10/31/13

Jordan Responds to Toby's Challenge

Image [cc] Shane Trueblood
Jordan Furlong and I need to take our show on the road. In our usual "Dan & Jane" fashion, we inadvertently tackled another topic. My original post threw down the gauntlet and Jordan, in his always well-stated fashion, answered the call. Below is his response - with a promise of more to come.

Thanks Jordan!

Update 11-4-13: Jordan provides a more complete response on his blog here.

Toby, you ignorant -- oh, wait, we already did that.

As usual, we agree on a couple of points. One is that law firm associates should not universally and presumptively be considered future partners. But we should also be clear about one thing: that very presumption has long been part and parcel of the underlying (and mostly unstated) promise law firms make when they offer lawyers the position of associate. 

Fundamentally, "associate" status represents full-time law firm employment in a salaried capacity. But there's always been something more: it's also a Golden Ticket for possible admission to law firm partnership. The beauty of this system, from the law firm's perspective, has long been that "associate" status carries the potential of ascendance to a higher level, with no guarantee that such ascendance will ever happen. It deliberately confuses possibility with likelihood. Will every associate be a partner someday? Of course not. But could any associate be a partner someday? Yes. That's the promise, the lure, the ticket -- that's what gives the title "associate" an extra shine. 

That's one of the reasons Greenberg's shift is noteworthy: by taking away the word "associate" from most non-partner lawyers (if that is in fact the outcome), the firm is essentially tearing up the Golden Ticket. It is making clear: you will never be a partner at this firm. Insofar as that makes explicit the implicit truth that we all know -- that many are called to partnership, but few are chosen -- that's actually a good thing.

Our second point of agreement is that law firms should indeed be hiring talented lawyers to be valued, potentially long-term, non-owning employees. Where we might disagree is over what we mean by "hiring." 

A major problem in law firms, as you suggest, is that firms are hiring and paying these lawyers to work stupidly. Well over 90% of the value firms compensate in their partners lies in developing business and billing hours. For lawyers who aren't partners and don't aspire to be, that eliminates the first category and leaves 100% of their value in producing billable hours. 

As I said in my post: if all you want out of a lawyer is the permanent ongoing production of work that can be billed to a client, that's fine. But why would you hire someone as a full-time employee to do that? From the point of view of client value, which is what we're discussing now, that work can be sourced from a temp lawyer, an LPO, an expert system, or elsewhere -- and none of these sources are nearly as expensive to the client (or as traditionally profitable to the law firm) as a full-time associate.

So that's our common ground, and as usual, it's pretty sizeable. :-) Because this comment is so long, though, I need to make the rest of it a separate entry.

 I think our fundamental disagreement may be whether there's really much purpose anymore in having associate lawyers in a law firm who aren't destined for ownership. I don't think there is, whereas I think you may. 

"Many associates 'just want to practice law' and not be under pressure to become an owner," is how you describe it -- and I'm sure that's true. I'm happy for any associates if that's what they want. I'd like a pony, too, but nobody's going to give me one anytime soon. If someone is a lawyer in a law firm and doesn't want to be a partner (and the firm agrees), then that person is simply an employee -- indistinguishable from secretaries, law clerks and IT people. But being an employee in the 21st century is a position with little stability and almost no leverage. Employees can expect to be paid relatively poorly and to be considered largely fungible. And that's exactly where many "law firm associates" who don't want to be partners are headed, in a hurry.

If it were up to me, the title of "associate" would be reserved for a lawyer in a law firm who is universally expected to become an owner at a specified point in the future. I like the word "associate" -- it has history, power, and gravitas. Law firms have cheapened it, however, over the past few decades by giving the title to people with no desire or expectation of partnership. An "associate" ought to mean "future firm leader." If a lawyer does not want that designation and the responsibilities it carries, he or she should not expect the rewards and security that come with it.

Law firms still need lawyers (and others) to produce work that delivers client value and can be billed accordingly. I don't see this ever changing. What will change is where these lawyers (and others) are located, how they work, what they're paid, what benefits they receive, how much job security they have, and so forth -- these will all be different, and often less attractive, for most of these lawyers than in the past. Full-time salaried positions in law firms will be scarce and will be reserved for lawyers who are or will soon become core members of the firm.

In that regard, I actually think Greenberg's approach is sound -- if that's where they're headed. The problem, and it's a major one, is that it provides law firms with an excuse to stop providing "training" to all their new lawyers. One of the major benefits of the traditional system was that every law firm associate, even the ones who clearly were short-term entities, received in-firm experience, exposure and training for as long as they were there. That training may not have been all that great, in most cases, but it was assuredly better than nothing. And "nothing" is what thousands of new lawyers are potentially poised to get under a system like the one described above. 

If and as we move towards a system of fewer law firm associates, a massive training/experience shortfall is going to manifest itself for the legal profession, and this will cause problems for all these law firms sooner or later. That's the topic I hope to tackle next at Law21.

Bookmark and Share

2 comments:

Susan Hackett said...

I'm with you both on many of the points raised, but have to say I'm most interested in two elements here that Jordan addresses near the end of his post and that he's promised to cover at Law21:

1.) the issue of training (or should I say "lack of training") in most firms because partners are so busy performing as much work as they can themselves (and sometimes hoarding hours and clients that should be served by others who are more junior) that they take no time to invest in the next generations of lawyers who will succeed them in the firm at EVERY level.

and

2.) the issue of the pipeline of legal talent - on which both firms and clients rely, which is only going to become a more acute concern as the boomers continue to move slowly toward retirement. There will be far fewer lawyers with significant experience and carefully cultivated training in the pipeline behind each successive class for the future if things don't change soon.

As a result, I think we have to give Greenberg Traurig (GT) more credit than Jordan suggests is due. At least they're actually training new lawyers in a systematic way (regardless of whether they're creating the future class of partners or not). Most firms are moving their mouths to claim that they're raising their associates and future partners up and helping them prepare for the challenges of sophisticated practice, but they aren't. And thus, the promise or offer made to those new lawyers who invest their lives in firms, as well as the promise or offer made to clients that the firm has a well-prepared bench who are properly prepared to handle their work appropriately, isn't worth the paper their marketing brochures are written on.

I'll offer up my regular harping on behalf of the client perspective in all this, and remind folks that many clients are watching closely what firms are and aren't doing to respond to change: not just open their minds to new thinking, but act to implement new ways of working. While the new class of employed lawyers that GT is raising up here are presumed by Jordan and perhaps others to be a non-starter in terms of value (suggesting it would be better/faster/cheaper to outsource than to build your own more expensive bench of employed talent), what GT is essentially creating here is a team of in-house counsel... clients carrying the same designation of employed lawyers working in their company's businesses may be a little surprised to hear the presumption here that employed lawyers are likely to lack the ability to deliver value as well as outsourced teams.

If anybody is likely to recognize and wish to discuss how to leverage a team of carefully trained and supervised law firm in-house lawyers, perhaps it's the in-house counsel who work in the clients firms like GT serve. Maybe GT isn't thinking like a law firm here; maybe GT is thinking like a client. In assessing their program, take a minute to look at it through the lens of the client's business model, rather than the mis-aligned lens that law firms often use to assess what's of value to them (while not focusing on what's of value to their clients).

(PLEASE READ ON FOR THE REST OF THE POST BELOW)

Susan Hackett said...

(CONTINUED)

I'm not ready to jump to the conclusion that clients won't value this new class of GT lawyers. They may not be motivated or trained to become the next generation of partners as we've known them in big firms, but that may not be such a bad thing. Why would anyone want to build their future firm based on the motivations and training that has left many firms with a teetering foundation in today's competitive market? Maybe GT is building something that they will profit handsomely from because it provides what clients want to buy rather than what old-line firm partners want to sell.

Let's remember who are the responsible parties for in-elastically driving up rates over the last several decades to the level that there is no longer any correlation between cost and value for clients of larger firms: it wasn't the servicing or employed lawyers (who clients LOVE!); it was untrained baby lawyers (who cost too much because firms hired 50 of them every year with the assumption that attrition would weed out 45 of them before they returned the firm's and clients' investment by becoming partners) and partners seeking ever-higher PPP.

Perhaps we should give GT credit for trying something new (more than most of its peers have done), and for exerting significant effort to train those in the firm serving clients with more efficiently valued services. I'm going to wait to see how that new class of lawyers' services are actually packaged and priced (you reading me on this one, Toby? :-) before I assume that the cost and value of those carefully trained lawyers is not as good for clients as the cost and value of lawyers in comparable non-law-firm service providers (or the cost and value of those associates who are largely not being developed in firms without programs like this).

Maybe GT will fail. Goodness knows, there are things I would have done differently if I was running the project.

But I'm not. And Huzzah! to GT for trying something new. There are a lot of smart people working there, and there's a reason they have a hugely successful law firm and I don't. So I'm in favor of giving them the benefit of the doubt and I'd encourage those of us who are interested in pushing forward firms to try new ideas to step back from our natural tendency to be hyper-critical about the perceived flaws in the idea to give the firm room to see if what's good in this project can move law firm training and client service options deploying new lawyers forward in the current desert of options for many new lawyers.

-Susan

 

© 2014, All Rights Reserved.