Being chastised for using the apparently un-Texan term “nincompoop” I have switched to the more general “Ninnies” in an attempt to keep this dialog above board. So now we can dive into my attack of Susan’s response, to Ryan’s ramblings on Susan’s reply to Jordan’s retort to my critique of Jordan’s original gauntlet-tossing scribe.

With all due respect to my colleagues, this is not a business model problem. The model doesn’t matter. What this is is a Management (and leadership) Problem. Law firm owners seem to think they should have a say in every management and operational decision. No matter the business model, a successful company will not give every owner business decision authority. Susan’s reference to the recently converted GC goes to the core of this. His frustrations center on the inability of even a progressive firm to make a decision.

I have a saying that if you asked a law firm to take a poop (I had to work that word back in), they would form a committee of owners and spend 12 months developing and issuing a report that says pooping is a good idea and the firm should support any owners who make poop requests. The committee wouldn’t actually approve a specific bowel movement request, but would instead suggest a method for how any request to make a ‘movement’ might be approved.

In a slight admission of some validity to the bitch about the partnership business model, it may be conducive to poor management decision making. However, I have seen firms using LLC or professional corporation models with all of the exact same problems. The only difference is they call owners shareholders instead of partners.

So I guess the five of us are basically arguing about the precise way in which law firms are screwed. This started as a discussion about associates’ expectations about becoming owners. Built in to those unrealistic expectations is that once they become owners, they will also be able to slow down the decision making process for a firm.

Of course we should expect individual business owners to want to maximize their own personal returns, but any business that lets those agendas drive overall decisions, or worse, stop decisions from being made, is nuts.

The bottom-line here is that I am right.

PS: I vote Jordan buys.

from Susan Hackett‘s comment on yesterday’s post.

Image [CC] – Matthias Weinberger

I was chatting yesterday with a great guy who’s been in-house as a GC for most of his professional life, and has recently affiliated with a law firm. He loves this firm and he loves the people he works with, but his one frustration is the slow pace of decision-making/change due to the business model for operations in the firm – even in a firm that is as progressive as the one he’s joined up with. Moving anything through a large firm partnership today is glacial, it’s inefficient, and the process is overwhelmed by the partnership’s inability to nimbly execute (think: turning an oil tanker in a bathtub).

So my point is that even if the best partners in the greatest firms have embraced super-valuable ideas to pursue transformative business strategy, their partnership model will continue to throw up operational barriers to their ability to implement change.

As Jordan notes, in larger firms, the partnership model doesn’t motivate behaviors as it might have been envisioned to do in a smaller firm environment. Instead, it creates a super-class of owners whose sole common ground is the maintenance of the status quo and rewarding short term financial returns. They hold the power to make decisions for the whole, but they don’t operate in the interests of the whole – whether the whole is defined as the entity’s current sustainability and future prospects or the long-term development and interests of the majority of firm workers.

I don’t know if this is a result of the law firm partnership business model run amok in larger firms, or just (as my Grandma used to say) “Plain Ol’ Greed” too long rewarded. But the fact is that partnership models in large firms punish and frustrate the efforts of strong leaders to execute better business decisions for the firm’s long-term health. And that includes better decisions about hiring, training, cultivating rising talent, and compensation: all based on value to the firm and to clients, and connecting performance to business goals.

Large firm partnership models allow for “super minority” packs of powerful, self-interested owners to hold captive the larger interests of firm and its future constituents. I live and work in the Washington, DC area – there’s an excellent example of such irrational dysfunction under a dome just a hop and a skip down the road from my office.

In the grand tradition of bad prison movie “wisdom”, I’m walking confidently into the yard and picking a fight with the biggest meanest gang I see, in this case, Toby, Jordan, and Susan.

With all due respect, you are all missing the point.  The problem is not what you call non-partners, or how you recruit them, or train them, or whether they exist at all.  The problem is the partnership itself.

I attended a conference last year in which a panel was discussing how they would design a firm if they were starting from scratch today.  Over an hour into the conversation someone asked, “What about a Limited Liability Partnership of owners?”  Two of the three panelists were partners in their firms, but when everyone was done laughing, they all agreed that partnership is a terrible business model and no one would build a firm that way today if given the choice.

Look at the new Alternative Business Structures in the UK and Australia, that allow firms to pursue outside investors and allow non-attorneys to be owners.  Admittedly, I haven’t been following too closely, but I haven’t heard of any investors clamoring to stick their money in traditional LLP law firms. If you look at new firms, and non-firms providing legal services, that are nipping at the heels of BigLaw, how many of them have a partnership structure? Why would they? How much time does Axiom spend trying to figure out what to call their non-partner-track attorneys?

Maybe the reason we are struggling to define non-partners, is because Partnership itself is limiting way beyond just liability.

OK. I’m ready to take my beating now…

Puzzle me this: If a lawyer conversed with a client in front of a law enforcement representative, would the conversation be privileged?

Answer: No.

Conversations held in the presence of any third party, let alone one representing the government, would constitute a waiver of privilege.

Previously on 3Geeks (and perhaps too many times) we have tackled the subject of the use of free email services and how that waives privilege. But now the NSA has upped the ante on the topic, basically spreading it to all email.

Unless you live under a rock with no wifi, you will be aware that the NSA is tracking global email communications and storing them in Utah (a nice place to visit). So, as a lawyer should you now expect that a government agency is obtaining copies of all of your confidential client communications? If so, you might want to ….

Oh never mind. If we actually took this rule seriously, all lawyers would be encrypting their email communications. And we know they are not and no one is asking them to do so.

I withdraw the statement.

Jordan and I will need to add Susan Hackett to our traveling road show as she has now entered the fray. Below Susan responds to Jordan’s critique of my critique of his original post. (Just writing that makes me kind of dizzy).

 See if you can follow the bouncing ball in this interesting debate.

 Thanks to Susan for adding to the conversation.

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).

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.

This post originally appeared on the LexisNexis UK Future of Law Blog under the title Stealing the market: The degree that now has infinite value.

Image [cc] – doozle

On 17 October I saw Daniel B. Rodriguez, Dean of the Northwestern University School of Law, speak at the ARK Knowledge Management in the Legal Profession conference.  His presentation explained how some of the challenges that we are experiencing in law firms have trickled down to the law schools, and he gave some examples of how they are adjusting their approach and curricula to better prepare their students for the “new normal”.  One of the solutions he described was partnering with other schools to provide joint degrees. Since the economic downturn, Northwestern has reduced the number of traditional JD-only students, but has increased the size of their JD/MBA dual degree program. He also expressed an interest in partnering with a medical school to develop a JD/MD curriculum, and he made a passing mention of possibly doing something with “the humanities”.

I wholeheartedly applaud the joint degree approach. In my opinion, there is a severe lack of basic business understanding among lawyers. The fact that the phrase “not all revenue is profitable” often requires a lengthy explanation is a good indication that attorneys need more business training.  The JD/MD seems a little less immediately applicable, except of course to medical and health care law, but anything that gets attorneys to see how other people think is probably a good thing.  Which brings me to “the humanities”.  As a former music major, I can say the JD/MFA in vocal performance, or piano pedagogy, will probably have limited application; however, there is joint degree program that I believe could provide infinite value to attorneys, firms, and clients: a JD/MA in Design.

In BigLaw, the phrase “Who else is doing this?” is so common a response to any new idea, that it has officially become cliché.  We have a tendency to focus heavily on what our competitors are doing. Unfortunately, we only perceive other BigLaw firms as our direct competitors.  We benchmark our businesses against similarly sized firms that think, act, and are run, very much like we are.  Meanwhile, there are a number of firms, and non-firms, providing legal services that are so far beneath our radar that they might as well be underground and they are beginning to get traction with our client base.  Unless we are careful, they will eat away at that base from the bottom, until we are fighting over the last scraps of global legal work that these smaller firms can’t handle.  But of course, by that point, they’ll be able to handle the big global work too.
There are numerous precedents for this kind of race to the top of the ladder, while an unexpected or unrecognized competitor dismantles the ladder from the bottom up.  Most famously in the US airline industry, where traditional airlines bench-marked exclusively against each other while low cost airlines like Southwest and JetBlue stole their market from the bottom.  

Incidentally, the epithet “low cost airline” is a bit of a misnomer.  While these companies do indeed offer lower priced tickets than traditional airlines, they have stolen much of the market by out-designing their predecessors. They designed new customer experiences, and new business models, while the old guard was focused on what all of other big airlines were doing.  Frankly, these “low cost” airlines have a better product that many consumers prefer, and they happen to deliver it at a much better price. And today, there are only two US airlines bigger than Southwest. They are the last two standing after a series of bankruptcies and mergers.

I think BigLaw faces a similar fate – not tomorrow, or next week, or next year, but that future is out there waiting for us – unless we begin to design new legal products, new customer experiences, and new business models that make those products and experiences profitable. We need to fight for the bottom and the middle of the market, if we hope to continue to provide our premium services at the top. I would probably start by hiring people with joint JD and design degrees, or even, maybe just the design degrees.

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.

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.

AALL President, Steven P. Anderson is looking for ways that law libraries and law librarians can communicate the value they bring to their institutions and communities. Anderson’s idea is to go beyond simply talking about the value, and actually create a report that presents the values through metrics and outcomes. Having sat with Steve over the past few years on the AALL Executive Board, I can tell you that this is something that he passionately believes is needed in the profession, and that AALL is the right association to commission the research needed to create the report. Anderson is putting his passion to practice and has issued an RFP to the research community to turn this idea into a report. Responses to the RFP are due by December 11, 2013 and a selection is to be made by AALL later in December.

The press release is below with more information.

                                         
 PRESS RELEASE For Immediate Release
Contact: Kate Hagan
312-205-8016 or Khagan@aall.org
 

AALL Issues Request for Law Library Value Report Proposals

Chicago 10/28/2013—The American Association of Law Libraries (AALL) today issued a request for proposal to commission a research-based report on the important role law libraries play in today’s legal community. 

When complete, the report should offer law librarians and the institutions and businesses they serve important metrics that can help them calculate the return on investment law libraries provide. 

“The objective of this project is to  produce a comprehensive study of the return on investment and the consequent value proposition that law libraries provide, while also equipping them with methodologies and best practices to employ to communicate this value to the appropriate people or entities within their institution,” said AALL President Steven P. Anderson.

The last several years have brought fundamental changes to the legal profession and business of law. These changes have served as an impetus for law libraries to transform their operations and services in varied and profound ways—and it is now imperative that law libraries demonstrate the value they bring in concise, measurable ways.

Specifically, the report research will identify key implications for all types of law libraries and:

·     Include quantitative and qualitative methods used to demonstrate law libraries’ value
·     Define value in terms of the institution’s goals, not the library’s goals.
·     Identify best practices for demonstrating value

The response deadline is Dec. 11, 2013. A provider will be selected by Dec. 20, with a contract start date of Jan. 1, 2014. For more on candidate qualifications, submission guidelines and other information, please visit http://www.aallnet.org/Documents/Leadership-Governance/Committees/roi-rfp.pdf.

About AALL

The American Association of Law Libraries was founded in 1906 to promote law libraries’ value to the legal and public communities; foster the law librarianship profession and provide leadership in the legal information field. With nearly 5,000 members, AALL represents law librarians and related professionals who are affiliated with law firms; law schools; corporate legal departments; courts; and local, state and federal government agencies. For more information, visit AALLNET.org.
 
Paper
Image [cc] pearlsareanuisance

I got a note from Peter Martin, the Jane M.G. Foster Professor of Law, Emeritus, and former dean, Cornell Law School, letting me know that he was starting a blog as a result of the work he was doing with the annual revision of Introduction to Basic Legal Citation. Peter, along with Tom Bruce, founded Cornell’s Legal Information Institute (LII) way back in 1992, and has been a staunch advocate of access to legal information, as well as promoting the consistency, accuracy, and non-vendor bias of legal citation.

Peter Martin’s new blog, Citing Legally, begins with a post on how States have claimed copyright on their codified and published works, and walks the reader through an example of how the State of Mississippi has used copyright claims to allow a private legal publisher to control the “official” statutes while attempting to shut out another publisher using “unofficial” compilations.

According to the Scope and Purpose of Citing Legally, the blog will cover the interesting issues that Peter Martin has uncovered while working on the annual revision. In his own words:

The aim will be to draw attention to important differences in practice among jurisdictions and distinctive approaches – from the commendable to the lamentable, the new and novel to the archaic. Like the reference from which it springs the focus here will be on how judges and lawyers cite legal authority rather than law journal norms.

I’m looking forward to reading more from Peter Martin on the issues he finds on legal citation and all the nuances and peculiarities that come along with the topic. Go check out Citing Legally and follow along with me.