the HBR may provide a reason for the disconnect - it isn't that young associates are not motivated, but that they may respond differently than their elders to the conventions of work.  Where many look to the hours you spend at the office as a measure of productivity, the HBR article suggests that the younger generation looks more to results, or task-based productivity.

 

Many younger employees find they can complete tasks faster than older workers,perhaps partly because of technological proficiency but even more . . . because they work differently.  They spend less time scheduling and are comfortable coordinating electronically.  They resent being asked to log hours and stay in the office after their tasks are done, and the idea of face time really annoys them.  [Generation] Ys love to work asynchronously - anytime, anywhere.  One said during out research, "What is it with you people and 8:30am?"

 

Does this explanation fit with your experience? 

 

The article suggests ways to devise a better model of how to define work:

• Articulate the results you expect - and tie accountability to getting the job done;
• Make physical attendance in the office, including at meetings, optional;
• Gauge performance on the quality of work performed;
• Help managers and employees learn to measure dedication in ways other than face time;
• Use today's networking capabilities to allow employees to work from anywhere;
• Support the changes by creating drop-in centers

The above also appears to support what Chuck Newton has termed the 3rd wave law firm. 

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In a February 29th article for Corporate Counsel titled Big-Firm Associates: Why They Go and How to Keep Them, Ben W. Heineman Jr. and David B. Wilkins discuss associate attrition at the top 250 law firms.   According to the story, firms are losing up to 50% of their associates after three or four years with half to two-thirds of them being the associate's decision to leave.  Heineman and Wilkins talked to students, associates, partners and inside counsel and came away from their discussions with the belief "that for a significant number, their first professional experience after at least seven years of higher education is too unprofessional and demoralizing."

Some of the problems listed:

• Early in their careers, far too many associates are given a steady diet of drudge work: reviewing documents; reading e-mails; organizing schedules for transactions; researching small, tangential issues.
• Associates work on large teams and are not given individual responsibility of any consequence.
• Partners may not take time to communicate the overall issues and strategy in a large matter, but just send younger associates off to till a small part of the North 40. Too often the junior associates have to work for senior associates whose goal in life is their own advancement, not the well-being of their younger colleagues.
• Partners, who have huge workloads and unceasing pressures to produce, do not spend much time worrying about the professional development of young lawyers nor provide adequate mentoring, education and training.
• Firms may not communicate candidly about their finances, their business strategy and the partnership prospects for young lawyers, who are not treated as young professionals but viewed as generators of "rates x hours" for annual revenue models.
• Corporate clients are unwilling to take risks on young associates and unwilling to pay their rates, so associates may not have interesting opportunities such as doing important work, meeting with businesspeople, or traveling to depositions, hearings or arguments.

Wow, this sounds a lot like many small and mid-size firms too.   So how can this benefit midlaw firms?  By correcting the above problems to the extent they persist in your firm, you can get the talent that biglaw firms can't keep.  For those firms who are having a hard time finding associates motivated to work, here's your opportunity.

Change in large corporations and large law firms is slow.  Mid and small law firms can make change occur much more rapidly (though historically no law firm is immune to procrastination when it comes to change).  To the extent that your firm is bitten by any the above problems, take action now to remedy them. Give more responsibility to associates.  Mentor associates and give them more ownership of matters.  Encourage associates to become better "firm citizens" by instituting an "upward review process" and providing opportunities for them to participate in strategic planning.  And, although you can't force a client to take associate work if the client is not comfortable with "taking a risk" with associates, you can help form client perception of the quality of your associates.  Allow associates to be more active in discussions to display the competence of your attorneys.  If you don't feel confident that your associates have the abilities to take on such added responsibilities, mentor them and if that doesn't work, they may not be a good fit with the firm.

According to the article, the attrition is made up of :

1. some just paying off school debt and intended to leave once the debt was satisfied;
2. some who follow spouses taking jobs in different locations;
3. some taking higher paying jobs in banking, etc;
4. some wanting a better quality of life; and
5. some who don't want to work themselves to death only to get denied partnership status. 

An amazing number that was listed in the article was that 25% of the 40,000 law school graduates were hired by the top 250 largest law firms.  10,000 graduates going to the top 250!  The number may be inflated a bit and the article did qualify the number, stating "by some estimates", but that is a pretty high number of recent graduates concentrated into a few firms. 

How many of those lawyers leaving biglaw firms will be willing to take a pay decrease?  With an attrition rate of 50%, just 20% of the 5,000 would provide 1,000 lawyers for mid and small law firms to hire at a better cost than you would when those same lawyers were more expensive and didn't have 3 to 4 years of experience.  Sounds like a deal to me.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and

services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

 

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 Bruce MacEwen writes in his post The Ten Years War something that I have heard from many managing partners:  talent combined with work ethic from those in the "millennial generation" (those born after 1980) is difficult to find.  MacEwen quotes an article from The McKinsey Quarterly titled Making talent a strategic priority:

 

"People in this group see their professional careers as a series of two- to three-year chapters and will readily switch jobs, so companies face the risk of high attrition if their expectations aren’t met. The Gen Y cohort, already representing 12 percent of the US workforce, is therefore perceived as substantially harder to manage than its predecessors. As one North American HR director explained, 'The millennial generation doesn’t want to work 100 hours a week. These kids want a different deal; they have seen their parents work all their life for the same company and then get fired. They are not interested in killing themselves for work.'"

 

Though the above sounds a bit overstated to me (is the threshold to being productive really 100 hours a week?), it hits on the point that many in mid-sized firms experience:  the unmotivated young attorney.  MacEwen cites the article's suggestions for battling this "ten year war" for talent:

• Target talent on all levels - not just on lateral partner hires - look for talent at all levels.  People tend to change in the environment they are in - if you have talent at all levels, this will encourage the right attitude.
• Communicate your firm's value propositions - it's what motivates behavior, says MacEwen.
• Bolster HR - MacEwen takes exception to this recommendation, arguing that "in many firms [HR's] reputation—certainly as a strategic asset—is tarnished beyond salvation".  Instead, he argues, have office managers and practice group leaders be the champions of recruiting.

For several years now, the ABA has made a focus on work/life balance, especially considering some firms where partners can work in excess of 2200 billable hours per year.   If you agree that work/life balance is important, how do you get young associates to buy-in to the work part?

Morepartnerincome.com is sponsored by Juris®.  For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

 877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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Tom Collins and I were discussing the relationship between legal professionals and non-lawyer employees of law firms. Following up our conversation he sent the comment to post:

I will never forget the time I spent on the site of a one law firm. The entire five-person accounting department shared one windowless office. Desks were pushed against one another. The accounting staff worked in chairs with missing arms, torn upholstery and busted springs. Their mismatched desks looked to be recovered salvage with missing drawers and loose veneer. This was an extreme case, but it is standard operating procedure for many firms to treat their non-professional staff as second-class citizens.

The non-lawyer support staff in a law firm has a lot of influence over the success of the firm's legal professionals—they can spoil the soup. How they feel about the firm is reflected in how they deal with law firm clients and prospects.

Excellence in client services starts with excellence in how the firm treats its own people.
 

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Management is achieving objectives through others. It's a continuing process of receiving input, processing input, taking action, receiving feedback, and repeating the process. It requires KASH in a real-time environment. It is a cycle of planning, organizing, actuating and controlling.

Prior to 1828, the path to becoming an attorney required not only to obtain a degree, but to serve several years as an apprentice before being able to practice law. President Andrew Jackson changed these requirements to break up the elitist methods of choosing attorneys (only attorneys could choose who the apprentice would be, much like real estate appraisers of today). By the end of the 1800's, apprenticeship programs for attorneys were well in decline and after the introduction of the American Bar Association in 1878, a more standardized formal process to becoming an attorney was introduced (Source: Bar Examination: Further Readings). An unintended consequence of this action was to lessen the importance of mentorship to young attorneys-in-waiting.

Today, the only qualifications (not to lessen their importance) to becoming a lawyer is a good dose of book smarts, focus and an ability to not crack under stress. Law school does much to help you think like a lawyer, but does nothing to help you act like a lawyer. Mentorship helps associates to learn from seasoned attorneys how to act as well as how to best service clients.

Management ensures that the value of mentoring is set as habit, achieving professional objectives not only for the individual, but for the firm. Unfortunately for some firms, management is treated much like strategic plans: either you spend time developing a plan but don't stick to it or you don't do it at all.

Good management starts by receiving input. Actively solicit feedback from your associates. Karen Asner wrote an article for Law.Com (Law Firm Partners Find Out What Associates Really Think of Them) regarding establishing an "upward review process":

Upward reviews give associates the opportunity to evaluate and provide input on the management and leadership performance of partners with whom they regularly work on deals, cases, committees or pro bono matters.

Law firms aiming to create an outstanding working environment for their associates and attract prospective recruits should seriously consider implementing an upward review process.

It's a good bet that associates, if put in a non-threatening environment to speak frankly, would have some pointed views on their plight. Some may be warranted; some may not, but if you want to consistently increase partner income, knowing what associates are thinking can be invaluable, especially if you are considering them as future partners. You don't want to find out after the attorney leaves how disaffected he/she was towards the shareholders. Plus, in an ideal environment, the associates are bearing the brunt of most of the work - you want to make sure they are well incented to be proper representatives of the firm, inside and outside of the office.

Implementing an upward review process is only the start: next, you have to process the input. The management committee or equivalent must review the results and develop a plan of action that will address concerns and further the firm's objectives. Accountability must be delegated to every member of the firm. Clear and concise roles and goals need to be communicated.

Then you must take action. Talking about management and goals is a waste of time otherwise. Taking action means mentoring associates - not only as to how to practice law, but how to act. Mentoring is a way to reclaim the lost art of apprenticeship. Not only will it allow the partners to dictate how the associate acts, but it also creates a bond of acceptance within the firm that the associate is part of the team. That can only help in fostering trust, a central component in management.

Measurement improves results. Always measure the effectiveness of your plan by again receiving feedback. Keep the upward review process going - quarterly, semi-annually, annually, whatever time frame will maximize the effectiveness of the campaign (understanding the resource drain on the review process - you don't want to lose productivity as a result of processes established to improve productivity). My suggestion is semi-annual.

Measure and adjust, then repeat the process. Nothing is gained by doing something only once. Consistency is the name of the game if you want to affect the habits of others. Don't let up, don't get down, never give up. Over the long run, your efforts will be rewarded with a smooth running operation that will scale with your profits.

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To Law Firm Leaders: Wishing you a Prosperous New Year

As I head into retirement and turn this blog over to those who will carry on in the years ahead, I leave you with two thoughts that, if you take to heart, will mean more partner income for 2008 and the years ahead.

I had to learn them the hard way. They are the core beliefs that have guided me throughout my business career. At least they guided me during the most successful part of that career. It took a while before I came to understand that these two certainties govern the success or failure of businesses—including law firms.

1. You are always judged by others

2. Business is a journey that involves constant change.

You are only as good as seen through the eyes of those that judge you. For a law firm, that primarily means your clients, your peers and your employees. But don’t forget all of the others that your success depends on, including vendors and service providers. The only sound business strategy is to pursue excellence. And excellence must be earned through their eyes, not yours. Excellence can only be pursued through change. You either purposely change to improve or the natural forces at work will pull you down to lower and lower performance.

Steering the course for excellence takes measurements. You have to set goals. You have to decide how you are going to achieve those goals. You have to measure your progress, make adjustments and set new goals as you continue to chase the allusive standard of excellence. It is a moving target. It takes constant innovation not to lose the race to others. Rather than stay too long with what has worked in the past, you must diligently simplify, eliminate and reinvent.

PS: Morepartnerincome.com just received Dennis Kennedy’s nod as the Best Overall Law Related Blog and also takes home the Blawggie Award for Best Law Practice Management Blog. Being recognized for your work beats a gold watch every time! Thanks Dennis.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

 

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A few days ago I posted Why Some Law Firm Won’t Plan. The answer to that question and the one above are similar. Jeff Gillingham with London-based SSG Legal summed it up in one sentence:

The problem is that culture eats strategy for breakfast.

Gillingham’s comment appeared in the July/August 2007 edition of Managing Partner. He was writing about selecting the right successor to a retiring managing partner and was making the point that selecting a successor who is counter culture is a path to trouble. But his comment also explains why so many law firm plans go nowhere. The culture (the core beliefs and biases) of the entrenched partners controls behavior. A firm’s culture is a product of the people in the firm. You don’t change a firms’ culture without changing the people.

Any plan with a chance of success has to start with the answer to the question, Who are we and what do we believe?. You can’t ignore the answers and planning without asking the questions will be a waste of time. A plan has to build on the firm’s culture and on the firm’s strengths if you expect buy-in by the firm’s legal and administrative team.

It is not surprising that people rising to a leadership position feel they have a mission to transform the organization. Few people move into a leadership position with the mandate to preserve the status quo; however, transformation is too strong a word. Transformations require either brain surgery or wholesale personnel changes. I should add that transformations are rarely successful. Rather than a mission to transform the firm, what people really want is to energize the firm. Problems tend to hide opportunities and usually solve themselves through the pursuit of opportunities. Weaknesses are often no more than strengths carried to an extreme. Rather than eliminating a weakness, a sound plan can harness its strength aspects. Perceived cultural negatives are likely to be the building blocks of a firm’s value proposition and brand. A plan that works will energize the firm rather than transform it. It will capitalize on the strengths of the firm’s culture. It will pursue opportunities rather than problems. It will market the firm’s culture as a strength.

A new leader or a new plan that is counter culture will go nowhere. Culture will win every time. As Gillingham says, “Culture eats strategy for breakfast”.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

 

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