October 2011

Thomsom Reuters’ report on the latest Hildebrandt Peer Monitor Index contains several interesting findings.  Here is the one I thought was the most interesting:

Billing rates were also up — 3.5 percent from a year ago. But that increase is marginalized by the fact that firms’ "realized rate" — the rate they are actually paid by the client — reached an all-time low this quarter. Net collected realizations fell slightly, to 85.4 percent, which also represents an all-time low.

Firms increased their rates and clients responded by paying less. This finding reflects a fundamental disconnect between firms and their clients.  Clients obviously do not believe they are getting fair value for the fees charged.  Increasing rates is not going to change that view: indeed, continued price increases will only  exacerbate the problem.

Firms should care more about the realization rate than the amount charged, and the road to greater revenue is increasing the realization rate.  How do you think clients would respond if firms announced they were holding their rates flat or, gasp, decreasing them?  If firms approached their clients and had a discussion that began with the expressed willingness to decrease rates provided the client worked with them on realization, I believe most clients would happily engage in that discussion.

But whatever firms do, simply doing what they used to do (increasing rates) is a fool’s errand.

 

Dan Hull asks the provocative questions, Did you ever have Neil Young’s passion? For even 5 minutes?  Just two nights ago, I was talking with a friend who asked what wish I had for my kids.  My answer was this:  That they find a passion and pursue it passionately.  A passion you ignore is torment.  A life without passion is just an existence.

So ask yourself this:  Are you passionately pursuing your passion?  If not, what the hell are you waiting for?

HBR Consulting has issued a report (summary here) of the results of a survey of in-house law departments.  Interesting results.

  • More than half the participants report increasing the size of their in-house staff.
  • More than 80% of the participants report increasing legal needs.

At the same time:

  • 60% of the participants have reduced external spend
  • Over 70% increased internal spend.

HBR’s conclusion is that as law departments focus on efficiency, they are coming to the conclusion that they can do work internally more efficiently than can their outside counsel.  This finding echoes what many in-house counsel have been telling their outside firms: the competition isn’t other firms.  The competition is keeping the work inside where the cost of producing outcomes is hugely lower.

For law firms, this is the great challenge of the next few years. 

I am sitting here pondering a project I asked someone else to do.  I don’t know whether it is done.  It should have been done by now, but I don’t know because I haven’t heard from the person I tasked with the assignment.  I don’t want to have to keep this task in the front of my mind.  I want to forget about it altogether.  But I can’t, because I don’t know that it hasn’t fallen through a crack.  I am frustrated and annoyed.

If this has ever happened to you, put yourself in a client’s position and ask yourself if you should let him or her know that the project has not fallen through the crack.  Attentiveness and responsiveness are hugely important.  I just reminded myself why.

Before my Dad died, I would use him as a sounding board for my trial theme and story.  Not that my Dad was a simple man but he was persuaded by clear simple, stories.  The Bob test. Now that he is gone, I have to look elsewhere for feedback, but the lesson is still the same.  Simple, clear, compelling stories are the best.

The October 17 issue of the Wall Street Journal contains a terrific article by Ashby Jones, What’s A First-Year Lawyer Worth?  The answer, it seems, is not much, at least to some general counsel.  Several GCs are quoted talking about how they deal with the "first-year dilemma."  Here’s the definition:

But lawyers said there is still a gulf between a newly minted lawyer and one who can provide value to a client. Among the skills often absent are a comfort and confidence with clients, a sophisticated knowledge of the business world, and many nuts and bolts, such as how to prepare a witness for a deposition or the precise terms that, say, need to be included in a particular kind of loan agreement.

The article includes thoughts of several managing partners of law firms.  Two managing partners showed the gulf between those who get it and those who don’t. The articles reports:

But R. Bruce McLean, the chairman of Washington, D.C.,-based Akin Gump Strauss Hauer & Feld LLP, said that if the trend continues, firms will have to find a new solution, perhaps a new billing model or intensive training programs similar to those in the U.K., where prospective solicitors take a one-year course on legal practice followed by an apprenticeship.

Compare McLean’s view with that of Peter Kalis, who advocates for yesterday’s status quo:

Peter Kalis, the chairman of K&L Gates LLP, said that when the issue arises with clients, he tells them "it’s their dollar, and they’re free to do with it as they wish." But he said he also tells them to "step back," and take a longer view. "It’s a bargain made throughout the generations that has served democracy and capitalism well."

I have a hard time imagining a lamer argument. It is essentially this: " Let’s ignore the changes in the business world over the last 20 years.  Let’s continue to pretend that law is immune to business demands.  Keep paying more than you need to because your paying more than you need to is good for democracy and capitalism."  The only thing he didn’t include is that over-paying large law firms is somehow divinely mandated.

The new world is coming, to some faster than others.

 

The latest issue of Edge International Review, authored by the principals of Edge International, is now out.  Terrific articles by Pam Woldow and Doug Richardson  onCreating a "communication engine" through legal project management; Ed Wesemann on What reputation really means (Hint: It’s not brand); and Jordan Furlong and Gerry Riskin on 7 business development tactics in a down economy.

The Edge International Review is an important read.

AmLaw Daily reports today that the legal sector lost 1,300 jobs in September.  This has to make many people nervous, starting with Managing Partners.  Coming on the heels of Citibank’s report showing that expenses were growing faster than revenue for 2011 and forecasting that the economy is in for a period of no or slow growth for a protracted period, the job loss has to make associates, income partners and law students concerned, especially those who remember the "layoff years" of 2008 and 2009. 

Those who thought they were seeing a light at the end of the tunnel might start listening for the sound of the train.

Several years ago,my friend John, the Cubmaster of my son’s Cub Scout Pack, died very suddenly.  It fell on me to take over his role.  At the wake, several of the parents said their sons were distraught, asking why would God make a person like him die so young.  It became clear to me that we would have to answer that question for the sake of our sons.

Until John’s death, I had only experienced death in its more or less natural order-people live to an old age and then die.  That natural order makes sense.  An early, sudden death does not.  To answer the question my scouts were asking, I spent a lot of time thinking about early, sudden death.  When my scout pack, families and friends gathered for a celebration of John’s life, I stood before them and shared this thought.

We tend to let life become a race, moving from work or school to chores, from one thing to the next.  When we do so, life itself becomes monotonous.  It is no longer life, but simply existing.  Every so often, God reminds us that life is a gift, and it is one we cannot take for granted.  When someone dies very young, we learn this lesson painfully.  But we know from experience that lessons painfully learned remain with us forever.  It will be hard for our young sons to fully appreciate this lesson, so it becomes even more important for we parents to show that we have learned from this sad experience that brings us here, that we are going to live our lives fully, each day, for that day, because we understand there might not be a tomorrow.  Because we also know that lessons our children learn by watching us are ones that remain with them long after the lessons they hear from us.

Tim McGraw sings a song called Live Like You Were Dying.  The song begins with these lyrics:

He said: "I was in my early forties,
"With a lot of life before me,
"An’ a moment came that stopped me on a dime.
"I spent most of the next days,
"Looking at the x-rays,
"An’ talking ’bout the options an’ talkin’ ‘bout sweet time."
I asked him when it sank in,
That this might really be the real end?
How’s it hit you when you get that kind of news?
Man whatcha do?

An’ he said: "I went sky diving, I went rocky mountain climbing,
"I went two point seven seconds on a bull named Fu Man Chu.
"And I loved deeper and I spoke sweeter,
"And I gave forgiveness I’d been denying."
An’ he said: "Some day, I hope you get the chance,
"To live like you were dyin’."

In his 2005 commencement address at Stanford, Steve Jobs touched on this same subject:

When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you’ll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

                                                  *******

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

With so much attention being paid to the sense of loss so many are feeling from Steve Jobs’ passing, it is the right time to remember the important lessons we should take away on these sad occasions.