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

Inside Straight: Tone [About What?] At The Top

What's the goal of your professional services firm: Do you want to strive for perfection? Or do you want to generate revenue? Or do you bill by the hour, so it's all the same thing?

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Folks (including those who wrote the Federal Sentencing Guidelines) think that “tone at the top” matters. And those folks are right: If senior executives include the words “with absolute integrity” in their elevator speeches about the company, other people in the organization will catch on. People will come to believe that ethics matter, and ethics will thus come to matter.

But there’s another aspect of “tone at the top” that the Federal Sentencing Guidelines don’t compel: What are we trying to achieve as an institution? What’s your organization’s “tone at the top” on issues apart from obeying the law?

Does a drug company want to “discover and manufacture new substances to help people live longer, healthier lives”? Or does it want to “deliver maximum return to shareholders”?

Or maybe it’s all the same thing. As the (perhaps apocryphal) story goes: An interviewer asked Itzhak Perlman what he wanted out of life. Perlman said he wanted to play the violin. The interviewer was shocked: “Don’t you want to be happy?” “I want to play the violin. If I play the violin, I’ll be happy.”

Maybe if you develop drugs that improve and prolong lives, your shareholders will be rich. (And you’ll probably be happy, too.)

What’s the goal of your professional services firm: Do you want to strive for perfection? Or do you want to generate revenue? Or do you bill by the hour, so it’s all the same thing?

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At the law firm where I worked for a couple of decades, very few clients brought (or even threatened) malpractice cases against the firm. Any lawyer was dismayed to be accused of providing substandard service; malpractice was just barely in the vocabulary.

Why?

Because, historically, the senior partners who ran the joint took pride — almost exclusive pride — in the quality of their work. They were proud of their legal skills and their client service. The name of the game was perfection — to be the best lawyers on the face of the planet — and the senior guys bequeathed that attitude to the next generation of lawyers. That generation in turn bequeathed it to those who followed. And everyone who worked in the place knew that we had one goal: We were as close to perfect as it was possible to be. Period.

There was a corollary to that rule: Do great work, and everything else will take care of itself. Satisfied clients will hire you again in the future, and they’ll recommend you to other clients, and business will come rolling in the door. Although no one spoke these words (or even thought this way), there was an underlying belief: Do great work, and the profits per partner will look out for themselves.

Perhaps by coincidence, the pursuit of perfection also maximizes short-term profits for people who bill by the hour: The more time a lawyer spends pursuing perfection, the more he charges the client. (I stuck the adjective “short-term” in there before “profits” for a reason: Over the long term, clients will realize who’s efficient and worth hiring, and who wastes time and money and is not. Over the long-term, efficiency counts. But in the short-term, higher bills equal more profits.)

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Times have changed, of course, and not all cases bear the perfection freight. But one can still be perfect within specified parameters. Client and counsel can agree: “We’ll take the depositions of A and B, because they’re essential, and we won’t depose Y and Z, because we’re deeming those to be non-essential. We all recognize that we may thus not learn some relevant facts, but we’re choosing to run that risk for the sake of economy.” The lawyer still aims for perfection, but perfection within bounds.

That’s a pretty good way to avoid malpractice: If everyone is reaching for the stars, few will miss by so wide a margin as to end up in the gutter of negligence.

But not all professionals bill by the hour. Some bill by the project; some work on commission; some perform “procedures” and look for insurance companies to cover the tab; others charge in other ways. Once professionals see their goal as the pursuit of revenue, rather than perfection, the tone of the joint has changed.

If professionals are striving to “bring in as much revenue as possible, while hoping not to give away too much in negligence lawsuits,” then those folks are no longer reaching for the stars. Instead, they’re skirting along the edge of the gutter and hoping they won’t fall in.

They will.

As law, and other professional services, firms instill values in their employees, they should think hard about what those values are. “Achieving perfection,” within reason, is pretty noble, and not too dangerous. “Billing time,” on the other hand, is a ridiculous goal that invites abuse. “Generating revenue” is no sin in a capitalist system, but it can ultimately lead to governments being forced to bail out the world’s largest financial institutions. (You can bet the kids’ college fund that the guys hawking mortgages that required no downpayment and no proof of income had not been instructed to “achieve perfection.” Those guys were told to “generate income.”)

For professional services firms, two tones at the top matter. One is easy: Integrity is the price of admission; it’s assumed if you’re going to work here.

But the second is trickier: What exactly are employees trying to achieve when they arrive at work each day? To generate revenue, or to do something slightly more noble and significantly less dangerous?

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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