Last week, part 1 of my written interview with Professor William (Bill) Henderson of Indiana University’s Maurer School of Law was published here. Again, I’d like to thank Professor Henderson for agreeing to this interview and for all the important work he is carrying out. As with my prior interviews, the commentary below Professor Henderson’s answers is mine alone.
AP: What current Biglaw practice do you find most disturbing?
That is easy: incentivizing lawyers to bring in revenue to the exclusion of other factors that would otherwise benefit the firm.
Last year I had an epiphany on this front. ALM and Major Lindsey & Africa conducted a survey of large law firm partners regarding compensation. When asked what factors were very important in determining pay, the responses overwhelmingly focused on business origination and maximizing their own working receipts. In contrast, factors such as good citizenship, management responsibility, and non-billable hours were barely weighted at all.
I presented these results in bar chart format to a group of law firm leaders. And what was the most common reaction? Outright dismissal, as most of them claimed that financial rewards were consistently being meted out for great teamwork and institution building. The law firm leaders commiserated with one another that they were all misunderstood. And therein lies the problem. We can debate the reality of what is, or what is not, being rewarded. But at the end of the day, it is perception of what matters that drives behavior. There is a classic article in the management literature that makes this very point. See Steven Kerr, On the Folly of Rewarding A while Hoping for B.
Because partners have to bring in revenues to feel safe, they lack the white space to think about the trend lines and challenges affecting their industry. Although large law firm partners have very high IQs, very few have the time or curiosity to engage in bigger-picture thinking. If the curiosity was there once, it has been squashed by the need to focus on the problems at hand. So very few read books and articles about what is happening in the broader world. A few years ago, I remember reading the obituary of Brooks Thomas, a publishing executive at Harper & Row who started his career as a white-shoe Wall Street lawyer. When a client asked Thomas why he left the law, he replied, “I felt that if I stayed in the law, I’d spend my life knowing more and more about less and less.”
Law does not have to be so narrow. There is room for a better model. Carve out an investment pool to underwrite a Skunk Works that would enable some of the firm’s best junior lawyers to set aside revenue goals so they have the time and energy to imagine a better way. The right young lawyers would take a pay cut for this opportunity.
AP: Or leave Biglaw to open or join a boutique, and by doing so trade the guaranteed money of Biglaw for a chance to really develop their own practices. My prediction is that for every promising (as in potential rainmaker) junior partner who takes that step, Biglaw firms will shed somewhere between five and ten current partners over the coming years. Most will probably start with junior equity partners, before turning to more senior equity-service partners. It will take some time, but as I said before, if you truly want to feel safe as a Biglaw partner (unless you are a busy partner at an elite, lockstep firm), it is best to personally control double your firm’s reported profits per partner in your book of portable business. Or be in firm management.
AP: Should firms make more partners nowadays?
I am glad you ask that question, because it is a logical one, but, alas, one that takes us to a dead end. Any law firm that wants to survive and thrive in the years to come has to figure out how to deliver greater value at a lower cost. If they can do the work faster – because of technology and process – they can make up the revenue and profits through volume (i.e., taking market share from competitors). Yet, such a business model is inherently collaborative and interdisciplinary. So I don’t know if the law firm of the future needs more associates or partners or something else. But I do know they need to be a cohesive team focused on the long run.
AP: One day, it would be great to try and construct a list of existing Biglaw firms that meet the description of a “cohesive team focused on the long run.” Suggestions welcome, but I for one am not inclined to be swayed by platitudes from the managing partner of some mega-Biglaw shop about how cohesive their firm is. Or from a senior partner at an elite lockstep shop. The better test is what are the most junior or lowest-paid partners saying about the firm, no matter where their firm falls on the Biglaw spectrum. But nobody wants to talk to them. (Except for me. If you are the lowest-paid or most junior partner in your Biglaw firm, let me know if you are interested in doing an interview. Confidentially, of course.)
I hope everyone learned as much from Professor Henderson’s astute observations as I did. Once again, I thank him for his service to our profession and wish him the best in all his endeavors. Finally, I continue to extend an open invitation for individuals concerned about making Biglaw’s future a bright one to contact me, and potentially share their thoughts with this audience.
Do you agree with Professor Henderson’s observations about the current state of Biglaw? Let me know your thoughts by email or in the comments.
Anonymous Partner is a partner at a major law firm. You can reach him by email at [email protected].