In-House at The American Lawyer
The American Lawyer
By Aric Press
November 01, 2009
A difficult year is about to get harder. It's the start of collection season for law firms, and the normal Christmas rush seems destined to run smack into fresh demands for deeper discounts. Adding a shiver of fear to those events are continuing rumors of coming partner bloodbaths. The glib talk revolves around two purported problems: some partners really have had little work all year, and some firms have done a poor job of keeping their members informed of just how far off budget the firm is. Dollops of pain seem likely to fall on many heads.
But before lacing up your Sweeney Todd signature aprons--or, if you prefer, while you're tying them on--it is useful to remember that now is precisely the moment to run your private partnership as an institution built for the long run. To do that requires facing up to seven decisions that many of the best-managed firms have already taken in whole or in part. All require going beyond the banal jargon of the moment: client-facing, cost-controlling, collaborative-acting. None are easy or allow for quick or obvious judgments. All require choices and real investments. All they offer is a promise of a better tomorrow. They are:
• PICK A TALENT MODEL. Whatever else we've learned from the events of the last year, it seems painfully obvious that the law firm talent model is: a) broken; b) too expensive; c) never reverting to form; or d) all of the above. For years, law firms have hired too many, paid too much, trained too poorly—and, of course, complained too loudly. That's over. What comes next seems likely to take a variety of forms, in itself a healthy sign for a business that too often confuses following the pack with leading it. Certain truths seem immutable: Few young lawyers will rise to Am Law 100 partnership; there is money to be made off leverage; if firms truly have different cultures, and hence different markers of success, those traits can be identified and sought in recruits.
Firms can embody these truths in a variety of ways. The smart talk now is about associate competency models and variegated pay for developing associates. I admire those systems and think those firms can achieve these goals so long as the firms are rigorous about maintaining their definition and discipline. The beauty of the current situation is that for clear-eyed firms, any of the methods, from competency to lockstep, from free market to mandatory assignment tours, can work--as long as firms decide which one will meet their needs. At least the personnel needs of the firms are unlikely to change: a small group of obsessive overachievers determined to become owners; a large group of hardworking lawyers willing to trade status for time and flexibility; new markets of overseas or temporary lawyers eager to dial in and out of the firm workforce. In combination, these groups can provide an essentially bottomless supply of able talent—and leverage by other means. There is no single recipe. Firms need to pick among this menu and prepare to manage the people and the consequences. Waiting for a return to normalcy will be long and tedious.
• EMBRACE THE SUCK. That's military jargon for being caught in a difficult situation and having to deal with it. Law firms and their lawyers are in the throes of choosing whether to adjust to, resist, or embrace the fallout from the economic calamities. Virtually every major firm has altered its billing practices, at least on the margins, in order to accommodate client demands for fixed, alternative, or hybrid fees. What's unclear is whether firms are, well, embracing the suck: Are they using this period to analyze their work flow and staffing, and then seek ways to do their work differently, more efficiently, and just as profitably? Or, are they begrudging, and counting the months until a robust sellers market returns? That's a process question--which lawyers are good at--and a taste for risk question--which lawyers are poor at. G.I.s have a term for the consequences of making the wrong choice: FUBAR.
• MINE YOUR TECHNOLOGY. Despite world-class investments, at too many firms technology leaps have meant only fewer secretaries, smaller libraries, more detailed billings, 24/7 communication capability, lifelike virtual conference centers, and an avalanche of electronic discovery. Knowledge management remains an aspiration; commoditized tasks are still custom-built; intranet partnerships with clients are celebrated too heartily, given how routine they should be. The younger generations have extended their social networking habits to their jobs; some even have the support of their firms. We know that the Web 2.0 world isn't disappearing; the desire, indeed the compulsion, of the young to share information and collaborate online is as stunning as it is irreversible. What we don't know is how this activity will play out for law firms. A relative few will lead this exploration; most will choose to follow. But if some combination of artificial intelligence, decision trees, and 2.0 techniques are suited to rote work—and a good chunk of the work of most major firms fits that category--how comfortable can you be ignoring or denigrating these developments?
• MINE YOUR CLIENTS. Especially in stressful times, law firms need to know where they stand with their customers. Oddly, during this Great Upheaval, that knowledge hasn't been universally sought; some lawyers have grown distant lest they open conversations with customers that end with demands for lower costs. (That doesn't work; see above, Embrace the Suck.) These relationships--at least of the top 25 customers on your roster--are too important to be left to individual partners. Instead, the head of the firm should be meeting with the assembled partners who touch these clients. And then, because if you're a firm, and not merely a collection of franchises, a top-25 client has to belong to the firm, the head of the firm has to make an annual assessment visit.
At some places, that's going to be hard. I used to think that the law firm world was divided into two groups: those who distributed name tags at partner meetings and those who didn't. It's divided another way also: those firms where the chair wouldn't dare visit that many clients and those where that's the biggest part of his or her job. In the race to the future, I would bet on the latter group. If you're structured around relationship partners handling the client contacts, we're going to short you.
• ENTER THE NONLAWYERS. In most of these categories, the decision is the easy part. But actually putting one or more decisions into action requires managing the tasks. Changing your talent model or redesigning your work flow just won't happen because you have a committee report. Better, then, to bring on nonlawyer managers and get out of their way. That won't be easy in some firm cultures where someone without a JD is truly unarmed. But if you can get past that, then professional analysts and managers can help run practice groups, recruiting and training, competitive intelligence, and many other tasks for which the partners are not well prepared.
• GO TO THE MARKET. Like hibernating bears, firms have retreated to their caves, leaving vast running room for rivals to promote themselves and capture market share. That's what happens in bad times across industries; those who raise their profiles at a time when others are in full cower tend to prosper when good times return. The litany of firms without chief marketing officers at the moment is no less shocking for it being so familiar. It may be that the firms have been ill served by their CMOs--although the opposite is as likely to be true. The business solution is not to cast off the tools of promotion and marketing, it's to find the right people to do it. In the modern era of law firm management, we have never had such an open and quiet public space. The opportunity is there for firms brave enough to enter it.
• GET OVER YOURSELVES. For all the hand-wringing, big-firm lawyers remain among the best rewarded, most secure professionals in our society. It's possible to obsess over their perils, and Lord knows we are guilty of promoting such anxieties. But give me and yourselves a break. The nonpharmacological cure for despair is deeds. Great law firms take seriously their obligations to the system of justice and those who can't afford representation. This is a time to redouble those efforts, to require of your lawyers 20 hours a year of pro bono work. And if they can't or won't do the work, then a check for 20 billable hours will suffice.
Seven decisions: make as many as you can. Skilled drivers accelerate into curves. Good businesses accelerate into downturns. Please let us know what you decide.
