Managing Legal
The Point
Where corporate Legal needs the services of a specialist, it should look primarily among law firm partners for the practitioner who has spent years — more typically decades — focused on the narrow legal area in which the company’s need arises (more on this here and here).
Surprisingly, attorneys employed by such firms as associates — especially the larger ones — receive very little training for their work (see here, here, and here). Yet these law firms assign such associates alongside such partners and bill them at hundreds per hour for their supporting role.
Management lesson: Corporate Legal, to get the expertise its client company requires, should maximize the services of the specialists it really needs, and minimize the services of associates who role is mainly to bloat billable hours (see here and here about the law firm financial technique called “associate leverage”).
This Matters to Your Business
Kenneth Grady, former law firm partner and corporate general counsel, wrote this last month:
“There was a time, at least in the 80’s, when Big Law paid more attention to training. I don’t know the percent (may not have exceeded 1%) but it was greater than today.”
This in response to news that Deloitte had announced a $1.4 billion training pledge across its three main service lines.
For the experienced general manager, Deloitte’s move is Management 101. But under the billable hour business model, as implemented through “associate leverage” staffing, law firms minimize training and treat associates as short-termers in their organizations.
Fred Bartlit, former head of litigation at one of the country’s most prominent law firms, puts it this way:
“In big law firms, their models have been to keep associates inexperienced. Big firms would hire 200 associates, and eight or nine years later, there would be four or five left. There was no incentive to mentor, because almost no one was permanent.”
(Bartlit left large his law firm to found BartlitBeckLLP, which has inverted the big law firm model to hire law school graduates with the intent to eventually make each a partner of the firm — its current partner-to-associate ratio: 3 partners for every one associate.)
Because …
Two comments:
First, general managers and other business executives should be aware that the vast majority of lawyers — including general counsel — willingly accept the bad bargain described above: the client gets its vitally needed specialist, but has to pay for less experienced attorneys as well.
It will be C-Suite decision-makers who need to bring business logic to bear here, because lawyers in-house and in large firms are unlikely to do so on their own.
Second, there are two ways to get the client company the specialist it needs without paying unnecessary fees for associates it does not need:
1. Robust negotiation with Big Law firms to minimize or eliminate questionable work by associates — while paying the needed specialist the high fees he or she is genuinely worth; or
2. Seek out a boutique law firm organized around a narrow legal discipline, or a “distributed law firm” which employs no associates, both of which features the work of experienced specialists — both of whose business models do not depend on “associate leverage”.
FisherBroyles is a distributed law firm, which last year grew to the ranks of the AmLaw 200 two decades after its founding. While it has paralegals and support technologies, it has no associate lawyers — only partners:
“One of the core building blocks of our firm is to not train young associates and bill the client for training them, like traditional firms . . . That’s one of the things we know that our clients didn’t want, so we don’t do that … “[We are] just going to be more efficient … because you’re not going to have the pyramid structure where you have a first-year or second-year [associate], and then a seventh- or eighth-year [associate] reviewing that [the lawyer’s work product], and then a partner that’s been practicing 25 years looking at it. You’re just going to have the partner who’s been practicing 25 years looking at it.”