Firm Leadership

Rants, Raves, Rebuttals, Reflections, Revelations & Ruminations

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Post #662 – Wednesday, April 24, 2013

8 Things Consultants Will Never Say

I came across this article today, authored by Jeff Haden (columnist for INC magazine) and which should be required reading for every managing partner and anyone holding themselves out to be a consultant:

Hiring the right consultant is tough, especially since in most cases there is no physical “product” to evaluate.  You often have to decide whether promises like “We can!” and “We will!” are likely to come true.   Aside from due diligence like checking credentials and references, your decision largely rests on what a consultant says – and on what you believe.   Here are eight things you’ll almost never hear a consultant say, especially during the wining and dining phase.  If you find one who does, consider it a great sign:

“Implementation will be more disruptive than you hope.”  All projects are disruptive.  In fact, the best projects are often hugely disruptive, as well they should — you’re making changes.  A consultant who downplays the disruption factor is inexperienced or fibbing.  A consultant who doesn’t sugarcoat things up front is much more likely to shoot straight during the rest of the engagement. 

“I don’t know.”  Consultants love to know.  Can you blame them?  A consultant’s job is to provide answers, especially answers you don’t have.  A consultant willing to say, “I don’t know, let’s figure it out,” is more likely to take a collaborative approach than one who pretends to be omniscient.

“No solution is ever turn-key.”  There are no turn-key solutions unless the consultant is providing very simple equipment, hardware or applications.  Even then some amount of training and process modification is usually necessary.  There will always be more involved on your end than you expect, so the more you know ahead of time, the better your plan, and the more likely you’ll end up on-budget and on time.

“I’m not sure I understand the requirements.”  Some consultants love fuzzy requirements because “misunderstandings” or “gaps” create wiggle room later. Good consultants want to know as much as possible since the better they understand your expectations the easier it is to deliver those expectations.  T

“You don’t need us to do that.”  (My Favorite!)  Great consultants are willing to point out ways clients can save money.  Losing a little revenue is better than losing clients who realize they purchased services they didn’t need.  Great consultants operate just like you do; they try to build long-term business relationships.

“Your team is telling me something different — let’s sort things out.”  What you want and what your colleagues want, can be two very different things.  Look for a consultant who tries to reconcile various perspectives and needs so the project scope is clearly defined.  A clearly defined project protects you.

“We’ll want to come back a month or so later, at no charge, just to see how things turned out.”  All consultants focus on successful project completion.  The problem is some feel “successful completion” means “final payment.”  Good consultants care about how the project turned out for you.  The best consultant I hired stopped by or called every three months to check in.  Great for us, but something in it for him too: Identifying problems helped him improve his processes.

“No.”  Rarely can a consultant provide everything you request for the price and schedule you need.  “No” is disappointing but is often the answer you most need to hear up front.  Would you rather create a plan based on reality or on empty promises?

Some consultants work on the “agree now, modify later” principle.  Find one who doesn’t.

Rant #661 - Wednesday, April 3, 2013

Spring 2013 Issue of International Review Is Now Available

Here’s my newest issue of International Review – an issue that I hope contains a balanced blend of thoughtful insight and practical contributions on law firm strategy and leadership.

Today, I believe we face a time when doing things fundamentally differently will ultimately trump doing the same things more efficiently.  To succeed firms will need to focus increasingly more attention on how they might differentiate themselves in ways that client value.  My Six Elements of Meaningful Differentiation is intended to provoke your thinking on this important topic.  And you may note that while this may not be the most comprehensive piece on this subject I have deliberately not identified costs as a significant differentiator.  For those who engage in predatory pricing, you might win the fee-cutting race . . . right to the bottom - but the real strategic issue is whether you will have a sustainable practice after you get there.

I am delighted to include an article that American Lawyer magazine agreed to publish an excerpt from earlier this year.  Malignant Leadership reflects upon some lessons from the Dewey catastrophe and has probably garnered more responses from readers than almost any other article that I’ve written over the years.

Be sure to have a look at the results of my latest research into the dynamics of being a managing partner as conveyed in Inside The Corridors of Firm Leadership.  This expose represents the responses from firm leaders of AmLaw 100, AmLaw 200 and other firms on everything from their job descriptions and how they spend their time to their leadership priorities and intentions for when they leave office.

Finally, I am observing a trend wherein more firms are starting to hit the Reset Button on their practice group management efforts and trying to start fresh. Practice Group Leadership 2.0 is my attempt to prescribe some fundamental structural recommendations for what firms absolutely must do to make their practice management efforts successful.

I sincerely hope that you find some practical ideas, tips and techniques here that you can put to use immediately.  To obtain your complimentary PDF copy simply click on the cover of the magazine.  Please send me your observations, critiques, comments and suggestions with respect to any of these articles.

Rant #660 – Monday, April 1, 2013

Once More On Cross-Selling

The other day on the Managing Partner discussion site (LinkedIn) I came across a posting wherein some member was informing us all that “cross-selling within law firms is broken” and lecturing the readers that “If a firm is truly serious, an organizational system should be put in place, driven by the management board, to facilitate the process straight from the top.”

I couldn’t contain myself . . . I was compelled to rant:

I could easily wallpaper my offices with all of the articles that have been written over the past twenty years on cross-selling, and yet the behavior doesn’t ever seem to change. And firm leadership taking control or issuing ultimatums hasn’t worked in the past and is unlikely to work going forward.

Here are two observations worth exploring.

One is that I rarely see cross-selling being quite such an issue within industry groups. Industry groups, by their nature, tend to focus much deeper into all of the various legal issues that clients face, such that it never feel like you are “selling” anything; but rather endeavoring to prevent or solve the client’s problems. But unfortunately, we still tend to structure our firms based on what we studied at law school rather than what the client wants – us to really know their business.

The second may lie in understanding how to motivate competent and conscientious lawyers. The process that is most often used in cross “selling” is that firm management asks the members of some practice group to go to the other groups and “tell them what you do” because instinctively we know that product knowledge (knowing what the other lawyers in our firm actually do for our clients) is pathetic!

The only shortcoming to this approach is that I do not, frankly, have the patience to listen to you ramble on about all of the various services that your group provides. And I don’t really understand most of it either. What would get my attention though, is if you could: 

(1) succinctly identify only ONE hot, topical legal issue that my clients might be facing now or in the very near future;

(2) identify the type of client (perhaps by number of employees) that this issue is most likely to impact;

(3) tell me in a very brief manner why and how this issue is going to impact my client; 

(4) tell me what the downside or consequences might be if my client does not take some remedial or proactive action; and

(5) give me a written cheat-sheet/script on what I should say to my client to make them aware of this issue (because frankly, I didn’t go to law school for all those years to now come across like some used-car salesman and I don’t know what to say to my client so as not to embarrass myself).

In other words, give me the tools to look competent in serving the best interests of my clients and I “might” be more interested in engaging in your cross-selling crap!

Rant #657 – Monday, March 25, 2013

How You Present Your Distinctiveness Makes a Difference

During an interview with a prospective client you are asked to briefly describe what differentiates you or your firm from your other competitors.  At that moment your overwhelming goal is to present some distinctive factors that impress this prospect; so you begin to list some accomplishments.  You tell this prospect about how Chambers has ranked your firm among the first tier providers in Health Care, about how your practice group has more bio-science PhDs than any other in the region; and how you currently serve four of the largest five regional hospitals. And then, almost as an after-thought you mention that you have also just recruited a leading lawyer in the area of IP and expect to be growing that practice.  Not yet an impressive accomplishment, but since this company is likely to have intellectual property issues, you figure mentioning that you are moving ahead in this area is better than saying nothing at all.

Or is it?

According to the work of Dr. Heidi Grant Halvorson, a social psychologist who researches, writes, and speaks about the science of motivation – it isn’t.  You’ve just fallen victim to a phenomenon that she says psychologists have recently discovered, called the “Presenter’s Paradox.”  It’s a fascinating example of how our instincts about presenting – ourselves, our firms, or our service offerings – can be surprisingly bad.

In essence, our erroneous assumption is this: when we present a prospect with a list of our accomplishments (or with a bundle of services), that they will see what we’re offering additively.  If our Chambers rating, our PhDs and our hospital clients are all a “10” on the scale of impressiveness, and our burgeoning commitment to IP is a “2,” then we reason that added together, this is a 10 + 10 + 10 + 2, or a “32” in impressiveness.  So it makes sense to mention your minimal IP experience to the overall picture.  We just assume that more is better.

Only more is not in fact better to the prospective client. 

Research shows that this is not how other people see what we’re offering.  They don’t add up the impressiveness, they average it.  They look at the package as a whole, rather than focusing on the individual parts.  To them, this is a (10+ 10+ 10+ 2)/4 package, or an “8” in impressiveness.  And if you had left off the bit about your IP initiative, you would have had a (10 + 10+ 10)/3, or a “10” in impressiveness.   So even though logically it seems like a little IP is better than none, mentioning it makes you a less attractive candidate than if you’d said nothing at all.

The challenge here is to recognize that more is actually not better, IF what you are adding is of lesser quality than the rest of your offerings.  So if you are an employment lawyer practicing in the firm with the accomplishments I just mentioned, but your particular group has little to mention by way of first tier achievements, you are better off presenting the firm’s big picture accomplishments then trying to finesse something of lesser status.  In other words, your highly favorable or positive attributes are diminished and diluted in the eye of the beholder (the prospective client) when they are presented amongst only moderately favorable achievements.

If this bias in how we present ourselves is so pervasive, how can we stop ourselves from making this kind of mistake?  According to Dr. Halvorson, we need to constantly remind ourselves when making any kind of presentation to think holistically. 

How distinctive is the package I’m presenting, taken as a whole, and are there any elements that take away from or dilute the impressiveness and overall value?

Three 10’s and a 2 is not better than three 10’s.  

Rant #658 – Tuesday, March 19, 2013

How Confident Are You That We’re Seeing An Improved Picture?

According to the latest Law Watch Managing Partner Confidence Index survey, released this week by Citi Private Bank's Law Firm Group those surveyed (only 77 firm leaders) are feeling more confident.  In a subsequent discussion with my fellow co-author and favorite law firm finances analyst, Ed Reeser, I obtained this insightful analysis:

As we recall, the first quarter of 2012 started off with some vigor, and then things went into the tank in the second quarter and continued rather poorly into the third.  Only an unexpected and marvelously active fourth quarter, both in terms of work and collections, appears to have saved the 2012 calendar year.  Specifics on how, when and from where this rebound came are to this point anecdotal and a bit vague, as the information has come from preliminary reports.  Greater details are eagerly awaited, as through the end of November the impressions were not positive for the fourth quarter of 2012.

There are some seriously inconsistent responses within this survey.  Heavy discounting (100%) and expectations of increased costs (72%) are in the same report as increased profits expectations (75%).  How can one reconcile those contrasting forces? 

First, there is revenue growth . . . and indeed 85% of the respondents have expectations of revenue growth.  How are they going to get it in a market that Citibank says is characterized by "not enough legal work to go around"?  

There is organic growth from within, which has been lacking for most firms, but perhaps with a recovering economy that could go up and help much larger numbers of firms.  Obviously that would be great, and indeed 93% are looking to conditions that are the same or better than last year.  That is pretty optimistic considering that Q4 was perhaps the biggest unexpected miracle result since the US defeated the Russians in hockey at the 1980 Olympic Games, and without it the year was pointing towards a serious disappointment.

There is buying growth through lateral hires . . . a strategy that recent reports from Professor Henderson and Chris Zorn at Lawyer Metrics on the US side of the Atlantic, and Mark Brandon on the UK side of the Atlantic . . . have shown to be a failing one most of the time.   

Second, there is removal of participants in the profits pool and increase leverage,  This approach is evident in the FTE chart on non-equity partner growth expectations.  Of the three tactics, only this last one of self-consumption is absolutely available and consistent with proven past behaviors and results.  Not for all firms.  But for a very large number it has characterized their performance in 2012, and more of the same should be expected.  

This report is like a finger, pointing to the moon.  The finger has strongly optimistic expectations of greater demand, overall confidence, stronger economy, stronger business conditions for the law, rock and roll profits, and increased revenues.

But the focus should not be upon the finger – it is about where the finger is pointing.  Strip away the aspirational and 'hoped for' expectations, and lift the gaze to where the substantiated components of the report based on past performance lead your vision . . . stagnant demand, heavy discounting, increased costs, reduced partner head-counts.

What do you see?

Rant #657 – Tuesday, March 19, 2013

IBM Asks Students To Choose Watson's Next Job

After famously winning Jeopardy! in 2011, IBM's supercomputer Watson helped healthcare professionals improve the speed and quality of treatment for cancer patients.  Now, the technology corporation is turning to the next generation to help determine where Watson should work next.

More than 100 University of Southern California students competed in the IBM Watson Academic Case Competition to apply the supercomputer to challenges in business and society. With only 48 hours to create a new purpose for Watson, 24 teams presented business plans to a panel of IBM executives, industry leaders and school officials.

The winning idea implemented Watson in LEGAL RESEARCH, proposing the computer build the research for cases.  Watson's quick response and ability to parse complexities in the human language would allow it to sort through evidence and forecast the probability of success.  By using the supercomputer, legal firms would be able to save money and time, and pair it with smarter outcomes.

Rant #656 – Thursday, March 14, 2013

As A Firm Gets Larger Does It Mean Looking More Conservative, Bland and Sterile?

Last week I had the ocassion to meet with the Management of an AmLaw 100 firm at their home office.  Upon entering Reception I was directed to a huge area with multiple couches and coffee tables.  This space could have easily welcomed dozens of people; but it was anything but welcoming! 

There were no newspapers, books, firm brochures or reading materials of any kind; absolutely nothing on any of the coffee tables.  Walking around this huge space I noticed, receding into the wall at the corners of the room, a slanted shelf with a couple of magazines.  The first one I selected was ‘Chief Executive Magazine,’ one I thought absolutely appropriate to those I might expect to frequent this firm’s office.  Only one small shortcoming.  This particular issue was dated - November 2010.

Wandering over to the other shelf I found a magazine with the huge headline: "America’s Best Law Firms" on the cover.  It was an issue of 'Corporate Board Member' which reports their annual assessment of the legal industry.  This particular issue was more recent – second quarter of 2011.  I assumed it was probably on display because it profiled the firm I was visiting.  Wrong.  This firm was not listed among the best!  Indeed one might conclude that they were promoting their competition.

Upon reflection, I realized that my experience here, was not isolated to this firm but consistent among many large firms that I’ve visited.  It reminded me of a General Counsel I heard speaking at a conference many years ago.  Prominent in the financial services industry, he oversaw dozens of outside law firms.  During the question period he was asked whether any of the firms that he used happened to stand out, for whatever idiosyncratic reason, in his mind.  He paused for a moment and then said, yes, one firm indeed stood out.  He was then asked why.  My mind immediately went to the likelihhod of him telling us about the firm’s expertise or significant legal accomplishments.  But that is not at all what we heard.

“These folks truly understand how to manage the client’s impressions and expectations.  By way of one small example, whenever I arrive at this firm’s offices, I note that they have two receptionists.  They don’t need two, but the second one comes out from her desk to greet me, always by name.  She doesn’t necessarily know me, but in this firm it is mandatory for every attorney to advise Recption of expected visitors; what time they are expected, their name, which company they are from and provide a picture or description of what they look like.  I’m then taken to get my beverage of choice, usually a capaccino or freshly squeezed orange juice, and escorted to a seating area that resembles your typical living room – comfortable chairs, beautiful lamps, interesting and unique reading materials; including one binder which contain press clippings highlighting some of the firm’s various community activities, industry initiatives and awards, and another binder which features some of the firm’s most recent articles and newsletters.  There are flowers, bowls of candy, fresh fruit, boxes of kleenex, and a basket of umbrellas that you are welcome to use should it be raining by the time your meeting has concluded.  And that receptionist who greeted me is available to suggest and make lunch, dinner, theater or other reservations to fit my needs while I’m in town.”

When I reflect upon that story and compare it to the sterile environment that I encountered, I wonder if it might not be time to invite some neutral third-party to visit your office . . . and then candidly report back to you on just how welcoming and comforatble they found the experience.

AM I BEING TOO SIMPLISTIC HERE? Do sophisticated clients really expect to confront a highly conservative rather than a welcoming living-room environment when they visit a law firm?

Rant # 655 – Wednesday, March 12, 2013

Two New Books Worthy Of Your Attention

I have been a fan of Jim Hassett and his project management work for some years now and am honored to participate (as one of only 2 consultants) on his 58-member Project Management Advisory Board, so I will declare my bias upfront.  That said, you really should take a look at Jim’s latest work – Legal Project Management, Pricing, and Alternative Fee Arrangements.  This book describes what leading law firms are doing to transform the way they plan, manage, and price legal work.  

It begins by describing how the legal profession is changing, and explains why legal project management is so important to future success.  The book contains reports from lawyers in the trenches who have used these techniques to plan their projects efficiently, develop budgets, price their legal work appropriately, and gain advantages over their competitors.

Jim describes eight key issues in legal project management and reviews a number of case studies to illustrate the wide variety of approaches that different firms are taking to change lawyers behavior.  He then discusses the theory behind changing models of law firm pricing, and what leading firms are actually doing in practice, including alternatives to the traditional billable hour.   The text concludes with a list of 10 key recommendations to help law firms adapt to the changing marketplace.

The second book, Targeting Profitability: Strategies To Improve Law Firm Performance is one that I’m delighted to have contributed a chapter to - entitled "How to differentiate in a way that is meaningful to clients"

Law firms are increasingly looking at new ways to drive profitability.  However, research shows that they are still not maximizing the potential of both clients and staff.  As a result, Managing Partner has brought together the sought-after advice of industry experts to provide you with practical tips on specific methods which can be used to increase the profitability of your firm. 

From clients, people, and training, to finance, billing, and IT, Targeting Profitability highlights the key areas that can be improved.  Useful strategies are provided to help you increase your law firm's profitability along with the key steps you need to consider when implementing them.

More information -

Rant #654 – Wednesday, March 6, 2013

Would Your Firm Openly Disclose Its Financials?

K&L Gates has pledged to keep the firm's accounting books open regardless of the numbers and put the onus on other firm leaders to reconsider public disclosures.

In a news advisory, K&L Gates announced its 2012 Financial Results on the firm’s website, complete with a detailed balance sheet including revenues, cash balances, bank debt, pension obligation percentages and even revenues by region.  According to a story on Law360, chairman Peter Kalis claimed, "We're prepared to embrace this quality of disclosure as a continuing part of our business.  It will be a reflection of our business in good times and bad?"

Kalis singled out AmLaw's yearly survey and firm rankings as another impetus for change, saying the publication engaged in the same kinds of secrecy as many firms by not disclosing the source of firm data or saying which firms did not voluntarily provide data. He called the widely-read rankings "an important part of the legal culture," but one that bypassed critical questions about debt, liquidity and retirement fund obligations. "Law firms die because of impaired balance sheets, and the surveys never ask those questions," Kalis said. "It's the balance sheet issues that go to the heart of institutional stability.

Kalis said the response from clients and partners has been overwhelmingly positive, but declined to make a prediction on whether other firms would follow suit.

What effect will this kind of transparency have on the profession?  Do you think clients care about a law firm’s financial transparency?  Would your firm be prepared to disclose its financials?


My reaction to reading this article was 'Holy Smokes'. Not because it will have a material transparency impact on the profession, because to a large extent, it won't in my expectations happen. Nor do I think clients will care much about law firm financial transparency. Indeed to some extent, while I agree with his point that balance sheet information is critically important, it is far from being dispositive of the question whether a firm is secure and stable financially or not, for which I have published several articles specifically addressing that very point. 

But at least two things are going on. One thing, he just took on AmLaw nose to nose on several points. First point being the data is incomplete and conclusions drawn incorrect...but it is widely read and relied upon. Ouch. Second point being it is no longer debatable, Dewey proved that law firms game the numbers, and everybody knows it. Ouch. However it is the Second thing that really shakes things around. He is making a strategic move to distinguish his firm in a very tough competitive market for talent, particularly against vereins and other firms modeled like his for global footprint, by using 'financial transparency' as a competitive tool. By saying nobody can trust AmLaw surveys, apart from getting knocked off their holiday card list in perpetuity, he puts it to the industry players to prove up their financial position with public numbers they stand behind directly. And by saying most firms should be able to do this, now they can prove up. But give it a couple of months, and phase two will come, which is those that have not stepped up obviously have not because they cannot prove up. Why consider joining that firm when you can come with us? And that means.....any MP and his/her firm that doesn't do so is tarred by implication with being a "Dewey", with being a firm that may be 'gaming' the surveys in which they participate....indeed they gave the order for the "Code Red", with words like "PPP" and "RPL" and "Productivity" and "Margin" instead of the ones in this clip that pretty much puts Mr. Kalis in the shoes of Mr. Tom Cruise: 

This could be an interesting few weeks to come. - Edwin Reeser

Post #653 – Friday, March 1, 2013

Revisiting The Performance Consequences of Leadership Tenure

In the March issue of Harvard Business Review, there is a fascinating article entitled Long CEO Tenure Can Hurt Performance authored by a professor at the university of Texas and two PhD candidates.  It summaries the results from a study of 356 U.S. companies from 2000 to 2010.  The conclusion – long tenures diminish returns. 

The findings suggest that Boards should be aware that long-tenured CEOs may be skilled at employee relations but less adept at responding to the marketplace.  These leaders may be great motivators but weak strategists.  The researchers arrive at an optimal tenure length . . . 4.8 years!

In my 2009 article for American Lawyer entitled Tenure Trap, I reported on how over 40 years ago, two sports researchers reported on a research finding that has significance to any debate on leadership tenure.  These two academics found, from a large sampling of college basketball coaches, that a relationship actually exists between coaching tenure and team performance.  The duo discovered that the longer the coaching tenure, the greater the team success.  However, after a certain period – 13 years on average, the team’s performance consistently began to decline . . . steadily.

Fast forward nearly twenty years and in 1991 two Columbia University professors, Hambrick and Fukutomi building upon this initial research, proposed a model outlining five discernable phases in the evolution of a CEO’s tenure in office.  Their research demonstrated that in the first phase the leader is working to develop an early track record, legitimacy and a political foothold.  This is followed by a period where the incumbent has achieved small successes and established credibility sufficient to be willing to consider exploring new directions.  In the third phase the leader tends to select a theme for how the firm should be configured and run from that point on – in other words, the leader selects those elements that seem to work the best and that are the most comfortable.  By the fourth phase a period of refinement occurs wherein only a few new changes are made and those changes are largely designed to fine-tune earlier directions.  At some point, job mastery gives way to boredom; exhilaration to fatigue; strategizing to habituation. Inwardly the leader’s spark becomes dim and responsiveness to new ideas diminishes.  Thus the primary risk to any firm from having an overly long-serving firm leader can be malaise and lethargy.

My most recent research, just completed in January (and soon to be published – Inside the Corridors of Firm Leadership) shows that the average tenute today for firm leaders is 9.8 years; although I did hear from 12 incumbents who have thus far served over 15 years and another two who had served over 30 years in the role. 

I remember something that Harry Trueheart, the former Chairman of Nixon Peabody told me; “one assumes a skilled leader can and should go on indefinitely despite the trajectory of the organization - not a sound premise.  Law firms in particular need to renew and refresh themselves, develop talent for the future, assure a continuity of leadership talent and a broader pool from which to pick.  So the process naturally requires renewal and there is a cycle.  The length of the cycle may vary and we could have an interesting discussion about optimum lengths.  I would say any firm leader who cannot sustain for 6 years in not a good pick.  If the firm can get more, then they have found a good one - say nine.  Depending on when a person starts the job, the next question is what does the firm do with them- after 6 or 9 more years.  It is a probability of law firm life that leaders who have been in the job long enough to see their practice waste away and find themselves in middle age or in a harsh political environment, must leave the firm to survive.  So firms may want to take that into account.  More than a decade of service is an accident of circumstance, luck and skill coming together.”

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