Posted Apr 25, 2013 2:11 PM CDT
By Patrick J. Lamb
Not long ago, I was speaking before a group of law firm managing partners who were curious about how we ran a firm without keeping track of hours.
One manager asked how we handled associate reviews considering we don’t track billable hours. Before answering, I asked how many used hours as part of their review process. All acknowledged they do. When I asked for other review criteria, the consensus seemed to be work quality and citizenship factors also weighed in during reviews.
Then I turned to client representatives who were in the room and asked if they also had a review process for lawyers. They did. But none of them used hours as a factor during reviews.
Why not count hours when measuring achievement?
They agreed that hours weren’t relevant.
Law firms have considered themselves “special” for so long that they routinely try to figure out solutions to problems that businesses have long ago resolved. Rather than learn from what businesses, including their clients, have done, firms want to try to figure out a solution anew. My fellow columnist Paul Lippe has described this as using the Lewis & Clark method of figuring out where you’re going instead of Google Maps.
The point, however made, is clear: Law firms are business enterprises and should build on the success of other business enterprises rather than simply solving problems from scratch or using other law firms as sources of solution insights.
Let’s look at a few examples. How do law firms view productivity? Most measure productivity by the average number of hours worked by the number of full-time equivalent lawyers. Yet no business uses a similar measurement. In the simplest manner, businesses determine the number of outputs in a given time period, controlling for variables such as the number of workers and so forth. The key is the focus on results.
Since Jack Welch popularized Six Sigma in his days at General Electric, the many GE vice-presidents who soon were CEOs in other companies have made Six Sigma a mainstay of business. It has evolved over time, and now many businesses combine Six Sigma with the principles of Lean. How do law firms score in that area? Poorly at best. Only Seyfarth Shaw stands out as a firm of any size that has even attempted to make Lean Six Sigma an integral part of its culture.
Marketing? Branding? Sales? Law firm efforts in these areas are infantile in comparison to business.
Leadership development? Law firms look to their best salespeople (almost always men) and make them department heads or managing partners. The implicit assumption is that accomplishment in sales and business development makes one a leader. Businesses know that leadership skills are honed in a number of ways, but they know most importantly that leadership skills don’t just happen.
Law firms, by contrast, are built solely on the hope that they do.
Finally, there is the very fundamental question of business model. Is there any business based on a model that jettisons people after they have spent years learning the business and become extremely valuable to customers? Do any businesses choose to structure themselves on the partnership model so many law firms use? If there are any businesses that do, they do a great job of disguising their success.
Part of the New Normal is the application of business tools and techniques to the business of law. One of the most critical tools is self-critical analysis—not assuming that we have right answers simply because we are lawyers or our practices previously were successful.The best businesses are building themselves for 2020 and beyond. Law firms should be doing the same.
Patrick Lamb is a founding member of Valorem Law Group, a litigation firm representing business interests. Valorem helps clients solve their business disputes and coping with pressures to reduce legal spend using nontraditional approaches, including use of nonhourly fee structures, coordination with LPOs or contract lawyers, joint-venturing with other firms and implementation of project management tools to handle lawsuits or portfolios of litigation.
Pat is the author of the the book Alternative Fee Arrangements: Value Fees and the Changing Legal Market. He also blogs at In Search Of Perfect Client Service.