Amazing Firms, Amazing Practices : Gerry Riskin : Edge International

From the Sacramento Business Journal today:

Law firm confidence index drops to record low

Excerpt:

Confidence in the economy among managing partners at large law firms nationwide hit new lows in the first quarter, according to the latest research from the Citi Private Bank Law Firm Group in New York City.

I recommend three priorities to Managing Partners:

1. Bulletproof existing clients (complacency is deadly in light of the predator-like behaviour you can expect from your competitors as their revenues diminish)
2. Concentrate Business Development training and strategic assistance on your best rainmakers (Train the rest later - for now, you need results)
3. Coach all partners on how to deal with fee resistance (Your partners will be divided and conquered unless you give them the tools and confidence to effectively deal with the inevitable fee resistance that accompanies a recession.)

PUNCHLINE: There is so much more to do, but I have seen these three initiatives making an immediate palpable difference. NOW is when you need these benefits most.

• Email This
• Print
• Comments (1)
• Trackbacks

 

               Ms. Juhi Garg

Edge International is delighted to announce the addition of Ms. Juhi Garg.   Juhi holds a Masters in Business Law from India's foremost law school, the National Law School of India in Bangalore and is also a graduate in media from Delhi University. With Juhi on our team, Edge International will offer our full traditional range of consulting services to Indian law firms. In addition, we will be focusing on assisting Indian law firms with their strategies to develop business in the western hemisphere and to assist western firms wishing to take advantage of the burgeoning Indian legal services market.

India is a legal services market that is attracting global attention, for good reason. It produces more law school graduates annually than any other country. Its impact with outsourced legal services in western markets has been significant and this is set to grow exponentially as western clients seek to cut legal costs in the face of the current economic recession. Also, upcoming legislation is expected to significantly relax restrictions on foreign firms and lawyers practicing in India. Several international firms have already entered into arrangements with Indian law firms in anticipation of this change.

 See Juhi's biography by clicking here.

PUNCHLINE:  If you are a firm based in Australia, New Zealand Canada the US or UK and are interested in exploring an arrangement with an Indian law firm and you would like counsel on the selection and vetting processes, please allow me, Juhi Garg or Robert Millard to explore helping you.

 

 

• Email This
• Print
• Comments
• Trackbacks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Read all of the Top Ten Predictions from the Futurist for 2009 and on - possibly most relevant to the legal profession are:

 

 5. There may not be world law in the foreseeable future, but the world’s legal systems will be networked. The Global Legal Information Network (GLIN), a database of local and national laws for more than 50 participating countries, will grow to include more than 100 counties by 2010. The database will lay the groundwork for a more universal understanding of the diversity of laws between nations and will create new opportunities for peace and international partnership. -Joseph N. Pelton, "Toward a Global Rule of Law: A Practical Step Toward World Peace," Nov-Dec 2007, p. 25

6. Professional knowledge will become obsolete almost as quickly as it’s acquired. An individual’s professional knowledge is becoming outdated at a much faster rate than ever before. Most professions will require continuous instruction and retraining. Rapid changes in the job market and work-related technologies will necessitate job education for almost every worker. At any given moment, a substantial portion of the labor force will be in job retraining programs. -Marvin J. Cetron and Owen Davies, "Trends Shaping Tomorrow’s World, Part Two," May-June 2008, p 41  

PUNCHLINE:  I have no idea if these (and the other eight) are correct but perhaps they are useful catalysts for thought as you plan.

• Email This
• Print
• Comments
• Trackbacks

The image above is the core of the post of internet phenom, Rajesh Setty, in his post today at Life Beyond Code: Optimists and Pessimists - The big difference is..

Couple that with the wisdom of lawyer and legal profession provocateur, Patrick Lamb, in his post today: Silver Lining in Black Economic Cloud? in which Pat says among other things:

If you don't see the opportunity to restructure relationships in ways that produce savings for your clients while at the same time strengthening your relationship with that client, you need to open your eyes.

Punchline:  My asking Managing Partners to treat the deterioration of the economy seriously is in perfect harmony with seeing the situation as a competitive opportunity.  My view of Dynamic Resilience as an alternative to a traditional strategic plan is just that - exploiting the opportunity to be stronger than competitors in challenging times.  (Remember the hiking joke when one hiker says to the other “I don’t have to run faster than the bear; I only have to run faster than you”).

I invite you again to push the button.

 

 

• Email This
• Print
• Comments
• Trackbacks

The worst market crisis in 60 years: "recession or worse"?  Says who? The 80th richest man in the world, George Soros, (estimated net worth of 8.5 Billion according to Forbes).  Is Mr. Soros toying with the "D" word: "Depression" when he says "recession or worse"?

I recommend that you read the entire Financial Times (FT) article dated January 22, 2008: The worst market crisis in 60 years.

This is not a new subject for me - see my August 3, 2007 post Doom and Gloom for the legal profession - it's coming with respect to which Valorem Law founder, Patrick Lamb, kindly called me "an awfully good soothsayer" in his January 19, 2008 post Will The Perfect Storm Fundamentally Alter The Foundation Of The Profession?

Citibank’s Law Group Head and friend, Dan DiPietro, seems to be singing in harmony with Mr. Soros.  Dan believes that US law firms may soon be battling unprecedented economic pressures.

As a law firm leader,  you need to ask yourself some hard questions.  My Edge International partner, Rob Millard, and I believe you need to: Recession-Proof your Law Firm and that Law firms must immediately prepare by reassessing their strategies in order to:

• minimize the potentially firm-threatening impact and
• capitalize on competitive opportunities

Managing Partners should consider these SEVEN KEY STRATEGIC FACTORS in order to “recession-proof” the firm:

1. Strong Leadership ??  In ancient times, the Cherokee Nation had one chief who would rule during times of peace; another during war. The need for hard, courageous decisions, even sacrifice, is common to both recessions and wars. In both, strong leadership is critical if hard decisions are to be taken and actually executed.
2. Ramp Up the Frequency of Financial Data Reporting   ??Things can change fast in a recession. Clients, under financial pressure themselves, terminate engagements. Revenues may contract. Debtor payment periods and write offs may deteriorate, putting pressure on liquidity. The firm’s key financial metrics must be monitored far more frequently than in boom times.
3. Make the Hard Decisions Humanely and Fast  ??Layoffs, if required, must be quick and humane not only to preserve capital, but also to get the firm past this trauma quickly and focused on working forward again. Continued employment of underperformers must be carefully assessed. Where the market is no longer buying specific services there are two choices: retool (quickly) or separate. (Do not misinterpret this as a suggestion to rush to lay off people though. Long-term considerations suggest this is a last resort option for all personnel except those who ought to have been asked to leave years ago.)
4. Get Practice Leaders and Client Team Leaders focused on short-term action plans  ??Actions must be executed more quickly than in “good times” and therefore designed for rapid implementation. Plans must be focused, systematic and disciplined. Those that will actually drive plans must be integrally involved in crafting them and managing their execution. Feedback and accountability measures are critical to ensure that the plans are executed, especially when they relate to the hard, courageous decisions (point 1.) Non-billable time becomes a valuable asset and must be actively managed to ensure that key tasks receive priority.
5. Involve Your Clients  ??In recessions, client mobility increases. Client needs evolve more quickly as new threats and opportunities emerge. Firms need to go beyond simply expressing empathy and assuring continuing loyalty. They need to actively position themselves to meet emerging key client needs. This cannot be done without actively discussing business (not just legal) issues with clients. If you don’t have client teams in place for your key clients, now would be a good time to start!
6. Manage Internal Expectations   Business as Usual Could Be Lethal??Remember the tale of the two frogs? The first is dropped into a bowl of hot water. It jumps out. The second is dropped into a bowl of cold water and slowly heated up. It doesn’t jump out and eventually dies. Similar procrastination has been the death of too many good firms. You need to explain internally what is being done to weather the recession and the likely impact on the financial positions of your people. This knowledge will motivate your people to do what is expected of them rather than default to “business as usual.”
7. This Too Shall Pass   Keep a Balance With Your Long Term Strategy??Think strategically about whether and where to cut short-term resources. Retaining some temporarily unprofitable practice areas and individuals may be advisable if they are important to your long-term goals. On the other hand, a recession is an excellent time to re-engineer or sever areas that have become less profitable but have been tolerated to avoid conflict.

The Chinese character for “crisis” consists of two symbols. One means “danger,” the other “opportunity.” While strategy may be more challenging during recessions, if you grasp the nettle, opportunities will arise to enhance your client mix and your talent base.

Thanks again to Robert Millard for his collaboration on this. 

As always I appreciate your feedback.

• Email This
• Print
• Comments
• Trackbacks

Gary Wingens of Lowenstein Sandler and Frank Burch of DLA Piper listen to Dan DiPietro of Citibank forecasting a tough 2008 at the Army and Navy Club in Washington DC during The Edge International Managing Partners Strategy Summit

Last week, my Edge International partner Robert Millard and I hosted a very private, personal, invitation only, Strategy Summit for the Managing Partners of 10 law firms to explore:

•    key strategic issues facing law firms today

•    what law firms are doing to address these issues

•    what constitutes "best practice" in the law firm strategy process

The managing partners represented firms ranging from the largest in the world (DLA Piper) to a tiny, brand new firm with a highly innovative business model (Valorem Law Group.) It was a truly fascinating two days of strategic debate and solution building.

On the facilitation / faculty side, we were joined by guests Dan DiPietro of Citibank’s Law group and Michael Rynowecer, President of BTI Consulting Group of Boston. The venue was one of the most prestigious and historic venues in Washington DC: The Army and Navy Club, barely a block from the White House.

We are currently preparing to communicate learnings from the Summit in a special publication in February. Not everything will be covered. The summit included many candid exchanges between the managing partners, sometimes on quite sensitive issues. Arguably, this was by far the most valuable part of the summit. We have agreed that the Managing Partners themselves will be the final arbiters on what gets published and what does not.

Thank you very much to the managing partners that participated. In alphabetical order, they were:

Charles P. (Chuck) Adams, Jr., Managing Partner, Adams & Reese
Francis (Frank) Burch Jr., Joint Global Chief Executive Officer, DLA Piper
Nicolás Herrera, Managing Partner "Guyer & Regules" (Montevideo, Uruguay)
R. Steven Kestner, Executive Partner, Baker & Hostetler
Patrick Lamb, Chairman, Valorem Law Group
Don G. Lents, Chairman, Bryan Cave
Christopher Marston, Chief Executive Office, "Exemplar Law Partners"
Keith Vaughan, Managing Partner, Womble Carlyle Sandridge & Rice
Mark D. Wasserman, Managing Partner, Sutherland Asbill & Brennan (substituted for by Executive Partner Tom Gick on Day 2)
Gary M. Wingens Managing Partner Nominee, Lowenstein Sandler

Each invitation was extended based upon personal peer recommendation.  The event was not publicized beforehand.  Many of those invited reluctantly declined because of conflicts with their internal firm events, often related to compensation given the time of year.

Given the very positive feedback from the participating Managing Partners, we will certainly host similar events in the future.  If you are interested in being invited and are willing to recommend other firm leaders with whom you would like to explore timely issues, please let me or my Edge partner Rob Millard know.

• Email This
• Print
• Comments
• Trackbacks

Many of my friends and clients know me as a very optimistic person so this post may surprise them.  I feel like I am about to watch the next dot com crash only I am not talking about the internet or high tech.

I have held this belief for many months and I believe that the economic indicators that can hurt the legal profession are gaining momentum.  How much longer can the legal profession remain insulated from the market realities?  I say not long at all.

Our legal profession is in for very rough times. My message to Managing Partners is not to become pessimistic but simply to have a contingency plan in place.

Most firms will:

a) continue to be hourly billers (for the most part)
b) plan for extensions of the historic linear revenue and profit per partner growth
c) perhaps fine tune by de-equitizing or closing an unprofitable office or two

but few will create a contingency plan for:

a) dramatic drops in demand for many traditionally hot practice areas
b) over-staffing (at all levels and in most practice areas)
c) the cancer of internally competitive behavior as the pie shrinks

Those inclined to tell me I am crazy I ask to wait six months following the next US election – then I will eat this post if I was wrong.

I love our profession and want only the best for it so I hope the smart Managing Partners out there will prove that great firms can thrive through adversity – especially when your competitors are not capable of doing so.

My heart hopes I am wrong – but my mind tells me otherwise.  I decided that down the road it would be no good to say “I knew it” if I lacked the courage to post it now.

Your comments are most welcome, as always.

Addendum:

Patrick Lamb posted the following comment both here and on his own popular blog: In Search of Perfect Client Service in his post: Gerry Riskin's Forecast: Stormy Times Ahead.

I think he deserves a response:

Patrick’s comment/question:    Gerry--very powerful post.  Not one that I disagree with at all, but can you share with us the signs you see that lead you to this conclusion?  And are the elections tied to result or simply a benchmark for the time by which you think the changes will be apparent?  Ciao.

My response:  The US election is a process that sees powerful interest groups exercising their discretion in a manner which will increase the probability of their preferred candidate(s) being elected.  As a result, a temporary and indeed unsustainable economic climate may be manifested.   I think things get very real about six months after US presidential elections.  With outcomes certain, interest groups lose their motivation in a hurry – at least for a while.   As for the indicators themselves, I am afraid to start because where do I finish?  However, here are some things to examine:

    Currency fluctuations
    Price of oil
    Price of precious metals
    Increase and decrease in “real” jobs
    Geographic location of those jobs
    Political stability of job locations
    Foreign relations as they affect business
    Balance of Trade between countries and regions
    Housing markets (not just prices – but demand)
    Auto market (demand)
    Credit levels (or should I say “debt levels”)
    Interest rates (they are not falling, in fact, get ready…)
    The advent of the largely unregulated Hedge Fund industry
    The establishment pensions that invest in Hedge Funds
    The Domino effect – how one indicator impacts many others

And specific to the legal profession:
   
    The disparity between views of General Counsel and Outside Law Firms
    Associate starting salaries (and consequential impact on all salaries)
    “De-equitization of partners” trend
    “Law firms going public” (anticipated) trend
    The obsession by partners on remuneration
    The expectation of continued increasing revenues, PPP and PPL
    The surrealism of the financial expectations of new lawyers
    Comments from Citigroup’s law firm market specialists

Disclaimer:  Yes, I obtained a business degree before law and yes I studied economics and yes I subscribe to reliable publications like The Economist but I do not profess to be able to predict the stock market or future currency fluctuations.  In fact, I will admit that my post is based to a large extent on a hunch – intuition (I read Blink by Malcolm Gladwell so maybe this is OK).

Punchline:  If there were a fund that invested in the legal profession worldwide (at least in the western world) I am not a buyer – I might even summon the courage to put some money at risk by “selling short”.

In closing, perhaps not you, Patrick but there are many who will think I am completely wrong – I not only respect their right to hold that view, I hope that their view prevails.  I post this because if there I seven a significant possibility I am right, as stated in my original post:  “My message to Managing Partners is not to become pessimistic but simply to have a contingency plan in place.”

Addendum #2:  In light of the stock market tumble today, I thought I should clarify that this post was not a reaction to it but rather done before today and scheduled to auto post after midnight this AM - here is an image from my aggregator to verify:

-30-

• Email This
• Print
• Comments (1)