BIGLAW’S GLASS IS 44% FULL

Posted on September 23, 2010 by thebellyofthebeast

Give credit where it’s due: Not all big firms are bad, and even those many might consider the most problematic aren’t problems for everybody in them. After all, the ABA’s most recent survey reported that 44% of lawyers in big firms (defined as having more than 100 lawyers — which means it’s not limited to Biglaw) were satisfied with their careers. Sure, that’s a failing grade in every course I’ve ever taken or taught, but it’s a base upon which to build. So what accounts for such attorneys and what can be done to increase their ranks?

Some are satisfied because they thrive in the predominant Biglaw business model. The myopic focus on metrics — billings, billable hours, and associate/partner leverage to maximize short-term equity partner profits — doesn’t seem misguided to them. Rather, it feels natural, maybe even necessary. When I was in law school, most of these personality types were in business schools. Now they’re everywhere.

Another group works at firms that have resisted adopting this MBA mentality; the beneficial results permeate their cultures. I spoke recently with a friend who’s the chairman of a big firm that hasn’t wrapped itself in the false security of numbers. Instead of metrics, he still requires senior partners to render subjective judgments about attorney quality in determining compensation and promotion. Of course, objective data matter, but they’re not dispositive.

That’s how most firms once operated. They’re reluctant to admit it now, but just about everybody running a big firm today owed early success to someone else. Typically, it was a mentor who recognized untapped potential and was willing to spend time and effort developing it. Rather than self-contained books of business, young attorneys had supporters whose principal aim was to identify and nurture first-rate minds that would eventually produce first-rate lawyering. Whatever wealth followed was a by-product of talent that attracted clients, not the exclusive goal of a short-term profits equation.

My friend’s firm doesn’t lead the Am Law 100 in any rankings, but it has done reasonably well in associate satisfaction surveys and equity partners are averaging over $1 million yearly. If polled, he and many in his firm would be among Biglaw’s satisfied attorneys. They serve interesting clients on challenging matters.

That takes me to a third point. Even firms adhering slavishly to the misguided metrics model have something valuable to offer their lawyers besides money. When I started at my former firm over 30 years ago, partners recruiting me warned that some tasks would be boring, even menial, but others would be exhilarating. Biglaw clients typically have problems at the law’s cutting edge. It was true then; it’s true now — although the balance has tipped more toward boring and menial, especially for younger attorneys.

Still, this begins to resolve an apparent paradox: The ABA survey reporting high levels of dissatisfaction — with big firms faring the worst — also found that seven out of ten attorneys generally regarded their jobs as intellectually challenging.

So whether a lawyer is at a firm like the one my friend leads, in a different environment where the MBA mentality of misguided metrics rules, or somewhere in between, a viable path to career satisfaction remains possible throughout Biglaw. In the end, it’s is no different from other aspects of life: We are products of decisions that define who and what we are.

That’s leads to a final observation. Sooner than it realizes (or prefers), the current generation of large firm managers will find itself replaced with a younger group of leaders who will impose their own vision. How will the ascendants respond to the choices that will define them, their institutions, and the 15% of the bar comprising the NLJ 250 that exerts a disproportionate influence over the profession?

My friend put the issue squarely:

“I’ve been able to resist the dominant trend toward what you correctly call misguided metrics. The challenge is whether those of us sharing that view will be able to pass that ethic along to the next generation. I don’t know the answer to that question. But you agree, don’t you, that it’s a great profession?”

Yes, I do.

He’s still the best — and smartest — lawyer I know.

ARE THE U.S. NEWS RANKINGS BIGLAW’S BLACK SWAN?

Posted on September 17, 2010 by thebellyofthebeast

An earlier post considered Nassim Nicholas Taleb’s bestseller, The Black Swan. (https://thebellyofthebeast.wordpress.com/2010/09/06/biglaw-and-the-black-swan/ ). Taleb describes the folly of relying on supposedly proven models of the past to anticipate the smooth continuation of existing trends. Such myopic thinking ignores the wholly unexpected Black Swans that actually shape history. The essence of the Black Swan is its serendipity, coupled with its power. It can be good or bad, but it’s always transformative. September 11 was a Black Swan, as were Microsoft and Facebook.

If you accept Taleb’s theory, I think Am Law introduced Biglaw to a Black Swan in 1985 with its profits per equity partner rankings. They encouraged internal behavior that, over time, dramatically changed most large firms’ cultures. Today, accepting conventional wisdom means following managers (few of whom are leaders — a crucial distinction for Taleb) who focus on supposedly proven metrics: billings, billable hours, and associate/partner leverage ratios. Free markets dictate decisions; important things that don’t impact the current year’s bottom-line drop out of key calculations; equity partner profits trees grow to the sky.

But wait! The U.S. News evaluations seem to ignore this crucial Am Law metric. They utilize client and attorney surveys assessing lawyer quality, not firms’ bottom-line profits. In seeking to attain or retain the highest available practice group rating (Tier 1), will firms teach to this new test that the criteria appear to use?

Not so fast. Even as U.S. News released the rankings, big firms began setting the goalposts for the new competition. Because U.S. News departed from its typical numerical approach in favor of tiers for practice groups, Sidley Austin and K&L Gates each claimed the overall #1 position based on their total Tier 1 rankings.

If I’m right, the new rankings will simply accelerate an embedded trend toward lateral recruiting at the highest levels. (http://amlawdaily.typepad.com/amlawdaily/2010/09/lateral-uptick.html) Big firms will compete even more ferociously for top partners to fill particular U.S. News practice group holes — and they’ll jettison incumbents to make room. How will high-powered partners decide where to plant themselves? They’ll take their books of business and follow the money. The definitive Am Law metric — average equity partner profits — will remain inviolate. Too many Biglaw partnerships will continue their devolution into collections of attorneys whose principal bond is financial.

So there’s no Black Swan here — just another log on the bonfire that is already consuming much of the profession.

But these developments favor the emergence of a Black Swan that I identified in my earlier post. Australia now has publicly traded law firms. Attorneys in Great Britain have begun preparing to follow that lead when the Legal Services Act becomes effective next year. (http://www.law.com/jsp/law/international/LawArticleIntl.jsp?id=1202463691626)

Biglaw’s ongoing transformation to a species of Big Business could culminate in non-lawyer shareholders and boards. What will stop them? Equity partners who have been hired to buttress a firm’s claim to Tier 1 status in the U.S. News rankings? As relative newcomers, their allegiance to their new firms will be more tenuous. The idea of preserving whatever remains of a unique professional culture will seem antiquated, particularly with the big bucks for their shares of an initial public offering (IPO) dangling before them.

It sure looks to me like the same country that introduced the first black swan to the New World is now exporting something far more ominous for the legal profession.

ABOUT THOSE BIGLAW ASSOCIATE SATISFACTION SURVEYS….

Posted on September 9, 2010 by thebellyofthebeast

The 2010 American Lawyer survey reports the lowest overall level of associate satisfaction since 2004.

The firms faring poorly will take comfort in standard disclaimers: response rates are low and negatively biased; survey questions are flawed; the poll captures attitudes from a generation of young attorneys who feel entitled. We all know the list. Lawyers specialize in explaining away bad facts and sometimes the critique is valid.

But before lower-ranked firms throw these results into a sea of self-serving rationalizations, they should consider the criteria by which others did quite well: relations with partners and other associates, interest in and satisfaction level of the work, training and guidance, policy on billable hours, management openness about firm strategies and partnership chances, the firm’s attitude toward pro bono work, compensation and benefits, and the respondents’ inclination to stay at their firms for at least two more years.

Now correlate each factor to the metrics that dominate today’s Biglaw business models — billings, billable hours, and associate/partner leverage ratios, all of which produce equity partner profits. For too many, the relationship is inverse. The absence of a metric by which firms hold partners accountable for associate satisfaction means that it gets ignored.

What’s the solution? Pay them more money? They won’t object, but according to a recent survey published in the Proceedings of the National Academy of Sciences, additional income beyond $75,000 a year doesn’t increase happiness. (http://www.pnas.org/content/early/2010/08/27/1011492107.full.pdf+html?sid=61f259ad-92a2-470f-b218-23537d8e2972)

How about just telling them to suck it up and push through to a better day? Doesn’t time cure all ills? Another NAS study suggests that our sense of global well-being is U-shaped. We start at a high point around age 18, move down until 50, and take a major upward turn until 85. (http://www.pnas.org/content/107/22/9985.abstract?sid=61f259ad-92a2-470f-b218-23537d8e2972) This comes from a 2008 telephone survey asking 340,000 people how they felt on the day the researchers called them. No attempt was made to control for health, employment, marital status, or anything else. It’s just a cross-sectional slice of the population at a moment in time. In short, draw conclusions at your peril.

Still, it’s interesting to compare these results with recent evidence about the happiness life-cycle of many Biglaw attorneys.

There no need for melodrama or hyperbole. Many lawyers of all ages have fulfilling careers and lead satisfying lives. Generalizations are always treacherous. Within and among firms, there are always exceptions to whatever is typical or predominant.

But the big picture can be informative. In the ABA’s 2007 survey of the profession, about 60% of attorneys in practice fewer than 5 years said they would recommend a legal career to a young person. That’s not exactly a ringing endorsement; however, it’s better than more senior attorneys’ views. For those practicing more than 10 years, it dropped to 40%.

Of course, “more than 10 years” covers lawyers from 35 to 90. So it’s difficult to know if the data support a U-shaped theory. They lend some credence to the notion that there’s a steep slide for people in their 20s, 30s, and 40s. But is there an uptick when attorneys hit the mid-century mark? That’s not clear — and it seems like a long wait.

It’s not all bad news. In the ABA survey, 84% found the practice of law to be intellectually stimulating. When I’ve invited lawyers of different ages and stages of their careers to make guest appearances in my undergraduate course on the profession, Biglaw attorneys spoke enthusiastically about tackling cutting-edge legal problems. Then they heard this question:

“What has been your happiest time as a lawyer?”

Here are some answers:

A 20-something senior associate: “Certainly not now. My life is not my own. I’m billing long hours in the hope of becoming a partner. Then I’ll gain more autonomy and control.”

A 30-something non-equity partner: “Life was easier when I was an associate. But I work hard now because I think things will get better if I make equity partner. Of course, that’s a big ‘if”.”

A 40-something equity partner: “I never realized how good I had it as an associate. Now I feel pressure to bring in clients so I can justify my equity compensation; that process never ends. You think that becoming an equity partner means you’ve crossed some finish line, but that’s when the race really begins.”

A 50-something equity partner: “I don’t know what I’ll do when I’m not a partner in my firm anymore. I haven’t had time to think about what’s next for me. Now, when I consider that prospect, the future becomes a source of anxiety.”

I don’t know to what extent these attorneys’ comments represent their respective demographic groups in Biglaw or elsewhere. But it’s no surprise to me that surveys consistently find practicing lawyers to be among the least satisfied workers and that attorneys in large firms today have the most difficulty finding the upward leg of the U-shaped happiness curve, assuming it’s out there.

The Biglaw business model has provided some of its attorneys with a lot more money than their predecessors. Career satisfaction that contributes to overall happiness?

That’s more complicated.

BIGLAW AND THE BLACK SWAN

Posted on September 6, 2010 by thebellyofthebeast

After reading my novel, The Partnership, an insightful observer wrote that its themes “sound like a biglaw version of The Black Swan by Nassim Nicholas Taleb. Drawing out the comparisons between your book and Taleb could fill many blog posts.”

This is the first.

Taleb’s title derives from the discovery of what everyone knew didn’t exist. In the Old World, universally reported human experience pointed unambiguously to a single conclusion: All swans were white. Then came the discovery of Australia and its black swans.

The lesson: Widely accepted truths often turn out to be false. Relying on models of the past to anticipate the future can be a fool’s errand, especially if it ignores the wholly unexpected Black Swans that actually shape history. Who imagined that Bill Gates’ boyhood fascination with computers would lead to Microsoft, or that Mark Zuckerberg’s college dorm room at Harvard would be the birthplace of a revolutionary social networking phenomenon?

Black Swans can be good or bad — but they are always transformative. Most of us fail to consider them because we tend to theorize about the future in specific and limited ways from prior experience. For example, Taleb notes, the French built the Maginot Line to defend against German attack following the Great War, only to watch Hitler zip around it during a greater one, World War II.

“What did people learn from the 9/11 episode?” he continues. “Did they learn that some events, owing to their dynamics, stand largely outside the realm of the predictable? No. Did they learn the built-in defect of conventional wisdom? No. What did they figure out? They learned precise rules for avoiding proislamic terrorists and tall buildings.”

The Black Swan came out in 2007 and was a best-seller before the Great Recession — an event that others began calling a Black Swan, although Taleb said it didn’t qualify. Rather, that downturn replays previous Black Swan events — including the 1982 bank failures, 1987 market crash, and 1998 collapse of Long-Term Capital Management — from which intelligent people persistently failed to learn. So-called financial experts with MBAs had lost fortunes betting that such Black Swans were so improbable that they could be ignored. According to Taleb, these empty suits persevered and suckered others into accepting their discredited models, only to have them fail yet again.

So how could this relate to Biglaw? After all, it has enjoyed a 30-year run as straightforward metrics — billings, billable hours, and associate/partner leverage ratios — enabled large firms to produce staggering wealth for their owners. Even as many positions disappeared and revenues remained flat or declined at some firms, average equity partner profits for the Am Law 100 continued to rise.

The dominant Biglaw model is working, right?

Only until a Black Swan appears. It would be presumptuous to predict its form or timing. Indeed, the Black Swan’s essence is its serendipity, coupled with its power. It strikes when overconfidence creates complacency and vigilance takes a vacation.

So for Biglaw, accepting conventional wisdom means following managers (few of whom are leaders — a crucial distinction) who focus on supposedly proven metrics that have made them rich. They let free markets dictate decisions; they ignore things that don’t impact this year’s bottom-line; they watch their equity partner profits trees grow to the sky.

Where in all of this might Biglaw’s Black Swans lurk?

The candidates are too numerous for thoughtful consideration in a single article. Some examples: increasing attorney dissatisfaction at all levels; client resistance to hourly billing regimes; the displacement of a professional ethos with business-school metrics aimed at short-term profit-maximization; prospective lawyers’ growing awareness of Biglaw’s darker side.

But many of us already know about these difficulties, which makes them less likely Black Swan candidates. Then again, the Black Swan need not come as a surprise to everyone. For too long, most Biglaw managers have been oblivious to the profession’s growing challenges; too many behave as if they still are. As Taleb notes, a well-fed turkey that becomes fatter as Thanksgiving approaches is amazed to encounter the ultimate Black Swan event — its slaughter. But the butcher always knew what was coming.

I’ll add one more to the list:

Australia has pioneered a new regulatory regime that allows outsiders — non-lawyers — to invest in private law firms. Some are now publicly traded. http://www.abanet.org/legaled/committees/Standards%20Review%20documents/AnthonyDavis.pdf

Lawyers in Great Britain have begun preparing to follow that lead when the Legal Services Act becomes effective next year. http://www.law.com/jsp/law/international/LawArticleIntl.jsp?id=1202463691626

Could Biglaw’s ongoing transformation to a species of Big Business culminate in non-lawyer shareholders and boards? It’s a frightening prospect — but not so scary that equity partners are likely to forego the enormous short-term windfalls they’d reap from initial public offerings (IPOs) of their firms’ stock. Most view themselves as disproportionately responsible for their own success and will be content to let the next generations fend for themselves in a bleak professional landscape.

Could the same country that introduced the first black swan to the world be exporting something far more momentous?

INTERVIEWING SEASON — THE MORE THINGS CHANGE…

Posted on September 1, 2010 by thebellyofthebeast

Labor Day is a good time to talk about getting a job. When it comes to Biglaw, I’ve been on both sides of that table. As interviews proceed on law school campuses, I wonder, “If I were a law student today, what would I ask big firm representatives?”

Here’s my answer: the same question that I posed to them 30 years ago. Before revealing it, I offer a few thoughts from an insider’s perspective.

Every law student knows the two-step process. Grades, life experience, and the campus interviewer’s subjective reactions combine at the first stage to answer a single question: Should the recruit receive an invitation to visit the firm’s offices for more interviews that, if successful, will culminate in a job offer?

As I conducted such interviews, I also asked myself what I assumed students were asking themselves about me:

“Is this someone with whom I’d want to work — perhaps for a long time?”

The process involved judgments about which reasonable partners differed. Personally, I was looking for brains and the interpersonal competence to use them effectively. I gave the nod only to those whom I thought would pass muster at the next level and receive offers. There was no reason to waste anyone’s time.

Can a student influence the exercise?

Grades and resumes are what they are, so there’s not much maneuvering room there. Even so, thoughtful interviewers are looking for something more: a relaxed, engaging conversation. How can a student help to achieve it?

This sounds trite, but being authentic is the best strategy because that’s how you’re most comfortable. What have you accomplished if someone likes the person you pretend to be? How long can you maintain that facade? Through the second stage of attorney interviews at a firm? For a summer, if you get an offer? Until you become a non-equity partner? You’ll lose yourself if you start down that road.

Eventually, most recruiters will ask if an interviewee has any questions. Generally, students are reluctant to raise controversial topics. I didn’t, either. Perhaps it was cowardice, but I like to think that I developed a more subtle path to a firm’s jugular. Subject to modification for a particular interviewer’s age, here it is:

“Can you briefly sketch your own career highlights at the firm as, say, a second-year associate, a fifth-year associate, a non-equity partner, and now?”

The question works for both stages of the interview process — on campus and in the office. Lawyers love to talk about themselves and, if you pay attention, you can learn much from the responses.

For example, when a young partner in a prestigious New York firm told me that he’d spent his 10 years there on a single large lawsuit and still hadn’t seen the inside of a courtroom (or much of his family), I learned everything I needed to know about the place. It was — and remains — a great firm of talented attorneys. But I’d attended law school for reasons that seemed unrelated to what he was doing with his life.

Conversely, a fourth-year associate from another big firm told me that he’d recently first-chaired and won a federal jury trial. That sounded like a better fit for my lawyerly ambitions.

Of course, that was then. Any recruit looking for the New York experience that I shunned 30 years ago can find it in most large firms everywhere today. On the other hand, a first-chair trial for any Biglaw associate is rare because small cases offering such opportunities fall outside the current metrics-driven business model in two respects: 1) The limited stakes render associates’ huge hourly rates prohibitive, and 2) a firm’s average profits-per-equity-partner are higher when associates become absorbed into the leverage calculation on large matters.

But the salient point of my earlier inquiry still holds. The experiences of an attorney who has been with the same firm for several years are relevant to potential newcomers. Those listening carefully — and hearing between the spoken lines — can glean important truths about opportunities, mentoring, lifestyle, working environment, and firm culture. If the interviewer is a lateral hire, the answers provide different insights.

So while you’re busy hoping that a firm will offer you employment, you’ll also be getting information that will help you decide whether it’s a job you really want (and for how long). The effort could prevent you from becoming another statistic, namely, one of the more than half of practicing lawyers who are so dissatisfied that they counsel young people to avoid a legal career altogether.

One final point: I, too, labored under constraints that still persist, namely, enormous student loans that leave new graduates little room to maneuver. Get any job now; figure out a way to tolerate it later; repay crushing educational debt; then regroup. I get it.

But law students posing the right questions might cause some big firm interviewers to revisit their own careers, institutions, and lives. As others within the profession raise serious questions about the dominant Biglaw business model, its impact, and its future, a gentle nudge from the next generation can’t hurt.

ALONG CAME LAW FIRM MANAGEMENT CONSULTANTS

Posted on August 27, 2010 by thebellyofthebeast

In the final analysis, Biglaw leaders have only themselves to blame, but they didn’t stumble into the world of misguided metrics on their own. They paid outside experts to guide the way — and they’re still doing it.

Thirty years ago, few undergraduates went to law school because they thought that a legal career would make them rich. For example, most students at Harvard with that ambition were on the other side of the Charles getting MBAs; the river formed a kind of natural barrier. The law was something special — a noble profession — or so most of us believed.

Particularly in large firms, nobility has yielded to business school-type metrics that focus on short-term profits-per-partner. The resulting impact on the internal fabric of such firms is depicted in my legal thriller, The Partnership (http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104/ref=sr_1_1?ie=UTF8&s=books&qid=1273000077&sr=1-1) But other collateral damage includes the decline of mentoring that produced great lawyers in my baby boomer generation. (See my article, “Where Have All The Mentors Gone?” – http://amlawdaily.typepad.com/amlawdaily/2010/07/harpermentors.html).

Among the reactions to my mentoring observations was this:

“I am particularly intrigued by your reference to the role modern legal consulting firms have played in the demise of law as a profession. This is worthy of a blog post in and of itself and I look forward to it.”

I discussed this subject in an earlier post, but it’s worth another look.

Hildebrandt Baker Robbins is the successor to Hildebrandt, Inc., one of the early pioneers in what became a cottage industry: law firm management consulting. The company’s 2010 Client Advisory includes this line:

“In our view, one of the serious misuses of metrics in the past few years has been the overreliance on profits per equity partner as the defining index of a firm’s value and quality.” (http://www.hildebrandt.com/2010ClientAdvisory)

Really? Who encouraged the use of this ubiquitous metric on which Hildebrandt has now soured? As Dana Carvey’s church lady character might say, “Could it be….Hildebrandt?”

Of course, it wasn’t alone. When The American Lawyer published its first ranking of the Am Law 50 (now grown to 100) in 1985, what was once off limits in polite company — how much money a person made — became an open and notorious measuring stick of law firm performance: average profits per partner. Greed became respectable as inherently competitive firm leaders began teaching to the Am Law test so they could gain or retain position in its annual listing.

When the 1990-1991 recession rattled a much smaller version of what is now called biglaw, the National Law Journal’s annual survey of the largest 250 firms in 1991 quoted Bradford Hildebrandt, who 16 years earlier had founded the company bearing his name:

“In most firms, current management has never operated within a recession and didn’t know how to deal with it…” (“The NLJ 250: Annual Survey of the Nation’s Largest Law Firms — Overview — The Boom Abates,” The National Law Journal, September 30, 1991 (Vol. 14, No. 4))

So who could save us from ourselves? As they watched profits slide, worried law firm leaders turned to Hildebrandt and other experts who could assist in bringing business school principles and MBA-type metrics to their big firms. By 1996, Mr. Hildebrandt himself had diagnosed the situation and offered his remedy in that year’s NLJ 250 issue:

“The real problem of the 1980s was the lax admissions standards of associates of all firms to partnership. The way to fix that now is to make it harder to become a partner. The associate track is longer and more difficult, and you have a very big movement to two-tiered structured partnership.” (“The NLJ 250 Annual Survey of the Nation’s Largest Law Firms: A Special Supplement — More Lawyers Than Ever In 250 Largest Firms,” The National Law Journal, September 30, 1996 (Vol. 19, No. 5))

With such cheerleaders at their sides, senior partners focused on the three legs supporting the PEP (profits per equity partner) stool: billings, billable hours, and associate/partner leverage ratios.

Hourly rates marched skyward — even during recessions — increasing an average of 6% to 8% annually from 1998 to 2007. Billable hours targets likewise rose. Yet talented attorneys who would have advanced to equity partner a decade earlier received their walking papers as firms increased leverage ratios, which doubled between 1985 and 2010 for the Am Law 50. (http://amlawdaily.typepad.com/amlawdaily/2010/05/classof1985.html) With a few sharp turns of the costs screw, the game was won.

The results were mixed. For equity partners in the Am Law 100, average profits soared to more than $1 million annually — and rose during the Great Recession. Yet today, attorneys in big firms have become the law’s most dissatisfied workers — even though lawyers as a group were already leading most occupations in that unpleasant race.

The law firm as collection of men and women bound together in common pursuit of a noble profession yielded to an MBA mentality that relied on business school metrics to produce more dollars — the new measure of individual status and firm success. Valued partners who wouldn’t have considered leaving in earlier times began to follow the money — eroding concepts of loyalty and shared mission that created a firm’s identity over generations.

Oh, what a mistake, Hildebrandt now urges — not unlike Harvard’s new business school dean who looks hopefully (but in vain) to the law as an alternative model that might restore integrity to that world. (See my earlier article, “The MBA Mentality Rethnks Itself?” — http://amlawdaily.typepad.com/amlawdaily/2010/05/harper1.html)

What does Hildebrandt now propose to replace profits per equity partner as the key measure of overall firm performance? Profits per employee. But it simultaneously suggests that client satisfaction ratings should replace billable hours while employee satisfaction ratings supplant leverage.

Is your head spinning over the interplay among these complicated and confusing new metrics? Hildebrandt has the answer:

“As always, we stand ready to assist our clients in negotiating through these new and uncertain waters.”

How comforting.

THE INTRACTABLE BILLABLE HOUR

Posted on August 23, 2010 by thebellyofthebeast

It’s been heralded as a revolutionary development, but it’s a red herring.

Drinker Biddle recently announced the appointment of a new Chief Value Officer. (http://www.law.com/jsp/article.jsp?id=1202466268769) According to one report, it’s the product of the Association of Corporate Counsel’s Value Challenge Initiative encouraging firms to look beyond the billable hour model and focus on efficiency, alternative fee arrangements, and leaner staffing.

A law firm management consultant called the move “brilliant…a real culture shift…a business model shift.”

Oh, please. This supposedly breakthrough position hasn’t even gone to a lawyer, much less a firm leader. Over the past decade, Drinker’s new CVO has been a law firm marketing director for four different law firms.

How can such a person bring about the end of the billable hour? She can’t and she won’t. But it’s not her fault.

With every recession, the billable hour takes another public relations hit and law firm leaders scramble to appear responsive. Regularly over the past 20 years, optimists have declared its imminent demise. Clients detest its perverse rewards for inefficiency; associates crumble under the pressure of ever-increasing annual requirements. Even perceptive biglaw partners acknowledge the toll it has taken on the culture of their firms and the nature of the profession.

Yet it survives because it has powerful defenders, including the Supreme Court’s conservative five-man majority. Yes, the obstacles facing those seeking better days are that formidable.

The lawyers in Perdue v. Kenny A sued on behalf of children in Georgia’s state-run foster care program. After eight years, the trial court awarded attorneys fees under the federal statute permitting winning plaintiffs to recover from the losers in such cases. In its April 2010 ruling, the Supreme Court adopted a rule that, ultimately, will reduce that monetary award by several million dollars. (http://www.supremecourt.gov/opinions/09pdf/08-970.pdf)

Writing for the majority, Justice Alito took offense at the suggestion that the prevailing civil rights lawyers should “earn as much as the attorneys at some of the richest law firms in the country.” I guess he thinks that’s a bad thing.

Importantly, the Court rejected the argument “that departures from hourly billing are becoming more common.” It noted that “if hourly billing becomes unusual, an alternative to the lodestar method [hours worked times billing rate] may have to be found. However, neither the respondents nor their amici contend that that day has arrived.”

But now how will that day ever arrive? In 1983, the Court first adopted the lodestar calculation as a useful starting point for fee awards. Now, its first significant ruling on the issue in almost 30 years has stripped away almost everything but the lodestar in determing a lawyer’s appropriate compensation level.

Where’s the room for practitioners to experiment away from hourly billing? Nowhere to be found in the majority opinion. In fact, the Court’s analysis extends beyond civil rights cases to “virtually identical language in many of the federal fee-shifting statutes.” It will influence any federal court evaluating any kind of fee request — fee-shifting or not, including bankruptcy petitions. State courts will continue to use the lodestar approach in probate, divorce, and other proceedings.

As a result, lawyers maximizing their chances for court approval of their fees will adhere to hourly billing. Innovators experiment at their peril because, depending on the type of matter, they risk not getting paid. The Supreme Court’s imprimatur on the billable hour regime creates a perpetual loop that won’t help the profession jettison it.

But here’s the really bad news. Even if: 1) clients succeed in their current efforts to promote alternative fee arrangements in purely private matters, and 2) the Supreme Court revises its position somewhere down the road, the worst aspects of the billable hour system will continue to haunt biglaw.

Here’s why. Accounting for the time that lawyers and other billers work during the day is firmly embedded into firms’ data collection systems. Those systems won’t disappear; neither will the resulting internal reports used to conduct annual reviews. Freeing clients of the billable hour yoke won’t change lawyers’ lives — unless it makes them worse.

It’s already happening. Even today, a client’s agreement to a fixed fee arrangement doesn’t relieve the attorneys working on the matter from logging their time. The fact that a special fee client doesn’t get an hourly rate-based bill doesn’t matter to reviewers. For them, the relevant metric remains the total number of hours spent serving firm clients. It’s a common denominator used to compare and evaluate associates (and partners).

So even when their time doesn’t result in a direct client charge at an hourly rate, attorneys continue to feel the heat of the billable time metric: “Keep your hours up.”

In fact, another metric — client billings — can make some alternative fee regimes even worse. Senior partners compare time actually spent on fixed fee matters to budgets they developed when negotiating the arrangements in the first place. When an associate or younger partner’s actual time exceeds what the senior partner had assumed, the junior attorneys sometimes feel pressure to record less time, appear more efficient, and render the matter more profitable.

In other words, eliminating hourly fees can cause younger attorneys to work more hours than they report to the system.

How will a real Chief Value Officer handle that one? Not in a way that makes affected lawyers feel better. After all, there’s still no metric for attorney well-being.

BLAGO, CLEMENS, AND LAWYERS

Posted on August 20, 2010 by thebellyofthebeast

Advising a client to do something he or she wants to do is easy. Giving counsel that contradicts a professed desire is a lot tougher.

When Ed Genson, one of Chicago’s top criminal defense lawyers, resigned his representation of Rod Blagojevich in January 2009, he said:

“I have been practicing law for 44 years. I never require a client to do what I say, but I do require them to at least listen to what I say…I intend to withdraw as counsel in this case. And I wish the governor good luck and Godspeed.” ( http://www.nbcchicago.com/news/local-beat/genson-quits-blagojevich-criminal-case-012309.html#ixzz0x9jPaEpt)

At the time, Blago had just begun what became his protracted media blitz. He hadn’t yet learned the self-described lesson of his sobering guilty verdict: “I talk too much.” Although Genson didn’t elaborate on the reasons for abandoning his leading role as defense counsel in a high-profile case, it’s fair to assume that his inability to prevent Rod from using television, radio, and a book tour to proclaim his innocence was an important factor.

Uncontrollable clients get their lawyers and themselves into trouble. I sometimes brought clients back to reality with a simple statement: “People brighter than you are in prisons all over America because they thought they were too smart to get caught.”

Which takes us to Roger Clemens. When persuasion alone doesn’t deter a self-destructive client, a lawyer’s options are limited. Sometimes a threatened resignation reins them in; at other times, even following through on the threat doesn’t.

Then again, there’s the possibility that the attorney blew it. I can’t say that Clemens’s lawyers gave him bad advice because, like the rest of us, I’ll never know what that advice was. But the chronology of the events leading to his recent indictment for lying to Congress raises interesting questions.

The story began in December 2007, when former Senator George Mitchell released his report about the widespread use of illegal, performance-enhancing drugs. Clemens and fellow Yankees pitcher Andy Pettitte were the most prominent of the implicated players. Pettitte eventually admitted taking HGH while recovering from an injury.

On a January 6, 2008 episode of 60 Minutes, Clemens steadfastly denied the claims. At the same moment, his lawyers were filing a defamation suit against the trainer who’d provided Mitchell with the incriminating testimony.

Meanwhile, the U.S. House Committee on Oversight and Government Reform continued its investigation into the matter. A week after Clemens’s 60 Minutes appearance, noted trial lawyer Rusty Hardin released this statement:

“I want to make very clear that there has been absolutely no change in Roger’s willingness and indeed desire to testify under oath before Congress in a public hearing at a date of the Oversight Committee’s choosing. Any suggestion that he or we are having any second thoughts about that is absolutely false.” (http://sports.espn.go.com/mlb/news/story?id=3194113)

House Committee Chairman Waxman later took Hardin’s comments a step farther, saying that he and the ranking Republican had decided that no public hearing was needed because prior depositions would suffice.

“[T]he only reason we had the hearing was because Roger Clemens and his lawyers insisted on it,” Waxman said. “Roger Clemens’s lawyers told us he wanted the opportunity to make his case in public.” (http://www.nytimes.com/2008/02/15/sports/baseball/15clemens.html )

In its totality, Clemens’s strategy was the litigation equivalent of “shock-and-awe” warfare.

When it became clear that the hearing had gone badly for Clemens, Hardin called Waxman’s statements “unbelievable, disingenuous and outrageous.” But according to the same Times article, “Once the depositions were taken…the Clemens side felt it had no choice but to proceed, fearing that the committee would use the depositions to produce a hostile written report. ‘We wanted this out in the open,’ Hardin said.” So Waxman appears to have the better of the “whose bad idea was this anyway?” argument.

In any event, this much is certain: Clemens didn’t have to: 1) appear on 60 Minutes; 2) file a defamation lawsuit on the Sunday evening that the show aired (or ever); or 3) tell Congress anything (unless it first chose to grant him immunity).

So what do Clemens and his lawyers have to show for their efforts?

In February 2009, a judge dismissed most of Clemens’ defemation claims against his former trainer. The Fifth Circuit Court of Appeals affirmed on August 12, 2010. The public has long forgotten about the Mitchell Report, but Clemens himself remains headline news. One of the great pitchers of all time now faces unpleasant proceedings that could culminate in a prison sentence.

I assume that his capable attorneys explained how high-profile politicians and celebrities consistently fail to learn the most important lesson of Richard Nixon’s shame. He resigned the Presidency over obstruction of justice charges stemming from a subsequent cover-up — not the original sin of breaking into Democratic National Committee headquarters at the Watergate. It’s rarely the underlying offense that creates the biggest problem. It’s what people say and do in its aftermath.

I also assume that Clemens’s lawyers were counseling him to keep his mouth shut and his profile low at every stage of that evolving circus. But the record on that is ambiguous, at best.

Blago is right that the jury failed to reach a verdict on 23 of the 24 counts against him. Whether he sought to exchange a Senate seat for campaign contributions will be decided another day. But unless an appeallate court reverses, he’ll go to jail for lying when the government asked him about his practices.

With the former governor back on the road again — and on the way to The Daily Show, among others — I’ll bet Ed Genson has lost little sleep over his wise decision to cut his former client loose.

I suspect that Clemens’s lawyers don’t think they have that option.

OUTSOURCING: THE BEGINNING OF A NEW AND IMPROVED BIGLAW BUSINESS MODEL?

Posted on August 16, 2010 by thebellyofthebeast

If you’re a new law school graduate looking for work, or an equity partner seeking to profit this year (and maybe next) from the leverage that high-priced associates add to your firm’s bottom line, outsourcing sounds like a bad idea. But for those concerned about the long-run psychological well-being of the profession, the implications are more ambiguous.

It’s not novel. Throughout corporate America, outsourcing has been an important profit-maximizing technique for a long time. Lawyers have made a lot of money assisting clients in the development and implementation of such strategies. The resulting loss of American jobs has been sold as a necessary price paid to remain competitive in the world economy.

Such cost-minimization makes sense where protocols can assure a quality finished product. But when lead turns up in the paint on children’s toys from China, well….

Now, as the NY Times recently reported, outsourcing has pushed its nose into the biglaw tent. (http://www.nytimes.com/2010/08/05/business/global/05legal.html) If the trend continues, what is the fate of the dominant large law firm business model that relies on associate/partner leverage as the source of equity partner wealth? (See my earlier article, “Send The Elevator Back Down” at http://amlawdaily.typepad.com/amlawdaily/2010/07/harper3071410.html)

Its days may be numbered but, then again, its days may be numbered with or without outsourcing.

As the Times article notes, outsourcing is particularly advantageous for mundane legal tasks — due diligence on corporate deals and document review for major litigation matters. What client can resist paying “one-third to one-tenth” of a big firm’s hourly rates for such work?

The challenge will be to find the limits and assure quality output. Due diligence seems unimportant until a major potential liability gets overlooked. Document review is dull, but large lawsuits have turned on an internal memo buried in a gigantic collection; a discerning eye made all the difference.

Still, it seems likely that clients will gravitate toward firms that can offer lower rates for outsourced attorneys performing necessary but non-critical work. It is equally clear that clients will continue to “pay a lot of money” to lawyers with special experience and expertise — “world-class thought leaders and the best litigators and regulatory lawyers around the world,” as one corporate leader put it in the Times.

With these trends, new law school graduates will face shrinking labor markets, especially at entry level positions in big firms. But for the fortunate few who get jobs, their work could get better as outsourced labor performs some of the menial tasks that now account for most young associates’ billable hours.

Meanwhile, senior attorneys will have new incentives to mentor proteges so they become their firms’ next generation of “world-class thought leaders.” (See my earlier article, “Where Have All The Mentors Gone?” at http://amlawdaily.typepad.com/amlawdaily/2010/07/harpermentors.html)

What will all of this mean for equity partner profits? The big firm leaders who do the right things — strict quality control of outsourced work coupled with a serious investment in the development of inside talent — will thirve as their firms deleverage. Unfortunately, others intent on maximizing short-term dollars by prolonging the lives of their leveraged business enterprises will do okay, too — at least for a while. But such a myopic focus runs enormous long-term risks for the affected institutions.

And here’s a wild card: Small and mid-sized firms with talented senior attorneys may find that these new pools of outsourced talent enable them to compete with the mega firms. Size may no longer be everything. In fact, it may not be anything at all.

If I’m correct, the resulting transformation will slow biglaw’s growth rate and, perhaps, shrink that segment of the profession. But instead of the mind-numbing tasks that are the bane of any young attorney’s biglaw existence, associates will find themselves doing work that more closely resembles what they thought being a lawyer meant when they first decided to attend law school. If that happened — and reality began to resemble expectations — lawyers as a group could become more satisfied with their jobs. The unthinkable might even happen: a slow reversal in the tide of recent surveys that consistently rank attorneys near the bottom of all occupations in career fulfillment.

Such a scenario would be an ironic turn of events. The extraordinary wealth that clients now confer on those running today’s highly leveraged big firms could be providing the impetus to upend the profession and force the emergence of a new business model in which leverage no longer mattered.

Of course, everything could careen wildly in a different direction –toward further corporatization of law firms as non-attorneys provide private investment capital, become shareholders, and complete the MBA takeover of the profession. That movement is clearly afoot in Great Britain. (See http://www.abanet.org/legaled/committees/Standards%20Review%20documents/AnthonyDavis.pdf) Once senior partners become accountable to non-attorney boards of directors, the individual autonomy that once defined being a lawyer will have disappeared.

But it doesn’t cost any more to be optimistic, does it?

ON THE BEACH

Posted on August 6, 2010 by thebellyofthebeast

While I’m away next week, perhaps you’ll reconsider one of my earlier posts, “VACATION? WHAT’S THAT?” (https://thebellyofthebeast.wordpress.com/2010/06/28/vacation-whats-that/))

Or, you could read my new legal thriller, The Partnership. It’s enjoying brisk sales and receiving strong reviews from lawyers and lay readers alike. (http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104/ref=sr_1_1?ie=UTF8&s=books&qid=1273000077&sr=1-1 )

A new post will appear during the week of August 16.

MIRED IN METRICS? HAVE SOME MORE!

Posted on August 5, 2010 by thebellyofthebeast

Once a bad situation spins out of control, is there any way to corral it? When all else fails, try making things worse.

The ABA recently released its report detailing just a few of the ways that U.S. News law school rankings have been counterproductive for prospective lawyers and the profession — from driving up the costs of legal education to driving down the importance of diversity. (http://www.abanet.org/legaled/nosearch/Council2010/OpenSession2010/F.USNewsFinal%20Report.pdf)

As U.S.News now develops law firm rankings, the report concludes with an ominous warning:

“Once a single rankings system comes to dominate a particular field, it is very difficuly to displace, difficult to change and dangerous to underestimate the importance of its methodology to any school or firm that operates in the field. This, we believe, is the most important lesson from the law school experience for those law firms who may be ranked by U.S. News in the future.”

In other words, rankings sometimes function as any so-called definitive metric: They displace reasoned judgment. Independent thought becomes unnecessary because the methodology behind the metric dictates decision-makers’ actions.

Since 1985, many big firms have become living examples of the phenomenon. That year, The American Lawyer published its first-ever Am Law 50 list of the nation’s largest firms. Most firm leaders now teach to the Am Law test, annually seeking to maximize revenues and average profits per equity partner. The resulting culture of billings, billable hours, and associate/partner leverage ratios begins to explain why surveys report that large firm lawyers lead the profession in career dissatisfaction.(http://www.abajournal.com/magazine/article/pulse_of_the_legal_profession/print/) Without a metric for it, attorney well-being — and the factors contributing to it — drop out of the equation.

Courtesy of U.S. News, large firms now stand on the threshhold of more metrics. Will they make working environments of firms that have succcumbed to the profits-per-partner criterion worse?

It depends, but more of yet another bad thing — rankings — could produce something good — forcing individuals to sift through contradictory data, think for themselves, and make a real decision. But that can happen only if U.S. News produces a list of “best law firms” that bears little resemblance to the rank ordering of the Am Law 100 in average equity partner profits. Such contradictory data would confuse newly minted attorneys and force them to develop their own criteria for decision.

The American Lawyer itself provides a useful example of the possibilities. Eight years ago, it began publishing the Am Law “A-List,” which has gained limited traction as a moderating influence on the Am Law average profits-per-equity-partner metric that otherwise dominates decision-making at most big firms. The A-List’s additional considerations bear on the quality of a young lawyer’s life — associate satisfaction, diversity, and pro bono activities. The myopic focus on short-term dollars still dominates decisions in most big firms, but the A-List has joined the conversation.

What methodology will U.S. News employ in evaluating law firms? If it follows the approach of its law school ranking counterparts, many firms will game the system, just as some law schools have. (See my earlier article, “THE U.S. NEWS RANKINGS ARE OUT!” (https://thebellyofthebeast.wordpress.com/2010/04/16/the-us-news-rankings-are-out/)) But misguided and manipulatable metrics aren’t inevitable.

Talent is essential for any successful firm, large or small. Other qualities — collegiality, mentoring, community, high morale accompanying a shared sense of professional purpose — make a workplace special. Can the U.S. News find ways to measure those qualities?

That’s the challenge. But I fear that students won’t bother focusing on the U.S. News methodology or its flaws. More likely, whatever rankings emerge from the process will provide — as they have for so many deliberating the choice of a law school — an easy final answer.

Ceding such control over life’s direction to others is rarely a good idea. There is no substitute for personal involvement in deciding the things that matter most. That means asking recruiters tough questions, scrutinizing the lives of a firm’s senior associates and partners, and finding role models who are living a life that a new attorney envisions for her- or himself.

In the end, the current large firm business model and its self-imposed associate/partner leverage ratios will continue to render success — defined as promotion to equity partnership — an elusive dream for most who seek it. For those who become dissatisfied with their jobs, time passes slowly. So everyone joining a big firm — even a person intending to remain only for the years required to repay student loans — has ample incentive to get that first big decision after law school correct.

So why would intelligent young attorneys let U.S. News’ self-proclaimed experts make it with something as silly as a ranking? Probably for the same reasons that they relied on U.S. News to make their law school decisions for them three years earlier.

Someday, maybe there will be a U.S. News formula for choosing a spouse. Then won’t life be simple?

“SILENT GRIEF” – “DEADLY SERIOUS” FOLLOW-UP

Posted on July 30, 2010 by thebellyofthebeast

Two especially useful comments to “DEADLY SERIOUS” — retitled in “SILENT GRIEF” in the Am Law Daily version posted Friday — illustrate why I continue this blog.

One came from “Recovering Attorney,” who wrote:

“There are some resources devoted to attorneys who need assistance. For law students, the Dave Nee Foundation promotes suicide prevention and education http://www.daveneefoundation.com/. The Lawyers With Depression website also has many helpful articles and robust discussions http://lawyerswithdepression.com/. Check out the many links at both sites.”

A longer comment came from “Former Big Law Partner.” It can be viewed in its entirety by clicking on the right side of The Belly’s home page, but here’s an excerpt:

“For starters, we have to recognize that the personalities of most of us who make the cut and are hired as associates at BigLaw firms are, by nature, extremely competitive and accustomed to success…I think that we need to recognize that we tend to have personalities that make us particularly susceptible to the kinds of excesses that occur at BigLaw firms when there are not other mechanisms in place, either in our personal lives or at the firms themselves, that can help us to draw back and retain a proper perspective on our professional lives.

“Second, I agree that the overriding profit motive of nearly all law firms, not just BigLaw, is driving lawyers to desperation…Without question, I believe that it is the motive not just to make a comfortable living, but to be wealthy, that is robbing our profession of its soul.

“Third, the law schools know that there will not be job offers for all of the graduating law students, many of whom will be saddled with tremendous debt when they graduate, but nevertheless, the schools gladly take incoming students’ tuition money. Many of those students have so much debt that, if they are lucky enough to get a job (because of the glut of lawyers churned out by the law schools), they have little choice but to remain in that job as long as they can to pay down their loans, which causes many to be trapped in situations where they are unhappy…

Finally, I think that society has changed in ways that have removed many of the safety nets that might have, at an earlier time, prevented some of us from reaching such depths of despair over our jobs…[O]ur shared political or civic community has eroded to a substantial degree and, I think, exacerbates the sense of alienation and depression that we sometimes can feel.

I went through a very difficult time as I rose through the ranks of a BigLaw firm and struggled with many of these tensions…I was lucky to have moved to a different situation at the time that I did, when there were such opportunities. Unfortunately, many of those don’t exist given the current state of the economy and glut of lawyers.

And that is the real crux of the matter with attorney suicides, as I see it: It is when people see no alternatives and have given up any hope that they take such a drastic and tragic action. I hope that structural changes in law firms and law schools can be made that will give lawyers real alternatives. In the meantime, I think that all we can do is what you are doing in your college seminar and here: bringing these issues into the light and trying to raise the consciousness of current and prospective lawyers to these dangers.”

Thanks for these thoughtful contributions.

STILL #1

Posted on July 30, 2010 by thebellyofthebeast

The debut music video from my son’s rock band, Harper Blynn, remains #1 for the week in MTV’s Rock category and has climbed to #8 for the week in All Genres. (http://www.mtvmusic.com/artist/blynn_harper/videos/538436/loneliest_generation)

If you check out the charts, you’ll find “Loneliest Generation” topping a distinguished collection of established stars. It won’t last forever, but Harper Blynn remains unique from all others — in its sound and in the path it has taken to this point. The band has done it independently — without the support of a major recording label. You’re a witness to music history in the making.

Meanwhile, their national tour with Greg Laswell and Cary Brothers continues. (http://www.myspace.com/harperblynn)

It’s nice to know that sometimes it’s just about the music. I wonder what they’ll do for an encore.

DEADLY SERIOUS

Posted on July 26, 2010 by thebellyofthebeast

For some reader out there, this may be the most important article I’ve written — and there’s no room for levity. Yet another biglaw attorney ended his own life.

On July 15, a Chicago subway train struck and killed a Reed Smith partner. Late last week, the Cook County medical examiner confirmed that the 57-year-old father of two intentionally placed himself in harm’s way. (http://www.law.com/jsp/article.jsp?id=1202463774221&rss=newswire)

It’s difficult to determine what leads anyone to take such an irrevocable step. The lines that tether each of us to this earth are thin and fragile. But the relative frequency with which lawyers in large firms have become the subject of such recent reports is disconcerting.

In April 2009, a 59-year-old Yale Law School graduate who headed Kilpatrick Stockton’s Supreme Court and appellate advocacy group took his own life. http://www.abajournal.com/magazine/a_death_in_the_office/

A month later, two more attorney suicides made the news — an associate and a partner in two different large firms. http://abajournal.com/news/disappointments_preceded_suicides_by_lawyers_at_three_major_law_firms In

January 2010, a 45-year-old partner in Baker & Hostetler’s Houston office apparently shot himself on a Galveston beach. http://amlawdaily.typepad.com/amlawdaily/2010/01/tragedy.html

Are these events more frequent? Or just more frequently reported? I fear it’s the former.

We’ve all encountered unhappy attorneys, but during my first 25 years in a big firm, I’d never heard of a lawyer anywhere who’d taken his or her own life. When I attended such a funeral for a young partner in 2005, eulogies confirmed that he’d battled internal demons since childhood.

That insight offered comfort. Survivors can move forward more easily when viewing themselves as dramatically different from the deceased. It requires a skill that lawyers hone: distinguishing otherwise relevant precedent.

Then came the unavoidable wave that began in early 2009.

Only those closest to the victim can even begin to describe the special circumstances surrounding his or her plight. The causes of such fatalities are as unique as the individuals involved. The choice to continue living becomes a frighteningly close call for some. Severe depression, other mental illness, and unrelenting physical pain can wreak incomprehensible havoc. None makes suicide a correct decision for the afflicted — just understandable. But if any such factors contributed to the recent spate of biglaw victims, the public reports didn’t disclose them.

Maybe government lawyers, attorneys in small- or mid-size firms, or those in other positions are committing suicide, too, but receiving less media attention. For example, when a 64-year-old Connecticut solo real estate practitioner hanged himself in November 2009, press coverage was minimal. (http://www.law.com/jsp/article.jsp?id=1202435932676) But such an argument loses its appeal when you consider that attorneys in the 250 largest firms comprise fewer than 15% of those practicing.

Does the interaction between the dominant large firm business model and the economic downturn provide a partial explanation? After all, most of the recently reported attorney suicides involved accomplished biglaw partners in their 40s and 50s.

No single set of shoulders bears the blame, and only the respective firms know whether or to what extent their actions might have contributed specifically to these final acts. I make no accusations in that regard.

But as a general matter, firms adhering religiously to an MBA-mentality of misguided metrics — billings, billable hours, and associate-partner leverage — as fundamental criteria for lawyer evaluation have become less collegial and more unforgiving. Even in good times, justifying your own economic existence anew during every review cycle can be unsettling or worse. For some, the feared loss of income or status can be powerfully unpleasant.

Assuming that they might have contributed even minimally to these tragedies, the pressures of the dominant biglaw model aren’t disappearing any time soon. So what’s my point? Simply this: The regime doesn’t have to victimize the most vulnerable.

Everyone — especially lawyers — should periodically assess whether the fit of a chosen job is right. Even if it’s not, the work may still be an acceptable way to make a living. No job is perfect; that’s why they call it work. But for some, the psychological toll can mount in dangerous ways. In such cases, only individual action can arrest a downward slide.

That might mean counseling, viewing your employment differently, finding a new legal job, or leaving the profession altogether. One thing is certain: For the chronically distressed, inaction can become a lethal decision.

In my Convocation Address to the Northwestern University Weinberg College of Arts & Sciences graduating class of 2010 last month, the line that interrupted my remarks with the longest and loudest applause from the 10,000 students and parents in attendance was also the most important:

“Seeking help when you need it is never a sign of weakness; it’s proof of strength.” (http://www.youtube.com/watch?v=DP3Uhiol6Vs)

I promise a lighter article next time.

#1

Posted on July 25, 2010 by thebellyofthebeast

As of this morning, July 25, Harper Blynn’s new music video, “Loneliest Generation,” was #1 on the MTV “most-viewed for the day” rock chart (even though MTV misspelled “Loneliest”) (http://www.mtvmusic.com/artist/blynn_harper/videos/538436/loneliest_generation) It premiered four days earlier.

The band won’t stay #1 forever, but it’s a relief to learn that Justin Bieber, Katy Perry, and Lady Gaga haven’t pre-empted the field.

INDULGE ME

Posted on July 22, 2010 by thebellyofthebeast

My son’s rock band, Harper Blynn, has a new music video premiering on MTV this week. Here’s the link: http://www.mtvmusic.com/artist/blynn_harper/videos/538436/lonliest_generation

After watching it, those of you who haven’t already clicked on this blog’s link to “The Belly’s Favorite Rock Band” (on the right side of the page) will do so.

Hey, have I steered you wrong yet?

WHERE HAVE ALL THE MENTORS GONE?

Posted on July 19, 2010 by thebellyofthebeast

Many biglaw leaders should take heed.

In last weekend’s edition of the Wall Street Journal, columnist Peggy Noonan lamented the loss of what she called “adult supervision.” (http://www.peggynoonan.com/article.php?article=531)

Commemorating the 50th annivesary of To Kill A Mockingbird, she recalls the “wise and grounded Atticus Finch, who understands the world and pursues justice anyway, and who can be relied upon.”

She then rattles off a list of world leaders whom she regards as young — President Obama is 48; British Prime Minister Cameron is 43; Canadian Prime Minister Stephen Harper (no relation) is 51. Noonan says they could benefit from the presence of wise advisers like the venerable Finch.

Of course, there’s an obvious problem with her analysis: Finch himself was about the age of the “young men” she now finds in need of wise older counsel. So she misses an essential point: Wisdom is neither the exclusive province of the old nor the assured destination of advancing age.

But Noonan states an important truth when she views the modern world and observes that “there’s kind of an emerging mentoring gap going on in America right now.” She sees it in “a generalized absence of the wise old politician/lawyer/leader/editor who helps the young along, who teaches them the ropes and ways and traditions of a craft.”

That is undoubtedly true for much of biglaw. Why?

There are exceptions within and among firms, but this development flows directly from the MBA-mentality that now dominates most large law firms. It forces leaders and everyone else to focus on short-term metrics — individual billings, billable hours, associate-partner leverage ratios.

The resulting behavior is predictable. Each individual’s drive to attain and preserve position in accordance with such metrics leaves little room (or time) for the personalized mentoring that turns good young lawyers into better older ones. There’s no metric for measuring the future contribution that mentoring makes to the current year’s average profits-per-equity-partner.

For firms adhering to the pervasive biglaw model, the absence of a mentoring metric makes all the difference. In Hildebrandt Baker Robbins’s 2010 Client Advisory to the legal profession, one of the pioneering consultants responsible for the proliferation of biglaw’s misguided metrics aimed at short-term profit-maximizing concludes, “There is a management adage that ‘what gets measured gets done.'” (http://www.hildebrandt.com/2010ClientAdvisory)

I would add this corollary: Throughout biglaw in particular and the world generally, that which lacks a metric gets ignored.

Unfortunately, some of those things are important.

YOGI BERRA’S WISDOM

Posted on July 12, 2010 by thebellyofthebeast

As a change of pace — and to a different medium — today’s offering is “GEMS FROM THE DIAMOND,” my June 19 Convocation Address to Northwestern University’s Weinberg College of Arts & Sciences graduating class of 2010. It’s ten minutes long and available for online viewing. There are two options.

The first is on Northwestern’s You Tube Channel and replays the original webcast: http://www.youtube.com/watch?v=DP3Uhiol6Vs

The second includes a brief student introduction (Part I), followed by my speech as seen from the cheap seats (Part II): http://www.youtube.com/user/harperstevenj#p/u/1/jrMfosruCiA

Also on my You Tube channel containing the second version is a clip of a short reading from The Partnership at a recent book appearance. (http://www.youtube.com/user/harperstevenj#p/u/2/p5zOMn_-bAM)

SUMMER ASSOCIATES TAKE NOTE: INADVERTENT REVELATIONS

Posted on July 9, 2010 by thebellyofthebeast

Today’s pop-quiz:

Question #1: What do the following statements have in common?

“Indiscretion happens with alcohol, but people understand that. You usually have to knock a partner out cold for it to be a career-ending event.”

AND

“Two years ago, we had lunch with an interviewee who insisted on ordering top-shelf liquor. It was bad judgment.”

Answer: Both remarks came from hiring partners at different Am Law 100 firms as they recently offered tips to students and summer associates hoping to land full-time job offers.

Here’s the odd part: the interviewer posed only general questions — whether there were any “golden rules for summer associates” and whether any candidates “bombed” because of a faux pas. But the first and only responses related to alcohol etiquette.

That’s revealing and a bit strange. Alcohol abuse is a widespread challenge for the profession. So how do we square either partner’s remark with that growing epidemic? The first treats it as a joke; the second, well…

Let’s pause for a moment on the second. This partner’s condemnation of an interviewee who ordered “top-shelf liquor” at a recruiting lunch made me wonder: What did he order for himself — and, even more tellingly, what does he usually drink? According to the 2010 Am Law 100 listing, his firm’s average equity partner profits totaled $1.27 million last year. I’ll bet the student’s lunch companion didn’t consume much Ripple.

Question #2: What do the following two statements about summer associates have in common?

“I’m not sure that a very significant number of associates even want to be partners.”

AND

“By going to a smaller number [of summer associates] this year, we had the luxury of getting people who are really enthusiastic about being [at our firm].”

Answer: The comments came from the same person during the same interview. He’s a hiring partner at another Am Law 100 firm. After graduating from Harvard Law School in 1995, he took an increasingly common path to biglaw partnership: a judicial clerkship followed by several years as an assistant U. S. Attorney. He didn’t join the firm for which he now serves as gatekeeper until 2004. So after lateraling into his position of power six years ago, he’s already so familiar with the firm’s culture that he now decides who among new graduates gets a job there. That alone is interesting, isn’t it?

Even more fascinating, he’s evidently recruiting split-personality associates — those who “are really enthusiastic about being at the firm,” but don’t “want to be partners.”

Huh? When does the enthusiasm wear off? Do they have wealth-related allergies? (His firm’s 2010 Am Law listing reports average proftis per equity partner exceeding $2 million.)

I know what you’re thinking about such contradictory characterizations of those receiving offers: “A foolish consistency is the hobgoblin of little minds.” (Ralph Waldo Emerson, Self-Reliance)

Question #3: Were these partners coerced into their bizarre comments? If so, we all know how unreliable that information can be.

Answer: Regrettably, no. The remarks came in voluntary interviews that each gave in May and June to the The Careerist, an American Lawyer blog. I suspect that all three regarded the media attention as personal and professional promotional opportunities.

Bonus Question: Is all of biglaw this bizarre?

Answer: No. Here’s a counterpoint: “[Recruits] should ask searching questions. How practice has changed over the years and how you deal with the changing demands. And how hard it is to reconcile your life at work with the rest of your life…I don’t believe lawyers should bow to icons. I want them to look me in the eye and ask tough questions.”

Now that’s more like it.

So here’s a suggestion to all of you summer associates out there who thought getting a job offer was the tough part: Pay close attention to the senior attorneys who will become your mentors if you sign on. Listen to them more carefully than some listen to themselves.

VACATION? WHAT’S THAT?

Posted on June 28, 2010 by thebellyofthebeast

While dining out recently, my wife and I noticed a young couple at a nearby table. Their respective BlackBerrys mesmerized them; they rarely looked up or at each other. Even the arrival of entrees barely interrupted technological trances. During the hour-and-a-half we were there, they spoke only a handful of sentences.

According to a recent front page NY Times article, there’s a scientific explanation for such unsociable behavior. Unfortunately, the report filled two interior pages of the paper, which meant that it wasn’t likely to sustain the attention of those most needing its insights. Yes, I’m looking at you, my fellow lawyers, but you’re not the only culprits.

Young adults face a special challenge. If BlackBerrys and text-messaging feel familiar to you millennials, could it be related to the fact that you had Gameboys as kids?

Here’s a summary of “Hooked on Gadgets, and Paying a Mental Price”:

1. Technology has reduced the need for direct human interaction. That produces important efficiencies, but it also inflicts collateral damage. For example, what was once considered family time has become parallel play on handheld devices. That’s what was happening with the couple seated near us at the restaurant. At another nearby table, a teenager and his younger sibling likewise lost themselves in their gadgets while preoccupied parents did likewise.

2. Multi-tasking is a myth for all but 3% of the population. The vast majority of us can do only one thing at a time reasonably well. Don’t blame me; that’s how the human mind operates.

3. When you try to multi-task, you become less efficient at juggling problems.

4. Multi-taskers are more sensitive to incoming information and, therefore, more easily distracted. But brains attempt to adapt. That can create problems, especially when the urge to remain plugged in assumes the attributes of an addiction. “The scary part,” notes Stanford professor of communications Clifford Nass, “is they can’t shut off their multi-tasking tendencies when they’re not multi-tasking.” Once the mind becomes attention deficit disordered (ADD), it gets bored more easily.

5. According to a recent poll, 30 percent of those under age 45 thought that cellphones, smart phones, and personal computers made it harder for them to focus.

All of this adds up to more stress — especially for lawyers and other professionals. So why do it? When economic historians revisit the stunning productivity gains of the 1990s and early 2000s, one big chunk will turn out to have been illusory. Specifically, technology facilitated the conversion of leisure time into working hours.

The legal profession epitomizes the phenomenon. In biglaw, productivity has become synonymous with billable hours, period. Don’t take my word for it. Here’s what legal consultant Hildebrandt Baker Robbins said in its 2010 Client Advisory to our profession:

“The high point of law firm productivity was in the late 1990’s, when average annual billable hours for associates in many firms were hitting 2,300 to 2,500.”

In other words, the billable hours imperative destroyed the wall separating work from everything else. Especially in large firms charging ever-increasing rates, clients understandably expected their attorneys to be on-call — 24/7. As client-billed time became a key metric for evaluating talent, senior partners demanded bigger sacrifices all the way down the food chain. (“Keep your hours up,” they urged — and still do.)

Laptops, cellphones, and BlackBerrys have been aiders and abettors. After all, who can credibly claim to have been unavailable for any longer than it takes to visit the bathroom?

So the next time you tell yourself that you’re taking time off, spend a moment contemplating what that really means. Meanwhile, if you’re seeking my insights over the upcoming long holiday weekend, perhaps you’ll consider one of my books.

They’ll have to suffice because this blog will be idle until July 9. I’m taking an old-fashioned vacation: no computer; no BlackBerry; no cellphone. (Well, okay, I’ll take my cellphone so other family members can reach me in case of emergency; no one else has the number.) Sounds just like your vacations, right?

WHO’S LAZY?

Posted on June 23, 2010 by thebellyofthebeast

My new novel, The Partnership, has led to some interesting conversations with other lawyers, especially biglaw partners.(http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104/ref=sr_1_1?ie=UTF8&s=books&qid=1273000077&sr=1-1)

“Here’s the problem with young associates today: they’re lazy,” barked a middle-aged man at a recent dinner party that I attended. Soon thereafter, he revealed his occupation: partner in an Am Law 100 firm.

“They feel entitled. They want to make the big bucks, but they don’t want to put in the hours,” he continued indignantly.

Biglaw partners say that a lot. Many regard themselves as special in ways that few young people today ever can be. It’s a form of magical thinking that rationalizes hubris, bad behavior, and arbitrary decisions.

“It’s more complicated,” I suggested after confessing that I’d recently retired after 30 years in a big firm that he respected. “For the last three years, I’ve taught an undergraduate seminar that has given me a different perspective. Ultimately, my students inspired me to write my latest book.”

“How so?” he asked.

“As you know, law school has long been the last bastion of liberal arts majors who didn’t know what to do next. Once they got there, the pressure to get a high-paying job at a big firm began. But most students heading that way had no idea what their lives at such places would be like. When reality struck, many didn’t like it.”

He nodded.

“That’s one reason lawyers are among the most dissatisfied workers in our society. It’s also why, before the Great Recession, the five-year associate attrition rate from big firms exceeded 80%.”

“I didn’t realize it was that high,” he interjected.

“Contributing to all of this is the business model that has overtaken most large firms over the past 20 years,” I continued. “It requires associate and non-equity partner attrition to increase leverage ratios and enhance equity partner profits. Being a good lawyer doesn’t mean the firm will have room for you as an equity partner. The resulting behaviors have dramatically changed the culture of most big firms.”

“You’re right,” he said as he inadvertently moved to his own unhappy plight. “People don’t understand what it means to go from 1,600 to 1,800 to 2,000 billable hours a year. Once you become a partner, it’s even harder. You can’t bill all of the time you spend on client development, but those hours are just another form of work.”

“We agree,” I suggested. “The job turns out to be much different from what most undergraduates expect, insofar as they have any expectations at all. In fact, even as an equity partner, your firm’s increased billable hour requirements have changed your job while you held it, right?”

“True,” he admitted.

“So you’re a victim of the MBA mentality of misguided metrics, too. When reality clashes with young attorneys’ idealized expectations, you have a prescription for psychological disaster. Factor in a business model that myopically focuses on a few metrics — billings, billable hours, and leverage — and look at the result.”

The biglaw partner then revealed his secret: “My son is thinking about going to law school. I told him to stay away from big firms.”

“You’re not alone,” I assured him. “The most recent ABA study shows that 60% of attorneys practicing 10 years or more advise young people against a legal career. As a group, biglaw attorneys are the most dissatisfied; public sector lawyers are happier.”

The senior partner nodded. Long ago, he confessed, his career began in government.

“So we’re back where you started this conversation,” I suggested, “– associate motivation.”

“How so?”

“When an entering class of, say, 50 new associates figures out that only 10 of them will be around five years later and maybe two or three will eventually become equity partners some unknown number of years after that, how does it affect their behavior? How would it affect yours?”

“Partners would say I was lazy,” he laughed. “I think I’m going to enjoy your new book. I’ll get a copy for my son, too.”

OTHERWISE OCCUPIED FOR A TIME

Posted on June 16, 2010 by thebellyofthebeast

My next post won’t appear for several days because I’m busy preparing for two events.

On Saturday, June 19 at 11:30 am, I’ll be delivering the Convocation Address to the Northwestern University Weinberg College of Arts & Sciences graduating class of 2010. Anyone interested can join the other 10,000 people in attendance at Welsh-Ryan Arena in Evanston, IL. No ticket required.

But you don’t have to be there to see it. The event will also be streaming online at http://www.wcas.northwestern.edu/convocation/. The topic of my ten-minute speech is “Gems from the Diamond.” After I finish, 1,000 graduates will receive their diplomas individually; you probably won’t mind missing that part.

Then, on Monday, June 21 at 7:00 pm, I’ll discuss and sign my new novel, The Partnership, at The Book Stall in Winnetka, IL (811 Elm Street). (http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104/ref=sr_1_1?ie=UTF8&s=books&qid=1273000077&sr=1-1)

So perhaps you’ll see me before you read whatever I have to say next.

FOR BIGLAW SUMMER ASSOCIATES ONLY…

Posted on June 13, 2010 by thebellyofthebeast

You’re thrilled, and understandably so.

In an impossible job market, you came up a winner. The summer associate offer rate for all firms dropped to its lowest level since NALP started gathering such statistics 17 years ago. But you worked hard, got good grades, and listened to tips from hiring partners describing what they wanted in a new lawyer.

You scored big. In compensation, it’s a summer job like none you’ve ever had. Your most pressing concern is whether there will be a repeat of last year’s dip in the full-time job offer rate for summer associates — 69% compared to 90% in 2008. So now you’re heeding advice that ranges from proper attitude to correct attire. At least there is some encouraging summer associate etiquette news. According to one biglaw hiring partner, “indiscretion happens with alcohol, but people understand that. You usually have to knock a partner out cold for it to be a career-ending event.” Whew! That’s a relief.

Anticipating a favorable next step, you hope that your full-time job offer at the end of the summer is real. You don’t want to wind up like the more than 60% who planned to start their careers at large law firms immediately upon graduation this year, only to be deferred into 2011 and 2012. You can’t bear to think about some of your predecessors who received offers of full-time employment after their successful 2008 and 2009 summers, only to see them revoked outright a few months later.

You’re focused on making sure the firm likes you. There’s no time to consider other things — including whether you like the firm.

Here’s a suggestion: think about those other things now, even if only briefly.

At a recent Cubs game, I was talking with a fellow biglaw refugee. He’d practiced in a large law firm — not mine — for more than 25 years before retiring two years ago.

“What questions should today’s biglaw summer associates ask?” I began.

“It depends on what they want,” he suggested. “They probably fall into one of two categories. The first group consists of those wanting good training, needing a decent salary to pay off their student loans, and planning to do something else when that debt is gone. A second group wants to make a career at a big firm; they think they’re in for the long haul.”

“OK, so what should someone in the first group investigate?”

“That’s easy,” my friend responded. “Mentoring. How is the training? Will they have opportunities to develop skills that make them better lawyers?”

“How about the second group — the ones who think they want a large law firm career?”

“For them, it boils down to a simple question: who among the equity partners has a life that they’d want? If they can’t identify such a person, that’s a big problem. If they can, then they have to dig deeper.”

“Such as,” I pressed.

“Such as, how did the senior attorney do it? Is he or she an oddity? Did the partner succeed under a biglaw model that no longer exists? Most large firms don’t resemble what you and I joined 30 years ago. Your new book says it all.”

“And to get at that issue,” I added, “they should search for answers to these questions:

1. Excluding laterals, how many new equity partners did the firm make this year?

2. How many years did it take them to get there?

3. What was the size of their original associate class?

4. What happened to everyone else?

If the chances of capturing the brass ring are about the same as winning the lottery, at least they know the ground rules. The answers will reveal the culture and working environment of the place.”

“Yep,” he said. “And whether it’s conducive to a happy life. Your new book covers that one, too.”

But some aspects of life seem destined to remain unsatisfying; an hour later, the Cubs lost — again.

BABY BOOMERS STRIKE AGAIN

Posted on June 9, 2010 by thebellyofthebeast

Getting old is tough. But not nearly as tough as being young these days.

Recently, the National Law Journal reported that an Am Law top 20 firm adopted a new policy allowing partners two addtional years before they must “begin giving business to younger colleagues.” Instead of 65, they’ll now have to start that process at 67. (http://www.law.com/jsp/article.jsp?id=1202458271311)

Meanwhile, a prominent 63-year-old white-collar defense attorney left his big firm of 16 years to avoid its mandatory retirement age (65). He declined his old firm’s offer of a two-year exemption that would have given him until 67. (http://legaltimes.typepad.com/blt/2010/05/mark-tuohey-leaves-vinson-elkins-for-brown-rudnick-cites-retirement-policy.html)

And the June ABA Journal includes the following admonition from the organization’s president:

“In August 2007, the ABA adopted a policy rejecting mandatory age-based retirement policies. The recommendation urging this advance is worth considering and adoption by all legal employers.”

Yes, she’s a 60-something baby boomer in a big firm, too.

What’s going on? Forget lip-service paid to the old age-discrimination argument against forced departure of equity partners. That sword of Damocles has floated over the profession forever, yet somehow current big firm leaders replaced their predecessors.

So why the big outcry now? The current chorus reflects an unintended consequence of a flawed biglaw business model: resistance to intergenerational transition. But extending check-out time is a bad move for the firm that does it, the younger attorneys working there, and aging baby boomers unwilling to contemplate life after the law.

Aging rainmakers have books of business that make them indispensable to many large firms. Why? Throughout biglaw, simplistic metrics (billings, billable hours, and leverage) have determined individual partners’ annual compensation with an eye toward maximizing short-term average profits-per-partner that appear in Am Law‘s annual rankings.

It’s become bad long-term news for the firm. In such a culture, partners have every incentive to retain client responsibilities and none to mentor proteges or promote intergenerational transition. As they age, the old-timers hoard their marbles and threaten to take them elsewhere. Does that sound like a prescription for long-term institutional stability?

What about younger lawyers hoping to inherit clients? Many will find themselves in the position of the wealthy parents’ child awaiting a large bequest. By the time it comes, the kid will be in his 50s. Meanwhile, blockage wreaks havoc all the way down the food chain.

How about the aging attorneys themselves? Encouraging them to deny their own mortality isn’t helpful. Sorry, but once you’re over 65, you may be young at heart, but to the rest of the world, your colorists and/or your combovers aren’t persuasive.

Here’s the painful truth: we baby boomers are not that special. Think you’re indispensable? Put your hand in a pail of water, pull it out, and look at the size of the hole you leave. That’s how indispensable you are. Do you remember any of your own mentors fondly? Well, someday that’s what you’ll be to others — if you truly succeed in the ways that matter most.

Those who have followed this blog from the beginning know that its first series of posts, “PUZZLE PIECES — Parts 1 through 12” (now archived in “CONNECTING THE DOTS”), dramatizes the problem of aging partners who hang on too long. (https://thebellyofthebeast.wordpress.com/category/connecting-the-dots/) Special ciriticism goes to those who have also inculcated their firms with a business school mentality of misguided metrics. Such baby boomers are now positioning themselves to extract one final pound of flesh on the way to dotage.

Are these aging leaders who retain literal death grips on their billings positive role models for successors? If the firms themselves don’t survive them, it won’t matter, will it?

WEIRD TILTS AT THE RANKINGS WINDMILL

Posted on June 7, 2010 by thebellyofthebeast

[UPDATE: On January 1, 2011, Northwestern’s former dean, David Van Zandt, became president of The New School in New York.]

Virtually all law school deans — with the notable exception of Northwestern’s David Van Zandt — have urged prospective law students to ignore U.S. News rankings because they’re methodologically flawed, susceptible to manipulation, and counterproductive to sound student decision-making. None of that seems to bother students, most of whom regard them as authoritative.

I introduced Van Zandt’s outlier position in an earlier post. (https://thebellyofthebeast.wordpress.com/2010/04/16/the-us-news-rankings-are-out/). More can be said about how his business school mentality hurts the school and its students, but not today. Right now, I’m more interested in two recent articles on U.S. News rankings.

First, Mercer University recently named its new dean. That’s not a particularly newsworthy item, especially for an undistinguished school. But the National Law Journal thought otherwise. Presumably, its May 27 headline explained why:

“‘U.S. News’ antagonist lands deanship at Mercer University.” http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202458884379&US_News_antagonist_lands_deanship_at_Mercer_University&hbxlogin=1

So that’s what made Gary Simson’s new job noteworthy? He was a U.S. News antagonist? But that describes every law school dean in the country — except Van Zandt.

Simson had been dean of the Case Western Reserve Law School for 18 months when, in summer 2008, he urged law schools to boycott the U.S. News rankings because deans pandered to them. (http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202423187148)

Dean Van Zandt quickly proved the point. A few months after Simson’s call to arms, the ABA Journal exposed Northwestern’s aggressive recruitment of prospective second-year students whom that school had rejected a year earlier. (http://www.abajournal.com/magazine/article/transfers_bolster_elite_schools/) As transfers, their LSATs wouldn’t count in the U.S. News rankings, but their tuition dollars would go directly to the school’s bottom line.

Nobody asked students in the original 238-person class what they thought of that win-win solution for the business school mentality of misguided metrics. Their class grew by almost 20% in 2006-2007. Ironically, Northwestern’s U.S. News ranking has fallen for each of the last three years — from 9th to 11th.

Unfortunately, Dean Simson was already a wounded warrior when he took up the rankings crusade. He’d generated criticism from faculty, alumni, and donors for a variety of reasons, including Case’s low state bar passage rates (75% for Case first-time takers in February 2008 compared to 95% for Cleveland State’s). In October 2008 — just before another round of bar passage results was released — the university’s president announced that Simson “had agreed to resign.” (http://blog.cleveland.com/metro/2008/10/case_western_reserve_law_schoo.html) So much for the boycott messenger and his message.

Yet now, two years later, Simson’s antagonism toward U.S. News rankings has become his claim to fame. Could skepticism about the rankings be attracting new followers and redeeming old ones?

That leads to the second article, also in the NLJ. The Society of American Law Teachers (SALT) has urged law schools to stop providing U.S. News with incoming students’ LSAT scores. SALT asserts that the pressure on admissions deans to get students with top scores compromises efforts to achieve campus diversity. (http://www.law.com/jsp/article.jsp?id=1202458731270)

It’s a noble gesture, but little more. Starving U.S. News of LSAT scores means only that the magazine will have to get such information from the ABA and the Law School Admission Council, both of which report LSATs at individual schools.

Still, recent noise about the dangers of using flawed rankings criteria as decisive metrics is encouraging. The volume should increase in October when U.S. News releases its newest compilation: rankings of the best law firms.

On that one, U.S. News may have awakened a slumbering giant. In February, the ABA House of Delegates adopted a resolution to investigate the proposed law firm rankings and, while they’re at it, take a close look at law school ranking methods, too.

Perhaps someday wise leaders of our profession will grasp the destructive impact of the rankings game — from law schools to big firms (based on their average-equity-profits-per-partner metric) — and it will all end. But I doubt it.

After all, metrics make life’s decisions so much easier, don’t they? Indeed, they eliminate the need to think at all!

A BETTER ALTERNATIVE OR A LEAP FROM THE FRYING PAN?

Posted on June 3, 2010 by thebellyofthebeast

Thirty years ago, New York was a scary place for me — mostly because I’d never been there. Midwestern curiousity led me to interview with Cravath, Swaine & Moore’s on-campus representative.

I’d heard that its road to success was the toughest. Rumors circulated that it hired twenty new attorneys for every one or two it might promote to equity partner eight or more years later. Not surprisingly, most of my fellow Harvard students regarded Cravath as the quintessential competitive sweatshop — a characteristic that many of my peers actually found attractive.

Not me. I went elsewhere because, in those good old days, there was an elsewhere to go. Cravath is probably not much different from what it was back then. It’s just that most of the biglaw world has followed its example. As other top-50 firms tightened equity partner admission requirements, Cravath just kept doing what it had always done.

Why did firms emulate Cravath? Law student lore made it the best by some undisclosed criteria. In retrospect, I think money had a role. Even back in 1980, it was one of a very few firms where advancement to equity partner meant wealth that was immense, at least for a lawyer.

According to the first ever listing of the Am Law 50 in 1985, Cravath ranked 2nd in profits per partner with $635,000. For those behind it, the descent was steep: the #10 firm was under $400,000; #30 was $255,000; #50 was $170,000.

Cravath blazed a trail to riches that now accompany those who reach biglaw’s summit: average equity partner profits for the entire Am Law 100 exceeded $1.26 million last year.

But Cravath remains different. Most of biglaw moved to two-tier partnerships and eat-what-you-kill systems where a few key metrics — billings, billable hours, and leverage ratios — now determine individual equity partner compensation. Cravath’s single-tier model has reportedly remained lock-step: admission to its partnership means fixed financial rewards over an entire career without regard to individual books of business.

I don’t know if Cravath’s lawyers as a group are any happier than attorneys in other big firms. But the firm is now courting its Generation X’ers. According to the Wall Street Journal, partners in their late-30s and early-40s have “taken a more pro-active approach, building new relationships and handling much of the work that historically would have been taken on by partners in their 50s.” (WSJ, May 28, 2010, C3)

Referring to Cravath’s deferential culture in which young partners traditionally forwarded big deals to older colleagues, the article notes that senior partners have nurtured the new environment that gives younger lawyers earlier name recognition.

Why has it worked so far?

“The older attorneys didn’t mind, partly because the pay they received didn’t get cut as a result,” the Journal observes.

In other words, lock-step allows elders to step out of the spotlight without hits to their pocketbooks.

In the current biglaw world, Cravath’s experiment is risky. Will young partners remain loyal or use their newly gained client power to pursue financial self-interest elsewhere? Will Cravath be forced to modify or abandon lock-step so that it can retain young partners controlling clients and billings?

I don’t know. Equally significant, I suspect those most directly affected by what the article characterizes as a “sea change at one of the best-known and most conservative of white-shoe law firms” don’t know, either.

And what does it mean for new associates trying to understand how this affects the firm’s culture and their own career prospects?

Ah, the things I didn’t think to consider when I was a second-year law student looking for a job about which I knew almost nothing.

Fortunately, students are wiser now, right?

‘TIS THE SEASON

Posted on May 31, 2010 by thebellyofthebeast

As this year’s college seniors graduate, relentless pessimism about their fate abounds. I’m a glass half-full kind of guy, but it’s starting to get to me.

On May 15, the Wall Street Journal offered “A Lament for the Class of 2010.” After reciting the dreadful statistics — 17% of those age 20 to 24 don’t have a job and 2 million college graduates are unemployed — the author discussed the intense competition that new graduates face in seeking jobs as “waitresses, pizza delivery men, file clerks, bouncers, trainee busboys, assistant baristas, and interns at bodegas.”

A May 16 New York Times article provided a more dismal assessment. “Plan B: Skip College” gave graduates the bad news that they might have wasted their time and money on the degrees they’re now receiving. Great. Now you tell them.

Another Times article on May 29 described the unhappy plight of a 2005 NYU graduate who is $100,000 in debt and has few prospects.

And of course, everyone knows about the abuse heaped on the next generation of workers searching for a toe-hold on opportunity through the 21st century version of slave labor: unpaid internships.

Enough, already.

It’s true that many of the nation’s best and brightest are now receiving student loan repayment schedules along with their degrees. Even those who lack educational debt will feel the burden of an economy that deprives them of the psychological satisfaction that comes with a decent job.

Where’s the good news?

Today’s new graduates are rethinking traditionally safe career tracks that aren’t so safe anymore. The legal profession is an example.

In the 1960s, law school was a sanctuary. Deferments from compulsory military service meant three more years of academia instead of rice paddies and bullets in Vietnam. That was a pretty good deal.

When the draft ended, law school offered another kind of sanctuary — it was the last bastion of the liberal arts major who didn’t know what to do next. But it was an acceptable default solution. For a reasonable price, it offered the status of a profession and the realistic prospect of a fulfilling career.

Not anymore. Those looking to weather the current economic storm find that law school is an expensive place to seek shelter. Even worse, its earlier promises of future rewards — not only financial security, but also a satisfying career — have become suspect. In fact, many face a Hobson’s choice: surveys consistently show that today’s unhappiest lawyers work in big firms that pay the most.

That’s actually good news for the next generation of would-be attorneys. The sudden unreliability of the law as a safe path provides an opportunity to regroup. For those who are adequately informed about the experience and remain certain that it’s for them, the law is a sensible choice.

But for the rest, using law school as an excuse for three years of procrastination could be a costly mistake. With crushing debt loads, even many of those who get high-paying legal jobs will find a harsh reality that conflicts with their expectations and aspirations. From there, it’s a short trip to the ranks of unhappy, dissatisfied lawyers. We already have too many of those because the light didn’t dawn on them until they’d passed self-imposed points of no return.

So, recent graduates, as difficult as it may be, consider yourselves lucky. You’ll eventually find yourselves among the most creative, entrpreneurial generation in history because circumstances forced you to think outside the usual boxes as you pursued your passions.

I look forward to seeing the fruits of your efforts.

FOR YOUR VIEWING ENTERTAINMENT

Posted on May 26, 2010 by thebellyofthebeast

My recent interview on the Legal Broadcast Network is up and running at: http://thelegalbroadcastnetwork.squarespace.com/the-lbn-blog/2010/5/25/author-steven-harper-the-partnership.html

IT’S NOT JUST ME

Posted on May 25, 2010 by thebellyofthebeast

They acknowledge it’s a tough sell.

The co-chairman of a large, well-respected law firm has teamed with the former senior vice president and general counsel of General Electric to write an article that appeared in the May issue of The American Lawyer. The title says it all: “Noblesse Oblige: Firms must teach the younger generation what it means to be a true professional.” (http://www.law.harvard.edu/programs/plp/pdf/Noblesse_Oblige.pdf)

Here’s the first paragraph.

“Law firms have been moving from loosely managed associations of professionals to disciplined business organizations for more than a generation. This shift has caused an erosion of professional values (lawyers’ traditional commitment to enhancing society) and has increased the focus on economic return (firms’ relentless quest for escalating profits per partner).”

So how did that happen? Why doesn’t the younger generation already know what it means to be a true professional? Who have been their role models?

Better not to ask. Like me, the authors are members of the baby boomer generation that, as a group, bears responsiblity for a culture that some of us hope younger attorneys can change. In other words, do as we now say, not as too many of us did and still do.

Their suggestions start with the toughest job of all: persuading firm partners to move away from “inward-looking economics (more hours, more leverage, more profits, regardless of value)….”

For example, consider the concept of “productivity” — a bill of goods that self-styled legal consultants have sold to willing biglaw buyers for the past two decades. Increasing productivity has become a nice way of saying: “Get your billable hours up.” In the Great Recession, it has translated into layoffs so that survivors worked harder.

The authors’ approach would revolutionize most firms’ fundamental cultures. The resulting benefits would flow to partners, associates, the unrepresented, and the community.

But it all begins with a willingness to jettison the business school mentality of misguided metrics that has made profits per partner biglaw’s pervasive measuring stick — in substantial part because it has made most biglaw equity partners wealthy beyond their wildest law school dreams.

How will equity partners respond to the news that they’ll have to earn less now for the promise of longer-term non-economic gains to the profession and, I dare say, to their own improved psychological well-being?

Sophocles wrote in Antigone, “No one loves the messenger who brings bad news.”

Shakespeare’s formulations — subsequently condensed to “don’t kill the messenger” — were likewise on point: “Though it be honest, it is never good to bring bad news” (Antony and Cleopatra) and “Yet the first bringer of unwelcome news Hath but a losing office.” (Henry IV, Part 2.)

And when it comes to a willingness to hear unpleasant news about average equity partner profits, those of us familiar with the profession know too well the pervasive presence of biglaw’s equivalents to Alice in Wonderland’s Queen of Hearts:

“Off with their heads!”

2,000 HOURS

Posted on May 23, 2010 by thebellyofthebeast

Why is Yale an outlier? Last year, only 35% of its graduates started their careers in large firms. An equal number accepted judicial clerkships; many will eventually join biglaw for a while. Still, Yale has a longstanding pattern of trailing peer institutions that, until this year, routinely placed more than half of their graduating classes directly into big firms.

One explanation is Yale’s public service tradition. Recently, I stumbled onto another: the school encourages candor about associate life in biglaw.

For many reasons — including the quest for perceived status, the urgency of educational loan repayment schedules, and the promise of future riches — most graduates seek initial employment in big firms with stated minimum annual billable hour requirements. Unfortunately, students view such numbers as abstractions.

They don’t pause to consider what it means to say that 2,000 hours has replaced 1,800 as a critical evaluation metric. (A 1958 ABA pamphlet suggested 1,300 as an appropriate yearly goal. Seriously. That would qualify as part-time, non-partner track employment today.)

Yale publishes a brochure that breathes life into the numbers. “The Truth About The Billable Hour” outlines hypothetical workdays and should be required reading for any prospective lawyer.(http://www.law.yale.edu/documents/pdf/CDO_Public/cdo-billable_hour.pdf)

When commuting, lunch, and bathroom breaks get included, the concept of billing 2,000 client hours assumes new meaning. It also provides perspective on legal consultant Hildebrandt Baker Robbins’s observation in its 2010 Client Advisory to our profession:

“The high point of law firm productivity was in the late 1990s, when average annual billable hours for associates in many firms were hitting 2,300 to 2,500.”

Astronomical billable hours are what Hildebrandt and others in its cottage industry told us was “productivity.” So guess what happened after they advised firms to increase it?

According to Hildebrandt in 2010: “The negative growth in productivity, even during the ‘boom’ years preceding the current downturn when demand was growing at a healthy rate, was driven to some extent by associate pushback on the unsustainable billable hour requirements at many firms.”

“Associate pushback” is a euphemism for skyrocketing attrition rates. Before the Great Recession, average associate attrition from the nation’s largest firms in 2007 had risen to 70% of that year’s new hires. (NALP published the data in its 2008 “Update on Associate Attrition.”) No one cares about that crisis level of turnover now because the demand for new graduates has collapsed and those who have jobs aren’t going anywhere soon — at least, voluntarily.

But if recent surveys are accurate, relatively few of the newly employed winners will find career satisfaction in their current firms. So what will happen after they finish repaying their school loans?

Like earlier crises confronting the profession, we’ll probably ignore that one when we get to it, too.

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The Belly of the Beast

Steven J. Harper, Esq.

BIGLAW’S GLASS IS 44% FULL

ARE THE U.S. NEWS RANKINGS BIGLAW’S BLACK SWAN?

ABOUT THOSE BIGLAW ASSOCIATE SATISFACTION SURVEYS….

BIGLAW AND THE BLACK SWAN

INTERVIEWING SEASON — THE MORE THINGS CHANGE…

ALONG CAME LAW FIRM MANAGEMENT CONSULTANTS

THE INTRACTABLE BILLABLE HOUR

BLAGO, CLEMENS, AND LAWYERS

OUTSOURCING: THE BEGINNING OF A NEW AND IMPROVED BIGLAW BUSINESS MODEL?

ON THE BEACH

MIRED IN METRICS? HAVE SOME MORE!

“SILENT GRIEF” – “DEADLY SERIOUS” FOLLOW-UP

STILL #1

DEADLY SERIOUS

#1

INDULGE ME

WHERE HAVE ALL THE MENTORS GONE?

YOGI BERRA’S WISDOM

SUMMER ASSOCIATES TAKE NOTE: INADVERTENT REVELATIONS

VACATION? WHAT’S THAT?

WHO’S LAZY?

OTHERWISE OCCUPIED FOR A TIME

FOR BIGLAW SUMMER ASSOCIATES ONLY…

BABY BOOMERS STRIKE AGAIN

WEIRD TILTS AT THE RANKINGS WINDMILL

A BETTER ALTERNATIVE OR A LEAP FROM THE FRYING PAN?

‘TIS THE SEASON

FOR YOUR VIEWING ENTERTAINMENT

IT’S NOT JUST ME

2,000 HOURS

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