In an article for the upcoming issue of the National Law Journal  (NLJ) posted yesterday on their site, law firms are not taking their own advice when it comes to arbitration clauses in employment disputes.

Is this a case of what's good for the goose isn't good for the gander?  Why would arbitration be a good idea for other businesses but not good for law firms?  The answer brings into question the utility of arbitration. 

The arguments for arbitration come from those who have been burned in litigation.  Litigation can have you sitting in front of a jury that likely has no experience in the subject matter at hand and may in fact have motives other than the subject matter at hand to deliver a large award to a plaintiff.   Arbitrators, on the other hand, are picked from within the industry from which the dispute arises and ostensibly provide a more fair, though equally binding, resolution at less cost than litigation.  Where litigation can hinge on perception, arbitration decisions are meant to be grounded in experience-laden fact.

According to the NLJ story, however, only 10% of 200 law firm respondents to a 2003 survey had "mandatory arbitration in place".  I assume this means that equity partners were bound by it through the partner agreement and that other employees were bound by it as a condition of employment, though it isn't specified in the article.  One reason cited is that arbitration clauses may have a detrimental effect on the workplace.  Said a partner with DLA Piper, "Your attorneys can perceive that you are materially changing their position vis-a-vis the firm and attempting to circumscribe the rights they might otherwise have."

I believe that statement holds true to any situation where arbitration exists, not just when applicable to law firms.  Any other reason to not have them?  The article paraphrased a partner in the New York office of Greenberg Traurig, writing "Arbitration [] no longer offers the benefits of a speedier, cheaper resolution, as proceedings have become bogged down in discovery and quasi-motion work that mirrors litigation."

If that is truly the case, then arbitration has a gloomy future indeed, and not just with law firms.  I brought up the article to an attorney I know who defends clients in arbitration and he told me some of his concerns with it:

• Arbitration has become very inefficient, with no control over evidence admission (ie, evidence can come in at any time);
• The arbitrators do not have the same fear of appeal that judges do and thus are unafraid to ignore precedent;
• The quality of arbitrators has declined.

This indicates some serious problems with the arbitation system for dispute resolution.  As the attorney I spoke with said, "Our clients used arbitration to get away from runaway juries.  Now they are going back to the courts to get away from runaway arbitrators".

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.

Related posts

• The Case Against Income Partners
• Midsized Firms Have Available Capacity and a Pricing Advantage
• Information-Driven Business Development For Law Firms
• Generation X
• What to do When Clients Don't Pay?

A recent article in the New York Lawyer entitled "Getting Fired" (requires free registration to view content) addresses a task that all managers would prefer not to have as part of their responsibilities: that of releasing employees.

The article is geared to the attorney as releasee, helping them not miss the subtle ways they are "shown the horizon".

If a conversation starts: “You seem to be distracted lately, and we are concerned that maybe this isn’t the right fit for you anymore.” - you might be getting fired.

If a conversation starts: “We think maybe you would be happier somewhere else. Let’s reassess where you are in six months. Hopefully, by then you will have found the right opportunity.” - you might be getting fired.

Suggestions when hearing words like the above? Start job hunting. In the second example, the firm is clearly giving the attorney a 6 month notice to find other employment. It isn't likely that the firm is going to reassess the attorney's performance in 6 months. More likely they will have had a replacement for 2 months and will be ready for the performance-challenged attorney to go.

Although geared to those near the door, it is also a reminder to managers of their responsibility to the firm. No one likes to fire someone, but without that part of the employment cycle, those who drag down the margin won't change. This helps neither the firm nor the employee. Not fitting into your firm culture doesn't mean the attorney is not a quality attorney. It means the attorney is not a good fit for your firm.

As the article noted, "[t]here is another . . .firm out there just waiting to snap you up! They love laterals!"

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.

 

Related posts

• No related posts.

 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.

Related posts

• No related posts.

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.
 

Related posts

• Rolling Realization Computation for Law Firms
• What to do When Clients Don't Pay?
• Value Curve for Law Firms
• Unintended Impact of Outsourcing on Law Firms
• Trust but Verify

Mark Beese, who hosts the blog Leadership for Lawyers, wrote “….mid-sized firms are hiring professional development directors to provide training and support to attorneys.” He based his remarks on an article appearing in the National Law Journal.

It is a good idea except for the chicken for the egg issue. Some midrange law firms appear to be compensating for their lack of a full time CEO or COO by adding a host of specialists to address under-managed areas in crisis. This proves the adage “it only cost a little more to go second class”. As a firm grows in size, it needs C level executives heading functional areas like Technology, Marketing, Training & Development, and other important functional areas. However, you can’t start there. First you need the head, then the arms and finally the legs.

Law firms would do well to make the first move to a full time CEO before going to the next level of management.

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.

 

Related posts

• No related posts.

The terms ‘secondment’ and ‘secondees’ aren’t used much in the U.S. Nor is the tactic (by whatever name) used often by midrange law firms. Secondees are usually young associates who for an intermediate term (several months to a year) are given over to clients as temporary additions to their in-house legal team. Internationally the practice is more common, especially in the U.K. It has expanded beyond secondment assignment just for young associations to include senior members of the law firm.

There are good reasons for the strategy. First and foremost is the relationship building aspect between the law firm and the client. Because secondees are usually provided at a bargain price, the client views the arrangement as the law firm making an investment in them. For midrange firms, a secondment strategy lowers the risk of adding to its legal team. Adding new associates is an expensive undertaking. The cost comes right out of partner profits and many experts believe that it takes as long as three years before the cash flow from the additional associate becomes positive. The smaller the firm, the greater the relative impact on existing law firm partners. Having an ongoing secondment program can help finance those additions.

The relationship with insiders that secondees develop during their tenure with the client will surely prove to be valuable in terms of retention and expansion of the business relationship between the client and the law firm. And the law firm builds a team with a far greater awareness of service quality concerns of all clients.

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.

 

 

Related posts

• No related posts.

The move to hire a C level executive to oversee the professional development, is working its way down from the AmLaw 200 group to smaller law firms.

In morepartnerincome’s opinion, the biggest barrier to an effective professional development program is decentralized scheduling of legal work. Associates have no control over the work that is assigned to them. Partners tend to assign work to their favorites, which causes associates to find themselves in a rut doing reparative-style work. An associate reads the absence of professional development considerations in case assignments as a lack of interest in them. As associates start to feel short-changed, the grass begins to look greener elsewhere. Until law firms have someone with the power to counter the preferences of supervising partners, the associate disappointment over professional development will continue to drive associates away. Accordingly to NALP, 80% of associates have left their original firm by their fifth year in practice.

At the same time that firms are beginning to face up to the retention issue many are also dealing with aging baby boomers. Why not combine these two management issues? Many firms have retirement age partners who would like to remain actively engaged but without the demanding work schedule of handling client responsibility. Many are willing to do so for same or less than what the law firm would have to pay to hire an outside professional development director. Combining the two could be a perfect match.

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.

 

 

Related posts

• No related posts.

Bruce Marcus lays out the case the ABA overlooked in addressing the issue of mandatory retirement. The ABA delegates voted to encourage firms to discontinue the practice, but as Marcus notes, ” …they came up with the lesser solution to the greater problem, which, is, I think, the question of judging a lawyer’s capabilities by his or her age, rather than by capability.”

He then proves his case that older can be (and often is) better. As he puts it, “A stupid lawyer at 30 will be a stupid lawyer at 80. A smart lawyer at 30 will be a smarter one at 80 (which, I’ve been told, is the new 39).”

Being on the other side of 65, I agree with Marcus regarding prospects of improving with age, but there is more than just competence at state here that lead one to ask, if not mandatory retirement, then what?"

Mandatory retirement has been crutch, a mechanism, for achieving the transfer of control and earning from one generation to the next. That transfer has to happen. As I often say, you will eventually leave. The question is, do you walk out, run out or get carried out?

There are two recurring problems, other than professional competence, related to the retirement issue that have to be addressed successfully if a law firm is to have a life of its own. The first problem is the founding or senior partner who is reluctant to give up power and control as the risk grows that illness, disability or death will leave the law firm headless. The second problem has to do with disproportionate compensation. It is a frequent problem. Many maturing partners shift their priorities in their life. They began to devote more time to leisure activities and non-firm activities. The problem isn’t with the diminishing work load. The problem arises as the compensation they are pulling out of the firm becomes disproportionate to the aging partner’s continuing contribution.

No question about it, law firms benefit from retaining their most senior talent—they are often the best rainmaker and there will never be a substitute for experience. But the peaceful coexistence of generations requires an orderly transfer of power and earnings. For midrange law firms, the lack of continuity planning, of which mandatory or voluntary retirement plans are a part, puts survival of the firm at risk and the disproportionate distribution of income usually leads to a revolt or splintering of the law firm.

Bruce W. Marcus is an author, consultant, and pundit for professional services marketing. In addition to his books and articles, he shares his insight and wisdom through his blog, THE MARCUS PERSPECTIVE. His 424-word essay on the ABA mandatory retirement resolution is titled They Labored Like Lions and Produced a Mouse.

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.

Related posts

• No related posts.

On August 15, the American Bar Association’s House of Delegates voted to encourage law firms to abandon mandatory retirement policies. The resolution traveled under two flags, the anti- age discrimination flag and the “graying of the bar” flag.

With regard to the discrimination issue, Law.Com noted that “The issue of mandatory retirement has received particular attention because of a lawsuit pending against Sidley Austin. Law firms are anticipating a decision from the U.S. District Court for the Northern District of Illinois in Chicago in an action filed by the Equal Employment Opportunity Commission on behalf of about 30 former partners against Sidley Austin over whether its alleged retirement policy violated age discrimination laws.”

My guess is that this issue’s place on the agenda is due to the increased number of delegates and partners in general that are nearing mandatory retirement age.

From the standpoint of midrange size law firms, the big issue is continuity. For midrange law firms to have a life beyond that of their current partners, there must be an orderly hand-off from one generation to the other. Mandatory retirement is one method of forcing that hand-off. It isn’t necessarily the best, but those in power are often reluctant to give it up.

In an earlier post titled Continuity or How Law Firms Acquire a Life of Their Own, I suggested alternative strategies assuring the hand-off between generations. Without an orderly handoff a law firm fades away or just survives for at least one more generation through an ugly or quiet revolution. We old guys leave one way or another. It needs to be through a win/win arrangement. Continuity planning is most important to the entrenched partners. Without planning for the handoff to the next generation, it is the entrenched partners and their heirs who lose the value of the legal service business they built (or improved) during their tenure.

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.

 

Related posts

• No related posts.

Not the American Lawyer, at least not the publication’s August 2007 issue reporting on the most recent survey conducted by the National Association for Law Placement.

After reading so many stories about the burnout demands being placed on associates, I was as surprised as you probably will be with the survey’s finding that associate job satisfaction was 3.81 on a five-point scale. Of course, the key here is that the survey does not focus exclusively on the AmLaw 200 group or the high-pressure firms in cities like New York, so it is a good dose of reality with respect to the law firm community at large.

There are, however, certain realities confronting law firms. Most associates entering the practice do not plan on spending their lives in private practice. Only 22.9 percent anticipate remaining in their firm for five years and only about 12 percent expect to become partners in the current firm. Another striking statistic is that in half the cases, the law firms appear happy to see the departing associates move on.

Is this really that bad? One of the great things about earning a law degree and passing the bar is that you are immediately a lawyer. You don’t have to spend years working your way up the organizational ladder to become a professional. That law degree and the time spent in the profession are a spring board for many law school graduates to enter the business world. It isn’t all bad for the law firm. Smart law firms can take advantage of their relationship with alumni to build and retain business. Granted, law firms also lose associates to lateral hires. Likewise, some associates leave to create their own law firm. But even that doesn’t have to be adversarial. Law firms refer business and the law firm that cultivates its alumni relations can be on the winning side of those referrals.

Yes, law firms can look for ways to reduce turnover. They can improve their selection process. But in large measure, law firms have to accept the fact that not all associates plan to make a career of it. Laws firms need practices in place to make the best of that reality.

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.

 

Related posts

• No related posts.