3 Geeks and a Law Blog

Hypocrisy is the tribute vice pays to virtue. As such, it is a venal sin. But I’m thin skinned and easily goaded. I couldn’t take it when my best friend called me out for being a hypocrite. And so I have found my way back to a law firm, Haight Brown & Bonesteel, on a part-time basis despite thinking that my law firm days were over.

NOTE: still running Procertas, consulting, writing, speaking, Nextlaw Labs, etc. the rest of the time.

Me = Hypocrite

My original image was as a scourge of law firms. But I didn’t write the headlines. As regular readers have come to learn, my actual message, best captured in my ACC guidebook, is focused on deepening relationships between law departments and law firms. My thesis is that there are win-win improvement initiatives that can come from data-driven law department/firm collaboration. As such, I have staked out the position that law firms are redeemable. I’ve stated repeatedly that law firms are capable of real, positive change.

But I could not be more cognizant of the fact that real change is hard. It is easy to write about change. It is relatively easy to advise large law departments to talk to their law firms about change. It is a genuine challenge to drive change in a law firm, especially absent explicit client mandates. So while I have accepted speaking gigs from law firms and discussed consulting engagements with defined objectives, I have shied away from nebulous commitments to assist firms with general improvement. Until now.

I feared failure. More specifically, I feared that I would be regarded with the same Easy-button mentality as a technology purchase. That is, they would see their commitment to pay the sticker price as their primary obligation. Then I, like technology, would be expected to work some magic in background. Make everything better but don’t make us do anything different. People are all for progress, but they sure hate change.

I don’t have easy answers. Some behavioral changes may be simple (stopping doing X; get better at Y). Few are easy (we’ve always done X; it will take time/effort to get better at Y). So I had an expectation of being completely ignored.

What I had to get over is that this did not make me special. Someone has to do the hard work eventually. I had no excuse for refusing to get my hands dirty.

Innovation is hard.  Despite how easily the word gets tossed around, like a "bong at a frat party" as a friend likes to say, but to truly innovate, to truly change a process, a culture, a product is one of the most difficult things to do. 

Many legal industry pundits call for law firm innovation, and us non-lawyers have been called out as the gatekeepers of innovation because we are not moving mountains, challenging the status quo faster or with enough chutzpah.  There may be some truth to those claims, we do get frustrated, our ideas can be difficult to implement in the highly matrixed world of law firms and we can get stymied by politics.  Often we give up and retreat into the comfortable,  "we've tried that before" type excuses.  But we have to keep trying, use different approaches, find new language and keep repeating the cost benefit of not changing.  If we don't innovate or transform what and how we do things, we may see more of our roles outsourced or vanish entirely as has been the trend. Today, I pulled out a report I created back in 2008 as an example of what firms could and should be doing for CI and practice strategy.  At the time, the report was shot down for a variety of reasons but as I resurrected it from my "precedents" folder today, and blew off the dust, I still saw its brilliance.  It would have been easy to walk away and not keep trying to innovate in the space given that set back. I was crushed to be honest and wondered why I was working in the industry when what I was hired to do was not welcomed with open arms.    The report was and still is a perfect example of CI innovation in firms. At the time, no one was talking about insights or big data.  But the report pulled together internal insights with external data, it combined form with function. It's a beautiful report and it lives in my file cabinet to this day.  A pretty picture of what could be. 

The newspaper also spoke with an unnamed chief litigation officer for a Fortune 100 company who also questioned the need for the pay raise. The chief litigation officer said a lawyer in the company’s litigation department with 20 years of experience doesn’t make $180,000. “Why would we ever think a first-year associate is worth that?” the lawyer said.

Quite a way to remind clients of all they fund beyond the mature domain expertise they actually value. It was a move guaranteed to engender client backlash and further fuel some threatening trends in client/firm relations. But firms still fell all over themselves to keep up with Cravath.

Keeping up with Cravath. Cravath, Wachtell, et al. I have cognitive dissonance because I don't really think of them as part of the general BigLaw market despite the fact that I recognize their role in driving that market (Cravath salary scale, Cravath bonus scale...). I've never found fault with the idea that there are elite lawyers and elite firms who are sought after to handle price-insensitive work. Such work exists. Clients pay a premium for it. Cravath, Wachtell, and a few others are undeniably in that class and are in many ways immune from most of the forces I drone on about.

But work is finite, especially price-insensitive work. And clients are getting more discerning about what they put in the price-insensitive bucket. It's easy to understand why the AmLaw 5 firm thinks they need to keep up with Cravath. But it is hard to understand why the AmLaw 95 firm thinks the same

Or is it. The game is follow the leader. AmLaw 5 is competing with Cravath. AmLaw 10 is competing with AmLaw 5. AmLaw 20 is competing with AmLaw 10. And so it goes down the line. AmLaw 95 is not trying to keep pace with Cravath, they are keeping pace with AmLaw 85.

Keeping up with Cravath II. And while a few law firm partners may be almost as venal and petty as me, it probably isn't pure ego.

There is client chatter about the New Normal. But many successful partners have not encountered it yet. They still operate in a world where law is a credence good. How much associates are paid is among the many status signifiers (impressive zip codes, lobby art, watermarked business cards) that communicate, "Don't worry. We got you. No one ever got fired for hiring [prestigious firm]." Not paying associates the going rate might be seen as evidence of diminished stature.

It is easy to imagine associate salary increases coming up as a negative the next time a firm seeks rate increases. "Rule No. 1 of associate raises is that partners do not pay for the raise.” Clients may push back on the basis that they are not going to foot the bill for delusions of grandeur.

But it is just as easy to imagine the mirror-image discussion if the firm declines to increase salaries. A firm that doesn't raise compensation has less of a claim to 'market' rates since they clearly do not consider themselves in the same class as their peers.

Moreover, large, diverse firms are not monoliths. There is plenty of intrafirm variation. You can be AmLaw 150 in profits per partner but still have a viable claim to the best tax or real estate practice around. Which herd is the firm trying to run with?

Clients notice. So do the laterals who might hesitate about moving to a firm perceived as falling behind the pack.

More of the Same. Maybe this is the straw that breaks the camel's back. More likely, it is just another straw because, well, inertia. Regardless, it is absolutely a sign that law firms expect the status quo to reign for the foreseeable future.

Yet even those of us partially inclined to yawn cannot ignore it. Above the Law's traffic went through the roof [every associate who got a raise should be sending lavish holiday gifts to Cravath's Executive Committee and the ATL editorial team]. And the story continues to occupy considerable mindshare.

The big story in law (measured by attention) is therefore something along the lines of: Rich lawyers give slightly more money to not-as-rich lawyers based on belief that other not-as-rich lawyers (inside counsel) will send them high-margin work regardless. 

That the story consumed so much oxygen manifests a lawyers-only view of the world. Obviously, the legal world is, by definition, lawyer centric (though some misguided souls argue it should be client centric). But delivering legal services is increasingly a team sport. The question of how domain expertise is leveraged through process and technology, not just additional expensive bodies, keeps growing in importance. Yet, unsurprisingly, I didn't hear anyone at ILTAcon discussing commensurate raises for allied professionals. The caste system remains intact.

I have no idea what Perkins Coie pays their associates. But I'd wager that hiring Toby will have a more significant impact on the firm's cost and performance (and revenue and profitability) in the near, medium, and long term than whatever decision they made on salaries. That the firm has now also lured Keith Maziarek away from DLA Piper is an absolute coup. Add a new, change-agent CIO in Rick Howell, and you can start to tell a story that should be far more important to clients than what associates make. But I doubt an item about a firm assembling a process/pricing/tech nerd dream team among its leadership would get one percent of the client attention or peer-firm mimicry of an elite New York firm marginally increasing salaries of people who already work there.

Likewise, I must have missed the media circus when Christopher Ende left Goodwin Procter to become the Law Firm Pricing, Solutions, and Panel Management Leader at GE. But knowing Chris (from conferences; no intimate knowledge of his role/plans implied) I suspect that his hiring will be more meaningful to the industry than whatever Goodwin pays its associates. If Chris does a quarter of what Vince Cordo has done since he left Reed Smith to join Shell, we're in for a wild ride.

Which, of course, means I've come back to my evergreen themes: (i) clients demanding change and (ii) allied professionals playing a critical role in both making and satisfying those demands. Neither really has much to do with associate salaries.

If clients truly care, then the salary increase is a big deal. If clients don't really care, then it isn't. Truly caring would mean changing purchasing behavior.

Referencing associate salary raises to score rhetorical points in the midst of a rate discussion—where negotiating down the size of the annual rate increase has somehow been reframed as getting a 'discount'—is not altering behavior. You are still just having a discussion about rates. You might consider a different conversation.

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D. Casey Flaherty is a consultant who worked as both outside and inside counsel and serves on the advisory board of Nextlaw Labs. He is the primary author of Unless You Ask: A Guide for Law Departments to Get More from External Relationships, written and published in partnership with the ACC Legal Operations Section. Find more of his writing here. Connect with Casey on Twitter and LinkedIn. Or email casey@procertas.com.


Some bonus material for those not offended by the length of my posts.

More of the Same II. You get what you reward. We're rewarding the same things in the same way as before. So behavior is unlikely to change much.

There is a genuine question of whether most firms are even increasing total compensation to their associates. Only after we get through bonus season will we know which firms are actually paying their associates more overall and which firms just moved bonus money into salaries.

Whether or not total pay is actually up, clients should absolutely take an interest in comp structure (and fee structures, governance, succession, process, training, tech, etc). The incentive that clients are rightly worried about is that the perceived increase in fixed costs will drive firms to (a) raise rates and (b) demand more hours from their associates. But these have been the dominant trends since forever. Annual rate increases have come to be regarded as natural law. And most law firm bonuses have been premised on hitting/exceeding hours for decades.

It's not that incentives don't matter. I'm just not sure they have shifted in any meaningful way.

Keeping Up With Cravath III: The herd is strangely selective when it comes to mimicking the elite firms. Keeping pace on salaries is relatively easy. But what about lockstep partner compensation? Ruthless brand discipline? Etc. When you bring those up, you get all kinds of "we're different", "they're different", "that won't work here", "you don't understand"....which is often true enough. Still, the idea that a firm is keeping up with Cravath or Wachtell because they pay their associates the same salary seems to get the causation backwards (you are not elite because of what you pay your associates; you are able to pay associates because you are elite).

I appropriated this from the estimable Bruce MacEwan:

So what does this putative firm of the future look like?

For as long as I’ve been in and around this industry, I have heard ad nauseum infinitum that firm ABC or XYZ, whether or not they had any remotely plausible aspiration to these leagues, only wants to act on the “highest value,” “price-insensitive,” “bet the company,” “make or break,” “premium work.”

Your day has arrived. You may wish it hadn’t.

Because what is the model I’ve sketched above? It’s a model, as a partner at an AmLaw 10 told me last week, with “clients who are happy to pay $1,100/hour for me but not $400/hour for even a qualified midlevel associate.” What is that model?

Wachtell.

We’re all Wachtell now, if we can pull it off.

But I put this squarely in the category of “be careful what you wish for,” since “being Wachtell” is far more challenging than being a typical AmLaw 50-ish firm—no offense to those of you in that category.

Let’s back up: I have a confession. I used “We’re all Wachtell now” calculatedly. The phrase—the very mention of the firm’s name—can inspire envy in the ranks of those who subscribe to the notion that their firm needs to be in that top right quadrant of the 2 x 2 matrix, the “highest value,” “premium work,” etc., engagements. And of course, who can object to Wachtell staking out its own party-of-one place in the PEP stratosphere?

But that’s not all the Wachtell model is about. There are two other critical elements more challenging to embrace: (1) that 1:1 partner:associate leverage, and (2) their intense focus on highly specialized and narrow lines of business, without deviation.

Achieving (1) is going to require wrenching changes in almost every firm that chooses to go down that path, and it can risk introducing centrifugal forces that can tear the place apart before you can achieve the goal.

And as for (2), it requires saying No relentlessly, and many more times than you’ll ever get to say Yes.

Are you game?

And if not, what’s your plan?

A couple months back, I was giving a talk in a far off land  (Canada) and the moderator introduced me as "the most internet famous person [he'd] ever met." This was genteel nonsense, all the more endearing because it was absurd on its face.

He was doing obvious violence to the concept of fame. Googling "D-List Celebrity" returns an image of the prop comic Carrot Top, who has 63.4K followers on Twitter. As you can see from the panel to the right, my follower count establishes me 4% as Twitter famous as Carrot Top who himself is only 5% as Twitter famous as Emergency Kittens.

Further, the moderator's puffery doesn't hold up even if "fame" is being used in the local sense--i.e., widely known among the tiny subset of people who read about changes in the legal market. As the panel to the right also indicates, I am one of the least followed Geeks. There were several people in that room who are Lambert-like in their audience reach. I was not even the most famous person the moderator encountered that morning.

Rather I think what he was commenting on my ubiquity. It may be dreck, but there is no denying that my production is prolific. If you are one of those people (he is) who actively engages on the topics I cover then I am downright Kardashian in terms of saturation. Repetition has a substantial impact on perception.

In a similar vein, after a few drinks, one of my fellow presenters complimented me on my ability to "stay on message." That was his polite way of noting that every time he sees me, which is often, I am spouting a slight variation on the same themes. But that's the thing, I am generally not directing my talks to the people with whom I share the stage, fellow bubble dwellers who see me too often. I'm talking to an audience where 99% of the people have never heard of me and are almost completely unfamiliar with my message.

These fine gentlemen read a huge percentage of what gets written on changes in the legal landscape so they encounter me all the time. They are not alone. There is a cadre of people who are similarly engaged. But how many? My anecdotal answer: not many. 

True Story 1. I used to write the legal tech column for the ACC Docket. For two years, a magazine sent to more than 35,000 inside counsel had my ugly mug opposite the coveted back inside cover. But when I would attend the ACC Annual Meeting--filled exclusively with people who get the Docket--my name/face recognition was de minimus among the people I did not already know (from the internet and other conferences). Mind you, I only got that writing gig after a fair amount of publicity elsewhere. Still, the people I met for the first time had no idea who I was, let alone anything about the ideas I espoused on the back page of the magazine they received every month.

That they did not know me was not all that surprising. Even today, I'm a niche player. But in trying to explain my interests to them, I would invariably make reference to important ACC initiatives like the Value Challenge or prominent ACC figures like Susan Hackett, Jeff Carr, and Ken Grady. Blank stares all the way around. So I would move onto 'common' concepts--AFAs, LPM, KM--and still elicit no spark of recognition or interest. Eventually, the conversation would turn to anodyne topics like the weather or the venue before we politely parted ways.

It was evident that attending the ACC Annual was the sum total of their engagement. If a topic was not covered in a panel they attended, they were not going to hear about it. And, of course, these were the self-selected individuals willing to make the extra effort to attend the ACC Annual (a great conference). The majority of their peers got their CLE's online or for free from local law firms. I was interacting with the most active subset of in-house counsel. And most of them had no frame of reference for topics I consider fundamental to legal service delivery.



True Story 2. Last week, I was talking to a friend who was preparing an internal presentation on his firm's successful use of alternative fees [slow clap]. He mentioned the presentation to a partner whose response was, "What's an AFA?" That a partner at any law firm is not familiar with the term is surprising. The AFA conversation is older than I am. Such ignorance from a partner at a firm that was already broadly and successfully using AFAs is even more astounding. Except it isn't. It is pretty easy to imagine a successful partner navigating a lucrative career without being confronted with the alternative fee concept frequently enough to internalize the abbreviation.

Most Lawyers Don't Read, Most Clients Don't (Seem To) Care

Imagine a conversation between an in-house counsel from Story 1 and the law firm partner in Story 2. The exchange might very well contain substantive brilliance that furthers a vital business interest. Neither story suggest that their subjects are anything other than true domain experts who render valuable client service.

But once the topic moves beyond discrete legal issues to the business aspects of the relationship, they probably struggle. Discounts would be about the long and the short of it. Regular writedowns of invoices. Annual rate-increase theater. Discounts serving as the fallback whenever the conversation veered into nebulous topics like efficiency, staffing, responsiveness, etc.

It's not that they would fail to recognize that there were problems. It's that they would not really know where to start with remedial action. So they would apply the discount bandaid and try to get back to their comfort zone, substantive legal issues. That is, until the in-house counsel became frustrated enough to shop elsewhere, leaving the outside counsel to wonder why the phone stopped ringing.

Most lawyers don't often pay a penalty for their lack of curiosity in these areas. And when they do, it is not obvious, especially to them. They can still be wildly successful themselves and make invaluable contributions to the success of their clients. Lack of broader interest in the process, technology, and business of law (T-shaped) rarely makes them bad lawyers. It just limits their effectiveness when more lawyering is not the optimal solution to a particular problem.
I don't blame anyone for not reading me. Indeed, I don't blame anyone for not reading the people I read (who are much better than me). Lawyers spend all day reading. It is natural that the little time they have off the clock is spent parenting, socializing, exercising, drinking, sleeping, or consuming popular culture. Despite some evidence to the contrary, lawyers are human.

Nor do I expect the reading habits of lawyers to change much. I expect an incremental increase in general awareness of the New Normal and an attendant increase in comfort with process and technology as necessary appurtenances to expertise in the delivery of legal services. Beyond some baseline improvements, I don't really expect most lawyers to add much process/tech acumen on top of their domain expertise. Rather I see the continued increase and integration of legal operations, legal engineers, allied professionals, process/tech nerds, etc. The integration point is key. It's not like these people don't already exist. But the caste system is resilient.

I'm not exactly the first person to point to the superior returns from the division of labor supported by proper management (i.e., making people capable of joint performance). If only we had a group of people whose job required them to keep abreast of changes in the legal market and who were then empowered to modify behavior at law firms.

You'd think that "managing partner" fits that job description. On recognizing shifts in the market, you'd be right. These fine people are acutely aware of what is going on. But managing partners rarely have the unilateral authority to do that much about it because their partners are so focused on autonomy that many of them would choose it over money:



So who do the partners listen to? Clients.

A return to that topic in the next post.



ADDENDUM: At ILTAcon (amazing conference), my friends mocked me for writing so frequently and so long. Deservedly so. I can't let go of ideas until I get them on paper. This is my scratchpad, which some of you seem to enjoy.

This was supposed to be the final installment in my series on why law firms are not doing more to change the way they deliver legal services.


In Part 1, I made the case that managing partners were well aware of the shifts in the legal landscape but were becoming more pessimistic about their firms' ability to adapt. In Part 2, I suggested it was rational for powerful partners to resist change efforts because their success validates their approach. In Part 3, I explained the clients tend not to ask for change (voice) because they seek alternatives instead (exit). In Part 4, I cautioned that client's signalling (exit) was too incremental to materially affect near-term behavior and therefore expressing their dissatisfaction (voice) was imperative if they want more/faster change than they are getting. Here I tried to dig a little deeper into why partners might be unaware of what they might do differently.

Because it is so important (and repetition matters), I want to conclude with some more thoughts on the role clients can/should play. Hence one more post than originally planned.

Six posts out of a single survey question serve as Exhibit A that I write way too much.

image [cc] Angelskiss31

Let me start out this post by saying that I like David Perla, President of Bloomberg Law and Bloomberg BNA’s Legal division, and consider him to be an ally for the law librarian and legal information/knowledge profession. However, I have to say that I am a little disappointed at his Above the Law article yesterday called "A Challenge for the Gatekeepers." His article starts out with a warning to the legal industry saying that "change is coming – with or without you," but then he spends the rest of the article singling out Law Librarians and Knowledge professionals as the gatekeepers. Although David says this isn't about Bloomberg Law's new roll out of a Tax Product, quite frankly, it reads like it is. I'm really disappointed that he took to Above the Law to vent.

Transitions in how a legal products perform for practice areas is something law librarians deal with practically on a daily basis. One of our primary responsibilities for our firms are to evaluate these products and present an initial evaluation report to the Practice Group Leaders or power players within the practice area. Law Librarians have a diverse legal expertise, and some are legal area experts. I know law librarians that are more savvy when it comes to understanding practice areas like Tax or IP than most Associates or Junior Partners in their firms. We understand our firms, we understand our Practice Groups, and we are tasked with the responsibility to know when it is right to push for new products, and when it isn't time.

I can't speak for everyone, but I push for change every day! EVERY SINGLE DAY!!

I constantly evaluate new products, establish training sessions to teach attorneys and others the value of the very expensive resources we purchase with our law firm partners' money. I work to de-duplicate resources so we are not wasting money. I also make recommendations on keeping similar products because I understand the way the attorneys work and know that sometimes it pays to have those resources, even if on the surface it seems irrational. I make sure that we have team members that go to PG meetings to observe, listen, and engage. It's not gatekeeping. It's called being a leader and making sure that we are implementing the overall strategies of our individual attorneys, our Practice Groups, our Offices, and our Firm as a whole.

I'm a little confused when David wrote:

I attended a session at AALL [American Association of Law Libraries] where librarians were brainstorming how to be more relevant or get lawyers to pay more attention to them. But when the moment comes to actually introduce change at law firms, they flinch out of fear. Afraid that the attorneys they work for will find change uncomfortable, they balk—just as Monster’s executives balked at upsetting the site’s customers.

Not buying a new legal information product is not the same as "flinch[ing] out of fear." I find that statement to be a bit misleading, and way overly broad in the assumption that law librarians can't pull the trigger on change.

I appreciate Bloomberg BNA being a disrupter in the legal information field. But, I will say that when the disruption initially affects the Tax and the Labor & Employment groups, it makes for a very difficult sale to those groups. Not that they are change adverse, but that they are either well served by their current products and have a comfort level with them, or that they are a group with very narrow profit margins that have to have concrete evidence that new, much more expensive, products will truly make their work more efficient and not decrease that narrow margin.

It's not about throwing up barriers for change. It's about understanding our environments and applying our expertise, experience, knowledge, and wisdom to every single change we see, every single day. I'm not a gatekeeper that flinches at change, I'm an experienced leader for change that make sense for my organization.