More reviews can be found at http://www.mpmagazine.com/publication.asp?pubid=78AE6CEB-1078-4874-9ADD-AD003C5515CD&PDID=F1F4F4D5-F49E-4280-B3C5-58D05F18A220]]>
It is also available on Amazon at
The Amazon listing does not, as of this writing (August 4, 2010), contain the detail contained in the former listing.
I think I may have found those folks.
During the last week, a number of extremely prominent law firms announced that they would increase their hiring for summer associates in 2011 (from which they will draw the bulk of their associates for the bulk of the class of 2012. Other equally prominent firms proudly boasted that offers would be made to all of their 2010 associates, which naturally equates to the fact that those summer associates will become full time associates in 2011. Further adding to this exuberant suspension of reality was a subsequent report ( http://blogs.wsj.com/law/2010/08/10/further-evidence-that-the-law-job-market-is-thawing/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Flaw%2Ffeed+%28WSJ.com%3A+Law+Blog%29&utm_content=Google+Feedfetcher ) that law firms would increase recruiting activities during the current 2010 recruiting season. And all of this in the face of a simultaneous separate press report that demand for legal services will either remain flat or decline over the coming months.
Well, what does this mean? Quite simply that some firms have remarkable and, indeed, unprecedented prescience regarding what the demand for legal services will look like in 2011 and 2012, respectively and how our economy will then fare. Don’t get me wrong, these firms stand above the crowd in terms of their leadership in the bar and quality of the service they regularly render. But, clearly, they seem to have enormous psychic and prophetic prowess in their vision of the future. Or hubris. They all seem to have a far different and more optimistic vision and understanding of the next couple of years than Treasury Secretary Tim Geitner, Paul Krugman, Nobel Laureate and New York Times Op Ed writer, Robert Reich, former Treasury Secretary, Ben Bernanke, current Chairman of the Fed, Alan Greenspan, former Chairman of the Fed and a host of other prominent economists. All of these folks have consistently reported that recovery from the Great Recession will be prolonged and that the recovery will be marked by an extended period of unemployment. Paul Krugman, in particular, has consistently reported over the last few months that the federal government’s current economic policy (and that of European central banks) will surely result in a double dip recession and perhaps even worse.
Let’s be sure we all have a shared understanding of what this means: As we sit here today, there are some law firms who now purport to know what the demand for legal services will be in 14 months (with regard to the class of 2011). More remarkably, law firms, sitting here in August 2010 have remarkable confidence, factually unsupportable, that demand for legal services will increase in October, 2012, when the crop of law students now being sought out for summer associate positions for next summer, will graduate. History being our guide, other law firms will in coming weeks and months “meet the competition” and follow suit with similar announcements.
These current announcements also seem dismissive of the Association of Corporate Counsel’s view that it also expects fees paid for outside counsel to continue to decline over the intermediate term.
As much as I admire these law firms for every possible reason, what do these law firms (and the number of law firms that will likely follow suit) know that most prominent economists don’t know? I surely haven’t a clue. But, if they prove to be right, be assured that I will be at their door asking for their advice on how to invest my meager savings; I suspect that if this indeed proves to be so, I will surely be sitting in their reception areas asking these seers to gaze in to their crystal balls and advise me on what the economic conditions will be two years hence and find each of you there.
The real issue seems to me be twofold: First, as I previously noted, the entire recruitment process is broken, virtually beyond repair and needs a major overhaul, with law firms, like every other business enterprise hiring graduates of either undergraduate programs or post baccalaureate programs, should be first hiring lawyers in the Spring prior to graduation. No firm has The second may very well be my fear that “deferrals” of start dates and withdrawal of job offers, based on economic conditions extant in the Fall have now become an accepted and acceptable part of the entire recruiting process and perhaps, just perhaps, firms expressing economic exuberance at this time of year in connection with future hiring, may simply shrug their shoulders if their economic forecasts prove to be wrong and act accordingly.
As I watched the sad events of the past year, I regularly recalled Langston Hughes’ rather famous poem, most apt through the past months, A Dream Deferred:
What happens to a dream deferred?
Does it dry up
like a raisin in the sun?
Or fester like a sore–
And then run?
Does it stink like rotten meat?
Or crust and sugar over–
like a syrupy sweet?
Maybe it just sags
like a heavy load.
Or does it explode?
Lord, I really hope that Hughes’ poetic question is not again brought to mind in 2011 or 2012.]]>
Kowalski & Associates
July 29, 2010
I am pleased to announce that my new book, Navigating the Perfect Storm: Recruiting, Training and Retaining Lawyers in the coming Decade (Ark Press) will be released late next week.
In this volume, I address the run up to recent events which affected the profession and forced us to change as well as the challenges that lay ahead.
Firms have gone through pain and stress and financial loss as the shifting market made demands on different practice areas. Client and practice concentration has been the bane of firms for many years. Recruiting and staffing for particular disciplines and training lawyers for those disciplines in the new world in which we find ourselves require dramatic new approaches.
Principle focuses addressed of the book are on recruiting lawyers at every level, the training of those lawyers and retaining those in whom firms have invested substantial time and energy. With the market flooded with high quality flooded lawyers who were the victims of recent layoffs and the waves of 45,000 new graduates entering the market each year.
Continued and escalating attacks on the citadel of hourly billing created the viral growth of value billing, Alternative Fee Arrangements, fixed fees and convergence. Clients are increasingly requiring their lawyers to assume some degree of risk in virtually every engagement. These new billing models and client demands, in turn, mandate the introduction of new disciplines to the profession, namely, project management, training lawyers in project management, client relationship managers and budgeting skills as well as taking our eyes off maximizing hours billed in favor of efficiently delivering quality product within the budget fixed for each engagement.
The profession’s historical method of recruiting law school students in the early Fall following the conclusion of their first year of law school attendance for summer associate programs with a view towards employing those students as full time law firm associates two years following the initial recruitment process requires impossibly obtainable prescience of business demands and economic conditions. The result is that students are being recruited in the confines of a completely “broken” system. I describe below some radical proposals for change initially proposed by important leaders of the profession and expand on these novel approaches.
In addition to looking at extant recruiting models adopted by law firms given the continued use of antiquated procedures, the importance of associate retention and methods which should be employed for such retention is also discussed. I also address foreseeable issues which the profession will need to address as firms continue to hunker down, recruit smaller numbers of graduates and then compete for a diminished pool of well trained lawyers.
With clients now purchasing legal services through the prism of corporate purchasing agents and price becoming significantly more important factors than prior relationships or name branded law firms, new opportunities for smaller and middle market firms are ballooning. The shifting dynamics of the current revolution within the profession also are creating new opportunities for these firms which should be further explored by these firms.
These shifting sands also require a review of associate utilization and compensation methods, as well as increased reliance on outsourcing of legal work and escalating use of temporary staff lawyers. These issues are also addressed.
In short, I have endeavored to address pressing intermediate and long term issues regarding hiring, training and retention of associates, the changing landscape of billing demanded by newly empowered clients as well as new opportunities and pitfalls. I hope I have added productively to the public discourse of the needs for change which lay ahead.
The book can be ordered through www.ark-group.com , by calling Daniel Smallwood at - t: (+1) 309 495 2853 f: (+1) 309 495 2858 e: firstname.lastname@example.org , or Amazon. Through August 10, Quoting the order code LOR-RTR1, place your order through Ark or through Mr. Smallwood you will receive a $200 pre-publication discount.
(c) Jerome Kowalski, July 2010. All Rights Reserved]]>
Kowalski & Associates
In 1990, the New York Attorney General and the New York City Department of Consumer Affairs began a series of investigations and other proceedings aimed at chains of various health and beauty schools, largely, if not exclusively in underprivileged neighborhoods. These schools were all licensed by the New York State and City agencies responsible for granting such licenses. The schools advertised broadly, primarily on subway posters, in various newspapers largely directed at underprivileged communities, posters pasted on the walls of these communities, as well as on wrap-around posters on the lampposts in those same areas.
The come-on was simple: The advertisements pitched the fact that beauticians, cosmetologists, hair stylists, make-up artists earned commendable salaries. The posters went on to note that many of those positions required both state licensing and a degree of training. The schools offered the requisite training and assisted the students in obtaining those licenses. And, then, the real hook in this come-on: Federally guaranteed student loans for tuition were available for attendance at these schools and, in essence, as far as the students were concerned, tuition would not impose any costs to the students: all they had to do was show up, sign a few pieces of paper, attend the program (often a year in duration) and after graduation and licensure, a career in one of these fields would provide a financially more rewarding career than was otherwise to these denizens of underprivileged areas.
The “hook” was exceptionally alluring: One would simply show up at the school, sign a few forms, fork over not a buck, take the classes and a more financially lucrative career lay ahead of them. Of course, among the stack of papers signed was the student loan applications. The lending institutions would then advance the entire tuition to the school.
There were only a couple of problems with the entire scheme: The fact was that there were not sufficient jobs available to the schools’ graduates. Many students, after graduating from the schools, could not find any jobs in these fields (there was simply a dearth of such jobs) and most of the schools’ students, after attending the schools and not obtaining any of those so-called well paying jobs, gave up after their job searches and simply found lesser paying jobs and abandoned their job searches. Word also spread from the graduates to the generation that followed and still attending the schools and large numbers of those students just simply walked away from the schools. None of these school graduates or attendees repaid their loaned, quite likely because they felt snookered (which they obviously were), and they simply otherwise lacked the funds.
Of course, the various institutions which either advanced the tuition loans began collection proceeding. A sufficient number of the victims complained about being hoodwinked and filed various complaints with regulatory agencies, which, of course, served as the catalyst for the commencement of these proceedings.
The question that nobody wants to ask is whether the recent crop of law school graduates, those currently attending law school and the thousands of current law school applicants are victim of a similar scheme, intentionally or not, created by the profession and the law school community. I have found very few who have raised or publically discussed the issue. An absolutely outstanding exception is the blistering report by noted law Professor, Brain Tamahana.
In June of this year, the United States Bureau of Labor Statistics reported that the legal profession lost a total of approximately 30,000 jobs during the preceding year; these numbers are actually misleading, as we shall see. Law Shucks, a blog site which maintains a tally of law firm layoffs, reported that as of April, 2010 the AmLaw 100 alone lost 14,000 jobs for the preceding 12 month period. Law Shucks acknowledges that its figures do not reflect accurate numbers for the AmLaw 100 alone. The Law Shucks numbers only include layoffs which AmLaw 100 firms publically acknowledged and does not include law firms that engaged in stealth layoffs, of which we now there are many. Nor do these numbers reflect law firms, notably Heller Ehrman, which had simply gone out of business, or law firms below the AmLaw 100, of which there are literally thousands. In our work, we found not a single law firm of 50 or more lawyers which had not engaged in some form of reductions in force.
The problem with the BLS statistics is that they are similarly misleading in that they do not include lawyers who became underemployed, for example, lawyers who turned to some form of public service jobs, government jobs, joined smaller firms, all at drastically reduced compensation. The BLS statistics also do not include 2009 graduated who have yet to find employment, nor do they count the armies of lawyers who have descended to the purgatory of staff or temp lawyering positions, where seasoned lawyers and young lawyers, who sit cheek by jowl in these often sordid purgatories.
In short, there are tens of thousands of both unemployed or underemployed lawyers nationally. There is no accurate metric by which to measure these numbers. Anecdotal evidence suggests that the total may be anywhere from 30,000 to 100,000 lawyers. More significantly, law.com reported on July 20, 2010 that employment levels for lawyers as a whole has declined to 1991 levels.
In the face of all of this, law firms, as is widely reported and similarly publically acknowledged by virtually every law firm in the country in the country, predict that hiring of 2010 law school graduates will be sharply reduced. These same law firms predict continued reductions at least through 2011.
In the face of all of this, our nation’s currently accredited law schools, of which there are now approximately 194, insist on adding at least 45,000 new graduates to these armies of unemployed or underemployed lawyers. Add to this mix the facts that (a) ten additional law schools are in a queue to receive accreditation; (b) law school applications have risen dramatically in the last year and a record number of students have enrilled in law schools for the classes of 2013, when, barring an historically and unprecedented event or series of events (perhaps a federal mandate that every municipality hire and compensate a lawyer for every 1,000 of its residents), there will certainly be a pool of at least well over 150,000 lawyers who will be looking for jobs; (c) economic realities are lowering the demand for lawyers and law firm revenues are in decline and (d) a number of universities announced plans to create new law schools.
With regard to the foregoing, let’s, for example, look at the rather odd recent events in Dallas:
Quixotically, in early 2009, The University of North Texas announced that it planned on establishing a public law school in the Dallas-Fort Worth area as part of its university. Those plans seem to continue apace in 2010 in spite of the dwindling job market for law school graduates. Adding to the enigmatic and rationally inexplicably plans of this University is that Houston hosts three law schools (one not yet accredited by the ABA) and 11.5% of the graduates of those law schools were unemployed nine months after graduation; the two existing law schools in the Dallas area, with equivalent post graduate employment results.
West Texas’ rationale: (1) There has not been a law school established in Texas since 1967; and (2) the Houston area had only 538 law school seats available; (3) the ratio of bachelor degrees in Houston to law school enrollment was 10:1, while the ratio in Dallas was 35:1 and (4) while the Dallas-Fort Worth area purportedly generates 1,400 new legal jobs annually, these lawyers were hired from other regional law schools and schools located in other states.
Obvious flaw in this otherwise inexplicable logic is that all of the positions for lawyers in Texas (including each of the 1,400 new openings for lawyers in Texas) are quickly filled and there are already multiple applicants for each such position; there certainly is no dearth of job applicants in Dallas. Another obvious defect is the presumption that Dallas jingoism would somehow favor the employment of students schooled locally by a law school with no track record, while lawyers already employed in the area and those seeking employment there are already drawn from top tier law schools, in existence for many years. Additionally, this new law school does not seem to limit enrollment to residents of the Dallas area; in fact it will likely draw applicants from the rest of the country.
Rather obvious additional questions come to mind: (1) what’s the point? (2) Why add to the enormous pool of unemployed and underemployed lawyers? (3) How can one reasonably expect a faculty and university administration with such patently unsound judgment be entrusted to educate aspiring lawyers in logical thinking, careful analysis and honesty and candor demanded of lawyers? (4) How does the fact that a growing metropolitan area has an entitlement to establish a new law school simply because it hasn’t had a new law school created in forty years make any sense?
It might be a cheap shot to call this proposed law school as Texas’ version of a bridge to nowhere. The fact is that there now exist 194 other bridges to nowhere.
Jim Leipold, the director of The National Association for Legal Placement, whose crystal ball is as good as anyone’s, announced last week that the earliest he sees an “uptick” in legal employment for new law school graduates is 2012. Any simple analysis of the facts on the ground ineluctably leads to several conclusions: The current graph shows a complete vertical decline in unemployment and underemployment of lawyers; that straight down vertical drop may move in 2012 to a drop that may move a few degrees to the right in 2012; there is no possibility that the total number of unemployed and underemployed lawyers will ever be absorbed in to the market.
Far more significant is the press release issued on July 22 by NALP, frankly one of the most opaque reports I have ever read and in which at least the second paragraph quoted, may have been inspired by Lewis Carroll, reads in part:
“The national median salary for the Class of 2009, based on those working full-time and reporting a salary, was $72,000, unchanged from that for the Class of 2008, and the national mean was $93,454. However, because some large law firm salaries cluster in the $160,000 range while many other salaries cluster in the $40,000–$65,000 range, relatively few salaries were actually near the median or mean, as the Jobs & JDs report details. The national median salary at law firms based on those reporting a salary was $130,000, compared with $125,000 the prior year, and the national mean at law firms was $115,254.
With the Class of 2009 report NALP introduces the concept of an adjusted mean as an additional way to provide a broad measure of salaries for full-time jobs as a whole and for full-time jobs in law firms. Essentially, the adjusted mean compensates for the fact that the distribution of reported full-time salaries is not the same as the distribution of reported full-time jobs, particularly when it comes to law firm jobs. Whereas salaries for most jobs in large law firms are matters of public record and reported, fewer than half the salaries for jobs in small law firms are reported. The calculation of adjusted means is accomplished by giving more “weight” to the mean or average salary in small firms and less “weight” to the mean or average salary in large firms to calculate the overall law firm mean and also the adjusted mean for all full-time jobs. In other words, adjusted means are based on estimates that account for the unreported salaries. The adjusted mean for all full-time jobs reported was $85,198 (in contrast to the unadjusted national mean of $93,454), and the adjusted mean for full-time law firm jobs was $102,959 (in contrast to the unadjusted mean of $115,254).”
I do not mean to impugn Jim Leipold, NALP’s dedicated executive director, previously trained and having served with distinction as a tax lawyer at DLA Piper, but you may want to try and pierce the opacity of the entire report, particularly the quoted text. The simple meaning appears to be that since NALP does not include compensation figures for small law firms, which employs the largest number of lawyers in the nation and similarly excludes staff or temp lawyers, the reported median salary for 2009 graduates of $72,000 per annum is largely a wild assed guess and the actual median salary is probably much lower. The newly coined phrase, “adjusted mean,” as Mr. Leipold explains (it may take a few readings to comprehend), results in lowering the previous blindfolded shots at the dartboard hitting, which previously, quite fortuitously, I suppose, hit higher numbers.
And, whether we do not address the 12% of 2009 grauates competely unemployed still. In fairness, it does include, apparrently those 11% of 2009 graduates who are employed in positions for which a law degree is not required (“would you like fries with that?”)
Certainly, using a “median” or “mean” or “adjusted mean” is simply Orwellian. Using a median number simply begs and avoids the single most important question: “What is the average salary of a 2009 graduate?”
The fact is that even the reported “median salary” of $72,000 is less than many, if not most, legal secretaries earn at large law firms.
Herwig Schlunk, a professor at Vanderbilt University Law School in an article published in 2009 entitled “Mamas Don’t Let Your Babies Grow Up to be Lawyers” performed an investment analysis of the monetary value of a law school education. He determined that the cost of attending a second or third tier law school ranges from $201,000 to $280,000. Graduates of such law schools require average compensation of between $80,000 and $150,000 to justify the expense of law school, while the average compensation of those graduates is below $65,000, although some top of the class graduates do earn up to $145,000. In all cases, Schlunk determined that the expense of law school simply does not yield a reasonable return on investment.
Add to that the fact that the nation’s law schools inexorably add 45,000 new lawyers in to the gaping and growing canyon of unemployment and underemployment lawyers every year. What we have here is the equivalent of BP oil relentlessly spewing out tens of thousands of barrels of oil, with no possibility at the current time that anybody has any interest in sealing this annual eruption.
There are an additional series of bizarre enigmas that must be added to the equation:
1. Law school tuitions are rising well above the rate of inflation annually.
2. As the hordes of new graduates are added to the kettle, simple rules of supply and demand will likely reduce Professor Shlunk’s suggested average compensation of $65,000 and even NALP’s optimistic and speculative $72,000.
3. These facts are well known to law school administrators, particularly deans and admissions personnel.
4. Although these facts are presumably ascertainable by those extremely bright college graduates who apply to law schools, law schools which are replete with (a) lawyers of presumably the highest moral integrity; (b) professors who are charged with imbuing law students with the ethical mandates required of lawyers; and (c) every law school has a passel of securities and corporate professors who spend their time drilling in to law students about the legal requirement of making full disclosure of all material facts while also being obligated not to make any omission of material facts; and that failure to do so would result in severe civil and criminal penalties.
5. All of the nation’s law schools are extremely well served by selfless alumni, hard working lawyers of accomplishment, who dedicate their time and service to the leadership and guidance of their alma maters. They well know the score.
Illustrative of these inexorable facts is a lovely glossy full color 64 page brochure I received from my own alma mater, New York Law School, just yesterday. The first eight pages contain a one page encouraging note from the law school’s extremely well regarded – and highly compensated new dean, Richard Mastagar — a distinguished legal scholar, with an outstanding biography.
When I attended that school, 35 years ago, tuition was $1,200. Today, with the creep of inflation, it is $67,000. Yet, a significant number of 2009 graduates of are still unemployed and the majority who actually have found employment are likley earning starting salaries less than that amount.
Dean Mastagar’s brief one page introductory message was “the [current] economic crisis continues to hit our profession hard.” (a) That he was proud of the fact that New York Law School’s graduates are flexible [emphasis in original].in terms of jobs they have taken. I may be improperly projecting, but I read that as saying that the school’s graduates are taking jobs that are either low paying or completely outside the profession; (b) The school’s graduates are innovators [emphasis in original] “Where other see problems, they see solutions.” Isn’t that the hallmark of any successful lawyer? And (c) the school’s graduates add value [emphasis in original] “in countless ways.” That reminded me of William Shakespeare’s oft quoted “damning with faint praise” from Twelfth Night. And, I must confess, while I do not intend to impugn any of the school’s graduates, my barista, Tony, describes himself as having all of these three attributes.
Not a word about the actual employment gained by the school’s recent graduates. Not a word about their average income.
Dean Mastagar’s cheerful introduction was followed by a mere three page article punctuated by handsome photographs (remember, this is a 64 page glossy brochure) entitled Navigating the Legal Job Market, stating (a) the virtues of patience, the history of the recession and its effects on the profession, (b) finding a job will be prolonged, (c) “The wait may yield unexpected rewards” ( I guess so would winning the lottery, (d) the “need to see the “big picture,” (e) “the need to interview effectively,” (Wow, I didn’t know that), the need to develop a network, (f) consider employment opportunities at small and medium sized firms (with no mention of the fact that tens of thousands of graduates are doing the same thing nor that the compensation offered at these firms often do not provide enough money to repay student loans, while simultaneously eating or paying for housing, and for at least 50 years, most NYLS graduates wound up practicing at small firms; in 1977, for example, there was only one NYLS graduate who obtained a job in the then equivalent of an AmLaw 100 firm: me ), (g) consideration of temp jobs (same problems as the preceding suggestion only worse working conditions) coupled with a daily fear that the temp job can abruptly end and the young lawyer will then look for another open casting calls), (h) starting your own law practice, citing the example of one graduate who successfully did so; and, finally the need to “think strategically.” (Clearly another innovative thought).
All of the parentheticals are mine.
The next 55 pages in this glossy handsome brochure are about the joys of photographing wonders of nature (you can’t make this stuff up), the school’s admirable bar pass rate and on campus activities and little bits about the faculty and school graduates.
I certainly have no particular gripe about New York Law School. It provided me with an excellent education and the skills necessary to have a wonderful career at the law.
But the fact is that more than 150 law schools regularly issue similar blather. What they should be saying, as loudly as possible, is “OMG, our hair is on fire! Run for your lives!”
A quick note about another vice in which law schools have recently been engaging, particularly third and fourth tier law schools: Most graduating college students, when applying to post graduate programs, apply to both “safe schools” and schools at the height of their grasp. Third and fourth tier school in recent years, in order to improve the employment reports of their graduates, have been inducing and recruiting top college graduates (in campaigns similar to that engaged in by NBA teams for LeBron James) to enroll in their schools with expansive and enticing scholarships, which are extremely difficult to decline. These students tend to do well and most often do wind up with far better jobs than their peers; not great jobs, just better jobs or at least get a job. The direct consequence is that students below the top quartile, those least likely to gain meaningful employment, are actually subsidizing the education of students who are far more likely to do well professionally.
So, you may wonder, what’s the point of all of the foregoing? Here it is:
I must confess that my conclusions, which are ineluctable, are not mine alone. At least four law firm managing partners, a number of other prominent lawyers and several law school professors have shared these thoughts with me. However, they openly expressed fear about making public statements supporting these obvious conclusions because they all felt they would be seen as pariahs, shunned by the profession, insofar as the practicing lawyers were concerned, they expressed the fear that their firms’ recruiting activities would be hampered at important schools; the academics also expressed the concern of being shunned by their colleagues, since, in effect, they would be encouraging significant unemployment among the academic community.
Analogous defenses to a securities fraud lawsuit brought on the grounds of failures to disclose or omissions of material facts, would certainly not fare well. An issuer could not defend his non-disclosures because investment bankers would shun him, non-disclosures or omissions would be viewed as contrary norms by issuers or that making honest disclosures would result in a reduction in force at his or her own company, without meeting with loud guffaws from judges, juries and prosecutors.
And, indeed, if you have reached this point in this note, in the unlikely event you haven’t already come to these other ineluctable conclusions, here they are: (a) law schools must stop behaving like the beauty schools of 1990 and (b) law schools should make full, fair and candid disclosure to every law school applicant (before they even remit the application fee) and have each applicant sign a document that he or she has read the disclosures and understands them.
And you are invited to read much more on the subject in my forthcoming book, “Navigating the Perfect Storm,” to be published by Ark Press of London. You can pre-order by contacting me or Anna Shaw at Ark at email@example.com .]]>
Kowalski & Associates
I previously wrote about the remarkable effectiveness of blogging as an incredibly effective and efficient marketing tool and strongly endorsed – in fact, encouraged our clients to make blogging an important part of their marketing efforts.
Law.com issued an extremely interesting report today concerning four blogs which serves to further prove the point
About as remarkable as Rick Blaine’s responding to Captain Renault in Casablanca with feigned surprise “What? There’s gambling in Casablanca? I’m shocked.”
Kowalski & Associates
I was completely puzzled and perplexed by all of the recent expressions of surprise, awe and amazement in the trade press and the blogosphere about Cravath embarking on a marketing campaign.
In fact, Cravath, as repeatedly described in the press, particularly the recent press, has been consistently described as the “gold standard” for more than a century in the profession and that it was somehow either demeaning or scandalous that a firm of that caliber would resort to marketing, as if marketing somehow is either debasing or tarnishes Cravath’s luster. The blogosphere seemed to suggest that Cravath was somehow joining the ranks of law firms posting billboards or the law firms seen on very late night television.
Indeed, Cravath has been actively marketing for more than a century. Its historical marketing was wildly successful. Cravath, in a soto voce style and often in a crescendo engaged in the profession’s longest, most successful and effective marketing efforts. Only nobody in the profession seemed to take active notice.
For many decades, Cravath created, not at all by accident, most remarkable name brand recognition (surely, the most basic form of marketing). It was not pure happenstance that Cravath found its way in to all of the nations’ important financial media standing shoulder to shoulder with titans of industry. Cultivated relationships with leading journalists (what we also today call marketing) was a hallmark of Cravath, whether created intentionally or by pure happenstance. Cravath made it well known that it handled the most important cases and attracted the nation’s best law school graduates. Over at least the last half century, as other law firms actively began to compete with Cravath for these students, Cravath simply upped the ante, consistently setting the pace by offering recent graduates increased compensation. Other law firms always followed Cravath’s lead by endeavoring to match Cravath, the maestro of “the going rate” of compensation. The point was that Cravath was the standard, the Cadillac of the industry (when Cadillacs were the Cadillacs of the automotive industry) compelling other firms to essentially say “See, we are as good as Cravath.” That message was received by significant consumers of significant legal services by questioning “why should I buy a Chrysler just because it advertises itself as good as a Cadillac, when for the same price, I could just buy the proven product, the Cadillac.
For a century, Cravath has indeed handled some of the nation’s most important litigations and transactions. The firm quite successfully and consistently, perhaps under the radar screen, regularly associated itself with matters of great significance. It effectively created remarkable name brand recognition, well before Richard Sokolove became a ubiquitous national name by spending millions of dollars on late night television advertisements to create name brand recognition. You’ve always known the Cravath brand for decades. Now, you also know the Richard Sokolove name, albeit in a completely different milieu of practice.
Ah, but the market has so dramatically changed in the last two years. Corporations, and in particular corporate general counsel, under their own economic duress, need to save their money and buy more reasonably priced means of transpiration to bring them to their destinations, safely and soundly. In fact, it is not necessarily the Cravath wannabes who are effectively competing with AmLaw 100 firms, it is the middle market firms which can now get clients to their desired destinations at small fractions of the Cravath priced law firms.
Many of these law firms have now created their own name brand recognition by employing well oiled marketing and public relations staffs, as well as the wildly effective and largely free blogosphere, as we previously pointed out .
In our new world, suddenly, the acquisition of legal services is increasingly made through the prism of a purchasing agent (with purchasing agents in many instances being integral parts of the acquisition of legal services processes), has made middle market firms in secondary markets significant competitors to the large name brand law firms, the Cravaths, since the smaller firm, the more competitively priced law firms, often in a secondary market has lower fixed costs and lower hourly rates. We have all observed that smaller regional firms have been much less affected by the business downturn, but in fact, many have been experiencing an uptick in business.
We also know that the demand for Alternative Fee Arrangements has replaced the haughty one line bill that the elite few at the top of the food chain could deliver to clients reading only “For Professional Services Rendered” followed with a bare number with no further explanation.
More remarkable than the notion that Cravath is now being more open and vocal about its marketing efforts, is the fact Cravath’s dynamic chairman has now even personally openly embraced the superiority of Alternative fee Arrangements.
Even some notable academics have recently taken a close look at the “Cravath system” and described it as a bubble about to be burst.
A strong argument can now be made that instead of so much of the profession having spent so many years chasing the “Cravath model”, it is now the Cravaths of this world following models those among the AmLaw top 50 law firms previously disdained.
© Jerome Kowalski, July 2010. All Rights reserved]]>
Kowalski & Associates
At our family’s ritual Fourth of July barbecue, a family member would invariably sit back on a lawn chair and sigh “man, what a hard winter we just had.” Acknowledging nods and grunts would circulate, bottles of beer would bottom up, which was then followed by bursts of discussion for what the summer cycle would bring: Time at the shore, golf, long weekends, a trip to a country resort. And, one family member or another would always bring this exchange to a grinding halt by saying something along the lines of “this year we’re going to be painting the back porch” or something akin to “this year we’re going to finally be cleaning out the garage.” What was particularly enraging about these sanctimonious relatives was that they meant it, they did it and their houses were always in marvelous condition.
This year, we not only have a hard winter; it was preceded by an even tougher winter. Next winter isn’t looking great either. Swimming, sunning, golfing and hiking, all important diversions to be sure, now must take a back seat to required home maintenance as the winter to follow shows no real sign of global economic warming. This is not the summer during which you should relax and then anticipate that things will get back to “normal” after Labor Day. There simply is no “normal” anymore. I have long cautioned about the serious danger of a double dip recession. Yesterday, Nobel economics laureate and New York Times Op Ed columnist Paul Krugman, upped the bidding and warned about the real danger of a “Long Depression.”
It’s therefore essential to be grownups and use the coming two months productively. Let’s put off the sunning and funning until we know the storm warnings have passed.
Here are some of the things we should be doing over the next eight weeks:
First, take a hard and realistic look back at what the first half of the year actually yielded. No, it’s not time to sling back in a hammock, toss back a brew and simply hope that the second half of the year will be better. Yes, the winds of this year’s summer must be put to their utmost advantage
This summer, we all need to be Twelve Steppers and seriously invoke Reinhuld Niehbur’s “Serenity Prayer:”
God grant me the serenity
to accept the things I cannot change;
courage to change the things I can;
and wisdom to know the difference.
We cannot change economic realities by wishing them away or hoping they blow away while we sun and fun. But, we do need to have the courage to make changes necessary to accommodate those things we can alter.
First, take a walk around your entire house and take an objective look at what needs fixing. Some thoughts:
2. Take the time to talk to peers at other law firms. Gain an understanding of how they weathered the months past and how they are planning to deal with the coming “R” months.
3. The longer days of summer also provides you with the opportunity to spend time with partners and associates to share with them the direction the firm is headed, solicit their input, eliminate the fear of the unknown and create a sense of shared common purpose and increased transparency. This year’s summer outing should not be only about golf, softball, volleyball, sunning, sailing and swimming. All of these activities should simply provide more comfortable venues for open substantive dialogue and an absence of opaque leadership.
4. The late spring and early summer have wrought significant substantive changes to vital areas of the law vitally affecting your clients. These include (a) recently enacted federal financial reform; (b) the continued vitality of Sarbanes Oxley in light of the Supreme Court’s ruling on June 28 in Free Enterprise Fund v. Public Company Accounting Oversight Board; (c) what is the practical effect of the Court’s holding in Bilski v Kapposs in regard to patenting business methods? And (d) health care reform legislation. Are you on top of these issues? Are you ready to respond intelligently to your clients’ inquiries on these issues? More importantly, why are you waiting for the phone to ring? The next few weeks should be the time during which you should be sending your clients succinct alerts and bulletins explaining in crisp simple English sentences how each of these events affect them and their business. And, while you are at it, you should also be taking the initiative and staking out and establishing your credible expertise in these areas by posting informative blogs on these important emerging issues. The New York Times opined on June 26 that the new regulatory schemes were actually intended to provide federal aid to employment in the legal sector. Nobody is coming up from Washington to hand you a check. You need to do the work to obtain your entitlement.
5. Take stock on the performance of your own firm’s practice areas. Compare year to date performance with the prior two years. Take note of the trending in these areas and determine where assets and talent might be better deployed. Be sure that you are not falling in to a business concentration trap to post short term revenue gains.Reach in to the bottom left drawer of your desk and dust off your current business plan and take stock of how the firm is performing midway this year and determine where tinkering is essential. The same should also be done with regard to your current budget. Business plans and budgets, in the current economic climate, are precisely like well thought through and thoroughly researched military battle plans. They are perfect until the first shot is fired. The summer solstice lifts the fog of war and provides the opportunity to revamp, revise, amend or trash plans that aren’t working. Don’t double down on bets that haven’t been working. Do increase investments in areas that are showing growth and staying power.
6. Become fully acquainted with the metrics of The ACC Value Index . Your firm is being graded by the Association of Corporate Counsel and those grades are publicly posted. Do not put yourself in jeopardy of being voted off the island only because you failed to appreciate on what bases you are being graded .
7. Alternative Fee Arrangements are not a passing fad. Our colleagues at Altman Weil reported just last week that a whopping 94.5% of law firms utilize varying forms of AFA’s. Firms which have more thoroughly embraced these billing arrangements are experiencing real increases (often double digit increases) in revenues and profitability and substantially enhancing client relationships. Now is the time to make sure your partners understand that clients are no longer buying in to the palaver that legal matters, particularly litigation, are so unpredictable that the only way for lawyers to be fairly compensated is through an hourly billing model. It is now the time for everybody to slake their thirsts and enjoy the Kool-Aid.
8. As I wrote some months ago, ACC metrics, maximizing profitability, maintaining best practices and requires that law firms be populated with experts on project management. Many firms have already stood up and not just taken notice but have moved forward and developed this expertise. The summer months provides you with the time to clean this part of your garage and develop the requisite in-house expertise necessary for success in this market.
9. Take stock of your colleagues’ ability to adapt to the revolutionary changes required of lawyers in this challenging and unprecedented competitive economy and make sure that your partners’ resistance to change is being treated with appropriate antibodies.
10. Realistically reassess, once again, your hiring projections for 2L’s and 3L’s. You won’t be caught up short if you under hire; you will doubtless have an agita relapse if you over hire. When you add the recent law school graduates to the pool of unemployed lawyers laid off in the last couple of years, the available labor pool is now in excess of 60,000. In 2011, it will exceed six figures. Think about it like packing for a vacation trip: Take half as much luggage as you planned and bring along twice as much money.
11. Dramatically expand your own network of contacts.
And, in the Fall, when well tanned visitors come calling, let them be impressed by how fantastic your home looks.
© Jerome Kowalski, June, 2010. All Rights Reserved.]]>
The Times — They Are Changing
How to Overcome Lawyers’ Innate Resistance to Change
In the early 1970’s, when I was a very young lawyer, exciting new technologies, or at least what we then saw as exciting new technologies, were sweeping the profession. Some of you may even recall what we old timers then saw as “holy crap” moments (this is a family blog, after all). Some readers won’t even know what I am talking about. There are many arcane terms used below; you may need to ask your parents or grandparents to explain them.
The Changes of the Late 20th Century
The “mag card” typewriters – IBM Selectric typewriter with a “memory” that retained information typed on the machine (no screen – the typist had to find particular entries through trial and error and sheer dumb luck to find the part that required editing). But, the document could be printed at the lightening speed of four minutes a page. Vydec machines; a prehistoric version of a word processor; (it was the size and had the feel of a small space station). It came with a screen, and, gets this, the ability to print a document at a warp speed of two minutes a page. Portable hand held dictating equipment. Direct dial telephone numbers; Voice mail (one of my former partners threatened to vote to dissolve the partnership if the firm acquired a voice mail system). Computerized time keeping and billing. Sharing secretaries. Lexis. High speed printers.
My personal favorite was the fax machine. The device then cost upwards of $15,000 a unit, and, get a load of this: you could stick a document in, dial a number and then, assuming the proposed recipient also had a fax machine in some other part of the world, the recipient would receive an exact copy, printed out on long endless rolls of wax paper – at the amazing rate of four minutes a page. Long documents produced a ribbon of wax paper that might stretch to the size of a football speed.
Then ultimately, two decades before the Internet, PC’s, which actually was my second favorite, since prior to the early 90’s, virtually no lawyer had a clue as to what they were or how to use them.
All of these innovations, and many, many more had a few things in common: One, at first, only the largest and best firms initially acquired these marvels. Second, anybody then over the ripe old age of 40 resisted each change. Smaller and midsize firms refused to invest in these technologies. The “older” generation swore they would never use them. But, slowly, and I do mean very slowly, each (and others not mentioned here) became regular tools of the trade.
As I said, faxes were one of my favorites. It was initially a sign of enormous prestige for a law firm to boast a fax number on its letterhead. Most still had cable addresses (if you don’t know what these are, ask your parents). Fax use spread at a snail’s pace. An older acquaintance, a single New York practitioner, an old family friend, finally succumbed to the pressure of an important client in Pittsburgh and invested $1,000 and purchased one. He had his mail room person unpack the contraption, read the instructions and install the device. Later that day, the lawyer dictated a long letter to his secretary, who used Pittman shorthand, who then transcribed it, using carbon paper for the two required office copies (who remembers this 0 and 2?). Changes and typos were made by cutting and pasting. The lawyer summoned the mailroom guy and bellowed (proudly) “fax this letter to Pittsburgh.”
The lawyer returned to other matters and two hours later the wildly angry client called and demanded “Murray!! What are you doing? I have 40 copies of your letter and you’re totally tying up our fax machine.”
Murray charged in to the mailroom and demanded to know what was going on. “Boss, “the mailroom attendant said, “I was just going to come in and see you. The machine is broken. I keep putting the document in, dialing the number, hit the send button and it keeps coming out on the other side.”
My second favorite was the desk top PC. In the early 80’s almost no lawyer had a clue as to what they were, except that they looked real neat. In 1985, while I was 35 year old partner in the world’s second largest law firm and absolutely nobody at my firm had a PC (and even if they did, wouldn’t have a clue as to how use them or their reason for existence), I traveled on business to Denver to work with a midsize firm which was our co-counsel on a matter. I was blown away by the fact that each lawyer in the Denver firm had a PC on his or her desk. I asked my Denver counterpart what this paraphernalia was. He said he didn’t have a clue; one of the managing partners bought a bunch of screens, mounted them in each lawyer’s office and visiting clients were simply wowed by their existence.
Kicking, fighting and screaming, the profession as a whole and individual lawyers adapted to these changes and more.
The point is that lawyers are genetically resistant to change.
21st Century Changes
The changes described above are mere child’s play when compared to the economy’s enormous demands that lawyers engage in spectacular change or join the piles of dinosaur bones: As Jeffrey Carr, General Counsel (and Five Star General of the army of corporate counsel demanding change) of FMC Technologies said “To quote a former U.S. Army chief of Staff, ‘If you dislike change, you’re going to dislike irrelevance even more .’”
We know the changes demanded of us:
Alternative Fee Arrangements
Get to know the ACC Value Challenge and live up to its standards.
Give us a real budget on an engagement and live up to it.
Take on some of the risk when we engage you.
Give us a quality product and do so efficiently.
Train your associates on your nickel and we’ll pay for them when they know what they are doing
Recognize, as we do, the inefficiencies and high costs hourly billing breeds.
Don’t overstaff or overwork a case.
Provide true transparency in the billing process.
There are plenty of providers for legal services and less demand for outside counsel. You’re going to have to meet the competition.
Well, all of that is easy. Perhaps. But given the professions’ genetic resistance to change how does the profession and how do law firms overcome that resistance?
In fact, resistance to change is not unique to the profession. It is widely known among psychologists and much ink has been devoted to the issue, including a note by Dr. A. J. Schuler, the observations of Value Based Management, strategies suggested by Team Building, Inc., and the more detailed exposition of The American Society for Quality.
In fact, there is nothing unique to the legal profession’s resistance to change. It exists in every stratum. A century’s study by academia and management professionals of resistance to change, applied to the law firm community, dictates the methodology which must be embraced by law firms to avoid extinction.
Transparency. Perhaps one of the most overused nouns of the decade; it does have real resonance here and is, indeed, the core principle to lawyers’ endemic resistance to change in the new era. Transparency must be adopted by law firms within every aspect of their very own societal culture and permeate every fiber of their being. Transparency is not limited to dealing with clients alone; it must be part of every law firm’s culture. Fear of change is brought about by fear of the unknown and inherent uncertainty of the future. In days of yore, associates, and, indeed partners, hade simple metrics by which they could readily determine their own compensation. Minimal hour billing requirements yielded certainty of compensation; meeting higher hours billed equaled a guaranteed bonus. Bringing in a level of revenues yielded an arithmetic equation by which partner compensation could be calculated.
Management must share openly with the partnership how demands by a newly empowered client base will be met and engage in open dialogue regarding how these challenges will be dealt with by the law firm. Dialogue means active and full participation and consideration of substantive productive suggestions and ideas of the full partnership, a clear, common and shared understanding of the challenges confronting the law firm and how they are going to be met. Sorry, top down management and fiat doesn’t work here.
Transparency also means that associates participate regularly in the discussion, understand the client demands and be part of the dialogue in which how these challenges will be addressed. Do not set hearts thumping and, more important, fear of the unknown, by summoning the troops to a conference room and issue diktats from on high. That is, unless you want your associates live in total fear and uncertainty and have an insatiable desire to provide grist to Above the Law and the rest of the blogosphere about imagined chaos at the law firm. Clients and potential laterals read this stuff; more traditional trade journals report on it, fed by the blogosphere. It has become the 21st century’s version of the childhood game of “telephone.”
A simple case in point: Had management openly discussed with the associate corps in 2009 the need to reduce payroll of the professional staff in 2009 and offered them the option to have a secret ballot of one of two options, namely, reduce salaries across the board or terminate some number of associates, there is little doubt that the vote would have been overwhelmingly for the former and an enhanced sense of common cause, rather than fear or resentment resulted.
And now, let’s get down to same basic principles of human nature, not confined exclusively to the legal profession. Actually, lessons learned over a century by management professionals:
1. We all fear that the risk of change is greater than the risk of standing still. The full and open dialogue now mandated, as discussed above, is designed in large measure to convey to the law firm’s entire community that the risk of standing still is far greater than the risk of standing still. Be sure that the message conveyed is an institutional sea change is required to be undertaken by the firm to survive as a continuing and thriving institution. The message: The risk of standing still far outweighs the need for change.
2. The nature of organizational life is that members of the lower level of the totem pole look to their seniors for role modeling. Young associates dress and act like their seniors. Senior associates dress and act like partners. Organizational life is one in which tone, tenor and style is indeed top down and set by example. Accordingly, as younger associates observe their seniors, mentors and role models adapting to the new realities, so will they.
3. The great motivator is the carrot and stick. Accordingly, lawyers within the firm adapting to and meeting the new challenges to the profession are those who should be rewarded. New yardsticks for compensation must be developed and clearly communicated. Instead of the old metrics for calculating compensation on the old “minder, finder and grinder” measure, the new yardsticks must be based on rating lawyers (and compensating them), utilizing numerical scores, on the identical scoring system of the ACC Value Index:  understanding objectives/expectations;  legal expertise;  efficiency/process management;  responsiveness/communications;  predictable cost budgeting skills; and  results delivered/execution. Lawyers within the firm must be educated on these new requirements and the annual review process demands that those who convey the reviews explain in detail how the yardsticks were applied in assessing performance and areas in which improvement is required.
4. At the same time, the law firm must instill a communal notion that attracting new clients, serving those clients and retaining them is a firm-wide obligation; part of the woof and fabric of the institution. Just as those who meet high grades using an internally applied ACC Value Index, so too should these efforts be gauged and included in the calculus of pain and pleasure on an individual basis, but viewed in the context of the firm as ongoing enterprise. Transitioning in to the new “new” should not be viewed as a threat to those who have the talent and ability to bring in new clients and simply be rewarded for those critical efforts. Rather, adapting to the new world will require weaning and time and should not be seen as a threat to those who had achieved money, fame and glory because of their unique ability to bring in new clients. Law firms and its partners simply need to begin to remove the personal pronoun and use the collective pronoun in reference to clients; it’s no longer “my” client, it’s “our client.”
5. Prevent systemic and personal overload by expecting and requiring changes overnight. Regular roundtables and group meetings must merge as a critical of the firm during which the new yardsticks are discussed; difficulties (no doubt shared by partner and associate alike), are discussed openly, with no judgmental factors attached. Participants should be encouraged to raise problems they may have encountered in this new paradigm and invite suggestions from those assembled on how to meet these challenges. Regular discussion of how the firm is meeting new client requirements removes fear of change, embracing change, have the competence to meet change, remove skepticism of change, threat of changes in personal standing wrought by change and universal buy in to its application and essential need.
© Jerome Kowalski, June, 2010. All Rights Reserved.]]>