Biglaw, In-House Counsel, Partner Issues, Partner Profits

Inside Straight: Do Law Firms Undervalue Good Lawyering?

A partner at a major law firm shares his thoughts on business development with one of our in-house columnists, Mark Herrmann.

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Last year, one of my columns explained how I went about developing a new practice at a large law firm. Now that ABA Publishing has repackaged some of my old columns as a book, I’m hearing new reactions to some of those older columns. One of my recent correspondents — a partner at an AmLaw 100 firm — raised a good issue about my column on business development. He gave me permission to crib from (and slightly revise) his long e-mail (without attribution to him), so that’s what I’m doing here:

“In your case study of business development, you ask whether the business development game is worth the candle. But you seem to presuppose that the game is really worth playing in the first place. My problem isn’t with the premise that if you want to develop business you must work hard at it and be lucky. My problem is with the assumption that the only goal worth achieving in law is success in business development. I think you are correct in saying that law firms under-appreciate business development efforts and over-appreciate business development successes. But I think they over-appreciate both compared to good lawyering . . .

“I recognize that law firms must have business (and that the lives of thousands of non-equity lawyers and staff depend upon this). I also recognize that developing business is a talent that you need some people in law firms to perform.

“But I am concerned about how firms seem to view business development as an end in itself, and strange things like providing good lawyering seem to be relevant only on the occasions when this sort of distraction might serendipitously lead to business. I think this attitude disserves clients. Lawyers have a huge incentive to oversell their skills, overstaff their cases, and overwork their strategy – for example, insisting on the mandatory five years of discovery before settling the securities case on the eve of a trial they are too afraid to try. The best lawyers are those who stare down the incentive and insist on being good lawyers despite its effect on the numbers. But I don’t think those lawyers are necessarily the best business developers.

“I think this incentive structure — showering rewards primarily on those who generate business — ultimately disserves not just clients, but also the firm itself. It causes lawyers to focus on attracting (rather than effectively representing) clients, which, over time, will reduce the quality of the firm’s work and hurt the firm’s reputation.

“Why can’t law firms recognize that they would be best served by a division of labor? Let the business developers bring in clients, and let the good lawyers handle the cases. And reward all of the lawyers appropriately for their contributions, because all are essential to the firm’s success.”

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I have an awful lot of sympathy for my correspondent’s concerns. But I fear that he can’t win this battle. Why do firms shower rewards on lawyers who generate business? First: Because those guys can leave the firm tomorrow, driving the joint into bankruptcy next week. “Good lawyers” don’t hold that power; rainmakers with portable business do.

Second: Rainmakers are now at the helm of many law firms. People who achieved wealth and power by generating business are likely to perceive generating business as a uniquely valuable attribute.

Third: Many lawyers believe — incorrectly, to my eye — that great lawyers are a dime a dozen. If people believe that lawyers are fungible, or that “we have hundreds of guys around here who can write a good brief,” then there isn’t much need to pay great lawyers handsomely to keep them at the firm. The great lawyers can easily be replaced, while great rainmakers are hard to come by.

Finally: A law firm’s reputation is a sticky thing. If the twenty finest technical lawyers were to walk out of a law firm today and the quality of the firm’s work were thus to deteriorate, I bet the firm’s reputation for quality wouldn’t suffer for years, and perhaps decades. When rainmakers leave, the firm takes an immediate hit. When great lawyers leave, even en masse, the firm suffers only slowly over time, if at all. In that environment, it’s an easy choice for law firm management to decide who gets paid more handsomely.

I had originally ended this column here, but then, in the interest of fairness, I decided to send a draft of the column to my correspondent, and I asked him what he thought of it. He sent a long, thoughtful response, from which I’ve excerpted here:

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“I see that you have set out to burn to a cinder the last remaining thread I hold to the view that lawyering truly does involve the type of pursuit of excellence you say you employed when you practiced it for real … er…. I mean on the outside. . . .

“How can it be to clients’ advantage to have lawyers chosen and rewarded for their ability to do sales? Doesn’t it suggest that clients should instinctively recoil from the pitches you talk so much about on your blog? The lawyers who are most likely to be there for the sales pitch are the ones who have succeeded based on their sales acumen and not necessarily the quality of their lawyering. . . .

“Ironically (or perhaps not), it seems even clearer to me that the firm is much better off having clients be clients of the firm rather than of individual partners. Why foster a culture of rewarding silo rainmakers who you will have to overpay to attract (thereby causing resentment and defections) and then will lose when their next better offer comes in?

“ . . . I take your point that the effects of lowering the general caliber of lawyering is a slow death for a law firm that plays out over too long a time horizon for lawyers to worry about. But I think that Dewey & LeBoeuf, Heller Ehrman, Thacher Proffitt, Howrey, etc., illustrate that the time horizon on a model that feeds rainmakers for the sake of rainmaking may not be quite so long as it appears. (I’ll also grant you that people have amazingly short memories for true debacles like those, but on occasion someone gets chastened).”

Do law firms undervalue good lawyering? Must they inherently do so? Maybe yes; maybe no. But there are plainly two sides to the issue.

Mark Herrmann is the Chief Counsel – Litigation and Global Chief Compliance Officer at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at inhouse@abovethelaw.com.

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