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Taking the Plunge: Do You Want to Be Managing Partner?

Posted in Law firm practices

So you’re thinking about diving into the election for Managing Partner, eh?

 

 

 

 

You think your chances are good: you enjoy the respect of your partners, your business judgment is on a par with your legal judgment, and during your term on the Executive Committee, you came up with strategies that helped the firm navigate some rocky shoals and weather some serious storms. You’re seen as a problem-solver who can think outside the box and eschew tradition when necessary to respond to change.

Yet some close friends, your significant other and probably your family are asking, “Why in the world would you want to do that?” What will be the rewards and satisfactions of trying to herd a bunch of self-interested cats fiercely protective of their turf? Why would you back away from, or at least throttle back on, a thriving practice with some solid client relationships? How big a kick in the butt will your take-home pay take, given your firm’s history of undervaluing and undercompensating its leaders? And after your leadership tenure, how hard will it be to ramp your practice back up to the point where it can fund your Gold Years? Why invite frustration and pain?

Push the Pause Button

Before you throw your hat into the firm’s MP selection process, now is the time to pause and reflect on your motivations and incentives for what is bound to be a significant shift in role, responsibility, stature, and quality of life for at least a few years.

First of all, do not fall victim to all the vague reasons people often cite for deciding to become Managing Partner:

  • Larry asked me and I said yes.
  • It seemed like the thing to do at the time.
  • This would represent a triumph in the firm’s internecine power struggles.
  • We sort of rotate the MP role, and now it’s my turn.
  • I’m a little bored with my practice, so this might be an interesting change of scene for awhile.
  • It’s the next logical step up the high-achievers’ career ladder.
  • No one else wants to do it.

Leadership and Management

Although the position carries the title of Managing Partner, to a significant degree it is in fact a leadership role. What’s the difference?  In a nutshell, management is exercising influence and control over present activity and near-term objectives. Management focuses on maximizing here-and-now performance variables and overseeing performers engaged in current activity. It’s about implementation.

Leadership, on the other hand, is resolutely future-oriented: it’s based on the premise that the present is never good enough and that the highest priority should be to guide the troops toward some improved future state. Leadership is about shaping and communicating vision.

Are You a Natural?

Research by Marcus Buckingham has suggested that while there are great natural leaders and great natural managers, very few people are both. Lest you aspire to a position for which you are not well-suited, now is a good time to ask yourself some hard questions about your leadership aptitudes and motivations.

In a landmark piece of social research some years back, emotional intelligence guru Daniel Goleman identified six predominant patterns in which people exercise influence over others. Two could be characterized as leadership styles:

  • Visionary: “Follow me, I will show the path to the promised land.”
  • Democratic/Participative: “Tell me what you think, and I’ll tell you what I think. Communication is king. Everyone has a voice.”

 The other four really are management styles:

  • Command and Control/Coercive: “I have formal authority.  Do what I tell you.”
  • Charismatic/Affiliative: “People come first. I inspire the devotion of people by caring about them.”
  • Coaching:Let me give you everything you need to perform at your best.”
  • Exemplar: “Want to see it done right?  Just watch me.  I’m the expert.”

Among lawyers, the exemplar style is most common, because lawyers are trained to be subject-matter experts who command respect by the display of their expertise. It is noteworthy that Goleman’s research showed that this style has the most negative impact on organizational culture and morale because the exemplar tends to remain so distant from the troops. In short, if you are naturally a “be reasonable, do it my way” kind of manager, you should think twice about that run for Managing Partner.

An important finding in Goleman’s research belabors the obvious: one size does not fit all. Different settings and challenges call for different styles of leadership, as well as the ability to adjust one’s style as needed.  Unfortunately, most of us have a tendency to default to a single, most-comfortable style, which implies that there are likely to be some situations where we are out of our element.

Some Serious Navel-Staring

The best way to reality-test your leadership mettle is not simply to try to catalog a bunch of abstract leadership qualities (e.g., vision, ability to inspire others, resiliency, etc.). Instead, try to construct a vivid template of what your leadership capabilities are likely to look like in action as translated into the Managing Partner position — in your firm under present circumstances.

You can do this by answering the following ten questions (and it helps to write your answers down, so that moments of fleeting insight or inspiration don’t escape working memory):

 If I realize my full potential as a Managing Partner…

1.    What will I be leading or managing?

  • A respected firm trying to preserve market share and status?
  • A firm committed to changing its brand and market identity?
  • A growth-driven firm undertaking geographic expansion and practice diversification?
  • A powerful cohesive culture marked by share goals, values and norms?
  • A firm in distress or caught in the cross-hairs of change?
  • A Swiss verein assemblage of basically autonomous entities?

2.    Whom will I lead? Who are my most important constituents?

  • External constituents – like maybe clients, or perhaps the firm’s banks?
  • The established power elite of the firm?
  • The heavy-hitting rainmakers and business developers?
  • Office managing partners, practice group leaders and/or client team leaders?
  • Equity partners eager for increased PPEP?
  • The successor generation hungry to ascend to power and control?
  • Directors of your administrative and operational infrastructure?
  • The soup-to-nuts rank and file performers central to legal service delivery?

3.    What will be the source of my leadership authority or clout?

  • The powers of your office and title?
  • A power base of influential partners?
  • My “ownership” of powerful clients and relationships?
  • My proven strategic and tactical vision?
  • My thought leadership and powers of rational persuasions?
  • Moral or ethical leadership?
  • My legal experience or subject matter expertise?
  • My charisma, personality, personal charm or irrational attractiveness?
  • My interpersonal and collaboration skills and ability to build trust and support?
  • My political savvy?
  • My ability to keep my head when those about me are losing theirs?
  • Other: _____________________________?

4.    What will be the effect, result or benefit of my leadership excellence?

  • Clear strategic direction for my firm, coupled with effective tactical implementation?
  • Acquisitions, affiliations, mergers or other forms of non-organic growth?
  • More effective organization, structure, policies, procedures, methods and standards?
  • Financial stability and sustainable profitability?
  • Resolution of short-term crises or threats to firm viability?
  • An improved firm reputation for exceptional innovation and creativity?
  • Exponentially strengthened client relationships?
  • Enhancement of your personal reputation and/or power?
  • Creating a platform from which to leverage personal wealth in the long term?
  • Other: _______________________

 5.    What form or style will my leadership take?

  • The inspired and inspiring visionary?
  • The break-the-mold change catalyst?
  • The general commanding the troops?
  • The financial wizard and nuts-and-bolts attender to detail?
  • The great communicator and bridge-builder?
  • The dearly-beloved team builder?
  • The transformative implementer of technology and innovation?
  • The talent recognizer and talent builder?
  • Other: ____________________________

6.    What 3 strengths, abilities, or “differentiators” will be most instrumental in my leadership success?

7.    How will others characterize my leadership?  What will they say about me?

 8.    What personal  rewards and satisfactions will enjoy, near-term and long term?

 9.    What kind of learning, training, support, resources or mentoring will I need to realize my full potential and overcome barriers?

Important Bonus Question

As you contemplate firm leadership, you may have a tendency toward first-things-first: getting elected, buying new furniture for your office, establishing your management/ leadership team, laying the foundations for your span of control.  At this point, it may be hard to envision the future, especially the long-term consequences of your leadership tenure.  However, in order to chart all the coordinates of your motivational map, now is the time to stop and ask yourself a final, utterly essential question: At the end of my day, what will be my legacy?  What will I be known for? How will firm history record my stewardship? What foundations or edifices will we have erected?

And finally, but for me, what would have happened?

 

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

“You did WHAT!?” – The Powerful Value of Providing Something for Nothing

Posted in Business Development

At the risk of further confirming our reputation as heretics, let us advance what to most practicing lawyers may seem like an outrageous proposition: “Not everything in life has to be a billable event. There are times when you’ll help your cause most by providing value and not charging the client.”

 Full disclosure: This post was triggered by the progress reports of a group of up-and-coming partners participating in a year-long business development coaching program. All confirmed the powerful BD benefits of face-to-face time, researching all aspects of potential clients’ businesses, and relentless follow-up on preliminary contacts.  But several reported a surprising — and surprisingly successful — tactic that had resulted in business breakthroughs: when the potential relationship was still in the courting stage and before engagements commenced, they volunteered to perform some “staging” activity, fact-gathering or preliminary situation analysis, at no charge.

Why Would I Do That?

Particularly in the course of business development, when you are trying to establish relationships and build trust (or get added to a panel or even to displace another established relationship), you may increase your chances of success by crawling outside the “how-much-and-how-soon-can-I-bill?” box.  “Strategic altruism,” in which you confer some value gratis, may take diverse forms and provide diverse benefits, near-term and long term:

  • Rapport: It may convince potential clients that for once they are not going to be on the receiving end of a high pressure sales pitch (part of which comes from that dreaded chapter of the Sales 101 course entitled “how to overcome customer objections”). They may relax, smile, stifle their skepticism, and throttle back their defensiveness. They may become more open to you and more open to what you are marketing.
  • Showing the Flag: It can provide you with an opportunity to give the client a low-risk taste test of some aspect of your expertise or judgment in action (particularly important if this is an attempted new client conquest or you are trotting out a new or specialized legal service, such as Inter Partes Review, Dark Pool financial litigation, patent portfolio monetization, cybersecurity protection, or some other new and esoteric practice area.
  • Scoping Support: In service of faster, more focused, and more accurate scoping of potential engagements, performing some preliminary evaluation without charge can help you do better situation analysis and propose more realistic project scope, phases, tasks and budgets. It may also tell you if you’ve stumbled into a mine field.
  • Learning About the Client: You may elicit some invaluable information (after executing an NDA, of course) that will give you a feel for both the “hard” dimensions of this client’s needs and priorities and for the “soft” dimensions of how this  client operates in relationships, defines value, and likes to communicate.
  • Setting the Stage and Differentiating Yourself From Competitors: By performing some baseline project-mapping, you can configure an approach to service delivery that is tailored powerfully and specifically to your or your firm’s capabilities. By “giving something away free,” you can demonstrate that you are a uniquely helpful and client-focused lawyer, as well as showing the potential client what it will be like to work together.  True differentiators are rare in the legal profession.  Being a “giver” can really set you apart. That is, you can put yourself in the BD driver’s seat and shove your competitors to the back of the bus.
  • Provoking a Little Guilt: By proactively conferring a “gift” of value on a potential client, you may foster a subliminal sense that “fairness” requires them to reciprocate in some way, if only to give you a more receptive ear or the chance to strut your stuff with some serious assignments. One wag has called this the “Genius of Generosity.”

How Long Since You’ve Sent an “NC” Bill?

Even after business development has morphed into an ongoing client relationship, sometimes it’s good strategy to demonstrate to the client that your overarching goal is not to profit-maximize at all times. Suppose a matter has been “overtaken by events” (especially events not of your making) and is experiencing some scope creep that’s triggering some unanticipated billed time.  Should you invariably hew to the letter of the engagement letter and bill to the last drop?

Some months ago, we walked with a General Counsel past a staff bulletin board in the legal department’s hallway. There, fastened with a giant push pin, was a law firm invoice – a pretty hefty invoice. Among the various line items was the item: “Additional research suggested by passage of new XYZ legislation.” On the charge line was the entry “NC,” circled in bright red magic marker.  “Do you see that?” the General Counsel exclaimed. “No one has ever sent me a ‘no charge’ bill before!  That’s being an attentive steward of our money, and I was impressed.”

The moral is clear: if circumstances conspire to force you to expend more time and resources on your firm’s own dime, don’t eat the cost in silence.  Let the client know the nature and magnitude of the work you’ve opted not to bill.  You don’t have to be virtuous in a vacuum.  And you will trigger happy surprise.

Now Don’t Get All Crazy

Let’s be clear: we are not suggesting that you turn your firm wholesale into a pro bono operation.  You should expect to be paid fair value for your work, and even cost-constrained clients should be expected to pay for it. If you make the decision to do a little loss-leading, of course you are not going to unilaterally write no-charge on significant amounts of substantive legal work product.

Your generosity-leverage events are best confined to ancillary or preparatory activities, in other words, they are “baby steps” that help build a platform for the later and greater value you can confer. That platform can be the foundation – the legal predicate — on which a significant engagement is built. It can also demonstrate what the working relationship with you and your firm will be like.  Either way, it can be a seed that grows big trees.

 

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

Straight From the Horse’s Mouth – GCs Say What They Want From Outside Firms

Posted in General Counsel

 

We recently attended a private meeting held in Panama with the General Counsel of 35 global corporations. Given the differences in their businesses, geography, cultures and operational envelopes, one would surmise that they saw their practices, priorities and peeves quite differently.  Not so: it would be fair to say that there were more areas of concordance in their thinking as there were differences and disagreements.  Plain speaking was the order of the day.

Their responses were particularly telling – and particularly outspoken – when we propounded a broad meta-question: What do legal departments want from their law firms?  

We then sat back, listening intently, typing on our iPads as fast as our fingers could fly. Here, verbatim and unedited, were some of their responses:

 

Tending the Relationship

  • You would do well to understand your place in our universe.  Your role is to serve us, not vice-versa.
  • We want to work with firms that really understand our business.
  • Treat clients as partners, not as customers.
  • We would appreciate less arrogance.  A lot less arrogance.
  • Spell our company and executive names correctly.  At least pretend that you care.
  • You are not unique.  You may think you are, but from the client’s viewpoint, law firms have more things in common than things that distinguish them.
  • Above all, communicate better. No surprises, no excuses. Keep us constantly in the loop.
  • And communicate more efficiently.  Get to the point and spare us the 10-page memos.  We want the answer, not a ton of irrelevant legal analysis.
  • Make the effort to get to know our Legal Department: our goals, priorities, our constraints and pressures, our initiatives, and yes, our lawyers and our culture. Work harder at learning to work with us.
  • Want to win our trust? Skip the tickets to ball games and provide some unbilled legal advice that shows you’re really invested in us.
  • We would prefer to work with one partner only – one who really understands our business.
  • Also, please understand that our CEO is not available at your whim. Respect our time.
  • You should run our matters like they are a business and like your own money is at stake for the results and fees.
  • If you don’t know the answer, admit it. Don’t BS us, don’t hem and haw.  Just go and find out the right answer.
  • You should view our in-house attorneys as intelligent resources, not pains in the backside. We’re tired of being patronized by people we pay money to.
  • Firms should match our genuine commitment to diversity, not just pay lip service.
  • Make training available to us that is practical and really useful. We don’t need abstract theory or generic legal summaries.
  • Don’t gild your lily on our dime.  We don’t fly first-class; you shouldn’t either.

Service Delivery Issues

  • Do the right legal work for the risk at issue.  This should be so basic, but we still see a lot of overlawyering.
  • Provide strategy alternatives, and be sure to tie them to associated fees and risks. We don’t operate carte blanche any more.
  • Deadlines and budgets are hugely important to us.  Teach your lawyers to work on-time and on-budget. If you see you’ll blow through a deadline or budget, let us now immediately; don’t wait until damage is done.
  • Send over a budget before we have to ask, and give us timely updates without having to be asked 10 times.
  • Interoffice conferences should be billed, if at all, to the single lowest billing rate of the attendees.
  • Use the right attorney – in terms of level and expertise – on our matter. Don’t just throw the work to someone who needs hours or happens to be available.

About Those Fees and Fee Arrangements

  • Good idea:  offer alternative fee arrangements right off the bat, before we have to ask.
  • We really liked it when a firm proactively suggested special billing arrangements for a large document review.
  • Please re-use previous work product and then only charge us for updating or changing it.
  • Do not charge us a geographic fee penalty.

About Those Associates

  • Stop training your associates on our dime.
  • We don’t want to use first and second year associates, much less pay for them.  Their work is immature and their judgment poor.
  • Associate work should be evaluated on our satisfaction with the work product, not on how many hours they spend on it. Billable hours do not correlate with work quality.

For these 35 chief legal officers, their dominant priorities seem clear:

1) Walk a mile in our shoes.

2) Treat the law firm-client relationship as a partnership. To team with us, really get to know us and don’t demean us or take advantage of us. Collaborate better. Try harder.  Show respect – to everyone, at all times, in all situations.

3) Expend more effort – much more effort — on better communication.

4) Think and act proactively; don’t make us do all the heavy lifting.

5) Work efficiently, mind the deadlines and respect the budget.

 

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

Making Your Net Work

Posted in Business Development

When we hear business development-oriented lawyers talk about all the wondrous things evolving social media technology can do to their (or their firm’s) market visibility and reach, we’re reminded of the story of the backwoods recluse who wins a new automatic dishwasher in a contest. When a neighbor runs into him in town and asks how he likes this life-changing bit of modern technology, the rustic shakes his head and scoffs, “well, it ain’t worth a tinker’s damn.  I’ve had it for two weeks now, and so far it hasn’t even cleared the table.”

Skilled social media navigators frequently brag about all the people they are “networked in” with –  scores, hundreds or even thousands of LinkedIn connections, Twitter followers or FaceBook friends. And you have to admit that the multiplier-effect potential of today’s digital technology is pretty astonishing. Social media certainly does seem to bring the entire world within reach.

But once you get it in reach, what happens then?

For many introverted, autonomous lawyers, the answer is…absolutely nothing. We cultivate these lovely long lists of contacts, and we think and act as if having a bunch of electronic synapses means that the nerves are firing and meaningful message content is actually being communicated among all the cells.  Not true. 

Those who gauge networking success by the sheer number of contacts they can cultivate digitally need to get this through their heads: You are not “networked” unless you make your net work, which is to say, unless you work your net.

A Relationship Game, Not a Numbers Game

Particularly when you are using networking for business development, your networking efforts must extend beyond simply reaching out and touching someone (or a lot of someones). All networkers – whether zealous or reluctant – must remember this: Contact Does Not Mean Impact. 

A robo-caller may succeed in contacting me when I pick up my phone, but has no chance whatever of impacting me before I hang up. Or I may say yes to your LinkedIn request (and I usually do; what harm can saying yes do?), but that contact does not mean we have forged a functioning relationship.

It is far more important to know how to trigger an interpersonal impact, and in successful networking, impact – positive, actionable impact — comes from one activity in particular: following up on initial contact.

Okay, I See You.  Now What?

Yeah, yeah, we know you’re going to tell us that powerful, positive impact also comes from visibility. All those articles you write, blogs you post, your Super Lawyer award (six years in a row), your year as Chairman of the Bar Association. Yeah, they count.  They do help bolster your brand, your image, your rep, your cred.  But truth to tell, they generally do not translate directly into business — into new client relationships, into client trust and rapport – into mutually interdependent interactions. Those things come most and best from the impact that results from face-to-face interactions, from relationships that have a nuanced personal dimension.

FU Means…Follow Up

Word of mouth may open the door but it does not close the sale. You must follow up! Personally. Frequently. Repeatedly. Appropriately. Effectively.  This is the part where lawyers’ self-marketing efforts most often crater, because all this following up stuff is, by and large, a huge time suck that drives socially standoffish lawyers nuts.  Lawyers hate all that follow-up stuff: the calls (and repeated calls), the banal lunches lubricated with humdrum pleasantries, the articles, the speeches, participation on conference panels, rubber chicken dinners and attendance at various events. All those things that take them away from practicing law, billing hours and showcasing their substantive legal expertise.

Making Networking Work

Online technology is not going to rescue you from life in the networking trenches. Just as social media freaks fall in love with their contact numbers, mindless networkers buy into the old salesman’s numbers myth: if I get one sale for every 10 rejections, I should go out and try to get as many rejections as I can, right? Okay, laugh, but when you only have a limited amount of time for self-marketing, there’s no possible way to follow up with all the names in your LinkedIn list, Facebook page and Twitter account (and a lot of them, frankly, are junk anyway).

Therefore, when leveraging your networking efforts – your follow up activity — setting efficient priorities becomes Job One. At the outset, you have to distinguish Tier One impacts from Tier Two contacts. That is, unless/until you have a lot of time available for mining low-probability leads, take the time to identify the people with whom you can hope to cultivate high-leverage, high-traction impact. Who are the people with high impact potential?

People you have justifiable reason to believe (because you have done thorough research) may be

  • Potential Clients because their needs and priorities fall in your legal sweet spot.
  • Referral Resources: People who respect you enough to be willing to open doors for you, as well as knowing others’ needs and what it takes to address them
  • Centers of Influence: Well-connected, high-torque people who can make things happen
  • Connectors: Those social extroverts who delight in bringing like-minded people together

Keep Your Eye on the Prize

Unless you are into affiliation for affiliation’s sake, you have to keep reminding yourself that social media, like the rustic’s automatic dishwasher, is a tool that requires human intervention in order to produce results. And to keep your networking interactions from devolving into a dull, daunting and ultimately disappointing numbers game, we suggest that you remember the fundamental characteristics of Christopher Columbus’ successful voyages: 1) They had purpose. 2) They had direction. 3) They maintained momentum. 4) They rewarded perseverance. Put another way, effective networking is a human activity, not an electronic passivity.

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

Cutting Corners, Part IV: The Readers Speak

Posted in Legal Project Management

If one purpose of a blog is to provoke spirited debate, we surely succeeded in our recent posts on whether client-driven pressures for greater efficiency and cost control compel outside counsel to “cut corners” in legal service delivery.  Our premise that “an inevitable dog fight erupts whenever lawyers try to discuss quality and cost in the same sentence” proved to be true.  Passionate and pointed comments filled our email inbox.

So now it’s time take the microphone out into the audience and let you hear different voices first hand.

On Guard, Sir

Unsurprisingly, we heard from law firm lawyers who took umbrage at the idea that their clients might think them guilty of overlawyering and overbilling. As discussed more fully below, one large firm partner specifically rebutted the suggestion that firms’ level of service delivery is keyed primarily to profit motives: “There are real issues here greater than Firm greed or ego…”  

Over on the client side, a General Counsel expressed equal indignation at law firms’ suggestion that they, the law firms, are uniquely qualified – on the basis of both their ethical responsibilities and their legal acumen — to weigh risks against legal costs (that is, to unilaterally make scope-of-service judgments): “Today our cost-benefit analyses are very sophisticated…When we consider various forms and levels of service delivery, we are definitely not blind to the stakes and the risks.”

Who Bears the Risk of Curtailed Scope?

For one GC, the answer to the “who should assess risk?” question was clear:

We, and only we, should determine acceptable risk because we are the experts on our companies and business strategies.  Our company takes risks every day, and we understand how to evaluate when to dig deeper and when it’s time to move on.  When we don’t want more research or memos or depositions, we have made internal decisions about cost and benefit. 

Sounds good, but who bears the responsibility for the consequences of those risk decisions?

Predictably, several law firm respondents immediately focused on the worst case scenario – the risk taken proves unwise, bad things ensue, and the law firm gets blamed, or even sued.  Of law firm lawyers tweeting or emailing responses to our posts, not one thought that clients make wise decisions regarding risk.

Law firm responders suggested that they find themselves on the horns of a dilemma: clients limiting the scope of work (and therefore escalating risk) for cost-management’s sake on one hand, coupled with their willingness to sue their outside law firms if/when things blow up in everybody’s face.

The solution, several lawyers suggested is simple: if clients agree to a certain level of risk, they should not later be heard to complain if the poor risk decisions lead to problems.

For one commentator, this took the discussion into the realm of power politics as played out in the world of insurance:

No doubt this series of posts strikes a very sensitive nerve. Missing, I think, is the issue of 1) law firm E&O [ed: Errors and Omissions insurance coverage], and 2) the tripartite relationship dynamic of an insured (brand and loss run concerns), the primary insurer who usually finances Legal, and excess who plays back seat driver and questions unturned stones.

When we first received this comment, we wrote back privately:

…When a client is well-informed and is an active part of deciding how it chooses to proceed, is it not less likely to bring suit, since it was actively deciding and instructing the firm how to proceed?  Of course, such discussions should be memorialized, and the client should be well informed of the potential risks the firm can foresee.

To all the law firm lawyers who raised concerns about being sued if they didn’t look under every rock, we asked:

In light of the fear of being sued, why not just proceed with the work that you believe is necessary to assess/reduce the risk, and simply bear that as a cost of doing business if you can’t bill it to the client?

After all, we reasoned, if you really want to be protected, wouldn’t that additional research, contract review or investigation be like your own insurance protection in case things go badly later? For example, you would be able to say, “we read every one of the 500 contracts (even though you only paid for us to read 25), and we now know there are no significant risks or, in the event you do find something,  that there is an environmental nightmare in agreement 852 that could really cost the client.”  Wouldn’t you sleep better if you turned over all the rocks even if some of that rock-turning was at your own expense? And, if you did, wouldn’t the E&O and excess carriers be prevented from second guessing you?

You carry fire insurance even though you usually don’t have fires.  Isn’t this similar?  Should you do the extra work just in case it will save your bacon someday  if a matter goes sideways because your ignorant client didn’t follow your recommendation to expend more time and effort?

These intentionally provocative questions were not popular with law firms, and not one said they would choose to perform the extra work on their own dime.

The Profitability Argument

Moving away from wounded pride and risk management, and focusing instead on the dynamics-of-profitability issue, one respected consultant suggested that we “overstated the case” when we raised the possibility, as he paraphrased us, that “if a firm does less work it will derive less revenue on the matter, thus cutting into profits.”  His reasoning focused less on the scope of work performed than on the efficiency of service delivery:

These days, most firms have write-offs or write-downs on most matters. To the extent a firm’s efficiency improvements reduce write-offs/write-downs, then every dollar of write-offs or write-downs that can be avoided improves firm profits on a dollar-for-dollar basis.  Efficiency improvements that reduce write-offs/write-downs are among the most powerful profit improvements a firm can make – more powerful than cost-cutting to reduce the firm’s expense ratio, and even more effective than increasing leverage (which is hard to do these days).

True enough, but here we run into a stumbling block – or at least a huge asterisk – in the form of this respondent’s qualifier, “… to the extent there is enough new work to which saved lawyer hours can be applied.” Hold on there, we thought.

The respondent continued in this vein, assuming arguendo, unlimited manna from client heaven:

In fact, as long as new work is available [emphasis added] (admittedly not always the case), even a firm with no write-offs/write-downs will not reduce its profits by a single dollar by becoming more efficient.

That’s Not How It Looks to Us

Ah, but therein lies the rub.  We know of many firms that don’t have full plates and lots of work pouring in the door.  And plenty of the lawyers in those firms are being told – directly or indirectly – that they must fill those billable hour targets no matter what.   The message is clear: don’t bother being efficient, just fill up those timesheets.

Everything we see these days suggests that in fact, for many lawyers, enough new work isn’t available – that we have too many lawyers, too little work, and too many new technologies and new service delivery modalities that will exacerbate the work scarcity problem going forward.  There just seems to be no getting around the fact that client demands for efficiency and limits on scope have the real potential to impact law firm revenues and profitability. To us there seems little doubt that finding practical ways to re-establish a stable and sustainable law firm-client economic equilibrium is the biggest elephant in the room these days.

Reasonable Folks Agreeing

At the end of the day, what we think is the proper collaborative tone was struck in the response of the Chief Operating Officer of an 800-attorney firm with offices nationwide:

I believe the challenge for us, in developing a competitive differentiation, is…to address the GC’s continued focus on value. Needless to say, education and communication with both our clients and our colleagues will play a major role in accomplishing this goal.

Another large firm partner put even a sharper point on addressing the cost/risk/benefit issue:

Law firms cannot behave like a restaurant that does not include prices on the menu and presumes what should be served to the guest.

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

Skilled Scoping Diminishes Discord: Cutting Corners, Part III

Posted in Legal Project Management

 
Note: Due to the numerous and passionate responses to the first two posts on Cutting Corners, we have added Part IV to the series in which we will highlight the insightful (but profoundly divided) points of view we received from In-House Counsel and Law Firms.

 

In the first two posts in this series, we considered the typical law firm complaint that such efficiency-producing disciplines as Legal Project Management (LPM) and Legal Process Improvement (LPI) may actually encourage legal “corner-cutting.” Does this complaint reflect a valid concern about threats to quality of service, or is it mainly the cry of pain of firms now caught in a billing squeeze?

Who Defines the Bottom Line?

The hard truth is that the quality-versus-cost debate actually is over. In the aftermath of the global financial crisis and its draconian impact on legal budgets, almost all clients are re-evaluating their definitions of value and quality – with a constant eye on costs.

ln all manner of engagements clients wield the whip hand: they are imposing unprecedented direct constraints on legal spend, as well as pursuing new avenues for addressing basic legal needs more cost-effectively, including alternative fee arrangements, expanded use of technology, convergence programs, pulling more work in-house and sending more work to alternative service providers.  As just one example, the latest BTI Consulting Reportnotes that for IP work in 2015, in-house counsel can be expected to aggressively turn to settlements, alternative fee arrangements and efficient new work processes to keep costs in check. The result? A lot less IP-related revenue for law firms, which obviously does not make them happy.

Front End Scoping Beats Damage Control Any Day

However, firms will not improve their profitability by complaining about client-driven approaches to improving productivity and value.  Trying to position LPM as a scapegoat by claiming it erodes quality will neither improve service quality nor enhance client relations.  The parties will be better served by learning to work collaboratively to define the scope of work and the degree of risk that scope implies. This definition, in turn, will frame the amount of lawyering, billing, and overall legal costs the client will tolerate.

Rather than suggesting that the parties blithely ignore risk assessment in the name of cost savings  – now that would be cutting corners — what LPM suggests is that client and law firm jointly scope and prioritize potential risks both at the outset and during an engagement.

After instituting mandatory scoping discussions whenever the legal department assigns work to outside counsel, the General Counsel of a global hotel company found that outside counsel really focused on the client’s goals, chased fewer rabbits, concentrated work to advance the goals, and provided significantly more useful advice.  And, not insignificantly, there were fewer billing disputes.  The GC noted, “law firms did not take the reins with scoping even when we asked them to.  Instead, we decided to lead the way because upfront scoping is the best practice for effective use of our budgets.”

Once law firms accept that today’s rules of legal engagement no longer support carte blanche lawyering except under extraordinary circumstances, LPM provides a bridge for aligning all parties’ content, cost and quality expectations. Time spent at the outset defining in-scope and out-of-scope activity will both diminish the likelihood of scope creep and result in less surprised and angry client responses if unexpected events threaten the budget later on.  And, BTW, it reduces those pesky write-downs and write-offs that erode profitability.

Houston, We Have a Problem

The problem is that most law firm lawyers are pretty dreadful at scoping. Sophisticated scoping involves intensive front end engagement with the client. It also requires the courage to embrace change and examine alternative service delivery approaches, rather than defaulting to the-way-we-did-it-last-time pricing and planning. Yes, good scoping may require a considerable investment of front-end time and effort, but it helps avoid charges of either overlawyering or corner-cutting down the road.

This is because the parties have taken the time to discuss not only project phases, tasks, costs/budgets, and desired outcomes, but also how the client will define quality and value at every step of the engagement. The client – now fully informed – can make informed decisions about what work should be deemed in or out-of-scope.  If nasty things happen down the road, a fully-informed client is unlikely to allege malpractice.

Any risks incurred by initially limiting which tasks are undertaken and which are bypassed can be diminished by carefully discussing both the likelihood and the potential impact of alternative courses of action or various unexpected events. Indeed, we know of several instances where firms expressed concern that omitting certain activities might create malpractice exposure, and the clients agreed to indemnify them or hold them harmless for any consequence deriving from leaving certain T’s uncrossed or I’s undotted.

All in all, it makes little sense to blame Legal Project Management either for today’s dramatically altered legal landscape or for the realignment of the bargaining leverage between clients and law firms.  LPM is a response to these changes, not their cause. The best way to align issues of quality and cost is to discuss them in detail early and often, rather than have the parties sling great handfuls of mud at each other.

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

Perfection Is the Enemy of Good – Cutting Corners, Part II

Posted in Legal Project Management

In this second of three related posts, we consider whether clients’ increasing efforts to control outside legal spend force their outside counsel to “cut corners.” Are firms being forced to compromise service quality and integrity in order to meet client price points?  Are Legal Project Management (LPM) and Legal Process Improvement (LPI), which are supposed to foster efficiency and cost-effectiveness, actually having the paradoxical effect of pushing law firms past “doing more with less” to the point where it becomes acceptable “to do less with less?”

Maybe You’ve Got a Point There

This is not a frivolous concern. LPM is a client-oriented control mechanism intended to help both clients and law firms exercise better operational and financial control over budgets, outside legal spend, the impact of unexpected events, and other unpleasant and costly surprises that pop up as matters progress.

Ideally, all this controlling is supposed to be accomplished without compromising the quality and value of the legal services delivered. However, as we noted in our last post, there’s the rub: it is indeed a stiff challenge to reconcile cost-containment pressures with quality and value-conferred.

Lawyering:  How To and How Much?

LPM’s mission is to translate the goals of efficiency, predictably and cost-effectiveness into a consistent set of lawyer processes and behaviors. LPM suggests that the parties pay a lot of attention not only to how lawyers do their lawyering, but also to how much lawyering they do.  In other words, work processes and work scope end up being equally important in managing legal costs.

Does “Working Smarter” Equate to Losing Money?

Although LPM’s fundamental purpose is not to reduce the amount of legal work being billed on a certain project, undeniably sometimes it clearly does exactly that.  Meticulous case management does in fact often result in tight reins on project scope, less duplication of effort, and fewer do-overs.  In other words, less time billed. Sometimes, therefore, application of LPM methods may indeed result in less revenue generated, thereby threatening to put a dent in firm profitability.

This is a touchy subject for law firms. Historically, firm lawyers have parried allegations of greed and runaway billable hours by reminding clients that they are obligated to pursue perfection. To try to minimize every risk. To expend every effort on the client’s behalf. Indeed, they claim such comprehensive lawyering is their ethical responsibility, and that to do anything less exposes the client to potential risks and therefore is tantamount to malpractice. Corner-cutting clients, they argue, expose themselves to undefined or unmanaged risks when they impose cost or work scope limits on outside counsel.

Cost of Risk, Risk of Cost

But is it the law firm’s job to decide how much risk a client should accept?  As a matter of both business and legal judgment, in-house counsel quite often assume the risk of not having their outside counsel turn over every rock if the cost will make no sense.

For example, it obviously is not worth paying outside counsel to conduct $100,000 of research in order to reduce $20,000 of potential risk in a matter (although historically law firms have happily done so).  Or consider an M&A deal where the acquisition target has, say, 40,000 contracts. Perhaps, due to the need for speed or pressures to control costs (or both),  in-house counsel  instructs outside counsel to review only the first 100 contracts (or the 100 highest-dollar contracts, or a random sample of 100 contracts) to see if any “doom darts” fly out.  Yes, by limiting the review, in-house counsel does indeed assume the risk that there may be problems lurking down there in contract  22,673. But weighing the costs and benefits of paying for more lawyering versus the foreseeable risks is the client’s right, not the firm’s.

“Cutting Corners” vs. “Overlawyering”

The corollary to the “we must provide perfection at all costs” argument is that every lawyer is unique, that every matter he or she handles is unique, and that every case or transaction should be designed afresh from the ground up. And so we hear the perfectionists speak dismissively of “commoditized” legal services or derisively of clients who are willing to “cut corners on quality simply to save a few bucks.”

Clients counterpunch by complaining long and loud about firms’ “overlawyering” and their tendency to “constantly re-invent the wheel,” not to mention “training their junior lawyers on our dime.” This kind of sparring and name-calling can create plenty of acrimony, but it never resolves the whole quality-versus-cost debate.

A better argument for clients is that careful budgetary resource allocation does not require all legal work product to be judged by the same quality standards.  As one general counsel told us, “When it comes to addressing the full spectrum of our legal needs, ‘perfection is the enemy of good.’  Today our cost-benefit analyses of various matters are very sophisticated. It is not cutting corners to apply our limited dollars as cost-effectively as we can, and when we consider various forms and levels of service delivery, we are definitely not blind to the stakes and the risks.”

In our final post in this three-part series, we will explore how law firms and their clients can better collaborate to align the amount of legal service provided with the cost of those services.

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

Cutting Corners and the Question of Quality

Posted in Legal Project Management

As you might expect, proponents of Legal Project Management (LPM), Legal Process Improvement (LPI) and other approaches for driving greater efficiency and value into legal service delivery get a lot of blow-back.  One of the more common gripes we hear is that “LPM encourages corner-cutting.”

Two Ways to Complain

In fact, in this form the complaint puts rather too blunt a point on the issue. So let’s be more precise: the substance of the corner-cutting charge actually derives from two quite distinct allegations. One, driven by market competition, might be labeled the “my competitors are all slime” complaint. It sounds like this:

“The reason our competitors are eating our lunch on price and stealing clients is because they are cutting corners on quality. They must be doing sloppy work or leaving important stones unturned. They are low-balling us to get work, but they can’t deliver good service at those prices.”

The other complaint derives from today’s law firm-client dynamics, as impacted by legal department economics, costs and budgets. We could call this “the client made me do it” complaint:

“When our clients’ budget pressures force them to demand greater ‘efficiency and cost-effectiveness’ from us, what they’re really doing is asking us to cut corners – to compromise our standards of quality service delivery. In so doing, they expose both themselves and us to unprecedented risks.”

We’ll discuss the first of these provocations in this post, following up with the second one next time. However, there is a common theme to these posts:

An inevitable dog fight erupts whenever lawyers try to discuss quality and cost in the same sentence.

 

If I’m Good, I Must Be Efficient

“Excellent lawyers” i.e., the ones who consistently produce legal outcomes that satisfy their clients, invariably assume that their way of lawyering is the best way of lawyering, perhaps even the only way of lawyering. This calculus tends to lump legal knowledge, quality, value and efficiency into one undifferentiated bolus, one clients have swallowed with scant protest for decades.

This time-honored (i.e., fossilized) line of thinking holds that if one’s approach to service delivery produces “good results,” it must be “worth it” to the client.  In other words, historically, law firms viewed their inputs (no matter how inefficient) as leading to an acceptable outcome, without regard to whether a comparable outcome could result from an improved (and efficient) process.

As the Worm Turns

So imagine their shock when, in the wake of the global financial crisis, clients suddenly began defining value as much in terms of costs as in terms of outcomes.  Many “excellent lawyers” simply did not know what to make of the notion of efficiency. This was because they seldom had had to subject their work product to a cost-benefit analysis before. A corollary problem was that law firms often had not bothered to measure the costs of doing business, because they could always pass them through to the client.

Run, Rabbit, Run

The fact is that most lawyers tend to fall into habits or routines of getting work done without really examining whether there might a better, faster or more efficient way to deliver the same (or better!) quality work.  They assume that if a piece of work is completed more “efficiently” – meaning that it took less time to do or otherwise imposed fewer costs — some essential step must have been omitted.  Some corner must have been cut, right?

It Ain’t Necessarily So

But this simply is not so. If a lawyer, at any level, whether working on a novel challenge or a redundant task,  can find – or be taught — ways to accomplish that task more efficiently (and thus can both charge less and/or stay on budget), s/he has not necessarily done a sloppier job or put the client at greater risk. It simply does not follow that the more time one spends on a legal activity, the higher the quality of that activity. In fact, in study after study into the relationship between productivity and hours worked, the results show that more time spent working on a matter does not lead to better results.  Robert C. Pozen, former executive at Fidelity Investments, former chairman of MFS Investment Management, and current lecturer at Harvard Business School argues this premise convincingly in his book Extreme Productivity: Boost Your Results, Reduce Your Hours. 

A Model of Efficiency

Enter LPM and LPI. These related process disciplines help lawyers re-examine and re-think the way they do work. They help lawyers identify superfluous steps, unproductive activity or missed opportunities to re-use prior work product as their starting point (rather than starting every matter afresh with a blank screen or legal pad).  LPM and LPI reduce redundancies, re-invented wheels, do-overs, communications babel or law firm-client disconnects, scope creep, budget creep, disorganization, internecine team battles, delegation disasters, having high-level lawyers doing low-level work, and vice-versa. They are tools for improving quality, not excuses for eroding it.

Work quality and process efficiency are not co-extensive, although the latter certainly may enhance the former. LPM’s emphasis on thorough front-end scoping, comprehensive project planning, and detailed budgeting are invaluable tools for defining – clearly and consistently – all the necessary corners, not cutting them.

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

Plugging Profitability Leaks: A Simple Tip for Great Delegation

Posted in Legal Project Management

UPDATE: This article won the BigLaw Pick of the Week award!

We’ve long known that vague, incomplete or misunderstood instructions from partners to associates is a prime source of profitability leaks — revenue lost because of all the time spent on reinventing the wheel, because  of do-overs, and because of significant amounts of time written down or eventually written off.    We’ve also long known that an amazingly simple delegation improvement technique can help reduce write-downs of time by up to 18%.

The Trick Anyone Can Master

What is this marvelous magic trick?  Whenever a task is assigned and instructions are given, the assigning partner should simply ask the associates to immediately play back their understanding of what they are being asked to do: task content, task priority, starting points or resources, client budget, level of accountability, time frame, questions.

This in the moment replay doesn’t have to be a hostile cross-examination or test.  On the contrary, a friendly reality-check to assure alignment of both parties’ understanding and expectations works just fine: “Jack, just to make sure we’re on the same page, take a moment to play back to me your understanding of the assignment we just discussed.”   This quick exchange allows for any missed information or misunderstandings to be cleared up before work gets underway, and it assures that the partner’s implicit intentions are made explicit.  It’s simple, it’s constructive, it’s collaborative, and, it turns out, it’s very, very effective.

“I Would Never Do That!”

At a recent Legal Project Management training workshop, however, several partners expressed disdain for this basic suggestion for materially improving delegation.  “Just uses up a lot of extra time!” said one. “Not my job to mollycoddle associates,” said another. “The best learning comes through trial-and-error. That’s how I learned!” A surprising protest came from another partner: “This idea is just incredibly demeaning to associates. Asking them to parrot back instructions is patronizing. It treats our younger lawyers like they’re stupid, like they can’t follow simple directions.”

This is Delegation?

All the partners in the workshop agreed that their own delegation skills were just fine, thank you, an opinion we find is generally shared by partners: they think they are good communicators: clear, succinct, focused, thorough, non-threatening.

But the people they delegate to often think just the opposite. Frankly, a lot of partners’ delegation skills are abysmal. Awhile back we were given the transcription of instructions an associate, eager to assure that she “got it right,” recorded on a pocket recorder. It sounded like an FBI wiretap of the mafia: “Get me, you know, that thing we talked about, and, you know, talk to that guy, and write up something I can, you know, show to the people, so we can move ahead with the other thing, you know, the one about that new standard. And you know I need this ASAP.”  Er, what?

What Do the Associates Think?

Back at our workshop, some of the associates attending this workshop were shifting uncomfortably in their seats, so I turned to them. “How would you feel about an informal feedback loop every time you were assigned work?”

“I’d love it!” exclaimed one. “A lot of our partners think associates are all just the same – that we all have the same background information on the matter, that we all have the same levels of expertise. So their instructions come in a kind of flood of verbal shorthand without any testing for comprehension. Frankly, I often struggle to figure out just what they do want. Sometimes their instructions are kind of simplistic, and sometimes they absolutely go over my head, and I have to ask other associates what they think the partner was saying.”

“I don’t think it’s insulting at all,” said another. “Many associates don’t want to ask questions because they are afraid it will make them look dumb. If double-checking our understanding was a routine step in delegation, it would take a lot of that fear away. Rather than being demeaning, I think it is respectful of us and our desire do work right.”

An experienced senior associate put in the final word: “I work with several partners, all doing the same kind of matters.  And they all have their own unique way of doing things. But they all think everybody does it their way. I hate it when I get chewed out or my time gets written down not because my work was lousy, but because it wasn’t done the way a particular partner prefers.  Anything that would help assure that I understand how each partner wants things done will go a long way in improving both the quality and efficiency of our work.”

So true, so true.  And, why would partners – business owners of their firm — resist a simple way to reduce write-downs of associate time by 18% and thereby amp up profitability?

 

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.

How You’ll Know When Your Firm’s Been Fired

Posted in Law firm practices

UPDATE: This article won the BigLaw Pick of the Week award!

I sat in on a meeting recently when a major corporation’s General Counsel, CFO, and COO made the unanimous decision to fire a law firm that had been serving the company for over two decades. There had been no catastrophic we-bet-the-company-and-lost kind of screw-up, no egregious failure of expertise, no utterly dropped balls — just steadily increasing client dissatisfaction.

This firm was shown the door solely on the basis of the same five-count indictment that has become increasingly common:

 

  • Too many surprises
  • Too many blown budgets
  • Overlawyering and overbilling
  • Failure to respect client internal deadlines
  • Indifferent communication and poor responsiveness to client needs.

Quietly Into the Dark Night

This firm was not told it was being fired. It was not ceremoniously stripped of its buttons and epaulets in full view of the whole regiment in the noonday sun, not told to pack up all its litigation files for immediate dispatch to another firm. It was not even initially told anything was amiss with the client relationship. It was given no chance to protest, argue, defend or negotiate.

The fired firm was just quietly going to be choked off, using a tactic the GC called “the long tail,” meaning don’t jerk ‘em around or humiliate ‘em, just gradually turn down the wick until the light goes out.

Ear to the Rail

As a group, lawyers are remarkably conflict-averse, prone to avoidance when confronted with uncomfortable situations, emotionally-charged interactions, or the need to deliver hard news. Accordingly, managing partners, relationship partners, business team heads and practice group leaders should never assume that no news is good news. They should keep a moist finger in the air and ear to the rail, ever alert to any of the five classic signals that the door is slowly closing on their firm:

1. Drought and Denial: If you’ve long handled a high volume of similar matters and the pipeline is presently full, it may take a while to realize that no one is loading the front end anymore. If the client denies any change in the relationship when you ask about the flow becoming a trickle, you may be getting let down easy. “We’re just going through a flat spell” or “we are re-distributing the cases across our firms” may just be a “humane” way of saying goodbye. Get the facts and call the question.

2. New RFPs: If you suddenly start receiving RFPs (requests for proposals) for types of work long handled solely by your firm on a no-bid, just-keep-sending-it-over basis, it’s a sign you no longer enjoy most favored nation status. It’s possible a firing decision is being cloaked in the mantle of due process and hiding behind the claim that the client is just “leveling the playing field” (satisfied clients don’t feel any particular need to level the playing field).

3. Quibbling: Any change in the tenor or content of your working relationship should trigger a concern that the status quo…isn’t. Any quibble that seems disproportionately trivial – billing disputes over minor amounts, pointless protocols, sudden challenges to how your firm manages work – may go beyond suggesting that you are in disfavor. They may signal that you are done – and the client is making a record to rationalize a decision already made.

4. Radio Silence: A sudden drop-off in client responsiveness either to your voicemails or your emails might just be a sign that the client, like you, is overloaded. But your clients are supposed to need you. If they are delaying in getting back to you or declining to talk to you altogether, it could signal that they don’t need you.

5. A Blossoming Decision Tree: If a client conversation starts with “if it were up to me, Joe…” push the panic button. One way clients can avoid the pain of delivering bad news is to claim that the “upstream” decision-making matrix has become complex and convoluted, requiring lengthy reviews that cause lengthy delays (in everything, from time-sensitive decisions to payment for outstanding invoices). The client figures that if you don’t hear anything or can’t get a decision for an abnormally long time, you’ll get the point and just go away. Or even not get the point, but just go away anyway.

 

© 2014, Edge International US, LLC. All rights reserved. No part of this article may be copied or reproduced without prior written approval.