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


Front page of the first issue of The Wall Stre...

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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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There are Fifty Ways to Leave Your Law Firm


English: Paul Simon, live in Mainz, Germany, J...

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Jerome Kowalski

Kowalski & Associates

January, 2012

 

Parting is such sweet sorrow.

As I predicted last November, the early weeks of 2012 have marked a surge in lateral partner movement at every stratum of the profession. Some partners are leaving their firms because they feel that their firms no longer provide them with an adequate platform and there are alternatives. Others are leaving their firms with the same spirit in which they arrived:  Fired with enthusiasm. Other partner will be seeking more hospitable climes because of law firm failures in the coming months.

Few articles or pundits address the art of departing.  Some law firm partners intuitively depart with grace and dignity. Some departures create unneeded disruption for the new law firm, the prior law firm, the partner or clients; sometimes all three. Accordingly, with due deference to Paul Simon, I shall briefly address the ethos of smoothly creating a fresh start.

You just slip out the back, Jack.  Bad idea. Some departing partners, particularly those who have left under less than voluntarily, burn bridges and simply leave and do not capitalize on personal relationships that yet may be of some real future value. Law firms that are constrained to ask partners to leave or enforce mandatory retirement policies, similarly do themselves a disservice by further fostering a culture of partner free agency, unhindered by institutional loyalty, when they promote quietly slipping in to the night. We have recently seen what may be perhaps the most poignant and sardonic example of this in a recent departures memo from a Sidley Austin retiring partner.

We are all painfully aware that law firm partners are no more than employees at will and the notion that partnership results on lifetime tenure and certainly not a sinecure, as was the case, arguably, a half century ago. Be that as it might, slipping out the back, without further cultivating personal relationships established during  partner’s  tenure at a law firm is just plain counter-productive. From the departing partner’s perspective, presumably, he or she has developed important relationships which will likely result in future referrals. From the law firm’s perspective, the departing partner himself or herself can be the source of future referrals because of conflicts or perceived expertise. Thus, a departing partner should make the round and bid proper adieus. A law firm, urging a partner out the door, should not set an arbitrary deadline at which time the partner will be stripped out of the firm’s web site or shoved out the door within an arbitrarily short period. Transitions, although always difficult, require careful planning and mutual planning by all of the stakeholders involved. Law firm management should not suggest, for internal or external consumption, that a partner’s departure was welcome (he or she wasn’t any good, he or she was overpaid and goodbye to bad rubbish and the like).  We have seen the management of one law firm announce during the fall of 2010 that a rash of partner defections was welcome and part of the law firm’s strategic realignment (read: we got them just where we want them:  our nose squarely in the jaw of impending implosion and we’re not letting go) only to see that law firm be 2011’s most spectacular law firm failure.

The point here is obvious: The loss of a valued partner can have a cascading effect and has been seen to be fatal. Law firm management should be honest in assessing when the loss of a partner will cause pain and then shore up its other productive partners in a positive, candid and constructive fashion. If a partner will be missed, because of contributions made by the partner to the law firm at any level, say so. Publicly and privately wish him or her well.

Grace, dignity and mutual respect, even through clenched teeth and feigned, serve all stakeholders best.

Make a new plan, Stan.   The essence of smooth transitions is careful planning.

The departing partner, as part of his or her practice integration plans, should set forth carefully his or he plans with regard to each of the myriad matters requiring attention as he or she extracts himself or herself from his or her prior firm. All steps necessary must be taken in accordance with a partner’s fiduciary obligations to his or her former firm, The Model Code of Professional Responsibility and other legal or ethical constraints. When in doubt, always consult an appropriate professional. Most certainly, a departing partner is best served when guided by an experienced professional, well informed of the various contingencies that lay ahead.

The steps range from the mundane to the sublime: assuring that all contact lists and related information is stored on someplace other than a law firm’s server, documents, pleadings, agreements, correspondence, templates, forms and other written information, not the property of the law firm, should be downloaded and stored on a safe site, such as Dropbox. Ethically compliant conversations should be had with clients as early on as possible (yes, do let the clients know that you are considering alternatives as soon as possible; be assured that many law firms will seek to retain relationships that you have introduced to the firm).

Law firms contemplating the compelled or likely departure of a partner should be assaying matters brought to the firm by the soon to be erstwhile partner and identifying those matters and clients that the firm may be able to hold on to. Similarly, the firm should identify those other lawyers who are part of a prospective partner’s team and determine which, if any of these teammates would be of value to the law firm. Law firm management should reach out to those lawyers, again, early on in the process and incentivize those lawyers to stay and reach out – together with those lawyers – to those clients which the law firm believes it can retain. Both lawyers involved in this process and affected clients should be offered real financial incentives.

At the same time, departing partners should not be shy about identifying clients of the former firm that might be amenable to a strong marketing pitch as soon as the partner has landed in his or her new home.

You don’t need to be coy, Roy.  While we’re on the subject of the futility of timidity, the fact is that while otherwise constrained by various ethical and legal obligations, candor (and certainly not rancor) should be the watchword of the day. A departing partner should have his or her backstory lined up and be frank and open to one and all. The same is incumbent of the law firm. In a mature and respectful setting the backstory should be the subject of mutual agreement and be a consistent thread of conversations and disclosures to all affected parties.  Neither a departing partner or a law firm should be in a situation in which a colleague, one day passing a dark and emptied office, ask “what ever happened to Roy?”

Partners should also insist that all future callers to the law firm will be forwarded to his or her new home. Optimally, the firm and partner should also enter in to a mutual non-disparagement agreement.

Coyness has its limitations during the search for a new home. As partners seek new homes, they must be realistic and conservative in projecting their likely future production. Giddy, unwarranted optimism will only inevitably result in real pain for all concerned. Similarly, skeletons in the closet must be disclosed early on. They will doubtless surface. Google, Lexis and online court data bases makes all of our live public and transparent.

Just get yourself free, Lee.   Once the planning and various required mutual understandings are reached, both the departing partner and the law firm should plan on lives apart. It’s time to move on.

Departing partners are too often wont to eagerly hear about the internal politics and vicissitudes of his or her former firm. Gossiping by former partners who either seek repeated personal assurances that they made the right decisions or who wish ill of their ouster is simply counterproductive and impairing. Recognize that it’s time to move on.  Revenge, while frequently desired, is best had when it is simply achieved by doing well.

Hop on the bus, Gus.  Once a decision is made, accept it. As twelve steppers do, invoke the serenity prayer (one should always pray for the serenity to accept the things he or she cannot change; the courage to change the things he or she can; and the wisdom to know the difference).

Just drop off the key, Lee and get yourself free. Transitions are always by definition disruptive in every sense.  

                However, approaching a transition with careful and deliberate forethought, vigilant planning and maturity serves the law firms affected, the partner and his or her client best. Anything less invites less than unfettered success.

© 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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