Law Firms Getting Schooled
/Law firm partners have a curious approach to addressing client needs. Imagine a crowded subway car in which a General Counsel is sitting comfortably while a Biglaw partner stands next to him. When the train lurches, the partner inadvertently stomps on the GC’s foot. “Ouch,” exclaims the GC, “You’re standing on my foot.” The partner’s response is, naturally, to call the office and direct three associates to drop everything and enroll in medical school, to specialize in podiatry, and to attend only night classes so as not to miss work, in order to ensure that, should the client’s foot pain persist in the future, the firm will be in a good position to resolve the issue.
This is what I envisioned as I read the recent article by Nathalie Pierrepont of The Recorder, an ALM publication, describing a new associate training program at Orrick. In “Orrick Puts Would-Be Partners Through Business Boot Camp” (subscription may be necessary) we learn of a refreshing and innovative program to teach business skills to lawyers, specifically senior associates on the partner track. The program, produced by The Fullbridge Program, covers a number of business topics that will help lawyers speak the language of business. The program, or something like it, should be required in every law school immediately. And it should be required of every practicing lawyer who wants to serve business clients. I’ve talked at length with Andrew Notaro, executive director of Fullbridge – he gets it and he provides a necessary service. Trouble is, most firms organize these programs for associates – law firms may be sending the wrong students to class!
Or more precisely, the law firm leaders, by failing to enroll fellow partners, are missing the central point of business leaders’ most common complaint. “Our outside law firms don’t understand our business” rarely means that an associate billed to a M&A transaction is unable to calculate the after tax weighted average cost of capital. Or that the lack of such knowledge means she’s therefore unable to properly advise on the relative risk of this investment over alternative courses of action.
More often it’s something less profound and business-mathy: “The partner in charge of this transaction, despite having led a half dozen substantially similar transactions for us in the last five years, once again underestimated the legal costs, this time by a substantial margin, and exacerbated the situation by failing to alert us until long after we closed our quarterly budget re-forecast process.”
Or “After relying on the same litigation counsel for numerous cases and constantly fighting over growing fees, a new law firm identified two key areas upstream in our business processes that we didn't realize were creating ongoing exposure. We addressed the exposure and within months the number of filings plummeted - and so did our legal costs.”
Pulling an all-nighter to cram for the test isn’t learning.
Perhaps my cynicism stems from hearing one too many in-house counsel or business client express frustration with outside counsel and their lack of interest, empathy, and insights into the client’s business. To be fair, many law firms have tried to address the issue, but many have also failed on execution:
Technology: Sophisticated tools have been purchased and breathlessly rolled out to help lawyers obtain “the most comprehensive go-to-lunch report” on a moment’s notice when meeting with a client or prospective client. However, few clients are impressed with a partner whose industry knowledge is parroting analyst report headlines or recent stock movements.
People: New roles have emerged in recent years, such as competitive intelligence specialists, whose primary skill is analyzing and synthesizing vast sums of information to proactively identify compelling marketing opportunities that provide a competitive advantage. The good ones are worth their weight in gold! Regrettably, more than a few spend a great deal of time manually creating last second, on-demand, “urgent” go-to-lunch reports rather than help inform strategy, resulting in fruitless pursuits of the wrong clients at the wrong rates.
Process: Some law firms have implemented client teams with the objective of capturing client insights, sharing learnings, cross-pollinating ideas, and collaborating to increase cross-selling opportunities. But even eager people stumble in the face of flawed processes -- and compensation systems that reward isolationist activity coupled with firm-centric org structures that inhibit cross-functional interaction are most assuredly flawed processes.
So what does work?
As a former business leader, I was pleasantly surprised when my outside advisers were familiar with my business segment. On a few occasions deep industry insight is crucial, but for many companies legal needs aren’t so unique to an industry that specialized knowledge is crucial. What most need, and what is a constant struggle to find, are advisers who understand our appetite for risk, how we make build vs. buy decisions, what factors matter and who’s involved in go/no-go decisions on major capital investments, our budgeting and re-budgeting (and re-re-budgeting!) schedule, and the relative importance we place on legal advice in the overall context of running a business in fiercely competitive markets. And we are often just as dissatisfied with in-house counsel as we are with outside counsel in this regard!
In case my point is buried, I’ll emphasize it: the partners who send their associates to business school need to attend business school first. The weakest link in the law firm value chain isn’t the associates, it’s the partners. Much of what business leaders and in-house counsel describe as “knowing our business” refers to how we do business, not our SIC codes or movements in our EPS. What keeps a business manager up at night? It’s not placing a multi-million dollar bet on a new product line or new acquisition – we do that all the time because of our high tolerance for risk and our endless quest to gain a competitive edge. It’s looking like an idiot in front of my CEO when the advisers I hire continually go over budget after claiming to be deep subject matter experts who have advised in this sort of matter hundreds of times previously. We all look incompetent as a result, and that’s not the sort of reputation that earns me a seat in the Boardroom.
So high marks to Orrick for making this investment in its lawyers' professional development, for an investment it is, not an expense. It will surely pay dividends down the road as business-savvy lawyers establish beachheads as trusted advisors rather than as expensive suppliers. But collectively, we can all do more to serve our clients' needs. And it should start at the top of the law firm hierarchy where partners with demonstrably improved business acumen can deliver immediate benefits, for their clients and their law firms. What are you waiting for?
Timothy B. Corcoran is the 2014 President of the Legal Marketing Association and an elected Fellow of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments, and legal service providers on how to profit in a time of great change. To inquire about his services, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.
