This is a continuation of the article I published in ATL two weeks ago. My previous article gave my view that the profitability metric of “Profits Per Partner” becomes in effect a master (rather than a servant) and is destructive and a root cause of some serious problems for Biglaw. In this article, I put forth a different way of doing business.
A long time ago, we at Duval & Stachenfeld decided that we would not make partnership decisions in our law firm based on a “numbers game.” Instead, we would look at the quality of the associates, and if they were qualified, we would make them partners irrespective of the effect that had on our firm economics. We have stuck to that view rigorously.
This is the first of a four-article series focusing on the following matters:
First Article – Profits Per Partner: A Good Servant But A Bad Master
Second Article – A Profits-Per-Partner Emancipation Plan
Third Article – Beyond Profits Per Partner – Embracing Volatility
Fourth Article – How to Embrace Volatility as a Law Firm
Those of us running law firms have two sets of clients:
Clients – parties that hire us for legal work.
Lawyers – parties that do the legal work for the clients.
One without the other is pointless, obviously – they are yin and yang. However, despite this almost symbiotic relationship, most law firms are set up to attract great clients a lot more than they are set up to attract great lawyers. That is how law firms define “marketing.” The other function is called “recruiting.”
Indeed, let me ask you — in your firm, which is cooler: to be on the marketing committee, or to be on the recruiting committee? Which one is more likely to result in success at your firm, including money, power, fame, a big office, etc.?
As clear as I can tell, Becker & Poliakoff lawyer and out-homophobe Walter Kubitz, author of the now-infamous “gay plague of AIDS” email, still has a job. I’m not at all sure why. Becker & Poliakoff keeps saying that such divisive views about gays and lesbians do not reflect the firm’s “core values” and will not be tolerated… AND YET the firm clearly values Kubitz enough that he is still being tolerated by the firm.
Is Kubitz just a fantastic attorney that Becker can’t afford to lose? The man has been working for 30 years and still hasn’t made “shareholder” at the firm, so I don’t think he can be SO good that the firm just can’t do without him. What kind of power does this guy have? Jesus, does Kubitz have photos of Becker shareholders getting gay with Santa Claus? Maybe firm management doesn’t understand that pictures of them getting busy with each other at a firm retreat would be CONSIDERABLY LESS DAMAGING to the firm’s reputation than continuing to employ such a proud homophobe.
Becker just put up a statement on their website about the Kubitz situation. The statement doesn’t actually say what Kubitz did, doesn’t contain an apology from Kubitz, and hides behind religious toleration rhetoric when that’s not even the point of what happened here. Let’s give it a close read….
As an openly gay attorney at Becker & Poliakoff for over nine years, I know that the email sent by this attorney does not reflect the core values of this firm. In fact, Becker & Poliakoff is committed to diversity as reflected by the firm’s hiring practices, outreach and diversity scholarships awarded annually.
The last few years have helped me get very used to the passive-aggressive bigotry that homophobes still think they can get away with. “Just believing” that marriage is between a man and a woman conveniently leaves out the stunning antipathy to gay love and civil rights… but it doesn’t sound as “hateful” as it is. And the idea that gay marriage can somehow threaten straight marriages sounds more stupid than bigoted, even though it’s both.
Don’t get me wrong, you don’t have to search very long for harsh anti-gay rhetoric. But in the refreshingly genteel environment of educated society, old-school, anti-gay hate speech comes off as particularly harsh.
Old-school, anti-gay hate speech captured over law firm email is downright surprising given the current environment. But then again, bigoted statements that a senior lawyer sent out to all attorneys at a law firm come back all the way around to “incredibly stupid.”
I guess what I’m trying to say is that this stupid, bigoted, dumbass, hate-filled, verbal feces slathered all over law firm email is… quaint.
There – I always wanted to write an article that had such a strange title that people would look at it and wonder what I was talking about. So here goes….
Everyone just loves to beat up on the big law firms. I keep reading articles everywhere that say:
They are overpriced.
They are inefficient.
Their partnerships destroy innovation.
They are terrible places to work – sweatshops – associates are worked to death until they quit.
Their business model is broken.
There was even a book that came out a year or so ago with a great title, The Lawyer Bubble: A Profession in Crisis (affiliate link). To me the book described the law business as part of a dying profession that is enmeshed in a conspiracy to ruin the lives of all in it — except the fat-cat senior partners at the top of the pyramid. I admit I read it a while ago and it is a bit hazy in my mind, but the author, a former Kirkland & Ellis partner, clearly is not a fan of the current state of Biglaw….
I’m sitting in a Vancouver, BC coffee shop with Gerry Riskin, author of the Amazing Firms, Amazing Practices blog. We’re talking about leadership and the differing mindsets of lawyers and business people. Our conversation was prompted by Gerry’s mindset slide:
I can relate. Early in my legal career, I worked with lawyers in leadership roles who wore this mindset like body armor. They did not inspire. They did not act in ways that moved people closer to a common goal. They often left a bad wake. They lacked awareness. They were not good leaders….
I am famous for a saying. Actually I am not really famous, but I have a saying that I have been, well, saying for years, as follows:
“Lawyers are only happy when they’re miserable.”
What I mean is this: You are working round-the-clock so much you haven’t even been home for a full day and hardly at all for a month on a doozie of a deal. You are completely sick of it. All you can think of is when the deal will be “over.” You are clearly “miserable.” If only you could have your personal life back! Then, finally, the deal closes — at last. Your client is wiring out the funds. As the transfer of funds is happening, a (terrible) thought races through your mind. You hate yourself for the thought — you try not to have the thought — but you simply can’t help it… and the thought is that you are kind of worried because you have nothing to do now and that is disquieting… gee, what if work has really slowed… at some point this will be a real problem. You’ve had your personal life back for maybe a second — you haven’t even taken a shower — and you are worrying where your next deal will come from.
Or the other way around. Work has been slow — very slow — for a couple of months. You have enjoyed some rounds of golf and gone out to a bunch of dinners and lunches, but you really would like a nice tricky and challenging deal to sink your teeth into. And of course you are mindful of the fact that like it or not lawyers just have to bill hours. That is how we make a living, and you just aren’t billing hours. Not a good thing. You are edgy — if only you could have a big deal to work on….
“Low overhead is great!” That is one of our sayings. We recite it all the time — yes, even out loud at meetings — as it is a powerful competitive advantage for a law firm. It seems pretty obvious, but if so, why doesn’t everyone get with this concept?
There is a term informally used to describe how overhead impacts a law firm called “Implied Overhead.” The “Implied Overhead” of a law firm is the cost of everything except the lawyers divided by the number of lawyers. So if you have 50 lawyers and the cost of “everything” except the lawyers is $10,000,000, then you have implied overhead of $200,000 per lawyer.
Our Implied Overhead for last year was about $165,000. Anecdotally I believe that Implied Overhead for major law firms averages about $300,000. (I admit I don’t really have this data for sure; it is just what I have heard.) If your firm has 100 lawyers and implied overhead of $200,000 and the average for major law firms is $300,000, then you have a $100,000 per lawyer competitive advantage over your major law firm competition. Multiply that by 100 lawyers and you just made $10,000,000! And this flows right to the bottom line! If there are, say, 30 partners at this firm, then each partner just got a check for $333,333!
Yikes — did I do that math right? Was that $333,333 per partner merely by reducing the implied overhead? I just double checked and $10,000,000 divided by 30 partners does indeed equal $333,333. That’s a sizable number, so maybe you should read the rest of my article….
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