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Post #291 – Good Friday, March 21, 2008
Busy In The LAB
You will remember that a couple of weeks back, in my Post #284, I talked about my role in initiating and now serving as Co-Chairman of The LAB. Well we have since been the subject of a number of blog posts (a huge thank you especially to: David Maister, Bruce Marcus, Jim Hassett, Dennis Kennedy, and Jordan Furlong)
We have also been receiving a number of inquiries. Here’s one that is rather timely:
As a relatively new managing partner I’ve not been involved in the management of our firm at any time that experienced a downturn in the economy. Do you have some advice for those of us who are going through this for the very first time? How do we manage our partners’ expectations given the ever-increasing compensation that they have all been enjoying over the past ten years and what are some prudent actions to consider in preparing for the worst-case economic scenario?
Read the entire question and response: Preparing For The Worst [PDF Version]
 The LAB was formed as a resource to provide pragmatic advice to assist new managing partners with their critical burning issues and help them succeed.
The LAB is comprised of the following distinguished current and former law firm leaders: Angelo Arcadipane (Dickstein Shapiro LLP); John Bouma (Snell & Wilmer LLP); Brian K. Burke (Baker & Daniels LLP); Ben F. Johnson, III (Alston & Bird LLP); John R. Sapp (Michael Best & Friedrich LLP); Keith B. Simmons (Bass Berry & Sims PLC); William J. Strickland (McGuire Woods LLP); Harry P. Trueheart, III (Nixon Peabody LLP); together with Patrick J. McKenna (Edge International).
Post #290 - Thursday, March 20, 2008
Non-lawyers On Law Firm Boards
 A couple of years back I wrote an article (“The Logic For Having An Advisory Board”) prescribing the merits for any managing partner of having an external group capable of providing real-world business advice and acting as your own personal think tank and sounding board. I was, at the time, hard pressed to find examples of actual firms engaging in such radical activity.
Diana Bentley, a former practicing lawyer and now a London-based journalist has updated my research. Diana says: “Today law firms are appointing non-lawyer, non-employees to their management boards, following the corporate notion that independent directors add rigor and fresh perspectives to management.”
To substantiate her claims Diana cites the appointment of Adam Shishmanian (Accenture consultant) and Philip Gore-Randall (director of leading insurance broker Aon) to 1600-lawyer Lovell’s international executive for three-year terms.
Another law firm whose experience has prompted it to have two independent directors is London-based 500-lawyer, international firm Simmons & Simmons. The firm has appointed Richard Stone (former PWC Chair) and Sharon Studer (a high-technology specialist). According to Simmons’s managing partner Mark Dawkins, “They’ve given us a very fresh view on how we run our business. They challenge our established ways of thinking, which we weren’t used to.”
Finally, not to be outdone by the larger firms, 100-lawyer Cripps Harries Hall appointed William Arthur (my old friend from Barclays) as their independent Director last April.
Now interestingly all of these are UK examples and all are examples of law firms appointing outsiders to their ‘official’ management boards. My proposition was that as a U.S. law firm, you could achieve all of the same benefits (and circumvent any potential infringement of Rule 5.4 (d)(1) of the ABA’s Model Rules) by simply forming a ‘non-official’ advisory board . . . as many corporations already do.
Let it be known that if your firm is interested in forming an advisory board and looking for an outside Director, I am available to serve.
Post # 289 - Thursday, March 20, 2008
Pictures Of Dead Presidents
 Further to my last Post #285 . . . We are in the early stages of a great unraveling. It took months for Enron to go belly-up. It took Bear Stearns one business week.
In conversation with a source, close to the Bear Stearns situation. “What went wrong? How could this group of very smart accountants, lawyers, and investment pros have been so wrong about what they had in their own portfolios?” One day, they think they have a stock worth $30 . . . a few hours later, they sell it for $2 – making the whole company worth less than a quarter of the value of their headquarters building.
“Well, they didn’t really know. And they still don’t really know,” said the source. “They have no reliable way of knowing what their ‘assets’ are worth. They’re not marked to market; they’re marked to whatever fantasy they have in their heads at the moment. And the really scary thing is that the other financial institutions are in much the same situation. They don’t really know what they have . . . or what it is worth. There are almost certainly some more horror stories that will be coming out.”
Little noticed in this Bear affair is the role of Chinese investment firm, Citic. The Chinese were going to put up some money to prop up Bear Stearns. There might be many explanations for why the Citic deal didn’t go forward, but here we suggest one that is the most far-reaching: the foreigners are growing wary of the United States. “For years,” begins a report in the Wall Street Journal, “the US economy has been borrowing from cash-rich lenders from Asia to the Middle East. American firms and households have enjoyed readily available credit at easy terms, even for risky bets. No longer.” “Clearly, the whole world is focused on the financial crisis and the US is really the epicenter of the tension,” the paper quotes Carlos Asills, at Globista Investments. “ As a result, we’re seeing the capital flow out of the US.”
How do you like those foreigners? We were nice enough to take their money . . . spend it on stuff they sent over . . . and ruin our own economy and our own balance sheets so theirs could grow at breakneck speed. And this is the thanks we get! Now that we really need their money, instead of opening their wallets, they ask questions . . . like, what’s that paper really worth? And the paper that these foreigners are most concerned about is the paper with pictures of dead presidents!!!
Post #288 - Tuesday, March 18, 2008
Hot Practices
According to a recent survey (we happened to get a peek at) that asked which practice areas were hot, while there may not be any big surprises amongst this data, here are some of the findings . . .
• Commercial litigation, bankruptcy, and patent litigation were the hottest practices in Atlanta, with corporate, real estate, capital markets, antitrust and banking work looking pretty grim.
• Patent litigation is booming in the Bay Area, with almost two fifths of respondents citing it as their firms' hottest practice. Real estate and structured finance, not so much.
• In Boston, patent prosecution and litigation remain popular, while commercial litigation, M&A, and real estate are still sluggish.
• Almost a third of respondents in Chicago cited bankruptcy as the busiest practice at their firm, while commercial litigation, corporate, real estate, and structured finance remain slow.
• In LA, most respondents said commercial litigation, patent litigation, or labor & employment work was busiest at their firms, while real estate and finance were slow.
• Both bankruptcy and commercial litigation are heating up in several New York firms, with over a fifth of respondents citing each as the hottest practice area at their firms. Structured finance, however, is taking a beating, followed by real estate, corporate, capital markets, and M&A.
• Patent and commercial litigation practices were declared busy in Washington, DC, with real estate and capital markets groups a bit slow. Antitrust practices in DC ran both hot and cold in the responses.
• In Texas, roughly a quarter of respondents said commercial litigation was the busiest practice, followed by patent litigation, energy and tax. A fifth of respondents, however, declared commercial litigation the slowest practice, followed by M&A and corporate work.
Post #287 - Tuesday, March 18, 2008
What Are My Strengths?
Post #286 - Friday, March 14, 2008
Beware The Obstacles To Executing Your Strategy
 As we navigate our way through helping a 500+ lawyer firm develop their latest strategic plan, I am reminded of some of the many obstacles that can derail your efforts toward effectively executing your best intentions. Here are some of the more common hurdles that law firms encounter:
• Strategizing and implementing are interdependent.
In many law firms the process of formulating the strategic plan and then implementing the plan are separated. Logically, implementation needs to follow on the formulation of the plan since you cannot implement anything until the plan exists. That said, strategizing and implementing must also be interdependent such that there is a natural overlap between planning and doing in order to improve the probability of success. In other words, not involving those of your power partners who formulated the strategy in having responsibility for also executing that same strategy threatens knowledge transfer, commitment to sought-after outcomes, and the entire implementation process.
• Planning is not doing
Another problem is that some power partners believe that implementing the strategy and “getting their hands dirty is beneath them.” They often act as if the implementation work is something best left to the non-lawyer professionals in the firm. This view holds that one group does the innovative, challenging work (planning), and then “hands off the ball” to lower-levels for execution. If things go awry, the problem is placed squarely at the feet of the “doers,” who somehow couldn’t implement a perfectly sound and viable plan.
• Executing your strategy requires an enormous time commitment.
To successfully execute your firm’s strategy often takes even more time than that which was invested by the Planning Committee members in the formulation of the plan. This can be extraordinarily taxing to the billable time expectations and client obligations of the power partners who were initially involved.
• Effective implementation needs to involve many hands.
Implementation always involves far more of the professionals in your firm than the initial planning involved. This presents problems. Communication throughout the firm or across different practice groups becomes a challenge. Linking strategic objectives with the day-to-day objectives at different offices and practice groups becomes a challenging task. The larger the number of people involved, the greater the challenge to execute strategy effectively.
Post #285 - Friday, March 14, 2008
This Will Get Much Worse
The Federal Reserve System announced a new program on Tuesday. The announcement was not quite gibberish, but it was damn close. Thankfully I have an free-market economist friend who understands this far better than I do and was able to shed a bit of light on the situation for me . . .
 “Tuesday’s announcement was an implicit admission of a looming credit crisis of monumental proportions: an unprecedented write-down of bank assets. Why? Because these assets, rated AAA by the big three ratings agencies, are nowhere near AAA. Banks are facing new rules on financial reporting: mark to market, meaning the end of the book value (face value) game that they have played for decades. This is the Financial Accounting Standards Board Rule 157. It goes into effect for banks on March 31. Bankers are going to have to report the truth or else face criminal penalties.
The solution? Sell these promises to pay at market prices. That solution would have brought economic reality to the investment world's attention: the AAA ratings have been overly optimistic. The FED rushed to the rescue. It offered to auction-off U.S. Treasury debt in its portfolio, which is always AAA-rated, in exchange for AAA-rated private debt. This will allow banks to transfer to the FED questionable assets in exchange for assets that cannot be downgraded in today's markets: Treasury debt. The FASB's Rule 157 does not apply to the FED. It will not have to report a capital loss. This program was as a last-minute desperation move by the FED to stop a free-fall in the credit markets and possibly even a lock-up of the banking system.
Curiously, the Friday before the FED's announcement, a media story appeared on a looming default by the Carlyle Capital Corporation, the legally separate mortgage investment entity of the giant Carlyle Group, whose investors include George H. W. Bush and the Bin Laden family. Carlyle Capital Corp. could not meet margin calls. The margin call was $400 million. Understand, this was not the total value of the fund. This was just the initial margin call. Yesterday the bad news came true. The company could not meet these margin calls. The price of the shares fell by 95% in the Amsterdam market, where it is traded. It announced that it had defaulted on $16.6 billion.
Now, we must get to the famous bottom line. Carlyle Capital Corp. was not acting alone. There were ‘counterparties.’ Carlyle's counterparties are a dozen Wall Street firms including Citigroup Inc. and Deutsche Bank AG, according to the fund's annual report. Who else? The "New York Times" (March 7) listed these lenders: UBS, Merrill Lynch, Lehman Brothers, JPMorgan Chase, ING, Deutsche Bank, Credit Suisse, Citigroup, BNP Paribas, Bear Stearns, and Banc of America.
Do you begin to get the picture? This was why the FED announced its credit swap plan on Tuesday. The economists saw what is obviously coming. Carlyle won't be the end of it. There's more to come. The problem is no one can give you an educated guess about how much.”
Now I think that these stories will get much worse as time goes on. Because the financial industry is at the center of this recession, the economy is at great risk. We are now seeing huge banks in trouble and enormous efforts to cover it up and contain the collateral damage.
Post #284 - Sunday, March 9, 2008
Welcome To The LAB
Managing Partner Magazine’s Leadership Advisory Board
“There is a dearth of good advice and mentoring available to new managing partners. It is staggering to think that corporate CEO's and other C-level people in the corporate world train their entire careers in order to be prepared when it is their turns to take the helm, but law firms put people at the helm of an enterprise whose revenue numbers have two commas in them with little or no formal training and almost no mentoring.”
Firm leaders often face challenges that require a mix of luck, skill and the support of experienced peers to guide their efforts. The LAB has been formed to address and inform the burning issues at the top of the managing partner’s agenda—issues like strategy, governance, performance, and profitability. We launch this initiative in tandem with a small group of highly distinguished and long-serving law firm leaders, all of whom have been recognized for their contributions to advancing and leading their own firms.
Whether you are new to the role of law firm leadership, are aspiring to spend more time or simply trying to be more effective in your role, we want to hear from you. You may pose your questions, challenges, or issues to tap the collective expertise of the LAB. Your inquiry will be circulated to all members of the LAB, asking for individual guidance, views, and examples. The co-Chairs will gather and synthesize the group's feedback, and draft a cogent response to the individual presenting the inquiry.
The LAB Members:
• Angelo Arcadipane – Dickstein Shapiro LLP
• John Bouma – Snell & Wilmer LLP
• Brian K. Burke – Baker & Daniels LLP
• Ben F. Johnson, III – Alston & Bird LLP
• John R. Sapp – Michael Best & Friedrich LLP
• Keith B. Simmons – Bass Berry & Sims PLC
• William J. Strickland – McGuire Woods LLP
• Harry P. Trueheart, III – Nixon Peabody LLP
Your inquiries to The LAB will be directed to Patrick McKenna (Edge International) and Brian Burke (Baker & Daniels) to coordinate an appropriate answer. All questions will be treated confidential.
You may send in your question today, either to Managing Partner Magazine or to me directly.
Post #283 - Tuesday, March 4, 2008
Practice Group Leadership Forum
 Wondering how to develop and implement effective practice group plans – establish baselines, identify action steps and assemble competitive intelligence . . .
If you are, then you need to join me in mid May at the University of Chicago Gleacher Center where I will, once again, be Chairing the third annual Practice Group Leadership Forum.
This year I am proud to be welcoming:
• John Butler from Skadden Arps talking about building consensus around a vision;
• Brian Burke from Baker & Daniels discussing how to prepare a strategic practice group plan; followed by
• Arthur Nathan from Haynes & Boone addressing the challenges of executing your plan;
• Tea Hoffman from Baker Donelson outlining the support that practice leaders need to make things happen; and finally,
• Mark Stevens and Darrell Kong, both from Fenwick & West on how to mobilize your firm’s resources to accomplish your objectives.
For further information, shoot me a note.
Post #282 - Monday, February 18, 2008
How To Stay Focused
 Determine what is most important to you or your team accomplishing.
Ask yourself:
- What can we be the very best at?
- What are we absolutely passionate about achieving?
The place where those two answers intersect should help you focus on your compelling purpose.
Keep it very simple. Complexity is the enemy of focus.
When we try to focus on too many things we often end up accomplishing nothing. The vast majority of us (even really smart people) can hold only three goals, or three issues, or three ideas in their heads at any one time. That seems to be the maximum. So when you have a rule that holds up, don’t violate it. Limit your firm’s primary goals, critical issues, and top tasks to three - - no more. If you can live by this rule, you will see that life becomes much easier. The Rule of Three is also a maxim of good communication - - limit your message to three main points and your power of persuasion will go up dramatically.
Write down your three goals and keep them visible at all times . . . literally. Keep your goals out on your desk for you to constantly see. This will help you start focusing your thoughts and actions toward achieving those goals.
Your non-billable time and energy are precious resources. Saying yes to one compelling pursuit means saying no to something else. Say no to anything that prevents you from focusing on what is most important. As we counsel new managing partners: Create a stop doing list. Identify those activities, tasks, meetings or reports that do not directly support what is most important to be accomplished.
Start every week with a list of what you need to do to achieve getting one step close to realizing your goals. Conclude each week with an assessment of your list. Cross some off, reassess some, rollover others.
Celebrate some small and positive step that has been made toward accomplishing your goals. Look back to appreciate how far you have come. It helps refuel your passion.
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