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Post #591 – Wednesday, February 1, 2012
Crazy Like A Fox
 My latest co-authored article (with Ed Reeser) for American Lawyer Magazine is now out and explores why the increase in nonequity partners (and decrease in associate ranks) makes business sense.
At first blush, it sounds crazy: firms shedding associates—long regarded as the sweet spot of law firm profitability—while expanding their ranks of better-paid nonequity partners. But even during the recession, that's what happened ["Holy Nonequity Partners," May 2010]. And the bankers have noticed. In an essay about third-quarter financial trends ["New Year, Old Worry," January], Citibank's Dan DiPietro and Gretta Rusanow noted "a discernable decline in the percentage of associates represented in the leverage composition and a significant growth in the income partner, counsel, and of counsel categories. The result is a much more expensive leverage model, which would be fine if these more expensive lawyers were as productive as equity partners and associates, but they are not. In looking at average annual lawyer productivity from 2001 to 2010, income partners and counsel worked about 150 hours less than equity partners and associates." In other words, relying on nonequity partners instead of associates makes for a dangerously expensive leverage model.
 We disagree. We believe that the growth in nonequity partner ranks is a part of a fundamental shift in the leverage model — call it the New Leverage. Reduced reliance on associates is part of it; so is the deequitization trend of recent years — and it's an aspect of the latter element, not the former, that firms should be worrying about.
First, about those nonequity partners: If firms are crazy to increase their nonequity ranks like this, they're crazy like a fox. In the deleveraging process, nonequity partners are immensely more profitable than associates. Here's why:
To read this complete article - download the PDF.
Post #590 - Tuesday, January 31, 2012
The 2011 Law Firm Financial Results
 Here is a sneak peek (as yet unpublished) at what Dan DiPietro, Chairman of Citi Private Bank's Law Firm Group had to say in our "The Future of Legal Services" Webinar this morning about how law firms performed financially in 2011 . . . and how he sees 2012 shaping up:
• The 2011 financial results were ‘okay’ compared to 2010 but it was really a tale of 2 years in one in that the first 6 months looked fairly decent with demand showing a very discernible slowdown in the transactional space during the last 6 months.
• 2011 Revenues were up by only 4% on average – a far cry from the 10% revenue increases enjoyed between 2001 to 2007
• Some Quick Statistics:
- Rates increased at 3.5%
- Realization was down 1% (from busted deals and collection challenges)
- Demand increased by only 1%
- Headcount was up by 1% . . . with the headcount for equity partners flat
- Expenses increased by 4.5% (the real shocker given the excessive expense reduction efforts in the last two years)
-PPEP grew by a modest 3% (compared to 7.5% in 2010)
The 2011 second-half decline was largely attributable to a great degree of uncertainty in the corporate markets enhanced by the crisis in Europe
• Dan expects that 2012 could be more challenging for law firm operations than even 2009 was.
It takes my breathe away!
Post #589 – Sunday, January 29, 2012
The State of Today’s Practice Group Leadership
 Further to my last posting, my friend Paul Lippe authored a great article on Practice Group Leaders in his New Normal Legal Rebels column on the ABA web site. Pual very acurately identifies the historically weak role of the practice leader and succintly captures my experience in every single master class I have conducted for Ark over the past six years.
To be specific, in each master class I have a group of somewhere between twenty to thirty practice leaders all from a variety of firms from across the country, and most all from firms of at least 100 attorneys in size. I usually begin by inquiring of my participants how long they have each respectively served as a practice group leader and how large their group is. I then pose a half-dozen critical structural questions:
• Question #1: “How many of you have a formal written job description that identifies the responsinbilities of being a practice group leader?”
In a group of 20 to 30 participants I am lucky to get 2 or 3 hands going up; and I don’t dare pursue asking what their respective job descriptions cover – the real essence of leadership activities or the more mundane administrative minutae . . .because I (sadly) know the answer.
• Question #2: How many of you have a formal written understanding of how many non-billable “investment” hours you are expected to spend managing your group?
For this question it is rare to get a single hand going up. In other words, in an environment where we normally measure the billable hour to the nano-second, we completely ignore the non-billable (or as one of my clients calls it – “Investment”) time.
• Question #3: How many of you work in a firm where the partners have been required to choose one “core” group wherein they will invest 100% of their non-billable time to working on projects that will progress the ambitions and best interests of the group?
The answer I usually elicit is that a couple of participants will again acknowledge that this is indeed how it works in their firms. The important underpinning behind this question is that each lawyer may choose as many groups as they wish to be “resource” (or secondary) members in (thus able to attend meetings, participate and receive minutes if they are not able to attend but are not required to invest any specific time in doing anything for the group); but they must choose only one “core” (or primary) group.
Now before I even bother with the remaining questions, please note the lesson here – MOST practice group leaders concur that they have accepted the “job” without knowing what the job is; how much time they are expected to spend; and who, specifically is in their group!
Now, at a time when the majority of managing partners have identified ‘improving the operating effciency of their practice groups’ as one of their top three priorties for 2012 – we don’t exactly have a guaranteed recipe for success.
Post #588 – Monday, January 23, 2012
Are You A Good Listener?
I just finished conducting a great session with a roomful of practice group leaders from law firms around the country at the American Management Center in San Francisco and was delighted to have Paul Lippe from Legal OnRamp join me as our special guest luncheon speaker . . . and Paul did a fabulous job.
During the day’s discussions we got onto the topic of listening and how difficult it really is to do well; especially given the addiction some of us have to our personal e-mail communication devices. I see more and more lawyers thinking only with their thumbs!
 Anyway, anxiety, preoccupation and pressure, can undermine the abilities of the best listener. Try this quick little exercise. Answer each of these questions based on your behavior at the end of each day during this coming week:
- When a problem arises, do you occasionally react before gathering all the facts?
- When you receive an answer to a question and your partner begins to speak about an unrelated subject, do you lose interest?
- Do you sometimes tune-out and daydream during a practice group meeting when the subject matter isn’t of importance to you?
- Do you often finish sentences for your slow, more deliberate partner?
- Do you think investing time in really listening to your partners is a waste of time, rather than an opportunity to gain some insight into an individual’s personality and working style?
- Do you feel uncomfortable asking a colleague if they understood your instructions?
- When a situation or issue is confusing, do you hesitate to ask questions that may clarify the situation?
Are you a good listener? If you answered . . . yes to any of these questions, your natural tendencies are inhibiting your ability to listen under the pressure of day-to-day activities.
Post #587 – Thursday, January 12, 2012
Contract Lawyers In Demand
A very interesting article in Crain’s New York Business emerged this week talking about how with corporations refusing to pay for first- or second-year attorneys, the demand for contract lawyers has heated up.
According to the report, while there's no precise count of how many New York law firms are turning to contract help, anecdotal evidence suggests that their numbers are on the upswing. Thanks to the bumpy economy, many corporate law firms are running so lean that they have to hire temps to get their work done. Meanwhile, corporations and government agencies are increasingly using contractors, too, with some “offshoring” services in India. As one commentator explained it, “in unstable economic times, you can eliminate benefits and contract for specific skills instead of relying on in-house staff attorneys with more general skills.”
Though the level of demand for contract attorneys is high in New York, so too is the level of competition among them for  well-paying gigs. With so many large firms located there, there is a wide talent pool, extending from laid-off lawyers to recent law school graduates with prestigious degrees who aren't finding it easy to win $160,000-a-year first-year associate position.
But here is the real SHOCKER (at least to me): Five years ago, contract attorneys could make six figures. Today, rates are lower, by many accounts. Whereas $60 to $80 an hour was the pre-recession norm for contract lawyers, current rates have dipped to between $32 and $40, and sometimes are as low as $25, say industry sources. Law firms are also keeping a close tab on the hours that temps work to avoid paying overtime to those hired through agencies.
Providers of contract help say that they see no signs of the trend slowing down, as staffing firms outbid each other to be the lowest-cost suppliers of legal talent
Post #586 – Tuesday, January 10, 2012
When You Ask For Help
 I’m taking my leadership cues this week from a social psychology book I’ve been reading which postulates that one good way to endear yourself to someone, beyond offering to do something for them, is to ask them to do something for you.
If we give this concept some serious consideration, it might just be one way to work with that stubborn, 800-pound gorilla partner that never seems to want to play with the others in your group.
For example, imagine this scenario: You have a couple of younger partners in your practice group that aren’t all that great at client development. You are a descent practice leader, but client development isn’t your greatest strength. So, you approach George (your curmudgeon) and tell him (and you need to be sincere and specific) how you and others in the group admire his skill with clients, that he is far better than most and that you desperately need him to help you with something. You ask George if he might invest a bit of his time working with and coaching two of the young partners in your group to help them build their skills. You might ask George to start by simply taking each of them to lunch, talking to them about how they deal with their respective clients and giving them the benefit of his wisdom and experience. You could suggest that he might even take each of these partners with him when he goes out to meet with a client just so that they can watch and learn from how he handles the discussions and situations.
You just may find that you can build a stronger relationship with any one of your colleagues and contribute to their sense of importance, by genuinely expressing your admiration for them, their particular skill-set, and asking for their assistance.
Post #585 – Sunday, January 1, 2012
A Reason, A Season, A Lifetime
 During the holidays I have had the good fortune to hear from a number of old friends and acquaintances; some I have completely lost touch with for a few years. It reminded me of a passage I came across many years ago that nicely summarizes how people always come into your life . . . either for a reason, a season or a lifetime. When you figure out which it is, you know exactly what to do.
When someone is in your life for a REASON, it is usually to meet a need you have expressed outwardly or inwardly. They have come to assist you through a difficulty, or to provide you with guidance and support, to aid you physically, emotionally, or even spiritually. They may seem like a godsend to you, and they are. They are there for the reason you need them to be. Then, without any wrong doing on your part or at an inconvenient time, this person will say or do something to bring the relationship to an end. Sometimes they pass on. Sometimes they just walk away. Sometimes they act up or out and force you to take a stand. What we must realize is that our need has been met, our desire fulfilled; their work is done. The prayer you sent up has been answered and it is now time to move on.
When people come into your life for a SEASON, it is because your turn has come to share, grow, or learn. They may bring you an experience of peace or make you laugh. They may teach you something you have never done. They usually give you an unbelievable amount of joy. Believe it. It is real. But . . . only for a season! And like Spring turns to Summer and Summer to Fall, the season eventually ends.
LIFETIME, relationships teach you a lifetime of lessons; those things you must build upon in order to have a solid emotional foundation. Your job is to accept the lesson, love the person (anyway); and put what you have learned to use in all other relationships and areas in your life. It is said that love is blind but friendship is clairvoyant. If you find both in one, never let them go. Hold them close, throughout your lifetime, and let the journey unfold.
Thank you to my friends, new and old, and the lessons you have all taught me. Whether you were a reason, a season or a lifetime; I am a better person because of you.
And a Very Happy New Year to All.
Post # 584 – Sunday, January 1, 2012
A New Year's Greeting
Post #583 – Wednesday, December 21, 2011
My 2011 Year in Review
 I’m often asked about my consulting practice, what kinds of assignments I get called in on, for what sized firms; what I’m currently researching and writing about, and just generally how I spend my professional time. I looked back over my various activities during this past year. With some of these items (like clients served) activity is not a sufficient measure; results and the client’s satisfaction are really what counts (and to that end, you can find numerous client testimonials and commentary throughout this web site). But for purposes of looking at where one’s time is invested, here is what my 2011 looked like:
CLIENT FIRMS SERVED
• Geographic Locations:
82% U.S. Based
9% Canadian
9% International
• Nature of Assignments:
53% developing/implementing strategic plans
29% governance and leadership issues
18% client relations and marketing projects
• Firm Size Range:
27% firms of over 500 attorneys
18% firms of 300 to 500 attorneys
55% firms of 100 to 300 attorneys
SPEAKING ENGAGEMENTS
• Participated in 9 International Speaking Engagements:
Conference Chair & Presenter – Change Leadership (January & August)
Presenter – Fifth Annual Practice Group Leader’s Conference (May)
Facilitator – Practice Group Leaders Workshop (August)
Presenter – Managing Partner Forum (May & November)
Co-facilitator – First 100 Days Masterclass (January & July)
Presenter – Management of Law Firms Conference (May)
THOUGHT LEADERSHIP
• Authored 1 New Book
co-author of Serving At The Pleasure of My Partners: Advice To The NEW Firm Leader – Thomson Reuters
 • Contributed Article or Materials to 4 New Books:
- Chapter: The Challenge of Sharing Leadership
The Future of Legal Services: Expert Analysis – ARK Publishing
- Chapter: What’s Your Organization’s Flavor?
Implementing an Effective Change Management Strategy – ARK Publishing
- Chapter: Can We Establish Some Sensible Codes of Conduct?
- Chapter: Getting Partners To Follow Your Lead
Strategy Development For Practice Group Leaders – ARK Publishing
- The Extraordinary Managing Partner: Reaching The Pinnacle of Law Firm Management – John J. Michalik
• Acknowledged as a Contributing Source to 1 New Book:
- Professional Services Marketing 3.0 – Bruce W. Marcus
• Authored or Contributed to 24 Articles in Publications including:
American Lawyer Magazine
Managing Partner Forum e-Newsletter
Of Counsel – Legal Practice and Management Report
CBA PracticeLink – Law Firm Leaders Edition
SLAW – Cooperative Legal Weblawg
Consult Magazine
• Initiated Published Research Project covering:
Managing Partner Outlook: Another Year Of Clients Demanding More Value
In January I posed a series of questions to a group of managing partners representing firms from every corner of the country.
HONORS:
• Being The Subject of A Harvard Case Study:
Three decades of experience in consulting led to being the subject of a Harvard Law School Case Study entitled: Innovations In Legal Consulting
OTHER INITIATIVES:
• Launched a new Linkedin site – Law Firm Leaders – the ONLY social networking site exclusively for the managing partners of firms of over 100 lawyers in size and hosting over 110 members by December - with 62% representing leaders from firms of 100 to 300 lawyers; 16% from firms of 300 to 500 lawyers and another 19% coming from firms of over 500 attorneys.
• Two new issues (March & September) of my International Review 24-page glossy magazine were produced and distributed.
 In spite of the challenges we face in the world, I am extremely thankful for the privilege of doing what I do. I might call this brief snapshot my personal Annual Report.
To everyone: I wanted to say thanks to you for being able to serve and spend time with you in the past. Thanks for your confidence and commitment.
To my valued clients: I look forward to serving you again in the future.
To my colleagues and friends: thanks for being a gift in my life.
I wish you and your family the Very Best for 2012.
Post #582 – Tuesday, December 13, 2011
Here’s A Great Idea For Any Firm Leader
 Regular readers of this blog will remember my posting of July 1st (Post #550) wherein I informed everyone about the NEW Linkedin group for Law Firm Leaders - the ONLY group on Linkedin exclusively for, and populated by, firm chairs, managing partners, and a few qualified executive committee members. From our humble start in July of some thirty-five (35) inaugural members we are now at over 110 managing partners, principally from U.S. firms of over 100 lawyers in size and engaged in a number of interesting discussions. Here is one suggestion that particularly resonated with me and an idea I think many progressive leaders should find worth emulating:
One element I installed was the "Consigliere" to the MP. Basically it was a process whereby any partner who had a question or challenge, was free to bring it up to my consigliere partner – a senior who was acknowledged for his embrace of the firm culture and values; someone that I had labored with for years, and whose judgment and fairness was well respected.
Any partner had access to approach and in total confidence lay out his / her concerns if they were, for any reason, concerned about doing it directly to my face. My promise to the partners was that there was no issue or subject too sensitive or too toxic, and no excuse for not getting it to me.
And no matter what, my pledge was that whatever I was doing, would be halted instantly and I would carefully go through with the consigliere whether the issues and concerns were not being weighted fully enough, or if they were game-changing in their nature, before proceeding.
It only happened twice during my years of service, but it was worth having for the effect it had on the trust in my decisions and elimination of any fear or concern of my being or becoming an arbitrary or arrogant leader, as contrasted with servant and follower of the best interests of my partners.
Now, if you are interested in seeing what your peers are talking about and joining in on the discussions, just go to www.linkedin.com and search under “groups” for Law Firm Leaders, click on the “Join Group” button and I’ll look after the rest.
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