Conflicts and the law of unintended consequences

by with 0 Comments

Posted in: Big Firms, Clients, Ethics

The Recorder reports this morning on the rising number of law firm requests that clients sign broad advance waivers (or blanket waivers) that would allow the firms to act against those clients on future unrelated matters. Firms, looking to maximize the amount of business they can take on, are trying everything they can think of to get around conflict of interest rules. Clients, reasonably enough, won’t sign anything that could impair their interests down the road if they can help it.

Clients’ responses to these requests vary according to the size and leverage of both firm and client. Large clients routinely blow them off, because they can — the lawyers need their business more than the clients need these particular lawyers. Smaller clients have less leverage, so if they want to hire big firms, they pretty much have to live by the terms those firms dictate. I can see a couple of trends emerging from this, neither of which is good for large firms and both of which reflect the unintended consequences of size.

First, when a firm is so big that it has to go begging for the right to sue the client in future, the client will correctly diagnose this as a vulnerability that can be exploited. Instead of simply refusing these requests, clients will start calculating just how much (or little) they actually risk by granting such a waiver, and how much the firm has to gain by it. The client might then say to the firm, “Sure, we’ll grant you the waiver — and in return, you’ll knock 15% off all your fees and pick up the costs of a new extranet system.” Large firms’ vulnerability to conflicts is going to cost them at the bargaining table. Continue Reading

Your invisible professionals

by with 11 Comments

Posted in: Big Firms, Management, Technology

So here’s a typical situation: I’m assigning an article for one of our CBA publications on a law firm practice topic — say, business development, or extranet use, or associate retention efforts, or what have you. And I want to find interviewees with knowledge and expertise to speak with our writers for said article. So one of the first places I’m inclined to look is within law firms themselves, to speak with the professionals in charge of these areas.

Except I can’t. Because with few exceptions, law firm websites do not list biographical or contact information for their non-lawyer professional staff. According to most law firms’ websites, even some of the largest and most challenging to operate, their offices contain lawyers and nobody else — all the day-to-day operations that sustain the firm, from accounting to marketing to IT to knowledge management, apparently happen independently, as if by magic.

Here’s a partial list of the key professionals within law firms who are rarely mentioned on firm websites:

  • Chief Administrative Officer
  • Director of Associate Retention
  • Director of Business Development
  • Director of Finance
  • Director of Human Resources
  • Director of Information Technology
  • Director of Knowledge Management
  • Director of Marketing
  • Director of Student Recruitment
  • Head Law Librarian
  • Webmaster

In fact, almost the only non-lawyer professional you’re likely to find on a law firm website is the Director of Media & Communications, if only because that person’s name shows up at the bottom of press releases. Then again, it’s just as likely the director’s name won’t show up — it’ll be the more junior media liaison who’s supposed to get all the calls from the press.

If this were just an inconvenience for media types like me, then you could almost forgive this oversight, despite all the lost opportunities to promote the firm’s name in the legal and business press. But the real damage, I think, is to the morale and status of these staff members, who work just as hard and take just as much pride in their craft as any lawyer, but who receive no public recognition from their employers. Continue Reading

Why your client’s generation matters

by with 3 Comments

Posted in: Big Firms, Clients, Generations

In one of last week’s posts, I talked about inter-generational tension within some law firms and how it can undermine these firms’ succession planning efforts. But as important as it is not to alienate good young talent through something as silly as generational resentment, law firms that are clueless about demographic differences risk an even more damaging effect: alienating good young clients.

Law firm leaders who complain about the values of their Gen-Y lawyers need to remember that there are a lot of Gen-Y clients out there, too. On the corporate side, Millennials are playing key roles in many forward-looking industries like life sciences, biotechnology, new media, offshoring, financial innovations, and more. On the individual side, Millennials are buying houses, drawing up wills, getting married (and divorced) and starting up small businesses. Thanks to their affluent Boomer parents, they’re not short on funds, and there’s more of them out there every year. But if a law firm can’t even relate to its own Millennial lawyers, how can it realistically expect to gain the confidence of Millennial clients?

This isn’t just about Generation Y, though — this crosses all generations and touches on fundamental issues of marketing and client care. Part of really understanding your clients (something every successful firm has to do) is understanding the demographic leanings and preferences with which every client comes equipped — and having understood them, incorporating them into your strategies both for dealing with these clients and for seeking out new ones.

It’s more than just not sending the earnest Boomer to talk up the jaded Gen-X entrepreneur, or leaving the presumptuous Millennial alone with the distant Silent retiree. It’s about crafting a complete range of tactical approaches to clients — talent selection, methods of communication, service delivery vehicles, etc. — designed to increase a particular client’s engagement, comfort level, and resonance with the firm. Obviously, you can’t tell everything about clients from their year of birth, but generational influences are real, and they need to be factored into all manner of communication, from initial marketing efforts to ongoing service delivery.

Susan Cartier Liebel discusses these important points in a post at Build a Solo Practice LLC about generational relations in the law, which in turn refers to a Copyblogger post by James Chartrand that provides a quick-and-dirty summary of generational attributes. The upshot of James’ article is that marketing and publicity materials need to be targeted to customers in part depending on their generational influences. One of the points of Susan’s article is that this is especially true in lawyers’ relations with clients. Both posts make excellent points that lawyers should read and take to heart when framing how they deal with clients and designing the tailored vehicles by which they communicate to them.

Surviving a succession crisis

by with 3 Comments

Posted in: Big Firms, Generations, Management

Law.com’s Small Firm Business features an article today about succession planning for law firms. I’ve seen a lot of these articles lately, talking about the importance of transitioning clients from one generation of lawyers to the next, encouraging leadership development among younger lawyers, and motivating more senior practitioners to mentor the younger ones and share files and client contact. All sound advice, of course. But from the tone of some of these articles, you’d think this process was just a task force and a subcommittee away from easy implementation.

The fact is, succession planning in law firms is a monstrous challenge. And if you’re just now getting around to thinking about it, then there’s a pretty good chance you’re already too late. Shifting the bulk of client responsibilities from more senior to more junior lawyers isn’t something you roll out on short notice. If your firm culture doesn’t already endorse in some way multi-generational client responsibility, genuine mentoring efforts, and innovative compensation methods, be realistic that the odds are against a happy ending.

Why is succession planning so hard? Pick your poison:

1. Loss of power. Succession planning hits every lawyer, especially older ones, at an almost feral level. Change in law firms is always hard, but when you’re talking about fang-and-claw issues like money, power and control, lines will be drawn and obstinacy will rule the day. Those with power will cling to it all the more tightly when they feel it’s threatened.

2. Resistance to change. Lawyers don’t like change at the best of times, so don’t expect them to suddenly start liking changes to who gets to lead trials, drive deals and get client face time. As independent professionals, they will fiercely resist management’s attempts to dictate how “their” clients are handled.

3. Few future leaders. Senior lawyers will say that the juniors “aren’t ready” to take on more responsibility — and often, they’re right, because the seniors have systematically excluded the juniors from meaningful client contact and lead roles on key matters. You can thank firms’ compensation systems in part for that, rewarding lawyers for direct proximity to clients and encouraging hoarding.

4. Generational conflicts. I still can’t get over the resentment that Boomers and even some Xers feel towards the Millennials now moving up the ranks. Gen-Yers are not a passing fad — there are 25 years of Millennials lined up to enter firms, and they’re going to change a lot more than the furniture in the reception area. Too many firms waste too much energy in pointless conflicts between older and younger lawyers, and it can make real succession planning a very unpleasant chore.

So what can you do if your firm is in this situation — late to the succession-planning party and facing multiple challenges to success? Continue Reading

The evolving costs of young lawyers

by with 3 Comments

Posted in: Big Firms, New Lawyers, Talent

In conversation the other day with a longtime friend of mine, a mother of three on hiatus from the practice of law, the subject of articling students came up (for those outside Canada, articling year is a required apprenticeship period after graduation but before the call to the bar, and no, it doesn’t work as well as it sounds). She opined that the annual salary for such students in Toronto (circa $70,000 — almost twice what my friend and I made in that city when we articled 14 years ago) was outrageous, especially considering how little new graduates actually know and can actually do.

My response was that (a) people pay what the market requires for a product or service, and that (b) if law firms needed to pay three times that much for articling students, they could (the amount of money swimming around in most law firms is astonishing) and they would (especially if they could price such students out of the range of rival firms). That’s why I think a lot of talk about starting associate salaries, including the latest volley from London, is so much hot air.

The same goes for the dreaded associate attrition trend, about which people continue to fixate. Most associates leave their law firms by the end of five years! Why, yes, they do. If they didn’t, you’d have quite a problem come partnership time, wouldn’t you? A group of lawyers from Stikeman Elliott made this and other good points at a presentation during the NALP meeting last week — firms need associate attrition. Not all your early hires are going to work out — people change, especially during their 20s and early 30s when you first hired them.

The amount of money firms spend on young talent, and their evident disinterest in taking serious action to staunch associate outflow, just confirms to me that talent has been almost a discretionary spend for law firms up until now. Young lawyers would need to cost a lot more than they currently do before partners really started feeling the pinch, and in no way would that cost threaten the overall financial viability of the enterprise. And considering how little rigour is brought to the new lawyer recruiting process generally, it’s no wonder there are so many more misses than hits over the first several years.

Two things are going to happen to change this. The first is that talent will become scarce, and good talent even more so, driving its real costs through the roof and making its departure much harder to bear. This, in turn, is going to force firms to pay much more attention to the new lawyer intake process and give much closer scrutiny to exactly who leaves. As the traditional pyramid structure of heavily leveraged associate starts crumbling, firms will hire fewer new lawyers, but they’ll need to keep them longer.

And firms will realize that the most important thing about associate attrition is not how many young lawyers leave, but whether the wrong ones are going.

Towards diversity in law firms

by with 3 Comments

Posted in: Big Firms, Diversity

Diversity in the practice of law has been on my mind the last few days. Partly it’s thanks to a confluence of events, such as the second annual Call to Action: General Counsels’ Summit on Diversity, which starts tomorrow in Arizona and gathers 150 top GCs to find ways to increase diversity among their own departments and their outside law firms.

Other triggers include Coca-Cola’s recognition of Kansas City’s Shook, Hardy & Bacon for making significant progress on diversity and Skadden Arps’ innovative $10M program to encourage minority students at City College of New York to pursue legal careers. But I was mostly prompted by my participation in a plenary panel last Friday at the National Association of Law Placement’s Annual Education Conference in Toronto.

Sharing a stage with an advocate like Vernā Myers, and hearing her speak incisively and passionately about diversity in the law, is a moving experience. So is sitting in front of several hundred NALP members, an overwhelmingly female and not uniformly white audience, and thinking about how many of them would, if they wished, be renowned lawyers, practice group leaders and managing partners today were the law firm environments they entered not been so structurally hostile to them.

Vernā made the case that law firms’ business and cultural models are white, male, straight and Western in their orientation; I think she’s right. The fact that there’s a commonly employed compensation system called “eat what you kill” tells you how lawyers like to imagine and narrate the law firm experience. If you had set out to design a compensation and promotion system specifically to reduce the number of women in firms, you could scarcely have done better than the billable hour regime. And male or female, law firm partners are near-universally white, and they continuously hire, mentor, associate with and promote people who look like them.

The results of this culture of exclusion are depressingly clear. Women make up half of law school graduating classes, but only one-third of the practising bar and less than one-fifth of law firm partners. In terms of diversity, 25% of US doctors are from minority groups, along with 21% of auditors and accountants and 18% of professors; for lawyers, the number is 11 percent. I don’t have statistics for Canada or the UK, but I imagine they’re no better and they might well be worse.

It seems to me there are three elements involved in dealing with diversity in the practice of law. The first is to establish that it doesn’t really exist, and I don’t think anyone has a strong argument against that. The second is to establish that its absence is a problem, one that the profession should care enough about to address. And the third is to actually address it and solve it. Continue Reading

NALP: the future of law firms

by with 1 Comment

Posted in: Big Firms, Clients, Innovation, Talent

Back from a lengthy trip, I have a lot of catch-up blogging to do. Just to get the ball rolling, here are my speaking notes from last Friday’s plenary session at the NALP Annual Education Conference in Toronto, in case they’re of interest.

I was honoured to be part of a distinguished panel of speakers, moderated by Ida Abbott and including Ron Friedmann, Rick Matasar, Tim McManus and Vernā Myers, on the future of law firms. I’ll pick up on a few of the points raised during the wide-ranging 90-minute plenary later on, but for now, here’s what I prepared in advance: Continue Reading

The seven-year law degree

by with 6 Comments

Posted in: Big Firms, Law School, New Lawyers

There are a couple of well-known phenomena about legal careers that, when juxtaposed, might give us better insight into how lawyers enter the profession.

The first is the common assumption that a law degree is far easier postgraduate degree to obtain than, say, a medical degree or Ph.D. Would-be doctors spend four years in medical school, which is extremely hard to get into and not exactly easy to graduate from; thereafter, they spend anywhere from three to eight years in internship and residency. To acquire a Ph.D, you need a Master’s (usually two years) and a Doctorate, which is at least another four, and you need to be extraordinarily bright. Other degrees with various specializations can be equally daunting.

Law, on the other hand, requires just three years of law school, and either the passage of a one-time Bar exam (e.g., the U.S.) or the completion of a one-year apprenticeship period (e.g., Canada). Moreover, the failure rate in law school is far lower than in other postgraduate programs. Once you’re admitted, you’re almost guaranteed to graduate and very likely to be called to the Bar soon thereafter, at which point you have the means to stay employed pretty much as long as you want.

Depending on the region where you work, your employer, what kind of law you practise, how good you are at it, and how attached you are to a well-rounded life outside the work sphere, you’ll then generate an annual income ranging anywhere from $30,000 up to millions of dollars. Even if your debt load leaving school is upwards of $100,000, that’s a pretty fine return on investment and a fairly low-risk and low-demand route into what is still a respected profession.

The second phenomenon is the disconnect and dissatisfaction experienced by many new law graduates during their first few years of practice, especially in large firms. A recent Hildebrandt study seriously questioned the perception that big-firm associates are an altogether miserable lot, but many of these lawyers nonetheless experience angst, unhappiness and disillusionment as they make the adjustment from law school and from the promises of flexible, family-friendly environments these firms increasingly make. Continue Reading

The culture-driven law firm

by with 5 Comments

Posted in: Big Firms, Leadership, Management, Talent

The era of the free-agent lawyer, and the law firm lateral hiring frenzy that it spawned, is drawing to a close. The rise of the culture-driven law firm is at hand.

It’s going to take me a while to explain how I got here. I’ll try to do this in two parts.

1. Followership in law firms

This all started when I came across a provocative article called “Leaders need followers: tips for team performance“ by Australasian legal consultancy FMRC Legal. The thrust of the article is that successful law firm management hinges on followership — lawyers’ ability and willingness to align their personal values and goals with those of the firm. I first came across “followership” in the law firm context in a 2005 blog post by Gerry Riskin, which was in turn expanded upon by Patrick J. Lamb shortly thereafter.

Here are some excerpts from these three insightful articles that I think sum up what they’re saying. Continue Reading