The good times rolled

A noteworthy item in the National Law Journal today, interesting for a bunch of reasons. The thrust of the article is that with a recession likely to arrive in 2008, associates at many top US firms are likely to see an end to the salary and bonus frenzy that has obsessed the legal press for the last year or so. (Starting first-year salaries of $180,000 and year-end bonuses approaching $55,000, in case you’re wondering.)

First of all, I had to smile at this explanatory sentence in the article: “Top firms, for the purposes of this article, compose a group of large New York-based law firms that, generally, copy one another in bonus structures.” That’s odd, because I thought top firms were the ones with lawyers who were, you know, extremely good at what they do and had the respect and loyalty of their clients. But apparently, top firms are the ones that are very big and do whatever the other very big firms do. This is the kind of muddled thinking that permeates too much legal journalism in the US and Canada both: mistaking the small fraction of huge firms retained by wealthy multinationals for the profession at large. The last time I checked the CBA database, lawyers in firms of 100 or more represented about a tenth of the legal population.

Secondly, the article talks up the coming recession, as has become widely fashionable lately and will, no doubt, soon become a refrain in presidential campaigns in the US and possible election calls in Canada. I don’t follow this topic especially closely, but it has seemed to me for a while that the booming economy we hear so much about has boomed for only a small percentage of the population, while real wages for a lot of working North Americans (including lawyers) have been stagnant or worse for awhile now. Banks may be hemorrhaging money in the wake of the subprime mortgage fiasco (and the imminent subprime credit card fiasco), but you could argue what we’re seeing is the financial sector coming down to earth and joining the rest of us. Of course, it’s the white-hot financial sector that has been driving “top firm” profits recently, so you can see how some white collars in those firms are now getting a little tight. (Gerry Riskin was on top of this months ago, at any rate.) Continue Reading

Waking the neighbours

Ten years ago, it was rare to see more than a passing mention of law practice management or legal business issues even in the legal press. Today, the legal press has finally caught up, but the mainstream media also seems to be warming to this topic. In recent weeks, we’ve seen prominent articles on lawyer job-hunting struggles in the Wall Street Journal, on the continuing bondage of the billable hour in Slate, and now on the decreasing appeal of legal careers in The New York Times (love that hip, timely photo of the cast of L.A. Law in the NYT story).

I’ll leave the articles for your perusal — they don’t say much that critics within the legal industry haven’t been saying for awhile –but it is interesting to see the MSM take an interest in the effects of the profession’s broken business model. One explanation could be the old anti-lawyer standby, that the media has always liked kicking lawyers around at any opportunity. But I don’t buy it in this case: the tone and approach of these articles is fair and at times downright sympathetic. The writers and editors behind these stories, I’m guessing, have friends and colleagues in the law and have been struck by their misery.

I suspect what we’re seeing here is the sharpening of the crisis within the profession — the tension rising to a pitch high enough to be heard outside our cloistered walls. This is, in the long run, a good thing — it’s like when an addict’s friends arrange an intervention; it lets the addict know that there really is something seriously wrong. I look forward to seeing a segment on the billable hour on a future 60 Minutes — and that’s not as outlandish as it would have sounded even a couple of years ago.

Amazon.law

This post originally appeared as an article at Slaw on December 16, 2007.

If you’ve ever ordered an item from Amazon, you know that every time you log back in to the website, you’re greeted with a list of recommended books, CDs and DVDs. Amazon compiles this list based both on your product purchases and the pages you’ve recently browsed. Essentially, Amazon alters its understanding of and relationship with you every time you use its services — whether browsing, adding items to your shopping cart, or actually purchasing something. Every point of contact between you and Amazon is another data point that redefines the relationship’s fluid dynamic.

There’s a lesson here for lawyers, and with technology continuing to evolve at an astounding rate, it’s a lesson that lawyers can start implementing right now. Lawyers already can — and someday, they all will have to — tailor their interactions with clients in the same way.

In the Amazon.law era, all types of client behaviour and activity can be automatically recorded and used to create and constantly improve a multi-dimensional profile of the client. This profile in turn can guide the lawyer’s interactions with the client, from billing and communication to service delivery and business development. To some extent, the technological tools to do this, from database software to customer relations management, already exist. Continue Reading

Partner up

I’m always a little bemused by those notices in the legal press in which national law firms announce that “X has joined the partnership.” I find it odd that a lawyer in, say, the Montreal office could refer to another lawyer in, say, the Vancouver office, as “my partner.” It seems to stretch the word rather beyond its general meaning.

The strict dictionary definition of “partnership,” as applied in a business context, is “a legal relation existing among persons contractually associated as joint principals in a business.” That’s a suitably dry, distant reading of the term for lawyers, who like to keep warmth and familiarity out of the workplace wherever possible. But it doesn’t jibe very well with the common understanding of what a partner is.

Think about the ways in which the word is used outside the law — “dance partner,” “tennis partner,” “jogging partner,” even “domestic partner.” They all suggest elements of teamwork, togetherness, friendship, common goals, and sharing. Try bringing up togetherness and friendship at the next partnership meeting and see how well that goes.

A lot of law firms these days, though, are gripped with tension and even turmoil about matters like partner compensation, partner defections to other firms, or partners’ behaviour towards others. At the core of many of these difficulties is a shortage of mutual trust, openness and common interest — precisely the elements that make non-law partnerships so successful. Maybe firms should rethink their aversion to the touchy-feely aspects of partnership.

This post originally appeared as the editorial in the December 2007 issue of National magazine.

Large firms and law schools

Law students seem to believe in a hierarchy of legal job options: large law firms #1, small law firms #1A, everything else #2 and lower. One of the main reasons for this is that the legal profession believes in it, too.

You don’t have to buy your average private-firm lawyer too many drinks before they’ll tell you that in-house lawyers “couldn’t cut it” in the trenches, that law professors are afraid of “the real world,” and that public-sector lawyers are basically civil servants with a law degree. It’s an asinine chauvinism, but one that’s still quietly held by too many private-practice lawyers (and that still resonates too much with some in-house/government/academia/NGO lawyers). That’s changing, but it’ll still be a while before our profession’s system is flushed of it completely.

Considering the broad range of legal careers out there, private firms (especially the large national and most prominent local firms) do have a disproportionately large footprint at law schools. These firms throw a lot of money, time and effort into branding themselves at the schools, resources that smaller firms and non-firm employers simply don’t have. You won’t see the Sierra Legal Defence Fund at too many OCIs. Little wonder that students assume law firms represent the be-all and end-all of legal careers, and focus their efforts accordingly.

But it’s also a fact that large firms are disproportionately represented in the pool of “employers willing to hire new lawyers.” Many large firms will hire two dozen or more articling students a year in one office alone — there are smaller and even midsize firms out there that won’t take on that many articling students in their lifetime. The associate pool at many large firms is larger than the full lawyer complement at most Canadian law firms.

Law firms are, effectively, the engine of post-call new lawyer training in Canada. A lawyer at one large firm in Alberta related that right before the firm announces which articling students will be hired back, she gets calls from other firms and legal employers inquiring about the ones who won’t make the cut. She’ll soon see those lawyers, whom her firm has spent a lot of money feeding, clothing and training, opposing them in court. That happens across the country.

How long firms are willing to subsidize post-call legal training in Canada is an open question – I keep thinking they’ll eventually run the cost/benefit analysis and rethink their policy. But for the time being, the legal profession requires these firms’ annual willingness to hire a lot of graduates who will eventually turn into few senior associates and even fewer partners. And all the students graduating with $50,000 in debt — which they won’t pay off with a job at the Ministry of the Environment — require it too.

All that said, I’m sympathetic to the plight of the excellent legal employers outside the law firm community who have little or no profile among law schools. But their day will come. When third-year students and young associates talk longingly about “alternative careers,” they’re belatedly turning their attention to the other 90% of the legal profession outside of large law firms. I’m a ‘95 call, and I and many of my friends articled and “associated” (is that a verb?) with law firms. Today, the great majority of us work for government, corporate law departments, or NGOs.

Law schools ought to do a better job informing students of the wide world of legal careers. But that’s encompassed by the much larger and more significant question of the relationship between law schools and law firms – a relationship in need of some serious work.

This post originally appeared at Slaw on November 13, 2007.

Three for the money

Three interesting items in the inbox today, each of which reflects a different facet of the many forces hard at work on producing imminent changes to the profession.

First comes news from the ABA’s Law School Admissions Council that the number of applications to U.S. law schools dropped in 2006 by 7.6%, the second straight annual decrease on top of a sharp deceleration in 2004 in the longstanding trend of rising admissions. The linked article focuses on the drop in both applications and admissions among women, and properly so. But many of the reasons for the decrease cited in the article — stronger economic times, more lucrative non-law career paths, bad publicity about punishing workloads in law firms — cross gender barriers altogether. With the talent wars in full swing, the private bar will not be happy to hear of a potential trend towards smaller graduating classes. I’d be very interested in seeing similar statistics from Canadian law schools.

Secondly, the consultants at Grant Thornton have released their 2007 Professional Services Insights survey, which looks at numerous mid-sized professional firms in fields such as engineering, architecture, and especially law (almost half of all respondents were law firms). The report says professional firms’ fundamental management models will have to change, in light of client consolidation, talent recruitment and retention, and generational cultural changes. “A broader team-based model characterized by a firm-client relationship will need to be adopted by professional services firms, to respond to the broader needs faced by clients and the new career demands of next-generation practitioners,” the press release says. “The report identified a trend toward this type of thinking at architecture and engineering firms, but” — you know where this is going — “less so among law firms.”

The day’s final story contains news of one law firm in Alberta that apparently is ready to adopt and adapt to the dynamics of 21st-century business. The Calgary Herald reports that the law firm of Shea Nerland Calnan is the joint owner of a new tax advisory firm called Moody LLP. The new firm isn’t providing any accounting services, even though most of the employees are CAs — it’s offering purely advisory and tax planning services. “What we see is the mid- to small-sized accounting and legal practices in the province don’t have tax planning departments,” Nerland told the Herald. “There are more and more people in need of those top-end planning services. There’s a lot of opportunity there.” There’s also a lot of opportunity for law firms to make bold strategic moves like this — Moody LLP is the first such jointly owned tax advisory practice in Alberta and only the third in Canada.

There’s a real first-mover advantage available to lawyers and law firms that feel the ground shifting under their feet and reposition themselves accordingly. It’ll be interesting to see who moves fastest and best.

This post originally appeared at Slaw on October 2, 2007.

Offshore reflections

It’s a few weeks late, but this article about offshore legal services published early last month in The Hindu is worth a read, although it’s not offered on the basis that all its contents should necessarily be taken at face value. It comes across rather as a corporate Q-and-A for SDD Global Solutions, an Indian legal services PKO, and some might differ with company president Russell Smith’s uncompromising opinions on the state of Western law practice. In fairness, not every shot he fires is accurate — but a lot of them sure are.

What’s particularly interesting about this article, however, is the unattractive picture of the Western legal profession that comes through — this is the image the profession has managed to develop for itself throughout the rest of the world. If your North American or European firm wants to be a global player in the law, you should be aware that your reputation is now preceding you.

Some highlights: Continue Reading

Millennial fever

This post first appeared as an article at Slaw on October 1, 2007.

During the past 50-odd years, the North American legal profession has been notable for a ready supply of labour. The post-war population boom and increased access to post-secondary education, combined with the enduring lure of a legal career, ensured that there would always be a deep pool of lawyers into which firms could dip for talent.

When a buyer’s market lasts that long, the buyers’ advantages become locked into the prevailing culture of the marketplace. Much of what we take for granted in modern law firms — hourly billable targets, ever-increasing workloads, lengthening partnership tracks, client hoarding by partners, and more — can be traced at least in part to firms’ established ability to dictate the terms of employment to a fairly low-cost and easily leveraged labour pool. Law firm employers have held the whip hand for so long that we’ve come to think it’s just the natural order of things.

That’s about to change. Talent — in nicer terms, the actual human beings who provide legal services — is becoming scarce. This is new, and for a lot of law firms, it’s not going to be fun. Continue Reading

What clients want

What do lawyers sell? To this day, you’ll hear a lot of lawyers say, “The only thing I have to sell is my time.” That’s the wrong answer, not only because it encourages our unhealthy fixation on hourly billing, but also because most clients prefer to pay for as little of our time as possible.

It’s also wrong to say that “lawyers sell knowledge.” We used to make a living at that, because we were virtually the only ones who had access to legal knowledge, and scarcity produces demand. We knew what there was to know and could solve the problems people pay to have solved.

But the Internet has helped make basic legal knowledge ubiquitous, non-lawyer competitors have turned intermediate legal knowledge into marketable assets, and as our cover story on information overload makes clear, advanced legal knowledge — “knowing what there is to know” — is becoming a practical impossibility. Legal knowledge, per se, is an increasingly shaky foundation upon which to build a competitive business.

So what can lawyers sell? Well, in the past few months, I’ve come across three firms (two Australian, one American) that have created online compliance and training programs for corporate clients. Employees log in and complete a series of lawyer-designed training modules that explain the legal and regulatory obligations in a given area, from employment law to corporate governance to privacy issues.

In the result, the client upgrades its employees’ competence, reduces its risk exposure, and can respond with detailed records to outside audits and reviews. The law firm earns a fee for the service while cementing its relationship with the client, and its lawyers spend their time on other value-building work rather than fielding phone inquiries or helping put out fires caused by poorly trained employees.

Doesn’t this mean the firm is billing fewer hours to the client? Why is the firm investing so much time and money in a project that will make clients rely less on lawyers? Ask these firms, and they’ll tell you: “It’s what the clients want. It allows them to meet their business needs.”

And that’s what lawyers must now sell: client empowerment. We must help clients, individual and organizational, to take greater responsibility for their legal lives — to develop “good legal habits” that prevent problems from developing. Doctors don’t just cure patients; they help them develop regimes to stay healthy in the first place. Why should lawyers be different?

Clients are ready to take more responsibility in their encounters with the law. Help them do that, and you’ll never want for work.
This post first appeared as the editorial in the October/November 2007 issue of National magazine.

To the Class of ’08:

I skipped my ten-year law school reunion in 2003. Partly I was just too busy, partly I already see a lot of my friends from law school here in Ottawa, and partly I never really got into that whole homecoming-week, relive-the-good-old days thing. Plenty of my classmates like it, however, and more power to them.

But I think we’re in the last days of the law school reunion. There are 342 Facebook groups with “law school” in the title, including one for Osgoode Hall’s 2007 graduating class that has (at time of writing) 129 members. In the age of social networks and real-time status updates on your fellow graduates’ lives, who needs the once-a-decade catch-up cocktail party in the old law lounge?

I raise this is to illustrate a fundamental change coming down the pike in how the legal profession conducts and organizes itself, and those changes are because of you.

You’re entering a profession whose culture was determined (consciously and otherwise) by the Baby Boomers. Gen-Xers like me never had the critical mass to alter that culture, so we just grumbled about it. But the generation graduating from law school these days can change things — and it will.

It’s not just about this whole “work-life balance” thing, which is overblown anyway (law is hard work, no matter who your employer is). It’s about foundational differences in how Boomers and Millennials view themselves and society. Here are some examples, all framed in generalized terms:

• Boomers viewed time as a means to an end (usually, higher earnings) and so created the billable hour system to calculate the value of legal services. Millennials view time as an end in itself — what system will you create to sell your work?

• Boomers maintained the great divide between lawyer and client — “we’re” the experts in charge, “they’re” the recipients of our wisdom. Millennials tend unconsciously towards collaboration, working with (not above) others — how will you relate to clients?

• Boomers were disturbed by the overwhelmingly white-male face of the profession and tried to make diversity a priority. Millennials take diversity for granted, and might not pay as much attention to the entry barriers still in place. How will you ensure diversity?

I could go on. With the legal profession finally undergoing true generational turnover (see our cover story), all the old assumptions are in play — everything’s up for grabs. You’re the ones who will set the rules, the expectations, the culture for lawyers for the next half-century. Go.

This post first appeared as the editorial in the 2007 Law Student issue of National magazine.