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THE INNOVATION ISSUE

 Table of Contents | Features | Frontlines | Technology | Business

April 2009 Issue | Volume 35 Number 3 | Page 30
FEATURES

RUNNING AHEAD OF THE PACK: TRAILBLAZERS IN THE LAW FIRM WORLD

When law firm leaders push through innovations that make their firms unlike all the others, how does it affect the rest of the pack? Some think their bold moves may alter the broader landscape of the profession-or at least that's what they hope.

Take, for example, the intentions of Polly McNeill, who in 1997 left a comfortable career at the then-profitable (now-defunct) Heller Ehrman to co-found Seattle’s Summit Law Group, where she’s the CEO. “We formed our law firm with the purpose of changing the way the practice of law is provided as a service,” she says. “Our orientation is to shake up the business model.”

Or consider the goal of Christopher Marsten, the CEO of Boston’s Exemplar Law Partners. “‘Exemplar’ means a ‘model’ or an ‘ideal,’” he says. “We are here to lead the way in the industry. A lot of people in this profession need a better way of life.”

Law Practice featured both Exemplar and Summit in a 2006 article that looked at some of the nation’s most cutting-edge firms. (See “Law Firm Mavericks Go for Broke” in the December 2006 issue.) Wondering how firms with such vanguard thinking are faring with their innovations nowadays, we decided to revisit these two partnerships as well as examine two other firms that have pushed outside the proverbial envelope—Levenfeld Pearlstein and Novack and Macey.

Part of the aim is to help firms of every stripe explore this question: In the current economic environment, is it prudent for firms to innovate or is it best to simply stabilize? Law firm strategy consultant Robert W. Denney says breaking, or at least reshaping, the old law firm mold could be great right now—with one important condition. “It is a good time for firms to try something new, provided the partners have the financial resources to do it,” he says. “That’s the businessman speaking first. But generally speaking, in every crisis there are opportunities.”

Of course, the decision to invent new ways of doing business, or to reinvent the firm by changing practices or procedures in other ways, depends on the particular operating parameters of each partnership. Here, then, to illustrate the possibilities, are snapshot-portraits of our four firms that have made the leap to become “something new.”

Embracing a Shirtsleeves Culture While Hangin’ in the Dot Lounge

A big signal that Summit Law Group is a different kind of firm is that it has no associates—all 30 of the firm’s lawyers are partners. And on any given Friday afternoon at about happy- hour time, one of those partners will send out an e-mail that reads, “‘It’s 4:30. Let’s go up to the Dot Lounge and get together,’” says CEO McNeill. “There will usually be a big turnout.”

The Dot Lounge is named for the orange-colored dot featured in the firm’s logo and for the dot-like orange beanbag chairs that help furnish the space. It’s supplied with a restaurant-quality espresso machine for these Seattleites to get their morning fix, and it also has fine wines, micro-brews, nuts and treats for those Friday afternoon gatherings that sometimes turn into brainstorming sessions.

The hip hangout space as well as the all-partners structure are among several manifestations of this firm’s unique culture, which has a tag line of “Energy. Passion. Commitment. Shirtsleeves.” Shirtsleeves? McNeill explains: “By that we mean we work hard but we value substance over formality. This does translate into a dress code that is highly informal. In the summer you’ll see people here wearing shorts and sandals and you may wonder: ‘Are they lawyers?’ They are.”

McNeill says several other things set Summit apart from more traditional firms, including its progressive approach in affording even its part-time lawyers partnership status. The thinking here, it seems, is that this gives them a genuine stake in the game. “We feel some of the best, most talented lawyers out there have been marginalized by the limitations in attaining partnership status at more traditional firms,” she says. “So we encourage and embrace those lawyers who choose to be part-time for family purposes.”

Summit has also gained considerable notice for its efficiency in delivering service, its flexible billing arrangements and a self-described “value-adjustment line” in its contracts with clients. Essentially, that clause encourages clients to adjust their bills—up or down—to match the quality of legal work they received, something that attracts clients even though they rarely actually ask for a reduction.

The firm hasn’t pulled in its bold-moves reins since the economy has slid south either. In fact, it recently launched a new practice area with a real estate asset group. “We feel we’re growing this area at the right time, that it will be flourishing in a year or two,” McNeill says. As she sees it, “This shows that we’re flexible, we’re nimble, we’re priced appropriately and we have the highest-quality people—all of this puts us in a very good position in these economic times.”

Banging a Gong and Celebrating Value

Engage in a conversation with Exemplar’s Christopher Marsten and you may come away both exhausted and optimistic. That’s because he’ll throw a lot of content at you but his exuberance is infectious—and his enthusiasm appears to be paying off for his law firm, too.

Let’s be honest, though. If you read about the then-29-year-old’s new firm in these pages or elsewhere in 2006, you might have wagered that his venture would fail. Fresh out of law school, and holding a master’s in finance as well, Marsten sunk every dollar he owned into Exemplar, ditched the billable-hour system, offered clients a satisfaction guarantee and hired only lawyers with a business degree or extensive business experience. But you would’ve lost that bet, at least judging by the firm’s success right now.

Exemplar is clearly demonstrating that innovation can pay big dividends, even in mean, lean economic times. “While many law firms were laying off lawyers and having other problems last year,” Marsten says, “we more than doubled our revenues [from new clients].”

In addition, in the three-plus years since its founding, the firm has more than doubled its lawyers ranks—to 21—apparently appealing to those attorneys who like its edgy brand, daring operating style and offbeat culture. “I tell people we’re not your grandpa’s law firm,” Marsten says, adding that Exemplar is the nation’s first business law firm to abandon hourly billing in favor of a fixed value-based pricing model.

The firm is also innovative in its hiring methods. First, a candidate must pass through at least four interviews, sometimes as many as six, which are conducted by various partners. And often Marsten gathers some of the firm’s lawyers and the potential candidate for a round of board games, particularly one called “Apples to Apples,” which has contestants match nouns to adjectives. Marsten says you find out a lot about somebody by watching how he or she competes. “You won’t believe how many people self-identify as the wrong kind of people during these games,” he says, adding that the firm has a no-jerks policy. “You get to see people’s sense of humor. Are they bragging winners or sore losers? Do they play as a team? We want to hire happy people. We’ll make as much money as we can but we’re not compromising happy.”

And there’s this additional proof of the firm’s cheerful offbeat culture. Exemplar has a gong in its wide-open office space—a space designed to foster idea sharing and teamwork within the firm—and when a lawyer wins a case, closes a big deal or achieves another goal, someone bangs the gong and “everyone comes running” to celebrate, Marsten says.

So what about that satisfaction guarantee? According to the guarantee’s terms, if clients feel that the value of the service they’ve received is worth less than the price they paid for it, Exemplar promises to negotiate a fair price with the client. “But in our three-plus years, we haven’t had a single client take us up on it,” Marsten reports with obvious pride. “I think that speaks volumes.”

Using Peppers, Frogs, Beetles and Associate Czars

At Chicago’s Novak and Macey, a 30-plus-lawyer litigation boutique, a recently launched marketing campaign says a lot about the firm’s bold spirit. Carrying the tag line “Small But Mighty,” the campaign was built around a few things from nature that are disproportionately powerful—like the pea-sized tepin pepper (the hot-test pepper in the world), the poison dart frog (touching it can kill you) and the rhino beetle (which can carry 850 times its own weight). Strange elements, surely, in law firm marketing, but maybe just right for these times.

In fact, some say that if law firms aren’t capable of dazzling potential clients with their marketing, they may as well save their resources. “In this economy, with all the cutbacks and layoffs, people simply don’t have time to read material that’s not valuable or interesting,” says marketing consultant Jonathan Asperger. “You’ve got to make your message innovative in order to pass the valuable-or-interesting test. If you can do that, then it’s worth your firm’s time and money.”

Certainly Novak and Macey’s campaign (implemented with the help of Chicago-based consultant Ross Fishman) passes the “valuable-or-interesting” test—just consider what they did with those unusual campaign elements: “ The marketing team fashioned ads with a picture of the “world’s most toxic frog.” They sent 2,500 packets of the “wear-a-hazmat-suit” tepin peppers to clients and friends of the firm. And they placed the firm’s new logos on actual four-inch rhino beetles and put them around the city in places near courthouses or banks to generate buzz. Images of each element spin through the firm’s Web site, too.

Firm cofounder Eric Macey says the marketing initiative aims to ad-dress the biggest problem for firms the size of his—establishing brand identity. “You have to do something different that makes people take notice,” he says. “You can’t simply have another ad with a picture of a conference table or one of the lobby with a bunch of white guys in suits standing in front of the logo. That’s not us.”

But its marketing isn’t the only way Novack and Macey displays its creativity. For example, when the two name partners organized their management model they wanted to avoid a common practice at law firms: Macey calls it the “Pet Theory of Associates,” whereby a firm’s top rainmakers choose their favorite associates to work with on every matter, turning them into … well, their pets. “When that happens the young associate doesn’t develop skills beyond what he or she gets from working with that partner,” Macey says. “He or she is limited by the scope of the work that the partner does.”

To prevent that from happening in their firm, Macey and Steve Novack created a position they call the “associate czar,” and they fill it with a young partner who monitors all the associates and assigns them to different partners over time so that the younger lawyers can work on a broad range of skills in different cases. “When we need attorneys to help us on a case, all of the partners and I must go through the associate czar,” Macey says.

Associates are also intrinsically involved in making decisions about the firm’s technology, which helps build rapport and supports Macey’s claim that the firm is “Obama-esque” in the way it reaches out to people. “On the technology front, it’s totally driven from the bottom up,” he says. “We feel that young associates know more about IT than we do. They know how to deliver products more efficiently, way more than partners ever would.”

Importantly, the firm is also untraditional in its focus on consensus in decision making. The partners discuss problems as they arise and come to solutions together, Macey says, in ways that most firms don’t. “We haven’t had a vote on a partnership matter in all of our 25 years,” he notes.

Reinventing While Retaining the “Power of Informality”

In 2000, a year after it opened its doors, Chicago-based Levenfeld Pearlstein made headlines for launching a gay-rights law practice, believed to be the first of its kind—a move that won chair Bryan Schwartz, who encouraged the idea and the marketing around it, the Spherion Marketers of the Year Award. And something else generated buzz in the firm’s early years—the fact that it had a, well, unusual culture.

What about the culture broke new ground? For one thing, the firm supplied crayons to all its lawyers to encourage creative, or “colorful,” thinking. (The idea was that too often lawyers think in blacks, whites and grays.) For another, it placed little race cars on the lawyers’ desk to remind them to respond to clients’ needs quickly. And then there were the Quiet Time Tuesdays, when the firm turned off the phones and everyone spent a few minutes silently focusing on the goals that they’d set for them-selves. As Schwarz once said about his firm, “Levenfeld Pearlstein’s not for everybody, and we’re proud of that.”

Today, however, the crayons, race cars and Quiet Time Tuesdays are gone primarily because, over the course of recent years, the firm has reinvented itself.

“We’re less quirky now,” Schwartz says. “As our clients changed, our firm changed to adapt to that. When we first started we were definitely focused on start-ups and emerging companies. Then we learned something: They don’t pay you. We realized we needed new clients and we needed to grow up as a business and invest in systems and people.”

Clearly, the firm has transformed itself and has a more businesslike management approach. The reinvention has evolved since 2002, when two new lawyers vaulted business in the firm’s real estate practice. Soon the partnership had significantly better clients in that area, and slowly that trend spread across the firm. It now has more corporate clients in particular, and the gay-rights practice is gone.

But this doesn’t mean Levenfeld has abandoned innovation—it remains set off from the pack in other ways. The simple fact that it has a centralized management structure and strives to run itself like a corporation differentiates it from the traditional law firm. At the same time, it maintains an emphasis on a supportive firm culture—for two years running, it has been on Business Ledger’s list of “Best Places to Work in Illinois.” The firm is also carbon neutral and was the first U.S. law firm to create a pilot program adopting the ABA’s Model Commitment to Sustainability.

Another example: A few years ago leadership realized it needed a different business development strategy, that their lawyers weren’t generating the type of work they wanted. So they brought in trainers—but not just for a day or two of seminars, the way many partnerships do it. “We brought in a firm that really lived with us for two years,” Schwartz says, “and provided our lawyers with one-on-one training to identify our targets and teach our attorneys to be innovative in how we go after them. We now have much more team-focused marketing. That helped bring in lawyers in a multidisciplinary way.”

And the firm still maintains a relaxed atmosphere. “We call that the ‘power of informality,’” Schwartz says, noting that the phrase is based on a speech by General Electric chair Jack Welch, who asked that everyone call him “Jack.” Elaborating in a tone that reflects how proud he remains of the firm, he adds: “We don’t have black-tie holiday parties. We wear jeans, go to funky places and have holiday skits where we make fun of each other. It’s no-holds barred and no toupee is safe. If you can’t laugh at yourself, you’re probably not going to make it here.” It seems reinventing to be more businesslike still leaves room for fun—and that sounds like a healthy outcome.

About the Author

Steven T. Taylor is an award-winning freelance journalist living in Portland, OR, who writes on various subjects in the legal media.

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