Staff cuts and short-term thinking

by with 9 Comments

Posted in: Management, Recession, Research

That sound you hear is the rapidly accelerating crash of dominoes. The mainstream legal media is tracking, body blow by body blow, the shocking personnel reductions taking place at law firms throughout the US and UK. One after another, firms are laying off employees, and it seems each firm’s announcement gives three others the confidence to go ahead and announce their own. I’ll be exploring this in greater depth in a post early next week, but for now, I wanted to point out an interesting subtext in all these cuts: the extraordinarily high rate of staff-alone layoffs.

It’s not just that firms firing lawyers are also firing two to three times as many non-lawyers; an unusual number of firms are firing only staff. Here are just some of the staff-alone cuts reported in the last couple of months: 9 at Squire Sanders, 14 at Ice Miller, 20 at Moore & Van Allen, up to 25 at Buchanan Ingersoll, 30 at Fish & Richardson, 36 at Fenwick & West, 38 at Cassels Brock & Blackwell, 40 at Goulston & Storrs, 60 at Edwards Angell Palmer & Dodge, 65 at Akin Gump, 72 at Dechert, and an astonishing 106 at Ropes & Gray and 115 at Reed Smith. Remember, these aren’t part and parcel of bigger, organization-wide cuts — each of these firms let go of staff, but no lawyers.

The official reason for these layoffs, of course, is the recession, though the actual causes and motivations will vary from firm to firm. But a staff cut without a corresponding lawyer reduction is a little odd. If a firm chops 30 or 40 associates, you expect to see another 60 to 90 staff go with them, on the theory that these support staff no longer have lawyers to support. So what does it mean when a firm jettisons scores of staff members but leaves the lawyers untouched? Beyond the well-known fact that many firms view and treat their staff the same way golf and country clubs do?

One possibility is that firms have to cut fixed personnel expenses somewhere, but they fear the recruitment black eye that comes from associate layoffs and the seismic impact of partner cuts, so it’s the secretaries, paralegals, IT and marketing people who get the heave. Another is that these firms were overstaffed to begin with, not an unreasonable guess — everyone was living large in the recent boom times, and if a one-to-one ratio of lawyers to assistants made some of the fee earners happy, it was all worthwhile. A darker possibility — that associates are keeping the administrative tasks to themselves to maintain their billable hour totals, depriving assistants of work — is all too likely.

It’s also very likely that in many of these cases, the firms either don’t realize or don’t care about the negative effects of deep, across-the-board staff cuts. Aside from the damage to morale, chopping people in key areas like marketing is just foolish, a reflection of the belief that marketing is a cost center, not an essential element of the firm’s business model. Ron Friedmann rightly points out, in two recent posts, that indiscriminate staff cuts reflect the fact that the “firm has no idea what support is really required. Evenly distributed cuts imply that rational decisions were made in the past, that support needs remain constant over time in spite of the march of technology, and that wild gyrations in practice group revenue have no impact on support needs.”

It looks like many firms are missing an opportunity here to carefully and intelligently review their support needs and re-engineer both their personnel and their infrastructure investment accordingly. Simply cutting staff jobs provides only a short-term bottom-line assist while creating many other short- and long-term problems, whereas a more creative approach could both save money and improve the firm’s operations at the same time. Here are just a few possibilities:

  • Equip every lawyer with voice-recognition software, so that memos and messages need no longer be dictated or even typed out. Ditto for real-time docketing and billing programs.
  • Get lawyers blogging about their areas of practice, the release of relevant decisions, changes to applicable laws, and more — instruct them in 21st-century personal marketing.
  • Outsource or offshore functions like human resources, IT or even research and other quasi-legal tasks — firms have already done this, from West Virginia to India.
  • Then, save jobs through upsizing: convert legal secretaries to workflow managers, specialize assistants by assigning them to practice groups, train marketers to conduct client meetings and do cross-selling — basically, give your non-lawyer employees the chance to show what else and what more they can do for you, rather than automatically putting them first in line on the chopping block.

There’s a better way to cut costs than simply throwing staff overboard while keeping lawyers around — all it requires is a little more ingenuity, far-sightedness and courage than law firms are used to showing. And as 2009 unfolds, we’re going to see all three of these traits evolve from nice-to-haves to full-scale survival skills.

The perils of squandering talent

by with 2 Comments

Posted in: Law School, Management, Talent

Malcolm Gladwell has written a new book about the factors that most influence the likelihood that you’ll achieve (traditionally defined) career success. Outliers: The Story of Success posits that much of what affects our success is out of our control, and that arbitrary or even trivial factors play a disproportionate role in what we end up doing and how well we do it. As part of the book promotion tour, he spoke with the Globe & Mail the other day and made an observation that I think resonates deeply with the legal profession.

Giving an example of arbitrary success factors, Gladwell noted that a huge percentage of professional hockey players have birthdays early in the year. That’s because the standard cutoff date for hockey programs is January 1, so when all-star teams and other squads are recruited, the players who seem most talented are invariably picked — but in fact, they only seem more talented because they’re older and more physically capable. But then these players get special attention, more coaching, more opportunities, and by the time they hit their teens, they actually are more talented. The same applies in school — Jan. 1 cutoffs mean kids born later in the year are younger and therefore farther back on the learning curve. His point is that arbitrary dividing lines can have huge unintended consequences.

Then the interviewer asked Gladwell, at the end of their conversation, why anyone should care enough about this to actually do anything about it. His reply made me sit up straight:

Because we squander talent. Even in a country like Canada, where hockey is a priority, an obsession, we’re squandering a huge amount of hockey talent without realizing it. We could have twice as many star players if we just changed the institutional rules around finding talent. To me, that’s such a powerful lesson. Because it just says, look, in a simple area like hockey, in a country that cares more about it than almost anything else, if you’re still squandering 50 per cent of your ability, how much more are we squandering everywhere else?

I’d go further and say that squandering talent actually has two components: failing to realize the potential universe of talent at your disposal, and then failing to maximize the talent that you do choose. When you apply that analysis to talent identification, intake and management in the law, you come to realize just how arbitrary and undisciplined we’ve been. Look at it in these terms: Continue Reading

Law firm capital and the financial crisis

by with 6 Comments

Posted in: Management

I don’t normally link to articles in National, the magazine I edit — this blog is my personal project and doesn’t necessarily represent my employer’s views, and so I try to keep Law21 and CBA in watertight compartments. But I’m making an exception for our September 2008 cover story “Who owns the firm?“, which looks at non-lawyer investment in and ownership of law firms, something that’s already underway in Australia and that’s coming to the UK within the next few years.

I provide the link partly because I think it’s a pretty good article — but mostly because it’s turned out to be awfully timely as well, in two respects. For one thing, the UK reform process is accelerating. The Solicitors Regulation Authority is fast-tracking plans to allow up to 25% non-lawyer partnership in UK law firms. “The timetable,” LegalWeek reports, “would put the SRA ahead of schedule, allowing it to fast-track applications when the regulations come into force, which is anticipated in March 2009.”

(The article is a little unclear on an important point. It refers to the SRA accepting applications for new Legal Disciplinary Partnerships (LDPs) — these are operations that comprise solicitors, barristers, licensed conveyancers and other legal professionals who up till now have not been permitted to form partnerships in the UK. But the proposal to allow non-lawyers to practise law in partnership with lawyers, a far more radical notion, envisions something called Alternative Business Structures (ABS). This article in Managing Partner magazine explains the difference very well.)

So the UK reform process is gathering speed. But the other reason why National‘s cover story is timely lies in the front pages of your newspaper over the past week — the financial crisis besetting the US (and increasingly, the world) economy. Continue Reading

An overlooked recruitment opportunity

by with 1 Comment

Posted in: Management, Talent

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.

The questionable future of partners and associates

by with 2 Comments

Posted in: Management, Talent

The evidence is growing that neither “partner” nor “associate” is going to be a meaningful term in law firms of the future. Both of these hallowed pillars of law firms’ talent structure are starting to be used more as means to an end rather than as ends in themselves.

In terms of partners, consider this article from The Lawyer about firms trying to expand overseas but having difficulty persuading lawyers to transfer to the new offices (especially in Dubai). One tactic firms are employing is to offer lawyers who accept the foreign posting the opportunity to make partner much more quickly than they normally would. Think about that one for a moment.

Partnership, which was once considered the ultimate law firm goal, is being reduced to an incentive the firm dangles in order to get what it really wants — boots on the ground in fast-growing locations worldwide. It’s been a while since admittance to partnership actually was a genuine endorsement of a lawyer’s skills and professionalism through invitation to an exclusive, tight-knit community with common goals. But it’s still surprising to see the fast track to partnership deployed as just another behavioural incentive — especially since partnership really doesn’t turn so many associates’ cranks nowadays.

To get a sense of how firms view those associates, take a look at how the chair of Simpson Thacher responded to a rumour that his firm was culling 30 associates through poor midyear reviews, an attrition tactic not unknown to large firms: “This is something that was made up by that rag in the U.K., it’s just complete nonsense” — the rag in question being The Lawyer, not a newspaper normally associated with Fleet Street standards. Continue Reading

Associates and the bad table

by with 3 Comments

Posted in: Big Firms, Management, Talent

The opening words to a sporty 60-second video montage at Cadwalader’s US student recruitment site are: “Make no mistake about it. A career at Cadwalader is not for the faint of heart.” So it would seem, following news that the firm cut 96 lawyers on Thursday, an astounding purge that surpasses Sonnenschein Nath & Rosenthal‘s recent 37-lawyer, 100-staff cut, and comes several months after Cadwalader’s January move to drop 35 lawyers.

The most recent pink slips were handed out largely in the firm’s formerly high-flying capital markets and global finance groups, which have been brought low by the real estate finance and securitization market’s struggles, and were given almost entirely to associates.There’s no small amount of schadenfruede about Cadawalader’s position to be found in the blawgosphere at the moment, much of it based on this February 2007 article in the New York Law Journal, with the built-for-irony title: “Does the future belong to Cadwalader?”

But “layoffs” (read: you’re fired, but it’s not your fault) are likely to become more frequent at the largest firms (DLA Piper announced a few in London this morning) for the totally understandable reason that the really hot parts of the economy that powered these firms over the last few years have gone really cold.

What’s funny, though, is that during these hot streaks, when associates were so hard to find and cost so much, I quite clearly remember many law firms ruing their decisions to chop associates the last time an overheated economy tanked. All those associates we fired, they said, shaking their heads, if we’d held on to them, would be able to help us now. Perfectly right, of course — and yet, now that the short-term pain of lower profits looms again, the long-term gain of associate investment apparently becomes hard to remember.

Coincidentally, today also saw the release of the American Lawyer‘s midlevel associate survey, which paints a bleak but familiar picture of associates’ waning interest in partnership or indeed any long-term law firm goals. Interestingly, though, the fear of layoffs hasn’t much to do with this, nor do issues of salary or even “work-life balance” (a term I intend to put “in quotes” until it goes away). What’s driving associates away from firms is that the work stinks. Continue Reading

The other talent war

by with 1 Comment

Posted in: Management, Talent

Boston-based Goodwin Procter seems to be one of the more innovative and forward-looking firms out there (how many law firms have not one, but two people blogging on knowledge management?). They solidified that reputation earlier this week by announcing the appointment of a director of professional development and training for professional staff (HT to Legal Blog Watch). Jamie Krulewitz’s job, evidently the first of its type, is to oversee the professional development and training of the firm’s administrative and secretarial staff.

This is self-evidently a good move, because everyone in law firms needs training and development, not just the lawyers (and many firms don’t even provide lawyer T&D). Goodwin Procter recognizes that if it wants its lawyers to operate at their very best, it needs to ensure they can count on equally top-notch staff support. This is consistent with the firm’s refreshing approach to its website personnel listings which, again unlike many others, groups lawyers and non-lawyers together as both “professionals” and “people.”

What’s interesting, though, is to consider that the firm went to the trouble of a press release and announcement for a “simple” staff hire. Firms hire non-lawyer professionals all the time without any public notice, and I’m sure Goodwin Procter normally is no exception. Probably this was simply a matter of endorsing the new person and boosting her morale by giving her a high-profile welcome, consistent with what appears to be the firm’s staff-positive culture.

But try this exercise: read the announcement again, this time not as a press release, but as if it were a recruitment piece for non-lawyer professional staff: Continue Reading

Core competence: 6 new skills now required of lawyers

by with 37 Comments

Posted in: Clients, Collaboration, Competition, Management, New Lawyers

Up till now, the necessary and sufficient skill set for lawyers has looked something like this (in alphabetical order):

  • Analytical ability
  • Attention to detail
  • Logical reasoning
  • Persuasiveness
  • Sound judgment
  • Writing ability (okay, that one’s apparently optional for some)

This list doesn’t include such characteristics as knowledge of the law, courtroom presence, or integrity — these aren’t “skills,” per se, so much as information one acquires or basic elements of one’s character. Even innovation, which I prize so highly, is first and foremost an attitude and willingness to think and act differently.

Rather, I’m concerned here with actual skill: a ready proficiency or applied ability acquired and developed through training and experience. Your degree of character, diligence and intelligence are innate characteristics; skills are what you acquire through their application. If you possessed these six skills in sufficient abundance, you were fully qualified to practise law.

Well, not anymore. From this point onwards, while these skills remain necessary, they’re no longer sufficient: they constitute only half of the set necessary to practise law competently, effectively and competitively. Here’s the new six-pack, the other half of tomorrow’s — no, today’s — minimum skills kit for lawyers (again in alphabetical order). Continue Reading

Don’t be stupid

by with 2 Comments

Posted in: Management

Google is of course famous for choosing the motto “Don’t be evil.” A lot of law firms could do themselves a favour if they adopted a slight variant: “Don’t be stupid.”

Law firms love to roll out big announcements of one kind or another, this or that latest success or significant hire. But it’s in the countless little things, the daily offences against sensibility that add up to the institutional bad habits of a lifetime, where firms undercut all the progress they could and should be making. Too many law firms are their own worst enemies.

You see this in partnerships that won’t enforce the rules against uncooperative or alienating partners who happen to bring in a lot of revenue. You see it in senior lawyers who consistently hoard the best work and the most client contact, driving juniors first to frustration and then to competitors. You see it in firms that know perfectly well that women lawyers leave because the partnership track conflicts irreconcilably with their priorities, yet refuse to change an iota of the process. You see it in firms that unfailingly prioritize short-term profits over long-term interests, and more besides.

You see it especially in hiring decisions, as Alex Novarese put it bluntly at Legalweek:

In any one year in the City you’ll see a good handful of senior hires that are breathtakingly ill-conceived. ‘Bad’ in these cases can mean … good lawyers with no cultural fit with their new employer or being the wrong personality type for the task at hand.… [But] there’s also a rich seam of chancers, time-wasters, burn-outs and the plain bored on the transfer market. And within this circle there’s a hardened sub-group that have such serious problems that it’s a miracle they made it past the first lunch or interview, let alone got a lucrative new equity partnership. These are the cases in which the failure is not to do with lack of due diligence, more a complete collapse of common sense.

And you see it in a story I heard this morning: at an established law firm not in a galaxy far, far away, a 71-year-old partner dies suddenly, to the shock and consternation of everyone. Particularly hard hit is his long-time secretary, who of course accompanies the late lawyer’s other colleagues to his funeral last Friday. The following Monday, the secretary arrives at the office and is told she’s being laid off. I leave to your imagination the dazzling impact this doubtless will have had on firm morale.

This blog always tries to provide solutions to any problem it raises. Here, there’s not much I can say beyond, run your firm according to the minimum standards of any self-respecting business. Be fair towards everyone, reward good behaviour, hire the right people, think about tomorrow, and try not to fire people after their boss dies. Don’t be stupid.

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