Welcome to 2005! I hope your holidays were joyful and that the new year brings great things your way. Since a new year is a time for predictions, I'll make a few here. Based on the strong trends under way in professional development, these are the ones I believe will have a profound effect on lawyers and legal employers in 2005.
The Case Study in this edition describes how we tackled complaints by women lawyers of exclusion and discrimination by improving cross-gender communication.
With associate attrition again becoming a major problem, this issue provides a Diagnostic to help you calculate the cost of associate turnover.
Like many of my clients, my practice is becoming international. I will be speaking in conferences in England as well as the Bay Area this quarter, and I will also be in Tokyo. For those of you with offices in Japan, please contact me if I can provide any services for your lawyers while I am there. Also, my article, Women in Law: Redefining Success, is the lead article in the current newsletter of Women in Law, a new website with an international focus. www.womeninlaw.com
1. Partner compensation will be based on leadership and management as well as revenue. Lawyers have always had to manage their cases, clients and teams, and they have done so with little firm guidance or interference. Only a few lawyers took on leadership roles as law firm managing partners or department heads. Now, however, the growth and expansion of law firms requires lawyers to become more adept as managers and leaders. With firms organized into multiple practice groups, nationwide client teams, international industry teams, and numerous offices, more partners are being asked to assume local, national, and international leadership responsibilities. Even in small and midsize firms, the complexities of modern practice require lawyers to be skillful managers.
In addition, lawyers need strong management skills to navigate the fiercely competitive, rapidly changing, and highly fluid marketplace. Expectations will be more pronounced than ever for partners to create and maintain strong client relationships, serve clients more efficiently, and develop and retain associates and staff. This requires them to be effective managers.
As a consequence, partners' compensation will no longer be based just on client origination and generated revenues. Instead, demonstrated leadership and management qualities will constitute a significant component of compensation (as well as a qualification for election to partnership). Firms will define expected leadership and management competencies and assess partners' performance in those areas. They will provide training, work assignments, coaching, and support to help lawyers at every level build the necessary leadership and management skills and behaviors. And they will become systematic about succession planning by identifying associates and partners with leadership potential and preparing "high potentials" to take on leadership roles.
2. Women lawyers will flex their muscles. In 2005, women lawyers will assume increasing power in law firms. Putting to rest the myth that they cannot bring in business, women will be recognized as proficient and successful rainmakers. In fact, successful women rainmakers will be seen as the norm, not the exception. Women have been laying the foundation for this shift by referring business to each other, mentoring and supporting each other, and forming active networks and alliances with men and women in law and business. Clients look for women on legal teams and appreciate the talents women bring to the table. As they gain access to powerful clients and seize the credit they deserve, women will increasingly become "players" in law firms.
In addition, women will become more active in leading law firms at every level, including the highest executive positions. This will lead to a different, more collaborative and respectful management style. That is not to say women leaders will change firms into "kinder, gentler" places, or that the financial decisions or competitive strategies of law firms will radically change. Women leaders will be as tough as they have to be and they will make decisions based on sound business principles. But they will embrace more diverse behaviors and approaches in all aspects of law practice and be more sensitive to the desire of men and women for careers that encompass a broader set of priorities.
3. Diversity efforts will shift from recruiting to inclusion. Law firms will ramp up their diversity efforts by creating cultures of inclusion where minority lawyers feel welcome, want to succeed, and believe they can. Until now, most firms' have focused their efforts on increasing the numbers of minority lawyers they bring into the firm. It is one thing to attract lawyers with promises of great work and friendly colleagues. It is quite another to create a culture that accepts, respects, and promotes people who are different from the mainstream. Because for most law firms this requires transforming firm culture, it will not be an easy task. But firms that are serious will make the necessary changes.
Diversity training, for instance, which until now has emphasized diversity awareness and sensitivity, will turn to training programs focused on specific, concrete management skills, such as supervising and mentoring diverse lawyers. Supervisors and mentors will be taught, among other things, how to closely monitor the overall work experience of minority lawyers to ensure that these lawyers are treated fairly in work assignments, evaluations, and everyday interactions in the firm. And firms will hold partners accountable for carrying out these imperatives.
A significant chasm will develop between law firms that have been making a steady, concerted effort to promote diversity and those that have not. Firms with a proven commitment to diversity will see positive results as they execute well-designed diversity strategies and establish accountability measures. In contrast, those firms that have not taken diversity to heart will fall farther behind. Firms without active diversity initiatives will find themselves at a serious disadvantage in their efforts to attract new lawyers (both minority and majority lawyers) and to serve corporate clients who increasingly expect meaningful diversity in the firms they retain.
4. Alternative career paths will become as common as traditional "up or out". Accepting the reality that fewer and fewer lawyers are willing to forfeit their personal lives for huge paychecks and equity partnership, law firms will create more flexible work options and career paths. While many lawyers will continue to follow the traditional pattern of 8-12 years of brutal work hours culminating in a partnership that requires even more work, firms will find alternatives that will be beneficial and lucrative. A flexible approach to career paths will allow firms to provide better client service by retaining talented lawyers with greater expertise, engagement, work satisfaction, and loyalty.
Reduced hours and flex-time schedules will be commonplace. Technology will continue to allow more lawyers to work offsite. The use of contract lawyers, project lawyers, and professional support lawyers will be widespread. Many lawyers will go off partnership track or leave practice altogether; while some will do so permanently, others will return to law practice and partnership track after a temporary period away. Law firms will find ways to accommodate these various scenarios. Some have already begun to do so.
Kirkpatrick & Lockhart, for instance, has taken a remarkably innovative step toward helping lawyers reconcile their work and personal lives. The firm has hired a full-time Director of Professional and Personal Life Integration to develop initiatives that make it possible for lawyers to find satisfaction in their legal careers and personal lives. Recognizing that policies alone are not sufficient to create results, this Director will focus not only on developing new work-life policies, but also on instituting cultural changes necessary to make work-life integration a reality.
5. Every major law firm will have an executive level director of professional development. Until now, only a handful of law firms have made professional development directors partners of the firm or members of the executive management team. More firms will move in this direction in 2005 as they appreciate how a strong commitment to professional development gives them a significant competitive edge in recruiting, retention, and client relations. Associates want to work in a firm that takes their learning and development seriously. Partners want to know the firm will support them in their ongoing personal development and by providing capable associates to do their clients' work. And clients expect the law firms they hire to promote the continuous learning and excellence of their lawyers.
As a result, the steady growth we have been seeing in the field of professional development will explode. This field is hot! The number of membership applications to the Professional Development Consortium continues to rise and attendance at the NALP and ALI-ABA Professional Development Institutes grows every year. In 2004, the College of Law Practice Management initiated "InnovAction" awards for innovation in law practice management and included professional development as an award category. I see the growing interest in professional development in my own practice every day. I regularly receive inquiries from individuals asking how to "break into the field," and from law firms of all sizes asking how to structure professional development positions and where to find professional development specialists.
As the positions gain in stature, sophistication, and importance, law firms are looking for executive level personnel to run professional development. The interest in professional development is drawing people from both law and business. The principal source of specialists will be associates and partners who transition out of law practice. While firms prefer to have lawyers fill these positions, the second largest source will be people with expertise in adult education or human resources from consulting, accounting, and other professional services fields.
A small California office of a large international law firm had 8 partners, all of them men. The 6 women associates in the office complained to the firm's Human Resources Director that the partners were discriminating against them in two ways: (1) the partners only invited male associates to lunch, and (2) women felt isolated at business development events to which they were invited.
The men partners were baffled by the complaints. Most said they had invited women associates to lunch and client events in the past, but the women either declined the invitations or said little while they were there. When they did attend, they seemed "bored" and made little effort to participate. The men interpreted all of these behaviors as a lack of interest. So after a while, the men stopped inviting them.
The women associates said that when partners asked them to lunch, they never went alone; the partners always invited another male associate or partner along. At business development events, the clients or potential clients were always men and the venues tended to involve sports. At these events (and at lunch), the conversation always turned to sports and other subjects that did not interest the women or that they knew little about. The women stated that the partners never tried to get to know them as individuals or to make them feel part of the group. So the women tended to be quiet or declined subsequent invitations.
To bridge these different perceptions, I brought all the lawyers in the office together. Using a fictional case study, we were able to examine how social awkwardness and a lack of shared understanding can contribute to a breakdown of communication. The men came to realize that it was important not just to extend an invitation, but to make all those who were present feel comfortable and participate in conversations. They also learned that there are other ways to entertain clients than on golf courses and ball games.
At the same time, the women associates learned that they, too, had to make an effort to participate. While they did not have to become experts on sports or hunting, they learned that having at least a little knowledge about the subjects that interest co-workers and clients can go a long way toward promoting meaningful social conversations and building professional relationships. They learned how they could obtain information about clients and prospective clients before a meeting, dinner or ball game, so that they could prepare for - and take the lead in - more interesting discussions. The women were encouraged to be direct and assertive. They could, for instance, take the initiative and invite partners to lunch, identify clients they would like to meet, and select events and venues that they enjoyed attending.
One of the questions clients often ask me is, "What is the cost of associate turnover?"
The expense of losing talented employees is an ongoing concern for all employers. Human resources professionals estimate the cost to be 1.5 to 2 times the employee's salary, and even more with highly specialized employees. The cost for law firms is particularly great because of the high expenses involved in recruiting, training, and replacing associates. The Project for Attorney Retention (www.pardc.org) says the cost of replacing a second- or third-year associate ranges from $250,000 to $500,000 per associate. This range is admittedly very broad, but that reflects the difficulty of quantifying all of the hard and soft costs involved, especially given the variations among law firms. This issue's Diagnostic lists the factors to include in your calculation. They include both direct, out-of-pocket expenses (e.g., travel, recruiting fees) and indirect, "soft" costs which are harder to calculate (e.g., lost productivity).
One way to quickly and simply produce "soft" cost figures that catch the firm's attention is to focus on just one item: the value of time spent interviewing candidates to replace associates who have left. Here's the formula:
(# of candidates interviewed) X (average # hours to interview each candidate) X (hourly billing rate of an "average" interviewer) = Lost time value
For example, if you need to replace 10 associates, you may interview 50 candidates. Let's say lawyers in the firm spend an average of 5 hours with each candidate. Although candidates may meet with partners and associates at various levels of seniority, for purposes of this exercise I suggest using an hourly rate of a third or fourth year associate (let's use $250). The lost time value of replacing these 10 departing associates would therefore be:
(50) X (5) X ($250) = $62,500
In this quarter, I will be speaking about mentoring, bias-free evaluations, diversity, and professional development at the following conferences:
"Women in Law Firms: Redefining Success," which I wrote last year for Law Practice Management, is the lead article in the current issue of the newsletter of WomeninLaw.com at http://www.womeninlaw.com/newsletter3/abbott.htm. This website, based in England, provides information for and about women in the legal profession around the world.