Valorem Law Group’s Nicole Auerbach spends a lot of time talking to inside counsel.  She has seen many who are leading major changes in their law departments, taking advantage of “the New Normal” to achieve unimagined savings for their companies.  She also has met her fair share of inside lawyers who are handling things today the way they have for so many yestedays.  It is this latter group of inside counsel who got Nicole wondering why more inside counsel are not demanding more change from their outside counsel.  Check out Nicole’s post in Corporate Counsel Connect.  And you can follow Nicole’s musings on Twitter @ValoremNic.

 

For reasons entirely unbeknownst to me, professors, law deans and others in law school frequently refer law school grads to me to suggest approaches to the legal workforce.  Valorem doesn’t hire new law school graduates (or even recent ones), but I end up seeing an awful lot of resumes.  I’ve put together a few thoughts here that may be of interest to recent graduates.

1.   Put yourself in the shoes of the lawyer/firm.  How many resumes do you think an average lawyer sees in a year.  The total is likely to be in the hundreds.  Resumes in one year blend together.  When you consider that 99.9% of the resumes I have seen since 1983 when I got involved in the hiring process look exactly the same, you can better understand how resumes blend together.  If yours looks just like 1000 others, why should I care?  How can I possibly remember you?

2.  Remember the grains of sand.  Picture a person surveying a lovely sandy beach.  You are a grain of sand.  You might well be the finest grain of sand in the history of sand, but how do you expect the person surveying the beach to pick you out from amongst the trillions of other grains of sand?  You can’t afford to appear to be like the other grains of sand.

3.  If you aim to not offend anyone, you will impress no one.  So many people, and virtually all law firms, are afraid of offending anyone.  You create a persona stripped anything vaguely rough and unpolished and you end up stripping away the real you.  Look at law firm websites–they are all so unbelievably vanilla.  And so utterly BORING.  You need to be the real you, the kind your friends see.  You need to do something so different that it captures attention.  A custom YouTube video presenting yourself?  Why not?  A parody to introduce yourself?  Give it a shot.  BE CREATIVE.   A lot of prospective employers may be turned off.  But you are far more likely to catch the eye of somebody that way.  That’s a key to getting an interview and even more so getting an offer.

4.   Understand the importance of “what’s in it for me?”  When firms hire a prospect, particularly when smaller firms do, there is a very real “what is the value to us” that enters the hiring calculus.  You need to make a business case for a decision to hire you.  Not a business case for a firm to hire a new lawyer–the firm has already done that–but why the lawyer they hire should be you.  You need to think like a business person, not like a lawyer on this one.

5.  Understand that you are not a good writer.  Most young lawyers I speak with talk about how well they write and how good they would be trying cases.  Trust me, you are not a good writer. At least you’re not so much better than others I’ve seen that writing skills would drive that decision.  When clients interview lawyers, quality is a given.  You would not have made it the interview if the client didn’t think you were good enough.  Likewise, good writing is a necessary skill set, but it is not sufficient.  Understand and embrace that idea.  On the flip side, your interest in trying cases is great, but my mother wants to try cases.  Tell me instead about what you’ve done to master the forum.  And by that, I don’t mean mock trials or other stuff in law school.  How have you learned to think on your feet?  To perform before an audience? To plot strategy like an elite senior military officer?  And so on.  There is a huge amount that goes into being a trial lawyer.  Don’t be so condescending as to think you’ve mastered it based on handling a moot court case.

Remember, free advice may only be worth what you pay for it. But I hope something in this post sparks a helpful thought.

My partner Nicole Auerbach, proud owner of a middle office, recounts the lessons learned when she voluntarily gave up her corner office, and also those from some other risks she’s taken along the way.  This is her story, as first posted in The Legal Balance.

A Middle Office with a View

BY NICOLE NEHAMA AUERBACH

I am honored to have been asked to write this monthly column, “Insights from the Corner Office” for the relaunch of The Legal Balance, but full disclosure is in order: I don’t have a corner office. Idid have a corner office, but a middle office opened up that had two great windows, including one with a view of Buckingham Fountain.

So I moved.

There was a risk that people might perceive me as less powerful without my corner office, but truthfully, I couldn’t be happier.

My office move dovetails well with The Legal Balance’s theme for this month—risk taking. As I’ve gotten older (I just celebrated another birthday; they seem to speed up as we age) I’ve realized that so many things we learned growing up—“Don’t talk about yourself or your accomplishments; that’s unbecoming,” or “Good things will happen to those who wait”—were probably good advice … during the era of Jane Austen. But in today’s world, while good things sometimes do happen to those who wait, they happen a lot quicker for those who aren’t standing around hoping the stars and the moon will align. And truthfully, while it would be nice if our accomplishments were automatically emblazoned on big lapel buttons so we wouldn’t have to brag, it’s clear that’s not happening, either. Instead, getting ahead requires some action and, also, a willingness to take risks.

The biggest risk I have taken in my career is, without question, the one that has delivered the most reward. In 2008, I decided (after a lot of hand wringing and soul searching) to leave my comfortable partnership position at the large firm where I had practiced for nearly 15 years to start a new firm with new partners and a new model, handling litigation using alternative-fee arrangements. There is no question that the anxiety associated with this move was huge, but so was the amount of excitement and the energy we had in launching Valorem.  While I know that hindsight is 20/20, if you had asked me just a few weeks into the endeavor—at a time when I didn’t know if we’d be around in five months, let alone five years—I would have said that the risk was well worth taking because it gave me affirmative control over my destiny. That’s a hard lesson to learn, because a lot of risks don’t pan out in the end. But I think that lawyers, and often women because of the way we were raised, tend to miss great opportunities because they are risk-averse and simply afraid to fail.

Having control over your own destiny is often the key to being happier and more satisfied with your career. But if you’re doing something because you chose to do it, that is exponentially more rewarding than doing something simply because it’s part of some master plan that you think society has made for you.

And don’t forget: Risk comes in a lot of different sizes, so if you are ultra-conservative, start with a small one—a risk that will make absolutely no difference if it doesn’t go well. Then try to build up to larger ones that may ultimately shape your destiny. Who knows—someday, you may end up in the middle office with the good view.

Or, if you prefer, the corner office.

Nicole Nehama Auerbach’s office isn’t in the corner, but it’s still nice. Nicole is a founding member ofValorem Law Group, a litigation firm solving its clients’ issues using alternative-fee arrangements. She also co-founded the Coalition of Women’s Initiatives in Law.

Ken Grady

With his permission, I want to share with you a note I received from Ken Grady, the former General Counsel of Wolverine World Wide, Inc. and architect of the astonishingly successful Wolverine law department and its accomplishments in recent years.  The topic I was discussing with Ken and others was whether Value Based Fees alone were enough to help law departments become high achievement groups. The discussion was part of our preparation for the most recent session of the Association of Corporate Counsel’s superbly designed Legal Services Management program.  Ken’s perspective as a General Counsel who went through the change process is so valuable.  I hope you find his insights as valuable as I do.

I think we are seeing in many ways that VBB alone is not going to carry the day.  If the law firm provides services the exact same way under a VBB arrangement as it does under a billable hour arrangement, nothing has changed – as Pat says, there is no risk sharing.  GC’s complain that law firms aren’t presenting them with really viable VBB options, so they default to billable hour – discounted fees.  Law firms complain that when they present VBBs, clients won’t do them and default to billable hour – discounted fees.  This is true even at the firms that are leading the way in doing VBB and implementing PM and other changes.

Distributed change – redoing the corporate legal world where no one firm or company has the power to force through change – is more difficult than changing a single company (obviously).  In the absence of a killer app or service that drives the change, it will be slow, uneven and lack clear direction.  This isn’t new, it is the same thing that has happened in other industries at other times.  It is new in the legal industry, and it is remarkable in the legal industry because it is so visible for an industry that considers one or two major changes every 100 years to be fast enough.

All of the tools and techniques we teach will help in the short term, but the tipping point – the real moment for change – will happen when someone shows that using model “X” results in meaningful change at such a level that there is no going back.  [Excuse the self-promotion] In the last five years, while our company has grown revenue by 60%, the Legal Department has reduced legal spending from that 5-year old starting point by 12%.  We are spending 12% less than we did five years ago to support a company with several new product lines, expanded geography, etc., etc. that is 60% larger and significantly more complex.  We did it by combining the tools and techniques we teach.  But, the real tipping point would have been if we had cut our legal spending by 50%.

With a few notable exceptions, major law firms are not going to try to reinvent their profit model (assuming they have the wisdom to know how) to help clients cut costs by 50% while allowing the law firm to continue generating revenues and profits as it has done in the past.  Since clients aren’t pushing, most competitors aren’t doing it, and there is tremendous risk in trying to do it – why bother?  The disrupters will be (as they mostly are) start ups who have nothing vested to lose and who can try new models while adaptively changing fairly quickly.

On the client side, those disrupters so far simply don’t have the geographic, subject area and expertise scope to do what we need in a broad enough way to meet the 50% reduction challenge.  They tend to be grouped around litigation (U.S.), small localized transactions, and volume/repetitive work.  While there is some market for that work, larger companies need the broader universe and scale to really drive down spending (versus moderating its growth and achieving efficiencies in spending).

I ran across a terrific post by Sampriti Ganguli of Corporate Executive Board, 9 Efficiency Trends to Watch for in Legal.  The author identified the source of the conclusions drawn”

As we reflect back on this past year, it’s worth looking back on what CEB has learned in analyzing legal departments’ budgets from over 300 different companies this past year (we’ve been doing this for a decade, so we’re homing in on some long term trends.)

The trends are all things many, including me, have been writing about for some time (that’s comforting).  The nine trends are:

1.  Moving more work in-house.  Outside counsel almost always lose on make versus buy decisions.

2.  Use non-lawyer professionals more often.  A good paralegal is worth more than a poor lawyer.  Take advantage of them.

3.  Invest in legal operations capabilities.  Legal ops control costs.

4.  Invest selectively in legal technologies. Applause for matter management and ebilling technologies.

5.  Unbundle legal services, particularly in litigation.  This is an area of huge potential savings.

6.  Focus on litigation management and oversight.  How departments operate without doing this escapes me.

7.  Use smaller firms. (So how much of their clients’ money do big firms invest in art?  Check out Dewey and Howrey)

8.  Reduce the number of law firms.

9. Use alternative fee arrangements judiciously.

From my vantage point, these are on the money. The CEB post is certainly worth checking out.

I had to do a bit of catching up on my MCLE, so I watched a program entitled Attorney Alternative Billing Options and Their Ethical Considerations.  Apart from the absence of any meaningful discussion of ethical issues, I was stunned by the speaker’s unequivocal statement that “discounted fees are a form of alternative fees.”  I am appalled that any thoughtful person would encourage this pablum, which is the nicest term I can conjure.  Alternative fees are based on the billable hour.  Not only do discounted fees not align the economic interests of firm and client, the structure has been proven not to lower total spend.  Empirically, it is no alternative at all!  Shameful shilling for large law firms who want to look like players in the AFA world but do little more than adjust their bills.

There has been a great deal of speculation about the collapse of the European common currency, the Euro, should Greece withdraw from the Euro or if Spain’s banking system collapses.  It is impossible to know how long or whether the Euro will last.  Indeed, given the relative cost to countries like Germany, bailouts are much less expensive.  But as we saw when the US Government refused to save the housing market because of the political concern about rewarding speculators, sanity does not always prevail in these matters.  As a result,  businesses need to prepare for the worst when it comes to their contracts.

Many  contracts that require payment in Euros.  But what happens if the Euro ceases to exist? One possible outcome is that one party would seek to substitute an alternative currency for the Euro, like dollars.  However, the payor is likely to seek its own country’s currency since alternatives like the dollar are likely to be very expensive for foreign businesses to obtain. It is entirely predictable that a Greek company would seek to have its obligations set in the new Greek currency and that a Greek court could make that ruling.  Given what has happened in places like Argentina, being paid in a new currency will not provide the seller the value it expected.

Here are five steps businesses can take to address the potential uncertainties regarding the Euro:

  1. For existing contracts, seek to amend the contract to add a provision that details what will be done if the Euro collapses.  The certainty will be of benefit to both parties.
  2. Add similar “what-if-the-Euro-collapses” language to future contracts.
  3. Watch your Euro receivables more carefully that ever before.  If you let a receivable grow, the problem will be greater if the Euro collapses.
  4. Consider whether new Euro contracts should be made at all.
  5. Require advance payment or COD if possible.  Once you’ve been paid, you can always convert the currency.  Your risk is in delayed payment.

The results of a recent ACC survey are out, and the results should worry outside lawyers.  According to a article on the survey from Inside Counsel, the amount of work corporations are referring to outside lawyers is declining, in some cases rather significantly. The results of the survey show:

  • 37% of GCs planned to hire more staff in 2011
  • 65% of in-house departments use outside firms for litigation, compared with 69% in 2006
  • 20% of in-house departments use outside firms for tax issues, compared with 30% in 2006
  • 28% of in-house departments use outside firms for M&As, compared with 35% in 2006
  • 22% of in-house lawyers earned more than $300,000 in 2011

In other words, work that was sent to outside lawyers in the go-go days is now being handled by inside lawyers.  Clients have learned the value of make vs. buy decisions, and outside lawyers are more often on the south side of that decision.

That trend, in combination with continued economic pressure on law departments and clients’ awakening to the realization that the power in the lawyer-client relationship is inherently theirs, should not make managing partners sleep more soundly any time soon.  The real question is what firms will do about this.

Corporate Counsel is out with a fascinating article, Bye-Bye Big Firm.  The article focuses on disaggregation as a disruptive force in the change cycle.  And while this is true, it is only part of the story.  The unbundling of services has allowed new entrants into certain markets, particularly in the process and content buckets (see here for explanation).  While everyone acknowledges that these specialized service providers (Novus Law, Integreon, being  good examples) can provide their services at lower prices, the real key is that they provide better quality.  Because they specialize in what they do, these firms hire people with different career paths than most biglaw associates have in mind, and they develop highly specialized systems to allow quality to be measured, managed and improved.  They are light years beyond at least most law firms in terms of the quality of services they provide, and they provide these superior services at a fraction of the cost.  As more clients move to these specialized providers, word will spread and only those still pining for rotary phones will expect their law firms to provide this type of service.

These service providers compete with many law firms, who like billing big bucks for process-rich work, whether document review or due diligence.  And many law firms are hesitant to rely on the work product of these service providers and so they find ways to “check it” that amount to a do-over on the client’s dime.  But as things evolve, law firms, at least those that want to thrive instead of fighting just to survive, will make the adjustments to work seamlessly with these subcontractors, just as a general contractor with good subs works seamlessly with those sub-contractors.  In the meantime, clients will have to be wary of the do-over tendencies of many firms.

The Corporate Counsel article ends with some interesting observations by Peter Zeughauser, with whom I agree.  But I would add that the number of large law firms is likely to decline at an accelerated rate until the equilibrium of the new normal is reached.

My partner Nicole Auerbach received word last week that she has been elected a fellow in the College of Law Practice Management.  Way to go Nicole.  A well-deserved honor.  Here’s why:

The College Law Practice Management was formed in 1994 to honor and recognize distinguished law practice management professionals, to set standards of achievement for others in the profession, and to fund and assist projects that enhance the highest quality of law practice management. The College and its Fellows inspire excellence and innovation in law practice management by:

  • Honoring extraordinary achievement
  • Developing, exchanging and disseminating knowledge
  • Stimulating innovation in the delivery of legal services

On every one of these criteria, Nicole has shown herself to be worthy of the honor.