Have you ever had one of those days where you planned things out, worked off a checklist and really accomplished a lot? Congratulations, you’ve just provided evidence of how project management works and why it is so important. In the value world, project management is as important a tool as a hammer is to a carpenter. Need to learn more? Here’s a partial list of law-related project management resources.
This story from a friend who recently started as General Counsel at a Bank. Previously, this person had been GC at a different bank that was acquired and then took some time off after the acquisition. The GC relayed a story about a recent conversation with one of the Bank’s outside lawyers. In that conversation, the GC commented to the lawyer about how much the firm’s rates had increased in the past two years, and how the GC was surprised given the economy and how firms had been struggling.
Here is the outside lawyer’s response: "Our clients were asking for such large discounts that we had to raise our rates so we could still net what we wanted to net."
If I were an inside lawyer, I would immediately be reviewing the bills from each of my firms to determine the effective hourly rate I was paying. And if it has gone up in the past two years, I would be having a "conversation" with that law firm.
PS–this illustration of law firm gamesmanship is precisely why asking for discounts is not going to yield the savings inside lawyers hope for when they request discounts.
In the past couple of weeks, several top law firms have announced that they are changing the salaries they will pay starting associates back to $160,000. Similar changes are expected, because all law firms are committed "to the market."
It seems like only yesterday that the elite of BigLaw were falling over themselves to tell their clients that they were changing structurally, that they had heard their clients’ loud messages that they were not getting value from entry level lawyers and so on. Apparently what these law firm elite heard was "blah, blah, blah, yada, yada, yada."
Remember how tone deaf we all thought the CEOs of the Big Three Automakers were when they flew their private jets to Washington when asking Congress for some bailout money? There you go.
Jeff Carr, the General Counsel of FMC Technologies, recently discussed the relationship between his department’s legal spend and his company’s earnings per share. In days when even a penny or two of increased EPS can positively influence share value, thinking about legal spend in the light of EPS really changes the focus. Each law firm should be cognizant of what it costs the company by this metric, and in-house lawyers should be thinking of this metric when focusing on what type of fee structure to utilize and what firm to engage.
In hospitals, they call it the "July effect." A recent study, described on NPR, shows that more people die of medical mistakes in July than any other month in hospitals. Not all hospitals, just teaching hospitals where a new crop of residents begin to learn how to be a real doctor every July. There is now proof that when it comes to doctors, experience matters. Does anyone doubt the same is true for lawyers?
Read Lessons From Private Equity Any Company Can Use (Memo to the CEO) by Orit Gadiesh and Hugh Macarthur. Gadiesh is the Chair of Bain and Company and Macarthur is a partner with the firm. They know private equity, and in this book they explain the simple rules that must be followed to extract maximum value from any operation, including a law department or a law firm. Here are the rules:
1. Define full potential.
2. Develop the blueprint.
3. Accelerate the performance.
4. Harness the talent.
5. Make equity sweat.
6. Foster a result-oriented mindset.
Does anyone really doubt that private equity would handle a law department or a law firm a bit differently?
Much has been said about John Wooden since his recent death. But two things John Wooden said have really stuck with me since I first heard them many years ago, and they are cornerstones of a value practice.
"Failing to prepare is preparing to fail."
"If you don’t have time to do it right, when will you have time to do it over?"
The planning part of what we do is frequently given short shrift in favor of frenzied execution. Execution of what is rarely considered. Consider it. Learn from John Wooden.