September 2006

FordSign.gif Ford yesterday announced that it would offer layoff packages to all 75,000 of its North American laborers, and that it expected to reduce white collar headcount by 6,000. It is hard to believe that the law department will be immune from this layoff pressure; certainly it will not be immune from the pressure to cut costs. If anyone has any great ideas on how Ford Legal can do more with less–or at least dramatically cut costs–now would be a good time to make your ideas known.

ListeningReaders of this blawg know that I am a strong proponent of listening.  I invite you to look at earlier posts here, here and here.  Lately, I’ve been reading a blog called Client Service Insights, which has nothing to do with law but everything to do with client service.  Today’s CSI contains a great post on listening–Two Mouths and One Ear?  The post title is drawn from a Mark Twain comment: “If we were meant to talk more than listen, we would have two mouths and one ear.”   But clever quotes aside, I invite you to focus on  Leo Bottary’s suggestion:

Being a truly good listener is arguably the most valuable skill you can develop – its applications both professionally and personally are too numerous to list.  For now, starting today, try to really concentrate on listening.  Don’t simply focus on the next point you want to make, or on what you want to do later that evening.  Try to really listen to what others are saying.  You can’t learn anything by talking, and if you’re like me, there’s still plenty left to learn.

Great suggestion.  Now, what was I going to say?

Weil Gotshal associatesThe September 1, 2006 New York Times has a fascinating article on associate compensation increases.  The news of the salary increases is old, but the article fascinates me because of this:

The inevitable issue for clients as well as the firms is whether higher salaries are reflected in increased hourly rates. But Michael J. Gillespie, a partner at Debevoise & Plimpton, another law firm based in New York, said: “There’s not really a connection between salary levels and hourly rates. We set salaries at whatever is necessary to attract and retain the best associates. We set hourly rates by client demand and market conditions based on firms operating at our level in the market.”

Frankly, the first thing I would do if I was a Debevoise client is fire the firm.  No one remotely associated with law firms or the practice of law will ever believe that there is no connection between salary levels and hourly rates.  Shame on them for even trying to plug that lame rationale.

For years, top New York firms have paid more to attract top talent.  And, as the article makes clear, the demand for top talent is growing while the number of graduates of top law schools remains constant.  But with a 72% attrition rate, it doesn’t require the business acumen of Jack Welch to realize the answer to the manpower and development issue lies not with the compensation issue, but with the reliance on hourly rates and the up-or-out structure employed by major law firms.  When I see firms taking meaningful steps to move away from those two related features, I’ll be writing here recommending that clients take a close look at a firm that “gets it.”

My thanks to The Wired GC for bringing the article to my attention.  With a great graphic, the Wired One’s post is priceless,

Wall-street-journal-masthead-175

On August 30, 2006, the Wall Street Journal reported (pg. B1) that Holland & Knight was involved in a billing dispute with a client.  The article was reprinted in the September 4, 2006 issue of the Chicago Sun-Times: it is the firm’s Chicago office that is embroiled in the dispute.  The details of the dispute are not of great moment, and in the interest of full disclosure, two of my partners (former Holland & Knight partners) are quoted in the article.  But while the details of this situation are not of moment, the article does beg the question of how a firm should handle a major billing issue with its client.

Let’s assume one of the facts in the Holland & Knight story–a young partner claims that the billing partner, not involved in a piece of litigation–has dramatically overbilled the client for that matter.  From that, let’s go to a place the Holland & Knight story does not go–that the young partner is threatening to make his complaint known to the client.  What should the firm do?

I have written previously about how to handle mistakes.   But that post involved errors in judgment, while this example involves an allegation of fraud.  Even if not true, the allegation itself can threaten the client relationship, with even the most loyal client wondering why the young partner made the allegations, and why.  It seems to me that simply denying the allegation is an incomplete response, potentially fatally so since it does not address the underlying questions that most certainly exist.

At the same time, simply offering to make an adjustment to the bill almost seems to validate the charge by the young partner, so that approach is not the preferred one either.  While potentially expensive, the response I propose is based on the notion that our integrity and credibility are traits that can never have an associated price tag.  With that as the premise, someone from the firm must be in the client’s office as swiftly as humanly possible.  The issue must be identified candidly and the obvious distress to the firm and the client must be recognized.  The client must be assured that its confidence in the law firm and its lawyers is the firm’s paramount objective, and to that end, the firm is prepared to refund the entirety of the fee paid by the client if, after investigation, there is any doubt on either side about the integrity of the bills and the billing process.  The firm should then volunteer to submit the entirety of its bill to examination by a neutral party agreeable to the client, with the firm to bear the entire expense.

There may perhaps be other ideas on how to retain the client’s trust without putting the entirety of the fee at risk.  Perhaps the client herself will be the source of ideas, and most certainly the query should be made.

There remains the obvious personnel issue.  While retaining the whistleblower may be distasteful, terminating him sends a powerful and negative message.  To the extent there is merit to the claimed breach of trust, the person responsible to the lapse may need to leave, but at a minimum cannot be left in a position where the firm’s integrity can again be compromised.

To the extent the matter has become public, as in the Holland & Knight story, it seems to me that the matter must be addressed publicly and that the firm’s clients need to be individually reassured that such behavior is an aberration and is not tolerated at the firm.  Toward this end, actions will always speak louder than words.

LovemarkFrom the Saturday, September 2, 2006 Business section of the Chicago Tribune–  J.C. Penny decided to move its $400  million advertising account from DDB to Saatchi & Saatchi after Pennys’ CEO heard Saatchi’s Kevin Roberts speak when promoting his new book, “Lovemarks: The Future Beyond Brands.”  As the Tribune reports, “Ullman was so impressed with Roberts and his ideas about making deep emotional connections with customers that he directed Pennys’ chief marketing officer to find out more. Thus began a courtship that resulted Friday in the surprising news . . . .”

I’m tempted to end with some trite rhetorical question about whether Pennys’ lawyers are reading this book today, but that would ignore the profundity of Penny’s decision.  DDB had orchestrated an ad campaign that resulted in Pennys’ stock moving from $14 to $65 a share, and increased sales of over $1 billion.  Their ad campaigns had been award-winning.  So the decision to move the entire account to an agency with little experience in marketing apparel and no experience in the mid-priced retail segment says a great deal about the compelling nature of Roberts’ “lovemark” theories.

What happens in the business world foreshadows what happens in the legal world.  So I leave with this rhetorical question:  Are lawyers creating their own lovemarks?