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Post #704 – Wednesday, May
is Your Firm’s Business Model?
This is a comment from Jeff Carr. Jeff is Vice President,
General Counsel and Secretary of FMC Technologies Inc. I think his thoughts
here are worth reflecting on:
“Let me take a minute of your time to describe the market
from my perspective (that of the true customer). The true gist is:
• “Big Law” or “Old Law” (aka a traditional law firm) is not
in the business of solving legal problems – it is in the business of billing hours
to solve legal problems.
• “New Law” (e.g., LPO’s, Axiom, Huron, etc.) is in the
business of billing lower cost hours to solve legal problems.
• “Enlightened Law” (e.g., Riverview, Valorem, etc) is in the
business of solving legal problems effectively and efficiently.
• “Next Law” is the business of preventing legal problems from
In-house counsel teams are uniquely situated to understand and
deliver on the prevention focus – precisely because that’s what a high
performance legal team does. The problem is that most in-house teams are just
as risk-averse as outside counsel and generally overwhelmed with reactive work.
As such, I think very few are actually focused on my vision of Next Law. The
most interesting thing about Next Law is that it co-exists with Big, Old and
New Law – as providers for reactive services when legal problems do arise – but
the focus of Next Law is on prevention and proactive law and therefore cost
reduction by limiting the incidents giving rise to the need for the high cost
remedial and reactive legal services. We’ll never eliminate fires and as such
will always need firefighters – but we can drastically reduce fire incidents
and therefore leverage the costs over fewer incidents. The truly interesting
thing is that I believe that large segments of the legal market are going
un-served today precisely because the cost of delivery of legal services is
prohibitively high. Many small and mid-size companies “go naked” and then when
they are embroiled in a legal issue, they have no recourse but to react – and
that means even higher costs.
If you wonder whether I have any basis for these views, let me
draw your attention to our track record from the time of our spin-off from FMC
Corp in 2001 until now: 2001 — $1.8B sales, $14.8 total legal spend; 2013 —
$7.5B sales, $9.8M total legal spend — and 7% average bonus to legal service
Unless you change how you provide legal services, you can’t get
metrics like those below in a world where law firm rates go up 10% a year, my
internal costs go up 5%-8% annually, the company has tripled in size, the
regulatory burden has grown significantly – while at the same time paying your
law firms more than they bill you!
Via la (R)evolution! I use that phrase because the legal
industry fights change and innovation at every turn – That said, whether
Revolution, Evolution or Foreverlution, I believe the tipping point has been
reached – it’s just that many of the players don’t see, or don’t want to see
the comet coming.”
What do you think?
Rant #703 – Tuesday May 13,
Inquiring Leaders Want To
As the story goes, it was a warm spring day in
Princeton, New Jersey. One Albert Einstein, who was then working at the Center
For Advanced Studies, was found hands clasped behind his back, pacing back and
forth, mumbling to himself incoherently. A bystander, curious to discover what
it was that Dr. Einstein was so obsessed with, moved discreetly to within
hearing range. Lost in thought, Einstein continued to repeat, “If I only had
the right question . . . If I only had the right question . . . ” To this great
thinker, the journey to understanding began not with solutions, but with
Today, our preoccupation with finding answers must not
obscure the importance of asking the right questions. In fact, average answers
to good questions, more often than not, yield better insights than astounding
answers to lousy questions.
Here are ten questions to clear out the cobwebs, jump-start your
creative thinking, tickle the brain, and hopefully, get you energized to take
Read my entire article as
posted on LinkedIn
Rant #702 – Tuesday, May 13,
Best Practices Aren’t Always
I was taken back the other day by an article wherein
the author, a law firm consultant, was promoting the concept of best practices. His proposition was that “the attaining of best practice can lead to a
competitive advantage in which true excellence becomes a winning competitive
formula.” It all sounded so compelling. He then suggested that professional
service firms should engage (obviously with this particular consultant) in a 'best
practice make-over' to concentrate on getting your firm to an improved
operational state. Doing a bit of research, I discovered that this idea
probably had its origins in a book entitled, “How to renovate your business:
the information best practice makeover that really works.” So get ready for
it. Here comes the newest consulting trend, best practice makeovers!
These days you hear a lot about the quest for best
practices in all areas. I have a biased view in that I think “best practices”
is one of today’s most overused terms. Anyone discussing what needs to be done
to improve some given situation will often use the term, as though to justify
the safety in taking action. So, what is it about the term, ‘best practices’
that makes it sound so persuasive, and yet why don’t they always seem to work
as well as some are suggesting?
I’ve had a few questions come to mind over the years that I
believe are worth considering . . .
Read my entire article as posted on LinkedIn.
Post #701 – Tuesday,
April 15, 2014
2014 Issue of International Review is Now Available
International Review is my 24-page glossy, printed magazine
distributed to over 1600 law firm chairs and managing partners throughout North
America. The articles in this issue
include The Seeds of Competitive
identifies 20 different US-based competitors that are growing and that your
partners should be aware of. Part of the
job of every firm leader is to neutralize complacency and so I’m hoping that
this article might be worth you passing around.
In our First 100 Days program (see:
introduce new firm leaders to the monumental task of taking the reins of
leading their firms. Firm
Leadership Is Not For Wimps! is an attempt to identify eight of the
more challenging truths to being an effective firm leader, and I’m grateful to
those who have provided valuable input into this piece (you know who you are –
and thank you).
Factors That Can impede Effective Firm Leader-COO Relationships had it’s origins in a Webinar that I was
privileged to conduct with John Michalik, retired executive director of the
international Association of Legal Administrators; while A Novel Approach To Compensation
grew out of an innovative ThinkTank event that I participated in earlier this
year, and Are You Getting The Minutes From Practice Group Meetings? is a
prescriptive article for every firm leader who has an interest in knowing what
their practice groups are really doing.
As always, I sincerely hope that you find some practical
ideas, tips and techniques here that you can put to use immediately.
Please send me your observations, critiques, comments and suggestions with
respect to any of these articles.
Click on the Cover to download your complimentary PDF
copy of the magazine.
Post #700 – Wednesday, April
Best Practices For Leadership
Drawing on lessons from Robert Dell of Latham and
Vincent Cino of Jackson Lewis, I had the privilege to co-author this column in
Forbes discussing best practices for leadership succession in law firms.
In it we identified the six steps to take if you are
the retiring firm leader and the five actions appropriate to the incoming firm
Post #699 – Tuesday, April 1, 2014
To Be A Better Version Of Yourself
I spotted a great
article authored by Marshall
Goldsmith. Marshall and I
both had contributions included in a book published a few years back, entitled In The Company of Leaders. In this piece, Marshall was talking about how
difficult it can be sometimes when you are trying to coach someone who is
A very wise leader
once told me that being coached is about being open to all possibilities. It is about being challenged “to be a better version of yourself.” It follows that one might ask, how do you
know when someone is coachable or not?
The harsh truth is
that maybe this particular lawyer is coachable, but just not coachable by
you! That is to say, it’s not the coaching
we resist. We are simply very discerning
about who we will welcome into
something as profoundly personal as coaching. When someone is attempting to
coach us we are usually thinking:
Does this person
truly care about me, my career, my challenges or are they going through the
motions simply because . . . it is part of their job description?
Can I trust this
individual to be candid with me but also empathetic to the situation or
circustances that I am dealing with?
Can this indicidual
serve as a good, objective sounding board and does this individual have some
valuable guidance to offer me?
Read my entire
article as posted on LinkedIn
Post #698 – Tuesday,
April 1, 2014
Scenarios For Economic Destruction
My economist buddy
sent me an e-mail yesterday posing an interesting economic scenario . . . as a
retaliation for US sanctions on Russia in the wake of the invasion of Ukraine,
Russia responds like this: Hackers attack the New York Stock Exchange and force
it to close indefinitely; the Russian government dumps its billions of US
Treasuries in the open market, causing interest rates to rise and crashing the
US real estate market. The banks go into turmoil as people panic and withdraw
their money. It would be a Russian
strike on the US, without firing a shot.
That was a scenario hedge fund manager, economist and author
Jim Rickards painted on the new era of financial warfare in a speech he
delivered to a gathering of economists yesterday. And if you think the Russian scenario is
far-fetched, Rickards pointed out that the US effectively did something similar
for real in Iran. It was only a few
years ago that the US government shut Iran out of the US dollar payments
system. This was in response to Iran's
The thrust of Rickards speech was whether the US dollar will
survive in its role as the reserve currency of the world and hold the current
system in place. It doesn't take too
much guesswork from the subtitle of his new book The Death of Money: The
Coming Collapse of the International Monetary System to see where he stands
on that front. Rickards made the point
that a major pillar of support for the US dollar is on wonky foundations: the
Saudi-US alliance. The deal's been
simple for over forty years. The Saudis
sell oil in US dollars only. The US
provides protection and security to the House of Saud. This deal was brokered between Henry Kissinger
and the Saudi royalty in the 1970's. But Rickards argues that
the Obama administration has moved to appoint Iran as the regional hegemon, and
this is regarded as a stab in the back by the Saudis, who may now move to align
with Russia and China.
Also, as best selling author of Currency Wars, Rickards is
now speaking bluntly about what he has labelled as the coming World War D. The D actually stands for two things.
The first is Devaluation.
The first cannon in
this war fired on September 27, 2010. On
that day Brazilian Finance Minister Guido Mantega became the first world leader
to use the words ‘currency war’. What did he
mean? Simply that countries are now using
a variety of means to devalue their currencies. They’re not doing it just for fun. They’re doing it to try and make their exports
more attractive and to bolster their ailing economies. Think of it as something akin to a retail war.
One shopping chain tries to
‘out-discount’ another. And it’s a race
to the bottom.
It’s called currency
devaluation. And everyone’s doing it —
Argentina, Brazil, Venezuela, South Africa, Turkey, Ukraine, Canada, China. And, of course, America. I know this is not a
breaking headline. ‘Currency War’ has
been in the news-cycle for several years now. What HASN’T been talked about is where
national governments are taking us with this tactic.
The second D stands for Global
Debt and to get what that means, you have a have a look at this
The blue line on the
chart shows the total size of the global debt securities market (basically
global government debt). It has now hit
ONE HUNDRED TRILLION DOLLARS, according to the Swiss-based Bank for
International Settlements (BIS). That mammoth debt
pile is now 140% the size of global economy. In 2007 it was 70%. It’s doubled. Now let’s just admit the obvious right now:
it’s impossible to grow out of that kind of debt. Not gonna happen! Nor will governments
solve this problem by ignoring it, which is what they’re doing now.
I am posting this on April 1st, but must assure you that
this is no April Fools joke. This all
could proffer serious consequences – most of which I don’t even fathom. But I will be following this carefully.
Post #697 – Tuesday, March 18, 2014
Assessing Your Worth As A Practice Leader
When we look in the
mirror we tend to have an overinflated view of what would be considered our
positive qualities and an underinflated view of our negative ones. There are a multitude of academic studies that
prove this. Researchers call it
“illusory superiority” and it’s a bias that shows up in a wide range of
personality, cognitive, performance, and other self-assessments.
Recently I was
sharing some data with a group of practice group leaders on the impact of
asking for feedback. The data shows a
strong correlation between asking for feedback and the overall effectiveness of
any leader. During our dicussion one of
the practice leaders asked if I might suggest four or five questions he could
ask his fellow partners to get a sense of how they were viewing his
Here are the sample questions
I recommended this leader pose:
• What do you see as my strengths and what value am I
currently adding to our practice group?
• What skills, behaviors or attributes do you think I need
to work on improving?
• What do you need from me that you are not currently
receiving in the way of coaching or assistance?
• Is there anything more that I could be doing to have you
feel that I have your best interest at heart?
• Do you feel comfortable bringing your professional and
personal problems to me? If not, why?
• What concerns or questions do you have for me that you’ve
been reluctant to mention?
The process of
asking others for feedback puts us in a position to listen carefully to the
feedback, ask questions, clarify the feedback, and then accept the feedback.
When was the last
time you formally asked your partners what value you were adding to your group?
Post #696 – Saturday, March
The Toxicity Of A Bad
heard this story the other day from the former office managing partner of an
AmLaw 50 firm and it probably sums up one of the primary causes of law firm
dissolutions over the past few years.
“A large law firm of
unsurpassed quality is not unlike a barrel of fine wine, where every partner is
a teaspoon of the prized libation. Every
teaspoon full makes a contribution and lends its qualities, and weaknesses, to
the whole. Let's do an experiment with wine and lawyers.
You stand beside two
barrels. One is filled with fine wine, the other is filled with sewage.
You then take a teaspoon
of the fine wine, and deposit it into the barrel of sewage. There is no
change. You still have one barrel of
fine wine, and one barrel of sewage.
However, reverse the
process. Now deposit a teaspoon of
sewage into the barrel of fine wine. There is a huge difference; you now
have two barrels of sewage.
Is it not so with law
Especially if you think
bringing on lawyers because of their prospects for bringing a lucrative book of
business with them is your highest priority, or that expanding internationally is
always a good idea because law firms have the leadership skills to handle what
all their partners are up to.”
I’m delighted to be
participating in a Webcast on the subject of lateral hiring. It is scheduled for March 12 at 12:00 noon
(Pacific) and hosted by LA Daily Journal (www.dailyjournal.com)
– California’s largest legal newspaprer.
I’ll be joined by Professor Bill Henderson (Indiana University Maurer
School of Law); Michael Roster (former managing partner of Morrison &
Foerster’s Los Angeles office); and Edwin Reeser (served on the executive
committees and as an office managing partner of firms ranging from 25 to over
800 lawyers in size).
Post #695 – Friday, February 14, 2014
Listening To The Client’s Voice
At our Compensation ThinkTank in New York we had the
privilege of welcoming two in-house counsel guests: Tom Trujillo, Director of
Operations for the Bank of America Legal Department and Steven Greenspan,
Associate GC at United Technologies Corporation. Tom instructs an outside counsel group of
about 1750 law firms while Steven deals with over 600. Their topic was “Client Priorities” and here
are a couple of highlights from our discussions:
• Firms need to appreciate that supply side concepts like
“process maps”, “staffing plans” and “lean project management” must be part of
your conversation when working with in-house legal departments. Clients are looking to see how firms will
utilize process improvements to enhance quality and reduce costs, while still
maintaining and perhaps enhancing their own profitability.
• During one discussion both Tom and Steven were asked, “How
many of the law firms that you deal with, proactively seek a formal meeting
with you to elicit your feedback on performance and satisfaction?” Tom responded
“2 firms” while Steven thought it might be maybe 4 to 6. (Yes,
please do go back and look at just how many outside law firms these two
gentlemen deal with!) They
proceeded to explain that many more of their outside law firms would claim that
they seek feedback simply because they might ask a question (“Ahh, so how are
we doing?”) in passing. But that is NOT
what these clients are looking to have their external advisors do. Taking it a step further, both of them spoke
to wanting to be interviewed by senior lawyers from their firms who are NOT
involved with the work, so that they can offer more candid feedback.
• Our in-house guests warned the audience that it was
starting to become more common for firms to have to deal with Procurement
Departments that unashamedly ask law firms to disclose their margins on the
work that they are doing for the client – and obviously want to share in those
margins. One of the problems firms have
in answering that question, is in how firms interrupt margin since they don’t
include the cost of the partner in any calculation. It is a bit like a corporation not including
the costs of the president and senior executives of the company and then
claiming that they operate with a 25% margin rather than the 5% that is reported
according to accepted accounting standards.
• One question from the audience caught our panelists
off-guard and that was whether either or both of their corporations were
shifting legal work, specifically over $5 million/annually, to “disruptors” (like
Axiom, outsourcing companies, and other non-traditional service providers)? Both Tom and Steven answered to the
affirmative and responded that the legal work going to these providers was
• Finally, Tom and Steven shared three law firm metrics that
undermine inside-outside relationships: high turnover, high profit-per-partner
and productivity hours-based bonuses – all because they put the firm’s interest
ahead of the clients. They also explained that that they believed that certain firm
compensation systems undermine professionals in properly serving their clients
– “eat-what-you-kill,” highly formula based, and systems that largely look at
billable hours as the primary determinant of rewards. There was some further discussion as to
whether having open compensation systems was for the best when one of my fellow
speakers, a notable consultant to the accounting profession informed us all
that 90% of the Top 100 Accounting Firms have all moved to closed systems.
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