This month began with the publication of The American Lawyer‘s annual Mid-Level Associate Satisfaction Survey results. The dismal descent to historic depths continues. Let’s end it with this question: Why should law firm leaders care?
Answer: Because dissatisfied lawyers are costing them money.
That’s the conclusion of Harvard Business School Professor Teresa Amabile and fellow researcher, Steven Kramer, in The Progress Principle. They reported their findings in the Labor Day edition of the New York Times. At a time when most workers feel fortunate to have jobs, Amabile and Kramer have a tough sell in convincing employers, including law firm leaders, to worry about the psychological state of their employees.
We all know the mantra: No one is required to accept any job. The market allocates resources. A labor market clears at the point where buyers and sellers agree on a price for services sought and rendered. Workers take into account the factors that matter to them and get paid appropriately for the jobs they’re willing to do. Case closed.
Not quite. Such an analysis makes dubious assumptions about the market. On the employee side, bad or incomplete information can distort outcomes. A prospective law student might hope to emulate popular media images that merge with law school promotional materials promising a secure, well-paying future. Once in school, individual financial imperatives — such as the need to repay staggering educational debt — can constrain post-degree options. Meanwhile, the anticipated job often turns out to be neither secure nor well-paying.
Likewise, employers take false comfort in the misconception that a new hire is simply exercising free will in a free market. A firm assumes that if young attorneys’ experiences diverge from rosier expectations, any resulting psychological distress isn’t its problem. Never mind that the firm’s underlying business model produces behavioral incentives and a culture that exacerbate the disconnect.
“We’re just trying to run a business,” most law firm leaders would say. “There’s no metric for assessing the impact of career dissatisfaction on performance. If I can’t measure it, how can I consider it when making decisions?”
As long as everyone keeps billing hours, the profits beast continues to be fed. As unhappy associates alone bear the burden of their discontent, leaders rationalize their indifference to growing dissatisfaction with a simplistic analysis: if it gets too bad, people can leave and find another job. In the current buyer’s market for associates, boatloads of replacements are waiting in the wings anyway.
The work of Amabile and Kramer offers an intriguing rebuttal to myopic managers who can’t see past next year’s profits. In a longitudinal study encompassing ten years and 238 professionals in seven different companies, they asked people to make daily diary entries about their emotional states. Negative inner work lives resulted in “a profound impact on workers’ creativity, productivity, commitment and collegiality.”
The findings challenge the conventional wisdom that pervades many big firm cultures, namely, that pressure enhances performance. According to Amabile and Kramer, the data suggest that the opposite is true: “[W]orkers perform better when they are happily engaged in what they do….[O]f all the events that engage people at work, the single most important — by far — is simply making progress in meaningful work.”
The authors note Gallup’s estimate that America’s “disengagement crisis” costs $300 billion annually in lost productivity. They also observe that the vast majority of 669 surveyed managers shared an important incompetence: the managers “failed to recognize that progress in meaningful work is the primary [employee] motivator, well ahead of traditional incentives like raises and bonuses.” The catalysts that enable such progress are worker autonomy, sufficient resources, and learning from problems.
Big firm leaders determine the extent to which their workers experience these three catalysts. The leveraged pyramid and its billable hour regime enslaves associates while inhibiting partners from becoming mentors. In other words, the prevailing big law model cuts the wrong way for everyone. The resulting work environment produces dissatisfaction that’s costing the equity partners money.
How much money? William Bruce Cameron’s observation (sometimes attributed to Einstein) was right: “Not everything that can be counted counts, and not everything that counts can be counted.”
While some things may indeed not susceptible to being counted, some important components of a law firm’s costs attributable to job dissatisfaction among associates can generally be calculated, even if the numbers are rough estimates. Law firms know how much they spend in hard dollars for law school recruiting. Firms also tally the hours spent by lawyers interviewing; the latter may be a “soft cost,” but it is certainly an opportunity cost. With most corporate clients refusing to pay for time billed by summer associates and first and second year associates, we can also assume that the compensation and other essentials (such as malpractice premiums, some allocated portion of G&A, etc,) law firms know with some precision how much they have spent to produce the profit center which is the third and fourth year associate. The price tag for producing that profit center often approaches seven figures when all of these items are tallied. Attrition rates at the third and fourth year are at their highest, with some firms experiencing attrition rates of 30 to 40%.
Imagine that, Steve: if a law firm loses 20 third and fourth year associates, that’s $20,000,000 right off the bottom line. The firm will then go out and hire replacements, spending perhaps another $1,000,000 in recruiting fees and devoting scores of lawyers’ hours in the interviewing process/
Other components of associate job dissatisfaction cannot be counted nearly as neatly: The errors committed by associates who are sleep deprived resulting in major malpractice claims. The damage to health resulting from sleep deprivation. The disruption to family life.
The point, as I have said before, is it shouldn’t suck to be an associate at a law firm. Even if a law firm creates a more pleasant environment for its own mercenary interests. http://kowalskiandassociatesblog.com/2011/04/18/it-shouldn%e2%80%99t-suck-to-be-an-associate-at-a-law-firm/
Not to be overly cynical about this, but isn’t the lost productivity actually profit-maximizing within the biglaw structure? Slower work is more time billed, so long as it is not so slow that it necessitates write-offs from bills. Shoddier work is more revisions and, again, more time billed, with the same caveat, so long as there are adequate quality assurance mechanisms (i.e., more layers of senior associate or junior partner supervision, which means higher leverage, which means more profits).
The problem with this in a functioning marketplace would be if clients see these effects and become frustrated with them, and, furthermore, have the option of switching to another provider they expect will offer better service along these lines. There are undoubtedly firms out there that could fill this role, perhaps AmLaw 200, boutiques, or regional firms, but the clients are not voting with their feet on any real scale, are they?