If you don't know this man, if you haven't heard his "last lecture," I urge you (when you have 76 minutes) to grab a box of tissues and watch it. 

In this picture, we're introduced to Sara Tucholsky (center) of Western Oregon University and Mallory Holtman (right) and Liz Wallace (left) of Central Washington University.  Sara hit her first home run in their game last Saturday--her first home run ever.  She missed first base and turned to go back to tag the base.  In doing so, she injured her knee and could not walk.  Under the rules, if any teammate touched her, she would be ruled out.  If she could not touch all the bases,  a pinch runner would be required and her hit would be ruled a single.

So what happened?  Holtman and Wallace confirmed with the umpire that there was no rule that prevented opposing players from aiding Tucholsky, and then picked her up and carried her around the bases, gently lowering her so she could touch each base.  Holtman and Wallace's team lost the game 4-2.

What do these two stories have to do with client service?  Nothing, really.  But there are lessons about character and honor in these stories.  And those two traits influence every aspect of our lives.  But more importantly, I just wanted people to feel good today, and these two stories surely have that effect.

Locke Lord etc., etc. and so forth was formed by the merger of Locke Liddell and Lord Bissell in October 2007.  Interesting quote from Jerry Clements, reported to be chair of the merged firm (though there is no such name listed on the firm's website): "Any time you do a combination as significant as the one we did, you're unfortunately going to lose some people who don't fit anymore."  She added that some practices are "suffering from rate pressures."

My point is not to comment on the firm's business decisions, because clearly there are winners and losers in mergers of this sort.  Rather, the point is simply to note the acknowledgment that "pressure" on rates is a fact of life in firms like Locke Lord that aspire to compete in the top echelon.  Even in today's difficult economic times, that rate pressure exists.

Anyway, from today's paper.

1.    "The Reuters/University of Michigan Surveys of Consumers said its final index of confidence for April fell deeper into recession territory, to 62.6 from 69.5 in March and below economists' median expectation of 63.2 in a Reuters poll.  The April result is the lowest since March 1982's 62.0, when the "stagflation" period of low growth and high inflation was an issue for Americans."

2.   Gas prices are now over $4.00 per gallon for premium in many locations.  Oil-producing nations are refusing to produce more oil.  Oil closed over $118 per barrel, almost double the price from a year ago.

3.  The stimulus package isn't going to stimulate much.  Most consumers expect to use it to pay higher food and gas price and to reduce debt.

4.  It costs so much to fuel up that the American Automobile Association is urging its members to leave their cars at home and take public transportation.  (For anyone who doesn't know, the AAA is the group that likes people to drive cars.)

5.   "The two biggest U.S. warehouse retail chains are limiting how much rice customers can buy because of what Sam's Club, a division of Wal-Mart Stores Inc., called on Wednesday "recent supply and demand trends."

6.  Summer is coming.  Gas prices will be higher.  George Bush is unlikely to agree to a gas tax holiday or release oil from the strategic oil reserve.  The Beijing Olympics are coming, so there will be no slowing down in China, at least until then.

Does anyone see an end-game here?  I don't see any short-term change in the economic pressures on our clients.  Quite to the contrary.

Every time I have the opportunity, I ask in-house counsel about whether their lawyers conduct formal or informal satisfaction meetings.  Almost invariably, the answer is no.  I always follow up by asking whether the client would find such meetings useful.  With equal frequency, the answer is yes.

From time to time, I ask lawyers whether they conduct formal or informal satisfaction meetings.  Almost invariably the answer is no.  When explaining why, lawyers almost always say the same thing:  if there is anything wrong, my client will tell me.  The gist of their point is that their relationship with their client is special and how dare for me for even implying that something so gauche as a discussion is needed.

Last night, as I am watching multiple channels at once, I am caught by a moment on a Dr. Phil-type show where the husband and wife are discussing their most intimate problems in front of a nationwide audience (and with syndication, perhaps a world-wide audience).  Breakthrough after breakthrough.  The Dr. Phil-type host offers this profound insight:  "your problem is that the two of you don't talk about your problems" (except in front of this nationwide audience).  He then goes on at length about how every relationship has problems (I think "hiccups" was the technical term) and that only by identifying them and talking them through can you hope to keep them from growing from small problems to bigger ones and, with good and candid talk, put them behind you.  Hardly profound, but most certainly true.

Also last night, I watched two of my kids, within the space of a few minutes, go from being BFFs to being unable to be in the same room to being, once again, BFFs.  The solution, a short but candid talk (with yours truly in the Dr. Phi-type role) asking each to explain why she was upset and what her perspective on the problem was.   The eye-opening moment?  When each saw the other's perspective, their own assessment seemed "less correct" and their judgment less harsh.

How do these three vignettes tie together?  Many (most?) outside lawyers operate on the premise that their personal relationship with their client is different that all other relationships that exist between people on our planet.  Every relationship has its problems.  Oh, excuse me--every relationship except for that individual lawyer's relationship with his or her client.  That one relationship is special.  But do the math.  It can't be that every relationship between every lawyer and every client is "special"--that is, immune from the rules of relationships that apply in every other kind of relationship.  And if not all lawyer and client relationships are special, the question that must be asked by each lawyer is why my relationships are different from all others?  Lawyers are never good at asking that question and it is doubtful that this short rant will cause any epiphanies.  But suffice it to say, until lawyers wake up and smell the relationship coffee, they will be missing the opportunity to "bulletproof" their relationships.  (Click here for a discussion of BulletProofing, a Gerry Riskin term that is more important than ever in today's difficult economic times.)

Now, does anyone what to discuss being shortsighted?

We also want to acknowledge and extend our thanks to several people who featured us in recent posts.  Gerry Riskin, David Maister and Mike Myatt all have featured us in posts.  We're humbled to be recognized by such thought leaders.

We were guided in large measure by Sonny Cohen and Jeff Kenny at Duo Consulting.  Duo provided a lot of really constructive input in very positive and upbeat ways.  Needless to say, a lot of the site's good qualities are attributable to Duo.  The shortcomings belong to me.

Thanks in advance who care to share thoughts, reactions and comments.

To quote my 13 year old son, "Ya think?" 

But to my mind, here was the more interest part of the report:

"While not endorsing any specific housing proposals, Mr. Bernanke made clear that the weakness in housing remained the single biggest drag on the prospects for an economic recovery and said that it was up to Congress to act."

These folks are missing the point.  Its not the foreclosures, at least not just the foreclosures.  Anyone who has tried to sell a house most anywhere in the country can tell you that prices are down 25-40% over a year ago.  (Anyone interested on a good deal in New Port Richey, Florida?)  Stopping foreclosures doesn't restore that lost wealth or borrowing base.  Yet Bernanke is predicting a mild recession and recovery in the second half of the year because of the President's stimulus package.  People get a few bucks and go to Walmart, which then ships the money to China.  Or they get their check and buy a tank of gas.  Wonder where that money goes?  All of this may temper the markets (how much wealth has everyone lost there?), but it won't alter the weakness of the dollar and it won't restore the lost wealth against which people have been borrowing to spend our way out of prior recessions.

I'm hoping I'm wrong here and to be sure there are tons people smarter than me on this and most other issues.  But this blog is directed at law firms, and one has to wonder when clients are going to feel comfortable enough to stop squeezing their law departments and outside counsel?  If it is a good long while (my bet), then the length of the recession is something people really need to worry about.  Because while BigLaw may expect to be able to offset lost deal revenue with increased litigation and bankruptcy work, there is a lot of anecdotal evidence that at least the litigation is not there this time.   And for all those who work at or run firms that don't measure their revenue in the hundreds of millions, the bankruptcy safety net may not be a safety net at all.

    Currency fluctuations
    Price of oil
    Price of precious metals
    Increase and decrease in “real” jobs
    Geographic location of those jobs
    Political stability of job locations
    Foreign relations as they affect business
    Balance of Trade between countries and regions
    Housing markets (not just prices – but demand)
    Auto market (demand)
    Credit levels (or should I say “debt levels”)
    Interest rates (they are not falling, in fact, get ready…)
    The advent of the largely unregulated Hedge Fund industry
    The establishment pensions that invest in Hedge Funds
    The Domino effect – how one indicator impacts many others

In January, Gerry wrote on this topic again, Recession-Proof your Law Firm.  In that post, he drew on the comment of George Soros that we were facing "recession or worse," many would even acknowledge that we are in a recession.  The scary thing, however, was Soros" concern about the possibility of "or worse." 

The third in the Riskin trilogy is Gerry's March 17 post, asking the question "What do Bear Stearns and Enron have in common?"  The punchline in Gerry's post?   His conclusion that "this trumps my wildest speculation about how erratic the economy may become."

Even those who disagreed with Gerry in August cannot ignore the dramatic downturn in the economy that we have witnessed in the months that followed.  But here's the problem from my vantage point.  I don't see a trigger for a recovery.  The past few recessions have benefited from consumer-driven recoveries.  In December 2001, Business Week wrote:

BUT THEREIN LIES A PROBLEM for the recovery. The NBER's four key indicators highlight an important atypical pattern of this recession. The bureau noted that "continuing fast growth in productivity and sharp declines in the prices of imports, especially oil, raised purchasing power while employment was falling." This rise in household buying power--even as the three other NBER indicators fall--will continue to sustain spending in coming months.

But that won't happen this time.  Consumers are losing wealth (and their primary source of borrowing power) because of the precipitous decline in housing prices.  The high price of oil, and hence gasoline, is consuming a larger share of household income, directly and indirectly as others feel the burden of higher energy costs.  Oil prices will not decline thanks in large measure the growing demand from China and India.  Debt rates are higher than ever before, meaning less ability to borrow.  Add the weakness to the dollar to the mix (meaning we pay more for imported products). And with the Fed flooding the market with easy credit to sustain the financial system, the dollar will not soon strengthen. 

This bad news has profound ramifications for our profession, especially on the pricing front.  Our clients are the industries that are suffering through this recession.  Legal departments (especially, since they are cost centers) will face enormous pressures to cut back on expenditures.  That pressure promises to grow more, not less.  And because much of the low-hanging cost-control fruit already has been picked, more and more drastic approaches to fee control will be the order of the day. 

As always, thanks to my friend Gerry Riskin for inspiring me to think more and more deeply than I would ever do on my own.

Don't belabor the rise -- the cost of a company's raw materials goes up just like a firm's. Instead, GCs should treat legal fees just like the C-level execs down the hall treat business issues that cross their desks.

He then provides five helpful rules.  Its certainly not an exhaustive list and it ignores the inherent conflict between a client's economic objectives and those of lawyers who bill hourly.  But my point here is simply to offer one thought expanding on the article--those lawyers who fall behind their clients' thinking on pricing issues are destined to play catch-up for a long time.  Perhaps to the point of trying to get a client back in the door once he or she has found joy elsewhere.

There is no bigger issue today than pricing.  Every business is feeling the pinch in the worsening economy.  You're either part of the problem or part of the solution.  There is no middle ground.

It is precisely the rapid turnover of associates at large law firms that allow firms like Valorem to offer those very same associates--not ones "just like those at big firms, but the ones who just left big firms" --at about half their original price.  And because firms like Valorem are forced to find cost-effective technology or other solutions to the problems Big Firms address by throwing hundreds of high-priced and dissatisfied associates at them, these immensely talented lawyers have a change to do the things that turn them, rapidly in most cases, into outstanding lawyers who are realizing the potential that led the big firms to hire them in the first place.

As a result, what's emerging is this paradox:  the best and the brightest leave the high priced big law firms in search of an alternative that provides better alternatives.  They find it, receive better training and better opportunities to develop, and actually do develop.  They develop so much they are actually better and more experienced than their former colleagues, many of whom are still reviewing documents manually, slowly and at great expense to the client.  The departed, meanwhile, have learned how to solve problems for their clients in a more creative, efficient way.

Which one of these provides the greater return on client fees?

So writes former GE General Counsel Ben Heineman, Jr. and David Wilkins, the Kirkland & Ellis Professor of Law and director of the Program on the Legal Profession and Center on Lawyers and the Professional Services Industry at Harvard Law School.  Heineman now is distinguished senior fellow in the Harvard program.  Heineman is widely credited with transforming the GC position into the powerhouse position it is today and certainly transformed GE's law department into one of the very best in corporate America.  His insights command attention.

The article's title sums up the dilemma facing corporate America: Big Firm associates are a "Lost Generation."  The article, "The Lost Generation?",  appears in the March 2008 issue of Corporate Counsel magazine.  Heineman and Wilkins put the real onus for change on the firms, conclude that firms must radically change the way they develop associates, while still acknowledging that corporate clients must be part of the change.  Here is part of their conclusion:

But the primary responsibility for professional development rests ultimately with big firms, which need explicit cooperation from their corporate clients.  They must address the paradox of ever-higher associate compensation and ever-shorter tenure.  The answer is not late-night dinners from The Palm on silver servers.  It is a stimulating, mind-expanding experience at the beginning of their professional careers that treats associates as adults, gives them responsibility, and, most of all, communicates the intellectual and practical excitement of confronting the significant issues that the best partners enjoy.  This challenging culture of professional service, more than pure dollars, can help firms become employers of choice. 

From my vantage point, this answer is wishful thinking.  The turnover problem has existed for decades.  And firms have simply chosen to throw more money at the problem, as they do confronting man problems.  The legal field has never been a particularly innovative one, so why expect that to change?  One former partner once compared the notion of changing a firm's ingrained way of thinking to the difficulty of "turning an aircraft carrier around in parking lot."

When discussing hourly rate issues, I have frequently said that clients must demand before firms will respond.  I think the same will be true with respect to this problem.