7 Habits of Highly Effective Partners

Actually it's 8; but doing excellent work is presumed and not counted on the list by this author.

I'm sure many equity partners fall far short in following these tips. These are all aspects of managing and building a business and obviously each lawyer brings a different strength to the table (aside from his or her practice expertise); but if you consider them aspirational, it's a good road map for success (i.e. pay for yourself, pay for someone else, cross sell, develop associates and staff, play nice, help manage the firm, represent the firm in the community).

At the end of the article, this author suggests that non-equity partner should not be a long term status (at least not for a large number of attorneys). He suggests that allowing non-equity ranks to get too large creates the perception that there is a log jam for advancement at the firm. It may even breed resentment (non-equity partners who don't believe they are being recognized enough and equity partners who don't think the non-equity partners are carrying enough weight).

I'm not sure I agree with this analysis. Other businesses have figured out how to segment senior staff into ownership and non-ownership categories. The whole work/life balance movement presumes that different professionals have different priorities in life (but that doesn't mean that non-owners can't make an important and substantial contribution to the firm's bottom line).

Upping the Partner Ante

For partners with portable business, this may be a good time to shop your practice. There are many hungry buyers out there; but be aware that the bar is being raised at most firms. A legal recruiter asserts that firms which wanted 500K now want 750K in portable business and firms that wanted a million now want 1.5 million. In addition, firms are looking closer at the portability of the business to make sure that a lateral partner can deliver and that the work is current.

ABA Rule Change May Ease Partner Movement

The ABA will be considering a change in the Model Rules of Professional Conduct when it meets in mid-February. The change would make it easier for partners to move laterally. In essence, the new rule allows firms to avoid conflicts of interest by screening a lateral partner from matters at the new firm.

This seems to be in keeping with the times though there is no guarantee that the measure will either pass or be adopted by every state. Regardless of the outcome, there will be a lot of partner movement in 2009. My colleague Dan Binstock has written a very good article outlining why this is the case. There is also an article in today's Wall Street Journal about firms tapping partners for larger capital contributions (subscription req.) This seems likely to fuel further unrest. May we all live in interesting times!

Keep Asking Questions

In my latest article in Massachusetts Lawyers Weekly (In Making a Lateral Move, Look Before You Leap ), I have addressed some of the important questions that you should be asking yourself before contemplating a lateral move.

As it turns out, asking a lot of questions (at least about firm finances), is not something that most partners have done in the past; but that seems to be changing as more firms are failing.

Swarm Theory

Just read a mind-blowing article from David Bilinsky of Thoughtful Legal Management. He is a fellow new blogger (he just got off the ground last month). Already he has some "buzz."

I say "buzz" because one of his last entries concerns bees (yes, the "buzzing" kind) and the implications such "hive-mind" problem solving may have for humankind.

The idea is that humans can perhaps better breakdown very complex tasks by giving a broader range of individuals a very few (but well-chosen) tasks, and letting a sort of "ground-up" management style lead to great solutions. Sounds weird, but I like it.

Click here to see a fuller exposition on the concept.

In the meantime, keep bzzzy during these last few days of the "dog days of Summer"!!!!

"Danger, Will Robinson!"--Baby Boomers About To Retire En Masse

I mentioned in an earlier blog the huge opportunities and challenges facing law firms with the impending baby boomer exodus from the leadership ranks. I thought I would expand on that theme here.

That's right, you heard me--the long-standing complaint among senior associates and junior partners that they have no role in leading firms is going to radically change in the next few years. Take a look at the bios of the leaders in firms--that grey should be telling you something. That, coupled with several years of very healthy profits for equity partners (meaning less incentive to hang on and keep billing), and moreover combined with the heightened expectations of us all for long and fulfilling retirements, will all work together to create a single and compelling phenomenon: an impending tsunami of retirements that is going to rock the leadership of firms great and small. Click here if you don't believe me.

As the referenced article advises, most law firms are blissfully unaware of the potentially crippling effect of management ranks being felled through retirement. Those that can begin to plan ahead and really take stock of their intellectual capital (meaning of course their junior and mid-level partnership ranks) and begin to groom them for real leadership, will weather the storm. Those that won't will be scrambling to import high-ranking talent from other firms to bridge the gap.

The looming crisis could even be bad enough to force many more firms to adopt corporate-style leadership with true CEOs and all the rest (possibly even, gasp, non-attorney management!). It will be something to watch, believe me. It will also be a feeding frenzy in the recruiting world.

Mark my words, firms stuck in old-style, top-down management styles that don't account for the development and grooming of their talent are going to be in for a shock. Further, all these factors combined with the tendency even of current leadership to think only of their own careers with no regard for the future of firms, is going to mean huge opportunities for some--and yet further rounds of mergers. Also, even those firms that have been doing a good job at bringing up good talent are going to find even greater pressures in terms of retention--good leaders are GOING to be even more aggressively recruited.

The smart money is going to be on firms that combine solid retention strategies with agressive recruiting practices and close collaberation with professional headhunters.

Bright young partners be on notice: You may be far closer in line for the 'throne' than you think!

You heard it here first, folks!

Pete Smith, Esq.

BCG Attorney Search

Is Less Equity Such a Bad Thing?

Law.com reports on a recent study released by Citigroup Private Bank. The study suggests that rising law firm expenses (higher associate salaries and rents) will create upward pressure on billable hours and downward movement on the number of partners who are invited into the equity ranks. One law firm consultant quoted in the article seems to think this is all bad news.

"I think that making it harder to become an equity partner than it has been in the past may actually work to the detriment of some firms, because associates coming into these firms looking ahead to the prospect of becoming an equity partner may throw up their hands and say 'I'll never make equity partner, why should I even try?'"

The reality, however, is that most associates at major firms already do not expect to make equity partner and many have no ambition of doing so. While upward pressure on billable hours is a scary thought, I'm not sure that less equity is such a bad thing. The accounting firms have already figured out that professionals need ongoing opportunities to advance their careers. So a system which provides lawyers with only one or two chances for advancement (non-equity partner and then equity partner) no longer makes sense.

I speak with so many young associates who would happily trade salary for a chance to advance more slowly. If firms would insert several layers of promotion into their ranks, then lawyers would have more opportunity to decide whether to go for maximum income (through a series of promotions) or to stick with a balance between good work, good compensation, and livable hours. Under such a system, an individual lawyer could decide to go through the hurdles necessary to achieve counsel and senior counsel status but not do what it takes to get to non-equity I, non-equity II or equity partner status (and still hold a good job!) Too unrealistic? Only if you rely too much on precedent to make management decisions.

Wake Up! PPEP Matters!

I have to write this blog entry to get some of the angst out of my system. There is something very disturbing in "the force" going on, and I want to warn those complascent few to whom this piece is directed.

To cut to the chase, there is a certain class of high-caliber firm with (relatively) low PPEP that is lulling its associates into a false sense of security. That's a dangerous place to be. Okay, I'll back up.

Let's see if you can identify this firm or firms in your market: old, prestigious, PPEP below 900K, known for its brainiacs, fewer (sometimes far fewer) than 1000 lawyers, limited international presence. Okay. Do you have this firm in mind? Let me tell you what some associates in these firms are telling me. Number one, they are blithely unaware or unconcerned about trends in the market and smugly minimalist about firm 'platform'. They don't care about PPEP and figure they are making plenty of money anyway. They see the firm has having an historically consistent partnership track, regardless of proven potential to bring in business, and figure there are plenty of mediocre partners there so why won't they fit in when the time comes? These associates did well academically and have not had to change firms before. In short, if this were 1950, they would be fine.

Guess what? It is not 1950 and things have changed. Bottom line: if you want to stay standing still, you have to be running. If these associates are not interested in joining the global "megalomaniac" trends (not my word) of continual growth and continual expansion, are not interested in being psycho-marketeers and are not interestd in being high-octane megalomaniacs themselves, it is even MORE incumbant upon them to start working TODAY on building their books of business. That's because either their current firm is going to eventually phase them out (because it will have changed business models) or these associates will have to self-select out because the firm they know is going to jump on the global bandwagon.

Better minds than mine have been saying for a good few years now that the future of law firms (10-20 years) is a "global 20" that are "all things to all men." Basically, there is emerging a super-class of firms to stand in dominant positions for global work in the future--and all the good work in the near future is going to be global work and all the good "domestic" work will be done by these firms as well.

Your nice, white-shoe firm with half-a-dozen domestic markets and a marquee foreign outpost is either going to jump onto or rejoin the mega-merger mania, or it is going to subside into a regional (what we used to and sometimes do still call 'national') player. Basically, these firms will drift into a second or third tier within the first tier of firms. Are you feeling this yet?

Anyway, the advice to network, write, speak, and get noticed, and that consistently, applies to ALL attorneys wherever they are. It's just that maybe those not in the circumstances described above already knew that (and just aren't doing it). Those guys in the ivory-shoe tower just didn't think this applied to them. So now they know.

Are You an Employee or an Entrepreneur?

I've had several conversations this week with senior associates who really understand business development. While neither is an equity partner, both bring in several hundred thousand dollars in fees to their firms. (i.e. as originations.) Both are interested in exploring a lateral move.

What was interesting was that both of these lawyers still chose to speak about themselves as employees and wanted to know who might be interested in "hiring" them.

In my experience, this is pretty common. Until you are actually a partner somewhere, most attorneys think of themselves as employees when in reality, anyone who has the ability to generate their own work is really an entrepreneur. An employee, in my book, does someone else's work. That is not a good description of a lawyer who is doing a lot of marketing and business development and having some success at it. While it may be technically true that you are an employee because you receive a pay check that is subject to withholding, it understates what that you have to offer.

This may sound like matter of semantics; but I think it is important for more senior associates to stop thinking themselves as wage earners. Changing the label you put on yourself changes the way you talk about yourself. It alters the dialog you might have with another firm.

Law firms continue to hire lawyers as employees, but few law firms "hire" senior associates. By the time an associate reaches his or her eighth year in practice, it is difficult to find a law firm that wants to "hire" that individual as an employee; however, there are many firms out there who are looking for senior attorneys who have the ability to generate work.

A Truly Cynical Analysis of Why Up or Out Policies Persist

Here is a truly cynical analysis of why firms maintain up or out policies. A professor at Case Western makes the argument that "up or out" is the best way to protect the firm's only real assets (i.e. the client relationships.) The argument goes that if you keep around bright people but don't make them partners, that they will walk away with the clients.

This is faulted logic on so many levels. For starters, many law firms have already adopted (and continue to adopt) multi-tier partnership systems (i.e. the professor seems to be overlooking the reality at many law firms today.) In addition, as the professor himself notes, lawyers cannot be bound by non-compete agreements. In other words, there is nothing stopping a senior associate who leaves from soliciting business from a client (whether or not the attorney has stuck around for a while after getting passed over for partner.)

The analysis also overlooks the negative impact on the client relationship when senior partners must continue to introduce new associates to service key clients (while removing senior associates who have built up trust with the client.)

A much healthier way to preserve client relationships is to institutionalize clients and make the client feel that everyone in the firm is available to help the client with his or her needs. When partners hoard client relationships and control client access, clients are poorly served and junior attorneys miss valuable opportunities to learn more about a client's business. This leads to bad morale. I could go on and on (but I won't.)

Weil Gotshal Creates "Flex-time Partners"

Who would have guessed? Maybe large firms are finally getting worried about retaining talent.

More on Women and the Lack of Advancement

Here is a nice summary of some of the recent articles on women and the challenges they face in trying to advance at top law firms. Here the author emphasizes the problem of billable hours as a measure of one's contribution to a firm.

Lauren Rikleen on Internet Radio

If you missed Lauren Rikleen the other night at the Boston Bar Association, you can catch her on the Legal Talk Network over the internet. Lauren, who just published Ending the Gauntlet: Removing Barriers to Women's Success in the Law, has a lot to say about why women are not advancing at the same rate that they are graduating from law schools.

When Lawyers Leave Law Firms

The March/April 2006 issue of the Boston Bar Journal features a good article on the fiduciary obligations that partners have to clients and to their firms (if they want to leave their existing firm.) Sorry, no link yet. The article has some very practical suggestions about how to move on without violating your ethical obligations.