What’s the end game?

30 09 2011

I was with a group of law firm partners from different City firms this week, listening to them discuss a case study about super-profitable US law firm Wachtell, Lipton, Rosen & Katz. Aside from their phenomenally successful business model and profitability (with the Amlaw100 reporting profit per partner of over $4m), one of the points that provoked most discussion was the idea that many of the partners would retire from the firm in their early forties.

Doris was overjoyed to hear she'd finally made partner

One response from the group was “that’s just coming into your lawyering prime”, which really got me thinking about careers in the legal profession, how they’re changing and ultimately what the end game is for many lawyers.

It used to be simple.

When I entered the profession in the mid/late nineties you joined a firm, did your training contract, hoped you’d get kept on, and if you did took your place on the conveyer belt. In the larger firms this often meant increasing specialisation and more often than not, increasing your hours.

In particular it was understood (albeit often unspoken) that the years between two and five years post-qualification were the proving ground. Where firms got to weed out those who were not suitable for partnership, and consequently lawyers were competing to prove they were up to the job.

This ethos, coupled with the leverage dynamic (with a smaller number of equity partners generating huge fees from supervising and managing junior lawyers) and chargeable hours model saw associates happily prepared to work all hours as they strived for partnership. The pot of gold at the end of the rainbow.

Every year their increased experience meant law firms could up their hourly chargeout rate, meaning in turn that as long as their chargeable hours stayed high, a nice chunky payrise was available, thus providing a short-term incentive for the associate to stay in the game.

Now this approach certainly had its faults, but it was largely understood and accepted and as a result it worked. Hell, early in my career I was certainly prepared to play by those rules.

But things have changed.

That model is breaking.

Firstly, the concept of work/life balance arose. Slowly, softly at first, it began to gnaw at some of the Generation Xers. Marriages came and went and at both points, people began to pause for reflection. Children brought matters into even sharper focus. None of these events were new, but society’s attitudes were changing and the legal profession was not immune from this.

With the emergence of Generation Y, the trend began to accelerate. I vividly recall a conversation with a managing partner of similar age to myself a couple of years ago, where he shared his frustration that many of his assistant solicitors wanted to leave work at 6pm. He understood this, but having put the hours in himself at that stage in his career, found this attitude difficult to reconcile with the drive and focus he expected from his young lawyers.

At the other end of the spectrum, change was also afoot. Many of those partners who had put in the hard yards and had been through the grinder were looking round and asking “is this it?”. Some had migrated into management as this was seen as the only upward progression, but either didn’t like it or weren’t suited with it. Others began to see the downside of their high levels of specialisation by craving a broader workload.

The model was also being tested by the market. A growing rejection of hourly rates, and more sophisticating procurement of legal services caused clients to question firstly whether hourly rates were suitable, and secondly, if they were, why they should be paying more for a particular resource than they paid a couple of months ago (simply because they had another year PQE and their rate went up) when the value delivered was exactly the same.

As the career model began to crack, the consequences began to emerge. Moves to in-house roles, into venture capital and private equity companies became more common, and law firms began to adapt by creating different career paths and non-partner senior roles such as “Of Counsel”, “Legal Director” and of course “Consultant”.

But with the structure of the profession fundamentally changing due to trends such as outsourcing, technology, commoditsation and globalization, is this enough?

While the supply of law students far outsrips demand, the answer I suspect is that the slow changes to the status quo will probably be sufficient in the short term, but ultimately as the profession reconfigures to meet the changing needs of the market, new and better career structures must emerge or I believe traditional law firms may begin to lose heavily in the global war for talent.

 





The Joy Of Secs (secondments)

22 09 2011

I’ve been hanging out with a lot of in-house counsel recently, and one thing’s clear.

They love their secondees.

Really love them.

The working environment on secondment wasn't quite what senior corporate associate Sarah was expecting

Whether it’s a GC who is relying on a specialist skill set that he or she can’t quite find the budget to recruit, a mid-level corporate counsel who is working with a junior lawyer from private practice who helps with the “heavy lifting” on a big deal, or a small in-house team that find having a secondee gives them much broader access to their external law firm’s resources than their usual interaction – the sentiment is unanimous.

For law firms, secondments offer some incredible benefits too. Time and time again, clients point to knowledge of THEIR business as a critical factor in selecting their external lawyers. The insight secondees getting living and breathing in that environment can’t be gained from market research or reading up on the company. Plus, alongside the knowledge of how a client works, their culture, their pain points comes the opportunity to build broader and deeper relationships – not just with the in-house teams, but with their internal clients too.

Where a secondment programme has a rolling element (whether trainees or more experienced lawyers) and the firm puts in a continuous series of lawyers over time (for example a change every six months), this can build an incredibly strong connection over time between firm and corporate team and build a powerful competitive advantage for an incumbent law firm.

Outside of the particular secondment relationship, lawyers often return to private practice with a broader skill set and a better understanding of clients at a more general level, and are much better placed to empathise with the in-house community as a result. Plus in-house experience, even at a secondment level, really does does count when pitching for work with corporate counsel.

So it’s all sunshine and light?

Hell, let’s try and stick everyone on secondment and then we’ll never lose a client. Right?

Alas, it’s not quite that simple.

The major challenge law firms face is economics.

The basic premise of a secondment being that if a client has enough of the right type of work (generally consistent in terms of volume, skill and experience required), but not enough to make permanent recruitment an option, then taking a single lawyer on secondment will be cheaper than paying for that resource on an hourly rate basis. In return the law firm gets guaranteed utilisation of the lawyer, a degree of certainty of revenue and predictable cash flow.

But the world has changed. Because the competitive intensity in the legal market is increasing rapidly, and because firms have wised up to the broader benefits of secondments (set out above), the price that in-house teams have had to pay for a secondee has fallen rapidly.

As the economy tightened, putting secondees in “at cost” became more prevalent. At a superficial level, this again made sense – with firms restructuring and struggling to find work to keep all their lawyers busy (and therefore employed), farming them out to clients allowed them to retain their good people while keeping clients happy.

But in reality, often the exercise often ended up costing the firms more than they anticipated. Questions arose to what “at cost” actually meant. Was it salary cost (and if so did that include benefits, bonus etc)? What about a proportion of overheads (often asked as the finance director walked past the secondee’s empty desk in an expensive City location)? Who picked up the tab for the upgraded laptop that was required to get on the client’s network? What about the opportunity cost when another project turned up unexpectedly and the firm was struggling for a particular resource profile to do the work efficiently?

As the requests for secondments increased, difficult decisions had to be made – who can we say “no” to? If we say “no” will another panel firm put someone in? Is it an investment rather than a revenue stream, and if so, how do we calculate the return on that investment?

Competition for resource within firms, already fraught with politics in many cases, heightened.

The pressure on resources is made worse still when a secondee doesn’t return (not as sinister as it sounds!). Two common outcomes are that the secondee “goes native” and is simply recruited by the client. If the relationship with the law firm is financially material, the firm will have limited ability to negotiate any form of compensation, irrespective of terms in the engagement letter. The other alternative is that the secondee gets a taste for in-house life, and after returning to the law firm simply finds another job with a corporate legal team as quickly as possible.

Speaking from experience, while I had already decided that an in-house role  was probably the next move for me, three months I spent on secondment a year before I made that move did help to crystallise my thinking when the time was right to make the change.

Another challenge is for longer term secondments, how does the law firm effectively keep the connection with the secondee? I’ve seen this challenge at several levels – from the junior associate living out of a hotel for nine months, disconnected from her peers and far from her family, to the partner slowly becoming marginalised in the partnership and losing the emotional connection to the mothership.

Pros and cons.

Swings and roundabouts.

To my mind however the overall value equation is clear. If the engagement is structured well, the economics thought through and the fit between secondee skill set, personality and appetite with the in-house team’s culture and need is good, a secondment is a winner every time. The key is not to assume every secondment fits this model and to put the time in up front to get to a working relationship rather than to simply react and throw resource in at every opportunity that comes along.

Happy seconding.





Why sorry is the hardest word

14 09 2011

I had a very interesting conversation with a colleague yesterday around a workshop he was facilitating for a fairly sizeable group of lawyers. As part of the discussion he asked the question “how many of you have ever been the subject of a client complaint”.

Our subsequent discussion centred around the fact that the solitary hand that was raised did not seem representative of the either the statistical probability of the number of complaints from the group (there was probably well over 150 years of cumulative PQE in the room) or the amount of unspoken discomfort in the room.

Adam readied himself to discuss his drafting mistake with the head of department

I’ve written before about why lawyers find it difficult to admit they are wrong (a training based on hiding weaknesses in your client’s arguments and exploiting your opponents, and a pathological fear of negligence claims), but the point I want to explore here is how much harder it is to deal with the consequences of a mistake, if you can’t admit it in the first place.

My starting point is that mistakes will happen. I don’t care how good you are as a lawyer or a law firm, while legal advice is predominantly a human activity (as opposed to automated or process based), the human factor remains fallible.

You, me, none of us are perfect.

Now of course you can minimise the risk of mistakes – quality checks, supervision, training, best practice etc, but at the moment I’ve yet to come across any law firm partner that can hand on heart tell me the firm has not made a single mistake in the past 12 months.

And as work becomes more complex and has to be done at ever increasing speed, the possibility of mistakes may well increase.

So mistakes are going to happen. The question is, how are you going to deal with them?

The majority of larger law firms and corporate legal departments have some type of relationship. Some are more transactional than others, but I’ll make an assumption that the mistake happens in the context of some type of broader relationship, not least because that’s when both parties are likely to care more about it.

My experience both in law firms and in-house tells me firms can deal with mistakes really well, or get it spectacularly wrong.

Let’s deal with some classic unhelpful responses ( Twitter would categorise these law firm #custservfails) first:

  • Refusing to the acknowledge the problem – “advising around it” – effectively providing remedial advice to sort out the problem before the consequences become significance (“I see your point, we’ll add some additional wording in here, just to clarify that”)
  • Blaming the client – implicitly or explicitly (“well, if they’d given us clearer instructions this never would have happened”)
  • Glossing over the problem (“lucky we caught that in an early draft”).
  • Sorting the problem out without any sign of good grace or contrition (“leave it with us”)

Perhaps my favourite example was a conversation I had with a law firm where I’d had a repeated breach of my company’s outside counsel policy (which explained among other things, who in the business could instruct external lawyers, and what involvement the legal department had to have with a matter). After the third clear breach since I drew the point to their attention, I asked for a meeting with the relationship partner to get to the bottom of the issue.

I have to admit to being amazed when the partner turned up with two of his peers from different departments, with a clear plan to try and turn the meeting into a cross-sell pitch. I was certainly expecting the “S-word”, but it wasn’t “sales”.

  • No apology.
  • No self-awareness.
  • No more instructions.

But it’s not all doom and gloom. Several firms I worked with were very good at managing the occasional mishap.

One of the most telling signs was where the law firms brought a mistake to my attention, particularly as there was a chance the error might not have got noticed. For example, I’ve had that happen when there was no chance at all of me noticing, because the error arose as a result of a translation from Arabic (where the law firm had arranged the translation).

This builds a huge amount of confidence, and in every case where that has happened, the firm also presented an explanation of why the problem arose, and (critically) a plan to make sure it didn’t happen again. Viewed in this light, problems can be an opportunity to improve the service for the future, and build genuine trust with the relationship.

To me, as a client, that open dialogue is critical.

It works both ways too. Rather than bitch and moan about poor service (which can be more than a simple mistake, as it involves performance measured against expectations, which in some cases may not be explicit), I believe it’s in both parties’ interest for the client to raise the matter with a law firm, and to do so in a clear and specific manner which allows the firm to take action.

I’ve done that in situations where this has helped the law firm have difficult performance management discussions with under-performing staff and also improve processes that have benefitted multiple clients.

Now if this sounds like some sort of rose-tinted utopia, let me be clear – it’s not. Not all of these conversations are easy, (“Difficult conversations – how to discuss what matters most” is a great read by the way) and at times can be uncomfortable, but I do believe that putting in the effort beats the alternative for both parties – a dysfunctional relationship benefits no-one.

There are also times where the scale of the screw up is so monumental, that the relationship simply can’t be saved (for example the reputation damage to the law firm within the client business is so great that the in-house lawyer would lose the confidence of his or her clients by using the firm again), but those cases are few and far between.

In most cases, starting an open, honest and productive dialogue is the best way forward, and saying “sorry” might be a good place to start.





How to find an extra 1,000 hours a year

6 09 2011

I have a confession to make.

The partners were surprised to see Fiona set fire to the firm's library in the name of productivity

I’m an information junkie. All my life I’ve been a voracious consumer of books, magazines and newspapers.

From burying my nose in novels as a child, through reading 3-4 books a week when commuting as a lawyer, to teaching myself to speed-read early in my legal career to keep on top of fast moving professional development, books have never been far away.

Indeed I wrote about how reading more widely can help a lawyer become more rounded and get a wider perspective that can enhance their thinking and advice (and I stand by that idea!).

So what’s the problem?

Well, the quantity, quality and ease of access to information  is so high these days, that reading can take up a disproportionate amount of time.

It’s possible to spend so much time reading, that experiencing life and reflecting on it can take a back seat.

I took some time to reflect on this challenge on a recent holiday, and realised that I was bombarding myself with information pretty much from the moment I open my eyes. Does some or any of this sound familiar…

  • Wake up. Check smartphone for urgent emails
  • Waiting for train – check news and sport headlines on smartphone, check twitter and facebook feeds
  • On train – read newspaper on Kindle, when done move onto ebook (usually business or personal development)
  • Work – check Google reader feeds, work reading, twitter while waiting for meetings, walking to get lunch etc
  • Train home – read ebook (business or personal development)
  • Before bed – read ebook or physical book (could be work or fiction)
  • Repeat.

Aside from the enjoyment I got from reading (an important factor not to gloss over in this discussion), it was apparent that my mind was whirring constantly from the moment the alarm went at 5am. My sense was that while this definitely had benefits in terms of the sheer amount of knowledge I was accumulating (much of which has been very useful), it was also draining a lot of mental energy and limiting the headspace I had for thinking and reflecting, and on balance the negatives were beginning to outweigh the positives.

As the Tao Te Ching says (verse 48) “learning is daily accumulating, the Way is daily diminishing”  (and yes I realise that’s a quote from a book!).

Sometimes less is more.

So I decided to do an experiment – I’d go on an information diet.

The first thing I did was cut out reading a daily newspaper. I’ve read a newspaper pretty much every day for the last twenty years. Give or take a few minutes, it takes me about 30 minutes to read the whole thing in my very methodical way. News headlines, sport, UK news, overseas news, business news, features and culture. Bish bash bosh.

Now giving this up might seem a small step, but psychologically I wondered what the effect would be – would it hamper my ability to hold conversations in the office? What about at social events? Would I go to meetings and find I didn’t know what people were talking about? Would this damage my personal competitive advantage? Would I become (perish the thought) less interesting?

The reality – important news found me. I didn’t have a complete news black out – quick checks on the BBC mobile news, trends from Twitter, and of course conversations have so far (four months and counting) brought me all the news I seem to need.

What I didn’t anticipate is that where I have needed to find out about something (and this has been very rare), simply asking the person who’s raised the issue to tell me what’s happened had led to some rich conversations and elicited opinions I might not have got if I’d already known the detail.

The other thing I noticed, is that when I pick up a newspaper, I now see how much news there is that really has no impact on my life (in any capacity), which is generally depressing, but which  I would have consumed anyway in my pre-information diet days.

On a similar note, a former journalist I met with last week mentioned that he was continually frustrated by his inability to block out which contestants are currently appearing on Celebrity Big Brother because despite his total lack of interest in the subject, it seeps into his consciousness through the media.

So far so good. I’d reclaimed three and a half hours of time per week (182 hours a year  sounds more impressive!). Assuming I used that time wisely, that was a real productivity boost.

The next step was to stop reading other books.

So for the last three and a half months, the only book I’ve looked at (which I mentioned in my post The Tao of Law Firm Strategy) has been the Tao Te Ching – the classic Chinese text which is best described as a cross between philosophy and poetry. Read for five minutes, ponder for an hour.

So for all intents and purposes, my reading has gone from say 3 hours a day, to zero. That’s over 1,000 hours a year. Or one and a half months.

Pretty drastic? Maybe.

Permanent? Don’t know.

One of the important points (in my eyes anyway) is that not only have I reduced the information I take in, but I’ve chosen not to replace that activity with another. It’s just white space and  I definitely appreciate the extra time I now have to think things through (work and personal) and also just be.

There are times when less is definitely more.

It’s also made me much more conscious of where I choose to focus – Davenport wrote a great book called The Attention Economy about the value of attention (related article  at Brainpickings if you’re interested), and having some extra time and space to allow you to step back and re-prioritise is surely a good thing.

So what’s the reading end-game for me?

Well, I think I will welcome books back into my life at some point, although I feel no rush to do it right now. When I do I think I’ll be more selective about what I read – to offer me greater benefit that the space I’ve freed up, it’s going to have to be quite a book!

So for busy lawyers, while I can’t free you from the tyranny of the timesheets (the market will do that in time…), by limiting the amount of information you take in outside the office, you might find yourself more productive.

Just don’t spend the time you’re freed up watching television. Please!