As Nicole Nehama Auerbach joins Valorem, she says:

“I saw Valorem as a once-in-a-lifetime opportunity to really make a difference in the way litigation is handled… I was captivated by the firm’s commitment to provide real value to business clients, and, in particular, its emphasis on alternative fees. Alternative fees are more important than ever to clients as the economy fluctuates and rates continue their upward march. Traditional law firms have been slow to recognize the need to satisfy their clients’ economic concerns."

Valorem Law Group represents a head on assault on the billable hour.  Here’s an excerpt from thier new web site:


The top ten list…

  1. We are all refugees of elite BigLaw firms;
  2. We are skilled courtroom lawyers, in practice and at heart;
  3. We are revolutionaries and risk-takers, entrepreneurs at heart;
  4. We bring a single-mindedness to the notion of client service;
  5. We believe you are entitled to budget certainty, to a real and realized commitment to help you deal with the cost pressures you face;
  6. We believe that the practice of law is an art, not a science;
  7. We believe in collaboration and hold the team rather than the individual sacrosanct;
  8. We love technology and efficiency — the more red tape we hack through, the better;
  9. We take our work very seriously — ourselves, not so much;
  10. We are real people, with supportive spouses and wonderful kids (who, at least today, appear to really like us).

They even have the audacity to say this:

We provide value or you adjust the bill.

I recommend a thorough tour of their web site.

My Opinion:  Don’t bet against these people – they are proven champions as individuals and together they are going to disturb the peace of the billable hour.  I say BRAVO!!  The leader is Patrick Lamb (center in photo above) – learn even more at his famous blog: In Search of Client Service


General Mills’ Roderick Palmore

According to Roderick Palmore, executive vice president, general counsel and chief compliance and risk management officer at General Mills Inc:

"The statistics speak for themselves.  They say our progress in the profession has been disappointing."

Attention Managing Partners:

More than 100 general counsel executives of Fortune 500 companies and managing partners of U.S. law firms are convening next month in an effort to come up with specific ways to improve diversity in the legal profession Managing Partners

The 100 GC’s (in addition to Palmore from general Mills), will include the likes of

General Mills Inc.
The Boeing Co.
Prudential Financial Inc.
Microsoft Corp.
Johnson & Johnson
Tyson Foods Inc.
The Coca-Cola Co.
Bank of America Corp.

See the full story at Law.com in Amanda Bronstad’s piece today called GCs and Law Firm Managing Partners to Convene Over Diversity (also the source of Palmore’s photo in this post)

The Services Safari Blog posted this yesterday:

Calling all Lawyers… The Bear Stearns Collapse

The following is an excerpt:

Shareholder litigants are going to be talking about this one tonight and tomorrow. Let’s recap the fall of Bear Stearns stock price and market value the last year:

Stock price last year: $159/share – market cap: $18.76 billion
Stock price last week: $69.75/share – market cap: $8.23 billion
Stock price Friday: $30/share – market cap: $4.04 billion
Acquisition price Sunday: $2/share – market cap: $236 million

The post ends with:

Are criminal indictments in the future?

Punchline:  this trumps my wildest speculation about how erratic the economy may become.  Managing Partners:  Are the appropriate practice group and industry teams watching all economic indicators (formal and informal) and reporting to you frequently (a la #4 in my January 24 post: Recession-Proof your Law Firm).

Answer Your Outsourcing Questions

  • Why do some corporations and law firms outsource legal work while others do not?
  • What ethical issues arise in outsourcing legal services?
  • Who is doing the outsourced work and what qualifications do they have?
  • What type of legal work is being outsourced? What are the concerns regarding the outsourcing of patent drafting and patent searches?
  • What impact, if any, will legal outsourcing have on the elite guild nature of the U.S. legal profession?

The International Out-Sourcing and the Legal Profession conference will be held on April 25, 2008 at the UC Berkeley School of Law.

I suggest you decide whether your firm can afford not to have someone attend.

For more information, contact The Institute for Global Challenges and the Law at  the University of California, Berkeley School of Law:

Telephone: 510.642.7830
Fax: 510.643.2362           
email:GCL@law.berkeley.edu

Registration is a modest $150.

For questions or to register by phone, please contact Emily Arntz: 510-642-7830

To see a full description on line, go to the Institute for Global Challenges and Law

The Wall Street Journal has a post called: Big-Law Associates Facing 2008 Salary Cap by Dan Slater.

Here is a key paragraph from that post from which my title was derived:

"We called around to firms to find out whether associate salaries, called economically-irrational in some quarters, have finally (or, at least, for now) hit a ceiling. The answer seems to be yes."

The comments under the post range from:

"I think associates should just worry about keeping their jobs instead of clamoring for increases in salary"

to

"I expect salaries in NY will bump up to 190 before the end of the year. That will cause other cities to match. The following year NY will again bump to 230, and other cities will again follow. The pattern has been established, and there is no way to stop it. It’s pure economics. Plain and simple."

PUNCHLINE:  I am empathetic with recent grads who must repay large loans and face rampant inflation.  However, I believe the only thing that matters is "the client" because collectively the clients will drive demand and the parameters under which legal services are sold.  As the world flattens, clients’ choices expend and as Cisco and GE and other powerful clients have clearly demonstrated, if the profession can’t summon the imagination to change the equation clients will change the equation for them.  I reference two of my previous posts:

Offshoring in India Changing Legal Services in the West
OUTSOURCING: "Lawyers are service providers. We are not gods"

Image Credit:  The image in this post was copied from the original WSJ post

Footnote:  At the moment I am on assignment with a prominent South African law firm…  you should see how wide their eyes get at the mention of the scale of associate salaries referenced in this article.

Is your “winning streak” about to become a “losing streak”?  I believe it is likely unless you prepare for the test you didn’t ask for but are about to take.  Let’s be honest, most law firms have had a pretty good run and your partners are well accustomed to it.  Will your partners understand what a decrease is? Will your firm maintain the winning attitude that brought you this far?  If you don’t think the next few miles of road are bumpier than you’re used to then the following may be of little interest (except perhaps for the reference to “denying the facts”).

I Irecommend that you visit (or revisit) Confidence – How Winning Streaks and Losing Streaks Begin and End by Harvard’s Rosabeth Moss Kanter. 


Rosabeth Moss Kanter’s biography for those interested

Confidence is a road map that helps you react more constructively than you might otherwise have to the challenges you will face (like this deteriorating economy).  The losing streak is fraught with a disease whose symptoms will infect your people – they include::

  • Stop communicating
  • Criticize and blame
  • Disrespect others
  • Become isolated
  • Focus inward
  • Let inequalities develop and persist
  • Lose initiative
  • Forget goals and aspirations
  • Spread negativity
  • Deny Facts

Your job as a Managing Partner (or as a member of the senior management team) is to understand and live Kanter’s three cornerstones  of confidence:

  • Accountability
  • Collaboration
  • Initiative

Most Managing Partners don’t read business books (don’t be insulted – you don’t have time and our studies so indicate).  So may I suggest you subscribe to one of the two excellent services that I subscibe tothat  summarize or abstract many good books for you in a short 10 to 20 minute read. Often they also provide an audible version for your iPod also from 10 to 20 minutes in length.

Check out Soundview Summaries and getAbstract.  If there are others, let me know.

PUNCHLINE:  Put Rosabeth Moss Kanter on your informal advisory team by buying the book or subscribing to one of the summary services above.  You cannot prevent the legal profession from having a losing streak here – but you can prevent your firm from having one.

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.

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.