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Robert E. Saudek and his firm seem to have found the lawyers’ Holy Grail: high revenue growth coupled with hours reasonable enough to let attorneys see the sun once in a while. In a sound rejection of New York’s bill-till-you-drop model, attorneys at Morris, Manning & Martin, the Atlanta-based firm where Saudek is managing partner, have raised gross revenues by an average of 28 percent in each of the last four years. What’s their secret? They’ve done it by focusing much of their practice on technology work, while billing about 2,000 hours a year or less. Between 1996 and 1999, revenues increased from $19.5 million to $49.5 million. That’s not bad for a firm with 158 lawyers and only one outpost, in Washington, D.C., in addition to its headquarters. Morris Manning is no impossible-odds lottery winner in the law firm game. Others around the country have achieved its elusive profits/free time balance. They include: � Cohen & Grigsby, Pittsburgh, Pa. Just a decade old, this 85-lawyer, one-office firm has been posting yearly revenue growth of 15 to 20 percent since 1998, thanks in part to growth in management-side labor work, immigration and international business, especially from German companies. Revenue for 1999 was $24.5 million. � Fenwick & West, Palo Alto, Calif. Founded 27 years ago by veterans from New York’s Cleary, Gottlieb, Steen & Hamilton who saw a tech gold mine in Silicon Valley, the firm’s revenues grew 20 to 30 percent in each of the past two years. Fenwick has 275 lawyers in three California offices and Washington, D.C. Its 1999 revenues were $100.8 million. � Gray Cary Ware & Freidenrich, San Diego/Palo Alto, Calif. Formed by a mid-1990s merger, this tech-focused, 390-lawyer shop with offices in three states had a 1999 revenue increase of 27 percent, to $140 million. With the exception of Cohen & Grigsby, these firms have focused most of their energy on technology-related business. There’s no question that it’s a big part — maybe the biggest part — of their success. But once firms had success, they found they had to manage it well, and they did so with some common cultural traits. For one thing, they are all relatively young firms and tend to target younger, entrepreneurial partners. And their pay depends on merit, not seniority. The management style at most of these firms is participatory. Even associates have some control over their careers. Their hours are, for the legal profession, a reasonable 2,000 billables per year or less. The firms have also stayed close to their roots, concentrating the bulk of their lawyers in one geographic region or one state. It’s not all roses, of course. A few have management techniques with a hint of Big Brother. But it seems to be working. These aren’t big firms, at least not in this ever-consolidating market. But they’re growing revenues at rates that legal Goliaths might envy. STARTING AT THE TOP At Morris Manning, it all begins with Saudek. He has been at Morris Manning since its founding in 1976, and if you want current or historical data dealing with workloads, clients, staffing or dollars, chances are he’s got it tracked on a well-thumbed chart or graph. He does it, in part, to promote the firm’s participatory culture. Partners see and discuss financial data at meetings each month, says corporate partner David M. Calhoun. Saudek says he also tries to foster teamwork. Although partners’ pay is based on the business they bring in, this firm — which has a chart for virtually everything — doesn’t track origination credits by individual, but by team. That, says Boston-based professional services firm consultant David H. Maister, is a “brilliant idea” because it encourages teamwork and discourages territorialism. That’s something Gray Cary tries to foster too. Twenty percent of its partners’ discretionary bonus pool is set aside for a teamwork bonus, awarded to lawyers who contribute to a team effort at the expense of their personal gain, says Chairman and CEO J. Terence O’Malley. This year, those who qualify will split $1.2 million. At Fenwick & West, teamwork means decisions by consensus, according to managing partner Greg T. Sueoka. For example, under the firm’s partnership agreement, its four-member management committee could have decided on its own to open the firm’s newest office in Mountain View, Calif. But Sueoka says that all 70 partners drove to the site and spent hours at a restaurant discussing the plan before deciding to go forward. There’s also a focus on developing lawyers’ careers. According to Maister, author of “True Professionalism,” a book on management, success comes more from paying attention to lawyers’ careers — thus producing better lawyers who can command higher rates — than from an overt focus on cold, hard cash. At Morris Manning, Saudek says, associates were asked what would make their lives better at the firm. The answer: knowing how to make partner. So the firm hosted three 1 1/2-hour lunch meetings about the topic. Next on the agenda is a marketing seminar. Fenwick & West offers what Sueoka calls a “free market economy” to help associates find niches. They aren’t assigned to particular partners or practice groups. It’s their responsibility to find work in, for example, the tax, intellectual property or corporate group and see what they like. “People are the happiest when they’re empowered to determine what their careers are going to look like,” he says. All the firms have honed a culture of youth, using merit-based pay to attract lawyers whose lack of seniority worked against them elsewhere. As a result, Saudek says, some of Morris Manning’s highest-paid partners are younger than 40. At Cohen & Grigsby, President Richard “Chip” Nelson III attributes much of his firm’s success to its hiring. “We’ve added a lot of younger, dynamic partners that we’ve stolen from other firms.” Sueoka, at 37, is the firm’s managing partner and a four-year veteran of its management committee. “I think other firms would say, ‘You need more gray hair,’ ” he says. Merit-based pay motivates lawyers to work and also can give them a measure of control over hours and earnings. At Morris Manning in 1999, partners’ average billables were 2,031; associates’ were 2,006. Based on billables so far this year, it’s likely both groups will be under 2,000, says Saudek. To keep people motivated, even associates’ pay is merit-based. Partners, armed with three years’ worth of individual financial data, vote by secret ballot to help the firm’s compensation committee decide each partners’ pay. Last year, equities averaged about $480,000. Associates are lockstepped at the other three firms, but they have bonus systems to motivate them to bill more, learn to market, recruit and do pro bono. At all three firms, average associate billables were at or under 2,000 hours a year. At Fenwick & West, associates have the choice of earning less for billing less. First-years who bill 1,950 earn $125,000; for 1,800 hours it’s $108,500. About a quarter take the reduced hours plan. Equity partners at these firms earn a living wage by billing livable hours. At Cohen & Grigsby, partners bill 1,700 to 1,800, and earned $360,000 on average. At Gray Cary, they billed 1,925 to 1,950 and earned $450,000. Fenwick & West’s Sueoka says of his firm’s partners, “One of the mantras we have is growth without greed.” They bill about 2,000 a year, and equities average $644,000, their pay calculated in part on their prior year’s performance. A few firms have quirky incentive systems that might seem intrusive but also seem to work. Fenwick & West offers associates a week a year in its condo in Hawaii. “Some people view this management as being a little parental,” Sueoka says. But, he notes, the incentive system helped put Fenwick & West on Fortune‘s list of best places to work, two years running. Morris Manning has a lawyer whose entire job is devoted to managing others’ work assignments. Attorneys e-mail in their projected hours twice a week. The firm also offers bonuses of up to a few hundred dollars a month for lawyers who get timesheets in by deadline, meet billing goals and send bills out on time. Partners are docked for being tardy. “At some places, lawyers get lost,” says a former Morris Manning of counsel who asked not to be named. “Here they keep tabs on everybody on almost a daily basis.” Maister isn’t a fan of such motivators. “They’re basically prostitute systems,” he says. “Do this, and I’ll pay you. … A better system would be to walk into someone’s office and say, ‘I haven’t gotten your time sheets. Is there a problem at home? I’ll stand here while you fill them out.’ “Saudek says that he doesn’t have time to walk into 150 offices twice a week. And the system seems to work without that personal touch. “It’s not egregious,” says partner Calhoun. “I like to get the extra money.”

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