10/31/13

Sounds of the Echo Chamber

Image [cc] Grand Canyon NPS
My posts have subsided a bit lately as I felt an echo chamber growing and started questioning a lot of stuff I was reading as either echoes or reiterations of prior statements. Some of these echoes are new angles on old subjects, but they merely restate the basic premise: BigLaw is broken and doomed. I feel lately, the echos are drowning out critical thinking.

And now I shall unfairly pick on my good friend Jordan Furlong.*

His recent post on "The decline of the associate and the rise of the employee lawyer" struck a nerve with me. It started with this phrase:
We’re now on the verge of entire associate classes whose only purpose and value is to generate leveraged work. They are not meant to be future partners: they are temporary employees meant to sustain the practices of current partners for as long as those partners need them.
The unstated presumption here is that the proper purpose of an associate class is being on a path to partnership. From my point of view the presumption that all workers should be on a path to ownership is nuts. Which is not to say that generating profit is the workers' "only purpose". Quite the contrary, I think their purpose should be providing value to clients. But that effort needs to be profitable or a firm will soon go out of business.

What is wrong with hiring talented lawyers to be valued, potentially long-term employees and not future owners? True - firms need to nurture future owners, but doing it under a false pretense that every associate could or should some day be an owner is part of the problem. The history of this approach has shown that not many make it to that level. And it appears that even fewer may make it in the future. But is that bad?

I don't think so. With any business, some talent is suited for working and some is suited for business development. Do we pick at clients for hiring in-house lawyers as employees who are "generating leveraged work?" I think not. I recently heard about one BigLaw firm that created a non-partner track for associates, thinking they would have to go outside to fill this track. So far they have not. What this tells me is that many associates "just want to practice law" and not be under pressure to become an owner. This up-or-out pressure turns a lot of excellent lawyers out or away from law firms. Why can't a talented lawyer become a world expert on a legal subject without aspiring to be an owner?

Another echo chamber comment I read recently had to do with how bad the billable hour is - since it encourages associates to bill time. Say what? Last time I checked, most employers encourage their workers to ... work. And the more they work, the better the employer likes it. Some employers even pay bonuses for putting in extra effort. It's not the billable hour, but instead the lack of management oversight reigning in effort that doesn't deliver value to clients that is the problem.  Bashing BigLaw for rewarding extra effort seems misplaced to me. But it is very easy to do. I think it is more appropriate to bash BigLaw for rewarding poor effort. If associates are bringing value with every hour they work - I don't see a problem in rewarding that effort.

And now back to the Echo ...


* We have a history of trading barbs.

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8 comments:

David Whelan said...

It's a perspective that is commonly discussed in libraries and, I expect, in any organizations with relatively flat hierarchies. Thanks for outlining it from the large firm perspective. For example, reference librarians don't all aspire to manage, many just want to be excellent reference librarians. Assuming everyone is on a ladder to ownership or management means also assuming that those people have reason to be successful. But someone who goes to law school may never be a rainmaker and may not have the energy or personality to lead practice groups. Putting them in those roles isn't necessarily positive for the firm either. Other flat organizations - again, libraries for one - have made this transition and encouraged subject matter expertise vertically, and to the extent possible, rewarded it rather than success through promotion or forcing people to move on.

Steven B. Levy, author of Legal Project Management said...

There are two other ways to become an owner of sorts, ways that other industries have pioneered well. One is through stock grants, which need not be public offerings allowing non-lawyers to own part of a firm. The other is profit sharing. (Non-public stock is really about profit sharing anyway.) The bigfoot owners - i.e., equity partners - take the biggest risks and earn the biggest rewards, but participating in a profit-sharing program can be a powerful incentive to focus on profit rather than revenue.

Jason said...

I've asked this question before, but how is the non-partner track associate position new? I've known plenty of firms over the last 20 years that have had staff-level associates. Is it just a Big Law thing, so now it's a big deal? Or is it just the need to make every change a big deal, like the news that LeClair Ryan was essentially offloading 400 lawyers to UnitedLex in an ediscovery partnership (rather than continuing to use multiple vendors to accomplish the same tasks)?

Jordan Furlong said...

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.

Jordan Furlong said...

Part 2: 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.

James Hannigan said...

Jordan: Where is the impression made in Greenberg's announcement that the new roles wouldn't receive training? Do you mean much narrower training than associates would normally receive?

Jordan Furlong said...

James, my original post tackled two subjects: the nature of Greenberg's new program (as gleaned from media reports) and the transition away from "associates" in law firms towards "employees" in law firms. I was careful to separate these subjects halfway through the post by saying, essentially, that we don't have nearly enough data about Greenberg's program to do more than speculate about it, which I don't like doing. My comments about training were confined to the latter subject -- I don't know what Greenberg intends insofar as training its lawyers.

My basic point is this: regardless of what Greenberg's new internship program involves (and I'm largely neutral about the program overall), the introduction of "interns" suggests a potential larger trend in which "associates" give way to "employees" in midsize and large law firms -- and that if this shift does come to pass, it will have serious implications for law firm hiring and lawyer training across the board.

Toby Brown said...

My 2 cents on the training issue:

For "alternative staffing" to be sustainable, advancement will have to be part of the program. Thus it needs to be a "track" and not a position. Advancement comes with through training.

The other reason I beleive law firms will focus on training for these roles is - profit. The quicker you advance the skill level of these people, the more valuable they will be to clients and the more revenue they will generate.

Some firms will experiment with different approaches - like Greenberg is now. But ultimately, I think these positions will evolve into employee roles. Valued employees, with reasonable comp and benefits and professional development - but still employees.

 

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