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Law firms are getting serious about management. Not their clients’ management, their own. The days are long gone when a managing partner was the guy with the best handicap on the golf course and the administrator was his secretary. Firms, top to bottom, are now run as businesses, and, increasingly, they are run by professional managers. Some have come up through the ranks, but a growing minority have come to firms from corporate and other backgrounds. Yet the bottom line remains the same: Administrators, also known as chief operating officers, are playing a more significant role in managing Washington, D.C., area law firms. To learn more about the challenges, concerns, and views of administrators, Legal Times‘ Editor in Chief Richard Barbieri and Special Reports Editor Lisa Benshoff sat down last month with five local administrators: one from a large national firm; one from a large D.C.-based firm; one from a midsize Northern Virginia firm; and two from small branch offices — one whose firm is based in New York and one from a Boston home base. Legal Times assured the participants anonymity to encourage open discussion and debate. Legal Times: Imagine you’re at a cocktail party and you’re talking to a manager from a manufacturing company who knows nothing about law firms in Washington. How would you describe what you do? Whom you report to, who reports to you — that kind of thing? Branch-New York: We have an executive director, who is my administrative direct report. We also have two managing partners, or co-managing partners, in the Washington office, so there’s a triumvirate that I report to. I think the reality for all of us, to some extent, is we ultimately report to everybody in the firm. All the administrative staff, meaning the nonlawyers in the Washington office, report to me. The practical reality is, obviously, the secretaries and the legal assistants report to the lawyers with whom they work. On the administrative side, I work with them on their issues of concern, both the lawyers and the staff, where working relationships aren’t going well, if the lawyers have problems on discipline or performance, and then I’m there as a supporter for those secretaries and legal assistants. Everybody else clearly reports to me: that’s the office services, facilities, things of that nature. Branch-Boston: I report directly to the executive director, with the dotted lines to the managing partner. The staff consists of paralegals, secretaries, information systems staff, and they report directly to me, with the dotted line to the attorneys, of course. It’s who they’re doing the work for. Northern Virginia Firm: I report to an executive committee, a three-member executive committee, which is elected every year. Now, the executive committee can stay the same, one or two members, and sometimes it does change for all three. But it does make it challenging. I have 12 managers reporting to me — absolutely far too many. Two are the branch office managers, and 10 are functional managers. Most of my time is spent with partners and managers. I really don’t interact with the staff at all. National Firm: The people I report to immediately are the managing partner and an administrative partner. I deal with my administrative partner on kind of a day-to-day basis, in order for our managing partner not to be bothered with some of those things. And that has been great. I have never had the opportunity to work for two different partners. This has worked out a lot better than I thought it would work out. They both are good communicators; both work well together. I have seven managers that report directly to me. Their responsibilities are pretty big, and I don’t have to interfere with them. I am a walking manager. I do get out and talk to people and at least let people know that I’m accessible. The managers and I have a weekly meeting. Basically, it’s a sharing of information on what each person is doing, what’s going on, making sure that everybody is familiar with the activities of the firm, the day-to-day operations, and the direction the firm is going in. It’s pretty open and it’s a good sounding board if somebody has any particular issues. They can either bring it up at group level or they can discuss it privately. I have a very good group of managers. The staff reports directly to our HR manager. D.C. Firm: I have administrative responsibility for this office and three branches. The chief financial officer and I both report to the managing partner and also to our executive committee, three partners who sort of have day-to-day responsibility for the firm. I have reporting directly to me four directors, one in charge of IT, human resources, marketing, and operations and plant, the financial side of that. The budgeting side of the house is a part of my responsibility, as well. Accounting is part of the chief financial officer’s role. And then we have maybe 10, 15 managers that report up through those four directors to me, including an administrator for our European locations. Legal Times: It sounds like none of you have the clearest reporting lines. Branch-New York: It’s a challenge, definitely. You’re responsible for keeping informed all the people who are in that superior role to you. And you can get tripped up if you don’t keep them all informed and one person knows something before the other, which is why e-mail is so wonderful. One click of a button and everybody at the exact same time, theoretically, has been informed. You also have to deal with the fact that not necessarily does everybody agree on what it is that you want to do. Some of them have strengths that complement each other, which works well because you then go to one person for certain things, the other person for other things. Sometimes their strengths are in conflict with each other. In other words, they’re both interested in the same items, and you have to really get the two of them to sign off on the exact same situation. So oftentimes, the decision-making can be a little bit slower than you would like. But it’s the job of the administrator to make sure that they know which are the important decisions they have to make quickly, and which are the decisions that they can sort of linger over. Legal Times: So you end up setting your bosses’ priorities sometimes? Northern Virginia Firm: I keep an ongoing agenda, and I use a star system. If it’s got five stars, that means it has to be decided today or this week, and then four stars, etc. We have a shared folder, and they can click on it and see what I have posted there. Branch-Boston: As [Branch-New York] was mentioning, I think you have to keep in mind who the owners of the business are. My managing partner is incredibly laid back and lets me handle the business side of things. He just deals with practicing law and helps me with partner issues. I think a lot of us — correct me if I’m wrong — if there’s a partner issue, we can go to our managing partner and say, “I may need your help on this. Stick up for me on this. Here are the issues.” In our business, I think it helps to have a managing partner who has management background. This is my first managing partner who’s had another type of management background, and it’s just wonderful. D.C. Firm: It’s sort of interesting to me how these jobs compare to a similar role in a corporate or other professional services environment. The [administrator's] work in a law firm is easy work but hard to do, versus working in a corporation, where the work assignments are generally very complex. But once you figure out how to do them, implementing is easier than in a law firm because you don’t have to sell them to 94 different people with 94 different opinions. In a corporate world, the secretary is like a nonentity. In a law firm, it’s like they’re kin to a vice president, so there’s a totally different people dynamic. The fact that I’m having to sell policies to secretaries is not something that any of my corporate assignments prepared me for. Branch-New York: And the other side to that is that the vice presidents in our business, if they don’t like what we’re trying to sell them, will go to their president, who then comes around to you and says, “Well, the staff doesn’t like X.” Remember, you don’t know if he’s talking singular or plural — so it’s complex dynamics. As I said earlier, everybody is your boss, because associates will go to the partners and complain about something that they don’t like that you have done or the staff is trying to implement, or partners will go to other partners. They all look to find where the power points might be, and you have to juggle all of them, because ultimately, they are all your bosses because of the way law firms work. Because they are collegial; they are partnerships. It’s not like a corporation, where there is a much more strict hierarchy of who’s who and who’s above them. Legal Times: It’s hard to generalize, I realize, but has the managing partner type changed over the years? Branch-Boston: I’ve seen them change from — I don’t know if micromanagement is the right word — but from the type that wasn’t quite the leader to a real leadership role, being given the ultimate responsibility for the business side of things — and maybe in a branch office, the human resource side of things also. Two of those leaders in my firm are nonlawyers, and that’s what I looked for, to make sure I found a firm that would let the administrator exercise the education and experience they had. D.C. Firm: I’ve been doing this for 24 years, and no matter how many stripes you get as a nonlawyer professional, there’s a little bit of second-guessing that goes on because you practice in an area where people don’t have any skill or have never seen necessarily how one progresses through that change — they can’t really evaluate. You know, it’s more of a political role. They like you because they like the decisions you make, or they don’t like you because they don’t like the decisions you make. It has nothing to do with the quality of the decision-making or the amount of, you know, sort of insider thoughtfulness or experience that goes into it. And so I think there is a greater recognition — at least our firm has taken it — in terms of hiring professional managers and letting them manage. I mean, I probably make 98 percent of the decisions that I’m responsible for. We have a weekly executive committee meeting where I sort of present new things, and we’ve made some fairly significant changes in the way our firm operates. For example, we have a very corporate-looking compensation system that’s performance-based, not experience-based. There have been areas where our management felt, well, she kind of knows what she’s doing, so if it makes sense, go save us a bunch of money, which it did, and they sort of signed off. But I think that there is, as [Branch-Boston] pointed out, a little bit of sort of earning your place at the table, that once you’ve been in some other environments they sort of assume that they’ve hired somebody with this level of management skill, and therefore, there’s an expectation. Legal Times: Has everyone been through a merger? Northern Virginia Firm: We’ve acquired a few people — a few groups, maybe no more than five or six, but I don’t really call that a merger. But you can imagine, being an IP firm, with that being a hot area of technology, a lot of people are very interested in us, both ways: for us to merge into a larger firm and for others to merge into us. And we’ve been feeling out for many years a lot of inquiries. Usually they can be dismissed within a couple of months because of a lack of commitment, profitability, what have you. But there’s some on our horizon that are taking a very, very long time to even get to. Legal Times: And what’s your role in that, as the partners dance around one another? Northern Virginia Firm: More of the silent partner doing the spreadsheets, gathering the information, analyzing what is received from the other side. I don’t do a lot of speaking up in the meetings. I do the research and feed the information to the attorneys. I’m not the talker in those meetings. Legal Times: How much of your time has been consumed by your firm’s merger? Branch-New York: Of my time, quite frankly, not much. First of all, a lot of it is pure finances. You know, it’s the accounting, CFO types comparing notes, looking at all the different financial ramifications, tax ramifications. Once we are one big happy firm, then the administrative workload fills up, because now you have to blend two cultures, blend two sets of lawyers. So lots of effort will be going into all the work needed to blend the two firms together physically, technologically. National Firm: Did they hire a company to come in and consult with management to get through all that? Branch-New York: No, we’re all doing it ourselves. D.C. Firm: We’re doing a merger now and we’re still working through the issues related to bringing this firm into ours, but also trying to maintain the integrity and identity of that firm because they’re not quite ready to give that up — unlike when the ABC Corp. merges with BCD, they assume they’re going to be BCD. What’s become clear to me in this process is that this firm wants to be a firm within a firm. They have an identity, and they want to maintain that. D.C. Firm: At most law firms, you just keep living and they just keep giving you more money. Nowadays, we tie salary increases and bonuses to performance. Historically, salary increases and bonuses were just tied to longevity, according to some notion that productivity increases over time. Anecdotal data would suggest that this is not always the case. After we put that system in place for our staff, our firm went to a non-lockstep compensation plan for our lawyers, which I understand a lot of firms are doing now. We are going into our second year of it. The partnership was concerned about the increasing investment in technology with no corresponding savings in other parts of the firm, in terms of processing people savings. And at the same time, there was just sort of a feeling that younger lawyers are much more self-sufficient in the law firm. Our biggest expense is secretaries, after rent, and when I got there, we had almost 130 of them. Legal Times: How many do you have now? D.C. Firm: We have about 100. Legal Times: I was going to ask you about secretaries. You all must have had to deal with that issue in recent years, as we’ve become so much more automated in our jobs. National Firm: And our attorneys are so much more talented. I mean, they know the computers sometimes better than the senior secretaries. It’s really important now to offer continued training throughout the year and make it mandatory for your staff. Before, you could have a senior secretary who had been there 20 years or 25 years, and she basically answered the telephone. Everybody wants to improve their ratios. You want at least 2-to-1. If you have somebody who doesn’t know the system and has gotten away with it for so many years, it just won’t fly anymore in a law firm. Legal Times: How do you manage such difficult personnel decisions? Branch-Boston: Very carefully. National Firm: I think the training is really important. We really try to offer education to all of our employees, whether you’re an attorney or staff. We have a wonderful program, which is in-house training, and it’s really mandatory for all our attorneys. In addition, we’ve started manager training, and we have five programs now. The first one is going to be communication skills. And we’re offering that for some of the staff as well. All of the training is mandatory, for the computer or any of the enhancement training that will improve their job. Because they will have to work for more than one attorney — and that’s a big change for some of the real senior partners. Branch-New York: Many firms are aiming at 3-to-1 ratios, and where you have large numbers of younger lawyers who are very competent at the computer and word processing, you can almost do six on one. You have a secretary who will do the final production, put it in the envelope, and FedEx it off to the client. Legal Times: Is the industry standard 2-to-1? Branch-New York: 2-to-1 or 3-to-1. Northern Virginia Firm: Except for IP firms. National Firm: That’s why you never merge with an IP firm. Northern Virginia Firm: It’ll ruin your ratios. I’ve got one partner who has seven secretaries. I have a number that have two or three secretaries. D.C. Firm: It’s sort of an inverse relationship. That’s going to be an integration issue for us because we have, over the last 18 months, gone from 1.87-to-1, to about 2.6-to-1, and now we’re bringing in these IP people who are .8-to-1 on one, and I can see some of our secretaries saying – Branch-New York: Part of the push to better ratios of lawyers to secretaries is it helps get the work to a level at which it can best be done. So you’ll have a word processing department where people may be paid slightly less than secretaries. There’s a cost savings across the board because they’re doing document production while secretaries are freed up to learn new skills, be more than just typists and telephone-answerers. They can help with research, for example, or the other work that can help the lawyers in the practice. And if the secretaries say, “I’m overworked, what do we do with all this extra work?” then you find the right person to do it: research, the legal assistants perhaps; straight typing goes to word processing; filing, which secretaries would spend an awful lot of time just putting paper into folders, you could have a clerk doing that. Again, less skill, less expensive, less costly to the firm, and it’s freeing up the secretary to do the stuff the lawyers really need done. Northern Virginia Firm: We take that another step further in that we take billing away from the secretaries. We get billing specialists. Not accounting, but billing, specialists. We also have an administrative department, administrative docket type of department. Our secretaries really need to know 37 C.F.R. backward and forward. They’re more like legal assistants who happen to be typists, just like our attorneys know 37 C.F.R. backward and forward and they type. So our secretaries are far more compensated than the usual legal secretary because we pay for that knowledge. National Firm: Do you have engineers or scientists, as well as attorneys? Northern Virginia Firm: Yes, we do. We have full-time law clerks who we pay to go to school at night. We pay full tuition and books, plus the taxes thereon, and then they have to work 1,500 hours for us so they’re really considered full time. And then we have technical advisers: patent agents, people with Ph.D.s. D.C. Firm: Are those technical advisers exempt or nonexempt employees? Northern Virginia Firm: Exempt. D.C. Firm: We’re struggling with some of those issues because they don’t fit. Northern Virginia Firm: They don’t fit in your usual — that’s right. They’re exempt. I understand there’s an issue whether law clerks should be exempt or nonexempt because they really don’t – D.C. Firm: They basically say that all of them are not exempt. Branch-New York: They’re like legal assistants. D.C. Firm: Anybody in a law firm that doesn’t have a law degree or is not a manager with a management role as more than half of their function is not exempt because of the unauthorized practice of law. Somebody with equivalent responsibilities outside of the law firm could be considered an administrative professional. But it seems to be a common practice that people do treat them as professionals and exempt. National Firm: Well, I remember about 10 years ago when everybody had to go back and look at their paralegal program because we were treating them as exempt and they’re really nonexempt employees. So everybody had to re-evaluate and reassess and completely change it. Legal Times: Are clients complaining about overtime? Branch-Boston: Well, it often gets charged to a client; sometimes it gets written off. But most of our clients do not complain. I mean, it’s a part of doing business. National Firm: The client sees the work product. And most of the time, people don’t want to work the overtime like they used to. You might have a couple of people that want it, but most people want to go home to their families, their spouses, have a life. And some firms, like ours, have 24-hour service and a word processing center for that purpose. Legal Times: How involved in financial matters are you? I assume you have a budget that you oversee. Branch-Boston: For this branch office, I do basically all of the financial matters that are relating to staff, paralegals, and somewhat, the associates. I do budgeting for hiring partners and hiring associates. All of that’s categorized in my budget. We don’t always pay attention to our budget, but we attempt to. National Firm: It’s a moving budget. Branch-Boston: Yeah, exactly. It’s a moving budget. It’s a working project. This responsibility is much more than I’ve had at other branch offices, where the main office sort of has tight control of your budget. This firm allows the branch offices to have their own control. It’s about goals and it’s about what you want. You do a forecast — projections of what you want to do in the next couple of years: build-outs, moves, even potential mergers that you’re thinking about in the next year or so that may be on the table. For me, it all boils down to communication with the partners and communication with the managing partner. I have really good positive communication with my managing partner. I know exactly what’s going on as much as he does, and what type of lawyers we’re going to bring in, and where we’re looking to grow, what section we’re looking to grow in. National Firm: I think your numbers are based on your head count. I mean, everybody starts with that. So if you’re doing a projection for the next year, this is when you get your partner involved. My ultimate responsibility is to put it together, work with each manager. I give them worksheets. Then I sit down with each manager to go over the worksheets. Then when you go to justify those numbers, based on what your partner has given you for projections for the new year, you can argue why you need more money in one particular area or another. We don’t know if the partners are talking to 10 different lateral attorneys, partners and groups, but we know the associates that we’re going to recruit, that we’ve already hired from the summer class from last year. I think we’re really involved. Most of us, I think, are responsible for putting the budget together. Some of us have to do it three to four times. Legal Times: Let’s talk about the expense side. I assume that a lot of how you are able to get things done in the firm is by making a cost-savings argument to the partners, but at the same time, all you do is spend money, right? Branch-New York: In certain ways, yes. You look at the expense side. For example, if you are very heavy into overtime, that has an implication, we would say, for your staff. Maybe you’re understaffed, maybe you need to do something different with your staff, maybe flextime arrangements to allow staff to do different things. For example, I have lawyers who roll in around 10, 10:30, and they’ll work until 7. Well, if they have a secretary who works 9 to 5, it doesn’t work. Where is the flexibility in that? But, often, the thought is that administrators will come in and cut costs and therefore help the firm tremendously. And the reality is, firms are profitable because of the revenue they bring in from the work product for clients, not from saving a couple thousand here, a couple thousand there from expenses that sometimes take away from the quality of life of the firm. There’s only so much that you can cut without starting to hit staffing capabilities, the perceived benefits that staff might be getting, and so forth. There’s enough stratification in a law firm to begin with without otherwise undermining the morale of staff by taking away small little perks that might save the firm $500, $5,000 a month. National Firm: I don’t think you can take away. I think it’s always a mistake when you take away anything from anyone, whether it’s an attorney or staff. It’s always a mistake. D.C. Firm: I don’t agree with that. I think that we live in a business community where law firms are no longer insulated from the same kind of pressures that other businesses have. I’ve seen a tremendous difference, having worked in legal 10 years ago and today. We didn’t have discussions about negotiated rates or competing for work. I mean, the purchase of legal services was a highly networked and very relationship-based transaction. Today, it’s much more of a commodity, like other things you buy. And so I think that there is a continuing pressure, particularly in law firms, to be generous in ways that other businesses aren’t. I mean, there aren’t a lot of $60,000 secretaries walking around in those corporations, so where clients pushed back on that overtime, they just need to do the math to figure out, “Wait a minute, this person has a base salary of $60,000. That’s what we pay professionals in this organization.” So I don’t agree. I do agree that certainly you’re not going to change the profitability model in a large organization by just looking at the expense side. It’s a two-edged sword. Branch-Boston: We’re basically told from the onset that if it doesn’t affect service of your firm, then you can present cost-saving measures and implement cost-saving measures. But remember, you need to serve the clients, you need to serve the attorneys, and you need to define what that service is. And taking away a water cooler is not going to affect service, really, versus cutting back on staff. You need to rethink those things before you do them. Legal Times: Have you executed any cost-saving measures? Branch-Boston: Because of the economy, we’re looking at cost-saving measures, but we don’t get dramatic about it. Northern Virginia Firm: Well, we’re looking. I think we are getting more hard-nosed about people that don’t perform. Going back to your compensation based on performance, we’re quicker to put people on probation, quicker to terminate. And for the professional staff, quicker to put somebody on job search. Putting a professional staff person “on job search” means they better go find a job because you don’t want them in the firm anymore. It’s a politer term than saying, “You’re fired.” Branch-New York: It’s affecting the associates as well. It’s not just staff. Branch-Boston: The staff and lawyers, across the board. Northern Virginia Firm: I would rather cut loose a professional staff person that’s putting in 1,500 hours than to cut back on some health benefits. Why shouldn’t I let somebody go who’s not really performing and save that salary? Northern Virginia Firm: My secretaries go home at 6, so I have real estate for 12 hours that’s not used until the next morning. Why can’t I use it? I mean, I’m paying for the rent, and I’m paying for that station. Why should I take over more space? Why can’t I go to 24-hour-a-day services? Because if I have to hire this attorney and an eighth secretary, where am I going to put that eighth secretary? Why do they all have to work from 9 to 5? D.C. Firm: Because we’re in a box. That’s the way it’s always been done. Northern Virginia Firm: So I’m saying, you know, it’s wasted real estate. If you want another person to assist you, it’s got to be on other than 9 to 5. Legal Times: Are the lawyers receptive? Northern Virginia Firm:They fight me on that, but – National Firm: I think lawyers are considering flextime a lot more than they used to, especially with the women that are having children. At my last firm, we had at least three attorneys who worked together, so they would work four days a week, and one would take off Friday, one would take off Monday. People are willing. It’s worth it when you have a valuable person who is a very good attorney and you want to keep that person. D.C. Firm: We have done that with a lot of our lawyers. I am even interested in looking at some different things because we need our day elongated, and to find more innovative ways, for example, to – National Firm: Job sharing. D.C. Firm: Job share and do a half-time split because it’s a very effective method. I think oftentimes you get better performance. People are appreciative that they can come in from 1 to 7. That works with their life. They want to keep that situation. They’re going to be a lot more dedicated than the person who’s struggling in from 9 to 5 who really doesn’t want to be there, because that doesn’t work with their life. Our firm is very people-centered. We’ve had paternity leave since the firm opened. That’s the kind of thing they do. But they are slow to adopt some changes. First of all, you have to make a list of who else is doing this. There’s something about a term called “being an innovator.” You know, somebody can be first; they shouldn’t be last. Branch-New York: Do they always want to know what other firms are doing? D.C. Firm: Right. Branch-New York: In our case, being a branch office, the question is: What are other branch offices of firms from our home city doing? So if you’re a New York firm or an L.A. firm or a Dallas firm, you almost don’t care what branch offices from other cities are doing. Everybody seeks that comfort. Legal Times: Is that because they’re worried about recruiting attorneys? Branch-New York: They want to be well placed in the market, but nobody wants to be the leader of the market. God forbid you should have your firm’s name attached to a policy that others don’t like, even if they will follow you. And so I think that’s part of it. They always want to know what everybody else is doing. Legal Times: There were two remarkable events in the last 15 months in associate compensation. First, it spiked historically and crazily, frankly. And now, after a kind of hysteria about the economy, that has now been brought down to earth a little bit. Branch-New York: Well, it’s only been brought down to earth in that there’s not another 15, 20, 25 percent increase. None of the associates are getting cut back on their salaries. What they got, they got. I think part of what may be happening, though, is, as was mentioned earlier, getting out of the lockstep. First-year associates make X, second-year associates make $10,000 more, and so forth, because people are looking at practice groups: Which practice groups are profitable, which practice groups are hot. And that leads to some of their own management issues — which are more the partners’ than ours, but it’s partly ours — of people who may be at the same class level, but making different salaries. Legal Times: You’re suggesting, though, that there may be a positive legacy for the management of law firms to come out of that period in the first quarter of 2000, when everyone tripped over one another to go to $125,000? Because what a lot of them also did was say, “We’re going to make some differentiation between the kind of law that these associates practice in.” Branch-New York: But it’s interesting because it’s not only differentiation. I think some of the associates are a little bit rueful about what happened because, as a couple of them said to me, they can’t complain anymore when they’re asked to work longer hours. And as we were talking about earlier, it’s attorneys, too, that are getting cut off faster. The partners are less willing to provide getting-up-to-speed training time, if you will. If you’re a lateral second-, third-year associate, or even a brand-new associate, and you’re not cutting it, where firms would previously have given you a year to prove yourself, they may now only give you six months. They’re being much more realistic, and many firms are very generous with the severance that we’ll give to a departing lawyer: You’ve got six months to find another job. Well, six months of $150,000 with benefits is a chunk of change. So let’s give this person only three months, but we’re basically cutting back the amount of time we’re going to give to that person to prove themselves. So the pressure is on the associates a lot more. Northern Virginia Firm: Now, our firm did not go all the way because we have a quality of life. We kept it at 1,800. But if you want to work 1,950, in our bonus system, you can make that kind of money. We felt it was very important to have quality of life in our firm, and so we have a different kind of salary structure. What we’re finding out in something called the Flash Report is that we are not alone. Not just at IP firms, but in general, firms seem to be interested in offering quality of life. D.C. Firm: We did the raise, but we didn’t change their hours because we subscribe to quality of life. So we just absorbed it. Branch-Boston: We did the same thing. We didn’t change the hours. We raised the salaries because they believe in the quality of life thing. It’s shocking how much that’s changed in the past, probably, five years. It’s interesting to see that that is a big focus point, because that’s where everybody’s going. Legal Times: How did what happened a year and a half ago change your world? I mean, a year ago, we were hearing from paralegals who were resentful of what was going on, who worked hard and wondered why they weren’t being compensated in this same way. Northern Virginia Firm: Well, they did. National Firm: I think everybody did. Northern Virginia Firm: Yeah, I mean, everybody got increases. National Firm: You can’t do it for one group and not do it for everybody. Branch-Boston: You’re not going to see the significant changes like you did with the associates. With paralegals, I don’t think it’s hit them yet that they’re making $10,000 more than what – D.C. Firm: There’s sort of a recruiting season for paralegals that starts about now, and that’s when the market is made. And I would say, from this time in 1998 to now, our starting salary has gone up by about $9,000. As a percentage of income, it’s about a third more. Legal Times: So what’s the morale of your staff like? Branch-New York: Staff morale in law firms is always perceived to be poor. D.C. Firm: Right. I call it “the Robin Hood effect.” You’ve got all these poor people working for the rich, and they always lament that, even though it is so distorted. When you look at any of these jobs against their counterparts, particularly in this city, against the government or trade associations, they make more money [in law firms]. Branch-New York: Staff Appreciation Day is what used to be Secretaries Day. Some people have the whole week. But in my office, we’re providing a catered lunch for the staff, and it’s specifically for the staff only. I’ve had to tell the lawyers who’ve asked, “No, you are not invited.” Because the first time I did it a few years ago, when my office was much smaller, I did it for the entire office, and I was chastised by staff members who said, “You know, the lawyers get fed all the time and we’re eating their leftovers. It’s about time that this is Staff Appreciation Day. It should be our lunch; let them eat the leftovers.” And so you always have that Robin Hood effect, if you will. I think it’s a great term. But there is a stratification where there’s this perceived class of the lawyers, who are making all these bucks, and us, the lowly staff. What’s interesting is, talking about salaries, the relative salaries that people make, how many secretarial candidates I see with paralegal certificates on their r�sum�, because they all thought, well the way to get ahead is to become a paralegal. And only then do they realize that paralegals start at $10,000, $20,000 less than they were making as secretaries, so they stayed secretaries. National Firm: I’d like to get back to your staff appreciation, because I really feel differently than you do. We include everybody in staff appreciation: partners, attorneys. We have almost 400 people in our office and a lot of our functions include everyone. One of our attorneys is getting an award, and we’re having the ceremonies at our office. Everyone is invited, and we really feel that’s very important for the culture of our firm. Sure, there are some events that are specialized. We have practice area lunches once a month. I think we work very hard. I think there are instances where, I don’t care what you do, some people would never go to anything. They’re never going to like anything. But overall, that’s what I like about this firm’s culture, the collegiality among everyone. D.C. Firm: That has been the hardest thing for me to get used to about being a nonlegal native, is that you’ve got these groups: attorney groups and staff groups and this group, and every time you get ready to do something, you’ve got to go through the list to decide who to invite. My own energy for it wanes because I really, truly believe in teamwork. Everybody who is responsible for some facet of client management and the delivery of the firm’s product is, in my mind, integral to that process. There are no fraternities or sororities anymore. I mean, lawyers don’t practice alone, secretaries don’t practice alone, we don’t practice alone. And the interesting thing is that having that dynamic and that structure, I think, is a disservice to these organizations because it makes people feel like you described. My own attitude has been, you know, I have my own friends and don’t invite me to some events and not to others. And I think there are a lot of people who also feel that way. And that does create, I think, an awkward environment. We invite everybody to our staff appreciation. There is an undertone to that meeting where people are feeling like, you know, this is contrived, because on a regular basis – Branch-New York: “Don’t appreciate me one day a year.” D.C. Firm: Yes. Northern Virginia Firm: Some of it is caused by the fact that attorneys, particularly partners, walk around talking about they just bought a Jag this weekend. But going back to what you were saying, and I said this before, I think what has happened again, even this year, raising them another $10,000, is that we really are looking at our staff to perform far quicker. Legal Times: Does anyone have any thoughts about the future? If the management and leadership of law firms has gone from there to here, in terms of the recognition that they need to bring in nonlawyers who know how to manage and lead, what happens in the next few years, not at your shops, but in the marketplace? D.C. Firm: I think it’s going to be interesting because I think that the kind of consolidation we’re seeing among large law firms sort of suggests that there may be fewer law firms. And I think that law firms are more and more going to be subject to a lot of the same kind of fiscal discipline that other large organizations are, and that the kind of have-it-your-way notion that most partnerships run with are not going to work when you’re talking about 500, 1,000, 1,500 — and the numbers get that large. I mean, we have 94 partners and each one has a place at the table — and for us, it’s not serving one client or one client group, it’s 94 separate clients. And I think that firms will get to a size where they’ll no longer be able to subsidize that. And there will be a cultural change. Legal Times: And partnership agreements will be rewritten. D.C. Firm: To the extent that you have some of the Big Five accounting firms who are starting their own law firms, they are going to create a new compensation structure and model that, from what I understand, is already richer than what most partnerships can afford. And that will become at least part of that list of what other people are doing that we’ll look at in the future. That might mean significant changes for some firms in the way they currently are structured financially, the way they operate, and what those opportunities look like in the future. I just think that there’s a lot of change out there and an opportunity to look very different in a fairly short period of time, like five years. Branch-New York: Several of us had a lunch yesterday and we talked about some of this kind of thing — the movement to very large firms, but also a role for the smaller boutique firms. We’re not talking boutiques of 10 or 12, we’re talking maybe 30, 50, 60 lawyers. And it’s the group in the middle that asked that question. Can they survive being 400, 500, 600 lawyers �- not being one of the megafirms and therefore having the economies of a corporate model, which, I think I agree, some of the partners will end up losing some of their seats at the table. The table could never be large enough for all of us to sit around it. But even now, if we have income partners and capital partners, by whatever term different firms call them, you may see more of a stratification of partnership and more and more of them saying, “Well, partnership just means I’m owner of the firm, I’m making more money but it’s still my clients. But management is not my responsibility.” But it’s this group in the middle. Where are they going to go? Are they going to split apart, become smaller, or will the older ones want to become larger? Will there be a role for the midsize firm, to be able to survive? In any case, they’re all needing to face the economies of the marketplace nowadays, where lawyers are beginning to recognize they do best practicing law and leaving management to the people who know how to manage, and that the lawyers who are in the management roles, the senior roles, have to have the management experience that was discussed earlier. Because you can’t just do things because, well, you like the partner down the hall so you’re going to give him something. It’s just not going to work in a corporate environment that law firms have to move to in order to be profitable in the future. Legal Times: Maybe there will come a time when there will be a genre of lawyer who is a managing partner, who maybe goes from one firm to another. National Firm: Well, we do have some lawyers and administrators that are lawyers, nonpracticing attorneys, that have been members of ALA for years, and for one reason or another chose not to practice law and are very good managers. We see that more and more now. Legal Times: CEOs jump from one Fortune 500 company to another. You know, the CEO of one big law firm may jump to another one. D.C. Firm: Well, our firm got serious about its future because we actually fall in that kind of size range, and after some not very favorable press, we found ourselves sort of mired in that. But as a result of that wake-up call, the chairman of our management board and executive committee has a full-time management role. That was the first time in the firm’s history they have made that kind of investment. They took the managing partner from being a half-time role to a full-time, funded corporate role. And so I think their feeling is to make the kind of change they want to make, in a fairly short period of time. They really did need lawyers in the partnership who would be focused on those things and that kind of duty. Committee assignments that were sort of half-time, quarter-time, really weren’t going to move them ahead fast enough. I don’t think that we’re going to be 1,000 lawyers, because I don’t know how you work the culture thing, but I think there’s some notion of being a very large boutique. And who knows where that will end.

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