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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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Essential Elements for Interviewing a Law Firm Lateral Candidate


English: One_Over Interviewing

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                                                                             Jerome Kowalski

                                                                             Kowalski & Associates

                                                                             December, 2011

 

About thirty years ago, I was assigned to be a second seat on a complex multi-party securities fraud case.  Among the many lawyers working with us on the defense side was a partner (let’s call him Tom here) at an AmLaw 50, who was a widely respected litigator with 25 years of experience. In fact, shortly before the case was scheduled for trial, this lawyer was nominated to serve as a judge on the United States District Court for the Southern District Court.  A month or so before the case was scheduled for trial, the lawyers for the dozen or so defendants met to begin planning for the trial and dividing up the various pretrial and trial tasks.

As the meeting started, Tom looked around the room and said plaintively “fellas you got to help me out here. I’ve never tried a case before. I’ve got lots of deposition and motion experience and some evidentiary trial experience in connection with injunctions, but I’ve never even seen a jury trial”  Yes, we all stared in disbelief. Five or six of the seasoned trial lawyers in the group took Tom aside and gave him a four day crash course on jury trials.

The case was duly called for trial and in the six weeks of trial, Tom, who had a high degree of innate intelligence, acquitted himself well, although I can’t say the same about his client who was found liable for serious damages. A few weeks later Tom’s nomination was confirmed. He attended judge’s school, went on to serve with distinction and ultimately became chief judge of the district.

The story comes to mind in connection with an interesting and provocative article by Mark Herrmann of Above the Law in which he discusses different interviewing techniques for lawyers being considered as lateral candidates at law firms. Herrmann first discusses the two standard techniques, resume based interviewing and second, behavioral based interviewing. The former is straightforward and is one in which the interviewee is asked about items on his resume. The second involves asking candidates about experiences in their lives and how they handled them.

The issue is even more timely, following a recent piece by Professor Steve Harper entitled “Fed to Death” in which Harper recounts, among other things, that injudicious lateral hiring of partners has caused the implosions of many major law firms.

A correspondent to Herrmann, Alessandro Presti suggested to Herrmann an entirely different approach. As recited by Herrmann, Presti

 “… suggested giving an applicant a relatively non-technical contract and asking the applicant to interpret it or identify issues that the contract left open. This might give insights into the applicant’s ability to identify issues and analyze them. Once the applicant identified the issues, you could explain that your client wants to launch a new product and ask whether the contract permits this. This would force the applicant to synthesize information and present it, thus demonstrating communications skills.”

While not utilized often, I have in the past fact seen this approach taken.

A couple of years ago, I arrived at the office of a managing partner of an AmLaw 200 firm for a scheduled meeting. He greeted me in the reception area and asked me to excuse him for a moment or two, since he had to conduct an interview of senior real estate associate who was being considered by the firm.

I was initially annoyed, thinking that I would have to cool my heels for 30 or 40 minutes as he conducted the interview.  Instead, he returned and collected me within five minutes. I complemented him on his efficiency in conducting such a quick interview. He explained that he simply started the interview and would conclude it in an hour. He went on to explain that he gave the associate a term sheet for a lease and a draft lease and advised her he would be back in an hour, at which time, she should mark up the lease and he would then discuss her markups when he returned. This was a first for me and I complemented him. He said that he’s been using this technique for a six months. He invited me to join him when he went through the second  substantive part of the interview.

We came in to the conference room and saw a clearly flustered lawyer on the telephone shouting at her headhunter.

She then sat across the table from the MP and slid her markup across the table. The MP began asking her questions about her comments in a mixed style of a partner reviewing an associate’s work and an adversary conducting a negotiation. When he got to the third page, he asked her about an issue that she missed entirely. She was silent for a moment and then tried to
explain that she just wasn’t given enough time to do a thorough review. He said, “you know, here, we are always working under time pressures.” She burst into tears, collected her things
and left. He turned to me and said, “too bad, she’s not going to work out here. Her legal work was pretty good but if she thinks this was pressure, wait until she has to deal with an SOB client or adversary.”

As we approach what will surely be a busy recruiting season, particularly at the partner level, we owe a debt of gratitude to Herrmann for opening up this subject for careful consideration. Much has been written about the essential need for due diligence, not enough has been addressed concerning testing the technical skills of lateral candidates.

Years ago, a fast growing law firm recruited a litigator who had an outsized ego and boasted an enormous book of business.  Once on board, he pitched none other than Donald Trump to handle a significant case.  He neglected to mention to The Donald or his partners that his only jury trial experience was a one day minor Civil Court case. Unlike Tom, he did not have a table full of experienced trial lawyers to guide him along and his hubris precluded him from confessing to his partners that he lacked real trial experience or from asking his experienced partners for a helping hand. He also assuredly did not want to share any “responsible partner credit”  with anyone. The case went to trial and received an inordinate amount of publicity.  The result was embarrassing; The plaintiff prevailed but the jury awarded damages of $1.00, which the court duly trebled.  The tabloids had a field day with this. This lawyer did conduct second jury trial several years later. In that second trial, he appeared pro se, defending himself of defrauding clients of millions of dollars.  This second time, he didn’t fare as well and his subsequent time in prison may have tempered some of his hubris.

So what do you ask a lateral candidate?  I would suggest a combination of resume, behavioral and real life discussion.

Review with a litigator some of the cases he’s worked on.  Pick up the identity of those cases from a Google search, if he or she hasn’t given you a list of cases he or she has worked on. Ask for the details that went on in strategizing the case, why certain motions were made or not and how the case was staffed, including the precise role played by the candidate.

Then pick up a recent case that landed on your desk and ask the candidate about his or her reactions to the claim (of course, being careful not to divulge client confidences).  Challenge him or her on some of some of the theories advanced. Inquire about how he or she envisioned litigating the case.

Ask about some of the adversaries he or she has dealt with.  Telephone one or more that you or your partners may know and mention casually that you ran into the candidate and ask about his or her skills and demeanor, being sure to couch the conversation as being prompted by idyll curiosity.

Ask transactional lawyers the same types of questions.  Inquire about deals worked on in the past.  Describe a pending deal (hypothetical or not) and ask how he or she would structure the deal.

A very similar approach should be taken with regulatory lawyers.

I know all of this sounds a bit gruesome and perhaps overbearing. But, if you are doing things right, your lateral partner questionnaire is overbearing and the ubiquitous use of these questionnaires have made them simply part of the pain a lateral must bear in making the move.

Explain at the outset, either directly or through your headhunter, that part of your firm’s recruiting process entails these procedures, so that there are no surprises.

Steve Harper is right in that lateral hiring may be fatal when not done well. Every managing partner can recite instances in which a lateral was a disappointment. And every managing partner knows full well that taking on a lateral involves substantial risk and investment. That risk must be managed carefully and tempered by a careful and thorough detailed vetting of the candidate. The future well being of your firm rests on working through this process with great care, vigilance and diligence.

© Jerome Kowalski, December, 2011.  All Rights Reserved.

 Jerry Kowalski, who provides consulting services to law firms, is also a dynamic (and often humorous) speaker on topics of interest to the profession and can be reached at jkowalski@kowalskiassociates.com .

 

Law Firm Crisis Management: Planning, Developing and Implementing a Public Relations and Communications Program for Law Firms


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                                                                              Jerome Kowalski

                                                                             Kowalski & Associates

                                                                             April, 2011

 

We lawyers are trained to rapidly assemble an emergency team and deploy swiftly to address a sudden client crisis.  In the world of the cobbler’s barefoot children, we do not adequately do the same for ourselves.

In analyzing the 41 major law firm failures since 1988, it appears that most were either caused by either to a failure to contain rapidly escalating adverse publicity or the ultimate implosions were certainly materially exacerbated by such adverse publicity.  Most often the source of the adverse publicity emanates from the law firm in decline itself. Like with so much in the world, planning is essential.  Every law firm must have a public relations crisis management program in place to deal with PR crises.  The time to develop this plan is when the seas are calm.

Let’s first look at a few case studies of both success and failures.

A starting point might be the recent tragic failure of Howrey. In his post-mortem study of Howrey’s failure, Professor Steve Harper catalogued the numerous ambiguous and inconsistent public pronouncements of Howrey leadership. Moreover, the vacuum created by the void in open and directed media disclosure was filled by an ad hoc blog penned by anonymous Howrey associates, largely based on rumor and innuendo, much in-fighting and demands for a virtual public lynching of Howrey leadership. At this writing, that blog has astonishingly attracted over 306,000 visitors.

Another example might be Wolf Block, a venerable Philadelphia based national law firm. That firm went through various upheavals as the economy began to tank and fruitlessly sought to merge its way out of its problems, first negotiating with Akerman Senterfitt and then Cozen O’Connor.  The problem was that these merger discussions were made very public and upon the failure of those discussions, the message seemed to have been posted on the front lawn: “Law Firm for Sale”.   Without any takers, the firm dissolved. In short, had the message in the media been better handled, the firm just might have survived.

The natural consequence of adverse media attention to a law firm is too often significant discomfort and insecurity among the firm’s own most valuable – indeed, it’s only — assets, its partners. The public attention paid to a law firm’s failing fortunes invites competitors to begin an often unstoppable onslaught to grab those assets.  When approached by more stable competitors, many law firm partners are beyond eager to be courted.

The point here is that message must not only be carefully publicly communicated to the media, it also has to be constructively and candidly communicated to the firm’s own partners.  Their confidence in management must be earned through open dialogue and gaining the trust of the partnership.

A different result obtained for a group of lawyers which originally practiced at Parker Chapin, which is now the core of the New York office of Troutman Sanders.  Founded in 1934, Parker Chapin was by the early 90’s a well regarded 120 lawyer New York commercial law firm.  In 2001, Parker Chapin elected to join a national law firm and after meeting with several law firms, it merged with 600 lawyer Dallas based Jenkins & Gilchrist. In 2005, Jenkins began to unwind because of alleged serious and purportedly criminal improprieties in which some of its Chicago engaged involving questioned tax shelters run out of its Chicago office, which preceded the Jenkins & Gilchrist/Parker Chapin combination.

The New York office, comprised still primarily of the Parker Chapin group, stood together and as a group joined Troutman Sanders. Parker Chapin leadership did an outstanding job in keeping the group together; they largely accomplished this result by maintaining an open and completely candid dialogue with their partners, in which all views were openly considered and all partners were fully informed regarding the steps being taken by the group’s leadership. Thus, despite the widespread media coverage of Jenkins & Gilchrist’s imminent demise, Parker Chapin leadership successfully kept the circling sharks at bay (only three Parker Chapin partner jumped ship before the Troutman deal closed. [Disclosure: I was a partner at Parker Chapin from 1987 to 1993 and played a bit part as Parker Chapin was considering its alternatives in 2005.]

Accordingly we can see that not managing communications in times of crisis can be disastrous, while the opposite result can be obtained through better communications.

Let’s now turn to the underlying issue of managing communication and public relations in times of law firm crisis.

The first step requires the assembly of a team dedicated to addressing a crisis.  The team should consist of the firm’s senior management, the firm’s general counsel, its chief risk management officer, its chief marketing officer, the head of HR, its director of media communications, the partners and staff in charge of the firm’s disaster recovery team and its outside public relations counsel.  The crisis communications team should also include an outside law firm consultant well versed in current trends in the legal industry.

This SWAT team should meet regularly; at least twice a year.  The first order of business is establishing a consensus as to what metrics should be considered in determining what constitutes a crisis which should result in deployment of the team. During those meetings, the team should also consider various particular scenarios that would create a crisis of some form for the firm; for example, the defection of significant partners, the loss of a major client, a significant criminal or regulatory investigation implicating the firm, a major malpractice case, loss of an entire practice area because of market conditions (think dot.coms, banking crisis, sub-prime mortgage meltdown), defection of an entire office, a rumored merger, a natural disaster, a precipitous decline in revenues or profits per partner and so on.  One member of the team should lay out a hypothetical and the SWAT team should then brainstorm how each such crisis will be dealt with from a PR point of view.  A basic operating principle of this task force is that neither individual egos or hubris have a place at this table.  This latter point must be repeatedly emphasized during the brainstorming sessions, so that if and when the crisis arises, to the fullest extent humanly possible,  neither personal ego nor hubris will be components of  problem resolution.

Following the initial meeting, a crisis communication plan should be drawn, with input from each participant.  In drawing the plan, thought needs to be given to the fact that information needs to be delivered to various constituencies. These include the firm’s partners, clients, staff and the professional and general media. Strict adherence to basic media relations principles are crucial:  The message must be consistent and come through a designated team member responsible for media relations.

The consequences of failing to adhere to these very basic media relations maxims can best be illustrated in the instance of Finley, Kumble (of which I was a member) and was the first of the 41 firms to implode since 1988.  Finley Kumble’s crisis was in large measure precipitated by a bristling critical series of articles in various media as well as infighting among the firm’s executive committee.  As the firm’s partners huddled attempting to address the issues, a small dissident group quietly proposed dissolving the firm and allowing each office to continue as stand-alone firms. While this concept had little appeal to the vast majority of partners, Hugh Carey, the former governor of New York and a Finley Kumble partner surreptitiously leaked a front page story to The New York Times on November 11, 1987 asserting that such a plan was imminent.  Within weeks, the firm voted to dissolve and the plan proposed by Governor Carey and a few others was never implemented.

The first focus must be on the partnership. In this era of law firm partner free agency, it is imperative that every effort be made to instill confidence in the partnership that management is substantively and productively dealing with the crisis.  This cannot be accomplished by an Alexander Haig fiat that “I’m in charge here.”   Those who are actually in charge are the firm’s partners who will make their own determinations about the adequacy of management’s handling of the crisis.  The partners have a voice and their voices must be heard as many will doubtless have productive suggestions. The partners must also fully appreciate the dire personal consequences to each of them in the event of a complete law firm collapse.

The next order of business is dealing with clients.  Here, a consistent message must be communicated and each partner should be tasked with making telephone calls to each client.

Finally, we must deal with staff and they must be dealt with early on.  Delays in informing the staff give birth to deadly rumors, almost always all or partially false, and are the progenitors of Howrey type blogs.  In written communications to the staff, assume that these communications will appear in the blogosphere, even before many staffers have read the communiqué. Oral communications, whether in the form of discrete meetings, telephone or video conferences will similarly be matters of public record – as will the fact that a meeting or video or telephone conference is being scheduled.  When you speak to your staff, you are speaking contemporaneously speaking to the entire world. And, should you fail to timely speak to the staff, a message will be parsed together, perhaps out of whole cloth, but certainly not under any control, and will instead be communicated to the world.

I don’t plan on ever having a flat tire, an electrical failure or a fire.  But I still carry a spare tire in my car, a flashlight and fire extinguisher at the ready.  I know you don’t plan on having a crisis, but having a plan on dealing with the crisis is more essential than simply having chicken soup. You don’t want to ever be in a situation in which you are rather desperate for the soup, you can’t seem to even find the recipe or an open deli.

© Jerome Kowalski, April, 2011.  All rights reserved.

Creating Better Law Firm Leaders: What Law Firms Can Learn from Google


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Jerome Kowalski

Kowalski & Associates

March, 2011

I recently attended a conference of managing partners in which one of the topics under discussion was “How many hats does a managing partner need to wear?”  The discussion was animated and the clear consensus was that an MP needs to wear them all: manager, strategic thinker, leader, psychologist, economist, parental figure, marketer, promoter, consensus builder, team builder, peace maker, visionary, piñata, the Harry Truman “buck stops here” hat, huckster, Indian chief, CEO,COO, CMO CIO,  and on and on.

As I relaxed in my easy chair on Saturday catching up on my reading, a piece in the New York Times about work performed within Google (clearly one of the greatest companies on the planet) to create better managers.  The piece, entitled “The Quest to Build a Better Boss,” describes Google’s detailed analyses and data mining to identify the definitive qualities of effective managers.  Remarkably, Google’s list is short and sweet. It identified “Eight Habits of Highly Effective Google Manager” and “Three Pitfalls of Managers.”

Among the reasons Google’s simple principles struck me is that they appeared as Bob Ruyback was being pilloried for his failed stewardship at Howrey by, among others, Professor Steve Harper and minions of anonymous Howrey staffers and lawyers on  a blog entitled “It’s Howrey Doody Time.” At the time of this writing,  that Howrey blog, which has been in existence for only a couple of months, seems to have received an astounding 262,000 hits.  And at the same time, Mr. Ruyback is also being criticized by his former partners (whom he said “abandoned him”) for putting them is serious  long term financial jeopardy.

Mr. Ruyack’s contentions, among other things was that partners jumped ship because they “had little tolerance for change” and the new free agency mindset of Big Law partners induced them to leave when there was a dip in revenues. Yes, lawyers do resist change, as I previously reported.  But that innate resistance to change must be overcome by leadership and sound management skills.

And in every study ever done on why people seek alternative employment, compensation factors rank at the bottom of the list.  Always at the top of the list for reasons for voluntarily leaving a job is a lack of job satisfaction.  I also previously wrote about how important it is for law firm leadership to concern itself with associate job satisfaction, even in an era when the supply of lawyers so far exceeds demand.  Certainly, the same principles of maintaining adequate job satisfaction is all the more critical at the partner level.  Maintaining job satisfaction is a critical function of management.

My own personal view, based on long tears of observation, is that successful law firm leadership is predicated on fairly few  building a team, developing consensus, avoiding hubris, and keeping lines of communication open and honest, giving deference and weight to all of a law firm’s stakeholders. Here, then is Google’s Rules, as reported by The Times.

 Google’s Rules – NYTimes.com

As I said, Google is a great company and we, as a profession, should build on these principles to create better law firm managers, practice group leaders, office leaders and lawyers heading up particular engagements.

© Jerome Kowalski, March 2011.  All Rights Reserved.

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