October 23, 2012


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Who's Running the Show? A Peek Behind the Firm Management Curtains

By Edward Flitton

If you're an associate wanting to effectuate change in the firm, here's what you need to know about how law firm management really works.

Knowing they have opportunities looming elsewhere leaves many of today's associates feeling freer than ones of yore to voice concerns about the way the firm is managed. However, be it the billable-hours expectation, compensation or benefits, number of years to partnership or some other topic, your chances of reaching a solution to the problem will increase, and exponentially, only if you approach management in the right way.

The role of associates has changed considerably from 30 years ago, when virtually every associate arrived at his or her first law firm with plans to settle in there and make partner, if possible. While many of today's associates still have that same goal, at least as many haven't the slightest desire to become a partner. Their goal is to stay around long enough to learn the practice of law and then move to in-house positions, governmental positions, nonprofits or other law firms when a better opportunity presents itself.

Partners are also much more mobile than in earlier years. As a result, like it or not, most law firms are much more like a traditional business than before, with more attention paid to the bottom line because profitability is critical to retain the partners who control the best clients. Things have changed at all levels, including the dynamics between the firm's stakeholders and associates who want to accomplish change within the firm.

Like everyone else, of course, associates have a right to speak their piece. Although if they truly want to succeed at changing the way things are done in the firm, they have to realize where they fit in the law firm business model so they can understand the best way to approach firm management.

Will You Stay or Will You Go?

Partners hire associates for three reasons: They want to assure the long-term viability of the firm; they need to be able to accomplish the more routine tasks for their clients at lower billing rates; and they want to accomplish leverage, which will increase partner profits.

For the associate with no intention of becoming a partner, the first reason for the hiring is irrelevant. In this case, the implied contract is purely economic: "I'll help you make money and serve your clients if you train me as a lawyer and pay me adequately." What this associate must realize is that most firms lose money on their associates in the first two to three years. (The exceptions are the firms with huge litigation and transaction projects that allow them to throw even first-years directly into discovery and due diligence projects at full rates.)

Unfortunately, the partners don't know which new associates really intend to stick around, so they tend to assume that none do unless convinced otherwise. For that reason, in the context of effectuating change, associates in the first three years or so should view their relationship to the firm as primarily economic and wait until they accomplish a firmer footing through strong performance and demonstrated commitment to longevity.

By the fourth or fifth year, it's usually clear that an associate may become a partner. Good partners recognize that these associates are the firm's future and, accordingly, want to keep them happy. They will hear what these associates have to say in a different way than they would have earlier, but the way the associates voice themselves still needs to be carefully planned. The truth of the matter is that, when listening to such attempts, the partners will be asking themselves whether they really want this person to become a partner. Or, put differently, is the associate interested in bettering the firm or just his or her own interests?

Now let's delve a little deeper.

Where the Two Sides Meet

Let's consider the all-too-common facts. Most of us became lawyers because we like fighting the good fight. And when we graduate from law school, most of us are usually highly idealistic and want to be fighting for the underdog. What better example of an underdog than a second-year associate, who typically has a heavy and often monotonous workload and little ability to control his or her career at the firm? The e-mails fly around among such associates, with constant references to the latest postings on GreedyAssociates.com. Talking about and strategizing around these issues is usually much more stimulating than preparing the next set of interrogatories.

The cause at hand varies—it may be the billable hours, career development opportunities, compensation, number of years to partnership, credit for pro bono work or some other area where it's believed the firm is being unfair to associates. Whatever the cause, secret meetings of associates occur, strategy is formulated, and spokespersons are chosen. The rumors get out and begin to circulate among the partners, and eventually the confrontation occurs.

The fact is, the associates may be totally justified in complaining about the issue. But the process just described is flawed for the following reasons.

First, note how the preceding states "the firm" is being unfair to associates. What is the firm? It's an organization far different from a business corporation because a third or more of the lawyers in the firm are owners. In all but a few firms, there is no CEO who single-handedly sets policy. Instead, there is usually a committee, the chair of which functions most like a CEO. But the truth is that this person and the other members of the management committee spend much of their time taking in the thoughts of the other partners and convincing the other partners of the desirability of paths selected by the committee. In other words, the organization is much more horizontal than the typical business organization. It is more like a university faculty. Power is very dispersed. While the associates' complaint may stem from a firmwide policy, more often it is the behavior or policies of certain groups of partners (maybe in a practice group or a department) that are causing the problem. And sometimes it's just a single partner who has managed to create the stir.

Second, if the behavior of a partner or group of partners is causing this much dissension among a group of associates, it's usually detrimental to the entire firm. Keeping associates happy is critical to the firm's financial and professional success and future—and the management committee knows this. If approached in a nonconfrontational way, the committee will often agree and work on the problem. However, if the associates come marching in, figuratively waiving banners and chanting slogans, the management committee will become defensive and push back.

So what's the solution? Read on.

How to Frame the Big Picture

If the associates approaching the committee couch the complaint in the terms that "We, collectively, have a problem," the chances of successfully resolving the issue are much greater.

Further, if the problem is one or a few partners treating a certain group of associates badly, a complaint is much more likely to be successful if made by associates other than those in the affected group. The message can then be: "We are really worried about the way partners x and y are treating their associates." This prevents the perception that the associates in the affected group may simply be whining about their supervisors.

In short, those managing a firm will be much more sympathetic to a message that is framed as concerning the best interests of people throughout the firm than to one that seems like a personally motivated gripe, an unsupported whine, or an unruly rebellion. If your cause is just, pursue it—but before you take action, understand the parameters of the model.