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It Shouldn’t Suck to be an Associate at a Law Firm, Part II


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                                                                             Jerome Kowalski

                                                                             Kowalski & Associates

                                                                             January, 2012

                                                                            

Today’s Wall Street Journal  features a piece entitled “Law Firm Keep Squeezing Associates,” which will likely engender some great buzz on the blogosphere serving the law firm associate population and, in all likelihood, a yawn from law firm partners. This article comes on the heels of the second annual extravaganza, attendance for which is appropriately limited to but a few elites, entitled “The Annual Spring Bonuses Follies.” In all events, I would suggest that perhaps law firm partners and law firm leadership ought to take a closer at some of the issues raised in the Journal.

The Journal generally addressed the well worn issue of fewer openings at BigLaw and fewer job prospects for recently graduated law students. Anecdotal evidence suggests hiring is down about 30% (a fact we also have observed as generally true). The Journal also mentioned the longer and rockier road to partnership.

But the big takeaway in the piece, a fact well already known to many of us, is that since the crash four years ago, associate compensation has been stagnant, while the average associate has seen an increase in his or her workload by 2.3% since 2007, which the Journal calculates to be approximately 50 additional hours a year.  The new base “normal” appears to be approximately 1,650 hours a year, which the Journal Suggest amounts to about 37.5 hours a week; the Journal relies on the besieged NALP (hardly a bulwark for full and open disclosure where employment opportunities for lawyers are concerned) for arriving at this conclusion. Yale Law School last year did its own math and concluded that in order to bill 1,850 hours a year, an associate needed to spend at least 55 hours a week in the office, with three weeks of vacation and two weeks of vacation, sick days and holidays.  Yale concludes that in order for an associate to bill in the 2,000 a year range, he or she will need to work for about 12 hours a day and three weekend days a month. And that does not accurately include time spent at departmental meetings, firm functions, commuting, serving on administrative committees, recruiting, pro bono work, griping about being overworked or otherwise shooting the breeze with colleagues, friends or family. The reality, as we all know, is that an honest time reporter needs to work in the seventy hour a week range.

But let’s get back to that additional 50 hours a year squeezed out of associates since the onset of The Great Recession. Roughly translated, at an average of $300 an hour, associates have each contributed an extra $150,000 to their respective firm’s bottom line, without their firm’s incurring any incremental cost. A few firms, in an entirely short sighted fashion, in our opinion, have bestowed “Spring bonuses,” generally topped out at $37,000, while the bulk of BigLaw firms have simply enhanced partner profitability.

The fact is that Spring bonuses have a Marie Antoinette quality about them, a sort of noblesse oblige.  As Steve Harper noted, law firms should do better. They do not enhance associate morale nor do they halt associate attrition. The temporal cure to associate attrition has been an abysmal job market. But, for those who are planning on checking out, all that many law firms have done is have associates defer packing their bags until the bonus check clears. Spring bonuses not quite as satisfying as yesterday’s passing summer breezes, the recent autumnal foliage or Thanksgiving turkey. The breezes, foliage and turkey will likely return at their respective times and seasons; Spring bonuses, who knows?  With law firm revenues rising last year at a sluggish 3% and expenses at 9%, law firms, under pressure to keep PPP at the highest levels and the bulk of AmLaw 100 firms having gotten along just fine without them, this chimera will likely evaporate.

Well then, what’s the point?  There are two: We all know that associates are law firms’ most important profit centers. We also need to be reminded that keeping the young men and women toiling away productively at 60 hours a week, during their decade-long march to the brass ring, optimally requires them to have a high degree of job satisfaction, which has nothing to do with compensation or bonuses.  For nearly a century, every study performed by every industrial psychologist and labor economist has consistently reported that when people identify the reasons they leave their jobs, they rate compensation at the very bottom of their lists.  Overwork ranks at about the same. We know how to keep associates satisfied and productive, but we largely continue to ignore long learned basic human resources principles.

So, let’s take a look at the extra $150,000 per annum each associate is contributing to law firm revenue streams.  Why not engage your associates in a dialogue as to what should be done to improve their lives. Some might suggest an increase in base compensation to help them amortize student loans (and if you hear that don’t wince and worry what the neighbors might think), some might suggest rolling the work squeeze and laying off some of those collective additional 50 hours a year on a couple of new associates. After all, if you have 100 associates, you have effectively replaced two associates by having those remaining in the galleon just row harder. Exhausted oarsmen often collapse or jump ship. The golden chains of Spring bonuses won’t keep your associates tied to their oars. In fact, even The Great Recession and the burden of student debt do not necessarily keep them in the ship’s underbelly deprived of sunlight and overworked; one associate recently left his firm to open a bike shop, anther jumped ship to simply walk across the country.

The second point is quite simply, it still shouldn’t suck to be an associate at a law firm.

© Jerome Kowalski, January, 2012. All Rights reserved.

Jerry Kowalski is the founder of Kowalski & Associates, a consulting firm serving the legal profession exclusively. Jerry is a regular contributor to a variety of publications and is a frequent (always engaging and often humorous) speaker to a variety of forums. Jerry can be reached at jkowalski@kowalskiassociates.com or at 212 832 9070, Extension 310.

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What Will the Business Model of Law Firms Look Like as We Emerge (very slowly) From The Great Recession?


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The Post-Recession Law Firm Model; New Programs for Associate Compensation; Different Categories of Associates; The Emergence of an Inverted Pyramid Replacing the Traditional Law Firm Pyramid Structure

Law.com ran an interesting piece yesterday concerning the question of what the business model of the law firm will look like as we slowly emerge from the recession. The article written by noted legal affairs journalist Gina Passarella addresses, among other things, how lawyers will likely be deployed at law firms as well as likely new associate compensation models which will likely emerge.

While the article describes three “castes” of lawyers, what we have not completely discussed in that piece is a perhaps a subset of the middle category, namely,  “interns,” which I previously discussed at http://kowalskiandassociatesblog.com/2010/05/09/rationalizing-the-process-of-hiring-and-training-associates/.  Current press reports show that at least three law firms, Howrey, Fross Zelnick and Gibbons have implemented such systems, with Gibbons paying its intern $48,000 per annum. http://www.lawjobs.com/newsandviews/LawArticle.jsp?hubtype=News&id=1202473054427&src=EMC-Email&et=editorial&bu=Law.com&pt=LAWCOM%20Newswire&cn=nw20101008&kw=N.J.%20Law%20Firm%20Starts%201-Year%20Apprentice%20Program&slreturn=1&hbxlogin=1

Ms. Passarella’s  article is well worth reading.

Associate “Job Satisfaction:” Why Law Firms should care


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Associate Job Satisfaction (JD)

Associate Job Satisfaction:  Should We Care?

         Jerome Kowalski

Kowalski & Associates

September, 2010

The American Lawyer recently reported the results of its annual survey of associate satisfaction and reported that law firm associate job contentment and morale dipped to its lowest level since 1994. American Lawyer concluded in its survey that job satisfaction, based on a survey of over 5,000 associates found that job satisfaction fell “from 3.897 in 2009 to 3.733 this year. That’s the lowest score since 2004. In particular, associates lowered the individual grades for their own firms, giving an average rating of 3.96 this year–less than the 4.16 rating in 2009–and the lowest score in recent years.”

This report was followed by a series of public comments and blogs that associates who complained were unnecessarily and inappropriately “whining”. Partners and unemployed or underemployed lawyers were particularly critical of associates receiving regular paychecks calling them simply “cranky”; an example of this public dialogue is contained in a recent ABA article, in which some of the nearly 100 posted comments had a rather interesting, if not at times bitter series of comments. The American Lawyer report can be exegetically interpreted and analyzed in a variety of different ways: First, “only” 25% of associates expressed dissatisfaction with their jobs. Second, perhaps cynically, American Lawyer was simply taking a tabloid and a bit sensationalist approach to its report, and the various releases describing its report were made in order to boost sales and interest. Or, perhaps, a rate of 25% of disaffected associates is not acceptable, because it significantly affects lawyer efficiency, morale and law firm profitability.

Employee dissatisfaction is wildly contagious and significantly adversely affects employee efficiency, an unacceptable result in an era in which associate efficiency is critical, in our changing law firm business model of increasing Alternative Fee Arrangements and the death of hourly billing. We have known for at least four decades the reasons for lack of job satisfaction in any work environment. In 1968, the Mayo Clinic identified the factors that lead to job dissatisfaction:  Bickering co-workers  Conflict with your supervisor  Not being appropriately paid for what you do  Not having the necessary equipment or resources to succeed  Lack of opportunities for promotion  Having little or no say in decisions that affect you  Fear of losing your job  Work that you find boring or overly routine  Work that doesn’t tap into your education, skills or interests

The cures for virtually all of these factors is largely greater transparency in law firm management and appreciably greater open and candid discussion, led by law firm management, joined in by partners regarding the state of the firm and how the firm plans to weather the continuing economic turbulence.

Interestingly, Joel Rose, a respected law firm consultant, in a recent guest column described the role of law firm managers. Mr. Rose seemed to suggest that law firm managing partners are hampered in their roles because of their needs to consult and obtain approval of other members of management. He also lists the sundry obligations of the managing partner, listing, in my view, “communications” way too low on the MP’s duties. In the current economic malaise, I frankly would list communication at the very top of the list.

I would take this issue a step further: In thirty years of being deeply immersed in the entire recruiting process, from hiring partner, to heading a legal recruiting firm to ultimately serving as a consultant to law firms on, among other things, lawyer recruiting, training and retention, by far and away, the single most often cited reasons given by lawyers who are asked why they are seeking alternative employment, is one form or another of “lack of feedback,” an absence of knowing what is “going on at the firm” and, finally, a fear by an associate that he or she will not make partner for reasons completely exogenous to the associates performance and a concomitant sense that partnership decisions are made in a fashion that is so deeply mysterious, unfathomable and enigmatic. Every lawyer involved in recruiting and every recruiting professional has heard this mantra repeated consistently and in a virtual talismanic fashion.

Law firms are theoretically well aware of this. Recruiting literature prepared by virtually all law firms for law school graduates consistently cite the firm’s regular feedback and open communications. Similarly, lawyers involved in the recruiting process, upon hearing the gripes of an interviewee of the absence of adequate communications by partners at their former law firms, recite, by rote, as it were, the firm’s open style of communications and regular feedback, with all associates being fully informed about matters affecting their careers. If so many partners hear and say the foregoing, how could so many associates consistently experience a diametrically opposite sense?

More crucially, as law firm economic pressure rise, the level of communications and transparency declines. As candid communications and transparency decline, so too does associate morale and efficiency. A material portion, if not all of these maladies can be mitigated with open and relatively full disclosure of the impact of The Great Recession on the firm, its economic performance as well as the firm’s strategic business plans. Associates (and I daresay the partnership) want to know and are entitled to know how the firm plans to get through these challenging times.

The bickering among associates largely caused by uncertainty of continued employment, in a continuing era of associate layoffs (openly acknowledged or through “stealth layoffs), “accelerated” reviews, deferral of start dates and reduced law school recruiting must be addressed in open forums with associate participation in which the subject is addressed and the subject is put on the table for associate input on the question.

On September 23, 2010, Hildebrandt Robbins Baker casually added substantial fuel to the fire and heightened associates uncertainty of continued employment by issuing a report which speculated that during the next 5 to 7 years 17,500 (out of a total of 65,000) “partner track” associates at AmLaw 200 law firms, amounting to some 27% of the total of such  associates could simply be “eliminated” (http://www.hbrconsulting.com/blog/archive/2010/09/23/chipping-away-at-the-traditional-model.aspx )  While, a reading of Hildebrandt’s report show that it is based on a series of assumptions and speculations,  largely not supported by any facts, the result is clearly heightened concern about associates’ job security.   Hildebrandt’s speculations, while widely correctly criticized, see for example, http://abovethelaw.com/2010/09/consultant-says-17500-non-partner-biglaw-jobs-at-risk/#more-37294 , the mere report sent an unnecessary and unwarranted shock wave among at least the 65,000 “partner track” associates at AmLaw 200 law firms and surely trickled down to a significant number of other large law firms below the AmLaw 200.  The Hildebrandt report, suggesting, among other things a completely unsupportable prescience, certainly had the consequence of sending a shock wave through associate ranks around the nation, who doubtless spent unnecessary time fretting and discussing the foreboding “news.”  I daresay that if Hildebrandt had the ability to predict employment statistics seven years hence, its crystal ball surpasses that of any other economist in the nation.

Thus, in addition to the irresponsible conflagration Hidebrandt ignited and the concomittant increase in associate disaffection, partner time is now required to douse these flames.

Issues like this must be the subject of open discussion by and among partners and associates.  Associate concerns simply must regularly be allayed.

Several recent case studies illustrate the point: The London office of Delloite Touche confronted the fact that incoming work was insufficient to keep all of the professional staff employed. Management and had an open dialogue with its professional staff openly discussed the subject; it proposed a number of alternatives, including layoffs or reducing compensation by approximately 20% and concomitantly reducing by the same percentage the time the professionals were required to work. The professional staff openly discussed these and other alternatives and expressed to management that the latter alternative was the far more desirable alternative. The result: enhanced employee morale and despite the reduced number of hours required, most of the professionals had no hesitation in working beyond the 20% reduction for clients, marketing efforts, mastering new skills and writing professional articles. More recently, Norton Rose of England took the same approach to similar effect.

Perhaps an even more insightful analysis appears in Above the Law, in an essay written by a lawyer who “switched sides”  and moved in house to Aon from Sullivan & Cromwell: http://abovethelaw.com/2011/01/inside-straight-human-resources-and-the-law/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+abovethelaw+%28Above+the+Law%29&utm_content=Google+Feedfetcher

Associates observe the obvious fact that many partners increasingly “hoard” work, partially because the AFA model requires quality legal work to be efficiently delivered by experienced lawyers and, quite frankly, sometimes “hoard” hours for their own job security. These factors, again, need to be discussed openly, with associates invited to openly discuss these issues and suggest alternatives, including ways they can contribute substantively to the firm, even in the new era. Acquisition of new skills (not simply in other practice areas, but also in marketing and project management), pro bono work, accepting the fact that they will necessarily take a step back in matter involvement as they endeavor to improve their own efficiency are obviously areas for open discussion.

Law firm management in this new era also must swallow the fact that associates and partners can no longer be assessed by the number of hours billed, but rather, the new metric is efficiency of delivery of quality work product. Applying these basic principles, associates need to educated that making these contributions will eliminate conflicts with supervisors. Dissatisfaction with compensation should also be openly discussed. Associates need to be inculcated with the plain fact that rather than unfavorably comparing their own compensation with that being paid at other firms, they should be comparing the fact that they are receiving compensation and have meaningful employment with the unfortunate throngs of peers not as fortunate.

Reading the commentaries of the articles I cited above, the fact is that most associates do “get it.” Associates should also be encouraged to devote their own time to various programs conducted by virtually every bar group (such as the New York State Bar Association’s Committee on Lawyers in Transition) which provides counseling to lawyers who are unemployed or underemployed. The essence of all of the foregoing is that transparency in management, open and regular communications and dialogue eliminates or, at least tempers) virtually all of the known reasons for employee dissatisfaction.

Interestingly, Professor Steven Harper of Northwestern University School of Law and a former Kirkland & Ellis partner, in a very recent article notes that associate dissatisfaction leads to lawyer inefficiency and adversely affects a law firm’s profitability. Professor Harper argues, quite correctly I believe, that all of a firm’s partners owe a duty to the firm in assuring associate satisfaction and that a metric which should be considered as partner compensation is determined should include the measure by which individual partners contribute to associate satisfaction, or, on the negative side, associate disaffection.

Surely, these concepts are completely revolutionary, as is so much the profession has been going through recently, such as AFA’s, value billing, the death of hourly billing and legal project management. Informed management, as well as each partner, if they do have some measure of concern for enhancing morale and efficiency by the firm’s professional staff needs to step away from the smoke and mirrors of the Wizard of Oz and the secret huddling of partners behind closed doors. But the fact is that the continued management styles that were widely used in the past, treating associates (and indeed, lower level partners and counsel) as mere mushrooms (being kept in the dark and fed muck) and elevates insecurity, job dissatisfaction, fear, inefficiency, morale, rumor mongering, attempts by associates to spend late nights to rifle through partners’ trash bins, email boxes, hack in to the firm’s computer system, seeking any grain of fact or hypothesis, embellish on it or make unwarranted assumptions and conclusions, spread these among associate ranks, which only escalates in the child’s game of “telephone”, and diminish morale, certainty, confidence and efficiency.

© Jerome Kowalski, September, 2010

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