The associate salary deception

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Posted in: Big Firms, Talent

When your average baseball fan goes to a ballgame these days, invariably he grumbles about the expense — $50 tickets, $15 beers, $9 hot dogs, and so forth. “It’s those greedy players,” he complains to the guy next to him. “They make millions of dollars, so the club has to charge high prices for everything. They should be grateful just to have a job in this economy.”

In reality, of course, the price of game tickets is completely unrelated to player salaries, which are tied to overall industry revenue. If you’re in doubt about this, ask yourself: When teams sell off players and lower their payrolls, how come tickets prices don’t drop as well? As for concessions, invariably these are run by separate companies and their prices are independent of what’s happening on the field. But the team owners are more than happy to encourage this faulty reasoning, because it gives them PR cover whenever they lock out players or conspire to keep salaries low — the average fan blames labour, not ownership.

In the same vein, law firms have been enjoying the fruits of a longstanding confusion in the legal sector: the one that links billable hour targets to associate salaries. The reasoning, such as it is, goes something like this: “Sure, firms make associates work long hours and meet hourly targets in the thousands every year. But look at the fat salaries the associates take home! Considering how unskilled they are, those associates should be grateful. If they want to work fewer hours and get more ‘work-life balance,’ they should accept a lower salary. If not, they should put their heads down and keep working.”

I’ve heard this line of argument, in one form or another, for years. The top-paying firms use it to justify back-breaking billable-hour demands for junior lawyers; the less competitive firms use it to justify paying less than the going rate. Associates themselves have long since internalized the argument — it’s commonplace to hear young lawyers say, “I’d gladly take a lower salary if it meant I didn’t need to work evenings and weekends all the time.” As an industry, we have created in our minds a causal relationship between associate hours and associate salaries.

I don’t believe that relationship exists. Law firms set their associate salaries before a single lawyer bills a single hour, and they set their billable targets according to how much work they think their associates can endure before breaking. These are two independent variables — but we link them together causally, again and again, because it fits the nasty little morality play our profession loves to perform about how “entitled” young lawyers are and how little they actually deserve (not even minimum wage, according to some).

The salary a firm sets for its associates is largely based on how badly the firm wants to avoid being labelled as a “cheapskate” or an also-ran, compared to what the highest-paying firms in their markets are shelling out. Those top firms, in turn, set their salaries partly because they want to be maximally attractive to new recruits, but mostly, I suspect, because it lets them put the screws to their inferior competitors. How often have we read articles about how one leading firm sets the associate salary standard and lesser firms feel compelled to match it? What does any of that have to do with the number of hours associates bill?

Law firms adjust associate salary in response to the actual labour market only on those rare occasions when the firms are swamped with client work and they have too few salaried lawyers, such as in the current “after-COVID” period and other post-recession recoveries when law firms, having once again laid off legions of associates to preserve partner profit, madly hire back more associates to get all the work done.

The only direct connection between the volume of hours worked and the remuneration paid to associates is the annual bonus: Bill past a certain (stratospheric) number of hours and receive a bonus in the tens of thousands of dollars. But the base salary remains the same for all associates, regardless of whether they make their targets or not. Falling short of hourly targets doesn’t mean you make less money; more likely, it means you’re fired.

It’s worth reminding ourselves just how incredibly profitable large law firms are. They are cash factories. Within the AmLaw 25, average profit per partner is north of $3 million. That’s average — meaning half the partners at these firms make more than the listed PPP. In the AmLaw 50, the cutoff is above $1.9M average profit. You have to go down past the 85th-ranked firms before the average partner takes home less than $1 million in pure profit. And let’s remember — that profit is generated directly on the backs of associates, who take home a fraction of the money they generate.

Law firms will make associates work incredibly hard no matter what they pay them. They work them hard until the associates quit, at which point they just go out and hire more. Firms would happily pay associates half of what they currently do if they could, and they could easily — easily, without the slightest threat to their viability or their comfortable profitability — pay more.

Whenever someone mentions to me how much baseball players get paid, I say, “Yeah, so think about how much more the owners must be making.” The next time you hear someone talk about high associate salaries, remember how much the firms are making. Remember that capital always pays labour as little as it can get away with. Break the connection in your mind, and in the industry, between how much associates make and how many hours they have to bill.

The intentional law office

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Posted in: Collaboration, Office, Talent

I want you to concentrate. Cast your mind back. Try to recall what life was like in the Before Times. Do you remember … The Commute?

Way back, before the pandemic, many of us would leave our homes early in the morning and travel to our collective workspaces. Then, when we were finished doing all the work things for the day, we would leave the workspace and travel back home. We would do this because … well, because that’s the way things were always done. We physically moved ourselves from a living place to a working place (and back again) every day, because we accepted the unspoken corporate assumption that everyone needs to be in the same place for work to get done.

This approach made sense back when people were manufacturing locomotive boilers in a factory or building cars on an assembly line, because you need a lot of people working together to physically turn massive crankshafts or to install each individual car part. If Fred or Carl doesn’t show up for work, then the remaining guys can’t get the crankshaft to move, or the fender doesn’t get soldered on properly, or whatever. The work can’t be accomplished unless everyone is there to pitch in.

If you’re in the service industry today, pouring lattes or changing dressings or fixing leaky pipes, then your physical presence continues to be necessary. But as our economy has increasingly shifted from a manufacturing base to a knowledge base — as more of us exchanged our blue collars for white ones and shifted from group tasks to individual tasks — we forgot to update our thinking about workplaces. We unconsciously carried over the factory model into the office space. We continued to leave our homes and commute to a centralized location even though, in many cases, we didn’t need to be in direct physical proximity with our co-workers anymore.

Was it sometimes helpful to ask a co-worker to look over some advertising copy or give some advice for closing a sale? Sure. But these were exceptions; for most of the day, we sat on individual chairs at individual desks in individual offices (and then cubicles) and did our work individually. Work was something everyone “came in” to do, whether or not everyone needed to be “in” to get the work done.

It’s taken two years of rolling pandemic lockdowns to shake us from our torpid habit of gathering together only to work alone. Over the next decade, a Stanford professor estimates, US workers will spend a quarter of their work time at home — “the number of person-days in the office is never going back to pre-pandemic average, ever.” This has obvious ramifications for corporate office space, employee well-being, and even climate change. But the workplace itself is ground zero for this change, and there will be enormous ramifications in this regard alone.

What we’re experiencing in our society is a shift from the habitual workspace to the intentional workspace. Rather than “coming into the office” because that’s what we’ve always done, workers will come to the office if there’s a reason to do so — and if there’s not, they won’t. The same shift is about to happen in law firms, whether the lawyers leading these firms realize it or not.

A useful contrast in approaches can be found in this Law360 article. Lowenstein Sandler, like many firms, will require employees to come into the office three days a week. This is how the firm’s managing partner explains this policy: “There is value to our people, our clients, and our firm of strengthening our community, which can best be achieved when people work together in a physical location on a regular basis.” This, of course, is simply an assertion of the firm’s preferred reality, a rationale for bringing back something like the status quo ante. Not one law firm in 100 cared about “strengthening its community” before people stopped going into work.

Then there’s Alston & Bird, which will not require its people to come into the office every day. The firm’s managing partner made these perceptive observations:

[G]etting attorneys to return to the office, not because they have to as part of a corporate mandate, but because they see it as adding value to their careers and to their clients, requires a sell on the part of law firms, Sullivan said.

Rather than simply expecting that protocols will return to how they were before the pandemic, firms should develop new work patterns that provide compelling reasons for being in the office, such as in-person mentorship sessions for younger attorneys, team meetings where lawyers can brainstorm in the same room together, and in-house learning seminars, he said.

“We’re not going to make you [come into the office] every day,” Sullivan said. “And if you do, we’re going to make it worth your while, so you see real value in coming in, rather than thinking, ‘Man, I came in because I felt I had to be there, and everything I did in the office I could have done at home.'”

These observations are hugely important, for two reasons. For one thing, everything law firms do has always been an expression of the purest self-interest on the part of their leadership and senior partners. “What will enhance our profits, status, power, and comfort? Do that, repeatedly.” Alston & Bird here is expressing that rarest of law firm phenomena, an employee-focused approach: “What matters to our people? What do they think is important? Let’s (also) pay attention to that.” Apart from anything else, this level of consideration for employees is an astonishing and delightfully dangerous departure from the industry norm.

But these remarks are also important because they represent an entirely novel view — that the law firm should give you a good reason why you should leave your nice home and come to the office.

This approach changes the default setting from “Come to the office unless you really can’t” to “Stay home unless you’d really benefit from coming in.” It assumes the law firm should make the case for coming to work, providing incentives or rationales that benefit the worker in some way. It reasons, correctly, that if the firm needs to order its employees to come to the office, then there’s nothing valuable (or even something repellent) about being in the office, and that has to be addressed.

Structured in-person mentorship, brainstorming meetings, and training seminars are all excellent reasons to put on some work clothes and make the commute. So are tightly planned and managed collaborative meetings with a specific goal and time limit, gatherings that couldn’t have been an email or a Zoom call. So are customized career advancement sessions with a professional development staffer and senior partner. So are strategic meetings with clients or negotiating rounds with opposing counsel where personal contact accelerates progress.

But let’s not forget, so are social spaces where people can hang out on couches and decompress for a while, greet colleagues and friends, share a coffee or chat about the episode that dropped last night. The social dimension of the office is the one that most home-based workers have really missed, the chance to connect with others. But in many law firms, people feel monitored and judged by the invisible six-minute taskmaster, looming over their frivolous social interactions, tapping its watch impatiently. Good law offices encourage human beings to engage with each other simply for the sake of engaging with each other.

There are all kinds of ways in which law firms could transform their offices into places where people want to be. But the connecting thread is that there ought to be a reason to come into the office. Rather than showing up just because you and everyone else always have, show up when you have a goal you can achieve, or a benefit you can enjoy, or a value you can obtain, or a person you can team with, or a resource you can utilize. The office should be the connecting space — the value habitat — for work.

So, here are three questions for you and your colleagues to think about and act upon:

  1. What would your firm need to do to make your office an intentional workspace — a value destination?
  2. Who would you need to ask to find out?
  3. When are you going to get started?

The end of serendipity

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Posted in: Culture, Leadership, Management, Talent

I plan to write about law firms a little less often in future, as part of a shift in the focus of my work (more about that in an upcoming post). But lately I’ve been thinking about the lessons law firms have been learning (or not) from the pandemic, and I wanted to share some thoughts about why managing and leading a law firm is going to become a lot more work in future.

To start us off, this American Lawyer article suggests that the “law firm leadership playbook” has been rewritten over the last several months. I think this is not quite correct. What’s happened is that many law firms have realized they don’t really have a leadership playbook as such — their leaders and managers, if I can extend the football analogy, are often sent onto the field without any plays at all. Consider some of the observations in the article about how much more difficult management has become during this crisis:

“…[W]e have to be really intentional about reaching out and making sure people are OK, mentally and physically. It’s not something any of us have ever trained for …  [I]t requires a lot more responsibility and time of our current leaders.” The remote environment … “has taken a big toll… because of the new demands of virtual management. [Managing partners] spend significantly more time managing.”

You’d have thought that managing is, you know, what managing partners do — it’s right there in the title and everything. In reality, of course, most managing partners are not trained for the role — they’re “managing” temporarily and part-time, keeping their practice running on the side with minimum lights and power until they can return to their real job full-time. This is a feature of law firm management, not a bug. Low-intensity management is standard in law firms because lawyers don’t like being led or managed. Actual leadership and trained management are not part of traditional law firm culture.

A consultant quoted in the article makes this connection more explicit:

“There’s a lot of concern out there about firm culture and what the glue will be that holds a firm together when people are not running into each other in the office, particularly with engagement and retention.” … In the past, a leader’s job could often be accomplished “just by bumping into people during the day, but now it has to be a lot more deliberate—and some are not up to that challenge.”

Now, what’s interesting is that the way law firms have gone about managing the firm and building culture is remarkably similar to the way in which they have gone about developing their junior lawyers: putting everyone together in the same space and hoping they run into each other in a constructive fashion. Consider the following claims made about the challenges of professional development when everyone’s working from home:

I’ve heard all these concerns expressed by managing partners I’ve spoken with — when people aren’t around each other physically, when junior lawyers can’t cross paths with senior lawyers and pick up work opportunities, how will they learn? How can they develop their business and professional skills? How can they absorb the firm culture, and how can that culture flourish if we’re not all together all the time?

But the answers to these questions, while obviously important, are less significant than the unspoken assumption upon which the questions are based — that the only way to really train and manage and acculturate lawyers is to have them show up in person and brush past each other many times a day.

Maybe that’s true. But if it is, law firms have a problem, as illustrated by this AmLaw article about the fundamental changes coming to legal workspaces post-COVID. A commercial real estate company’s survey of law firm personnel that asked people where they now want to work produced some noteworthy results:

Somewhere between 50% to 80% of [staff] would prefer to work completely remotely, although they may not get their wish. Even a majority of partners have said they wish to be in the office between zero and two days a week. Associates, likewise, appreciate the flexibility of working from home but also value the human interaction, collaboration and training they get in the office; 30% to 40% would like to come in less than two days a week. 

We are not going back to the “everyone in the office at the same time, all day, five days a week” law firm. Whatever its merits and demerits, that model has run its course, and something different will take its place. When it does, law firms will have to find new ways to train junior lawyers, manage senior lawyers, and build and maintain firm culture. More specifically, they’ll have to do these things strategically and intentionally.

Many law firms, it’s becoming clear, have been substituting mere physical proximity for planned and purposeful efforts to build culture, teams, and professionals. They’ve been content to set lawyers to work side-by-side in the same physical office and assume that culture and development would just follow automatically, like shy teenagers mixing at a high-school dance.

In a word, law firms made serendipity a core element of their culture. They hoped that random encounters generated from the shared use of narrow office corridors would render unnecessary any efforts to actually exercise leadership or develop professional skills or build firm culture. Let lawyers be who they are and work as they like — culture will happen naturally. Let juniors attach themselves to partners and follow them around — they’ll learn the ropes on their own. (And if the juniors most successful at attracting partner attention happen to be overwhelmingly white and male, hey, what can you do?)

If the foregoing scenarios describe your firm in whole or in part, start thinking about how to build culture, management, and professional development systems intentionally and strategically. Some suggestions:

Culture: Every good article about intentionally developing a great law firm culture returns over and over again to two fundamental features: your firm’s purpose and its values. Why does your law firm exist? If its purpose is only to make money for the partners, it will always struggle to draw and keep good people. If it’s only to carry out whatever clients want, it will never stand out as truly superior or praiseworthy.

And then, what values animate the firm? Choose the ones that matter above everything else and make clear to everyone their primacy — where necessary, by requiring anyone (and I mean anyone) who violates those values to leave immediately. Force the issue of culture and values: Don’t make hazy declarations of good intentions while letting people do what they like. No good culture ever developed laissez-faire.

Leadership: The first rule of lawyer management has always been, you do not talk about lawyer management — never suggest to lawyers that they are obliged to follow a prescriptive set of rules about how to go about their business. But lawyers’ emotional frailty about being managed is unprofessional, and law firm leaders and managers must stop coddling it.

Tell lawyers what you expect of them, and hold them to it. Don’t let star lawyers attain diva status. Require people’s participation in difficult conversations. But most of all, legitimize management and leadership as essential standalone roles. End the silly tradition that leaders must also bill work and bring in clients. Hobbyist leadership is over. Law firm management is real, hard work. Treat it that way.

Professional Development: It’s not a coincidence that the pandemic has slowed associate development and left junior lawyers adrift. A crisis reveals an organization’s true priorities, and many firms have made very clear where their newest lawyers rank among their concerns. But it also reveals that, lacking physical proximity, most firms simply don’t know how to train new lawyers.

In future, a mix of online training, creative team-building exercises, and continuous mentoring will complement in-person experience on those occasions when your people can’t gather physically. So take this opportunity to reconfigure your suddenly available office space into a dedicated professional development centre. It’s nice that you really want to get back to the office. But “the office” isn’t going to be what it once was.

This is obviously a huge challenge for law firms — but it’s also a great, once-in-a-lifetime opportunity. Most aspects of law firm culture and infrastructure evolved inadvertently, through everyday practice, decades ago. They seem random and irrational because of how they came about, making them especially ill-suited to the 21st-century (post-)pandemic world. This is a chance to put aside all those old ways of doing things and replace them with smarter policies and practices — deliberately designed, expressly intended, and systematically rolled out.

You inherited a law firm model that was built almost by accident. Bequeath to your successors a model that was assembled very much on purpose.

Law firm culture and the “war for talent”

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Posted in: Strategy, Talent

This is a moment of opportunity for law firms. As systems and technology transform the engines of legal services and a new legal economy emerges, firms have a rare chance to strengthen their competitive positions and grow their market share through innovation and investment for the future.

A few firms are doing exactly that; but most are not. And what’s weighing down many of those firms is a cultural millstone that we don’t talk about enough. It’s not the tired excuse of “our lawyers are too risk-averse.” It’s something more formidable: a toxic mix of owner complacency and employee intimidation. It’s a culture of timidity.

At these firms, serious investment in meaningful innovation doesn’t happen, partly because the partners won’t sacrifice individual profits and comfort for the firm’s long-term strategic advantage — but also because nobody else in the firm is willing or able to confront this unpleasant truth and challenge the firm’s owners to do better. At exactly the moment when bold leadership would pay huge dividends, nervous silence predominates. The partners are afraid of risk and sacrifice, and everyone else is afraid of the partners.

A useful illustration of the culture of timidity in many law firms is the so-called “war for talent,” which apparently is still going on about 20 years after it first broke out. Law firms love to talk about how they’re “winning the talent war” by acquiring this lateral or appointing that director or paying first-year associates a little more than the firm down the street.

The thing about wars is that they’re expensive and destructive, even in the business world, and you don’t get involved in one if you can avoid it. But if you are going to get involved in one, you better have a plan for how to win it and an ironclad resolve to pay the costs you will incur.

As far as I can tell, no law firm has tried to actually start, or win, a war for talent. No law firm has been willing to make the sacrifices necessary. For the benefit of any law firm that might like to try someday — and more importantly, to illustrate how a culture of timidity hobbles the effort — here’s a suggested blueprint. A few caveats:

  • I’m focusing here on new legal talent, the kind law firms (often) hire straight out of law school and (occasionally) develop into partners, but the principles here can apply to acquiring more experienced talent too.
  • I’m discussing this in the context of large law firms, but the principles absolutely apply to midsize or regional firms, with appropriate changes to elements like quantum of compensation and range of law schools.
  • I’m restricting my definition of “legal talent” to just lawyers, which is unfair, but designing a full-spectrum legal talent strategy is beyond this blog post. Most of the reasoning below applies to acquiring all legal value providers, however.

1. Hire for your firm, not anyone else’s. The purpose of a talent strategy is to help implement a pre-existing firm strategy. Consult your firm strategy (if you have one) and ask yourself: What business are we in? Who are we serving, what do they need from us, and what is our differentiated value proposition to them? You are hiring people for that firm, and no other. Law firms that hire “the best and the brightest” (however they define that nonsensical term) end up with a generic pool of talented lawyers who could work anywhere. You want lawyers who will do better at your firm than they would anywhere else. But getting ruthless clarity about your firm’s nature and purpose can be a long, brutal slog through your partners’ selfish priorities and comfort zones. Effective strategic planning starts with honest self-assessment, and that is not most partners’ strong suit.

2. Hire for tomorrow, not yesterday. Law firms routinely make the mistake of looking for new lawyers who’ll “fit their culture.” That’s a problem — not only because “culture” invariably justifies and perpetuates the exclusion of women and visible minorities from the firm’s ranks and power structures, but also because your firm’s culture is old and your incoming talent is young. You’re not just hiring for 2020 — you’re also hiring for 2025, 2035, and 2050. You need lawyers who won’t “fit” your culture so much as make your culture new and better. You’re hiring leaders for a diverse future, not worker bees for a monochromatic past. But your partners, especially the older white guys, want to hire the candidates they’re “comfortable” with, and you know what that means. They need to be persuaded otherwise, or you’ll wind up building a law firm ready for all the challenges of 1998.

3. Cast the widest net for new talent. Most firms hire from a small group of favourite or “safe” law schools every year. It’s easy, convenient, and uncontroversial, which means all the other firms are doing it too. Look everywhere for talent. Your very specific needs will be hard to fill, so broadcast them to every school in the country through social media and targeted ad placements. Visit more “lower-ranked” schools in person and meet their brilliant, hard-working, creative, empathetic students. Your rivals are ignoring these rich veins of talent, but you’re smarter than they are and you’re willing to spend more than they do. But first you’ll need to persuade the partnership to increase your recruiting budget, and to consider schools other than their alma maters or those most highly ranked by some penny-ante online magazine.

4(a). Pay twice the going rate for new talent. A New York firm raises its starting associate salary to $190,000, and the rest of the industry either meekly follows along or clutches its pearls in dismay. That’s not a “war for talent,” that’s a PR exercise. You want to win the war for talent in New York? Pay new associates $350,000 a year. Or pay $240K in Chicago, $190K in San Diego, $140K in Halifax, whatever. Publicize it far and wide, make sure the whole industry (and every law student) knows that your firm crushes everyone else in this category. Or, if you simply can’t persuade the partners to ramp up associate salaries that much, try this cheaper alternative:

4(b). Take over your associates’ student loan payments. Pay the top-ranked salary as well as all your new associates’ loan instalments, and keep paying them until the associate becomes an equity partner or leaves the firm. Nothing preoccupies new lawyers more than their debt loads, so take this burden off their minds; you’ll be inundated with applications. Either of these tactics would vastly increase the size of the talent pool from which you can draw. It would also blow partners’ gaskets, not just for the hit to their profits but also for the exposure they’d feel from adopting such a bold tactic. Most firms that have made it this far into the list would falter at this step. For those that soldier on, we’ll add another outrage:

5. Don’t bill your new associates’ work. I campaigned for the revenue-neutral associate a couple of years ago, and you can read all my arguments for it there. But the upshot is that even your hand-picked high-paid new associates don’t have the skills to produce work of value that clients want to pay for, and forcing them to do so creates enormous negative pressure. “But, but,” the partners sputter, “Who will pay for the associates if we don’t bill their time?” Here’s a radical answer: The owners of the business can pay employees out of their own profits, like in the rest of the world. Another hard truth for the partners, another differentiating factor for candidates. And here’s one more.

6. Immerse new lawyers in a world-class training program. Take a group of brilliant, diverse, highly motivated, well-paid new lawyers, and instead of pushing them to bill thousands of low-quality hours, spend their first two years on the job equipping them with a suite of 21st-century legal business knowledge and skills. Which ones? Customer service, process improvement, project management, human-centred design, cultural competency, financial literacy, artificial intelligence, knowledge management, industry intel, time management, I could go on and on. Embed them on cases, in transactions, and especially on-site with clients, as observers and apprentices. Can you imagine what you’ll have on your hands at the end? What a contrast they’ll present to the exhausted, disheartened second-year cohort at every other firm?

All of the foregoing can be yours — probably yours alone, because how many firms will copy you? And to get it, all you have to do is pay the price for it. But this strategy would cost something even more valuable than money: It would cost political capital.

A senior staff member who seriously brought this proposal to the partnership at most law firms might not have a job this time next year. A senior partner who tried to sell their colleagues on it would suddenly stop getting invitations for dinner or golf. Breaking the culture of timidity in law firms, speaking truth to power, can come at a high price.

The path to winning the legal talent war is simple. But it’s not easy, and it’s not supposed to be. If it was easy, everyone would do it.

Will a law firm’s owners yield a fraction of their profits to help make their firm the undisputed winner of the legal talent wars, year after year? Will a firm’s leaders gamble their status, risk their relationships, or spend their political capital to make it happen? In the great majority of firms, maybe 99 out of 100, the culture of timidity ensures that these questions won’t even be asked, let alone answered.

So how about your firm? Are you one of the 99? Or are you the 100th out of 100, where someone was brave enough to raise this and the partnership was bold enough to try it? I’m not saying every law firm should mount this talent strategy — frankly, many firms shouldn’t. But every law firm should be a place where it could be openly considered, where employees feel empowered to raise difficult issues and owners are mature enough and secure enough to be told things they’d prefer not to hear.

Because of course, this isn’t just about the “talent war.” This is about everything coming our way in the legal economy over the next decade or more. Every law firm is going to experience the same storms, go through the same crises, and glimpse the same opportunities. The firms that come out of this gauntlet leading the pack will be those that found their courage, empowered the right leadership, galvanized the partners, accepted the sacrifices, and committed to act. They calculated the steep price of starting and winning a war, as well as the risks of breaking the code of silence around that price — and they chose to pay it nonetheless.

There’s no other requirement. There are no other tests. Is this your firm? Are you ready?

The revenue-neutral associate

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Posted in: Law Firms, New Lawyers, Talent

Last month, while writing an article about professional development in the law, I impulsively posted the following question on LinkedIn:

Quick survey for those of you who began your careers as law firm associates: How many months and/or years did it take before you felt like a reasonably competent and confident lawyer?

The answers came rolling in — more than two dozen in a couple of days. The lowest number of years offered was two, the most was ten, but the frequently cited median was five. Only one person said they never felt unready for law practice; everyone else said, essentially, “It took me years to feel like I knew what I was doing.”

Yes, small sample size and all that, but I think there’s a lot you can take from this. One takeaway is solace: If you felt overmatched and out of place during the opening months and years of your legal career, you were far from alone. Another is insight into the lawyer mindset: For all we try to project confidence in ourselves and our abilities, most of us suffered from impostor syndrome for years after our call to the Bar, and I’m sure many of us still do. A third is confirmation that, yup, law school really does do a terrible job of preparing us to be lawyers.

But what those results also affirmed for me was a strong suspicion I’ve harboured for years now — that expecting new law firm associates to perform billable work is kind of ludicrous.

There’s a widely held assumption in law firms that new associates should be billing hundreds of hours within their first months on the job, and many thousands of hours within their first two or three years. At more than a few firms, an associate’s failure to meet his or her first-year billing targets can permanently dim that lawyer’s prospects in the eyes of management or can even result in early termination. Associates learn this quickly, and drive themselves to generate work that can be added to a client bill regardless of its utility. Because most new associates possess low skill levels, their work product tends to be either (a) utterly rote and low-value, (b) riddled with errors, (c) subject to massive editing and/or discounting by partners, or (d) all of the above.

Clients, of course, figured this out years ago. Some of them indirectly advised firms of the problem when they began refusing to pay the billed hours of first- and second-year associates. Those clients without the confidence or leverage to withhold payment on first-year bills pushed for discounts or just gritted their teeth and signed off. But the message they were sending was the same: “Your least experienced people add very little to your value proposition. We don’t want to pay for their efforts. You should do something about that.”

Firms say they are doing something: investing in professional development, sending their new associates off for business training, and so forth. I’m sure many of these activities pay at least some dividends immediately, and others further down the line. But almost all these efforts share a fundamental drawback: they treat associate professional development as a part-time endeavour. Taking courses and acquiring skills is something associates do in between their “real work” of serving partners and billing hours. They’re expected to generate billable work with 90% of their time while slowly learning how to produce that work in the other 10%. It’s like having to earn a living as a cab driver while still enrolled in driver training school.

This drawback, in turn, is founded on a more serious issue: the common belief throughout law firms of all sizes that inexperienced, low-skilled lawyers should be generating revenue within weeks of their arrival in practice. Law firms that push law schools for better “practice preparation” and train their new associates intensively upon arrival are certainly trying to do right by their associates and their clients — but their good efforts nonetheless stem from an assumption that new lawyers should be “ready to bill” at the earliest opportunity.

I wonder if that’s realistic, and I wonder even more if that’s healthy. I don’t think a person can switch from being a full-time student (even an articling student) to a full-time fee-earner that quickly without experiencing some mental and emotional whiplash. By forcing new lawyers into high-target fee-earning roles this early in their careers, we’re trying to radically accelerate a development process that’s meant to take much longer — maybe as long as five or ten years.

My modest suggestion, therefore — especially modest because I suspect few firms will adopt it — is that law firms consider re-envisioning the role of the new associate, de-emphasizing the importance of billing and emphasizing instead the primacy of training and experience. What I’m suggesting is the revenue-neutral associate.

For at least their first two years in the firm, possibly longer, make the development of skills, knowledge and experience the primary activity and responsibility of new lawyers. Enroll them for months-long training in process improvement, customer service, business management, and new technologies, testing them at regular intervals throughout this period to assess their progress. Send them to client meetings to watch and listen and report back on what they learned, at no cost to the client. Take all the piecemeal, intermittent professional development that law firms provide to associates in between their “real work,” and make that their real work. Take seriously the process of turning raw prospects into polished professionals, because it’s really not a part-time exercise.  (I argued almost ten years ago that we should consider the lawyer development process to be seven years of education and practice, not just three years of education).

Can firms bill their associates’ efforts during this period? Yes, but only work that has legitimate value, and only to the extent necessary to help the firm to recoup some or most of the lawyer’s costs — that is to say, his or her salary, benefits, and associated support costs. That might come to only a few hundred hours in the first year, several hundred in the second, a thousand or more in the third — although smart firms will be pricing their associate-level work on a non-hourly basis anyway, making it even easier to support this kind of role. 

The goal of a revenue-neutral associate program should be that at the end of the designated period — two to four years — the new lawyer has been rigorously and professionally educated, mentored, trained, and skilled to such an extent that he or she can deliver real (if not extraordinary) value to the firm and its clients — and that in doing so, the lawyer has undertaken enough billable work to help cover his or her training costs for that period. A lawyer developed in this fashion will be equipped to provide much more valuable and expensive services than a typical third- or fourth-year associate who has had to figure things out on the job under tremendous billing pressures — if the associate has even stuck around that long.

Would this approach be workable for a $180,000 first-year associate? No — but then again, the $180,000 associate is a market abnormality based solely on big law firms’ desire to draw the attention of the most attractive law school graduates. The reality is that no $180,000 associate, no matter how smart or hard-working, is worth his or her salary — and the billing pressure firms place on these young people to justify their inflated salary damages these assets in their formative years. A revenue-neutral associate would be paid in line with greatly reduced billing expectations — and the promise of much higher-earning potential after a few years of high-calibre development. 

There is precedent for this idea. Back in the late 2000s, firms such as Frost Brown Todd, Ford & Harrison, Drinker Biddle & Reath, Strasberger & Price and the late Howrey LLP all experimented with “apprenticeship models” by which new associates were paid less but received extensive training and mentoring. It was a good idea that unhappily arrived ahead of its time — these programs were launched during the post-crisis recession, when it was hard to persuade new graduates to turn down high starting salaries in favour of lower-paying “training opportunities.” It’s a different world now: Graduating lawyers understand that they need marketable skills and know-how in order to have sustainable legal careers. Law firms that can offer a path to that future will have a competitive recruitment advantage.

This would, obviously, be a major change in how law firms view and use their associate lawyers. But I also think it’s a necessary, and in fact an inevitable one. For decades, law firms have been getting their clients to pay the training costs of their newest and lowest-skilled workers. No other business has the gall to do this — to send customers bills for all the low-value puttering around by the firm’s least useful employees and justify it as “training.” It’s not training — it’s years of immersion in the law firm’s least valuable and interesting activities, subsidized by the client.  

But now that train is coming to a halt. You know all about the myriad game-changing substitutes that have entered the legal market over the past decade — technology that can carry out basic legal tasks, outsourced platforms of flex-time lawyers and managed legal services providers, insourcing of work by corporate law departments themselves. These alternatives have arisen precisely because the market is tired of paying law firms inflated rates for low-value work by low-skilled associates.

Clients want a less costly and more effective replacement for the labour of unskilled yet expensive junior associates, and the market has been more than happy to oblige — it is offering equal or better options for “associate work” at a superior price. These options are not going away; if anything, they’re gathering momentum and increasing sophistication. The hard truth is that the day of the billable young associate is drawing to a close anyway. 

So think about the possibilities of a “revenue-neutral” approach to associate hiring and training, and how it could change the nature of professional development in law firms for the better. Law firms will have to find a solution to their associate-lawyer challenges before too much longer. The sooner this option is considered, the sooner solutions can be tried and a new approach to law firm associate development can be found. 

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Law firms’ problem with women

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Posted in: Talent, Women

The last time I wrote about women and the law, it took weeks for the flames to die down. Only a glutton for punishment would return to this topic again. Ahem.

So I’ve been collecting articles about the seemingly endless issue of the apparently insurmountable barrier to the full participation of women in law firms. Another article on that score, this one from The New York Times earlier this week, galvanized me to pull them all together and talk about them. To wit:

  • ‘A Bleak Picture’ for Women Trying to Rise at Law Firms (The New York Times, July 24, 2017): “Women are 50.3 percent of current law school graduates, yet they still make up just under 35 percent of lawyers at law firms, [according to the 2017 Law360 Glass Ceiling Report.] Most important, their share of equity partnerships — where the highest compensation and leadership positions are lodged — remains at 20 percent and has not changed in recent years, the report found.”
  • Study Shows Gender Diversity Varies Widely Across Practice Areas (The American Lawyer, April 17, 2017): “The majority of AmLaw 200 practices have an average female head count ratio of 30 percent. Practice areas with the highest compensation and focus within Big Law, such as banking, intellectual property and litigation, had the lowest percentages of women. Women made up only 35 percent of Am Law 200 litigation departments, 31 percent of banking and taxation practices and accounted for 27 and 23 percent of IP and M&A teams, respectively, [according to a study by ALM Intelligence, Where Do We Go From Here? Big Law’s Struggle With Recruiting and Retaining Female Talent.]
  • The Gender Pay Gap for Big Law Partners: 44 Percent (Bloomberg Business of Law, Oct. 12, 2016): “Of the 2,153 [BigLaw] partners polled [by Major, Lindsey & Africa], men earned an average of $949,000 per year while women brought in $659,000. The differences in partner billing rates ($701 for men and $636 for women) and hours billed (1,703 for men and 1,632 for women) remained relatively small. But the results show women still lag behind significantly in originations, pulling in an average of $1,730,000 versus $2,590,000 for men. … Lack of credit for origination is a common complaint leveled by women in BigLaw.”

And here are a few other recent articles that have been archived at Lexis-Nexis and have thereby been hidden from the world at large:

None of this, of course, is new. When I was a legal newspaper editor 20 years ago, we were assigning articles on the discrepancies between men and women in law firms. I have to admit, if you’d asked me then whether the situation would have resolved itself, or at least improved, 20 years into the future, my optimistic younger self would have said, “Of course!”

Yet here we are, in 2017, having the same discussion, talking in the same careful way about diversity and representation and trying not to upset anyone in upper management. “It really is striking how much attention this problem is getting without any movement whatsoever,” Daniella Isaacson, a senior analyst for legal intelligence at ALI, is quoted in the AmLaw article above. Yes, it is.

I want to say two things here about causes and one about remedies.

The first point I want to make is about sexism. In almost every conversation we have about women in law firms, some folks go to great lengths to de-emphasize the role of overt, intentional sexism in law firms’ overwhelming maleness, in an effort not to offend (male) senior decision-makers. I don’t buy it. There’s an enormous amount of overt, intentional sexism in law firms, as there is in society generally. There are plenty of male lawyers who think less of their female colleagues as a group, who denigrate them (or tolerate those who do), who are fully aware that men exercise more power and make more money in their firms than women do and are perfectly fine with that. Let’s not pretend that sexism isn’t a significant contributor to women’s status in law firms. I’ve seen and heard differently, and I’m confident that you have too.

The second point I want to make is that in addition to sexism, the fundamental structure and culture of law firms relegate women to second-class status. Mark Cohen of Legal Mosaic phrased this issue succinctly and accurately: “BigLaw was architected by men for men.”

Today’s law firms were built by and for late-20th-century married white men, and everything about these firms reflects the choices, habits, preferences, and conveniences of their builders. Anyone is welcome to join these firms and experience great success — just so long as they adopt the choices, habits, preferences, and conveniences of their architects. Work long hours, glad-hand clients, immerse yourself totally in the job. Can’t manage that, because you’re pregnant or you’ve got primary home care or child-care responsibility? Too bad for you. Everyone else here can manage it just fine.

The traditional law firm is more favourable to men than to women because men built it. The people who founded and built these firms enjoyed preferential status in business and society and could leave child-rearing to their domestic partners; they could walk through any door they liked and could spend all the time they wanted in the rooms on the other side. From their perspective, spending 3,500 hours a year on work and billing two-thirds of that time is normal. It’s just the way things are. If you struggled to succeed in this environment, you were the problem. If you tried to challenge the normalcy and sensibility of this environment, you were a threat. If you’ve wondered what the term “privilege” refers to (the non-legal, non-fun kind), this is an example.

So to a certain extent, calling out law firms for being unwelcoming and discouraging to women is like criticizing water for being wet. Law firms were built by and for men; so were most other businesses and organizations in the world. The great majority of other businesses and organizations, though, got over it. They decided that maintaining their default male architecture put them at a strategic disadvantage in terms of talent acquisition and market competitiveness, and they adapted. They haven’t adapted fully, not by a long shot, but most are at least trying.

Similar attempts to restructure law firms away from their “maleness,” however, have met with much less success. At the heart of law firms’ inherent inhospitability to women is the lawyer compensation system, which rewards the outlay of enormous amounts of lawyers’ time and effort, and the procurement of clients and business, above everything else. Go get clients and bill tons of hours: that’s the law firm advancement system in eight words. I and many others can speak from experience how incredibly hard it is to move law firms away from this system of valuing lawyers’ contribution. And yes, partly this is because it’s difficult to rewire any company’s reward system, at any time.

But let’s not kid ourselves: at least as important a reason is because the people who own and control the firm (80% male, most of them in their 50s and 60s) benefit directly from time- and effort-based remuneration, because they have loads of time and they have almost nothing distracting them from their efforts to go get clients and bill tons of hours.

It’s not just that this system makes these guys more money; it’s that it values them for who they are and what they do. This system affirms to them that their choices are the right choices; it vindicates and rewards them for doing things their way. It’s the mirror on the wall assuring them they’re the fairest of all. And if a side-effect of that system is to drive away by the thousands women (and men) who don’t live that life or choose those choices, well, c’est la guerre.

I promised one thing about remedies. I must tell you that I don’t have much to offer here (although happily, others do), because neither sexism nor law firm compensation systems are going to change tomorrow. But I do have an appeal to make, to any law firm lawyer who has read this far and has not stomped off feeling bruised or offended.

My appeal is this: Imagine a world in which half of all graduating lawyers are men (as is the case now), but only about one-third of your firm’s lawyers are male, and barely a fifth of your men are equity partners. Moreover, your few male lawyers are predominantly found in practice areas widely regarded as less profitable and less influential than the practice areas dominated by women. To make matters worse, your women lawyers out-earn your male lawyers by hundreds of thousands of dollars every year. Imagine further that your firm has been like this for decades.

Now ask yourself: Wouldn’t you think there was something wrong with that? If you happen to be male, sure, you’d almost certainly feel like the deck was stacked against you and your fellow men. I’m not appealing to your sense of fairness, though, but to your business instincts.

Wouldn’t you think that your firm was being hamstrung by some kind of systemic, gender-based flaw in its retention, compensation, and promotion practices? Shouldn’t simple arithmetic suggest that about half your lawyers should be men, and that maybe you’ve got a whole lot of less qualified women lawyers hanging around the office and filling out your equity ranks? Doesn’t it seem like you’re needlessly missing out on a whole bunch of great male lawyers? That somehow, you’re not getting the full benefit of what the legal talent market has to offer? And if the answer to all these questions is yes, is it really that hard to flip the scenario around the other way?

My last word on the subject to law firms is this: If you have a significant gender imbalance within your firm’s lawyer population, and especially within your firm’s equity partnership, there’s something wrong with your firm. Somewhere along the line, somewhere inside your firm, something went off the rails and crashed. You don’t have enough of the best people — you demonstrably, obviously, do not. And the reason you don’t have enough of the best people is that you are systematically driving half of them away. This isn’t normal. No matter what it might feel like to your most powerful people, if your firm is 65% male and your ownership is 80% male, your firm is fundamentally screwed up. Fix it.

Reinventing the associate

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Posted in: Big Firms, New Lawyers, Talent

Last week’s post, “The decline of the associate and the rise of the law firm employee,” wasn’t just my longest Law21 title on record. It also triggered a detailed response from Toby Brown of 3 Geeks, to which I left a lengthy comment and which in turn inspired a further comment from Susan Hackett of Legal Executive Leadership. Toby converted both of these comments to posts, and I’d invite you to read all three consecutively to get the full exchange of views.

My plan this week is to follow up my original post with two more: one (today’s) that will explore more deeply the past and future role of the “law firm associate,” and the other that will study the whole issue of “lawyer training.”

I don’t really have strong feelings one way or another about Greenberg Traurig’s new “residency” program, largely because (as I noted in my original post) we don’t have nearly enough data about what the program actually involves. If it manages to strike a healthy balance among the needs of the firm, the interests of clients, and the well-being of lawyer employees, then I’m all for it. We’ll have to wait to see how it unfolds in practice. For the moment, I’m  more interested in the implications of introducing another new employment category (“residents”) for novice lawyers in law firms. It raises the whole question of what we mean by “associates,” and why they exist.

For most of law firm history, lawyers who were not equity-owning partners had only one title (“associate”). Associate status represented two things: full-time salaried employment and potential future admission to equity partnership. In theory, associates are lawyers who are learning their craft and honing their skills for the chance someday to become partners — and that does still accurately describe a small percentage of each firm’s associate class. In practice, however, most associates are short-term, leveraged assets whose purpose is to bill hours that fuel the firm’s profits, and who will leave the firm (voluntarily or otherwise) well before the brass ring of partnership comes into view. [do_widget id=”text-7″ title=false]

Many firms have begun to explicitly acknowledge this reality and to call this larger group of associates “staff lawyers” or something similar to indicate their status. Greenberg introduced the title of “practice group attorney” at the same time as it announced its “residency” program. Other firms refer to such lawyers with the unwieldy term “non-partner-track associates.” More senior members of this group, over the past several years, have been classified as “non-equity partners,” highly experienced associates whose time for partnership consideration has come, but about whom there are doubts (on one side or the other) that admission to partnership is a good idea. And now we have the “resident,” a short-term position for newly admitted lawyers that pays less, bills less, and gets “trained” more than a normal associate role.

So, for those keeping score at home, here are some of the ways in which law firms are now describing lawyers who aren’t partners:

  • Associate
  • Resident
  • Staff Lawyer
  • Practice Group Attorney
  • Non-Partner-Track Associate
  • Non-Equity Partner

That’s a whole lot of terms meant to express one basic idea: “You’re not an equity partner.” And for every title on that list other than the first one, there’s an additional component: ”…and you’re not going to become one, either.”

Toby argues that this is no bad thing: all of a law firm’s associates should not presumptively be considered its future partners, not least because few lawyers are truly cut out for the demands and responsibilities of ownership. I think that is certainly correct. But as I mentioned above, the title of “associate” has always carried with it the potential of ascendancy to partnership. Not every associate will become a partner someday; but any associate could become one. That’s the promise and the allure that gives “associate” an extra shine. And it’s exactly this shine, I think, that law firms are trying to remove these days.

Law firms are developing an allergy to equity partners. “Under-performing” partners are being removed from firm mastheads in every jurisdiction, while partner tracks grow longer and “non-equity partner” holding pens become more crowded. Altman Weil’s “Law Firms in Transition” survey explicitly advises law firms: “Make equity partnership very difficult to achieve.” The reason is simple: the revenue pie is shrinking, and the slices are becoming thinner than many partners want. The easiest short-term solution is to remove as many place settings as possible, adding new seats only for lateral recruits who can bring more pie of their own.

So it’s very much in law firms’ interests to lower the expectations of their associate lawyers about their chances of partnership. What many firms would prefer now is new classes of lawyer employees who don’t have all the baggage of “associateship.” These firms want salaried lawyers who work competently and bill profitably, but who neither desire nor expect equity partnership offers. All the rejigging and reclassifying of lawyers who used to be called “associates,” but who increasingly are called anything but that, is in service of this outcome.

The timing for this effort is excellent, because the traditional law firm associate model no longer works very well anyway.

  • New associates cannot be paid handsomely to be trained on clients’ dime as they once were, but firms don’t want to absorb the costs of training on top of the salaries they’re paying, and they’re afraid of cutting salaries because of the potential hit to their reputations in the market.
  • Experienced associates do good work and can still be billed at high rates, but the work they would normally be doing has been grabbed by partners desperate for billings, and the opportunities to gain experience early in an associate’s career are drying up anyway.
  • Senior associates have successfully run the gauntlet and “won the tournament”, but even these few winners increasingly outnumber the available internal routes to equity ownership, leaving them in a restless state of non-equity limbo.

In short, both a driving need and an unprecedented opportunity to replace or reinvent the law firm associate have arisen — and as it happens, they’ve arisen right in the middle of an historic surplus of unemployed lawyers.

In the result, for the next several years (and maybe longer), law firms figure to employ or engage the services of lawyers on much more advantageous terms than in the past. Whether located within the four walls of the law firm or in an outsourced capacity, most lawyers who work for law firms will do so at lower rates, with less job security, on shorter time frames, with less expectation of long-term equity rewards. The idea of “graduating” from associate to partner, from employee to owner, as part of a natural process of law firm development and advancement will lose its traction in many firms. If you no longer want to develop many partners, then you don’t really need many associates.  [do_widget id=”text-8″ title=false]

Is this good, bad, or indifferent? Insofar as firms are recognizing the growing obsolescence of the traditional associate model and are taking steps to rework it or replace it, I think it’s good: that model worked very well in the 20th century but seems a poor fit for the 21st. Agile, flexible workforces are coming to every industry, and the law will not be an exception. But describing this as a strategic shift may be giving law firms too much credit: in most cases, the driving force behind these moves is to reduce personnel costs and compress the ownership pool in order to increase partner profits on a short-term basis.

And it’s the short-termism that worries me. Law firms are meant to be multi-generational entities that grow through a natural cycle of development. You invest in new lawyers at a cost today because you confidently expect your investment to pay off years down the road; you accept short-term losses in exchange for long-term profits as part of a big-picture view of the firm. Law firms everywhere are currently gripped by a fever that drives the opposite behaviour: you accept long-term losses in exchange for short-term profits, because you won’t be around for the long term and you don’t really care what happens when it arrives. This, unfortunately, describes more senior lawyers in more law firms than I care to count, and it’s positioning these firms for a very dangerous future.

The traditional associate model needs to be replaced by something better. But it can’t be better just for law firm partners, or even just for partners and clients, and just for this year’s financial results. It has to be better for everyone, on a sustainable, sensible, long-term basis. If the associate model is replaced by a system that simply strip-mines our legal talent resources for maximum profit for the balance of this decade, leaving the cleanup and rebuild to the next generation, then as both a business and as a profession, we’re going to be in a lot of trouble. More on that in my next post.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

The decline of the associate and the rise of the law firm employee

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Posted in: Big Firms, Careers, New Lawyers, Talent

Earlier this month, Greenberg Traurig became the latest large US firm to take a new approach to its legal talent. Rather than firing secretaries or de-equitizing partners, however, as is all the rage elsewhere, Greenberg proposed something different and potentially groundbreaking: the introduction of a “residency” program for new associates. Here’s how the Am Law Daily describes it:

Join the firm as an associate, but only if you’re willing to spend a third of your time training rather than churning out billable work. The catch? Those who sign on will be paid considerably less than the typical starting associate, will bill at a much lower hourly rate—and may wind up only sticking with the firm for a year.

The offer is the basis of what Greenberg is billing as a new residency program that is being rolled out across its 29 U.S. offices. Firm leaders envision the program as a way of recruiting talented associates it wouldn’t have hired during the traditional on-campus interview process for one reason or another. It will also allow the firm to assign junior lawyers to client matters without billing their work at the usual cringe-inducing hourly rates.

Greenberg is simultaneously creating a new non-shareholder-track position, practice group attorney, that is akin to similar jobs created by Kilpatrick Townsend & Stockton; Orrick, Herrington & Sutcliffe; and others that have moved beyond the up-or-out structure typically employed by large law firms. …

[C]lients have been eager to use the junior lawyers, who cost less than a typical associate, and have allowed them to sit in on meetings and calls—at no cost to the client—as part of their training. The rest of the training, MacCullough says, comes via online courses with the Practising Law Institute, the professional development courses the firm offers all associates, and extra “hands-on learning” with partners without concern about billing for the time.

This initiative emerged from Greenberg Traurig’s Fort Lauderdale office, where new graduates are offered the chance to be “fellows” who resemble associates, but are paid less, bill less, and spend more time training. This innovation has now spread firm-wide. “Once the initial one-year period ends,” the Am Law Daily reports, “residents will either become a regular-track associate, take on the new practice group attorney title, or leave the firm.” (This reminds me of the old college football coach’s admonition against the passing game: “Only three things can happen when you throw the football, and two of them are bad.”) [do_widget id=”text-7″ title=false]

Response to Greenberg’s program has been generally positive, and I can understand why. Anything that offers even partial employment opportunities to new law graduates these days has to be considered a good thing. The “residency” approach contains echoes of the “apprenticeship” programs that firms like Drinker Biddle, Strasburger, Ford & Harrison, Frost Brown Todd, and Howrey pioneered about 3-4 years ago and that I thought might herald a whole new approach to associate training. (They haven’t.) And Greenberg’s residents bear a close resemblance to Canada’s articling students, whose one-year apprenticeship in a law firm is a widely admired (although increasingly flawed) way to introduce new lawyers to practice.

Yet something still seems off. By crafting the position of “practice group attorney,” Greenberg has joined many firms in creating a class of associates who aren’t going to be partners; by introducing “residents,” Greenberg appears to be creating a class of lawyers who, most likely, aren’t even going to be associates. What’s not clear is why either of these new groups of lawyers are inside the firm at all. If what you’re looking for are low-cost, non-essential generators of legal work, why not talk to Axiom or The Posse List or any LPO with offices in Mumbai, Manila, or Minneapolis? Why introduce and maintain yet another costly group of lawyers who aren’t here for the long term?

One possible reason is that the whole point of the residents is to eventually replace the associates altogether. Lower salaries? Essential for continued partner profitability, and more reflective of actual associate value. Lower billing rates? Clients aren’t paying the higher rates anyway, so you might as well find a rate that they will pay. Lower billing targets? There isn’t enough work available for partners to make their targets, let alone new lawyers. As the article makes clear, these are really the only differences between a “resident” and an “associate.” Which of these two classes do you think the firm will want to sustain?

The law firm associate market is way overdue for a serious compensation correction: $160,000 starting salaries were and are ridiculous, relative to both the availability and value of new associates. New lawyers can’t and shouldn’t be expected to bill 1,900 legitimate hours a year, and a system that required them to do so was impractical and unwise at best, improper and unethical at worst. Something had to replace that system, and this may be the replacement.

Greenberg’s model is obviously still in its formative stages, and there’s not much point in exploring it further with such limited data. But it’s possible that it might be part of the next stage, maybe the final stage, in the decline of the law firm associate and the rise of the lawyer employee.

Go back several decades to the emergence of the Cravath model, which originally viewed a small class of salaried associates as future partners who could nonetheless generate profits through leveraged work along the way. The distortion of that model, over time, led to much larger and more profitable associate classes, of which only a few members would make partner — but all the same, the firm and its clients still treated those associates as professionals with potential long-term value. We’re now on the verge of entire associate classes whose only purpose and value is to generate leveraged work. They are not meant to be future partners: they are temporary employees meant to sustain the practices of current partners for as long as those partners need them. [do_widget id=”text-8″ title=false]

You might object that that’s not a good long-term stratagem. But a lot of law firms these days aren’t being managed for the long term, and there’s nothing more long-term than associate development: the investment of serious time and money in hopes of producing future partners. Many firms are employing fewer new lawyers than ever, and they have little incentive to invest heavily in the long-term development of the ones they do. They don’t need more equity partners — many firms are busily culling their own ranks — and if they do, they’ll get experienced, plug-and-play veterans with books of business via lateral acquisitions in the free-agent market. (Where laterally trained partners will come from in future, if firms no longer commit to investing in new classes of associates today, is not firms’ leading concern at the moment.)

It’s therefore possible that the era of the “law firm associate” — the partner in training — is now coming to an end, as I suggested back in 2009. Replacing it might be the era of the “lawyer employee” — here today, gone tomorrow, with a completely different set of expectations on each side about the nature of the relationship. It’s true that at several firms, the transition I mentioned above has long since taken place: most associates are essentially revenue generators. But the title of “associate” has a lengthy history and carries powerful expectations: “associateship” has been the precursor to “partnership,” just as adolescence has been the precursor to adulthood. Take away the title of “associate” and replace it with something smaller and poorer — “intern,” “resident,” “employee” — and the impact is profound.

This must surely be an attractive route for many law firms eager to reduce salary costs, minimize training expenses, and boost partner profits. But there’s a risk to the law firm that trades associates for employees straight-up, that diverts resources from internal development to external acquisition: it might permanently lose its capacity to develop any lawyers at all.

The ability to onboard a new lawyer, bring her into the firm’s cultural and structural orbit, develop her capacity to produce higher value over the course of time — this is an organizational skill, no different than any other a firm might possess. A firm that ceases to take internal development seriously will see that skill atrophy: it will become a muscle rarely exercised, with predictable results. PD professionals may leave the firm for better environments elsewhere; partners may lose whatever remaining interest they might have had in bringing along new lawyers; potential recruits may regard the firm as a dead end. These outcomes might not matter to the firm today. I guarantee that they’ll matter down the road.

Once a law firm switches off its lawyer development engine, it’s not easy to rev it back up again — and if you intend for your firm to be operating more than five years from now, it’s an engine you will desperately need to work at some point. That’s the tradeoff, whether they realize it or not, that some law firms now seem poised to make.

There’s another risk to this development, by the way — a threat to the continuing development of the legal profession itself. But that’s for another post.

[Here’s the next instalment in this series: “Reinventing the associate.”]

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

Your future legal survival kit: Another Law21 survey

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Posted in: Innovation, Talent

I have a new survey for you to complete, similar to my previous questionnaire about building your own law firm — except that today’s quiz looks like a lot more fun. But first, some background as to what prompted this one.

Five years ago this month, I posted a short entry here at Law21 called “Core competence: 6 new skills now required of lawyers.” I identified six attributes that the legal profession has traditionally valued, the ones we’ve always assumed are the most important assets for a lawyer to possess (e.g., analytical ability, logical reasoning, persuasiveness). I then suggested that these skills, while still necessary, were no longer sufficient — that tomorrow’s lawyers will require new abilities such as financial literacy, emotional intelligence, and project management. I thought it was an interesting post, but to be honest, not much more than that.

In fact, however, “Core competence” turned out to be far and away the most popular post I’ve ever written on this site. It’s among the most frequently accessed posts every day of the year, and often this five-year-old article is the top daily entry.

The popularity of that post just underlines for me the tremendous demand, both from within the legal profession and among those who wish to join it, for information about what kind of abilities — practical, functional, and performance-based — you need to be a successful lawyer. This is a question that ought to be occupying virtually everyone with an interest in the practice of law over the next decade:

  • Current or potential law students (there are still a few out there) who want to know what attributes they’ll need to compete in a tough market with a heavy debt load;
  • Law school administrators who want to know what kinds of pragmatic, professional courses they should be offering to attract those students and impress employers;
  • Managing partners and law firm hiring directors who want to know what aptitudes should inform their recruitment, training and retention efforts;
  • Clients who want to know what characteristics they should require of both their outside counsel suppliers and their own growing ranks of inside lawyers; and
  • CLE directors who want to know what training and educational opportunities they should offer in order to maximize market interest and curriculum effectiveness.

Over the course of the last five years, however, I’ve found my own thinking on this subject has evolved. I’m still interested in skills — the ability to effectively execute important tasks will always be highly coveted — but a focus on skill that underplays other characteristics will result in a work force too heavily reliant upon technical abilities and shortchanged on the kind of dynamic talents that separate the merely good from the truly great. Not only that, but over-emphasizing skill ignores the reality that some people are simply born with innate talents that give them an advantage over others. Charisma, for example, is a talent, a remarkably effective one (especially for trial lawyers and rainmakers), but like speed, it simply can’t be taught.

So that got me thinking: if we were to expand our repertoire of potential abilities and advantages for lawyers — if we thought more broadly about what lawyers require to be successful in the coming years — then we could start to assemble a more diverse and well-rounded inventory of market-centred attributes for 21st-century lawyers. And that leads me to my new survey.

This survey, like my new book Evolutionary Road, was co-created with my friends at Attorney At Work, and it touches on the same basic issue: the future development of the legal marketplace (if you haven’t checked out the book yet, please click through to learn more). Evolutionary Road posits five stages in the transformation of the legal market and recommends ways in which firms can adapt.

But what about individual lawyers? What can they do to adjust their own inventories of market offerings? The answer to that question depends on another one: what precise individual skills, talents and resources will maximize lawyers’ odds of success in the coming years? I have my own answers to that question, but I’d like to find out yours first. So I’ve put together a survey that tries to elicit your responses, and in an innovative way.

Have you ever taken one of those survival quizzes, like Survival At Sea or The Sub-Arctic Plane Crash Survival Test? The idea is that an accident has stranded you in a harsh and desolate location, and you must choose, from among a small array of remaining supplies, the items most important to your survival. In some tests, you can only take a limited number of items with you; in others, you can take them all, but you must prioritize them in order of importance. These quizzes test, to a certain extent, your knowledge of basic wilderness survival techniques — but also, and more importantly, your ability to think creatively and cleverly about how you can use the tools and resources available to you.

Using these tests as inspiration, allow me to present: Your Future Law Survival Kit Quiz:

Evolutionary_Road_takeTheSurvey (1)

You’re stranded in a future legal market, vast and unfamiliar, and you need to launch a new legal career. Luckily, you get to start off with several skills and talents — but it’s a limited supply, and you’ll need to choose carefully. Which ones will help you most? Below you’ll find 15 resources that seem like they’d be useful, including innate abilities and valuable skills. You have 100 points to assign among these resources, according to how important you think they’ll be.

And here are the 15 attributes (listed here in alphabetical order, but randomized in the quiz):

  • Connections: Strong and productive relationships with clients in your chosen field.
  • EQ: Your emotional intelligence fosters great relationships, especially with clients.
  • Famous Brand: Start off your new career widely known and respected in your field.
  • Financial Facility: You have a business background and a great head for figures.
  • Innovation: A talent for and enthusiasm about improving upon current practices.
  • Legal Knowledge: Good old-fashioned legal know-how, the black-letter kind.
  • Moral Fibre: You’re renowned for strength of character and high levels of integrity.
  • Nice Niche: Start your career with a strong grasp of a narrow but very promising field.
  • Pricing Strategies: You know how to price your work effectively and profitably.
  • Process Mastery: A knack for developing systems, procedures and efficiencies.
  • Recruiting Prowess: You easily attract talented colleagues and collaborators.
  • Risk Acceptance: You’re not averse to risk; you’re confident about taking chances.
  • Solutions R Us: A gift for solving seemingly intractable challenges, legal and non.
  • Techno-Wizardry: Facility with programming, web design, apps and all things tech.
  • War Chest: A bank balance to help finance many (but not all) of your future needs.

Which of these would you choose to launch a legal career in the future legal market described in Evolutionary Road? How much weight would you give the attributes you choose? As with the previous test, you’re given 100 points, which you must distribute throughout the list according to which features you think will prove most important; you will almost certainly have to leave some out, and you will have to award some choices more points than others.

Here’s the link to the survey — it’s open as of today, July 22 , and will stay open until August 12 (or until I have enough responses to draw some conclusions). Please take the survey — Note: print out your choices before pressing “Done,” so that you retain a copy — and forward it to your friends and colleagues. And then check back here next month to see how your answers compared with your fellow readers — and with mine.

Available now! My first two published books: Content Marketing and Publishing Strategies for Law Firms (co-authored with Steve Matthews, published by The Ark Group) and Evolutionary Road (e-book published by Attorney At Work). Click the links to learn more and order your copies today.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

Disrupting the legal education marketplace

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Posted in: Careers, Law School, New Lawyers, Talent

Are you old enough to remember when the only way you could send a letter or a package to someone in another city was through the Post Office? Do you remember what it was like to deal with the employees and policies of a company that had a complete monopoly on a vital service? Remember how much you enjoyed that?

Are you also old enough to remember when the only way you could phone someone in another area code was through long-distance services provided by your local telephone monopoly or duopoly? And how you had to wait and call after 6 pm to get a discounted rate, or after midnight for an even steeper discount? How did that work for you?

It’s easy to forget how much technology and globalization have changed and improved our everyday experiences in the last few decades. Today, we take companies like Fedex and Skype for granted. We have trouble picturing a world — a very recent world — in which there was no Ikea, no Amazon, no Samsung, no Starbucks, no SouthWest. You don’t have to use these companies or like their products to recognize that their arrivals changed the markets they entered, created more choice, forced the incumbents to lower their prices or raise their games or change their offerings or all three. And I can presume that you wouldn’t go back to those old, narrow, barren markets unless forced at gunpoint.

Now, take that frustrating, constraining, 1970s-malaise feeling you recall from the old days, and apply it to legal services. Because that’s the way many people and businesses still experience the legal market: one type of provider, one set of rules and procedures, one definition of adequate service. But that’s all about to change:  our cozy little market is opening up, and new players are entering.

These new players, like the Ikeas and Southwests that entered other markets before them, will undermine clients’ existing assumptions about how legal products and services should be created, priced and delivered, and they will find many willing customers desperate for a breath of fresh air. This isn’t really negotiable or reversible. All that’s left for us to decide, as lawyers, is whether we want to wind up as the future equivalent of the Post Office in a FedEx world.

Now, here’s the better news for lawyers: there’s a growing chance that we could experience the same kinds of consumer benefits arising from the opening and expansion of another dusty, moribund market: legal education.

As you know, for all practical purposes, there is one and only one route into the legal profession: a law school degree and a Bar-administered admission process. The degree goes by different names (e.g., Bachelor of Laws, Juris Doctor) and so does the admission process (e.g., articling, Bar exam, solicitor training, Bar admission course). But the basic structure is universal and hasn’t changed for decades: three years of law school followed by a competence assessment that, in most (but not all) cases, is not especially difficult to pass.

The practicing Bar’s unhappiness with the legal education system has been thoroughly documented. But the Bar also has no one to blame but itself. By allowing a law degree to stand as the exclusive means of legal education credentialing, the legal profession has also created a monopoly that works against its own interests. If you want to become a lawyer, you must first go to law school. Legal educators, gifted with sole possession of an extremely lucrative and perennially increasing market, have responded exactly as you would expect any monopolist to respond: jacking up prices, fending off change, and ensuring their own nests are comfortably lined. (Before you start feeling too resentful about that, go back and read the fourth paragraph again.)

Law schools, of course, are currently in the process of watching their pleasure domes start to crack and crumble. Thanks in large part to recessionary forces and changes to the way law firms hire and use associates, US lawyer employment has imploded, and law schools are paying the price. You could argue — I won’t, at least not strenuously — that this is unfair to the schools: they didn’t cause the changes to the market, and if anything, they’re doing a slightly better job preparing students for practice today than they did 10 and 20 years ago. Not that that will help them now — there’s an old saying that when you sow the wind, you reap the tornado.

Anyway, the most recent US law school data is remarkably grim: as you’ve probably read, applications to ABA-accredited law schools are down 20% from 2012 and are on track to nosedive 38% since 2010. If you go back to 2004, the drop is an astonishing 50%. This has hit the legal academy like a hand grenade tossed through a window: Paul Campos has been tracking the resulting panic and shrapnel for several months now.

The problem has become large and serious enough to have caught the attention of the mainstream press: The New York Times, The Atlantic, Forbes and The Daily Beast have all picked up the story, coverage that is just going to accelerate the race away from law school enrolment. I issued a “sell” advisory on law schools 20 months ago, and nothing that’s happened since has changed my mind. (Smart schools still interested in saving themselves should read Bill Henderson’s Blueprint, today.)

That, obviously, is the bad news. The good news is that this market disruption, like every other, can create opportunities for new players and new models. Here are a couple that you should note and encourage.

In England & Wales, now widely recognized as the world’s legal laboratory, apprenticeship is poised to make a comeback in the professions. “At the moment, to become qualified as a solicitor, accountant or in insurance, the typical route involves three years at university, then on-the-job training and professional qualifications,” wrote Skills Minister Matthew Hancock in the Telegraph. “But university is not for everyone. There is no reason why you can’t attain the same qualifications, without the degree, starting on-the-job training in an apprenticeship from day one. So I want apprenticeships spanning craft, technical and professional jobs that open up work-based routes to the top.” The minister cited approvingly an apprenticeship program under development at BPP Law School, which has close ties to the profession.

Now, if you’ve been reading my work for a while, you’ll know that I think highly of apprenticeship, and that I wrote a few years ago about some promising apprenticeship programs at a handful of US law firms. (Here’s the paper I submitted to a Georgetown Law symposium on the subject.)  I imagined and hoped that this was a trend that would take off in a recessionary climate; it did not. But that was apprenticeship as a training method for new lawyers; we’re now talking about apprenticeship as a non-school route into the profession.

Hardly anyone takes that path anymore; but if it could be revived, ideally complemented with a mini-degree that provided grounding in the essentials of jurisprudence and legal theory, then law schools would have more on their hands than just a PR nightmare and a shrinking inventory: they would have competition. And unlike those first two factors, which will spawn only destructive outcomes, competition can and should be constructive for schools. Competing models that threaten to siphon off the best applicants would spur schools to make real changes in their approach to the market — it would give them a target to focus on and a framework within which to reconfigure and rebuild.

Nobody wants law schools to disappear; we want law schools to thrive — but on their merits. Putting a viable alternative up against law schools would motivate them to reconsider their own models, defend their own visions of lawyer preparation, or adapt their approaches to more closely resemble what the successful options offer. Complaining about law schools didn’t work; trying to regulate them won’t work; and putting them out of business is pointless. So give them competition: unleash alternatives that can give them a run for their money, and let them fight their way out of this mess.

A similar sort of innovation may be unfolding here in Canada, which it seems fair to say is not widely recognized as the world’s legal laboratory. But the Law Society of Upper Canada in Ontario has recently done something which could be just as bold, in its own way, as the UK’s move towards apprenticeship.

Law graduates cannot be admitted to the Bar in Canada until they’ve completed a year of articling — itself a form of apprenticeship with a practicing lawyer or law firm. More than a few US commentators have envied this approach and suggested its adoption in the US (or the British solicitor trainee program or German Referendarzeit). But articling in Canada is itself the subject of ongoing controversy, and in Ontario, articling placement — which used to be all but automatic — is now down to about 85%. That’s a problem that the US bar, facing a 55% new-lawyer law-related employment rate, would love to have.

In Ontario, however, concern about the articling crisis led to heated debates and finally, late last year, to the approval of a pilot-project Law Practice Program that would run parallel to articling and provide an avenue to those who cannot land articling positions. The program is not, shall we say, universally popular, and at this extremely early stage, it’s almost entirely speculative anyway. But I think it’s tremendously important nonetheless, for much the same reason as I think the possibility of apprenticeship is important: it creates competition for new lawyer training.

Up until now, articling in Canada has, in a sense, enjoyed a monopoly, in much the same way that law schools and lawyers have. There is only one “apprenticeship” method, one training route, for Canadian bar admission, and that’s the articling process. Knowing this, many Canadian law firms have felt free to offer articling positions without having to worry very much, if at all, about the quality of those positions. All they really had to concern themselves with was the provision of a competitive salary; it was accepted wisdom among lawyers and law graduates alike that the articling experience itself would always be uneven, and that whether you really learned much about being a lawyer would be partly a matter of your own efforts and partly the luck of the draw.

Now, introduce the Law Practice Program into this mix. Suddenly, articling programs can’t afford to be complacent, because now there’s another training option. Providers of the Law Practice Program (it’s envisioned that there would be several) can pitch themselves to the law student market thus: “Law firms won’t really train you to be lawyers, you know. They’ll have you photocopying and doing grunt work and picking up drycleaning. But we will train you, through competitive work placements and practical role-play sessions and other cutting-edge methods for inculcating business skills. We will give you the tools to be employable upon graduation.”

These providers will have to offer and deliver these kinds of benefits, because that’s the only way they’ll be able to make money. In order to attract candidates — and, much more importantly, to produce graduates attractive to employers — they will need to build a training program superior to articling (and based on some reported articling experiences, that might not be terribly difficult). They will have to do more than just be a consolation pathway for students who couldn’t find articles — they’ll have to persuade law graduates of all stripes that their programs are as good as or better than articling and are worth the investment.

And if they succeed — well, then suddenly, we have a race. New lawyer training stops revolving around the tired old question of “Whose responsibility is it?” that we’ve been grappling with for ages. It becomes a question of “Who wants the opportunity?” Which training option is better for new law grads? Which can deliver the best results? Which can draw the best students into their programs and produce the best subsequent employment rates? A market filled with new lawyer training options, competing with each other to attract law graduates into their program, would have many ramifications — the likely end of standard paid training for new lawyers almost certainly among them — but the overall impact on the profession would be highly positive.

That’s why I think the Law Practice Program for the Ontario legal profession has the potential to be a game-changer, and why the suggestion of an apprenticeship route into the British profession is equally significant. Our legal education and admission methods have grown stagnant because they are monopolies, no different from the post office or phone companies of the past. Break up those monopolies — open up these markets and let in some sunshine and fresh air — and you’ll have the first real opportunity for serious reform and improvement in the new lawyer development process.

And if it all breaks right, then just like with mail and long-distance calls, no one will want to go back to the old days again.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.