Money and billable hours should not a law firm make

For the decade that I have been in legal marketing, the business plans of the big-firms, and the followers, hasn’t changed much. Bill more, bill at higher rates, increase leverage, lower real estate, get rid of under-performers, shed practices, or only invest in “high value” practices.

Some firms have learned how to get their partners playing nice in the sandbox together well by redesigning compensation plans to promote cooperation, or forming productive client teams. Some firms have learned how to better integrate new partners, new practices, new offices and newly acquired firms. But not many.

I had a great response to my “Not so Classy … Katten” post last week over at Legal OnRamp.

I don’t like cross posting, as that would defeat the purpose of having a forum like Legal OnRamp, but I’ll try and recap a couple salient points:

Money cannot be the only reward. Right now law firms are not developing and retaining talent. The only incentive to stay right now is money … and that reward is not a business plan.

Partnership is no longer the glue that holds a firm together. If money is the driving retention factor in a firm, it is left vulnerable to the portability of clients and talent to the firm across the street when revenues take a downturn.

Job or career security at a law firm has disappeared. The bigger the firm gets, the more susceptible their partners are to becoming more like “employees.” With no support or loyalty to the employees, including partners, how can the institution expect to receive any in return?

More Hellers and Thelens to come. Why, in the face of an economic downturn, without a compelling reason to stay together, would partners who don’t really know, like or trust one another, stay together?

Firms need to invest in their partners, associates and staffs in good times and in bad. While the corporate clients are taking a financial hit, left and right, every day, where are the law firms (And accounting firms, office supply/paper vendors, building management, etc.)? Will the law firms automatically increase billable rates come January, or will they partner with their clients to weather the coming recession? Will they continue to lay off non-equity partners, associates and staff, rather than reduce their PPEP?

Today’s ABA Journal blog, Howrey Chairman: ‘We Have to Economize for Our Clients’, is based on a Washington Post article, Law Firms Tightening Belts — By Request.

Robert Ruyak, chairman and managing partner of Howrey LLP, said he began feeling the heat from corporate clients last year. With tighter budgets, legal departments at Procter & Gamble, Qualcomm, GE Healthcare and others prodded the Washington-based law firm to provide significant savings in the fees it charges.

Howrey responded: It is assigning more work to lower-paid staff attorneys and negotiating fixed fees for certain clients rather than billing by the hour. To keep up profit, the firm is hiring fewer associates and has acquired a Madrid firm to expand its antitrust practice into the booming Spanish market.

Will client partnering win out? Or will be just more of the “same-old, same old” in the end?

Washington area law firms are retooling due to a financial crisis that is bringing growing pressure from corporations and a drop in work in mergers and acquisitions, litigation and commercial real estate. At least one global firm with a D.C. office is closing, and another announced layoffs last week. Some big firms here are becoming bigger through mergers, which are up this year, or by snagging teams of lawyers from their competitors. Others are shifting to more lucrative specialties, such as bankruptcies, foreclosures and regulatory work related to implementing the bailout package, or capping salaries of associates and restructuring.

(Emphasis added)

Not So Classy … Katten

Well, it didn’t take long for our first “not so classy” layoff announcement. Our friends over at Above the Law quote Katten partner and spokesperson Tasneem K. Goodman:

Katten Muchin Rosenman LLP this week eliminated the positions of 21 associates and counsel across multiple offices and practices. This measure was taken to further improve the firm’s efficiency, to allow for the continued growth of its associates and to ensure the firm’s long-term success. No adjustments will be made to the new first-year associate class. The firm’s financial performance remains strong despite the current economic downturn.

I am so glad that eliminating these 21 associates will further improve your efficiency. Good luck to the Fall Associates.

Just Because … I have a posse

Carolyn Elefant asked in her blog post earlier this week: Who Needs a Mentor, When You Can Have Your Own Posse?

today’s colloquial meaning of “posse” — a group of folks with whom you surround yourself for personal support, or in the case of the workplace, to help you meet your career goals.

I have to say that not only am I fortunate to call many of those reading this blog mentor, but I also have a posse who have my back.

Here’s to Jayne and Tank … watch this (video also embedded in next post) .

Here’s to my posse

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Greetings from Ohio

Law firms shutting doors on both coasts, lawyers looking for work on both coasts, marketing staff reductions on both coasts of the U.S. and in the U.K , have been the conversation on this blog and on the Legal Marketing Association Listserv. There is even an “emergency” Webinar on the topic being hosted by the LMA.

A day ago I reluctantly, and with low expectations, dined at the restaurant of a hotel in Dayton Ohio where I was staying on business. Greeted by a cheerful hostess, seated at the white-clothed table with a lush vase of fresh flowers, I glanced at the attractive evening view over autumn hued flatlands. A fall menu was featured. The waiter approached and made a recommendation. I ordered the celery soup with fennel to start and pheasant with a wine reduction sauce. The entrée came with potatoes William, asparagus, and a field greens salad. The waiter recommended “Little Black Dress” pinot noir promising it would lift the flavors of meal. If I weren’t delighted he would make another recommendation. Warm bread with a crisp dark crust accompanied my first glass of wine. The ambiance was calming and even romantic; just me and my book. And then the soup arrived. Hot, but not too hot, and incredibly over the top delicious with fresh fennel. I sent the chef my compliments. The attentive waiter allowed just the right amount of time before serving the salad. It was remarkably crisp, chilled, very fresh and tasty. Okay. I’m thinking; it’s just a salad. I really wanted to ask for the celery soup recipe. A few more pages of reading after the salad was finished and the second glass of wine arrived. Did I mention that it was really nice wine for food? Then came the pheasant. The plate was beautiful. The bird topped with an orchid. I know, pretty predictable, but all the same it was a visual treat. The real dream was the asparagus. Not over cooked, not undercooked, just perfect. The wine glace on the pheasant, with a few fresh mushrooms, was light and proportionate; not over seasoned. The pheasant was moist and warm. Now the potatoes, well, people who know me know that I am a potato connoisseur. I judge a restaurant by the French fries they serve, so this William stuff was out of my ordinary scope. It did NOT disappoint. A mound of mashed with a crispy crust – almost like a croquette. I could hardly contain myself. Give the chef my compliments –again. I almost ate the whole meal. Okay, I’m not a restaurant reviewer and I’m getting to my point. When the bill arrived I thought they surely forgot to add the wine to it. Nope. 2 glasses of wine, soup, salad, and all the rest for $40.00! I was blown away. In Miami, $40.00 will get you a basic chicken entrée. In New York it will buy you a glass of wine. I had to tip generously just to feel good about myself. I felt I had robbed this chef of his priceless meal.

Back in my room I thought…that was an amazing meal; in Dayton Ohio. Funny – I didn’t have to pay New York prices to get an extraordinary meal. And that, my friends is what clients will learn once they taste the service, the menus, and the pricing of a mid-west law firm. Take heart non-AmLaw firms in the heartland. There is opportunity to shine when you may least expect it.

Class Act … Thelen (for now)

Law firm life can resemble family life in many ways. For many people, 50 hours or more in the office is normal. Saturdays, Sundays and evenings are devoted to the office, with some partners known to sleep with their BlackBerrys under their pillows. Husbands and wives have met in the halls (or at the holiday party). Baby showers are celebrated, and who hasn’t bought or sold something for some school fundraiser?

So when a firm breaks up, it’s kinda like mom and dad getting a divorce and all the kids ending up in different foster homes.

Late yesterday afternoon I received a phone call that Thelen was planning a “Heller” announcement and I felt a tug in my belly. So soon?

So I was hopeful when I woke this morning to this headline:

Thelen Looks to Parcel Out Sections, Core Group May Stick Together

With a full-firm merger increasingly unlikely, Thelen has begun looking to other firms to pick up practices or offices, a current partner confirmed this week.

(skip)

While Thelen is looking for firms willing to pick up various pieces, a core group may choose to stick together, and Thelen partners are meeting on a weekly basis to discuss their options, said the partner, who spoke on condition of anonymity.

And while Thelen has been a Class Act up until now, doing their best to place practice groups together, I hope that they are as thoughtful in placing their administrative and professional staff.

Thanks for the invite, but I’d rather read a good book

I’m seeing a lot of fuss in the legal press about the firms that did not submit proposals from the Treasury Department here and here.

Of the six firms invited to the dance, only two responded, and there now appears to be some “shock” over the decision by the other four who chose not to respond. I mean, really, how can you say no when the captain of the football team invites you to the homecoming dance?

For anyone who has ever participated in an RFP/beauty contest, they get it. An attorney’s first impulse is to respond when an RFP hits their in-box, when it really should be to start asking questions.

Do your due diligence

A firm has to do the due diligence of whether or not they should respond. A major RFP can suck resources out of numerous departments, grinding some, like marketing, to a stop while everyone is focused on getting this thing out the door. In addition to the ENTIRE marketing department, active participation on the RFP will be required by the lawyers and their assistants, paralegals, word-processing, finance, IT, and the good folks down in document production, not to mention any consultants brought in to assist in writing and editing.

Do we want the work?

My first instinct is to grab a cup of coffee, start reading the RFP, and make a list of questions, beginning with: Is this work that we really want.

  • Do we have a shot at winning the work?
  • Do we handle this type of work already? Can we tell a story?
  • Who else has been invited to the dance? How do we stack up against them?
  • Who are the decision makers?
  • What is the decision making process?
  • Is there a “fix” in for the winner and is this all just for show?
  • Are we conflicted out of the work? What are the current client conflicts?
  • Will it lead to potential new conflicts for better work down the road?
  • Are there any issue conflicts?
  • If we get the work, do we have the resources to do it?
  • Will the partners back the RFP process? Will they take the time to actually respond to the questions posed by the client?

For this RFP I would also ask: do we want the attention and focus that this will bring to our firm?

And, for any public agency, I have to remind the partners that this RFP will be susceptible to the Freedom of Information Act. I know “confidential” areas can be redacted, but what about everything else? Do I want my billing rates, client lists, firm finances and malpractice information disclosed to the American public?

Obviously, for four firms their due diligence lead them to decline the invitation.

And while being asked to the dance can be really flattering, sometimes staying home, eating popcorn and reading a good book is the best decision.

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