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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.
Post #694 – February 3, 2014
The Compensation Impasse
At our Compensation ThinkTank last week in New York with
some 50 firm leaders, one of my fellow speakers spoke eloquently and presented
insightful statistics on the degree of excess capacity, stagnant demand and
suicidal pricing pressures that firms are currently facing. At the conclusion of his talk he offered “a
five-step program for your partners.”
His five steps consisted of:
• Denial: Snap out of it; understand the world has
changed. We’re not all going back to
• Anger: Is fruitless.
Your clients have done nothing wrong.
• Bargaining: With the managing partner, the compensation
committee, and your friendly local headhunter will get you nowhere;
• Depression: Let us
know when you feel like behaving as an adult again; and
• Acceptance: You’ve had an insanely great 25-year run, how
about a little gratitude?
When the request for questions arose, I could not contain
myself from offering an observation:
These five steps all assume one thing – that when dealing with your
partners on money issues, you are dealing with RATIONAL people! I would respectfully submit that that may NOT
be the case.
Exhibit One. At a
time when many firms have come off a year of flat revenues (at best) and fairly
flat profitability, one of the common stories that I’m hearing from managing
partners is about having to confront the partner with the big book of business
who wants more money this year. When
informed that the firm’s revenues and profits are flat and indeed that even
this partner’s billings and performance was on only par with last year, the
response the firm leader gets is that the partner still feels they deserve
more. When asked why they feel that way
given the statistics, the demanding partner informs you that their book of
business is obviously worth even more
to the firm now than it was last year.
Conventional wisdom, as well as economic theory, tells us that the more
of something we have, the less of it we want . . . but that is not the case
with money! According to some brand new
research released in January by Jeffrey Pfeffer (professor of organizational
behavior at Stanford’s Business School), money earned through our individual
labors is more important to us than money that comes from other sources like
investments. And the more money paid for
each hour of work, the more important that money becomes. According to Jeffrey’s research paper, “When Does Money Make Money More Important”
money is like an addictive substance in that it raises the bar and leaves
people always wanting more. We generally
believe that our compensation communicates our self-worth. The higher the compensation, the more importance the person places on
Now I don’t know what the answer is and we certainly did not
get any magic bullets from either the five step suggestion above or from any of
the other discussions during the day, but it would seem that leaders who focus
on money as THE reward are going to have to give more and more of it to have
any motivational effect.
What do you think?
Rant #693 – January 22, 2014
How Important Is Leadership In Law Firms?
I recently received a
research report from the folks at Service Performance Insight (SPI),
a global research and training organization, entitled “Just How Important is Leadership in the Success of Professional
Service Firms?” For the past seven
years SPI has been analyzing leadership metrics, across a number of
professions, in their annual benchmarking initiatives. They ask a number of questions, which are
subjective in nature, yet provide insight into the importance of something as
difficult to measure as leadership.
The questions include the degree to which:
• the firm’s strategic direction is clearly communicated and
• partners have confidence in the firm’s leadership;
• it is relatively easy to
get things done within the firm;
• leadership communicates
• leadership embraces change
and is nimble and flexible’
• leadership focuses on
innovation and is able to take advantage of changing market conditions; and
• everyone has confidence in
the future of the firm.
The clear result of their
seven years of research is that firms with strong leadership – those scoring
highest in answering their questions (on a 1 to 5 scale) evidence far stronger
results in areas like: higher revenue growth, client service efficiency, and
percentage of new business derived from new clients, among other key
performance indicators. In other words,
firms with leaders who truly lead their firms, with higher levels of
communication and collaboration, grow their organizations at a much higher rate
than those lacking these qualities.
Now this research, to the
best of my knowledge, measures leadership in consulting, engineering and other
professional service firms, but does not include any law firms. In law firms, we seem to have a different
mind-set towards how important leadership really is. That mindset was on display this past week
within two published news articles.
First there was the
Citibank/HBR 2014 Client Advisory, which provided a commentary under the title:
The Leadership Challenge. According to this report, “One
development which gives us concern is that some of the newer breed of leaders
continue to maintain busy, full time practices. In this scenario, their clients’ needs are
likely to take priority, to the detriment of the management of the firm. If we could see any change, it would be that
firms recognize that to be effective, the firm leader is best performed as a
full time role.” My own surveys have
shown that there is a significant reduction in the number of full-time firm
leaders since 2004, with many of the new incumbents looking to maintain a minor
practice (minimum of 500 to 1200 hours) that they can go back to when their
At the extreme other end of
the spectrum is an AmLaw Daily report, last week, on the defection of a couple
of practice group leaders at Dorsey & Whitney. In any law firm your practice groups
constitute the fundamental underpinnings of your organization. I have long joked with managing partners that
what you are managing is not one homogenous organization, but rather a
portfolio of very different businesses.
So, when any of your business unit leaders depart, especially if they
are going to a competitive firm, it is a pretty significant event.
about the losses, Dorsey managing partner downplayed their impact by saying,
“We have more than 60 practice groups here, so we give out a lot of titles.”
a bit of research I find that there are 248 partners at Dorsey, but not sure
how many of those are equity partners.
Looking to my latest 2014 issue of the Yellow Book I see entries of 40
practice groups - so maybe only two-thirds of all of their groups. But 26 of those groups (65%) have co-chairs
(and one with three co-chairs) therefore providing for a further listing of 67
practice group leaders. Projecting these
numbers out, one can assume that with “more than 60 practice groups” over 100
of the 248 partners at Dorsey are in practice leadership positions. But wait, that’s not all! Then there is the firm management committee,
an elected board, and we must not forget the 13 office managing partners. It looks like the majority of partners at
Dorsey are all in some kind of leadership position . . . which leaves us only to wonder
who there is left that is being led.
How important is leadership
in law firms? I’ll let you decide.
Post #692 – Friday, January 10, 2014
What Do You Know In Your Heart?
In a recent email exchange amongst a group of firm leaders,
GCs and other colleagues talking about the challenges ahead in 2014, my old friend Richard Susskind offered this observation:
This is what the leaders in top law firms know in their
• the volume of price insensitive work (where the fee is not
an issue) is reducing steadily;
• the price insensitive work that remains will be
• there are new players in the market, who are making
headway at the low end and are hungry to move up;
• the laundry bills in BigLaw are certainly going up because
the party will soon be over, but
. . . not that soon because law firm leaders can rely on most of their clients
not to push them too hard;
• given the still modest pace of change, the revolution need
not happen on their watch so, most GCs remain inexplicably supine; and
• most managing partners are trying to hold out until
retirement before all this stuff engulfs them.
What do you think?
Post #691 – Saturday, December
The Irony of Predicting
I’m always amused by the numerous
forecasts offered at this time of the year by various journalists, pundits and legal
consultants who feel compelled to weigh-in on what they think the coming year’s trends
will be and how they are likely to impact our profession.
For example, a story
appeared last week in The Triangle Business Journal entitled, “Experts Predict
Top 2014 Trends For Law Firms.” It
begins, “Alternative billing arrangements, R&D and lateral hiring will be
among the top law firm trends for 2014, according to the experts at legal
research firm LexisNexis.”
Now I’m not sure what you mean when you use
the word trend, but I tend to think of something that is just “beginning" to
show itself as a gradual change or development capable of producing some
particular result. If that accurately
captures the definition of trend, then someone needs to inform the experts at
LexisNexis that alternative billing arrangements became a trend with the
publishing of Beyond The Billable Hour: An anthology of alternative billing methods . .
. in (wait
for it) . . . 1989!
Anyway, as coincidences curiously happen, I was clearing out
some old papers and came across the outline to a presentation I delivered on
legal trends to a meeting of the ABA’s Law Practice Management Section. In this hour-long presentation I identified
eight major trends and then went into some detail on each, as to why they were
important and the implications for law firms.
The eight major trends I identified were:
1. Firms will
learn to stop promoting what it is that they have to sell and start giving
client what they’re looking to buy. (I was referring primarily to client’s wanting more
specialized industry knowledge)
2. By the end of the decade 33 to 50% of most
firms revenues will come from providing services that they do not currently
provide. (I was making the case that with the pace of change the
marketplace was experiencing combined with the challenge for firms to continue
growing, more firms would focus their efforts on identifying and dominating
lucrative micro-market niches)
3. Creating a
sustainable competitive advantage for the individual lawyer will depend upon
continually building skills. (My premise here was to have lawyers continually assess
whether they are learning any new skills that would make them more valuable to
their clients or simply spending their days in the office just doing the same
clients will care only about the total cost of a legal transaction – and not
about rates, hours, the geographic location of the service provider or
alternative billing procedures. (I had the audacity to suggest that the balance of power was
shifting to legal buyers)
5. The quiet revolt
against the costs of litigation will see business disputes largely adjudicated
through the use of advanced technology, the application of artificial
intelligence and mandated mediation.
6. In future
litigation clients will be more demanding of their lawyers that they share
proportionately in the downsides of a client’s results, just as they have
traditionally shared in the upside.
will become ever more intense – from in-house sources, from technology-based
self-help programs and from accounting and consulting firms offering substitute
8. Issues of
growth, individual lawyer motivation, profitability and practice development
will coincide with building strong practice groups and strong practice group
Now how many of those trends sound somewhat current?
You see, what caught my attention as I glanced through these
notes was the year . . . 1993!
Post #690 – Tuesday,
December 17, 2013
often asked about my consulting practice, what kinds of assignments I get
called in on, for what sized firms; what I’m currently researching and writing
about, and just generally how I spend my professional time. I looked back
over my various activities during this past year. With some of these
items (like clients served) activity is not a sufficient measure; results and
the client’s satisfaction are really what matters (and to that end, you can
find numerous client testimonials and commentary throughout this web
site). But for purposes of looking at where one’s time is invested, here
is what 2013 looked like:
/ FIRMS SERVED
Nature of Assignments:
developing / implementing strategic plans
governance and leadership issues
6% client relations and marketing projects
Firm Size Range:
firms of over 500 attorneys
firms of 300 to 500 attorneys
firms of 100 to 300 attorneys
6% corporate legal departments
Participated in 5 Workshops & MasterClasses
Chair & Presenter – Practice Management 2.0 Conference (September in
– Practice Group Leaders Workshop (January in San Francisco, June in New York &
November in Atlanta)
– First 100
Days Masterclass (August in Chicago)
Authored or Contributed to 26 Articles in Publications including:
Lawyer Magazine / AmLaw Daily
The Business Magazine for Lawyers (Canada)
360 – Legal Industry News
Angeles and San Francisco Daily Journal
Counsel – Legal Practice and Management Report
– Cooperative Legal Weblawg
Partner Magazine [UK]
Legal Intelligencer – Practice Column
For Success [UK}
Two new issues (Spring & Fall) of my International Review 24-page glossy magazine
were produced and distributed to 2000 firm leaders.
Contributed Articles and Materials to Four (4) New Books:
Chapter in Law Firm Strategies For The 21st Century (International Bar
Introduction for How To Engage Partners In The Firm’s Future - August Aquilla /
Robert Lees (Bay Street Group Publishing)
Chapter in Targeting Profitability: Strategies to Improve Law Firm Performance
Chapter in Practice Group Leadership for Lawyers (Ark Publishing)
Participated on Dr. Jim Hassett’s legal project management advisory board.
DOUBLED the size of my Linkedin site – Law Firm Leaders – to more than
250 members. Law Firm Leaders is the ONLY social networking site
exclusively for the chairs and managing partners of firms of over 100 lawyers
in size - with 62% representing leaders from firms of 100 to 300 lawyers; 16%
from firms of 300 to 500 lawyers and another 19% coming from firms of over 500
Received numerous “UNSOLICITED” LinkedIn Endorsements for my strategic planning
expertise from firm leaders and senior professionals from major firms
Hardy & Bacon
spite of the challenges we face in the world, I am extremely thankful for the
privilege of doing what I do. I might call this brief snapshot my Personal Annual Report.
To everyone: I want to say thank you for allowing me to serve and spend time with
you; for your confidence and your commitment.
To my valued clients: I look forward to being of service to you again
in the future.
To my colleagues and friends: thanks for being a gift in my life.
wish you and your families the Very Best for 2014.
Post #689 – Sunday, December 1, 2013
Join Our Compensation Think-Tank
On January 30th, I
will be joining old friends Mike Roster, co-chair of the ACC Value Challenge;
Professor Bill Henderson from Indiana University; Don Lents the Chairman of
Bryan Cave; writing collaborator Ed Reeser and numerous others in a
“Compensation Think-tank” – a forum for discussion and debate concerning ways
to adapt to the emerging procurement environment and design reward systems that
will attract and retain key lawyers while also incentivizing them to do more
with less and in ways that will accrue to the benefit of the larger
Does the average rank and file partner
understand that the years of ever-escalating compensation have come to an
end? How can firm management address the
pressure to deliver on unrealistic expectations? Of course many see the problem differently -
or don't see the problem at all. No
compensation system is perfect. But any
sound compensation system will remove impediments to good management and be
flexible enough to address the current and future strategic needs of the
How do we make sure that the culture of the
firm, perhaps the single most important component of a thriving organization,
is not only tolerant of change, but in fact complements and is reinforced by
For more information on attending a think-tank focused on aligning
compensation systems with current and future business realities and
the goals and objectives of your firm - go here Compensation [re]Design For Law Firms
Post #688 – Sunday, December
Watch Your Use of Jargon
corporate speak may make meetings seem amusing it can seriously undermine
effective communications. Reading an
excerpt from Flat Army: Creating a Connected and Engaged Organization by
Dan Pontefract over the weekend reminded me of how using jargon undermines a
person’s ability to lead.
out clichés and over-worn vernacular may give you the feeling as though you’re
effectively leading, but in reality it brands leaders as shallow and lacking
true leadership depth,” Mr. Pontefract said.
way of a few examples:
Certain terminology can spur unintended reactions. Continually harping about "getting your hours up" can send a message and drive behavior that you didn't mean to emphasize.
And, consider the numerous acronyms that some lawyers throw around. Those same
acronyms can undermine your communications effectiveness, especially when using
terms that your clients aren’t familiar with.
Meanwhile, from Glain Roberts-McCabe, founder and president of the Executive
Roundtable, the issue is less about jargon and more about juvenile word
choices, such as “my bad.” “Saying
‘oops, my bad’ when you’re in a leadership role makes you sound like an
adolescent and, depending on the severity of the situation, can make you look
like you’re blowing it off with a shrug.
Cutesy phrases don’t make you sound strategic.
Post #687 – Monday, November
Leadership Succession Done
In early 2007 I initiated a
survey and asked
firm leaders to reflect upon the various Managing Partners that they had met, observed and / or read about, from across the country,
and report back their answer to this question: “Aside from your own law firm,
please tell me the name of that law firm Managing Partner / Chair / CEO you most admire for their management
/ leadership competence?”
Far and away the most
admired law firm leader was Robert M. Dell, Chair and Managing Partner at
Latham & Watkins. The announcement
this past week that Bob would be retiring after 20 years as Latham’s firm
leader reflects a loss that will not be easy to fill. That said, the steps the firm is taking should
serve as a role model for any firm that takes management and leadership
Let’s take a look at just a
few of the steps that Latham’s is doing right:
• Dell gave the firm over 13
months advanced notice that he would be stepping down
• To oversee the
identification and election process, Latham has appointed a succession
committee that consists of a diverse group of partners from a variety of the
firm's offices and practice groups.
• Once the new managing
partner is elected, Dell will work with the individual for about 6 months to
help ensure a smooth transition.
• Following this
transition period Dell plans to leave the firm in order to “get out of the way" of
whoever succeeds him. "When a new
person is coming in, following a person who has been doing it for two decades,
I think that new person deserves a lot of space," he says. "So, my
view is it's best for me to retire and to let that person create his own
successes, or her own."
Now contrast this example
with the one reported at Reed Smith. On
October 5th, the firm announced that their Global Managing Partner of 13 years,
Gregory Jordan was leaving (immediately) to become executive VP and GC at PNC
Financial Services. As a replacement, Sandy
Thomas, the firm’s Litigation Department Chair, was anointed (with no
opportunity to deal with his personal practice or be properly oriented into a
job of this magnitude) to take over. According
to the media spin . . . Besides being an "exciting opportunity" for him to join
PNC's leadership team, Mr. Jordan said the time was right to hand over the top
job at the law firm to Mr. Thomas. Asked
how he feels transitioning from his role at the top of Reed Smith to be part of
a team of executives at PNC, Jordan said, "I feel great about
Now think about you
personal investment portfolio. Imagine
the corporation in which you hold the largest number of shares suddenly
announcing that their CEO was fleeing the post.
As an owner, stakeholder and investor - Would that he a “buy” signal for
you or a “sell” signal?
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