Overemphasizing Innovation & Underestimating Common Sense: Law Firm Management Dos & Don’ts

Academics keep throwing around the word “innovation.” Innovation is often used synonymously with “new technology”, “creativity”, and even “best business practice”.

In theory, innovation is meant to be radical change or ideas. In the real world, however, investing in innovative ideas is both costly and risky, and the returns uncertain.

So while firms are constant in search of the next big idea in business, occasionally the best way to create fresh ideas is to affirm tried-and-true old ones.

In an article titled, “Nine Rules for Stifling Innovation,” Rosabeth Moss Kanter laments, “For all the talk about innovation, I see many leaders in numerous organizations in every sector who actively stifle it.”

“They say they want more innovation. But at the same time, they seem to operate by a set of hidden principles designed to prevent innovations from surfacing or succeeding.”

For law firms, forget designing an environment around innovation. Kanter’s nine rules are easily applied to the legal industry’s biggest flaws in everyday management.

Remember a few of these “don’ts” so that you “do” retain employees, impress your clients, turn a profit, and successfully manage your firm in this year.

“1. Be suspicious of any new idea from below — because it’s new, and because it’s from below. After all, if the idea were any good, we at the top would have thought of it already.”

Sure there’s a law firm hierarchy, but that doesn’t mean the best case strategy can’t come from a hardworking first-year. In fact, with so many billable hours spent in the office trying to impress senior attorneys, junior associates may even have a leg up.

“2. Invoke history. If a new idea comes up for discussion, find a precedent in an earlier idea that didn’t work, remind everyone of that bad past experience. Those who have been around a long time know that we tried it before, so it won’t work this time either.”

Certainly senior attorneys and law firm partners have the most trial and transactional experience. But, sometimes the line between objectively-perceived experience and personal bias is fine.

In the courtroom, use past precedent to help you argue the merits of your case, but in management, don’t treat it like it’s the law.

“3. Keep people really busy. If people seem to have free time, load them with more work. In the name of excellence, encourage cut-throat competition. Get groups to critique and challenge each other’s proposals, preferably in public forums, and then declare winners and losers.”

Healthy competition—especially among first-years—can be beneficial. However, so is collaboration and training.

In law firms, having free time is usually a faux-pas. But, associate free time can be weel spent networking around the office, collaborating and learning from peers, and pertinent but not billable research.

Stop treating billable hours like a competition for who is the best. Sometimes high billable hours simply represent the person who manages their time the worst.

“4. Confine discussion of strategies and plans to a small circle of trusted advisors. Then announce big decisions in full-blown form. This ensures that no one will start anything new because they never know what new orders will be coming down from the top.”

Law firms should consider constructing a youth board composed of up-and-comers.

Firm partners should be given one nomination each, and the reign of these young attorneys (or legal professionals) should last at least a year.

A representative for this youth board can then report directly to managing partners on a regular basis. This board should be official, transparent, and meaningful. It should be perceived as an honor.

Give your youth board concrete powers and abilities to impact firm policy and strategy—don’t make it an honorary position. For more information about how and why your firm should start a “youth board,” see this article.

“5. Act as though punishing failure motivates success. Practice public humiliation, making object lessons out of those who fail to meet expectations. Everyone will know that risk-taking is bad.”

Sometimes placing blame—like in the world of torts—is necessary. But, on a micro-level, within the law office, accepting responsibility is better.

When individuals accept responsibility for their actions, a plan for reparation can be made more quickly and efficiently (at least, that’s surely what Lance Armstrong’s lawyers are telling him).

With this in mind, law firms should remember to be lenient and reward open communication. Forgiveness will not encourage mistake making—that’s just a fact of life. It will, on the other hand, keep your firm from being sidetracked by the blame game instead of strategies for recovery.

“6. Above all, never forget that we got to the top because we already know everything there is to know about this business.”

If you didn’t laugh (and understand the sarcasm of) this last one, why don’t you start again from the top…

So, law firm mangers: Do make plans for installing innovative technology, implementing innovative strategy, or incentivizing innovative idea generation at your firm. But, for all the other days, don’t forget to use your common (and good business) sense.

-WB

New Year & New Trend–Law Firm Partners Looking At Layoffs

Bells are ringing in the New Year for law firm professionals, but for whom does the bell really toll?

Unfortunately, law firm partners have little to celebrate in 2013, as their numbers decline in both health and good fortune.

Law firm partners face layoffs, according to a recent Wall Street Journal article.

“You’re only as secure as the amount of money you bring in,” a partner recently told Jennifer Smith of the Wall Street Journal. The aforementioned unnamed partner was first asked to leave a large national law firm during the recession, and then subsequently let go last year from his following firm.

This is just one anecdotal story of many in the legal industry. And, the problem many be more prolific—reaching coast to coast, continent to continent.

Once a managing partner for the British law firm Clifford Chance before leaving in 2000, law-firm consultant Tony Williams explained to the Wall Street Journal, “Firms are now much more clear in what they expect…and much less forgiving if people consistently fall short.”

Lawyers are no longer recognized for their mastery of the law. Instead, lawyers and law firm partners must be managers, leaders, and technological and social media savants all tied into one.

Like many of its predecessors, law firm Waller Landsen Dortch & Davis LLP, located in Nashville, Tennessee, also overhauled its partnership structure during the recession, adjusting pay and hour requirements, in addition to revenue goals for its partners.

“Over that time we went from about 85 equity partners to about 55,” said Chairman John Tishler of its 200-lawyer firm, according to the Wall Street Journal.

“We had a lot of hard conversations, and so some people left us.”

In fact, roughly 15 percent of nearly 120 firms surveyed in Wells Fargo Private Bank’s Legal Specialty Group study intend to cut partners in this year’s first quarter, continuing a three-year trend of partner layoffs, reports the Wall Street Journal.

So, what New Year’s resolutions are to blame for the New Year’s redundancies? Apparently, lack of productivity.

A legal consultant in the U.K. told the Wall Street Journal that partner restructuring was simply “good housekeeping,” seeing as many law firm professionals are having trouble keeping busy these days.

Partners are billing about 30 percent fewer hours per year than pre-recession industry benchmarks. Before the recession, partners averaged roughly 1,900 billable hours per year. Now, they’re lucky to reach 1,300 hours.

“There are a few very major firms that are genuinely and consistently busy,” law-firm consultant Paula Alvary admits to the Wall Street Journal.

But, death of the traditional partnership track means birth to a new, more efficient system.

Here are a few ways to make your partners more productive at your firm:

1. Track more than just billable hours and new business. Consider leadership or management responsibilities, as well as mentorship as requirements among your partners.
2. Make partnership duties transparent so that struggling partners can become inspired by the work of other more successful ones. And, more successful partners can see which of his or her peers need some extra help. Espouse an environment of mutual assistance, not competition to increase productivity.
3. After promoting a new partner, require special partnership training. Don’t send your partners into battle without the proper legal weapons.
4. For partners in large law firms whose specific practice may permanently fail, consider their cross-sectional expertise and what other departments may profit from their experience. Encourage partners to have multiple, cross-sectional knowledge and flexible skill sets.
5. Retrain, don’t rehire. It may be tempting to make cuts to maintain profits. But, where possible, see where you can retrain current partners to become more productive. It often costs more in the long run to fire employees only to rehire one in the future. Before you layoff partners, find out if they’re willing to work part-time, contingency cases, or under a new title (Of Counsel, for example, with a smaller salary).

Law firm partners are certainly ringing in a new era of change.

But, change can start with communication. If productivity is the problem, think about putting partners on sabbatical or asking them to attend training on becoming managers or more efficient workers.

Certainly, partnership standards and cutbacks to increase profits at law firms have increased. But, increasing your firm’s creative management techniques and its communication about new partnership requirements to keep its top executives is just as valuable.

Adapt or downsize? Which New Year’s resolution will your firm follow this year?

-WB

Law Review Begets Law Firm Review: Brief History Of The UPenn Law Review

The University of Pennsylvania Law Review has existed, in some form or another, for the past 160 years. It remains one of the oldest continuously published legal periodicals in the United States.

Like other law reviews, the University of Pennsylvania Law Review was a product of various legal reforms enacted during the mid nineteenth century. As a reaction to these changes, the Law Review was created as an attempt to balance the pragmatic orientation of the industry with the academic approach of the legal publishing world (Greenlee 1875).

Upon its foundation, the Law Review was forced to find ways to fund the publication and its staff, especially during periods of financial instability and at times of fluctuation in student population. After all, 1852 was the onset of the American Civil War.

In fact, 1852 was quite an impressionable year for law.

Not only was the Law Review (under the name American Law Register) first printed, but Harriet Beecher Stowe also published Uncle Tom’s Cabin, bringing the issue of slavery to the legal and social forefront.

Thus, at its inception, the Law Review was alreadylooking to grant equal opportunity to students and lawyers of diverse racial, ethnic, and gender backgrounds (Greenlee 1876-1879).

Over the years, the content and tone of the Law Review has evolved. But, by the 1890s, the Law Review assumed the form recognizable today, referred to frequently as case method.

“Students who excelled in the classroom wrote for the Law Review, where they typically applied this scientific analysis [the case method] to a recently decided case,” quotes Greenlee in “The University of Pennsylvania Law Review: 150 Years of History” (Greenlee 1881).

And, it is still students who determine whether or not an article is accepted for publication.

Ergo, within the lifetime of its founding editors, the Law Review had built an institution that adjusted for risk, encouraged diversity, implemented structure, and embraced youth in the field.

Today, law firms are wise to remember this basis for law review.

For example, it’s not often that young associates are trusted for their opinion or included in high-profile cases.

In addition, law firms these days have forgotten the importance of structure, especially at the higher levels. Managing and equity partners are often left to their own devices just because “they made partner”—regardless of the hours they (may or may not) keep, clients they seldom attract, or colleagues they’re prone to abuse.

It’s rare that a law firm would use peer review on their partners. And, sometimes, it’s exactly this structure and rule-enforcement that’s needed.

Furthermore, although diversity is improving, the industry of law still ranks low on the level of women or minorities in senior positions.

And, finally, firms like Howrey LLP remind use that law is still slow to incorporate administrative innovation, embrace technological change, or look for methods to diffuse financial risk.

The University of Pennsylvania Law Review continues to be one of the most revered legal publications in the U.S. and the world. A simple look back on their history and their business model explains why.

 

-WB

Reference:

Edwin J. Greenlee, “The University of Pennsylvania Law Review: 150 Years of History,” University of Pennsylvania Law Review , Vol. 150, No. 6 (Jun., 2002), pp. 1875-1904. Published by: The University of Pennsylvania Law Review [URL: http://www.jstor.org/stable/3312982?seq=7]

Can Blogs And Social Media Alone Teach New Grads To Be Good Lawyers?

“It’s 10:00 p.m. … Do you know where your children are?” was a popular public service announcement in throughout the 1960s and 1970s. In 2011, the same question can be asked of young associates. It’s 10:00 p.m. … Do you know what your lawyers are up to?

Well, they’re blogging… and on facebook, LinkedIn, or Twitter. In today’s new online world, the same predator targeting your children is now after your impressionable first-years. But when it comes to recent law school grads looking for guidance and mentorship, how harmful or beneficial is social media?

Kevin O’Keefe—ironically the author of Real Lawyers Have Blogs—claims social media puts high-quality work product and the clients it serves at risk. “I’m not including gaming Google as a skill you need to provide effective representation,” writes O’Keefe. “For those lawyers, blogging is putting a gun in a child’s hand. Clients who find those lawyers and don’t see through the charade may be in jeopardy.”

In a troubled economy, young lawyers are forced to resort to predominantly digital methods to find jobs, to obtain post-bar card training, and, in the total absence of employment, to market their services as an independent professional. Websites boasting legal advice, information databases, or other legal training are booming. Blogs posting various legal news and developments (like this one) are also popular. Access to information, however, also means access to misinformation. Social media connects people—and attorneys are no exception.

“I’m not sure we should blame a recent grad who cannot get a job in a law firm from reaching out to connect with more senior lawyers.” Instead of directing this public service announcement toward inattentive parents, the message is for distracted managing partners, reminding them that mentoring the younger generation means more than a few in-house CLE sessions or a tour of the law library.

“In the old days… We asked questions of our mentors—whether we called a partner a mentor or not. We got feedback on transactional docs we drafted and briefs and pleadings we crafted. We sat in on depositions and trials, hopefully getting thrown a bone by being allowed to take a witness while our mentor sat at counsel table in court or along side us in a conference room.”

In sum:

1. Good firms implement training and mentorship programs so that first-year associates don’t have to resort to Google for answers.
2. Good associates seek out advice from their peers and respect the experience of more senior attorneys. When no formal mentorship program is in place, young lawyers should not hesitate to visit the courthouse or ask questions of court clerks, call the lead counsel on the case or even the representatives at LexisNexis and Thomson-West.

At the same time, the study of law and the structure of law firms are two constantly evolving cogs in this venerable industry. Social media should not be seen as a negative addition to the more traditional aspects of law. Instead, social media can encourage young associates to connect with more experienced ones.

Blogs also keep attorneys apprised to important news and developments, which, thanks to instantaneous Internet communication, stay transparent. LinkedIn is still a premier networking tool for professionals. It provides an affordable means to market firm services, advertise job vacancies, and skim through the resumes of potential employees.

In addition, allowing associates to spend a few minutes a day browsing facebook feeds has been shown to alleviate stress and promote productivity (not to mention, giving you ample “likes” on your firm’s page). Finally, myriad court cases today involve e-discovery and investigation into social media. Having lawyers who are familiar with such sites is to your firm (and client’s) advantage.

Free-access information and information broadcasting over the Internet is a permanent addition to the practice of law. Rather than eschew social media, try embracing it with an official firm blog or twitter, state-of-the-art technology and computers, as well as an internal online chat forum. Whether digital or at a desk, mentorship and associate training, in any form, is key to law firm success.

-WB

Read other reactions to O’Keefe’s post at The Lawyerist.

Attend C4CM’s Social Media Policy Course on Thursday, June 9, 2:00 PM To 3:15 PM Eastern, called “Social Media Policy Dos and Don’ts: Employees, Networking Sites and the Law”

How Partners Can Improve Management Performance With Associates’ Feedback

According to a post in Law.com’s In Focus series, there are several ways in which partners and associates can develop a healthy and productive working environment–and feedback is #1.  “[N]othing can stall a program faster than a belief by associates that management does not take their feedback seriously.”  

The Law.com piece takes the position that partners are generally of the opinion that they are well-liked and that associates consider them great managers.  Not always the case, says the author. “[Feedback] is a crucial first step in developing an evaluation questionnaire that truly captures the qualities most valued by the lawyers at your firm.”  

So what’s a good way to break the ice? “Upward reviews give associates the opportunity to evaluate and provide input on the management and leadership performance of partners with whom they regularly work on deals, cases, committees or pro bono matters.”   This upward review protocol is liable to attract prospective new recruits, as well, as the word is likely to get around.  

The idea is to enhance management performance and to show your associates they are valued.    How to start? Conduct focus groups which encourage participants to pitch core values and other important topics, and, if needed, bat those concepts back and forth until it’s clear what everyone considers of utmost importance.  

It’s likely you’ll find the meeting quite eye-opening.  Here are some of the characteristics that one law firm heard their associates give voice to: trust, integrity, training, mentoring, respect, associate development and teamwork.  Also, sensitivity to the needs of others.   

One valuable criterion: keep the upward reviews anonymous and confidential—and pass this fact on to all the associates. You must communicate the idea that their identities will be safeguarded, or they might not be as forthcoming with their comments as they—and you—would like.  

Before the actual sit-down, it’s also recommended that partners take some time to honestly assess their own leadership and management characteristics. This serves the dual purpose of prepping them for the commentaries—which will give them a basis for comparison—and will also point out for them, maybe for the first time, the areas they excel in.  (This will bring balance to the evaluation. We all have plusses and minuses in our management style!)  

Finally, if there are issues which merit management intervention, this sort of reality check will raise a red flag and avert a possible problem.  “[W]orking with individual partners [post-evaluation; towards improved performance] is critical.”   You should also consider “testing” the upward reviews program in one group or department, to “get the kinks out”.  If it’s at all successful, you’ll want to roll it out large-scale.   To read the full story, go to: http://www.law.com/jsp/llf/PubArticleLLF.jsp?id=1172052185553

-EM

Why Law Firms Should (But Don’t) Make More Women Partners

It’s time to choose a sponsor! Put away your Alcoholics Anonymous membership and pull out your bar card. There’s now an economic reason to advocate for more women in law. Law firms, especially partnerships within them, are notoriously shy of female representation. But potential future revenue depends on making Jane, not John, a partner at your firm.

The ratio of women equity partners to women non-equity partners from 2002 to 2007 was 2.546, roughly half the ratio of 4.759 for their men counterparts, according to a recent Temple University Legal Studies Research Paper. Female partners are also paid less than male partners despite being equally productive in generating revenue per lawyer for their firms, according to the same data. There is also no indication that there are fewer women practicing law; in fact, women represented approximately 50 percent of associate hires in the eighteen years prior to 2001. For the same years, however, women accounted for only 15 to 16 percent of partners. So what are women doing differently to prevent them from earning that corner office? Some are now calling it the “The Sponsor Effect”.

Just like the phenomenon El Niño, success in the workplace is a paired effort (see, La Niña). In this case, the success of younger female lawyers depends on sponsorship by a more senior male or female lawyer. A study conducted by the Center for Work-Life Policy in collaboration with American Express and published by the Harvard Business Review found women underestimate the importance of sponsorship and networking among senior level managers. Furthermore, those who do appreciate its importance don’t take the time to properly develop these relationships. Sylvia Ann Hewlett, founder and President of the Center, explains, “a sponsor is someone who advocates for my next promotion and speaks of your strengths and makes the case for your advancement in your absence.” Supplementing this definition, Kerrie Peraino, Vice President for Human Resources with American Express, says “a sponsor takes calculated risks for you.”

These calculated risks are especially important in our current economic environment, where billable hours are at an all time low and fear for your job at an all time high. Instead of increasing billable rates, reducing vacation time, or cutting costs (such as HR initiatives targeted at morale and employee incentives), senior managers should take the time to sponsor younger female associates. In fact, the average gross revenue of firms with the highest percentages of female lawyers was approximately $20 million higher than firms with the lowest percentage of female lawyers. More female employees leads to higher revenues because for less compensation, women are willing to perform at the same level as their male equivalent. The biggest mistake made by partners within firms of any size would be de-prioritizing professional development and career advancements of their subordinate associates, especially during a recession.

Recession leads to higher competition, and sometimes harsh realities. So firms—promote more women to senior positions since female lawyers are equally productive, but cost you less (sorry, ladies, it’s true). Female attorneys—find a sponsor, network to the top of the power chain, research the opposition, and then don’t let your firm negotiate you down from anything but equal opportunity and pay. On the macroeconomic level, everybody wins. As demand for female partners grows, so the wage gap (and hopefully discriminatory hiring practices) will naturally decline (For more information, see “The Economics of the Wage Gap Explained”).

For more information, please read:

1. Statistical Evidence on the Gender Gap in Law Firm Partner Compensation (Marina Angel et al.) – September 9, 2010 (report).
2. Hewlett, Sylivia Ann, Kerrie Peraino, Laura Sherbin, and Karen Sumberg. “The Sponsor Effect: Breaking Through the Last Glass Ceiling,” The Harvard Business Review: Jan 12, 2011, 90 pages.

The Economics of the Wage Gap Explained

In the same year, Wheel Of Fortune darling Vanna White was born, 13-year-old Bobby Fisher became chess champion, Physicist Gordon Gould invented the laser, and Nobel Prize winner Gary Becker wrote The Economics of Discrimination. In his book, Becker argued that discrimination as a result of prejudice by employers leads to economic inefficiency; therefore, the more competition and free market behavior, the less likely employers would be able to get away with discriminatory hiring practices. That was back in 1957.

Today, America continues to be a country of high-stakes competition, strategy games, and the litigious long haul (Gould spent thirty years fighting the U.S. Patent and Trademark Office to obtain patents for his laser and related technologies). Women in all professions have fought prejudice and lower compensation for decades. If Becker is correct, shouldn’t the inefficiency of a gender-biased wage gap have been eradicated by the market long ago?

Alas, gender bias is still pervasive in America. According to a study conducted by The Women in Law Committee of the State Bar of California, 85 percent of female lawyers surveyed noticed a slight but persistent gender bias in their position, and nearly two-thirds of surveyed female lawyers agreed that they were not accepted as equals by their male colleagues.

The effect of such a bias is great. Women comprised less than one third the total number of legal professionals in the U.S. in 2009, although they accounted for nearly half of all J.D.’s awarded for that same year, according to the American Bar Association. Furthermore, women accounted for a mere 15 percent of General Counsel in Fortune 500 Corporations and 24.7 percent of District Court Justices in 2009. Finally, gender bias places women in law, like many other industries, at the losing end of the wage gap.

Both female equity and non-equity partners are compensated less on average than male partners, despite operating at equal productivity levels, according to a Temple University Legal Studies Research Paper. However, this discrepancy is not limited to partnerships. The study found women in the legal industry in general, regardless of their position, were all paid less than their men counterparts.

Since law firms are more common than Starbucks these days, in a competitive market, the demand for employees who cost less but produce more should be growing. At least, that’s what Becker would opine:

For example, a biased monopolist might hire a more expensive white worker even though a cheaper black one was available and up to the job. But if another firm entered the market, it could produce its goods more cheaply by hiring the black worker that the monopolist had turned down. By discriminating less, it could undercut its blinkered rival. Mr. Becker did not argue that competition would get rid of bias or even necessarily reduce it. Rather, he argued that competition could greatly soften the economic effects of a given amount of bias on the part of employers. His model also implied that competition would have a greater effect where the existing degree of bias was greatest. “Race and red tape: One unsung benefit of financial deregulation is greater colour-blindness”

                Nov 13, 2008 from the Print Edition of The Economist

An especially distressed economy becomes rife with competition. Among law firms, competition exists for penny-pinching clients. Among associates, competition exists for a limited number of jobs against an overabundance of candidates. Once law firms realize the market has undervalued the price of female attorneys, the demand for them will only increase. As this demand is filled, the price (think, salary) of female attorneys will increase. To compete, men will have to settle for lower compensation, thus (in theory) decreasing the wage gap between male and female lawyers.

Sadly, Becker is right—economics alone cannot eliminate prejudice. But, in a recessed economy where the bottom line matters most, perhaps economics can at least give the appearance of gender equality and impartiality until societal mores catch up. So… here’s to hoping.

For more information, please read:

1. Statistical Evidence on the Gender Gap in Law Firm Partner Compensation (Marina Angel et al.) – September 9, 2010 (report).
2. http://www.lectlaw.com/files/att06.htm