Friday, February 02, 2007

 

Associates v. Partners v. Clients

Stephanie Ward of the ABA Journal has a new piece out that is sure to stir some conversation -- if not a hornet's nest. The article, "The Ultimate Time-Money Trade-Off," appears in the February issue of the ABA Journal and is available for a limited time online at the ABA Journal eReport.

The article brings into sharp relief the differing views of law firm associates, managing partners, and clients. These three constituencies have complementary goals, but you'd never know it from what they're saying.

First, the associates: from an admittedly "unscientific" poll, associates overwhelmingly say they want fewer billable hours and they are willing to trade money for time. This finding matches the finding of several studies, including work done by PAR. What is striking is the high percentage who want to work fewer hours: of 2377 respondents, a whopping 82.4% say they would trade time for money. Clearly, the results are skewed (people who don't want to make that trade off probably wouldn't bother themselves with answering the poll), but even if you discount half the results, the number still gets your attention.

Second, the partners: some of the partners and one law firm consultant are apparently out of touch with reality. Rather than recognizing that today's workforce has certain expectations, needs, and limits that have to be addressed in order to attract and retain good talent, they are plowing forth on the same doomed path that got them into the high attrition/low loyalty/high client dissatisfaction situation they have been suffering from for the past decade.

Carl Leonard, former chair of Morrison & Foerster (anyone seen their attrition stats recently, particularly among women?) and now a law firm consultant, is quoted as saying that you can't cut hours if you want to be a successful firm, and that lawyers who cut back their hours are "so-so lawyers." Amazingly, regrettably, and horrifyingly, Mr. Leonard is a consultant to law firms, so I suppose he is counseling law firms not to let attorneys cut their hours. Solid real-world evidence refutes Mr. Leonard's claim that a firm that allows its attorneys to cut their hours can't be successful -- numerous law firms and accounting firms have been very successful and have significantly reduced attrition, improved their recruiting of top talent, and enhanced their relationships with their clients because they let their attorneys reduce their hours. They are still profitable, including profit that stems from saving a few million dollars a year in attrition-related costs.

As for "so-so" lawyers? We know former Supreme Court clerks, top litigators, and associates who already have a solid book of business who are now working reduced hours. No one would consider them to be so-so. We also know plenty of men and women associates who are bright, provide excellent client service, and could be the future of their firms -- and they are working reduced hours. Again, none are so-so. Mr. Leonard's type of knee-jerk thinking is exactly what is holding law firms back from being as open as their clients are to flexible ways to work.

Third, the clients: The article reflects a fear that PAR has heard from corporate clients, that billable hour requirements are so beyond what attorneys want to work that there may be a little padding going on. Whether true or not, perceptions like this related to high billable hour requirements do affect client relationships.

The article also quotes several in-house counsel as saying they would support a reduction in billable hours. PAR's studies concur. Barry Nagler, GC of Hasbro, Inc., says he thinks reduced billable hours would be a good retention tool, calling it a "creative and enlightened" way to hang on to your best lawyers. Susan Robinson of Stanford Law School adds that it would be a good recruiting tool. Again, experience proves them to be right. Law firms that have implemented non-stigmatized reduced hours policies are measuring their increased retention and enjoying a better pool of applicants from which to hire. Accounting firms have had the same experience, and have publicized their results.

Michael Roster, a VP of a Wachovia subsidiary, offers another reason firms won't reduce billable hours: the firms will have a harder time measuring "who is really good and who is committed" and who should be made partner if they no longer have high numbers of billable hours to use as a measuring stick. Mr. Roster is accurately describing the way many law firms think, but that description is completely out of touch with good business practices. Using the number of billable hours worked as a proxy for worth is ridiculous -- it tells you only who can put their bottoms in chairs the longest, and may even tell you who is the least efficient. Many firms are starting now to decouple face time and worth, which is commendable trend. Instead of looking at billable hours, firms need to base their evaluations and partnership decisions on each attorney's experience, successes, client relationships, potential for business development, and the like. That is the only logical way to measure value. The numerous companies that have implemented good flexible work schedules know this. Deloitte and Ernst certainly know this.

As for billable hours telling you who is committed? Don't get me started. You have to be extremely committed to the law to try to be a lawyer while also meeting obligations outside the office. The only reason lawyers who cut their hours appear not to be committed is the way they are treated by their firms once they make the cut -- poor assignments, more critical evaluations, reduced client contact, less mentoring, fewer business development opportunities, and worse operate to push those lawyers out the door. It really is the firm that is less committed -- to the lawyer. The reduced-hours lawyers are probably in fact more committed to the firm and is trying to stay with the firm -- the lawyer who bills 70 hours per week is probably getting through each week by repeating over and over again: "Just six more months, just six more months and I'm outta here, just six more months until this is over, I can make it for six more months...".

I would much rather have an associate working for me who bills 40 hours a week, does solid work that returns favorable results for the client, has a strong relationship with the client that is not undermined by mistrust of the number of hours billed, and that is likely to get additional work from the client as the relationship strengthens than an associate who bills 70 hours a week and gets good results for the client, but who is likely to leave within two years because of burnout and a desire to have a life outside the office. The first associate will give me much higher profits in the long term, and will contribute to the financial stability of my firm.

The article concludes with sage observations from Ida Abbott, a law firm consultant who frequently works with PAR, who says better management of firms would mean hours could be decreased without hurting profitability -- and that really, the associates are only asking to work what the rest of the world considers to be full-time work.

Comments:
Where can one get a list of law firms that have low billable hour requirements?
 
There are several sources for billable hour requirements and the number of hours attorneys actually work. The NALP Directory (www.nalpdirectory.com) and the AmLaw Midlevel Associates surveys are two of the best, but I don't believe they rank firms by billable hour requirements, so you'll have to wade through the list.

If you want information about firms' part-time programs, check out PAR's Scoop (www.pardc.org/TheScoop/).

At PAR, we're working on a project called "New Models of Legal Practice". It contains information about several firms that have very low billable hour requirements (like 1600 hours). That project will be available to the public around the end of the year.
 

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