Money talks

I get a huge kick out of law firm innovation. It’s one of the reasons I signed on last year to be a judge for the College of Law Practice Management‘s Innovaction Awards, and why I’m doing so again this year. It’s like being a film buff on the screening committee for the Oscars.

So I was happy to see this Legal Blog Watch article penned by Carolyn Elefant. The Rosen Law Firm, a major family law outfit based in North Carolina, set up an internal wiki for operational and knowledge management, to which all lawyers and staff contribute. It essentially replaces the firm’s previous Lotus Notes regime and saves them thousands of dollars. That alone is innovative, compared to most firms.

But the kicker is that in order to motivate employees to participate, every Wiki contribution puts the author’s name into a draw for a $1,000 prize. That, as you might imagine, spurred the rapid development of the Wiki, which is now an invaluable firm asset.

This isn’t Rosen’s first venture into innovation: the firm has also distributed dozens of copies of a video game to help kids through a divorce, and name partner Lee Rosen wrote this excellent article on getting the most out of your firm’s technology investment. But I’m really impressed with the Wiki and the $1,000 incentive prize, which sets an example more firms ought to consider.

Law firms ask a lot of their employees, mostly with regard to cramming a whole lot of work into comparatively few hours. The lawyers, in particular, are directly motivated by the compensation and advancement systems built into the billable hour regime, and they place billable activity in extreme priority to everything else, including marketing, business development, practice management, pro bono work and, most importantly, their own personal time. So if firms want their lawyers to do things other than bill time, they need to design a reward system that can compete on those grounds. Continue Reading

Something’s actually happening

There’s a lot of buzz building about an article in today’s New York Times with the rather odd title “Who’s Cuddly Now? Law Firms.” It summarizes a recent rash of new business models in American law firms, from flextime for lawyers to flat-fee bills for clients to alternative billable-hour schemes and more. It’s the second article the Times has run recently about lawyers seeking satisfaction, and it prompted its rivals at the WSJ’s Law Blog to ask: is there really something happening here?

The WSJ blog’s readers are providing their usual snarky responses: “This new ‘movement’ will dovetail nicely into the massive layoffs that will be coming in the coming months,” says one. “So, you want more time with your family or to pursue your passion for flamenco guitar? Here is 3 months severance.” Nice. So, here’s my answer to the blog’s question: yes. As Judith shouted at Reg in The Life of Brian, “Something’s actually happening!”

I can refer to you any number of articles and links about law firms that are making changes to the way they manage their employees and their work — see the Financial Times‘ law firm innovation report and the Innovaction Awards, for starters. In addition to the firms identified in the Times article, there are others making changes to how they operate in terms of compensation, of partnership, of billable hours, of women in law firms, and even of the entire firm itself. And these are just a few of the ones we hear about — other changes are occurring, quietly and beneath the radar, in areas such as recruitment, retention, training, parental leave, and evaluation.

Law firms are under pressure. They’ve gotten used to a comfortable world where they could set the tone and pace of operations. That comfort zone is evaporating from two directions: externally from clients and internally from lawyers. Clients really are more sophisticated and more demanding, and they’re looking for more than their firms have traditionally been willing to give them. And lawyers really are more inclined to walk away from (or try to change) work conditions that don’t satisfy a wide range of personal needs.

But even that’s not really new — both clients and lawyers are longstanding complainers, and pressure has been brought before, which law firms have ignored. And keep in mind that many, many law firms are continuing to ignore these pressures. What’s really new this time, I think, is not just that law firms are changing the way they do business, but why. I think they’re doing it, voluntarily, to gain a competitive advantage. Continue Reading

The value proposition for associates

From the Recorder comes news of a 220-lawyer firm in San Diego that has decided to abandon lockstep, year-of-call-based compensation for its associates.  Luce, Forward, Hamilton & Scripps has created no fewer than 14 different levels of associate compensation, based on what type of law the associate practises and how good she is at it. Not exactly a mind-blowing approach to remunerating your employees, except in the law, where it’s still pretty radical. Luce Foward’s move follows a similar, much-discussed program at 630-lawyer Howrey LLP, which applies subjective evaluations of performance and experience to determine associate salaries. Bruce MacEwen has written about this at Adam Smith Esq. and in a recent article for National.

One line in the  Recorder article jumped out at me, a criticism of the move by a legal recruiter: “I don’t know if that will sit well in terms of creating a collegial environment…. It’s saying your practice area is worth less than, say, an IP litigator.” Well, that’s kind of the point, isn’t it? Some practice areas do generate more revenue than others, and some lawyers are better at what they do than others, so adjusting your compensation system to reflect that is simply an acceptance of market and human realities. Law firms’ traditional approach to associate compensation assumes that all associates are equally valuable, which, if you stop and think about it for a moment, really is absurd.

I think what we’re seeing here is another indication that lawyers are finally making a serious effort to extract and identify the economic value of their work. Most lawyers know, deep down, that the billable hour is a contrivance designed to make billing and remuneration simple and unconfrontational. I suspect that generally, the larger the firm (and the farther the lawyer is removed from the nuts and bolts of the business), the less the lawyer is acquainted with how much his practice costs, how much his performance and experience are actually worth, and what kind of fee structure should be built around those two points. Solos don’t have the luxury of simply slapping a rate on their invoices — they need to really understand the profitability of their practices, or they’ll go out of business. It looks like that day is arriving for lawyers in larger firms too.

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

Mom and Dad, Esq.

Somebody asked me, after I returned to the office following three months’ parental leave, “Did you enjoy your time off?”

“I enjoyed the last three months immensely,” I said. “But trust me, ‘time off’ does not in any way describe it.”

If you’ve spent more than a few weeks raising a child hands-on, you’ll probably get that. If you haven’t, you might have a hard time understanding how parenting can be more work than the toughest law job — and can be more rewarding than the greatest law job, too. Similarly, I think most legal employers these days are either clued in to helping their lawyers be parents, or they’re not.

It’s been heartening to hear and read the stories of law firms that do get it: they accommodate within their work structures lawyers’ decisions to have kids. They understand not only the business advantages to that approach — retention, recruitment, and more (set out below) — but also that a law firm community that respects its employees’ personal lives is a triumph of professionalism.

And some firms don’t get it. Their business models can’t maximize production from young parents, and so they accept high turnover rates and the exodus of women lawyers as a tolerable cost of success. What strikes me, even more so than before I spent three months as a full-time dad, is how it’s the firms who are missing out here, not the lawyers. What sensible law firm wouldn’t want to employ a parent?

Parents are the ultimate multi-taskers, simultaneously juggling numerous duties — all urgent priorities and all mandatory — through hard work, organization and efficiency. That’s not valuable to firms trying to leverage the most work out of the fewest professionals?

Parents are tremendous dispute resolvers, balancing both the short-term demands and long-term interests of parties with deeply self-interested viewpoints, usually in high-stress situations. That’s not useful for clients who need conflicts settled quickly and calmly?

Parents are great listeners, reading between the lines of what they’re told and figuring out what someone really needs, earning their trust in the process. That’s not the very heart of effective client relations and marketing?

Parents function on much less sleep than they need. That’s not a survival skill in the modern law firm?

The business case for law firms to recruit and retain lawyers who are parents is clear. The business case for the billable-hour regime and the work-‘em-till-they-drop culture of many firms, which drive away these valuable professionals, remains a mystery to me.

This post first appeared as the editorial in the July/August 2007 issue of National magazine.

Family values

Big news: most law firms no longer consider a lawyer’s decision to start and raise a family to be an implicit violation of the employment contract. Many women lawyers can now take nine months or more of maternity leave and return to find their jobs still waiting for them and their career prospects not greatly dimmed.

This is good news, of course, and I applaud the architects and pioneers of parental leave acceptance. But in many firms, parental leave allowances are simply part of an effort to staunch the hemorrhaging of young talent. Firms have learned that if they want to keep young lawyers around, they could start by accommodating these lawyers’ desire to have kids and to be with them during the first several months of their lives.

But that young talent probably will continue to drain away regardless, because it’s not just about getting time with a newborn. Consider that for many of these lawyers, the hard part comes when they return to work and find the firm demanding exactly the same hours and dedication it did pre-leave — if not more. I know a lot of ex-firm lawyers for whom that was the breaking point.

Why do so many lawyers still have to choose between a fulfilling career in a law firm and a fulfilling role as an involved parent? There are always tradeoffs, naturally: you can’t be a high-powered, high-paid lawyer and still spend hours on the playroom floor with your kids. But lawyering and parenting don’t have to be mutually exclusive. And more to the point, the firms seem to keep mistaking the symptoms for the problem.

Law firms are businesses trying to turn a profit. But they’re hamstrung by how they go about it — by their addiction to the billable-hour system. When you sell your services, compensate your workers and evaluate your future partners on the volume of hours billed, you will disproportionately reward those lawyers who have few if any commitments outside the office.

If time equals profitability, and if profitability equals profile and promotion, a firm inevitably will exclude lawyers who want or need to spend time away from work (a group that remains overwhelmingly female). There are thousands of excellent lawyers who fall into that category. They form a vast pool of top-quality resources that continue to slip away from firms addicted to the billable hour system. Is the system worth that?

This post first appeared as the editorial in the March 2007 issue of National.

A to Z: 26 trends for the legal profession

This article was co-authored with Mélanie Raymond, then-Senior Editor of National, and appeared as the cover story in the April/May 2006 edition of the magazine.

The legal profession is turning upside down, and many of the familiar landmarks are disappearing or bring replaced by brand-new structures. There are so many changes afoot that National’s editorial team could match each letter of the alphabet to a development that presents a threat — or an opportunity — for lawyers. Twenty-six trends, 26 letters: which ones matter the most to you?

Associé (Partnership)

It’s always been the Holy Grail, the ultimate goal for lawyers starting out in private practice It has been considered the final step in a lawyer’s transition from simply an employee to a partner. But this is all changing, thanks to systematic and generational change.

Equity partnerships (partnership without capital investments or draws), salaried associate, permanent or advisory associate — new forms of quasi-partnership are born every year. The journey to the associate level is accelerated in some firms, delayed in others. Methods vary from one firm to another, from one individual to another.

And increasingly, there are lawyers who choose to not aspire to partner status at all — for whom client development, firm management, and the additional responsibilities that go along with being a partner hold little or no appeal. Will partnership become obsolete? No, but flexibility, rather than tradition, will rule this ancient institution from now on.

Runners-up: Asia, Latin America Continue Reading

Speed kills

In every survey the Canadian Bar Association conducts, we hear lawyers talking about “work-life balance.” I’ve always found this an odd term, actually, because work and life aren’t two sides of the same coin — life is the coin, and work is one side of it. Or better yet, life is a pyramid or a tetrahedron, and work is just one facet.

What lawyers are struggling to express with this phrase, I think, isn’t so much a search for “balance” as a reaction against the overwhelming pressures of law — pressure from clients, employers, regulators, suppliers, creditors ,and, oh yeah, family.

This pressure never eases, and it usually rises — if we don’t control expectations, they overpower us. Accordingly, for most lawyers, anxiety is the standard operating mood.

Many lawyers are over-pressured and unhappy, I think, because they’ve ended up with an assembly-line approach to their work. They’ve discovered that the reward for greater efficiency in their job is not more time off, but more work. They don’t get to enjoy the time that their increasing expertise saves — they just plow it back in to the next file on the desk.

Thanks to the billable hour system, speed has become a matter not only of pace for lawyers, but also of volume. It’s not just the hour you spend at the office — it’s how much billable activity you can cram into that hour. Lawyers fear wasting a single drop of time — it’s the fuel that powers their revenue. The faster they work, the more “efficient” the fuel becomes — and never mind the damage to the “vehicle.”

What’s the bottom line? In the billable hour system, time literally is money. So if we want an easier pace at work and more time for ourselves, we’d better get used to a lower income — unless we’re willing to adopt a compensation system that doesn’t use time as currency.

The lesson here is: own the clock — don’t let the clock own you.

This post originally appeared as an article in the January 2006 issue of the ABA Law Practice Management Section’s Law Practice magazine.

Dangerous hours

Like anyone who’s served time in an office cubicle, I find great wisdom in your average Dilbert strip. A recent edition showed the employees mocking the boss’s mantra that “Change is good.” “Why don’t you triple our pay?” they ask. “Why don’t you work for free? Or would it be better to admit that change can be very bad?”

One of the objections to abandoning the billable hour has long been the lack of legitimate alternatives. But there are now many of them, adaptable for various types of practices, clients and files. Most importantly, leading members of the profession are starting to openly admit the billable hour’s limitations.

Why has it been so hard to move away from a system that neither clients nor lawyers particularly enjoy? Maybe because the billable hour renders lawyer revenue predictable and easy to compute — appealing to many law firm financial planners. Maybe because it generates handsome livings for many lawyers who see no need to fix what doesn’t appear broken.

Mostly, though, it’s about resistance to change — a very human trait, one that’s magnified in a legal profession trained to be cautious and rely on precedent. Lawyers are resistant to change for change’s sake — and as Dilbert has observed, that’s sensible. Change is good only if there are specific, measurable advantages to be gained, if there’s a legitimate case to be made.

With regard to the billable hour, that case is ironclad. It’s not just because clients resent paying for time spent rather than results obtained (something you wouldn’t accept from your accountant or mechanic). It’s not just because the billable hour discourages lawyers from integrating more closely with their clients’ goals and interests. It’s not just because billable-hour targets are the bane of thousands of lawyers’ lives.

It’s because the marketplace has shifted. Consumers of every stripe demand choice and customization — they’re not just purchasing products and services, they’re purchasing a feeling that their wants and needs have been considered and accommodated. They want the assurance of an established service provider coupled with the sense of individual attention. Increasingly, thanks to Internet businesses, they’re getting it — and they’re getting used to it.

Too many lawyers still believe they can sell their services according to what best suits their own needs and conveniences. Clients are poised to deliver a powerful message to the contrary: change is good.

This post originally appeared as the editorial in the March 2005 issue of National magazine.


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