Firm Leadership

Rants, Raves, Rebuttals, Reflections, Revelations & Ruminations

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Post #723 – Thursday, December 11, 2014

There Could Be Real Trouble On The Economic Horizon

Once in a while I dabble in writing about economics, a subject that has always fascinated me.  Some readers will remember that back in August 2008, a time when most pundits were suggesting another possible 18-month recession, I had the audacity to author a piece entitled, Managing Through A Prolonged Downturn.  In that article, I stated: 

Conventional wisdom, publicly espoused by a number of market watchers and legal consultants is that: “The recession will be intense, but short.  Everyone wants to get back to normal.  Short term, the backlog of real estate will be sold as owners accept losses; banks will end the credit crunch; layoffs will make companies more efficient.”

My view is far little less confident.  I believe that unlike past experiences, this recession isn’t being caused by a downward spiral in a few isolated industries.  It started with the burst of a protracted housing bubble and then metastasized into a full-blown credit crunch, eventually destabilizing the entire financial system. Therefore, I submit that for the next five years, every time you think it's safe to get up and dust yourself off from this downturn, every time you feel like you've endured the worst of it, another piece of news is going to come along to freshly bludgeon you.  This time the economic slowdown is going to be a lot different and, in many ways, a hell of a lot tougher.

Well, we are now beyond my five-year prediction and many of my friends are elated with their good fortunes from the stock market and cheerily optimistic from reading the various newspaper forecasts for 2015.  Many believe that we are slowly returning to the pre-2008 period we so enjoyed.  Let the good times roll!

Today we all watched crude oil moving even LOWER than the $60 level the Saudi Arabian government claimed was something it could live with.  The price of crude oil has dropped 40% since June.  The Saudi’s are betting they can bankrupt the U.S. Fracking industry.  But that’s not the real story here.

The first hint of the real story was advanced in a Bloomberg article on December 2nd entitled: “Junk Bonds Backing Shale Boom Facing $11.6 Billion Loss.”   “The oil sell-off,” Bloomberg reported, “is deepening concern among bond investors that the least-creditworthy oil explorers will struggle to pay their obligations and prompt bankers to rein in credit lines as revenue slumps.”

The real story is that Energy companies sold $50 billion in junk bonds through October, 14% of all junk bonds issued.  But junk-rated energy companies trying to raise new money to service old debt or to fund costly fracking or off-shore drilling operations are suddenly hitting resistance.

What does this mean?

Go back to 2007 and have a look at what the total of subprime and Alt-A loans amounted to.  That number was about a trillion, and the losses in that sector were above 20%.  There you had a $1 trillion market with $200 billion losses.  Today, in energy sector junk bonds, you have a $5 trillion market which, if it experienced the same 20% loss rate means $1 trillion in losses.  This is far bigger than the subprime crisis that took down the economy in 2008.  

Smaller drillers are in trouble.  All of them had horrific single-day plunges, some over 30%, on “Black Friday” after OPEC’s Thanksgiving decision to keep production quotas at 30 million barrels per day.  These are the very companies that benefited during the crazy good times from yield-desperate investors who’d been driven to obvious insanity by the Fed’s interest rate repression.  These investors -- such as, perhaps, your bond mutual fund or your pension fund -- loaded up on energy junk bonds and leveraged loans.  Ouch!

Companies in this sector are now facing a harsh reality: crashing revenues and earnings. Some of them are going to have liquidity problems.  Unless a miracle happens that will goose the price of oil pronto, there will be defaults, and they will reverberate far beyond the American oil patch.

Meanwhile, the too-big-to-fail banks are bigger, the risky derivatives bets that tanked the market are larger, and the Federal Reserve’s money printing is running even further amok.

Post #722 – Friday, December 5, 2014

The Future of Legal Management Magazine – RIP?

On the LinkedIn site for the Association of Legal Administrators, the Managing Editor of the Association’s Legal Management magazine asked the following question, “What do you think of the Legal Management’s November issue?  We want to hear your thoughts on the content we are creating for our members!  This month learn how firms are revamping their online presence, explore 401(k) options for employees, and meet the legal industry's latest enemy: prescription drugs.  Are we covering the right topics?  Please let us know in the Comment section below.”

The first comment to be posted was this:
"I barely look at the magazine anymore.  When it was a paper version, I read it pretty much cover to cover.  The digital version is proving to be very difficult for me to maneuver around.  If there were even a way I could pull it up in book form and "flip" the pages, I might be more inclined to read it.  In the current form, I just always feel completely lost.

In spite of a number of offers from the Managing Editor to provide assistance (“If you would like a one-on-one tutorial on how to use the Legal Management website or the app, or both, I would be happy to provide one.”) that posting was followed by numerous Executive Director and COO’s comments, from small firms to those of over 500 attorneys, claiming:

I always read the print version but never read the online version. I used to read it at lunch time, but I can't do that now.”

I must agree with most of the comments here.  I, too, have pretty much given up on reading it.  I can carry a magazine about and read it any time there is light.  Reading on a computer, pad, or phone is very tiring on my eyes, especially the tiny phone screen. Additionally, it is far easier to flip between pages than jump back and forth between screens, even when there is an index or ToC.”

“I have not read any of the issues since you have changed to this format.  I find it difficult to maneuver.  I prefer the printed issues that I can take with me anywhere.  I hope you reconsider and bring back the printed issues.”

AND even from the owner of a Law Office Technology Consulting firm, this insightful observation . . .
I find it interesting that the ‘powers that be’ seem to think that going on-line is the wave of the future.  I disagree.  You can't take your computer and read the publication over breakfast, lunch or dinner, or over coffee, or on the bus / train, or while in the "library".  No....give me printed material every time.  When you are done reading it at YOUR convenience, you can always recycle it.  Please, stay with the print version!

The response from the Association’s Managing Editor in a classic demonstration of how to give clients what they want . . .
At this time, there is not a plan to bring back the printed version of the magazine. However, if you do have specific suggestions that would help with your user experience, please feel free to share them, either here or by emailing me . . .

The Editor’s comment was followed by the disgusted response of this COO:
Sometimes I think the HQ Staff doesn't realize that all of us are busy doing our job.  We really don't have the time to have a personal tutorial on how to use an app to read a magazine that many of us read over the years the "old fashioned" way.  By reviewing the comments in this blog, it seems that ALA Legal Management is probably being read less since the introduction of the electronic version, compared to the printed version.

Please do not misconstrue the intent of this Blog post.  I am not picking on the ALA.  I am sincerely fascinated by this discussion and thinking out loud about how many readers, those magazines that make themselves available ONLY in an electronic format may be turning away.  In the case of the ALA, their LinkedIn site identifies over 9000 members, but not one member answered the original question posed in this discussion post by citing some specific article that they enjoyed reading in the November issue.

Meanwhile, one wonders what those who invest good money advertising in this magazine might think after reading all of these comments.  For my part, it reminded me of an earlier life spent as a VP in a technology-based public company where the CEO would comment that "it is often not a matter of what our technology can do so much as what our sociology will accept."

Post #721 – Tuesday, December 2, 2014

15 Leadership Reflections For 2015

Culture change experts take heed: If you can infuse these practices into every leader's drinking water, you'll be more than halfway there.

• Create goals that are both realistic and UNREALISTIC; commit your goals to writing and ensure that they are measurable, and then celebrate the achievement of each goal.

• Repetition is paramount. Remember parenting? How many times did you have to remind your kid to shut the door, wipe their feet, take off their shoes or wash their hands before they did it on their own? Nobody remembers to do something after hearing it once. In this respect, adults are just overgrown kids -- make it clear and say it often. The bigger the change, the more this applies.

• Be genuinely interested in the needs of others and be interested in the growth of others even more so than the others are at times.

• Know that all endeavors will not be easy and will not happen the way you would have planned or wished. Inspire persistence even after the first, second, and third rejection of an attempt.

• Infuse a need to grow by teaching . . . rather than simply giving the answers.

• Fuss over others’ events, achievements, families, and friends.

• Avoid assuming that your communication or personality style is the one everyone else has and learn to modify your communication style to the style of others. Adhere to the principle that “communication is not what was said, but what is received.”

Give yourself permission to leave things undone and let go of needing to be perfect, and of needing everyone else to be perfect

• Show up and play to the heart. Communication that is high-touch, low-tech inspires people to action faster than the one-way speech, the blog, the dry facts. If you want buy-in, find the passionate story, do the road show, and make it interactive.

• Find the real meaning, stop hiding in your office, and get with the people.

• Become clear and comfortable with the fact that leadership does not mean “being the most popular one on the playground.”

• Believe that people do what they get paid attention for, and be spontaneous, as well as scheduled in your recognition efforts; but avoid giving a public person, private recognition as they will see little or no value in it.

• Maintain an awareness of just how much your body communicates and remember that your body continues talking long after your lips stop moving!!!

• Remember that money does NOT motivate for the long term and becomes expected.

• Do before talk, ask before tell. Almost all leaders over-talk and under-do. If you want people to make a change, DEMONSTRATE the change yourself first. Ask a lot of questions and listen well (it's why you have two ears and one mouth, right?). Fix something that is driving your colleagues crazy. You want more innovation? Show them an innovative idea you carried out. Want to cut costs? Cut one of your entitlements first. Anything less will be viewed as insincere and arrogant -- even though you are infinitely well-intended.

Exhibit leadership traits as part of who you are, not what your particular title is.

Post #720 – Monday, November 17, 2014

Why Great Leaders Always Give Feedback

Here's an exercise for you to try.  Take a blank piece of paper. Draw a vertical line straight down the middle.  On the left-hand side of the page, jot down five recent instances wherein you did NOT give someone feedback . . . when, in retrospect, you definitely should have.  This can be anything – from not confronting some partner who failed to follow through on their promises, to not telling your colleague how she could have handled a difficult situation far more diplomatically.

Now look at the first of your examples and in the right hand column write the reason you didn't say anything.  Do this for each situation.

I'll bet that the rationalizations you have cited in the right hand column are things like: "no time, it's not worth creating a fuss, why bother?” Or, “I've tried it before and nothing changed, I don't want to offend."  These are among the countless justifications we all use for doing nothing.

Let's turn this situation around.  If you were on the other end of a confrontation that someone thought you could have handled more effectively, would you want to know?  I think you probably would.  So what prevents you from providing frank and constructive feedback?

I guess the only legitimate reason would have to be that you either don't like this individual or you don't really care!

After all, there is only one legitimate reason you (and every great leader) should give feedback.  You give feedback because you sincerely want to help someone.  You're giving feedback because you are genuinely concerned for the individual.  You want them to do something differently in their best interests and for their benefit, not for yours.

Finally, there is a strong correlation between asking for feedback and leadership effectiveness. In a recent study of 51,896 executives by the leadership development firm Zenger/Folkman, those who ranked at the bottom 10% in asking for feedback (they asked for feedback less often than 90% of their peers) were rated at the 15th percentile in overall leadership effectiveness.  Meanwhile, those leaders who ranked at the top 10% in asking for feedback were rated, on average, at the 86th percentile in overall leadership effectiveness.


Post #719 – Saturday, November 1, 2014

Being An Effective Leader Is All About Relationships

It has been my observation, over the years, that many leaders rank low on empathy.  They understand it intellectually, they just don’t pay enough attention, ask the right questions or comprehend that it is not just about what your colleagues think, but about how they feel.  To be an effective leader you need to do more than just manage the bottom line and watch the numbers like a hawk.  Obviously that may be necessary, but so is offering suggestions, being supportive, being a source of creative ideas, helping your people think through their roles and helping them make the best use of their time.  If fact, that is precisely what the best leaders do.

As you think about how you exhibit genuine empathy here are five questions for you to contemplate.

• Do you show a genuine interest in what each of your professionals wants to achieve with their careers?

Think about each member of your team.  Have any valued members left recently or announced that they are about to?  Are some individuals, with a lot of potential, performing at levels far below where they should?  If your answer to either of these questions is affirmative, then the chances are that you may have neglected to pay attention to something these individuals need to jump-start their careers.  Paying close attention to what your professionals need in developing their careers is a critical part of any leader’s role.

• Do you show an interest in the things that mean the most to your people in their personal lives?

All of the people in your group have personal lives that are very important to them. Consider: do you explore with each of your people what they are keenly passionate about in their lives?  Do you ask questions that get them talking about their interests?  And when they do start talking about personal issues, do you show anything more than a perfunctory interest?

You may think, I’m not sure that people who have a professional working relationship really need to talk to each other about this kind of stuff.  What is unsettling to me is that the qualities it takes to develop and nurture any successful relationship, are the exact same as required to develop and nurture a successful team.  We may need to reflect upon whom we spend more time with during the average working week, our spouses or our office colleagues.

• Are you there for your colleagues in their times of personal or professional crisis?

Every so often all of us confront crises and make important transitions in our lives.  A family member goes into the hospital or a child is having a particularly difficult time at school.  These various personal issues can very naturally manifest themselves in professional behavior that suggests a sudden disinterest in the work or, at the other extreme, people who are burying their personal issues in workaholic traits.

Right now, as you read this, it is very likely that some member of your team is facing some significant crisis or transition.  If you are even aware of it, what kind of support are you offering?

• Do you informally “check-in” with each of your colleagues every so often?

Then there is the situations when work commitments get over-powering, when our internal systems seem to make it harder to get anything done, or when a technology glitch makes us wish for simpler times.  When these things happen, they don’t have a devastating effect, but they do preoccupy us.  One of the things that helps is having someone notice and say: “You look a little distracted. What’s going on?”

If a leader takes a few minutes to listen, something special happens.  We have a chance to “vent.”  It rarely solves the problem, but we usually feel better.  If you’re the person doing it, it doesn’t take a lot of time or effort.  But for the individual who is the fortunate recipient, it’s special.  It seems like you’ve been given a battery recharge just when you needed it.  Do you notice when team members are frustrated or distracted and take time to check in with them?

• Do you offer to help when some member of your team clearly needs it?

If your team is typical of ones I work with, you are very busy people and sometimes can find you’re stretched to the limits of your capabilities.  One of your team has just landed some monster project.  Meanwhile, two serious glitches have just cropped up that were never anticipated.  The question is, are you going to make some time available to help? And by help, I don’t mean a few minutes being a sympathetic listener for your teammate. I mean as busy as you are, are you willing to take on some of your colleague’s headaches to help him or her through a rough period?

If you truly seek to lead people I believe it all starts with determining whether you are prepared to spend time building and nurturing a relationship, above and beyond other urgencies.  One of the things I observe is that those who lead don’t always pay attention to the tremendously important role that relationships play in inspiring the success and satisfaction of those in their groups.

Post #718 – Thursday, October 16, 2014

Where Is Your Leadership Attention Directed?

As your firm’s leader, what you pay attention to determines what your colleagues perceive to be most important. It therefore follows that if you do not track what is going on outside of the walls of your firm, you may soon be caught dealing with a priority that seems urgent but is less important than the one you should be dealing with.  Determining what you will pay attention to is your first priority in effectively leading your firm.  Here are a few challenges that you should not loose sight of:

Don’t get caught with your attention firmly fixed in the rear-view mirror.

Many firm leaders get so caught up in the busyness of business, that they don’t take a good long look at the world outside their firms.  Concurrently, the executive committee members also become consumed by these immediate issues, and firmly enmeshed in the fierce urgency of now.  Yet, the uncertainty and potential impact of the future demands that we reallocate our attention - because disruptions in the client environment can disrupt our business models with lightning speed. Uncertain client demands, encroaching competitors, and new technologies can be anticipated and managed only by routinely tracking them, even if they don’t have any immediate impact on your firm’s performance. Executive committee members must now spend some portion of their time reading, listening, and thinking about the external environment. Even your senior administrative professionals should allocate some amount of their precious meeting time to looking out rather than in.  Jim Collins described the highest performers, as those leaders who were always looking out the window to identify where success comes from and looking in the mirror to find the source of failure.  This trait is especially valuable when dealing with an uncertain future.

Don’t fail to challenge assumptions until they bleed.

Many of us often don’t question our beliefs when it comes to dealing with uncertainty. We continue to assume that people will always read newspapers, buy music in stores and pay legal fees based on a billable hour model.  We assume that our firms will work best with a practice group structure based on professional competencies.  We assume that the United States will continue to be the global economic powerhouse and that the US dollar will continue to be the global currency.  These could be right or wrong assumptions, but for every firm, whatever is assumed based on the past, is likely to be wrong for the future. As comfortable as it is to determine your priorities based on your past experience—and as much as it saves time and money — it is today, a deadly practice.

Don’t allow hubris to cloud your view of the future.

By definition, arrogance makes you vulnerable to surprises.  When you convince yourself that you have the answer — that you have a winning formula that will triumph in all circumstances — then something in the future is bound to get you.  As Murphy’s Law postulates, “If something can go wrong, it will.”  Intel’s Andy Grove once insightfully suggested that “sooner or later, something fundamental in your business world will change.”  The future humbles us all.  The challenge for everyone is to look into an uncertain future with a learner’s mindset and maintain flexibility.
  Thank you Newsletter for featuring this among your recommended Leadership & Management Insights articles.

Post #717 – Friday, October 3, 2014

Eight Undeniable Truths About Change

If your firm wants to initiate any kind of change, you need to recognize and deal with some basic and undeniable truths.  These are things that can’t be avoided or changed (ironic), but can be mitigated, leveraged and worked with – to enable change with more ease and less tears.

• Commitment to the past hinders change in the future.  Like a tree’s roots, our hold on the way we do things grows deeper over time.  The success or failure of changes in the past, your colleagues’ appetite for growth, and the culture of your firm all help determine how deep the roots go and how hard it will be to change.

• Effective communication demands quality and quantity.  Effective communication is critical during any change effort.  Honesty, organization, consistency and responsiveness all will help ensure that communications are supporting the change.  You can say that again . . . and again . . . and again . . . and again!

• Your actions always speak louder than your words.  What you do and say has far more influence over the success or failure of a change than anything else.  Your colleagues are constantly watching you (not just in scripted moments) for cues. 

• People support what they help create.  The movie “Field of Dreams” was close but not exactly right.  It is not, “If you build it, they will come,” but rather, “If they build it, they will come.”  No one ever gets excited about, enthusiastic for or willingly supports any direction, strategy or change . . . that they themselves have not had a part in formulating.  Your people inherently connect with something they help build.  Engaging your colleagues in the change effort, early on, will pay big dividends in the long run.

• Firms change only when the people within the firm change.  It truly does take a village.  All professional service firms are, in essence, groups of people.  If your firm is going to change, a critical mass of the partners within your firm need to go through an individual change process – first.

• Resistance is inevitable.  You probably heard it first back in your high school physics class, when Newton said it . . . “An object at rest tends to stay at rest.”  There are personal, structural and physiological reasons to resist change.  Firms that expect and deal with resistance proactively will experience the most effective changes.

• Connecting to the head and the heart builds commitment.  In spite of being highly analytical, your pcolleagues are not purely rational.  They need to have a rational recognition of the need to change, as well as a deeper emotional connection to believe in what the change is all about.  Winning the hearts of those who will experience the change will make all the difference.

• Sustaining change takes support and reinforcement.  As your firm changes, you are not in Kansas anymore.  Those that make change stick make sure they are hiring, training, developing, measuring, rewarding and communicating with people in ways consistent with the new model rather than the old practices.

Post #716 – Monday, September 15, 2014

The Fall 2014 Issue of International Review is Now Available

International Review is my 24-page glossy, printed magazine distributed to over 1600 law firm chairs and managing partners throughout North America.  Our Fall issue begins with a piece entitled, Perspectives On Firm Strategy which contains seven thought-provoking ideas on everything from becoming distinctive to quantifying and communicating real value to clients.

In our First 100 Days program (see back cover) we introduce new firm leaders to the monumental task of taking the reins of leading their firms.  When Firm Leaders Transition provides prescriptive counsel and specific steps to both the departing firm leader and their successor on what they need to do to facilitate an effective transition.

Once again, my good friend and colleague Ed Reeser joins me in The Question of Partner Compensation Guarantees cautioning how, while providing guarantees can be a legitimate transitioning tool for incoming laterals, these same guarantees can also present firms with some real problems when best intentions and future forecasts don’t materialize.

Finally, Create Your Stop Doing List is some straight-forward guidance on how to keep the urgent from crowding out the important, while Integrating Laterals provides pragmatic advice on how to best integrate the key talent that you have spent so much time, effort and expense attracting to your firm.

As always, I sincerely hope that you find practical ideas, tips and techniques here that you can put to use immediately.  Please send me your observations, critiques, comments and suggestions with respect to any of these articles.

Click on the Cover to download your complimentary PDF copy of the magazine.

Post #715 – Tuesday, September 2, 2014

The Critical Step in Firm Leadership Selection

The latest issue of American Lawyer magazine is out featuring an 8-page cover article (“Meet The New Boss”) that deals with the many complexities of leadership succession.  I was honored to be interviewed by the author, provide materials, as well as contribute substantively to the “How To Succeed At Succession’ side bar.  One point that needs to be emphasized even more than in this article is the following:

In any effective leadership selection process, before you can begin discussing the “who,” your executive committee/ board must agree on the strategic direction of your firm in light of trends and discontinuities that your firm may be facing in the future.  It follows that if the members of your executive committee cannot agree on strategic direction, they will have even greater difficulty agreeing on the requisite capabilities they require from their next firm leader.

Therefore in any leadership succession process you need to pay particular attention to defining the criteria for selecting your next firm leader based on future performance ?requirements.

To go beyond generalities, your executive committee / board has to identify the very specific effect it wants the next Firm Leader to have on the firm’s business and define the skills that it will take to accomplish that.  A law firm delivering solid but unremarkable profitability, for example, may want the next firm leader to refocus on high value practices or lean toward selecting a strong operator with a record for overseeing a cost efficient operation.  Even a firm that has delivered consistently high performance versus its peers must evaluate which candidate has the greatest likelihood to help the firm continue to outperform, but also find ways to innovate, drive value-distinctiveness and avoid the complacency that can come with success.

Your firm’s ability to predict your next leader’s success requires a frank view of each candidates’ readiness, including an understanding of their development needs based on the future direction of the firm, and the likelihood of their being able to close those gaps suitably and in a reasonable amount of time.  Specifically, a rigorous review of an individual’s competencies, including the observations of others who can validate their performance in current and past roles, can reveal whether candidates have the relevant experience.  However, it is not enough to look at just the attorney’s past accomplishments.  Your executive committee / board should also strive to gain an understanding of each candidates’ analytical capabilities, social intelligence and self-awareness — all skills that speak to their EQ and ability to succeed in more complex and demanding contexts.

Post #714 – Tuesday, August 19, 2014

Your Recipe For Becoming More Valuable

How do you go about making yourself more valuable today than you were yesterday?  In today’s world, you have to continually assess your skills and adapt them to match up to the evolving needs of your target markets.  You need to consider the following if you ever hope to keep pace:

Skills are more specialized

Rapid knowledge growth means it is increasingly difficult for professionals to keep on top of everything they need to know.  You need to specialize; knowledge micro-niches are the reality for most enduring careers.

Skills are degradable

The half-life of knowledge is decreasing at a furious rate.  Professionals and their firms are painfully discovering that many of their skill offerings are becoming commoditized at an ever-accelerating rate.

Skills can be transferred

The boomer retirement issue is real.  Of the 6,800 partners that occupy positions in large law firms today, nearly 20% are just a few years away from or have already surpassed the mandatory retirement age; and usually represent well over 50% of the revenue your firm generates.  Smart firms are spending serious money to ensure that the important knowledge of senior practitioners is being captured, codified, retained and archived.

Skills are increasingly portable

That's the thing we've learned with globalization.  With clients sensing that certain skills are readily available, they’ve learned about outsourcing their various requirements.  It doesn't really matter to them where the skills are, as long as they can procure them when needed.  Not exactly good news for you.

Skills are renewable

Fortunately, the expiry date on your skills can be extended.  If you can develop a mind-set and discipline toward constant improvement and invest some portion of your precious and finite time in developing new skills, you can adapt and evolve.

So, here is your personal and career building ACID-TEST: What is it that you know today, as we approach the final months of 2014 that you didn’t know one year ago? 

Or, put slightly differently: What is it that you can actually do for your clients today, that you couldn’t do at this time last year? 

If your answer is “not much”, then bless you, but you may quickly be on your way . . . to becoming obsolete!

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