JordanFurlong + partners   244

LeClairRyan: Mistiming The End Of The Legal Monopoly | Above the Law
LeClair concocted an accounting and stock structure within the firm that allowed for the purchase of a preferred class of firm stock that paid an 8 percent return contingent on the firm making budget. In the short term, firm partners theoretically could invest, build up the firm’s capital reservoir, and have a comfortable long-term return on their investment. In the long term, once the rules governing firm investment loosened up, LeClairRyan would be instantly positioned to either accept massive waves of outside funds and grow itself into a superpower, or sell the firm and allow preferred shareholders to cash in. Sounds like a great plan, right?
collapse  firm  partners  innovation 
25 days ago by JordanFurlong
How LeClairRyan’s Grand Plans Unraveled | The American Lawyer
ven before leadership changed hands in 2016, some pointed to decisions such as overpaying underperforming lawyers and creating too much overhead that led to the lackluster financial metrics.

The firm failed to meet its budget in for the first time in 2011, according to an arbitration award filed in litigation between former partner Michele Craddock and LeClairRyan over claims of gender bias.

The firm missed budget again in 2012, 2013 and 2014, the court filing said.

According to the filing, LeClairRyan had pointed to its own financial problems—such as problematic compensation packages for its lawyers—to defend against Craddock’s claims that she was paid unfairly.

“The firm’s leadership acknowledged that the ‘raise culture’ of ‘paying more in compensation than [it] should be paying … resulted in (the firm’s financial) shortfalls,’” the arbitration award said.

According to the Craddock decision, the firm used subjective and objective criteria to determine compensation, including hours worked, origination, matter management and team leadership. The firm described its compensation system as a “‘relatocracy,’” the filing said, referring to the connection between each lawyer’s contribution to firm values and execution of its strategy, which “is not determined by the rigid application of a formula.’”

The compensation system wasn’t a big hit. Some sources told ALM that the system, described as complicated and murky, paid certain partners more than they were worth—inconsistent with the firm’s competitive price points for clients.
collapse  firm  partners  innovation 
25 days ago by JordanFurlong
Being a Law Firm Partner Was Once a Job for Life. That Culture Is All but Dead. - WSJ
Four hundred of Kirkland & Ellis LLP’s top lawyers gathered in May at an oceanfront resort in Southern California to toast another banner year.

Kirkland was the highest-grossing law firm in the world for the second year running, earning $3.76 billion in revenue. When a slide flashed on the screen, showing the value of the firm’s shares, the partners in the room quickly did the math. They would be taking home $1.75 million to $15 million.

Not invited were another 560 partners, who were back at the firm’s 15 offices around the world, working. Though outwardly carrying the same title as those lounging poolside in California, they hold no equity in the firm and generally can expect to make $800,000 at most. While a comfortable living, the salary and its implied second-class status is not the reward many expected after striving to join the venerated partnership.
firms  partners 
6 weeks ago by JordanFurlong
Do Laterals Create or Destroy Value? - Adam Smith, Esq.
Finally, back to integration:  It begins at the very start of your talks with the potential target firm or lateral hires.  And you will need to spend real money on it.  According to the study, over 90% of the acquisitions that added value spent 6% or more of the deal value on integration, while 93% of the value-destroying deals spent less.  (I know it may be hard to draw a comparison to “6% of what, exactly?” but notionally think of it as real money.  A $100-million acquisition, which probably happens across the national economy several times a week, would imply >$6-million spent on integration.)

Finally, do not
laterals  partners  strategy 
9 weeks ago by JordanFurlong
Data Snapshot: The Path to Big Law Equity Partnership Is Narrowing | Law.com
Data analyzed by ALM Intelligence, a division of Law.com parent company ALM, shows that among partners at firms ranking in the Am Law 100 index, the percentage of equity partners has been steadily contracting for almost two decades.
That decline comes even while many firms have seen positive financial performance. The Am Law 100’s average revenue per lawyer was up 4.2 percent in 2018 to almost $1 million—the fastest year-on-year growth since 2010. The average Am Law 100 equity partner brought in $1.88 million in profits in 2018, up 6.5 percent from the previous year.

David Altuna, a client adviser at Citi Private Bank Law Firm Group, told The American Lawyer last month that maintaining or shrinking the equity partner tier has become a trend—and that some firms are seeing an “upward lift” in profits from cutting partnership ranks.

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“I think this is just an arms race,” said Nicholas Bruch, a director and analyst at ALM Intelligence. “In the old days where most firms had collegial partnerships where all you had to do was work long enough and you got into the partnership, what that meant was that some people were being subsidized. ”

“ As soon as one or two firms decided that they weren’t going to do that, then everyone basically had to go to that world,” Bruch added.

The American Lawyer categorizes “non-equity partners” as those who receive more than half of their compensation on a fixed-income basis.
partners  firms  compensation 
may 2019 by JordanFurlong
Who Does Your Law FIrm Serve? - Adam Smith, Esq.
I said a moment ago that we worry about firms’ perseverance and diligence in executing every material element of a plan, but I wasn’t quite leveling with you.  If other priorities are expressed–greater collaboration, disinvestment in particular practice areas, more authority and accountability given to business professionals (for example)–then yes, we hope the firm will be conscientious, thorough, and determined in pursuing them, but the “clients first” bothers us in a way we’ve struggled to articulate for some time.  Now we think we have a hypothesis that might clarify this.  Here’s Part 1 of the hypothesis:

Many lawyers do not understand that they’re in a client service business.

They may, and usually do, pay it lip service, but in their core they don’t act it out.
firms  partners  clients  purpose 
may 2019 by JordanFurlong
Comment: ‘This ain’t stewardship’ – delaying partnership until mid-30s is unsustainable - Legal Business
Consider a few issues for a moment. The haemorrhaging of female talent at mid-level from private practice. The disengagement of associates under 30 with major law firms. The loss of talented lawyers to US law firms. Client dissatisfaction with lack of partner time. Inter-generational tension in law firms. All of these issues have a common theme: the sustained yet unsustainable practice of major law firms pushing partnership decisions until far too late. And let’s be frank: routinely delaying partnership decisions until lawyers hit their mid-thirties is ludicrous.

Much of this happens because City law firms strive to keep partner profits by restricting access. But much of the hand-wringing debate about changing attitudes to work among younger lawyers misses the snowflake-encrusted elephant in the room. There has not in living memory been an age in which junior lawyers have been content to plough on in the hopes of the distant prospect of partnership ten to 12 years after qualification. The same veteran partners fretting about Millennials, themselves generally made partner four or five years earlier than the current practice at a time when the odds of success were a lot higher than now.

So if you are part of a major law firm that doesn’t routinely make up your best associates at the seven-to-eight year PQE mark, you are singularly ill-suited for the industry as it stands and looks likely to evolve. Older partners – and law firm leaders – can keep pretending to not see the issue staring them in the face but it won’t end well for your firm. Of course, older partners have decent odds of making it profitably to retirement but for the few lawyers still into that quaint notion of leaving the firm stronger than you found it, well, this ain’t stewardship.

Let’s be frank: routinely delaying partnership decisions until lawyers are hitting mid-thirties is ludicrous.
Consider the meteoric rise of Kirkland & Ellis. There are many singular elements to the Kirkland formula but the most potent is its dual-tournament structure that allows for early promotion to salaried partner before a second chance at full equity. And yet no other element of its model is more derided by rivals for reasons that remain mysterious to neutral observers. Kirkland unsurprisingly doesn’t fret much about changing attitudes to work.
partners 
april 2019 by JordanFurlong
'Change' Is a Mantra for Law Firms, But Will They Tune In? | Law.com
To Ralph Baxter, the former chairman of Orrick, Herrington & Sutcliffe, nearly everything about law firms will need to change if they are to be successful in the near future. They will need to re-examine their financial model; their resources model; their underlying legal services delivery model; and their investment model, Baxter said.
“Associates earn $200,000 when they barely know where the office is,” said Baxter, who is now a board member of professional services technology company Intapp. “That is the lowest-cost resource in a law firm. And you’re going to compete with [alternative providers]? Nobody starting from scratch would start with that model. And so you have to address that. And if you’re not willing to address that, you’re not going to have a chance at competing.”

While Baxter’s message may ultimately be right, according to James Goodnow, the managing partner of Am Law 200 firm Fennemore Craig, there is also a risk that what conversations about change will be tuned out by law firm partners who are still making healthy salaries from traditional law firm models.

“Until it starts hitting partners in the pocketbook, they will not believe it,” Goodnow said. “There is no existential threat, or perceived existential threat, and so that is why there’s no change. So what’s the problem? We are all part of the problem. We have been saying the same thing over and over again. We’ve said, ‘Change is coming. We need to rethink everything.’ And the partners at the law firms have heard this. And it’s like the boy who cried wolf. Nothing has happened. And the law firm partners are doing very well. So because of that, you have tremendous skepticism among a group of people who are very skeptical to begin with.”
change  innovation  process  firms  partners  competition 
january 2019 by JordanFurlong
The Ten Barriers to Collaboration and Effective Client Development in a Law Firm  - PP&C CONSULTING
Several commentators have recently published research on the benefits of collaboration in fully maximizing client relationships in law firms. After 40 years of legal practice, 20 of which were spent in the upper management of one of the world’s largest law firms, I have reached some conclusions about forces that can act as a barrier to effectively collaborating to broaden and deepen client relationships, and consequently to maximizing the economic benefit from firm clients. Lest one conclude that I am not following my own advice on the benefits of collaboration, allow me to explain that some of my observations have been informed not only by personal observation but also by leading focus groups of law firm partners and subsequent interviews with the leaders of some of the largest law firms in the world.
management  leadership  strategy  collaboration  partners 
january 2019 by JordanFurlong
Hogan Lovells Uses Simulated Law Firms to Train Real Partners
Hogan Lovells is amping up its attorney training by engaging newly promoted partners in computer simulations that allow them to test their skills at running a global law firm.

Hogan hired Simulation Studios, a corporate training firm, to create the digital leadership development program for its 2018 equity partner class.

The training was the first for any new equity partner class and is part of the firm’s commitment to partner development on a global scale, Michelle Nash, Hogan’s director of learning and development, told Bloomberg Law.

Since the 2010 merger of Hogan & Hartson and Lovells, the firm’s been dedicated to making annual, incremental advances in its global culture and this training is the one result of that goal, Nash explained.

During the three-day pilot program in June of last year, about 25 equity partners from Hogan’s 2018 class gathered in Monaco prior to the firm’s global partners conference to compete in teams of five against one another running their own simulated law firms.
firms  training  partners  innovation 
january 2019 by JordanFurlong
With Risks Growing, Lateral Hiring Takes a Leap of Faith | The American Lawyer
As it has in years past, the lateral hiring market among the nation’s largest law firms remained robust in 2018. With private equity and corporate practices in the highest demand, some firms have been busy recruiting top legal talent with top paychecks to match.
But as law firms brace for the impending economic downturn, will the lateral strategies they implemented in 2018 lead them down a rabbit hole in the next year that will leave them wishing they’d chosen a different path?

Despite a dip from 2017, lateral activity was still high last year. ALM Intelligence’s Legal Compass, which tracks lateral moves, counted 2,754 partner moves among firms in the Am Law 200 from Oct. 1, 2017, to Sept. 30, 2018. This marked a drop of about 3.5 percent from the previous 12 months, during which there were 2,849 moves. Last year’s report saw a 2.25 percent decline.
Even with the small drop, legal recruiters and consultants contend that the lateral market was as strong as ever. Law firms stared down the barrel of what many economists predict is an inevitable recession in the next few years and kept on hiring.
recession  laterals  partners 
january 2019 by JordanFurlong
The Big Three Annual Reports: Citi/Hildebrandt - Adam Smith, Esq.
In other words:

The “rate growth” group outpaced everyone else by over two percentage points/year over the entire seven year period and still grew demand faster than everyone else; clients were evidently not buying from these firms based on price.
Meanwhile, the “demand growth” crowd beat the daylights out of everyone else in, what, demand (up over 4 percentage points/year for the entire period) while essentially meeting the market dead on in terms of rate growth. They were not “buying” market share with discounts.
In Citi’s apt summary of these findings (emphasis mine):

In our view, brand strength and product focus are among the most highly rewarded traits of a law firm in today’s market. In recent years, much of the demand growth has come from high value work—work that is typically undertaken by firms who enjoy a strong brand, and can command high rates. Firms who have established themselves as the go-to practice in a market—whether that be by industry, practice or region—have been able to increase demand for their services while also charging higher rates.
firms  partners  laterals 
january 2019 by JordanFurlong
Millennials in Big Law: Resistance Is Futile | The American Lawyer
In her seminal series of articles on millennials in Big Law, Lizzy McLellan has noted that “millennials make up the largest generational group among lawyers at large and midsize firms” and that “the numbers starkly illustrate the reality facing law firm leaders: Millennials will soon take over the legal profession in sheer numbers—and soon enough they’ll dominate leadership positions and partnerships, too.”



Like the Boomers, millennials have been vilified by the generations preceding them. Millennials are often described as “self-centered, needy and entitled with unrealistic work expectations,” Jada A. Graves wrote in U.S. News & World Report, in June 2012, and perception has changed little in the ensuing six years. However, “this unsavory list of descriptors is in sharp contrast with how this generation views themselves. … They don’t see themselves as entitled, they see themselves as very hardworking, dedicated and loyal,” she wrote. Like Graves, we believe millennials are no different than their predecessors, and what they really suffer from is a classic communication gap between generations. Moreover, given their unfettered access to information via the internet, millennials are arguably the most well-informed generation. They don’t think they’re lazy—just misunderstood—and they don’t seem to care what their elders think.

The vast majority of millennials are still associates whose main responsibilities are billing hours rather than business development, and the data suggests that the traditional system of leverage, with partners landing major clients and associates putting in the hours to service them, continues to produce favorable financial results. According to McLellan, 61 percent of attorneys at the top 10 law firms by profits per equity partner are millennials, and that percentage decreases as the profitability of firms decreases. However, with the oldest millennials now entering their mid-30s and nearly a decade in practice, firms are looking to elevate them into the partnership vacancies left by the significant number of Boomer retirements expected in the coming years. Given millennials’ priorities (which differ significantly from their predecessors) and the significant post-recession shifts in the way law is practiced, it seems obvious that Big Law will need to get creative in how to accommodate, retain and elevate its largest and arguably most leverageable group of attorneys.
millennials  demographics  generations  firms  laterals  partners 
january 2019 by JordanFurlong
Big Law Should Raise Partner Billing Rates 10+ Percent Now | Law.com
The connection between delegation and partner billing rates isn’t entirely obvious but it’s real. Many partners recognize that much of the work they do is not true partner-level work. Hence, they are wary about charging full partner billing rates; but rather than delegating (as they should), they appease their conscience by shaving a little off their billing rates. Despite this back-pressure, the failure to delegate results in unnecessarily-increased client fees and also denies associates learning opportunities and disinclines partners from doing that which they should be doing, i.e. going out and finding more high-quality work. Raising partners’ billing rates assertively will push back on this dynamic, increase delegation, lower fees, and thus help stem the contraction in market demand.
On the issue of re-balancing where margin is generated, let’s again start with two observations. The first is that, over time, technology will continue to reduce the demand for junior lawyer time relative to that of senior lawyers. The second is that today’s billing rates generate higher margin on junior lawyer time than on senior lawyer time. To see this latter, take a look at the amount by which billing rates exceed compensation (converted to an hourly equivalent) by lawyer cohort. What you’ll find is that billing rates are 4.5 to 5.0 times compensation for junior associates and only 3.5 to 4.0 times compensation for senior associates and counsel. Again, linking the two observations: Big Law is on a path to see margins and profitability diminish as technology continues to erode the demand for junior lawyer time.

Big Law’s margin structure is befuddling. It is inverted relative to all other businesses—all others charge a higher mark up on their higher-value products—e.g. in the rag trade, the mark up on haute couture is much higher than that on prêt-à-porter (ready-to-wear). The inversion is the cumulative effect of many years of raising associate rates more than partner rates while being careful not to let senior associate and counsel rates come too close to junior partner rates. Clients are instinctively aware of the nonsense that associate billing rates have become; that’s why they say they see the value in partner billing rates but balk at the junior associate rates. The truly weird part is that Big Law’s wacky billing rate structure is entirely of its own making. Clients care greatly about the total fee charged; they care little about how that total is arrived at in the law firm’s billing system.
partners  pricing  compensation  clients 
november 2018 by JordanFurlong
New Partners Don't Know What to Expect After Promotion, Survey Shows | The American Lawyer
Of the 238 survey respondents who answered the question “What has disappointed you the most” about making partner, 71 were disappointed with compensation.

Asked to rate their satisfaction with various aspects of partnership, only 57.2 percent of new partners said they are satisfied or very satisfied with compensation.

One respondent said they were disappointed to be “treated as a glorified associate for purposes of compensation and bonus (and, thanks to the midyear associate raises, I’ll make less than most senior associates this year).”

Another said that buying shares, along with lower-than-expected pay and an end to performance bonuses, had placed a strain on finances. “It’s really depressing and demoralizing to get a promotion and then to have to put your family on a strict monthly budget,” that respondent said.

James Cotterman, a consultant at Altman Weil, said he’s not surprised by the number of new partners expressing a misalignment between their compensation expectations and reality.

“In general, career progression management is not a legal profession strength,” Cotterman says. New equity partners see higher pay, but they have to pay for their own benefits and self-employment taxes, as well as capital contributions.
jf  partners  firms 
november 2018 by JordanFurlong
TMG’s Take on the Further Decline of the Portable Book of Business | The McCormick Group
But slowly the concept of the portable book of business is losing steam. First, firms are well aware of the statistics that show the percentage of laterals that can ring even three-quarters of their projections is 50 percent at best. Second, the increasing efforts of clients to concentrate their work among fewer firms, to go to approved lists, and to emphasize law firm teams rather than individuals, are making transfers of clients from one firm to another more difficult. Finally, the candidates are becoming increasingly jaded about the lateral market in general. Too many times, we hear the comment, “they really don’t want me, they want my book of business.”

 

Firms often fail to realize that lateral partner recruiting is still a bit of a romance. When firms, either on their own or through recruiters, do things like setting a hard line on minimum book of business, demanding a lateral partner questionnaire after the first interview, or conducting a “Spanish Inquisition” into the candidate’s existing client base, they turn off many good candidates who perceive that the firm values dollars over quality or culture. As a result, the firm that least emphasizes a portable book of business most often gets the candidate who actually has the portable book of business.

 

We recently met with a managing partner of a regional law firm who offered a unique breath of fresh air. “I don’t care at all about a portable book of business. What I want to know is if that lawyer lost whatever book she claims, would she have the ability to rebuild it.”  As the practice of law continues to emphasize collaboration and client service, more firms are going to need to adopt a similar attitude.

 
lateral  partners  bizdev 
october 2018 by JordanFurlong
Managing Partner Comp Expectations in a Record Financial Year | The American Lawyer
Structural Elements:

Compensation Interviews. Most firms understand the benefits of talking with partners about performance and compensation, but one important question is, is it better to do that before or after setting compensation? Firms sometimes surprise lawyers with a disappointing compensation decision, and then try to rationalize it after the fact. It has been repeatedly shown that post-compensation interviews rarely create satisfaction or understanding, much less change behaviors. Even among leaders who only do post-compensation discussions, it is common to find they dislike the process, they readily acknowledge it doesn’t work well, and yet they do it repeatedly because it is all they know.
It may sound illogical but talking to partners before setting their compensation produces dramatically better engagement, improved performance in the following year, and more effectively manages expectations. But they only work if firms do those interviews well, and unfortunately, perhaps only a quarter of all law firms meet that standard. Good interviews are two-way conversations, focused on helping the partner to be more successful. They explore each partner’s strengths and weaknesses and include a focused discussion of priorities for the coming year. To do that well, those conducting the interviews need to be adept at both listening and coaching (if you are lucky, you may find that 2 percent to 3 percent of your partners have those skills. That’s not a criticism, just a realistic assessment of the rarity of the skills).

Where do these interviews go wrong? Some leaders conduct compensation interviews like a deposition, and not surprisingly, the partners walk out with all the satisfaction of a typical deponent. Just as bad, some leaders sit in silence and let every partner describe how extraordinary they are at everything they do. That fails the most basic test of managing expectations or determining how to extract the best possible use of that partner’s unique skills and talents.
management  compensation  partners 
september 2018 by JordanFurlong
[no title]
What Successful Companies Know That Law
Firms Need to Know: The Importance of
Employee Motivation and Job Satisfaction to
Increased Productivity and Stronger Client
Relationships
compensation  partners  firms 
september 2018 by JordanFurlong
The Battle For Talent Is Disrupting The Business Of Law | The American Lawyer
When partners move (and big-money partners, in particular), they may give any number of reasons as to why, but when push comes to shove, the vast majority move for one or more of three reasons: (i) more money, (ii) and/or to stop carrying unproductive partners (this is a “social” aspect, is generally highly underrated by courting firms in the way of motivation, and goes hand in hand with making more money) and/or (iii) anxiety surrounding their firm’s strategy and general durability. Let’s look at each:

Aggressive payouts: When you are already making $5M and really like your firm, it is one thing to refute the allure of another $1M, but another $5-6M? That’s a different animal altogether. This may sound, well, odd, to the average person – “another $1M isn’t enough to jar someone loose?” – but in many-to-most instances at the higher levels, no, it is not. Generally speaking, the highest producers are not actually driven by money, which has helped them get to their current station in the first place. They work a lot because they like it; they are (almost exclusively) fiscally responsible; they focus on skill/knowledge/personal development, client service and solving practical problems; and their current financial success is a happy byproduct, not the driver, of their decisions. But, we all have our price, do we not? The current climate is proving this and it is happening more and more.

“Equality” issues: With the roots of all law firms hailing from a partnership culture – i.e., one of equality, contribution and having the same amount of “skin” in the game – it is generally very difficult for firms to openly discuss, much less act upon, what is effectively (and sometimes blatantly) unequal contributions to the firm’s bottom line. Further, with (a) the ease of information flow, (b) the (almost uniform) presence of transparent compensation systems, and (c) the relatively recent spike in huge lateral paydays, it is becoming harder for major rainmakers to feel comfortable being paid “in-and-around,” or in some cases equal to, their lesser-contributing partners.

Durability: The movement of big names, firms’ inability to backfill those names with commensurate finances and reputational capital, and the resulting optics have caused significant anxiety amongst partners in many firms, including those that once were considered bulletproof.
laterals  firms  talent  partners 
august 2018 by JordanFurlong
Four charts to better understand the Class of 2017 (060) | Legal Evolution
One of the NALP findings latched onto by the legal press was the increase in hiring among 500+ lawyer firms — up 368 jobs, or 8.6% from the prior year.  However, the data in Chart 4 suggest that BigLaw is unlikely to power a recovery for law schools.  Although the number of lawyers working in 500+ lawyer firms has increased significantly over the last 11 years (+36%), associates appear to be waning in importance. We see this through the shrinking proportion new-hires within large law firms.  Why is this happening?

A partial answer is that firms are finding it harder to sustain organic growth. See, e.g., Georgetown Law, “2018 Report on the State of the Legal Market” at 14 (“Since 2008, the overall growth trend for demand for law firm services has (with certain spikes and dips) been essentially flat to negative in every year.”); MacEwen, “It’s [not] The Economy. Stupid,” Adam Smith Esq., Aug. 5, 2018 (showing large drop-off in annual revenue growth after 2008). Because many lawyers and firm managers associate size with safety, growth through mergers and lateral partner hiring has become a dominant strategy.  The idea is to focus on groups of lawyers who can pay their own way in the current fiscal year.

One of the primary consequences of this strategy is that firms are relying less on associates and more on staff attorneys, counsel, and non-equity partners. See Henderson & Parker, “The Diamond Law Firm: A New Model or the Pyramid Unraveling?,” Lawyer Metrics Industry Report No. 1 (2013). First-year associates require higher salaries; more training and supervision; engender greater client pushback; and often leave before the firm recovers recruitment costs. Thus, large firms are finding ways to get by with fewer of them.
firms  laterals  partners  admisison  schools 
august 2018 by JordanFurlong
At Law Firms, Rainmakers Accused of Harassment Can Switch Jobs With Ease - WSJ
Law firms stand out in a corporate landscape where rainmakers accused of bad behavior often receive second and third chances, according to interviews with dozens of lawyers, legal recruiters, consultants and leaders at some of the country’s largest firms.

Firms’ sole assets are lawyers and their client relationships. As demand for work from the biggest law firms has softened since the financial crisis, poaching top partners has become one of few ways to boost revenue.

Many firms ask about prior complaints in new-hire questionnaires but do nothing to vet the answers, lawyers say. Firms rarely ask partners for references at their old firm, for fear of alerting competitors a star lawyer is in play.

“It can be particularly difficult to find out about misconduct in the legal industry,” said Christine Chung, a partner at New York-based law firm Selendy & Gay who has been involved with hiring lateral partners from big law firms for almost a decade. “If the person left the old firm for a bad reason, you may not figure it out.”
partners  women  diversity 
august 2018 by JordanFurlong
The Double-Barreled Bias Against Black Women Lawyers | Law.com
Just .56 percent of partners at major law firms are black women. That’s not a typo.
As part of her series focused on the struggles and successes of women and minority lawyers, The Careerist Vivia Chen in this episode interviews Michele Coleman Mayes, a leader in the profession who is general counsel for the New York Public Library and former GC at Allstate and at Pitney Bowes.

They focus on the challenges for black women lawyers, and the inherent cultural bias against them, particularly in Big Law.
Mayes also shares what she thinks needs to happen to change the momentum for the better.
partners  women  diversity 
august 2018 by JordanFurlong
A Present-Tense Solution to Law Firms’ Short-Term Thinking | The American Lawyer
Molot has figured out a sort of backdoor to provide today’s partners with permanent equity. And that is by spinning off a firm’s back-office operations and granting partners long-term equity in what may be called a “service co.” Molot said Burford is actively discussing financing this structure with major firms today. He expects a deal will eventually close—it’s not just a hypothetical.

“I think liberalizing the ethics rules is a good idea,” Molot told me. “Because you’re not looking to move the entire profit center of a law firm into a permanent structure, only a slice of it, I think that can all be done now without any change.”

Molot said he couldn’t go into all the specifics of how the structure would work, but he said there would be enough value in a potential spin-off entity to create the types of long-term incentives he wrote about years ago.

“The reason I think there is enough value in that non-legal services company is because you don’t need to get a majority of the profits to that entity,” he added. “You still want a majority of the profits to flow to the partners who are generating them. A minority [of profits in the spin-off] is plenty. I’m not looking to revolutionize the way lawyers practice law. I’m just looking for an adjustment at the margins that rewards partners who build long-term value with a nest egg when they retire and that incentivizes ongoing performance and long-term thinking.”

In an article this week for a Burford publication, Molot wrote that beyond the long-term incentives, there are tax advantages to this spin-off structure. Partners’ equity ownership, when sold, would be taxed as capital gains rather than personal income. And for ongoing operations, the back-office operations could be structured as a pass-through entity, which receives tax preferences in the 2017 tax law.

Much has been written about the varying desires of differing constituencies inside a law firm. That often inhibits change. But one reason I think this structure may actually work—or why it would at least be intriguing to a managing partner tasked with coalescing a firms’ constituencies—is that it benefits almost all groups.

I’ve written already about the benefits to senior partners. Equity into retirement can be a much-needed nest egg. Junior partners would benefit from knowing that the senior partners at their firm are invested in their long-term future. The same can be said for associates. And wouldn’t clients like to know that the partners they trust today are invested in training the partner they can trust next year?
partners  equity  succession  strategy  innovation 
july 2018 by JordanFurlong
How Blank Rome Went From Representing Insurers to Suing Them | The American Lawyer
“From time to time an insurance recovery lateral would arise,” he says, but the firm didn’t want to bring on a single partner without support.

When the firm saw the opportunity to add Dickstein Shapiro’s remaining lawyers, Hoffman says, keeping the insurance recovery practice seemed like “a great way to remain relevant” to the firm’s corporate clients. Since Blank Rome already represented them in other business matters, he says, why not add insurance recovery to that list?

And Murray learned that his whole group would be welcome.

In February 2016, the Philadelphia-based Am Law 100 firm absorbed more than 100 lawyers from foundering Dickstein Shapiro—not in a merger; the latter ceased practicing law.

Going Conflict-Free

Adding an insurance recovery practice called for a few sacrifices and some quickly executed branding.

First, Blank Rome had to commit to giving up any conflicting work. The firm had been involved in panels for Chubb and AIG, working on their insureds’ labor and employment matters. The Chubb panels had to go entirely, Hoffman says. Blank Rome was able to stay on AIG’s panels, but gave up the work in New Jersey and California, where firms are prohibited from working on an insurer’s panel, then later suing that insurer for recovery.
insurance  partners  strategy 
july 2018 by JordanFurlong
The Faculty Lounge: A Glimpse at the Future of BigLaw
The view from 30,000 feet is pretty clear:  Weil Gotshal has officially adopted policies giving itself room to retain a broader range of developing lawyers for a longer time and reward them according to their usefulness and profitability without constraints from an artificial partnership “track.”  It has done so by imposing a formal structure designed to support that approach to retention and promotion by offering lawyers they consider worth keeping general assurances that, at least for the next few years, they are likely to be retained so long as they continue to work hard and improve, and their services are needed.  In reality, this is not a change to the firm’s “partnership track” at all; it’s simply a formal confirmation that what used to be a “partnership track” disappears into the underbrush at a point you can see from the starting line, rather than inevitably ending at a fixed point in plain view as it once did.
partners  firms  leverage 
june 2018 by JordanFurlong
The War for Talent Gets Teeth | Adam Smith, Esq.
Here’s what I think this is about: Once top-tier firms awaken to the reality that we live in an age of Superstars who can command outsized compensation packages–and once firms reconfigure their compensation ladders to accommodate the whopping market rates for top-end individuals–the money has to come from somewhere.

So this is  the first highly visible fissure revealing the implications for the vast majority of us who are not superstars; We may not be worth as much as we thought we were.

Perhaps a visualization would help.  If the classic lockstep system (modified or otherwise) resembles a sort of staircase  ascending and perhaps descending in orderly gradients, the new Super Pointer systems have morphed into something closer to a discontinuous step function.  Most of the smooth old staircase remains–it makes tremendous sense for the bulk of B, B+, and A- players–but grafted onto each end are waterfalls. The waterfall that descends at the right for the B-, C+, and worse players symbolizes an abrupt cascade downward, embodying a stark and unforgiving message.  And the waterfall on the left descending from the aerie of the A+ Super Pointers to connect up with the good old staircase is for the marquee players identifiable by name on the front pages of The New York TImes, The Wall Street Journal, or the Financial TImes,
compensation  partners  talent 
june 2018 by JordanFurlong
Is your Managing Partner afraid of the partners? | Adam Smith, Esq.
Now we can get back to the Managing Partner.  

When you contemplate making the decision that is certain to invite dissension, you need to be prepared to discuss the principles of Hirschman’s organizational construct plainly and directly.  You will (I assume!) have offered ample opportunity for “voice” ahead of time, so that leaves the unexercised options on the table for your partners at two: “exit” or “loyalty.”

You need to make it clear to them the binary decision in front of them.  If they choose “exit,” everyone lives. It’s a free, and large, country, with a lot of law firms out there.  If they choose “loyalty,” they must understand its full implications. And you must be prepared to call them to account if they cut corners on loyalty. And above all you need to have that conversation utterly free of self-interest or self-regard. If your provocative decision is truly in the long-run best interests of the firm (we can stipulate to that, can we not?), then that is the end of that inquiry.  Its implications for your tenure or the voiced attitudes of your partners are not properly admissible in your thinking.  

And if you have “admitted” them into your decision-making, that means you’ve permitted yourself to be afraid of your partners.

Ultimately, of course, this calls on you to live out the indissoluble link between leadership and courage.  As one who knew something about leadership with existential stakes and constituents who had already tried to play the exit card put it:
leadership  firms  partners 
june 2018 by JordanFurlong
Clients have 2 big sources of insomnia. Law firms only cause 1. — BTI Consulting Group
Almost 30% of corporate counsel are unnerved because of the following experiences with their primary law firms:

Partner turnover—lateral movement is making clients less confident in their firm’s ability to deliver without gaps and turnover. Clients are also concerned about the loss of institutional memory and the additional labor and elapsed time required to bring a new partner up to speed.
 
Partner retirements—clients know when key partners at their primary law firms are nearing retirement—but clients believe their firms just passively react to the departures and let things take their course. These clients believe there is no formal plan or thought as to how their matters will be managed going forward. This has the same negative impact as partner turnover.
 
Loss of associates—just as clients are getting to know associates working on their cases, these associates seem to disappear. Clients are fully aware of the high associate turnover rate—but believe their firms will be figuring out how to retain their best associates—which, of course, is any associate your client really likes.
 
No support—clients are discovering their law firms just want to do the work. These firms have no apparent interest in helping their client think through new issues, initiate and carry on conversations to help clients sort out their thoughts, and engage at a level beyond the scope of work. Clients believe this type of dialogue is not only helpful but also crucial to understanding client goals and sensitivities.
 
No team—many attorneys are doing the work, and clients don’t see 1 single attorney as being in charge or accountable. Clients perceive the finger pointing among partners when things don’t go according to plan as evasiveness.
 
Inconsistency—clients experience superstars, mediocrity, and embarrassments all from the same firm. These corporate counsel openly worry the performance will sink to the lowest level delivered.
clients  quality  partners  laterals  strategy  firms 
may 2018 by JordanFurlong
The Law Firm Disrupted: The Most Bedeviling Aspect of Law Firm Change | Law.com
Um lays out a helpful response to this pit of frustration and confusion, which can be the feeling presented by a hype cycle. If you’re told everything is changing but you see that nothing is changing, why bother? Um points out that the challenges of innovation are not unique to lawyers and law firms. Change is difficult in almost all business environments.

Why? She says people are persistently bad at picturing the future—often underestimating long-term change as we overestimate short-term change. People are also wrong in repeatable and predictable ways. And that is further amplified by public discourse. Um’s final point is to acknowledge that change is hard.

But if you want to make it happen, stay the course. Don’t give in to cynicism.

That’s a good lens through which to view a survey put out this week by Buying Legal Council, a trade group for legal procurement professionals.

For anybody thinking there has been a massive change in legal spending, the report might be a damper. The biggest businesses still spend 82 percent of their overall legal budget on traditional law firms and only 5 percent on alternative legal services providers.

But the report also asked about individual experiences. What actions led to savings?

An interesting result on that question was the finding that the amount of time a company has pursued savings through procurement was the biggest indicator of success.

Companies with 10 or more years in legal procurement on average achieved 19 percent in savings, the most of any group.

“The biggest factor is time: Tenure in the legal category has significant effects on what procurement can achieve,” the report says.

So, as Um writes, the lesson might be to tune out the noise. If efficiency and savings are what your legal department or law firm are looking for, stay committed to making the changes in front of you. What does it matter that most others don’t view alternative legal service providers as worthy of their money? If you’re committed they would work for your problem, give it a shot.
change  firms  partners  pricing  procurement 
april 2018 by JordanFurlong
The Right Incentives for Legal Tech | Blog | PartnerVine
The Solution

Law firm partnerships need to get the incentives right to be successful at Legal Tech. The proposal here is to treat investments in disruptive tech differently so that the benefits for partners match the burdens. Here are the key elements:

Ownership. You can’t ask partners to make a long-term investment in disruptive technology if their share of the rewards is based on their billing pyramid at some uncertain date in the future. Partners that make the investment should have a clear stake in the rewards, unrelated to their billing pyramid. As with other business ventures, there should be equity and sweat equity, as further described below. I’ll call this vehicle the “Legaltech Project”.
Control. You also can’t ask partners to make a long-term investment if they don’t have control. We suggest that the equity owners of the Legaltech Project have control of the project unrelated to their billing pyramid. As with other businesses, the equity owners would determine the terms for the issuance of new equity, preferably on an annual basis.
Services Agreement. Now that there’s a sub-group of partners investing in the Legaltech Project, there should be a Services Agreement to incentivize all partners in the firm to work for the Legaltech Project. The Services Agreement would cover the terms of compensation for employees and partners working on the Legaltech Project. For partners, the terms of any sweat equity and discount to external billables would be set annually by the equity owners of the Legaltech Project.
Voluntary Investment. Since ownership and control have been separated from the main partnership, law firms can consider making the investment in the Legaltech Project voluntary, particularly if pursuing Legal Tech is held back by a sub-set of partners.
There's plenty to unpack there, but that's the way I'd convince my partners. The worst outcome for a law firm is no action, and an important part of treating the Legaltech Project separately from the main partnership is to enable decision-making. It is also a better way to match the risks and rewards for law firms pursuing Legal T
firms  it  disruption  partners 
april 2018 by JordanFurlong
First a Big Law Innovation, Then a Split | The American Lawyer
As founders of a small firm, the new Actuate partners said they won’t face some of the problems that can come with building products inside a larger firm where most partners are selling their time.

“As owners of the firm, we are taking the laboring oar to put our money where our mouths are,” Tarkowski said. “Martin and I don’t have to worry about how we’re going to figure out a way to compensate [other partners], because we’re the people doing it. He and I, with the support of our partners, are the ones investing our time and committing our resources to do it because we believe in it.”

The five founders of Actuate Law first worked together at Katten Muchin Rosenman before Tarkowski, Tully and Douglas Albritton, a commercial litigator, joined Akerman’s Chicago office in 2014. (Albritton had a stop at Reed Smith in the interim.) Two other founding partners, Charles Chejfec and Phil Tortorich, were partners at Katten until leaving for Actuate Law.

In addition to a focus on expert systems, the founders of Actuate Law said they offer more flexible billing arrangements than those often found in Big Law, including working with litigation finance firms to offer contingency fees. Actuate Law also rewards all of its lawyers, including associates and nonequity partners, with cash bonuses for originating new clients and work at the firm.

By being in a smaller firm, lawyers are free from rate pressure and client conflicts that had precluded them from working with a number of middle-market clients, Albritton said.

“We think Big Law will become increasingly hostile to the middle market,” added Albritton, “because Big Law likes to brag about how high their billing rates are and how high their profits per partner are. And that decimates the middle-market client that doesn’t want to pay for that.”
firms  partners  innovation 
april 2018 by JordanFurlong
'Half-Assed Innovation': Do Law Firms Need to Change Incentives to Innovate? | The Recorder
Law firms are starting to try to do stuff, but firms were not set up to do anything that’s innovative. It’s like a horse-and-buggy company: How can a horse-and-buggy company design cars when their whole business model and all its individuals are incentivized by how many horses they can make run faster? All the decision makers were incentivized by how many hours they spent on horseback.

Your whole business model is based on that metric, and I come along and say, “There’s these things called cars, and your clients love cars so much more than horses.” Why would you do that?

Is this due to the partnership structure?

It’s entirely because of the incentivization structure at law firms. It was built on a model that made perfect sense in the ’60s, ’70s and even the ’80s and ’90s. It’s completely orthogonal to innovation.

When we see firms quote, unquote “innovate,” it’s horizontal innovation. It’s like, ‘Oh we have a better buoy system. We have a more efficient system for sourcing work. We have a better way of document review.’ They’re making the horses run faster and enable people to stay in this battle longer.

Upon leaving Littler, were you frustrated because of these concerns?

No. Law firms are really trying, and I think they are really genuinely trying to catch up. They realize that the market is shifting, but there’s a disconnect between that realization and what they can do because of their structure and their incentive. Humans can’t overcome that unless you have people that completely change incentives and structures. And there’s a disconnect between those considerations and those questions and whether firms can innovate. Many firms are not linking those two things.

I’ve given many presentations to C-suite leaders and law firms all over the world, and when I bring this up they’re like, “Oh yeah, that makes a lot of sense.” And I’m like, “OK, here’s the fix. Before you start rolling out some half-assed innovation, how about changing the way your firm is structured to incentivize innovation?” And they’re like, “No, no good.”
compensation  it  partners  firms 
april 2018 by JordanFurlong
The Three Noble Horsemen of private practice: ‘Finders, Minders and Grinders’ – RWS_01's B[D]log
And then we introduced the ‘balance scorecard’.

Under the balanced scorecard, in order to maximise your revenue (100 point partner), you needed to be a little of everything – but expert at nothing.

Finders needed to do some minding and, heaven forbid, grinding.

Minders now needed to do some finding and grinding.

And, worst of all, those introverted Grinders now needed to do some finding and minding.

Unsurprisingly, after a short period of time, the Grinders were on their way out. It was just too hard for them to find work and even if they did fluke a new matter, they simply couldn’t keep the client past one or two deals. So, on the basis that “if you cannot beat them, join them” many of the Grinders decided to join the growing ranks of in-house counsel.

More surprisingly, the Finders found themselves in a spot of trouble. They were a heavy cost, and under the new performance structure, they weren’t making any money/profit. Sure they may get the odd referral credit, but they weren’t really doing any of the work and so – in truth – anyone could do what they were doing.

Out of all of them, the Minders were doing the best. But without the Finders to help them find the work and the Grinders to actually do the work, the Minders soon become what we like to call ‘entrepreneurial‘ partners.

And so that is where we are today.
partners  firms  bizdev 
march 2018 by JordanFurlong
The Death of the Law Firm Partnership Vote? | The American Lawyer
“There’s increasing recognition that partnership agreements, a lot of them, fundamentally are obsolete, in the sense that they were written for a different time and place,” Bruce MacEwen of Adam Smith Esq. says. “Notions that it takes some super-majority … to de-equitize a partner, you can’t run a firm that way.”

It used to be that everything from a lateral hire to new leases to major capital expenditures on new laptops for lawyers would require a vote, says Frank D’Amore of Attorney Career Catalysts, who handles lateral and group moves as well as mergers. But those days are fading.

“You could do it in 1950, but it’s a heck of a lot harder in 2018,” D’Amore says of holding partner votes on most initiatives.

And firm partnership agreements are changing as a result.

“The trend is definitely to have fewer votes and to give more authority to the leader of the firm and/or the senior management team, depending on how the firm is run,” D’Amore says.
firms  partners 
march 2018 by JordanFurlong
Should the partnership vote be up for a vote? | The Legal Watercooler
Whether you are operating in 10s or 100s of millions of dollars, or billions, operating as a business should not be held hostage by personal interests. 

Boards v. Shareholders
I am a shareholder in a corporation, I am also on the board. We, the seven person board, make the decisions. We seek input. We are transparent. But when it comes time to vote, we all understand our fiduciary duty to place aside our personal interests and vote in the best interest of the corporation as a whole, and to the shareholders. If we’re doing a good job, we are reelected to our terms on the board, and if we’re not, we’ll there is always the next election or recall.

Many of our shareholders cannot see past their personal interests. That’s human nature. Not so shockingly, they either don’t run for the board, or they are not elected. But they have a voice, and they are heard. But they don’t control how we vote or operate as a business.
firms  partners 
march 2018 by JordanFurlong
Abuse of power within law firms: The rainmaker dilemma
That was the situation that confronted the managing partner of a 50-lawyer New York boutique when he had to deal with an abusive lateral who accounted for one-third of the firm’s total revenue. Other partners were nervous, but the managing partner felt they had no choice. The rainmaker caused constant chaos, complaining about everything. It was not hard for the rainmaker to find another home, and he was gone in short order. The firm took a big hit financially, but everyone was relieved and more productive when the rainmaker left.

In dealing with troublesome rainmakers, Peters also recommends that firms analyze just how much of a contribution the rainmaker is making. Peters described a situation in which one partner’s client accounted for 10 percent to 15 percent of a firm’s revenue, which resulted in the firm’s being very deferential to the partner. When Peters did a profitability analysis, he discovered that the partner and his team were taking nearly 100 percent of the profits generated from the client as compensation, which meant the rest of the firm got no benefit from this group. When these facts emerged, the partner’s power diminished radically, and the firm was able to address the abusive behavior.
women  partners 
march 2018 by JordanFurlong
3 Geeks and a Law Blog: Me Being Wrong (More BS)
Massive passive resistance. Agency dilemmas. Institutional inertia. Status quo bias. Loss aversion. Endowment effects. Lack of urgency. KAP gaps. The Chasm. System justification. Institutional isomorphism. Reams of academic literature explain the Planckian notion that progress does not occur when its opponents see the light but only when they lose their power to oppose—that is, funeral by funeral. I've not only read my Rogers, I've read Bill Henderson's masterful series applying the Rogers Diffusion Curve to innovation, or lack thereof, in the legal ecosystem.
innovation  partners  culture  firms 
january 2018 by JordanFurlong
National | Law firm partnership: in name only? Lawyers can be fiercely independent. It's hindering their ability to change.
“I just don't think it's going to happen,” says Jordan Furlong, the Ottawa-based legal industry analyst. “The vast majority of law firms are incapable – not necessarily unwilling, though many are – of addressing the fundamental flaws at the heart of their model and making significant structural changes to address them.”

Furlong is not alone in doubting whether the old model can weather the combined forces of technology, globalization and a shift towards a buyer’s market for legal services. “What you’re seeing now is that the strains on the industry are revealing the issues that come with partnership,” says Janet Stanton, a partner at Adam Smith Esq, a New York-based consultancy for the legal industry. Stanton even challenges the notion that partnership was ever all that great a success. “Frankly, everybody was making a lot of money, so it didn’t really matter how they were organized,” she says.

Almost a decade has passed since the global financial crisis, and stagnant or declining profit margins are still a major concern for law firms understandably worried about lower earnings in the future. Meanwhile, they are losing market share to in-house legal departments, to new legal upstarts focused on technology and niche legal services and even to the Big Four accounting firms, who are at once boldly and surreptitiously making a push into the legal space.
partners  jf 
december 2017 by JordanFurlong
BigLaw sales debate in the spotlight again - Remaking Law Firms
Aric “Press detailed how Big4 accounting firm PwC has opened a law practice in Washington, DC, that utilizes a “vast sales force”. Sales forces, as Press details, are one example of a series of competitive pressures BigLaw firms currently face. He notes how “sales, at least at some law firms, has become a useful term to trigger debates about the future of client relationships and who controls them.”
An effective sales process” Press details “tends to be a long-term effort and one that in concept at least is not entirely foreign to the ways in which law firms operate. They’re doing what a talented law firm rainmaker or relationship partner is supposed to be doing, if only they had the time.”
As Press explains: “Independent sales teams remain rare within law firms. By now everyone has heard about Womble Carlyle’s efforts to build a sustained sales force.” As I’ve detailed previously, BigLaw firms DLA Piper, Baker & McKenzie and Patton Boggs (now Squire Patton Boggs) have also utilized sales divisions.
sales  firms  partners 
december 2017 by JordanFurlong
HLS CLP | The Practice | Why Law Firms Collapse
The force with which law firms shatter is amazing because it has no parallel in other kinds of businesses. Amazon lost money for more than 20 years. Chrysler filed for bankruptcy seven years ago. Yet both companies—like countless others that suffered financial problems before them—are still shipping goods and churning out cars. Law firms show no such resilience. No large law firm has ever managed to reorganize its debts in bankruptcy and survive. And the pressures that bring law firms down are often surprisingly mild. Most collapsed firms crumpled when they were still current on their debts and earning a profit. Law firms die with extreme ease and astonishing speed.

Why? Drawing on a review of every large law firm collapse in the past 30 years, I argue that the answer lies in the unusual way that law firms are owned. Unlike Amazon and Chrysler, law firms tend to be owned by their partners rather than by investors. And this makes the partners unusually sensitive to decline. As a firm’s profits drop, the decline can feed on itself and turn into a self-reinforcing spiral of partner withdrawals.

Law firms die with extreme ease and astonishing speed.
Partner ownership encourages a cascade of partner withdrawals for two reasons. The first is that, as owners of their firms, partners get paid in profit shares rather than fixed salaries or wages. This makes partners acutely sensitive to problems in a firm because it links their individual compensation to the fortunes of the firm as a whole. For some partners, at least, a decline in profits means a decline in pay. As profits drop, some of a firm’s partners will inevitably start to leave for better-paying opportunities elsewhere. But this causes profits to drop even more, which drives even more partners to leave. Profits then decline still further, causing even more partners to leave, and so on, until the firm finally collapses. If partners were paid in fixed salaries, they would not care about the declining profits. But because they are paid in profits, departures become self-reinforcing. As each partner leaves, the benefits of staying decline for all those who remain.
collapse  firms  partners  ownership 
november 2017 by JordanFurlong
Your Law Firm’s True Profitability Revealed | The American Lawyer
Treating net income simply as profit means that, from an accounting perspective, equity partners receive no above-the-line salary and therefore represent no cost to the business. The result is artificially inflated profit margins that dwarf those at some of the most profitable companies on earth. The average profit margin across the Global 100 is 39 percent and goes all the way up to Quinn Emanuel Urquhart & Sullivan, at a staggering 68 percent.

The piece was intended as more of a thought experiment, rather than seeking to provide yet another metric to assess law firm financial performance. That said, I did refer to a series of specific notional equity partner salary bands, which had been proposed by Alan Hodgart, a law firm consultant. By assigning firms with notional equity partner salaries and deducting this cost from net income, you are left with “true” profit.

Hodgart suggested setting average equity partner salaries at a 25 to 30 percent premium to each firm’s highest-paid salaried fee-earner, or matching the compensation packages offered to general counsel at that firm’s core clients. That equated to around $1 million for an elite firm; $650,000 for a midmarket firm; and $400,000 for firms focused on lower-margin, commoditized work.

(Applying these figures to our latest survey data led to some pretty wild results: Assigning a salary cost of $1 million per equity partner causes Jones Day’s profit margin to crash from 49 percent to just 2 percent, while a $650,000 notional equity partner salary sees Norton Rose Fulbright’s profits wiped out entirely, with its margin plummeting from 31 percent to 0.003 percent. Impressively, Quinn Emanuel and Wachtell, Lipton, Rosen & Katz’s profit margins both remain above 50 percent, even after such deductions.)

Among the many emails I received from readers about the article were several questioning the levels at which these bands had been set.

Some suggested that the salary portion of equity partner compensation should merely be equivalent to that of a firm’s most senior associates. I somehow doubt that equity partners would be happy with that arrangement. Others suggested mirroring nonequity partner compensation. That’s better, but would again underestimate the true cost. Equity partners should have more responsibility or generate more business than their nonequity peers—that’s why they were given equity in the first place—and would therefore reasonably expect to be paid more. (This also wouldn’t work for all-equity partnerships, such as Cleary, Davis Polk, Jones Day, Paul, Weiss, Rifkind, Wharton & Garrison, Ropes & Gray, Simpson Thacher &
partners  profitability 
october 2017 by JordanFurlong
Parsing the Data as Susskind Warns of ‘The End of Leverage’ | The American Lawyer
Nicholas Bruch, a senior analyst at ALM Intelligence, said he does not predict an “end” of leverage, but rather that the high leverage model would be reduced to a smaller amount of firms and practice areas. As clients demand more efficient services and technology makes more types of legal work routine, Bruch said determining the composition of a law firm will become more complicated.

“There is a tendency to see these things as either dead or alive,” Bruch said. “The truth is usually somewhere in between. But we’re definitely seeing the breakdown of this model.”

One law firm that has long eschewed a high leverage model is Honigman. The firm’s 2005 leverage was 1.67, and that number has since fallen to 0.97 last year, making it among the lowest-levered firms in the Am Law Second Hundred.

Foltyn, Honigman’s leader, said he has seen changes in his firm’s staffing model across the spectrum. Work that used to be done by second-year associates, for example, is often now done by staff attorneys who aren’t on the typical partner track. That change goes “all the way up the chain,” said Foltyn, with the goal today being to have “the right person doing each task.”

“Lots of what the 15- or 20-year person does can be done by an eight-year person, and a lot of what the eight-year person does can be one by a four- or five-year person,” Foltyn said.

Foltyn noted that Honigman can deliver a “better, less-expensive product” at a similar margin for the firm when matters are “proportionately leveraged.”

“In that sense, I think leverage is increasing but in a nontraditional way,” Foltyn said. “It’s not the typical triangle model of the law firm where a bunch of associates are working for a few partners. It’s a more complicated leverage model.”

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leverage  partners  laterals 
october 2017 by JordanFurlong
Law firms employ fewer black lawyers than other minorities; which firms have best representation?
Minority law school enrollment recently topped 30 percent, but law firms are not making substantial progress in hiring and promoting minority lawyers, according to a Law360 survey.

Nearly 85 percent of lawyers at more than 300 firms surveyed are white, “a number that has not meaningfully budged over the past three years,” according to a summary of the findings. The Law360 story on the findings is here (sub. req.).

The survey found that only 15.3 percent of lawyers and 8.8 percent of partners identify as a lawyer of color. Among equity partners, 7.9 percent identified as minorities. At every level, minority representation grew by less than a percentage point over the previous year.

Black lawyers are the least represented at every level. Overall, only 3 percent identified as black, while 3.6 percent identified as Hispanic and 6.8 percent identified as Asian-American.

Though Asian-Americans have the largest representation at law firms, they are the least likely minority to be partners. Twenty percent of Asian-American lawyers are partners compared to 28 percent of black lawyers, 33 percent of Hispanic lawyers, and 48 percent of white lawyers.

In a separate story (sub. req.), Law 360 identified the best firms for minorities, based on their percentage of minority lawyers. Above the Law summarized the findings on the best law firms for minority equity partners.
diversity  firms  partners 
august 2017 by JordanFurlong
ILTA 2017: Where Have all the Lawyers Gone?
It’s as if the big firms for whom most of the legal professionals here work for have basically farmed out all things tech and don’t want to get their hands dirty. And therein lies the problem: by creating this gap between the lawyers using the technology and what some lawyers call “staff” a lack of understanding and communication exists. Warren Rheaume of Davis Wright Tremaine, a speaker on the politics of change—and one of the few other practitioners in attendance—calls it a crisis.

So many of the conversations going on at ILTA about innovation and technology lack the input of lawyers actually using the hardware and software. The lack of involvement and participation by lawyers leads in turn to their lack of understanding of what works, what’s coming and how it may impact what they are doing. So the gap is not only cultural in a sense but is also one of knowledge and understanding. As Rheaume told me, “lawyers need to be alert and energized about technology and innovation; there n
it  firms  partners  innovation 
august 2017 by JordanFurlong
How Firms Should Be Measuring the Profitability of Matters | The American Lawyer
How MPH Works
Consider two idealized matters. Matter A is a year-long counseling arrangement. It's relatively low leverage—1.5 associate hours per partner hour, but the client pays full billing rates. Matter B is a litigation matter that settles before going to trial. It's relatively high leverage—4.1 associate hours per partner hour, but the client is getting a 15 percent discount so realization is only 85 percent. Table 1 below shows the calculations of the matters' MPH. Gross revenues are determined simply as hours multiplied by billing rate, (the examples use the same average partner and associate hourly billing rates of $1,000 and $650, respectively). For ease of comparison, gross revenues are $1M for both matters. The matters' realization is applied to gross revenues to determine net revenues from which associate cost—approximated as one quarter of the associate billing rate (discussed more later)—is subtracted to determine margin. Margin is then divided by partner hours to provide MPH.

Hugh Simons
The final line of the calculation presents the matter's MPH as a percent of firm target, typically the MPH level implicit in the firm's financial plan, (every annual plan has such a metric in it ). There are a number of reasons to look at MPH in this way. One is that, because the MPH metric is new, partners don't have a feel for what constitutes a "good" level of MPH in the way that they do for, say, an individual's billed hours; comparison to a target level makes it easy to assess. Another is that comparing a matter's MPH with a target brings into the assessment of profitability how well the matter is contributing to covering the firm's fixed costs and to meeting the firm's profit expectation. Finally, as billing rates increase year by year, the level that constitutes a good MPH also rises; looking at MPH as a percent of firm target allows the assessment of what constitutes a strong MPH to rise naturally over time.
The calculations show that the high-leverage, low-realization Matter B has the higher MPH—111 vs. 80 percent of firm target. That is to say, each partner hour on Matter B is contributing significantly more to coverage of the firm's fixed costs and generation of its partner profit pool.
profitability  metrics  data  firms  partners 
august 2017 by JordanFurlong
Kennedys creates new route to partnership for employees with ideas - Legal Futures
Karim Derrick, head of research and development at Kennedys, said: “This is actually providing a new route to partnership for young lawyers. It encourages them to combine their legal skills with modern entrepreneurship skills.

“Partners, assistant solicitors, paralegals, IT people – it doesn’t matter where the best ideas bubble to the surface. They can stay with it, and become CEO of their product, if they want, or simply have the idea and let other people turn it into reality.”

Mr Derrick said the ideas are crowd-sourced using the software Ideawake, enabling anyone to “post their ideas” onto a kind of social network, which other members of the firm can ‘like’ or comment on.

The ideas then pass through a series of ‘gates’ before they are ready for development. The first ‘gate’ is getting enough likes or positive comments from colleagues. At this point Mr Derrick said he will help develop the ideas into business cases, along with Tom Gummer, a solicitor who in a previous life was the founder of a tech start-up.

Members of staff will then be invited to pitch their projects to a panel of partners on the law firm’s research and development board, in a similar way to Dragon’s Den, before a decision is made to invest and build a prototype.
innovation  r&d  partners 
july 2017 by JordanFurlong
Mishcon promotes two non-lawyers to senior equity partner | Law.com
Mishcon de Reya has promoted two non-lawyers to senior equity partner as part of its “10-year vision”.

The firm has made up business development director Elliot Moss and human resources director Vanessa Dewhurst (pictured) to its senior equity ranks.

The promotions come after long-serving COO Bambos Georgiou joined the partnership in 2015, when Mishcons converted to an alternative business structure.

In its annual promotion round earlier this year, the firm’s corporate, employment and real estate departments all saw one partner made up, including two female partners.

Managing partner Kevin Gold said: “In 2015, we decided to initiate a comprehensive process for developing a 10-year vision for the firm. We engaged people at all levels in an internal consultation, which started with a review of our core values.

“This announcement reflects a key element of our subsequent 10-year vision: reward everyone – lawyer or non-lawyer – who contributes to our success. Our people and our brand are at the heart of our business and Vanessa and Elliot have played a key role in Mishcon de Reya’s ongoing growth and development.”
clementi  partners  nonlawyer  innovation 
july 2017 by JordanFurlong
Bigger is not always better for law firms | Human Resources | Business in Vancouver
“It is like I went from being a C-suite officer in a multinational to doing my own startup,” said Steven Lukas, who recently left a partnership at the international firm Fasken Martineau to join Harper Grey LLP, which has only one office, in Vancouver.

When Lukas and fellow Fasken partner Prentice Durbin left Fasken to join Harper Grey, Harper Grey had 57 lawyers, and 53 of them were litigators.

Lukas and Durbin, however, focus on corporate commercial work instead of litigation.

“I have the ability to come in here and help build Harper Grey’s corporate commercial side in my own image, rather than worrying about whether I can fit within the mould of a bigger firm.”

Conflicts of interest within smaller firms are also rare, he said.

Law firms are not allowed to represent a specific client in one case when that same client is a defendant in another lawsuit in which the law firm is representing the plaintiff.
firms  biglaw  boutiques  partners 
june 2017 by JordanFurlong
Is Jonathan Molot right about BigLaw firms' capital structure? - Remaking Law Firms
What is to blame for this discontent? This Article suggests that the cause is law firm short-termism. Law firms place too much emphasis on current revenue generation—the annual “profits-per-partner” numbers— and not enough emphasis on building long-term value. At core, it is this short-term outlook that leads law firms to squander valuable opportunities to build long-term loyalty among their clients and lawyers.
The Article further argues that the most promising solution to law firm short-termism is a simple one: change the law firm’s capital structure. Law firms focus exclusively on the short term because the people in charge of law firms are compensated based solely on short-term performance; they do not hold permanent equity interests that would compensate them for creating long-term value.
Law firm partners share in a firm’s profits only for so long as they are employed and generate revenues. Upon retirement, they may receive a declining draw that resembles an employee pension, but their equity interest vanishes. It is no wonder that law firms favor current revenues at the expense of long-term value. Law firms are structured to be nothing more than transitory associations of individuals who happen to practice law under the same roof for a particular period of time.
The Article explores how an alternative capital structure—one with conventional permanent equity—would change lawyer incentives and improve both the economics of law practice and the cultural experience of all of a law firm’s constituencies. The proposed reforms offer the promise of marked improvements for law firm partners, associates, and clients.
equity  firms  business  partners  regulation 
june 2017 by JordanFurlong
Prism Legal Large Law Firms Must Improve Client Service Delivery - Prism Legal
Size Matters Not So Much, a guest post at Adam Smith, Esq. (aka Bruce McEwen) in March 2017 found that law firm size hardly correlates with profitability. “When an incumbent partner contemplates an investment in growth and asks ‘Will this put more money in my pocket?’ the answer cannot be supported by any broad statement about firm size among the American Lawyer Top 200”

The Untold Story Behind Big Law Mergers: Revenue Slips, Costs Rise in The American Lawyer in March, notes that an ALM Intelligence report found “that most major law firm combinations since 2000 have not resulted in significant growth.” Of course mergers made the firms bigger. But growing bigger did not fuel any additional growth.

Global Lateral Hiring by The Numbers: A Look Behind the High 5-Year Attrition Rate in American Lawyer International in February found that “Half of lateral partner hires are failures. To be precise, 47 percent of laterals don’t stay more than 5 full years.” And not staying at least 5 years leads to losses it found.
firms  profitability  partners  lateral  service  clients 
june 2017 by JordanFurlong
'Giving the partnership back': Linklaters to ditch individual partner metrics to target team performance | www.legalbusiness.co.uk
In a highly symbolic break from its 2000s incarnation, Linklaters is to phase out individual partner metrics and annual assessments to focus on broader measures of team and firm performance.

In a notable shift from numbers-driven assessments, Linklaters is planning to abandon individual partner targets in favour of focusing more on team performance. The Magic Circle firm also wants to ditch annual appraisals for partners, instead hosting more regular feedback sessions for individual partners and teams.

Moving away from the metric-driven approach ushered in under influential former chief Tony Angel during the 2000s, Linklaters global managing partner Gideon Moore proposed the overhaul at Linklaters' recent annual partners' meeting in Monaco.

The aim is to ensure assessments give added weight to practice performance as well as client-winning, business development, training and innovation. The move is touted as addressing concerns that its codified approach to benchmarking encouraged defensive gaming of the metrics and a focus on narrow utilisation and billing benchmarks rather than broader business goals. Linklaters' leadership argues that approach will allow the City giant to focus on cooperation, strategic practice development and its strengths as a lockstep-based firm.

The shift will be watched in the profession as Angel's pioneering use of metrics was hugely influential in the global legal market.
partners  compensation  innovation  leadership 
april 2017 by JordanFurlong
Do you really know why your law firm has partners?
I know that might be a grotesque prospect for some of you. But just for the purposes of this column, let’s imagine that your law firm was allowed to receive a significant capital injection from, say, a benevolent and highly ethical trust fund that sought only market-average annual returns on its investment and pledged never to intervene in the firm’s operations.
jf  partners 
april 2017 by JordanFurlong
Law Firms Struggle With Lateral Partner Due Diligence, Report Finds | The American Lawyer
An ALI survey found that 96 percent of respondents consider hiring lateral lawyers with a client following "very important" or "moderately important" to their revenue growth strategies. But 30 percent of laterals deliver less than half their expected book of business in their first year at the new firm. Another 21 percent deliver only half to three-quarters.
"All firms will fail at lateral hiring at some point," said Steve Kovalan, the author of the ALI report. "Unfortunately, these are extremely costly failures, impacting firm finances, cultural stability, brand and client relationships."
Many firms have no formal vetting process at all for lateral candidates, Kovalan said. Those that do often aren't rigorous enough about collecting business development plans and other information.
Most firms don't fail at lateral hiring all the time, Kovalan added. They get inconsistent results because they put their trust in gut instinct or personal relationships instead of doing due diligence.
The report recommends a three-part process for lateral hiring: develop a candidate profile, collect candidate data and then use a scorecard.
laterals  partners  firms 
december 2016 by JordanFurlong
Prism Legal Flex by Fenwick - A Strategic Approach to Service Delivery - Prism Legal
and

“[FLEX attorneys] are covered by the firm’s malpractice insurance and receive PTO benefits, as well as insurance benefits if they work a minimum of 20 hours/week. … They are free to work for competitors…. FLEX seeks to offer its lawyers stable, predictable, and high value engagements. … [FLEX will] assist its lawyers who want to go in-house…”

Give your average client and your average lawyer the choice between engaging with a traditional law firm (even one as forward-thinking as Fenwick & West) or with the entity described above. Which will be more attractive? Especially for Gen-Xers and Millennials? For many legal market participants, both buyers and sellers, it’s a no-brainer. FLEX is a better option.

I think this is the main reason why the vast majority of law firms shy away from setting up their own flex agencies. Consciously or unconsciously, they recognize the emergence of a superior model that inevitably would come to replace them.
partners  firms  flex 
july 2016 by JordanFurlong
3 Geeks and a Law Blog: Law Firm Partners: If It Ain't Broke...
That’s all well and good until a few key rainmakers decamp for other firms where they are guaranteed to make more money. Those people who don't usually pay attention because they don’t have to will still notice if the firm pursues change initiatives that affect their time, workflow, or bank account. On the latter point, supported by strong historical evidence, these successful, high-status professionals consider substantial annual growth in their compensation to lie somewhere between a natural law and a birthright.

Even now, their belief in their ever-escalating economic value seems well founded. The lateral market is nuts. 93.7% of firms are pursuing growth via the zero-sum game of acquiring laterals. Unhappy rainmakers are coveted free agents subject to bidding wars. This makes the BigLaw business model—where your most valuable assets can walk out the door—inherently fragile. Even the largest law firms are susceptible to animal spirits and the cascade effect of rainmaker defections.

The prime directive of the managing partner is to keep the firm solvent and intact. That limits their leverage to force through changes that key partners resist. Successful partners need someone to handle the administrative side of the business. But, as autonomy-seeking missiles, they hate to be managed. Martin Bragg captured this well in exchange we had after my first post on the topic (reprinted with permission):
partners  firms  strategy 
july 2016 by JordanFurlong
Time for a Change? Lessons for Avoiding Lateral Mistakes | Law.com
As the number of moves continues to climb–reaching a post-financial crisis high of nearly 2,900 moves last year—the regrets seem to be piling up faster too. Recruiters and consultants say lawyers change their minds in about 1 in 20 lateral moves. That doesn’t include partners who arrive at a new firm only to second-guess their decision, and either suffer the consequences or plan yet another move.
laterals  partners 
july 2016 by JordanFurlong
Laterals, Beware the Capital Loan Honey Trap (Perspective) | Big Law Business
Infusion of cash from multiple sources including new partner capital helps the law firm to meet its obligations to stay afloat. The firm doesn’t have to use the new partner capital to pay down working capital loan debt. Instead, the firm uses it to pay operating expenses, returns of capital to other partners, distributions to partners including the new partner, and maybe some interest or principal on the working line. It doesn’t matter where it went, the money is gone.
partners  firms  compensation 
july 2016 by JordanFurlong
Where in the World Is Your Fenwick & West Lawyer | The American Lawyer
Fenwick is far from the only large firm that allows lawyers to work remotely.
Lisa Smith, a principal at the legal consulting firm Fairfax Associates, said that most firms she works with make it an option in some way. But she noted it’s often only for part of the year. Senior partners may spend the winter in Florida or Colorado, which firms will accommodate.
“Firms are conflicted about it,” Smith added. “Some firms feel like it can detract from collaboration because you don’t have quite as much of the dropping-into-the-office approach.”
Legal consultant Edwin Reeser said that Fenwick’s practice of building out an office around the lawyers who work remotely is unique and indicates the firm must value the lawyers who do it. (Boies, Schiller & Flexner has an office in Hanover, New Hampshire, though their partner in the bucolic hamlet did not return a request for an interview.)
flex  partners 
july 2016 by JordanFurlong
K&L Gates announces 'game-changer' program to develop income partners
Craig Budner, the global integration and strategic growth partner, called the program “a game-changer” in the firm announcement. “Too often in law firms, someone makes partner and they are left to figure things out on their own,” he said. “This program affords our lawyers the tools and training they need to be successful owners of the firm.”
partners  firms  training  ffs 
june 2016 by JordanFurlong
The Cravath Pay Raise: Challenges and Opportunities for Law Firms (Perspective) | Big Law Business
This time is different. Not because Big Law has moved into some form of corporate socialism, but because circumstances have changed. As power has shifted to buyers of legal services and the options for legal service delivery have expanded, the idea that firms will be able to shift some or all of the cost of associate compensation to rate increases seems almost inconceivable. Over a period of years? Perhaps. From the start? Not likely. As Bloomberg Big Law’s Casey Sullivan noted in an article discussing the odd way in which the industry sets compensation, he quotes Craig Silliman, the General Counsel of Verizon:
compensation  laterals  partners  firmd 
june 2016 by JordanFurlong
Perspective: Lawyers and the Benjamins, Six Lessons | Big Law Business
Here again, many of the most successful, profitable firms with the happiest partners don’t feel the need to disgorge every fact.  Those firms focus heavily on honesty, managing expectations, helping partners succeed, competing outside the firm rather than inside and engendering high levels of trust through strong and consistent communication.
compensation  partners 
june 2016 by JordanFurlong
Perspective: What Law Firms Can Learn From a McKinsey Consultant | Big Law Business
firms are struggling because “expert work is misaligned with customer value.” He cited four reasons, all deeply embedded in the cultures and assumptions of the law firms, which, by word and deed, emphasized:

Expertise over service
Knowledge over management
“Craftwork” over continuous improvement
Individuals over teams.
What does that mean in practice? Bollard offered four examples of how the misalignment between service providers and clients manifested itself. They included:

Expertise was “valued for its own sake, rather than for contributing to customer value.”
Knowledge was shared via “ad hoc apprenticeship, [and was not] codified or shareable.”
Experts “own tasks” and fail to improve “the way organizations perform tasks.”
Finally, there was a glaring lack of teamwork, no “end-to-end ownership” of the client’s experience, and a failure to create and enforce “standard ways of working.”
firms  partners  management  change 
june 2016 by JordanFurlong
Firms Increasingly Making Partners Pay to Leave | Law.com
n the past few years, a growing number of law firms that have delayed distributions of prior year pay sometimes as late into the following year as June. Some firms have lengthened the time they will take to pay back capital to departing partners to as much as four or more years, and have amended partnership agreements to limit a partner’s earnings to whatever their draws were at the time of departure, forcing departing partners to forfeit unpaid distributions that would have come out of year-end profits.

“I think it’s ridiculous what big firms do to try and force people to stay,” said one Chicago partner who recently left a large firm. “What you’re describing from Kirkland doesn’t even touch the tip of the iceberg.”

The partner said the firm he left was holding onto his capital contribution for up to two years, which he said he expected before announcing his departure. He said his previous year’s compensation typically wasn’t paid out in full until May. And at his former firm, he said the partnership agreement allowed the firm to claw back compensation from the year prior to a partner’s departure.

Edwin Reeser, a consultant in Los Angeles, said law firms have typically used such provisions as protection, only enforcing them when a departure would severely impact the financial stability of the firm. But now, he said, they are being more aggressively applied.

“They are being used as a sword now, [where it] used to be it was a shield,” Reeser said. “It puts huge restrictions on the ability of a partner to leave.”
partners  firms  laterlas 
june 2016 by JordanFurlong
Too Many Lawyers Report Faults Firms for Resisting Layoffs | The American Lawyer
• Respondents said that the most immediate threat to demand for legal services is coming from corporate legal departments. Two-thirds of the firms surveyed said that they have lost business because the work has gone in-house.  
• More than have half of the large firms surveyed said that they are making changes to how they approach pricing. At large firms, typically around one-third of all fees were discounted. 
• More than 88 percent of law firm leaders reported that they believe technology will continue to replace human resources.  
• Seventy-five percent of large firms surveyed are using part-time lawyers and contract lawyers. 
• About half of the firms surveyed said they had increased their equity partner, nonequity partner and partner-track associate ranks in 2015. 
• Nearly all large firms said that they would grow by acquiring laterals this year. Just over 88 percent said that they would acquire groups; 30 percent said that they would open new offices; and 42.7 percent said that they would acquire other law firms. 
firms  laterals  strategy  partners 
may 2016 by JordanFurlong
The Ten Barriers to Collaboration and Effective Client Development in a Law Firm  - Bernero & Press
Several commentators have recently published research on the benefits of collaboration in fully maximizing client relationships in law firms. After 40 years of legal practice, 20 of which were spent in the upper management of one of the world’s largest law firms, I have reached some conclusions about forces that can act as a barrier to effectively collaborating to broaden and deepen client relationships, and consequently to maximizing the economic benefit from firm clients. Lest one conclude that I am not following my own advice on the benefits of collaboration, allow me to explain that some of my observations have been informed not only by personal observation but also by leading focus groups of law firm partners and subsequent interviews with the leaders of some of the largest law firms in the world.
collaboration  bizdev  firms  partners 
march 2016 by JordanFurlong
Sorry, partner, your capital cash is gone--but where?
Q. What is partner capital?
A. Partner capital is a deposit of cash with the firm by the partners.

Q. How is the amount of the deposit of cash determined?
A. It is usually determined as a percentage of a partner’s forecast compensation.

Q. What is a typical percentage used by firms?
A. The percentage varies from between 20 to 60 percent in large law firms, and averages around 35 percent.
partners  firms  finances 
february 2016 by JordanFurlong
Law Firm Leaders' Books of Business Lend Credibility | The Legal Intelligencer
As law firms grew in size and complexity, there was a well-adopted school of thought over the past decade that the firms' leaders should focus 100 percent of their time on managing what had become large-scale businesses. But in Pennsylvania alone, there are a number of firms, including the largest by head count and the most profitable, respectively, whose leaders have some of the largest books of business in the state.
And, for them, it comes down to credibility.
leadership  firms  partners 
february 2016 by JordanFurlong
Time To Rethink Partner Capital Contributions | The American Lawyer
Capital contributions and commitments give partners an equity stake in their firms and fund the firm’s operations. Firms raise capital from partners in order to finance new investments ranging from furniture upgrades and new technology to the opening of new offices. The amount partners contribute is often calculated based on their projected annual income, though that’s not always the case. 
capital  partners  finances  firms 
february 2016 by JordanFurlong
Verizon GC: We Don’t Need Law Firms At Our Business Meetings | Big Law Business
By definition, when we’re bringing in outside counsel, we’re bringing them in as a vertical staff, as a highly specialized resource on one particular issue.

The best outside counsel understand they are the client of the in-house legal team, and should make that team look good.
Outside counsel who are best at what they do understand that their one vertical issue fits within a larger strategic framework of legal policy, regulatory, and business issues that our in-house team is supporting the company on. Understanding how their role fits within a larger framework, and therefore the types of decisions we make about how to handle a case, how to move forward on something, have to be viewed through that larger lens.


Photo Courtesy of Verizon

Related to that, I think outside counsel always serve their clients best when they understand that they are the client of the in-house legal team, and should make that team look good, understanding that the legal team in-house has a set of clients they’re interacting with on a larger basis.

As far as pet peeves go, I can’t say, “Boy, I have a big complaint about some of our outside counsel,” because if I did, we would find other outside counsel.

Big Law Business: So if other firms wanted to work with you, what would turn you off?

Silliman: One pitch that you sometimes hear from law firms is, “We want to be your strategic partner, we want to sit inside your meetings, we want to get to know the business, etc.” You have to understand that, particularly at today’s billing rates and with the way billing is structured, we have an in-house legal team that sits with the clients every day, and that’s part of the larger strategy of the business.

That is what our in-house legal team does. We don’t need outside counsel to do that, and more to the point, it wouldn’t be cost-efficient for us to pay outside counsel to sit in meetings just to hear what the business is thinking, or even what the in-house legal team is thinking in a larger strategic sense.
clients  partners  strategy 
february 2016 by JordanFurlong
Graying Firms Wrestle With Making Room for Younger Lawyers - The New York Times
In an effort to broaden its approach, Bryan Cave, a 950-lawyer firm that began in St. Louis 142 years ago, started a “business academy” two years ago to give associates the opportunity to brainstorm ways to better serve clients. At its most recent meeting last spring, about 100 entry-level associates offered ideas to improve client service. A winning idea was to offer electronic tagging of federal bankruptcy filings so interested clients are updated automatically, according to Therese D. Pritchard, the firm’s chairwoman.
laterals  training  partners  compensation 
november 2015 by JordanFurlong
Survey: New Partners Optimistic There's Room at the Top | The American Lawyer
A smaller percentage than last year deemed it "nearly impossible to make partner" at their firms: Just 34.6 percent agreed that it's "nearly impossible" for associates at large firms to become a partner, compared with 43 percent in 2014. More than 65 percent disagreed, compared with 57 percent last year, which seems to indicate that more newly promoted partners who have accomplished the feat think that others can do the same.
partners  laterals 
november 2015 by JordanFurlong
Two ways to tackle mixed and ill-fitting practices in your law firm | Nick Jarrett-Kerr
Whilst many firms have found it possible, within reason, to operate different business models for parts of their practice, there remains a strategic issue which will need to be determined at some stage. This is because firms need to seriously consider the strategic importance of maintaining areas of the firm that offer no synergies with the rest of the firm, whilst burdening the firm with management inconsistencies or economic headaches.
strategy  firms  partners 
october 2015 by JordanFurlong
The Legal Whiteboard
That said, I am not counting BigLaw out.  I am writing this blog post from the International Legal Technology Association (ILTA) conference in Las Vegas.  From far away, it is all too easy to treat BigLaw as a monolith--it's not.  At ILTA, professionals from several of the most innovative law firms are willing to pop the hood and share what they doing.  See Ahead of the Curve: Three Big Innovators in BigLaw, Aug. 25, 2014. Suffice it to say, some firms are several years into strategies that have the potential to take market share from peer firms.  Further, the innovation teams inside these firms are having the time of their professional lives because the work is so collaborative and creative--the antithesis of billable hour work.  What is also clear is that many competitors just can't muster the leadership nerve to make similar investments. 
firms  demographics  generations  partners  compensation 
september 2015 by JordanFurlong
Is it time for you to go, Joe? - Bernero & Press
Second, firms need to start these conversations early because they are difficult. For many lawyers, their work is their life and they may not want to go gently away. And even those who look forward to stopping can’t miss the intimations of mortality that are encroaching. (Of course, my friend, everyone needs an estate plan but you don’t really expect I’ll ever have to use it, do you?) By starting early with their partners, whether at age 55 or 60, firm leaders can eliminate some of the drama and make the end of a partnership seem a natural, expected transition. Of course by starting early some firms may spook colleagues to leave prematurely. But I assume that firm leaders already keep a list of flight risks, of those who can’t afford or bear to contemplate stopping: the 60-year-old who has just started a third family or the pale partner who has not taken a vacation since making partner in the first Reagan administration. The needs of those outliers can’t govern the firm’s policy, at least not at most places.
succession  partners 
september 2015 by JordanFurlong
Tomorrow’s law firm: has anyone asked its clients? | Opinion | The Lawyer
I spent 13 years working in-house and what mattered to me when working with legal service providers (I deliberately avoid using the term law firms) can be summarised as output and value.

When undertaking complex M&A or litigation, did I care about the partnership structure of the Big Law firm I instructed?  No.  When I needed additional bandwidth for business-as-usual work, did I care about the corporate structure of the ‘new law’ service providers I turned to?  Of course not.   And I bet very few GCs give the whole structure issue very much thought at all.

What matters more than structures is business models.  What matters is legal service providers deciding what it is they do well and how best to deliver that in the simplest way possible for their clients.
innovation  firms  partners 
august 2015 by JordanFurlong
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