An overlooked recruitment opportunity

At a certain point, a market’s inability to correct an imbalance becomes a competitive advantage for others within that market. In that spirit, allow me to illustrate an imbalance that innovative law practitioners can exploit right now.

We’ve all heard and said a great deal about how law firms need to better address the treatment of their new lawyers and associates. The volume of that conversation has grown sufficiently loud to capture at least a few firms’ attention, suggesting that we’re building towards a critical mass. Consider this update on Ford & Harrison’s successful decision to drop billable requirements for associates, as well as Denton Wilde Sapte’s move to give associates more control over their own business development plans and even Curtis-Mallet’s decision to start a recruting page on Facebook.

All well and good — nice to see a few firms coming to appreciate the importance of adapting their traditional practices to make best use of the incoming lawyer talent wave. Now, let’s see; we’re working on the associates, the partners always look after themselves … is there anyone we’re missing? Any significant group within the law firm that’s still being overlooked?

Employee survey reveals support staff dissatisfied, says The Lawyer in reporting the results of its first employee engagement survey. The poll “shows a chasm between lawyers and business services staff, with the latter feeling undervalued, underpaid and out of the loop. An overwhelming ­majority of business support staff -– 64 per cent -– did not feel that non-fee-earning roles are valued at their firm.” Read the article for the depressing details, including one recruiter’s characterization of how lawyers view support staff: “lackeys to ­support the real business of generating fees.”

I’ve argued before that most law firms come up very short in this regard. Lawyers are notorious for their habit of treating employees without law degrees as separate and lesser entities within the firm structure, less worthy of respect and collegiality. We’ve done articles in the magazine on sensitive topics within law firms, including advancement of women and associate dissatisfaction. But the only time we’ve ever been turned down flat by every potential interviewee was when we tried to do an article on legal secretaries’ views of their workplace. Not even the offer of anonymity could overcome the intimidation factor.

So what can you, the innovative legal professional, take from all this? Valuable members of your rivals’ firms are disaffected and alienated, seeking workplaces where they’re fully integrated into the firm’s business and culture. Build or reinforce those elements in your own operation, developing a deserved reputation for proper treatment and engagement of non-lawyer professional staff. When that reputation starts circulating in your legal community’s support staff grapevine (and there is one, believe me), you’ll have a major lead over your competitors in the pursuit of these underrated and underappreciated employees.

Firms work hard to rank highly in surveys of associate satisfaction, as well they might. There may never be similar surveys of support staff, but all the better for you: recruiting the best of these professionals in stealth mode means your lead will go unnoticed, and unchallenged, that much longer.

Repainting or renovating?

There’s repainting, and then there’s renovating. Innovation in the practice of law can take either of these forms, and while there’s nothing wrong with a fresh coat of paint or moving the furniture around, installing new support beams and ripping out the plumbing is a whole other order of commitment to change.

As a useful example of repainting, word from the UK is that 18 major law firms are getting together to establish a new “carbon footprint” protocol for their industry. The Lawyer reports that the “Legal Sector Alliance, a movement of law firms and organisations committed to working collaboratively against the climate threat, [will] provide law firms with a practical guide to adopting environmentally sustainable practices.”

Not meaning to discourage any sensible steps towards a better environment, and the firms deserve credit for promising to reveal footprints that could be embarrassingly larger than expected; the free market in saving face is a powerful force in a tightly knit profession like ours. But best intentions aside, this initiative will have a lot more of an impact on, say, marketing and community relations than it will on the fundamental business of these firms: serving their clients.

Clients are looking for something a little more substantive. Mike Dillon, GC of Sun Microsystems and occasional but engaging blogger, expressed as much in a post last month called simply “Finding Value.” Mike ticks off areas of needed reform in law schools and legal media, and acknowledges that clients need to step up, too. But law firms, he says,

need to understand every component of their operating expense and business model. What is the cost of attorney turnover in the firm? What are its core v. non-core technical strengths? Can the firm manage sub-contractors (i.e. other legal service providers) to provide more cost effective services to clients in non-core areas? Does the firm fully understand its customers and does it tailor its services to the customer’s specific needs?

These are the kinds of questions that start the kinds of conversations among lawyers and clients that we need. To that end, let me direct you to a very promising conversation just getting started: Continue Reading

5 blogs and 5 blawgers

Eight months into this gig, and I’ve finally received my first “five things” meme! Colin Samuels at Infamy or Praise went and tagged me in his recent post to continue this game: “The idea is to post links to five great blogs (other than law blogs) on your blawg and tag five of your favorite blawgers to do the same under the post title ‘5 Blogs & 5 Blawgers.'” Done and done:

Seth Godin: Seth’s ideas and perspectives are prima facie valuable — I link to him often here —  but what I admire most about his work is, first, his ability to deliver powerful thoughts with the utmost conciseness, and secondly, his unspoken but clear belief that marketing is a profession with moral implications, one that can and should make things better. Here are three of my favourite Seth posts: Responsibility, Price, and Labor Day.

Publishing 2.0: The upheavals that the law is now experiencing hit the mainstream media several years earlier, and that industry, one close to my heart, is still wracking itself trying to adjust. Scott Karp is one of the clearest voices for reform and innovation in the media business, and just as the best law bloggers focus relentlessly on the client, he focuses relentlessly on the reader. Lawyers could learn a lot from Scott’s deconstruction of a traditional profession in turmoil.

The Technium: After co-founding Wired magazine, Kevin Kelly has gone on to do any number of things, including a fascinating blog (really a book in progress) called The Technium. Briefly, it explores technology’s impact on society and business, but it’s much deeper, more innovative and more profound than that. Here are two examples, blog posts titled Better Than Free and 1,000 True Fans, that have particular resonance for anyone, like me, who makes their living creating something that can be copied and pasted.

Indexed: Jessica Hagy has mastered the previously unknown art of being both funny and thought-provoking with nothing more than graph paper and a pencil. Indexed delivers a daily cartoon that relies on nothing more than a standard X-Y chart or a Venn diagram to make some trenchant points about youth, celebrity, suburbia, recreation, media, and the future, among many others.

Astronomy Picture of the Day: Maybe it’s not a blog in the strictest sense, but this NASA-run site provides a stunning new vista every day, from gigantic nebulae and the surface of Mars to the center of the galaxy and the north pole of Saturn. I’m not even a backyard astronomer, but APOD gives you a daily opportunity to pull yourself away from your momentary preoccupations and quietly marvel at the sheer scale and brilliance of the universe.

There you have it — five non-law blogs that I think will reward your time. Time to tag five other law bloggers with this meme: Simon Fodden, William Henderson, Nick Holmes, Susan Cartier Liebel, and Bruce MacEwen.

Never mind the billables

Steve Matthews of Stem Legal has a thoughtful post at Slaw that talks about The Economist‘s recent article on the demise of billable hours. As Steve points out, focusing on how a law firm bills its services obscures the more fundamental conversations around value and cost that are needed to frame the process of negotiating price. Hourly billing’s real damage is that its over-simplicity and ubiquity make it hard to have those conversations.

It’s becoming clear that “value to the client” and “cost to the lawyer” are the only two concepts that have any utility to the legal services pricing process. Clients are getting their act together when it comes to determining exactly what “value” means to them in the legal services context. As soon as the value assessment process becomes standardized and even routine in the client world (and it will), then lawyers will suddenly inhabit a much less flexible pricing environment, one in which their customers understand exactly what they need and what they’re willing to pay for.

For this reason, those lawyers who intimately understand their costs of operation and production have already opened a lead on their competition, a lead that will widen into a gap over the next few years. That’s why the single most important thing you can do for your law business, right now, is to know your costs inside out, down to the last dollar, pound or peso. And then, once you understand your costs, streamline them — through technology, knowledge management, automation, and creative use of legal talent (including contract and offshore lawyers).

Every time you reduce your costs, you create an equivalent opportunity in your profit column, because the amount you spend to render a service to your clients has no effect on the value of that service to the client. (It never has.) Your client doesn’t care how much profit you make for yourself; the client only cares that you delivered excellent value in a cost-effective (to the client) manner. How you bill your services is between you and your client; how much it costs you to deliver those services has to be your number-one business priority.

The goal should not be to stamp out the billable hour once and for all. The goal should be an open, rational legal services pricing system in which the question “How many hours did you bill?” — whether asked by a client of its law firm, or by a partner of an associate — is, for the most part, completely irrelevant.

Casualties of the salary war

Dan Hull at What About Clients has stirred the smouldering embers of the associate salary debate with a post suggesting that new lawyers should pay law firms to apprentice with them. It’s a provocative idea, and while I voiced my disagreement with it in a comment there, I do appreciate the frustration he and other legal employers feel when the marketplace requires salaries that don’t correlate to the value they can realistically expect from rookie practitioners.

The problem, though, is that new lawyers don’t generally leave law school primed to deliver serious value to employers, and the largest law firms don’t have a lot of economic incentive to provide them with any real training — what they want are billable drones. So let’s be clear: it’s no accident that our current system delivers this result — it’s exactly what we should expect. It’s a problem we could ignore when times were good, but not anymore.

This is going to come to a head sooner rather than later, and it’s going to be the new lawyers themselves leading the charge, as this article in The Recorder about the tough lateral marketplace demonstrates: “[F]or a partner who isn’t holding a big book of business, moving may not be so easy — and for associates it may be impossible — as firms increasingly look only at the most productive partners.” [Emphasis added]

When large firms’ profitability is threatened, associates are the first ones cut loose and the last ones picked up elsewhere, and a lot of them are finding to their dismay that they’re simply not that employable. Their primary skill — a willingness to work long hours on middling-level tasks — isn’t in huge demand by large firms right now and is never of any use to smaller ones. These new lawyers are going to be squeezed hard, and they’re going to start asking hard questions: why are we left holding the bag? How is it that the law schools and the large firms, to which we had entrusted our development as lawyers, are sitting pretty, and we’re left banging on doors trying to get work?

In point of fact, it isn’t fair — and it’s no way to introduce the next generation of practitioners to our profession. A few of us have been saying for a while that the lawyer education and training system needs a massive overhaul. Expect to hear many more voices join that chorus over the next several months — those of the thousands of stranded new lawyers who are starting to pay the price of our cavalier approach to bar admission.

The day after tomorrow

As Patrick J. Lamb of Valorem Law Firm reminds us, change is inevitable once a marketplace has decided to do things differently. In a week in which the American Bar Association not only gave offshoring a passing grade but positively embraced it (Ron Friedmann and Russell Smith contribute their thoughts), and in which the prospect of publicly traded law firms is discussed not in a mere blog but in the hallowed pages of The Economist (as the Australian pioneer in this regard reports more financial success), then you’ve got to know tumult is underway. Maybe law schools will get it too, though they have farther to go, judging from the latest silliness involving the US News and World Report rankings (see me vent my frustration at Legal Blog Watch yesterday). But ready or not, no matter where you are in the law, change is here, and it’s real.

You know, I read a book a few years ago that helped reshape how I view geopolitical and sociological change. The Fourth Turning contends a whole bunch of things, not all of which I necessarily buy, but for present purposes, the most significant is that roughly 80-year chunks of history can be divided into four “seasons,” and we’re now firmly into Winter: a period of destructive crisis. Whereas the preceding Fall (by my estimate, from the mid-’80s to 9/11) was a time of institutional unravelling and decay, Winter is a time of dynamic upheaval, when an old civic order is replaced with a new one. Change and reform that seemed impossible in the Fall come fast and furious in Winter, and there’s no guarantee the change will be for the better.

Looked at in this context, the waves buffeting the legal profession can be understood as part of a cyclical pattern of evolution rather than an unforeseen bolt of upheaval. We’ve been talking about reform in the practice of law for decades — the first article calling for the death of the billable hour probably dates from the Jurassic Era — but the social and institutional paralysis of the past couple of decades has frustrated these efforts. Now, though, greater forces than simple goodwill are in motion, and boulders that once seemed impossible to move now suddenly shift with greater ease than ever. All of which means it’s time for us to pause and take stock of where we’re trying to go.

Look, if you’re reading this blog, you’re aware of the changes manifesting themselves in the law, and probably you’d like to see things change for the better: a more effective and fulfilled legal profession, a more informed and satisfied client base, a more focused and responsive legal education system, a fairer and more accessible justice system, a more collaborative and innovative spirit of lawyering. Those of us so motivated constitute a small minority in the legal community, but we’re growing. And I’m greatly cheered by the thought that at this time of crisis in our profession, we have the means and the opportunity to help direct the forces of change into positive channels, and to help make the profession better than it is and maybe even as good as it needs to be. Continue Reading

How David beat Goliath

Reading to my three-year-old from her new book Bible Stories for Toddlers last night, I was struck by something about the story of David and Goliath that I hadn’t fully appreciated before. David is often held up as a symbol of bravery in the face of insurmountable odds, as well as the power of divine protection. But it struck me that courage and righteousness aside, young David was no fool: he didn’t engage a gigantic opponent in hand-to-hand combat. He kept his distance, picked up a sling and stone, and took out a heavily armed warrior with missile fire. David was one of history’s earliest recorded asymmetric fighters.

There’s a lesson here for lawyers who work in smaller operations, from midsize firms all the way down to sole practices: taking on your bigger competitors on their terms is a losing strategy. Either avoid their strengths or capitalize on their weaknesses, but at all times remember that you can’t do business the way they do and you shouldn’t try. Recent news items offer three examples that bear this out:

1. Technology: The 2008 ABA Legal Technology Survey Report sent out some highlights in a press release, including this one: 37% of respondents use case or practice management software. But what’s interesting is that smaller firms have better uptake: 24% of large-firm lawyers use the software, versus 33% at firms with 10-49 lawyers, 50% of respondents from firms of 2-9 attorneys and 40% of solos. If you’re in a small practice, you absolutely must capitalize on big firms’ unwillingness to adopt these programs, which pay for themselves almost immediately in terms of increased productivity and efficiency. Biglaw’s failure in this regard is a gift to its smaller rivals, one that won’t last forever.

2. Receivables: The Daily Business Review reports on a raft of firms that, in the face of a weakening economy, are cracking down on overdue receivables and getting their cash flow pumping harder. Firms could ignore outstanding bills when times were good, but now they’re motivated to collect those debts — or at least, judging from the article, the midsize and smaller ones are: the only large firm in the story says it “touch[es] base periodically” with clients whose lack of payment suggests the firm has “fallen off their radar screen.” Small firms can and must take cash flow seriously, because it adds an extra layer of profitability that some larger firms still feel, for some reason, they can ignore.

3. Exclusivity. Your ABA reports on a session at its annual meeting in New York on how solos can get referrals from large firms. The critical feature, as is always the case for smaller practices, is focus: develop a specialized niche that offers a complementary, not competing, profile to firms that could send you work. True enough, but the greater point is that large firms seek to be as many things as possible to as many clients as possible. You need to do the opposite: be very few things to a limited selection of people, so that you can own that cross-sectioned block of work and clients. Large firms think constantly about their fellow big-firm competition; your goal should be to have as little competition as possible.

Taking an asymmetric approach to strategy allows you to think of other big-firm weaknesses that you can turn into small-firm strengths:

* Overhead: One of the two biggest expenses for large firms, which feel compelled to occupy tony premises in expensive locations, can be a competitive advantage for you. Take steps to reduce your real-world footprint by going wireless and mobile, accessing caselaw and precedents online, sharing office space, or working from home or outside urban centers.

* Payroll: Here’s the other major expense for your huge competitors, whose business models assign many highly paid young lawyers tasks that have them punching below their intellectual weight. Hire experienced lawyers on contract, or let them work from home, and try to send at least some work offshore every month. The big firms have made salary a weakness for you by driving up market prices, so compensate by offering the flexibility and satisfaction that they can’t. Which brings us to:

* Women: Large firms’ inability to retain women past their sixth year of call is well-known, thanks to an economic model that pretends women don’t carry a disproportionate amount of child and home responsibilities. Women lawyers are an undertapped source of talent, a Moneyball-esque market inefficiency. Take advantage: find out what women lawyers are looking for in a legal employer and shape your workspace accordingly.

You can adjust and add to this list based on your own community, practice area, talent pool and client marketplace. What it comes down to is: don’t try transplanting a large firm’s business model to your more modest tract of land. Identify your bigger rivals, figure out their vulnerabilities, and make the appropriate changes to your own smaller firm’s profile.

But one final note of caution; beware of focusing too much on your competitors and not enough on your own strengths and vision. David was smart enough to use a sling and stone against a giant. But he was also adept enough with that weapon to take the giant down with one shot.

The rise of good enough

Developments last week in the world of electronic discovery have gotten me thinking about matters of a weightier nature. The Wall Street Journal published an article about the rise of automated e-discovery services and the degree to which they’re eliminating the need for lawyers in this area (it’s subscriber-only, so I’m relying on the good graces of Carolyn Elefant at Legal Blog Watch, who provides some highlights).

New e-discovery tools, says the article, promise cost savings of more than 85% — something bound to elicit sweet hosannahs from clients, but perhaps rather different responses from lawyers. One such lawyer, a partner at Fenwick West, cites a cautionary tale of a client that decided to go the cheap route and handed over an e-mail archive search to its internal IT personnel. You can guess the result: disastrous disposal of necessary files and big money paid to the law firm to clean up the mess.

Now, there are two things worth noting about this example. The first is the dichotomy it suggests: either have the professional lawyers do the work or give it to the complete non-specialists, and no in-between. But in fact, there’s a lot in between, and some law firms are figuring this out. Ron Friedmann at Strategic Legal Technology brings us word that Dorsey & Whitney has launched its own e-document review service, at fixed prices to boot. As Ron says, this is less a challenge to e-discovery providers than it is to other law firms, who might have to start rethinking how their business models incorporate e-discovery.

But there’s another angle here, one that goes to a more foundational matter in the law. The example above presents a familiar, even archetypal warning to clients: engage a lawyer now to do the job right, or engage the lawyer later, for more money, to fix the mess you made by trying to do it on the cheap. You might even call this the Cardinal Principle of Lawyer Marketing: the short-term cost of hiring a lawyer is less than the long-term cost of going without one. We’ve all heard it, and many of us have used it, but few of us have examined its foundation or implications. Continue Reading

Preaching to the choir about innovation

Legal Times reports the release (2nd ed.) of Fair Measure: Toward Effective Attorney Evaluations, by the ABA’s Commission on Women in the Profession. Fair Measure offers law firms instructions and materials to help them conduct performance evaluations free from gender bias. And it offers us a useful prism through which to view the most important role innovation plays in the practice of law.

I haven’t read the book, but its central premise — that evaluations are (a) key to lawyers’ career progress in law firms and (b) extremely susceptible to both overt and unconscious gender bias in favour of men — seems unassailable. But the book also seems vulnerable to two underlying assumptions: that (a) most law firms systematically rely on evaluations or indeed any other rational method when assessing and promoting lawyers, and (b) most law firms are sufficiently troubled by their clear inability to retain women lawyers that they’ll actually do something about it.

In a typical law firm, when partners evaluate associates, they often do so in a peremptory manner that reflects the low priority management has accorded the task — it’s not billable, it’s not tied to the partner’s own status or compensation, and it’s not part of a holistic approach to associate development that includes mentoring and training. Similarly, decisions to extend partnership offers are often made with subjective criteria that reflect partners’ own personal likes and dislikes, which invariably includes stereotyped beliefs about gender and ethnicity.

The real problem is the absence in many firms of rational, consistent mechanisms for evaluating and nurturing talent, and the untroubled attitude towards the negative impact that absence has on fairness and diversity within the firm. In other words, Fair Measure is a book designed for the small minority of firms that actually believe they have a weakness and actually want to fix it. The bulk of the profession likely will pass it by.

But you know what? That’s fine. Continue Reading

Capped fees, limited innovation

To the well-known list of companies that have consolidated their roster of outside counsel to one firm (DuPont, Tyco, and Linde, most prominently), you can now add Pfizer, which Corporate Counsel magazine reports has given all its employment litigation work to Jackson Lewis and its 500 lawyers across the US. But this one comes with a twist: in exchange for its sole counsel designation, Jackson Lewis is capping all its fees to Pfizer, issuing one invoice a month containing one-twelfth of its annual fee and an accounting of its its time spent on Pfizer matters in the last 30 days.

There are three interesting points to take away from this story. The first is to note that when Pfizer’s GC was asked to list the reasons why Jackson Lewis won this ten-firm competition, the first thing she cited was trust: “We were putting all of our eggs in one basket. Before, we had a choice among ten firms. Making this decision meant that choice was gone.” Never mind the economics: you don’t win a contest like this unless the client has the utmost faith in your reliability and wisdom.

The second is to observe what happens in the absence of trust: tucked away in a sidebar at the bottom is an account of Pfizer’s frustration with fat, vague law firm invoices that didn’t comply with the department’s well-established billing guidelines. So the company hired a legal bill assessor called Legal Cost Control, which found that Pfizer’s outside counsel were billing for things like making copies, sleeping on airplanes and assembling budgets. Now Pfizer sends all outside counsel invoices to a billing review team — and it’s fair to assume that firms submitting questionable bills won’t be in that trusted inner circle, if they remain counsel at all.

But the third, and most significant, aspect of this story is that while Pfizer is combining two innovations here, convergence and capped fees (well, UK law departments wouldn’t call law firm panels exactly innovative), it missed an opportunity to add a third when it retained the right to recoup Jackson Lewis’s unspent fees at the end of the year. Continue Reading