Many law firms that raised salaries in response to the e-business gold rush are now facing the consequences. To stay profitable and still cover the high price tags of their legal talent, firms have demanded more work from lawyers in hot practice areas and jettisoned lawyers in less-productive practices. These knee-jerk approaches have proved shortsighted and wasteful. Consider the lessons to be learned from the following four stories. Then consider what your firm can do to make life better for its lawyers and, thereby, assure its future.
Tom: "The Living Dead"
Tall and haggard, Tom entered my office with the harassed and hunted look of a cornered animal. As he sat across from me, he glanced restlessly at the clock on my desk, the window beyond and his hands, which were twisting and untwisting in his lap. He was the picture of agitation and exhaustion as he launched into his tale.
"I work at a large firm that raised salaries almost two years ago. First-year associates were bumped up to $120,000. I'm a fifth year but they bumped me up, too. They raised everyone's salaries. Now they expect us to live at the firm. I'm up until 2 a.m. for nights on end. I sleep on my office floor some nights. I'm the living dead. There's always more work. I never finish.
"I'm so stressed out and depressed I went to see a therapist," Tom continued. "But I'm not crazy. I'm overworked. I don't see my family, my girlfriend or my friends. I'm so tired I must be making mistakes. But I've never been like this before. I've always been cheerful, energetic, top of my class-a Harvard undergrad, Michigan J.D., Order of the Coif, law review. I know they think I'm a star, and originally I very much wanted to be a partner here. But forget that. Over my dead body. Actually, that's just what I'll be if I keep this up much longer-a dead body."
Jillian: "This Lousy Firm"
Jillian had fled to the ladies room on the third floor to avoid other lawyers in her firm. Now she took a long look at herself in the mirror. She applied fresh makeup under her red-rimmed lids and tipped two drops of Visine into each bloodshot eye. She had just been fired.
It wasn't because of her billable hours, although it's true they had been low. But that wasn't her fault. The problem was the practice area she had been assigned to when she joined the firm two years ago. How could they blame her for that? She had been a real team player. She had even missed her sister's wedding to help with a major piece of litigation, believing that she was doing the right thing for her career. Her reviews were good enough. How had she failed?
No one had told her that she was doing badly. What they had said just now was that she was in a slow practice area and her salary was "not justifiable." Okay, maybe that was so, but then why not work it out another way?
She had offered to take a pay cut, work fewer hours, even become a staff attorney, but they said the firm wasn't set up for alternative arrangements. The firm "didn't like them."
Well, for her part, she didn't like this firm.
She was especially angry that she had turned down offers from other firms to join this one because of its reputation for fairness to women. Now she looked forward to telling everyone she could about the way the partners had treated her. She'd begin her scorched-earth campaign with the placement director of her heavily recruited law school. She'd post her view of the firm on the Greedy Associates Web site. She'd also do what she could to discourage the summer associates from joining this lousy firm. The partners would be sorry they had treated her this way.
Don: "Not on Their List"
Don stared at the printouts, irrefutable evidence of his shortcomings. His billable hours last year were a disaster. Here he was, 57 years old and a partner at one of the city's leading law firms, seemingly at the apex of his career. He should be generating business, especially in light of the big compensation hikes 20 months ago. But his practice area, environmental, was now the proverbial stone that yielded no blood.
Sure, there were still some brisk areas of environmental law, but he had no contacts in those areas. Developers all seemed to have relationships with favorite lawyers, and he was not on their list. He had tried everything he could think of to prime the pump: meetings with former clients, with potential clients, with other lawyers at his firm to cross-sell his practice area. He had tried involvement in bar association groups, a move that landed him a few speaking engagements but generated no new clients. What more could he do? He'd be willing to become "of counsel" or reduce his hours and pay if that were an option, but he wasn't sure the management group would permit it.
He knew he would have been a lot happier without that ridiculous and unnecessary raise. The raise simply created pressure to bill more. Every practice area felt the pressure-but not every practice area could generate the hours to justify the higher pay. What in the world had the compensation committee been thinking when it raised salaries?
Ed: "What About Now?"
Ed walked briskly down the firm's hallways on his way to the compensation committee's annual planning meeting. He was proud of his firm's glamorous appearance, but now that he was involved in management, he was also very aware of the price of success. It cost a lot to be a leading law firm.
Only two years ago, law firms were bleeding out talent to dot-com businesses that enticed transactional and intellectual property lawyers to join their ranks. So the committee had decided to raise everyone's compensation levels dramatically. Otherwise, Ed's firm, like other law firms, risked losing too much talent in key practice areas-it had to stem the loss of associates. A few members of the compensation committee were not pleased about the decision to raise salaries across the board, but increasing salaries in only the "hot" practice areas would create divisiveness. Compensation had to go up for everyone, and it had to be in tandem with other leading firms.
But that was then. What about now? Now there were different economic factors at work. The economy had cooled and many dot-coms had folded up. Law firms, tied to the business cycle as they were, could not hope to escape the effects of the downturn plaguing even active practice areas. What had seemed a sensible compensation nugget had become a millstone around the firm's neck. Ed was worried and wasn't sure what the partners should do.
The Common Threads
Each of these real-world stories illustrates the current phenomenon of stress by high salary. Individual lawyers are suffering its harsh consequences today. Law firms that don't take proactive measures to counter its effects will suffer for years to come.
Demanding exceptionally high hours from lawyers results in burnout. Burnout leads to the loss of good lawyers who might have (or should have) become the firm's future leaders. Moreover, when lawyers burn out, the firm also loses its recruiting and training investment. And it suffers a loss of morale as remaining lawyers who are already overworked are asked to shoulder the workload of those who have left.
Getting rid of lawyers who are underused in slow practice areas can be just as damaging. In addition to losing good lawyers, training investments and morale, firing the "deadwood" creates a potential for a negative image in the legal community and beyond. Even pruning senior lawyers who cannot generate high billables results in the loss of valuable mentors for younger lawyers and negatively affects firm morale.
The Agility Advantage: Flexible Staffing
For the foreseeable future, we have to assume that the economy will remain unpredictable and the market for lawyers will continue to be volatile. Demand for legal work will rise and fall in response to business needs. That means law firms must be agile enough to gear their manpower costs up or down to save money, retain talent and have an edge over other firms.
Firms that lack agility will persist in binge hiring and purge firing. They will have to hire to meet new market demand and fire to respond to reduced demand-each cycle generating unnecessary and high investments in recruiting and training, followed by the loss of those investments.
This is not a cost-effective way to run a business.
A better approach requires that firms put flexible staffing in place. That requires three concrete steps:
- Permitting lawyers to expand and contract billable hours expectations and compensation in response to market forces and lawyers' needs
- Encouraging and promoting lawyers to retrain and alter practice areas to meet the needs of the firm and market forces that create greater demand for certain practice areas compared to others
- Providing real support for these options, not just tolerance or superficial, halfhearted acquiescence
Firms that not only permit but truly support and promote both a wide variety of work-time options and retraining within the firm will create a more supple and responsive workplace. This new approach is a win-win proposition for the firm and the lawyers who work there.
Don't Tell, Don't Ask
A majority of the lawyers I work with as a career counselor voice a strong desire to balance work and life outside of work. Many (men and women alike) say they would prefer to work fewer and more flexible hours. These lawyers would be willing to earn less if they could still have sophisticated, challenging work and be treated as valuable team members.
But it is often difficult for lawyers to express the wish for an alternative work arrangement. They fear being treated as second-class citizens and scrutinized about their "commitment" to the profession if they so much as mention an interest in reduced hours. So, while many lawyers leave their firms because they are overworked, they almost never tell the firm the true reason for their departure. As a result, managers at many firms are often unaware of the depth of lawyer dissatisfaction.
To build satisfaction and improve retention, the firm must consult its lawyers about their career interests and aspirations. Many firms, in fact, would benefit from an on-staff recruiter and career coordinator to help the firm and its lawyers openly balance their needs and wants in a manner that benefits both.
The Change Imperative
Keeping the best and the brightest will continue to be a challenge for law firms through economic ups and downs-but it will also be the key to success in the future. Firms can meet the challenge by subscribing to staffing agility and internal flexibility. This can be accomplished by having lawyers function at different work paces with corresponding salaries, permitting liberal practice area retraining and responding with support to lawyers' career needs. That's an approach that will satisfy the career needs of lawyers and promote retention and recruiting efforts for the long-term benefit of all.
Sheila Nielsen is a career counselor and coach specializing in attorneys. A lawyer and social worker by training, she counsels lawyers on a wide variety of career issues and does outplacement counseling for numerous large firms. Her business, Nielsen Consulting Service, is located in Chicago. She can be reached at (312) 616-4416.
All client names have been changed in this article.