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Post #445 – Monday, February 1, 2010
The Question of Whether to Focus On Core Practices
In March 2008, together with Baker & Daniels Chair Emeritus Brian K. Burke, I co-founded what is now known as The LAB (the Managing Partner Leadership Advisory Board) – a forum designed to provide recently appointed managing partners with a source for obtaining pragmatic advice on their leadership questions and critical burning issues. The formation of this group was the result of suggestions made during our bi-annual First 100 Days master class for new managing partners and has proven to be a valuable resource for new leaders.
Here is the latest question in a series of different queries that The LAB members have now responded to:
As managing partner I believe that this is an important time for our firm to assess our strengths and strategically choose those practices for which we want to be known. There are three practice groups that I’ve identified as our best prospects for the future – for our competitive market position and for the firm’s profitable growth. These would be the core practices in which I would envision that we invest the majority of our time and resources to build in 2010. The question (that I would sincerely appreciate the LAB’s advice on) then becomes how do I sell this internally without causing certain partners (and staff) to feel that they are second-class citizens or incite a palace revolt?
Read: The Question of Whether to Focus On Core Practices 
 An excerpt of this article, entitled "Support System" appears in the February 2010 issue of American Lawyer magazine.
LAB responses derive from its members' many years' experience as law firm leaders. Along with Brian and I, the LAB is comprised of the following distinguished current and former law firm leaders: Angelo Arcadipane (Dickstein Shapiro LLP); John Bouma (Snell & Wilmer LLP); Ben F. Johnson, III (Alston & Bird LLP); Keith B. Simmons (Bass Berry & Sims PLC); William J. Strickland (McGuire Woods LLP); Harry P. Trueheart, III (Nixon Peabody LLP); R. Thomas Stanton (Squire Sanders); and Robert M. Granatstein (Blake Cassels and Graydon).
Post #444 – Wednesday, January 20, 2010
Looking Behind The Numbers
In discussion with my colleague, Ed Reeser, this morning, we were reviewing an interesting article in today’s AmLaw Daily wherein Cadwalader Wickersham & Taft posted a 28% increase in profits per partner – the firm's first positive results since 2007. In fact, their reported numbers were curiously intriguing:
- 28% rise in PPP.
- 21% drop in equity partner headcount.
- 10% drop in gross revenue.
- NOI up about 1.4%.
Hmmmm we wondered. How does this happen?
 Here’s Ed’s insightful take: They lost those equity partner heads in a defection of 7 partners in London to PHJW, and a couple of bankruptcy heavy hitters to GT. The departures did not have the smell of moves initiated by the firm, but defections for greener pastures by people in a position to "know" how things were shaping up.
They got the dynamics back by cutting 130 some associates in 2008, another 25 in 2009, and 34 sabbaticals, or being "right sized" for the work they did have. OK, that had to help.
It would be easy to equate drop in equity partners with rise in net distributable to the remainder. But the key is the NOI pool did not really change. Normally a drop in gross has a multiplier effect on the net . . . like three times. But instead of crashing 30% they went up almost that amount. Astonishing really.
Being "right sized" in the associate ranks was not the factor that was determinative here. It helped, but it did not make it happen. You cannot cut your workers like that and deliver the same income numbers. Ranks are down by a massive number, but gross only 10%. So how does that happen?
It has to mean that some significant income was generated by other than the billable hour model.
Looking at their biggest deals, they did some work for the $68 billion Wyeth acquisition, and there was the Barclays plc share acquisition play. And the Lyondale bankruptcy where heavy NYC fee rates on $40MM would help. I think that there is some "old school" M&A multiplier fee in there, that added several tens of millions of net fees, on at least the Wyeth deal. It is simply impossible to cut costs to work this dramatic a bottom line turnaround. It has to be a top line driven element. Without a material cost component to create it. Which means, it is not a reliably sustainable component in the future. But, hey, take it when you get it, baby!
Think about it for just a moment.
 Assume you have 60 equity partners, and you get a $20MM performance kicker on your M&A project, with a January start on the billings in 2009. (A very reasonable if not low performance fee figure for a deal that large). A one tenth of one percent fee would be $68 million. That $20 MM kicker is the equivalent of $60MM in billings and collections without the overhead, roughly calculated. And for partners it is about a $325k boost in PPP, all by itself. I remember a couple of contingency wins in my old firm that were in the $10MM range and they had a very palpable positive impact on the distributable income we received, even though there were more of us and the amount was smaller.
If there is another path that makes more sense, I wish someone would please let me know. This is great news for their firm, and sure helps for 2009. But the numbers don't suggest all is well on the good ship Lollipop. They just got some more time. And, under the circumstances, I seriously doubt that money was "equitably" spread. It went to the horses that brought it disproportionately, and perhaps skewing even further the difference between arithmetic average and mean in the profile of partner net income allocation.
Years ago, Graham & James had a big IP litigation matter that it worked at for the better part of five years without pay. As the firm was coming apart, the matter settled and the firm received a $40million payday. It went to the few that worked the case in actual distributions, and the rest that was allocable to the other partners as their share was "confiscated" to apply to the holes in the leaky financial boat. Once the rank and file realized that they were not going to get a distribution of that money, but only enough to pay taxes on it, with the rest effectively going to address the capital crisis from bad management – they left. And the guys that had their nice payday from the case . . . took their share and left too. The firm was dead in less than 24 months.
So, never forget that just because you report a PPP does not mean the partners actually received it!
But of course, (as Dennis Miller ends each of his famous presentations) that is just my opinion, I might be wrong! If somebody is willing to give us real numbers and answer a few additional questions, I can report exactly what happened.
Post #443 – Thursday, January 14, 2010
Getting Your Partners To Follow-Through
How do you ensure task completion when important projects need to get implemented, when partners seem to agree to participate, but when you are not really certain that you are going to get committed follow through?
 Whether it is in a practice group setting, around the table with the members of your Strategic Planning Committee or wherever you happened to be working with your fellow partners, this seems to be one of the most common challenges. That said, there are seven important steps you can take to ensure results (in most cases):
1. Ensure that the undertaking is voluntary.
Far too often the group leader (in their wisdom) thinks that George is the best person to do a given task and publicly arm-twists (or subtly embarrasses) George into taking on that task. Now ask yourself: just how motivated is George really going to be with an assignment that was delegated to him under those circumstances? Even worse, I often see those instances where one particular committee member was absent from a meeting and the others debated about what project “to stick Jennifer with responsibility for.” Now, once again, should we really be surprised when people don’t follow through? Keep in mind that when someone voluntarily takes on a task they are far more committed to ensure the completion of that project. Your role as the leader is to seek out voluntary undertakings from each of your fellow partners, even though you might strongly feel that someone else is better equipped to do a specific project.
2. Where possible, break the endeavor into smaller steps.
Some of the tasks that need to get done may be fairly huge in that to complete the total undertaking will take more than two or three hours of some partner’s time. When that happens get the partners to break the task down into its logical and sequential phases and estimate a time-frame for doing each phase. Even if you think you know how long each step should take, you want buy-in from the individual doing the work. Then when someone is taking on this task we can examine which steps of the task to start with and ensure that they are not setting themselves up to fail.
3. Ask each partner, specifically, what he or she will deliver back to your next meeting.
It is quite conceivable that even an enthusiastic partner might go off and tackle some project only to ultimately deliver a result that was not anywhere near what everyone in the group was anticipating. Therefore, it is helpful for everyone to think about any particular task in terms of the desired outcome or deliverable - what they expect to bring back to the next meeting – whether it is simply a written report or evidence of what action was undertaken. Ideally it is something tangible to show that progress has been made. As the leader, you need to ask each partner to briefly summarize (for the group) what they understand the work is that needs to be done, how they might approach the task, and whether they forsee needing help from anyone else in the group. Doing this will put them in the right mindset to owning the task and ensure that both they and you understand exactly what the outcome or deliverable will be. You might say something like, “I wan to ensure you and I both understand how this will unfold. Could you describe to me what you will do and when?”
4. Ask for a personal commitment. 
When you have finally determined the parameters or scope of the undertaking, you then need to look your partner in the eye and say, “Now George, you understand that what is required here should take about three hours to accomplish. Given your current and anticipated client obligations, are you comfortable that you can invest three hours and deliver your report for our next meeting?” When people give their word, especially in front of their peers, that generates an even deeper level of personal commitment.
5. Determine an acceptable completion deadline.
Ideally you want to have tasks accomplished before your next meeting such that any status reports might be circulated to everyone to review ahead of time and not waste the time of everyone at the meeting. For some strange reason, I’ve noticed that we often will pick a Friday as our deadline. Where possible, a Monday may make for a better deadline as most people don’t really jump on their individual project until the last minute anyway; and a Monday often allows the weekend for more reflective thought.
6. Produce a written summary of the commitment.
When working through the various tasks that need to be undertaken during a meeting, it is advisable to written them all down – on either a whiteboard or paper flip chart – for all to see who is going to do what and by when. To help people remember their individual commitment, you can then transcribe those flip chart sheets into meeting minutes and circulate (within 24 hours) to all attendees. Most organized people agree that there is something about the physical act of writing down a commitment that makes it easier to remember and more likely to be acted on.
7. Follow-up with each partner one-on-one.
One of the most valuable ways in which you can spend your leadership time is following up with your partners, between meetings – to offer your help in ensuring that they complete their task. You know that your star performers don't need to be managed. They absolutely do what they say they will do, which means being really careful about what they say they will do. Others in your group may well need someone with the patience to prod them a bit and offer their assistance, so that best intentions actually do get implemented.
Finally, carefully manage your (leadership) time.
If you accept the proposition that your work is infinite and time is finite, you realize you have to manage your time and not your work. You need a laserlike focus on doing first things first. And that means having a ferocious understanding of what you are not going to do. The question used to be which phone call you wouldn't take. Now, it's the discipline not to have your e-mail on. The skill is in knowing how to sift through the blizzard of information that hits you all the time. That's a different skill from what you may have needed 10 years ago, but the fundamental principles don't change.
Post #442 – Wednesday, January 6, 2010
Saying Goodbye To My Mentor
While I may have been the first person to really know, over a year ago, that this was coming . . . it still stimulated a tear (or two) to read David Maister’s retiring comments on his blog.
 "After nearly 30 years of advising and writing about professional services, I have decided to retire. I no longer plan to consult, speak or write."
I’ve often been asked what it was like to work with David and especially when we were writing First Among Equals together. While I have enjoyed a long-term working relationship with David that dates back to our earliest years in consulting, I can not tell tales out of school. I am however reminded of a story that I'd heard, that exemplifies the relationship I've enjoyed with David, as a co-author, a collaborator and as my mentor.
The elder summoned the junior into his office and explained that while the junior had not yet had the occasion to do a certain task as important as he was about to give him, he was confident that the junior had the knowledge, the skills and the talent to excel. He explained that this task would need to be completed within the week. So off the junior went, new task in hand.
It was but only a few days later when the junior returned to the wise elder’s office and placed the completed task on his desk.
Without even looking up, the elder quietly asked, “Is this your very best work?”
The junior stammered for a minute and suggested that perhaps he might review his materials a bit more before he submitted his final effort.
The next day the junior returned once again to the elder’s office, task in hand. This time and before even looking at the work the elder asked, “Are you completely certain that your efforts here will make us both proud?”
“Well,” the junior hemmed and hawed “maybe just give me one more hour to make absolutely sure that it is perfect.”
Returning an hour later, the junior was greeted with the question, “So, am I to understand now that this is your best work, something that would make us both proud and something that you feel is truly excellent?”
“Yes, sir.” came the meek reply.
“Then why,” commanded the wise elder, “did you not give me this in the very first instance?”
Words alone cannot express how grateful I am to David . . . for collaborating with me on the book; in the writing and development of our PracticeCoach® initiative; in helping me develop a program for effective strategic planning; in allowing me to provide input to five of his business bestsellers; in stimulating the birth of this web site; in serving as a sounding board on challenging client issues; and for always being there to give me a good swift kick in the ass when I needed it the most!!!
Congratulations to David once again on his being presented an Award For Excellence from the Association of Management Consulting Firms. I think Tom Peters said it best when he commented that “David Maister is the world's leading authority on the management of professional service firms.”
He is not the first among equals - he has NO equals!
I am consoled by the fact that David and I, and our wives Kathy and Monique continue to get together a couple of times each year, in some part of the world, to share quality time. And so while my most generous mentor has retired, my good friend remains.
Post #441 – Sunday, January 3, 2010
Make January Your Gateway Into A Year of Renewal
January, for the Romans, was the month named after Janus, the gatekeeper. "Since a gate opens both ways, Janus was thought to be able to see back into the past, and forward into the future, and he was usually represented in pictures as having a double head that looked both ways."
 As we pass through the gate from 2009 to 2010, it is only useful to look back to the past for learning. We have an opportunity to ensure we bring with us only the things that work and leave behind the old and unproductive habits and approaches. Plan to make your January a month of renewal and the beginning of a year of growth and development.
Here are a few suggestions for what people will treasure from their leader:
• Accept the new reality
Recognize that there is no returning to the good old days. The changes we are experiencing today and have been experiencing over the past two years will radically transform the way your firm functions, interacts with clients and competes for business. Success is a moving target such that you are now being required to do everything faster, leaner and quicker than ever before.
• Fight complacency
Winning leaders know that their firm needs to refresh the gene pool. That happens when you forget about old (or supposed best) practices and begin to open up your mind to new ones. That can also happen when you bring in and expose yourself to new people and new partners with a diversity of new ideas. The many years of prosperity lulled firms into a sense of comfort – comfort in having a profitability that always increased and clients that always came back for more. Our uncertain economic times now demand that we challenge these comfort zones such that new behaviors, new thinking and new approaches flourish.
• Focus your energies
Abandon those activities that don’t progress your strategic results. If something isn’t working, stop doing it. This means that you need to voluntarily let go of things that may be close to your heart. Ask yourself:
- What do I need to do more of?
(what do you need to continue focusing on to leverage results);
- What do I need to do less of?
(and identify the ineffective things that consume your time)
- What do I need to start doing?
(identify anything you are not yet doing that could be the key to improving or implementing your strategic agenda); and
- What do I need to stop doing?
(eliminate low-impact activities like getting sidetracked by colleagues with trivial matters rather than investing time on your more critical tasks)
 Also consider:
- What matters most?
What was most important a year or two ago may not be the driving force today. Press the reset button and, together with your leadership team, clarify priorities and commit to keeping them in focus.
- What leadership skill should I get better at?
The fact is, your personal effectiveness affects the success of your firm. Pick the leadership skill that most needs your attention—listening, coaching, problem-solving — and commit to improvement. Small changes really can make a big difference. Just ask your partners on the receiving end.
• Strategize on an ongoing basis (as I ranted about in my last post)
Strategic planning isn’t an event—it’s a discipline. In less volatile times, developing a strategic plan every three years was the norm. Today, planning once a year in not sufficient. You now have to learn how to evaluate, test and revise your plans and strategies several times a year to maintain your competitive vitality.
The next few years are going to be an economic roller-coaster ride. That means that firm leaders are going to be challenged repeatedly not just to make fact-based decisions, but also to make some sense out of all of the conflicting and hard-to-detect signals that come through the fog and the noise. You need to get comfortable with handling gobs and gobs of ambiguity.
• Ramp up the energy level
Every successful firm, every team, and every new initiative runs on one thing: energy. And it is your job to be the energy source that others feed from. Leadership, in the end, is all about having energy, creating energy, showing energy, and spreading energy. As the firm leader you should be seen to emote, erupt, flame, and have boundless enthusiasm. The cold logic of it is unassailable: If you do not love what you're doing as a leader, then why in the world are you doing what you're doing? And why in the world would you expect anybody to follow you?
Merry Christmas & Happy New Year
 Setting aside important religious implications, the visions of decorated trees, gift giving and tasty treats . . .
Christmas is all about family and being together with them. Our memories go back to our parents, our brothers and sisters and our grandparents – some of whom are with us and some who are not. It is those memories of things past and now lost, that helps us appreciate the joy of the present.
Please take the time to share joy with whomever you care about.
Have a fabulous Holiday Season with a safe, joyous New Year’s Celebration.
Post #440 – Thursday, December 17, 2009
The Emergence of Continuous Strategy Reviews
 As I’m currently engaged in a number of strategy reviews with client firms, the question that I’m being asked is whether we are not now at a point where law firms should be engaging in a continual strategy review process – and the answer is a most definite YES!
In a recent poll, firms were asked how often they are updating their strategic plans:
29 percent review their plans once a year;
12 percent review their planes twice a year; and
18 percent review their plans four times a year;
The trend is clear - more regular updates are becoming more common.
Another 12 percent claim to review their plans almost continually;
While 12 percent responded that they conduct reviews whenever it seemed appropriate.
For More Information 
Post #439 - Thursday, December 17, 2009
New Alternative Fees Forum Planned For March
I'm pleased to have been asked to present at a new one-day forum entitled: Alternative Fee Arrangements - From Theory to Practice. This event promises to move the discussions around alternative fees from why . . . to HOW!
In fact, this forum is designed to help participants:
• Cultivate a value-focused legal delivery system centered on the true meaning of partnership between law firm and client — sharing in both risk and reward
• Manage risk in experimenting with other fee arrangements by achieving cost-certainty yourself before offering cost-certainty to your clients
• Realize a compensation system built upon the longevity of partners and an open dialogue at the firm — rather than reliance on billable hours
• Approach alternative fees head-on—confronting the key elements that have structurally compromised the modern law firm
• Navigate engagement project stages delivering high client value with controlled costs that maintain firm profitability
• Understand how the experience / results model for quality and efficiency links to superior recruitment, training, mentoring, advancement and retention of talent
• Define value while fostering relationships that reward service
WHEN: March 10 at the AMA Executive Conference Center in New York City
FEATURING: Fred Bartlit - Bartlit Beck; James Bender - GC at The Williams Companies; Pat Lamb - Valorem; Steven Levy - Lexician; JL Novak - Asst GC at AOL; Ed Reeser; John Riccione - Aronberg Goldeghn; Michael Roberts - Shook Hardy; and yours truly.
Please have a look at the program and plan to join us
Post #438 – Thursday, December 17, 2009
A Quote For The Coming Year
  "Men make history, and not the other way around.
In periods where there is no leadership, society stands still.
Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better."
Harry Truman
Post #437 – Sunday, December 13, 2009
A New Survey on Alternative Fees
 Following from a wonderful breakfast meeting I had last week with Jim Hassett, I received a bound copy of Jim’s 140-page research report on Alternative Fees. Having co-authored a few articles recently about this subject, I was eager to see what Jim had developed . . . and I must admit, I am impressed.
The LegalBizDev Survey of Alternative Fees is based on Jim conducting in-depth interviews with the chairmen, senior partners and C-level executives at 37 of the largest US law firms about their past use and future plans for alternative fees. Jim conducted interviews with nine chairmen and managing partners, 16 executives (including CEOs, CFOs and CMOs) and 22 senior partners, many of whom head their firm’s alternative fee committee.
Jim’s interviews revealed that:
1. Last year, the 100 largest law firms in the US generated approximately $7 billion in revenue from alternative fee arrangements.
2. Every single participant said that the use of alternative fees will go up, but there were dramatic disagreements about how much.
3. When different firms say they are offering alternative fees, they may in fact have radically different business models and offer totally different types of deals.
4. There are nine types of billing arrangements that are most commonly used: risk collars, fee caps, fixed fees for a single engagement, fixed fee menus, portfolio fixed fees, retainers, success fees, holdbacks and full contingencies. These terms are defined in the complete report, along with advice on when and how to use each fee structure.
This report concludes with a section on “How to prepare for an uncertain future,” highlighting key decisions law firms and in-house law departments must make in order to succeed in today’s increasingly competitive environment.
Many lawyers are gradually coming to agree with one participant in this survey, who said: I’ve heard for years about the impending demise of the billable hour. Now, for the first time, I believe it is going to change.
This is an important subject and Jim has compiled some important research. The LegalBizDev Survey of Alternative Fees is $395 per copy (with volume discounts available) and may be purchased online at www.legalbizdev.com/survey or by calling 800.498.7246.
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