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http://www.patrickmckenna.com/blog
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Post #571 – Friday, October 28, 2011
Roundtable On Managing Partner Compensation
 The Canadian Bar Association’s November Bulletin for firm leaders is now out and features a panel of leaders discussing “the ideal compensation arrangement for managing partners.” What you might find particularly interesting is not only the substantive content in this article but the fact that this entire discussion, which I was pleased to moderate, is excerpted from an ongoing dialogue between numerous managing partners that took place over a number of days – via Linkedin.com
Our Law Firm Leaders group has grown from its inaugural 35 members in July to over 100 members 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. Law Firm Leaders is the ONLY group on Linkedin.com exclusively for, and populated by firm chairs, managing partners, and a few qualified executive committee members.
If you, or any law firm leaders you know, are not members please feel free to encourage them to make an inquiry and come join us.
Post #570 – Thursday, October 27, 2011
The Managing Partner Forum's Fall Conference
 The MPF 2011 Fall Leadership Conference is being held on Wednesday, November 16th at The University Club of Chicago. This conference is designed specifically for law firm managing partners and we are expecting in excess of 50 firm leaders from across the country to be in attendance.
This is one of those extraordinary opportunities to attend and participate in an event where much of the day's agenda is driven by the participants sharing common challenges, learning from each other and gaining far more insight than is probably provided by any of the faculty members . . . and I say that as a member of the faculty. I hope to see you in Chicago.
For additional information and to register, visit: managingpartnerforum.org
Post #569 – Thursday, October 20, 2011
The Future of Legal Services
 As law firm leaders look to the future following the global recession, few will deny that the profession has entered a period of unprecedented change. This is evident not only in the way that legal services are procured, but also in how firms manage the expectations of their clients. This includes pressure to adopt alternative fee arrangements and to provide a leaner, more efficient service. Gone are the days when lawyers could charge by the hour and clients would pay without question. The client is now very much in control. Managing Partner Magazine's new report The Future of Legal Services features in-depth guidance, analysis of key trends to keep an eye out for, lessons learned, and practical advice provided by the professions most well respected and leading experts on law firm management. Including:
Patrick J. McKenna, law firm strategy and management consultant
Jim Hassett, founder, LegalBizDev
Patrick J. Lamb, founding member, Valorem Law Group
Michael Bell, managing principal, Fronterion
Robert Sawhney, managing director, SRC Associates
Bruce MacEwen, president, Adam Smith Esq
E. Leigh Dance, president, ELD International
Paul Lippe, founder, Legal OnRamp
Dr Silvia Hodges, lecturer in marketing and management, Fordham Law School
Steven A. Lauer, independent consultant
Tom Berman, owner, Berman & Associates
Larry Bodine, editor in chief, Lawyers.com
Dan DiPietro, chairman, and Gretta Rusanow, senior client advisor, The Law Firm Group, Citi Private Bank
Not only do they reveal their visions for the future of the law firm and the ‘new world’ of legal services, but they provide expert advice on how to tackle the foreseeable challenges and opportunities. They cover topics including:
+ The law firm of 2015 - How it will be shaped by dominant market forces including alternative fee arrangements (AFAs), legal process outsourcing (LPO) and project management.
+ International horizons – Addressing the changing needs of international clients, and strategies on how law firms can expand into new markets
+ The Asian legal market - The pros and cons of setting up shop in the region
+ Brave new firm - Best practice approaches to managing the level of change required to adapt and survive (and prosper) in the challenging legal landscape
+ Emerging trends that are changing how lawyers and law firms work – The formal assessment of value, increased collaboration, the restructuring of work, unbundling of services and self-help.
+ Power of the purse – How corporate procurement is influencing law firm selection_
+ Combined forces affecting in-house counsel relationships –Key trends and their effects on the provision of legal service to business entities
+ The challenge of sharing leadership - Cultivate self-awareness, shared commitment, developing working relationships and defining leadership roles
+ Cultural evolution - The effect that international mergers are having on law firm culture, and the challenges for managing partners.
+ Legal project management – A trend that is here to stay
+ The need for disruptive change in litigation - Improving the litigation process to bring measureable value to the resolution of cases.
+ The next big thing – Information integration to reduce risk - Using integrated practice management software programs to reduce risk on a case by case basis
+ Maximizing online presence - Social tools that individual lawyers and firms will need to use to win new clients.
+ Managing law firms in challenging times – A focus on AFAs and buying growth through the successful acquisition and integration of laterals into the firm.
+ Legal process outsourcing - A strategic priority - Making third-party relationships meaningful and successful.
Firms which are open to change and introducing new ways of working are likely to emerge from these difficult times stronger, more efficient and more flexible to the developments that are shaping the future of legal services.
Pre-Order your copy of The Future of Legal Services today for just $295 (excluding shipping) simply call Ark Group Publishing at 309 495 2853 before 5pm November 2nd quoting the code DS-EM1
Post # 568 – Thursday, October 20, 2011
Plan Carefully For 2012
According to the Deloitte CFO Signals survey, CFO’s are increasingly fearful about the economic outlook. The majority of the nation’s CFO’s (53%) say they are losing faith and are worried by economic crises and gridlocked political systems.
Other highlights:
• While expected year-over-year capital investment growth is still positive at almost 8%, this represents a significant decline from the 10.7% and 11.8% estimates from the last two quarters.
• Moreover, domestic hiring projections fell from a dreary 2% last quarter to a dismal 1.2% this quarter.
• Nearly 45% say economic woes are their most worrisome risk.
• One-third now see recession as the most likely scenario over the next few years.
• More than half say the global economic turmoil has caused their financial expectations to decline.
• Two-thirds of CFOs say they are at least somewhat concerned that their strategies are not well enough defined and clarified—with 28% indicating strong concerns.
• And more than half of CFOs say they are at least somewhat worried about reaching agreement around their strategy—both within their management teams and with their investors.
Post #567 – Friday, October 14, 2011
Battle-Hardened Leadership
 General Rick Hillier is a career cavalry officer and one of the most charismatic and controversial officers ever to lead the Canadian Forces. Here are a few tips taken from a recent interview that I think are highly relevant to any law firm leader:
Leaders don't take the easy path. I learned my stuff by pulling on doors marked 'push.' Leaders set high standards for themselves and others, and don't compromise their principles.
Don't be dismayed by the abundance of bad leadership in your organization. Leverage their weaknesses to build your own skills. I learned 70% of my leadership lessons from bad leaders. Use them, look at how they're behaving, and tell yourself you will never do that.
A leader's job is all about people. Attract the right people. Let them know what they have to do. Give them the tools to do the job. And when they get it done, your job as a leader is to make sure they get the credit for it.
Stand up for your team, even when it's risky (maybe especially then).
Create a culture of respect and willingness to achieve in your team. Don't tolerate people who don't share those values. There will always be ruthless, soul-destroying, energy-sucking people on a team. Get them out of your firm.
Try to rehabilitate the laggards first. Give them a chance to redeem themselves. But fire their ass out the door if they can't do it.
Share the challenges. (Hillier spent as much time as possible in the field with his troops, sharing coffee with the officers, debating ornery noncoms, and speaking to the assembled troops.) Whatever their task, he says, Make sure they know they have hope.
Motivate your teams around their missions. Fill people full of piss and vinegar so they are inspired to do what you want them to do.
Keep things simple: run interference when bureaucracy threatens to frustrate or hold back your people. Don't get bogged down in process or the process will become the product.
Post #566 – Friday, October 14, 2011
On The Art of Living
 My good friend and colleague Paula Black (well known for her excellent series of books on law firm marketing) writes a well-read blog wherein she posted a couple of reminders that got me thinking:
- the first was on how we need to develop an “attitude of gratitude”
“Do your clients KNOW that you appreciate their business? Do they KNOW that you enjoy the work you do for them? Do they KNOW that you truly care about their situation? OR are you the one who communicates entitlement and is too busy to say THANK YOU?”
- the other was about how we need to maintain an “attitude of positivity”
“If you start with the thought that something WILL work... you will reveal ways that indeed make it possible... that lead to other thoughts and ideas that build on one another.”
Both of Paula’s postings also reminded me of the art of living . . . an actual building. The Art of Living is a rather unique building in downtown St. Louis that claims to blur the lines between work and play and offer state-of-the-art, contemporary loft-style office space. What I found most striking when I visited one day, was an inscription that actually exists in the building’s entrance:
“A master in the art of living draws no sharp distinction between his work and his play, his labor and his leisure, his mind and his body, his education and his recreation. He hardly knows which is which.
He simply pursues his vision of excellence through whatever he is doing and leaves others to determine whether he is working or playing. To himself he always seems to be doing both.”
Post #565 – Monday, October 10, 2011
Two Straight Months of Legal Job Losses
I had an insightful dialogue this weekend with a good friend and colleague who is a former managing partner at an AmLaw 100 firm. We were reflecting upon the latest report of job losses within the profession.
 “After a see-saw first half of the year, the legal sector has seen a net loss of 1,500 jobs so far in 2011 and has shed 3,500 jobs since September 2010, according to the BLS report.”
This is the essence of our discussions: As of right now, those numbers don't mean much as a predictor for the future . . . but in six weeks the story could be very predictable.
A couple of observations here (we are assuming that summer clerkships are not included in the legal employment figures): Most summer clerkships end at the conclusion of August, and some of them by mid August. It is fairly standard practice to issue full time associate terminations after the summer clerks have completed their program. So it should be expected that a fair number of associate terminations are involved in this September figure. In addition, this is the time to commence other attorney reductions in force, so that the severance and other costs are fully absorbed into the current year and the next year will receive the full benefits of the variable cost reduction from the terminations.
Reductions in staff will be implemented as well during this period for the same reasons. In the past, reductions in staff did not necessarily lead to the conclusion that reductions in attorneys would follow, as firms changed their staffing ratios to service more attorneys with fewer staff. But meaningful reductions in attorneys almost inevitably results in reductions in staff as well. So if firms are "right sizing" for work volumes, look for these reduction numbers to climb in the last quarter. While activity has increased significantly in some practice areas for some firms, overall transactional volumes outside of the big public company mergers and such has been tepid. Litigation remains for the most part soft for the same reasons it has been soft for the past three years. We don't see anything in the current global economic situation to suggest that it will get better, and there is much to suggest it will get worse for the legal industry, possibly much worse if the "double dip" gets a push from the Euro crisis and China cuts back.
Most newly graduated associate additions are taking place later than has been the case a decade ago. Putting aside the "deferral" nonsense of 2008/2009, start dates are now often October 1st rather than September 1st for more firms. This could account for a somewhat lower number of additions in September and a somewhat higher number of additions in October.
The real key will be the November and December numbers on two fronts. One will be the net headcount. Two will be the October billings and the forecast net distributable income figures which will be fully projectable by law firms in mid November. When the realistic "realization" percentages are applied to the accounts receivable base outstanding after the October billings, firms will know where they stand with respect to partner incomes, and then there will be a rush to take action, both to "save" this year and to position next year as best as possible.
SO: Watch the October BLS law industry employment report as the first key, and then November's BLS. If it shows a significant downward move after the September downslide - such as 2,500 or more reductions . . . things are going to get very rough. If it is 1,000 reductions for each of October and November, or a total of 2,500 for the last quarter. . . then while tough, we may be stinging a bit, yet ok. But if it is significant reductions in force, you know it means a lot of firms have concluded their final year end performance is likely to be way off, and the firms are also looking at distressing first quarter pipeline projections for WIP, and that means they have to start or extend headcount cuts into the first quarter of 2012 also, so we will be looking at 5,000+ job reductions in a single year, like we did in 2009.
Post #564 – Monday, October 3, 2011
Another Namby-Pamby Client Panel
 As is so often the case at partner retreats, someone on the management committee decides that it would be highly enlightening to hear from the clients themselves and so organizes a panel comprised of some of the firm’s more important clients. In this instance the firm was a 400-lawyer firm that I’m in the middle of taking through a strategic planning process. Our discussions thus far have incorporated looking at where the profession is going, the increased value that sophisticated clients are demanding, and how the firm needs to be more proactive in utilizing technology, delivering service and increasing their efficiencies; among other things.
Now my past experiences with moderating and observing client panels has not been all that positive. In most cases I find that firm leaders choose “safe” clients – those clients that are guaranteed to tell the partners what they want to hear – how wonderful the firm is; how responsive all the partners are; and how they could never imagine anything interfering with their long-standing relationship with the firm – what I’ve come to label “namby-pamby tripe”.
In this instance, I was assured that the clients chosen would be more progressive General Counsel, those that can speak eloquently to the challenges facing their organizations, their internal legal departments and guide the partners on how to think more proactively. Our subsequent panel was comprised of the GC from an international retailer with $5 billion in revenue with over 1000 stores; the GC from a $10 billion private equity company; the GC from an international energy company with a legal department of over 30 lawyers; and the GC heading the regional office of a key Federal regulatory agency.
This panel of four were all of one-mind and consistent in delivering a number of messages:
They all voiced their concerns for where BigLaw rates were going – “never met a lawyer worth a $1000 an hour.”
They all expressed their strong view that partners need to “know my business and be competent in the specific area of practice.”
They all expressed skepticism of firm’s efforts to cross-sell, admittedly asking themselves whether the lawyer being cross sold to was likely not busy and needed some work.
No surprises so far . . . but wait for it . . .
 They were all totally non-supportive of any alternative fee arrangements – even to considering fixed-fee matters. As one of them expressed it, “it is not your decision as to whether you are going to do more or less due diligence.”
They were totally disinterested in participating in any form of client satisfaction feedback. So much for all of those prescriptive articles written by legions of marketing consultants! This group clearly did not like client surveys or even taking the time to review how the firm had performed on a particular matter. They told the partners that “time for any meetings with outside counsel is precious.”
AND in addition, in response to specific questions both from the moderator (which was not me – thank God) and from various partners in attendance . . . Not one of these panelists expressed any interest in having their outside law firm make better use of technology, offer greater client transparency, provide access to prior work product, or . . . well heck, you get the idea.
The TakeAways:
As one (somewhat shocked) member of the strategic planning committee and moderator of this client panel expressed it to his fellow partners, “I guess every client is different and we all need to make sure that we understand the unique needs of each client.”
In a time when it is important for every firm to improve their ability to see where the winds of change are blowing and get their sails up, it make it real hard when you hear from clients who aren’t interested in any change other than perhaps . . . “just give me a discount!”
Post #563 – Thursday, September 22, 2011
Confronting The Underperforming Partner
I witness this same scenario play itself out, time after time, and we never seem to learn.
 Imagine this: The practice group leader or managing partner has their attention drawn to the fact that one of our beloved partners is underperforming. This leader knew that the particular partner was underperforming. It didn’t come as a shock. But they were content to let the situation drift without resolution, rather than have to confront the ugly reality of the circumstances. But today we have the facts thrust before us and now something must be done.
Our devoted leader, unaccustomed to having to deal with an interpersonal situation of this nature, makes a case for simply leaving the underperforming partner alone and instead sending this individual a message via the annual compensation review. The rationale is that by cutting this person’s compensation they will quickly come to the realization that they had “better pick-up-their-socks and get with the program.”
Given that we are dealing with rational people the leader’s argument reaches sympathetic ears and after some months, the compensation adjustment is finally executed. No effort is ever made to fully explain the compensation adjustment or to inquire as to why this partner’s performance has declined. Has work dried up in their area of practice? Are they experiencing some personal problems, perhaps afflicted with burnout? Are problems at home creating a distraction? All potentially temporary in nature and capable of being remedied. But no one bothers to ask, “what’s going on here?”
LEARNING #1 – in an earlier era of lock-step compensation, if a partner was underperforming, it was quickly detected and resulted in someone discretely visiting with the individual to offer assistance to get him or her back on track. Today, when that happens, management simply abdicates their job under the guise of adjusting the individual’s compensation.
To read the complete article - download the PDF.
The above represents my latest column for Slaw.ca Slaw identifies itself as “a cooperative weblog on all things legal.” Slaw has been publishing for five years and gets 30,000 unique visitors and about 100,000 visits every month. For the past two consecutive years it has been the winner of three different awards as the best legal blog. I’m honored to have been asked to become a regular columnist and invite you to comment on my latest meandering.
Post #562 – Wednesday, September 14, 2011
Beware The Naïve Marketer Calling On CEOs
This is a headline appearing in yesterday’s Legal Week:
Company CEOs are key decision-makers in selecting law firms, not in-house counsel
"'Much of my time and our marketing and sales effort over the past decade have been wasted through concentrating on the wrong people.' That was the stunned reaction of one law firm leader on learning that the client CEO or chair is primarily responsible for a massive 82% of law firm appointments for organisations with sales up to $500m..." Are law firms are focusing much of their marketing on the wrong people?
What makes this important is that the individual behind this research is planning a cross-country road-trip in the coming months to promote to law firm marketing people the results of his breakthrough survey and one can just imagine the number of marketing people who will soon be out calling and having their lawyers calling upon corporate CEOs. Here’s the copy contained in an e-mail I received about a week ago:
Are you interested in getting inside the head of client CEOs?
“Much of my time and our marketing and sales effort over the past decade have been wasted through concentrating on the wrong people.” That was the stunned reaction of one law firm leader on learning that the client CEO is primarily responsible for a massive 82% of law firm appointments for organizations with sales up to US$500m, according to a recent Financial Times (FT) / Managing Partners’ Forum (MPF) survey of law firm clients based worldwide. We believe this to be the most comprehensive survey of the views of client CEOs ever conducted in the professions. MPF and FT are organizing a series of FREE breakfast sessions from 8am to 10am exclusively for C Suite members at law firms that are interested in getting inside the head of client CEOs. Is your firm in the 10% whose leaders spend more than 30% of their time with client CEOs? If it isn’t, then maybe it should be…
I am MPF’s Founder and CEO and will be traveling to North America to present the findings as our contribution to Professional Legal Management Week. Please join me at:
New York – October 3 / Toronto – October 4 / Chicago – October 5 /
Los Angeles – October 6 / San Francisco – October 7
 Now, I don’t for a moment believe this to be true – either from my experience as a public company VP or as a Board Director. A diligent CEO would never usurp or override the responsibility of one of their C-level senior team members. But, that may just be my impression. So, I decided to go to some people who would know far better than I, what’s going on here.
First, let’s hear from Elisa Garcia, the Executive Vice-President & General Counsel at Office Depot. Elisa reported to me:
This is clearly not the case in U.S. public companies. Europe, however, is different . . . I find even in a multinational, I have had my battles with European Managing Directors that think they can fire the lawyers I oversee, so I am not surprised that they think they should be hiring law firms as well.
In-house counsel overseas does not have the level of respect that it has here (I have seen evidence of this in Asia, when clients were surprised by the number of former law firm partners I had in my law department--they could not understand why someone would move in-house).
There was a time when selection of outside counsel was made by CEOs. There were "old boy" networks that ensured that CEOs fed their friends, but that mentality does not exist with companies that have complex legal issues requiring expertise and hands on management of outside firms. Those firms that want to believe that marketing to client CEOs in the USA is a good idea are going to be surprised. Every CEO I have worked for would send that solicitation to me, and, if a firm went directly to the CEO over me, then that firm would not get a leg in the door. Even firms that have had an established relationship with the CEO and the company before my taking the GC role have the sense enough to ensure I am the primary contact, that I am always the first informed of issues and those that have not done so have been "retrained.'
I am about as shocked as that law firm leader that was quoted in the article!
I also conferred with my old friend Michael Roster who I’ve had the pleasure of participating with at practice management conferences and law firm retreats. Mike is the Chair of the ACC Value Challenge Steering Committee as well as being a former General Counsel at Stanford University and Golden West Financial. From Mike . . .
. . . agree on all points, and in fact, many U.S. CEO’s would be furious about an attempted end-run. CEO’s have far more important things to do in their day than get calls from sales people. At best, the CEO (or more likely, his or her executive assistant) would likely tell the GC about the call, with an admonition from the CEO to tell that particular firm, don’t ever bother the CEO like that again.
Finally, just to round out my little panel (after all they always say that you should get three quotes) I went to Jeffrey Carr, Senior Vice-Preident and General Counsel at FMC Technologies, Inc., with whom I co-authored a couple of articles last year. Here’s what Jeff had to add to our discussion:
All I can say is “wow” -- and I wouldn’t be the GC/CLO at such a company. I agree with Mike and Elisa. In addition, I’m thinking the 82% statistic falls either in the category of delusional/wishful thinking of the law firm marketing folks, or the literal manifestation of Benjamin Disraeli’s (interestingly, another Brit) famous statement that “there are lies, damned lies, and then  there are statistics”
So there you have it folks. It’s always nice to have my impressions and prejudices confirmed by smart people. Be forewarned. This may be the kind of research where someone shots an arrow into the air and then paints a target on where it lands!
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