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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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How to Effectively and Efficiently Integrate Marketing Your Alternative Fee Arrangements with Your Other Marketing Activities


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Alternative Fee Arrangements and Marketing 101

 

 Jerome Kowalski

Kowalski & Associates

 September, 2010

Recently, Patrick J. McKenna a well respected Canadian based law firm consultant, lamented on the fact that despite the fact that so many corporate clients seem to be relentlessly demanding Alternative fee Arrangements,  many of his law firm clients were experiencing less than resounding results when AFA’s when approaching prospective new clients with AFA proposals.  While our experiences have not mirrored those described by Patrick, his comments did provide me with some food for thought.

Our clients have repeatedly advised us that they are seeing revenue erosion from existing clients, who are either diverting matters to other firms with more attractive billing models or some clients were simply electing not to proceed with either litigations or transactions relying on outside counsel, as a cost saving matter.  A significant number of these “diverted matters” wound up being handled by different law firms, often smaller, but nonetheless many of the firms which were actually engaged for these matters were law firms with whom the client already had some relationship, albeit in previously limited roles.

These facts and Patrick’s observations set me to thinking about some marketing basics:  We know that the cost of attracting new clients is five times higher than getting business from existing clients.  Given the new paradigm within which we find ourselves operating, which of course, includes both AFA’s and the universal need by law firms to limit expenses wherever possible, while at the same time, seeking to grow a firm’s revenue base, it seems quite obvious that marketing investments would certainly experience a higher return on investments by increased focus on existing clients.

Accordingly, a return to some basis essentials and maxims of marketing are, in my view appropriate:

Communications. Regular substantive communications are essential. This does not mean the occasional lunch or the annual pilgrimage by management to the client.  Nor does mere reliance on Client Alerts or Bulletins , while critical, suffice.

These communications should serve a number of purposes:

  •  For our purpose here, your existing clients should be made aware of various AFA’s which your firm is offering. You may think you are rocking the boat when you propose an AFA to a client which seems satisfied with the traditional hourly billing model, but you surely will be extremely disappointed when you see a client leave your mooring and engage another firm which offered an attractive AFA.  And, you certainly don’t want to be at a competitive and economic disadvantage by chasing the client, already boarding another boat, by shouting from dockside, “Wait! We can beat that price!”
  • Gain market intelligence.  Find out what deals and services the competition is offering.  Determine your client’s receptivity to these other options (although do not feel your client’s receptivity is dispositive) and when you return home, carefully assess and evaluate the information acquired.
  • Recall that the ACC Value Index consistently reports that law firms score lowest in the areas of communications, responsiveness and budgeting skills.  Raise your score and your clients’ appreciation by using these regular communications to discuss the progress of particular matters and provide timely reports of the progress and budgets for existing matters.
  • Make sure you understand your clients goals.
  • Discuss new practice areas and new capabilities of your firm.  Don’t rely on formal engraved, glossy announcements or emailed press releases. The first two get tossed in to the trash bin unopened and the latter instinctively sends the reader to the “delete” button.
  • Also discuss with clients opportunities your firm is considering, whether they be new practice areas or new offices. Seek their counsel.  Invite your clients to make some level of at least emotional investment in your firm’s growth.  And, heed and take into account their advice and recommendations when making the final decisions. Share the information with your partners.
  • Most well managed law firms annually conduct annual client satisfaction surveys.  Yes, these are important, but more regular discussions on the issues are far more productive.
  • Don’t leave these areas of communication to the annual pilgrimage of a managing partner to a client.  Rather, these dialogues need to be part of regular open and objective discourse; the whoop and wharf of your relationship.
  • Inquire about their own growth within their own respective companies. Feed this information in to your data base and work to make a contribution to their own personal advancement within the company by giving them the opportunities to shine in the eyes of their superiors or boards of directors. Let the individual take credit for your contribution.
  • Listen.   Don’t ignore a contribution from your client to a dialogue just so that you can “reload” and recite an anecdote relevant to a prior comment. Just like in court, listen to the comment or question posed and respond directly and candidly. A response of “I don’t know but I will get back to you on that” is far better than a fabrication, a guess or a misstatement.
  • Do not make billing and payment for pending matters a staple of these meetings.  A more productive staple would be an Ed Koch inquiry:  “How am I doing.”
  • Be Prepared.  Before embarking on your visit to the client, review the matters you are handling for the client. Familiarize yourself with the status of the matters and, if necessary, speak to the lawyers on the front lines of these cases. Be a critical analyst: Ask your colleagues the hard questions.  Identify any potential issue in the progress of the matter, wearing the spectacles of a client who will identify either problems or any potential issue with the progress of the matter.  If you are handling the matter give serious thought as to a plan you will embark upon to resolve the issue.  If a colleague is responsible for the matter, ask what is or should be done to resolve the issue which might raise the client’s concerns.  When you sit across the table from the client, be prepared to answer, in an informed way that the issue has already been identified and a course of action is being pursued.  If there are various options which ethically or tactically require the client to select from, take the initiative: Advise the client of the issue (demonstrating that you are “on top” of the matters being handled by the firm for the client) describe the options, be prepared to respond on an informed basis to the client’s query as to your recommendation. ­ do not, if at all possible, put the client in a situation in which he is compelled to make a quick decision. Afford the client to weigh the options and discuss the matter further with you or your colleagues.

Google the client. Be informed of the latest developments of the client.  Take special notice of matters     other  firms are handling for the client and ask the client how these matters are proceeding.  Do not criticize or disparage he other firm.  But at an opportune time, even if it is subsequent to the meeting, let the client know of your firm’s expertise in the substantive area of the law. Identify the lawyers who have this expertise and notable matters they have handled in this matter. Discuss your firm’s willingness to handle any subsequent matter in the same area on an AFA basis.

If the client is publicly traded, review recent filings.

  •  Accept responsibility.  If a client expresses dissatisfaction for any of the work you or your colleagues have done, do not seek to excuse it.  Express personal remorse, take ownership of the problem and express your intention to remedy the issue and then follow up, both within your firm and with your client.

Ditch the email. When you are having these communications with your client, do not believe for an instant that you are doing your job by merely sending them an email. You have a telephone; use it, but only as a second resort.  Nothing beats or even matches a face to face meeting (in the Middle East, these are called “Four Eyes Meetings”). Lunches and dinners are swell, but frankly, clients more sincerely your visiting them at their offices and your thereby communicating an interest in what they and their colleagues are doing.  These visits are most appreciated when the client’s office or plant is distantly removed from your office. While at the client’s offices or plants, you should make it a point of pressing the flesh of other company executives with whom you have only had a telephone or email relationship. The office and plant visit also gives you the opportunity to meet other executives who might provide additional points of productive intersection with the client.  Too often clients feel that a mere lunch or dinner is distracting.  The office or plant visit might well be punctuated by a meal shared.  Woody Allen was right:  The key to success is showing up.

Network your clients. As you listen to what your clients are doing, keep your own contacts lists rumbling through your mind. Be ready to suggest the name of a different client, an acquaintance or a partner involved in a similar or complementary project and bring them together. And, do the reverse at the same time: Use the information acquired, with your client’s permission, of course, to reach out to that other special somebody in your contact list.  Amass business cards at conferences and acquire an understanding of the work these folks do and put that information in your contacts list. Work towards developing a relationship as both a master networker and somebody who knows everybody.

The utility of having small, regular and very informal get together in your office cannot be overstated.  Keep the fare and attendance relatively light. Make them regular; once a week, once a month or twice a month.  Invite some partners. Subjects you and your partners should recite mantra-like, is “yes we do that; we just finished a succesful project on that; we have some very attractive billing arrangements for these kinds of projects;  we have some partners with a great deal of experience in that field; and we we have some clients we’d like you to meet who may be helpful to you.”  Use these events to stitch together clients and potential clients with each other as well as with other partners with potential synergies. Strive for a mystique in which people say to each other “You know, Bill has a small networking cocktail party the first Thursday of each month at his office; there are folks you might want to meet who could help you with your project. Let me see if I can get you an invitation.”

For those who are a bit more technology savvy, or have access, within their firms or through other resources, an interesting additional new model is the creation of a web portal through which you and your law firm  create a web site in which there is an open dialogue by and among clients and lawyers through which a virtual on line network which your clients can access and use for business networking and client based collaboration with some input from you and your clients.  Thus, for a simple example, a client or potential client would register for access to the site (at no fee) and might pose a simple question such as “We are thinking of doing a project in Singapore, has anybody done any work there and what have your experiences been? ” Clients could respond and where appropriate, you and your colleagues could chime in with your own experiences in that arena.  Paul Lippe, CEO of www.legalonramp.com, probably the best independent collaborative lawyer/client collaborative network in existence, recently delivered a brief presentation of this model at this year’s ABA convention.  It’s seven minutes long and worth a viewing, as is a stroll through legalonramp.com.  Paul’s presentation is at http://www.legalrebels.com/posts/maven_your_way_to_successcollaboration_is_the_new_normal/

          Show them that you care (http://www.youtube.com/watch?v=ycbgHM1mI0k).  Keep their birthdays on your calendar and extend wishes. Keep information about spouses, children and other such information in the notes section of your contact list. Follow industry or other media news about the client or his or her company.  Extend a greeting or commendation where appropriate. Ask about children by name.

 Get help from your marketing professionals.  Your firm’s marketing directors and outside marketing consultants must be your partners in these exercises. Discuss plans for each of these activities with your marketing professionals. Have them conduct some market research for the client with whom you are meeting so that you have an understanding of any new trends in your client’s industry as well as information about any relevant press releases the client may have issued. Show up being prepared.  Have your market professionals put together packets of take-aways that are relevant and germane. Ask your marketing professional to suggest other services your firm can offer the client. Be very selective about delivering these take-aways. Deliver too many and the contents will likely find their way quickly in to the trash bin unopened and unread; maybe the folders will be retained for client’s kids as neat receptacles to keep their homework assignments. Upon your return, debrief your marketing professional.  You can never be too prepared for these meetings.

        Follow up, Follow up. Success in marketing ultimately requires only adherence to three rules:  (1) Follow up; (2) Follow up and (3) follow up.

Never leave home without it. Bring along a copy of this, review it before the meeting and then after the meeting, use it as a checklist to make you have covered everything. (And if you find there is something I left out, call me).

© Jerome Kowalski September, 2010; All Rights Reserved.

Law Firm Reports on Revenues and Profitability: A Radical Proposal


Seattle Transit System 32 Year Net Loss & Prof...

Seattle Transit System 32 Year Net Loss & Profit History (Photo credit: Oran Viriyincy)

Law firms’ profitability and revenue stream which infect the trade press at this time of year is a reflection of the profession’s hubris in boasting about how much money it makes on the backs of their (frequently cash strapped) clients.  The principal creator of this villainy may very well be Steve Brill, the initial publisher of The American Lawyer and who some 30 years ago, invented the AmLaw 100.  A casual observer might wonder why private partnerships publicize their personal financial information.  I doubt that very many law firm partners distribute to the press or otherwise publish their own personal tax returns or post them on their Facebook sites.  But why would law firms  stick it in their clients’ faces that law firm partners or a particular law firm is making oodles of money, when the clients, who fill their coffers, are on austerity budgets?  Who would expect that before engaging a physician, you first asked him or her how much money he or she makes every year.  The result of law firms crowing about the wonderful profitability the firm is realizing, often exaggerated by legerdemain, smoke and mirrors (which those of us who advise law firms can see right through) is just plain pissing  clients off.  Lexis/Nexus recently conducted a survey and found that 58% of in house general corporate counsel believes that their outside lawyers are just making too much money.  And, what is their reaction?  For those firms not willing to assume the financial risk on legal engagements, clients are cutting hourly rates and taking more work in-house.  The demands for reduced hourly rates by clients is only emboldened by the otherwise inexplicable compulsion by law firms to boast about how much money they are already taking out of their clients’ pockets.

A significant parenthetical to some of the examples of the creative dexterity to which firms resort to artificially inflate their profitability is instructive:  First, we have all known for years that the so-called “Profits per Equity Partner,” the purported gold standard, is adroitly manipulated by most reporting firms by simply dubbing some lowered paid partners to “non-equity partners,” without in any way affecting the actual earnings of such partners or their roles or status within the firm.  Rather, by eliminating the lower earning partners from the metric, the PPP number is – poof  — inflated.  Reporting for 2009 provides an added level of prestidigitization. During a difficult year for the profession as a whole, with decreased revenues and wholesale elimination of timekeepers, we have seen so  many firms report that despite such reduced gross revenues, profitability has nonetheless increased.  However, there is no mention made of the fact that the differential is caused by the elimination of salary expenses and personnel, while bills rendered by the firm for work already done by such timekeepers as well as work already in progress (WIP) yet to be billed will yield revenues, the so-called “ramp down effect.”  Yet, long term effects of ramp downs can have staggering negative consequences.

Financial accounting for law firms is governed by applicable generally accepted auditing standards and generally accepted accounting standards, adopted from time to time by the American Institute of Independent Certified Public Accountants.  As we all know, footnotes to income, balance sheet and profit and loss statements are an integral part of any financial statement.  Yet, it is virtually unheard of for any law firm to release its full financials or the required footnotes. In many instances, lawyers are fully aware of the fact that release of partial data, including the failure in particular the integral footnotes may constitute material and actionable omissions.  Despite such knowledge, the release of financial data by law firms with material omissions is pandemic.

There is no federal, state or regulatory requirement that firms boast about their profitability or slink in shame when their numbers are off.  So, just don’t do it.  Let the American Lawyer magazine say what it might, but, in the end, it simply won’t matter if you don’t report to them.  The only people who should see  law firm revenue and profit numbers are partners, their accountants,  the firms’ and partners’ bankers,  potential lateral partners,  the IRS and clients who require such disclosure prior to engaging their services. And each should be held to confidentiality requirements.  For those who suggest that declining to participate in this perp walk might adversely affect recruiting, bear in mind that just like the market for legal services is purely a buyers’ market, so too is the market for lateral partners and young lawyers.

The bottom line and our radical proposal is to simply stop this chicanery and flouting of plumage. Let that which is private remain private and remove revenue and profitability numbers from public discourse until some rule, regulation or governing requirement compel disclosure and if that ever that becomes the case, require uniform reporting consistent with AICPA standards.

© Jerome Kowalski, February 2010, All Rights Reserved.

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