The New Normal
A ‘Valorem Dozen’: The Ingredients for One New Normal Firm
Posted Apr 11, 2012 7:30 AM CST
By Patrick J. Lamb
Several recent posts by Paul Lippe have highlighted the problems currently being encountered by Dewey & LeBeouf. Already this year, more than 45 partners have abandoned the firm, and American Lawyer recently restated, rather dramatically, Dewey's revenue and profits per equity partner for 2010 and 2011.
Comparisons to Howrey abound: The slow drip, drip, drip of the "run on the bank" surely seems to have started. While the focus for the moment is on Dewey and its remaining partners, the truth is that most BigLaw partners must at least secretly wonder what they would design if they were required to start a new firm to survive.
Some start new firms because they have no alternative. But for me and my colleagues who founded Valorem in 2008, the decision to start from scratch was a deliberate choice, not one forced on us by our firms or the marketplace. It was a decision we gravitated to because we believed the BigLaw model that then monopolized the legal marketplace was not sustainable. We spent considerable time debating the principles of the firm that came to be Valorem.
Looking back on our “Valorem dozen” principles in light of Paul’s recent articles on Dewey, here's the recipe we followed:
1) Sell what is valuable to your clients. No client has ever gone to a law firm looking simply to buy time. They go to lawyers to solve business problems that involve some legal issue. So if clients don't really care about time, why do lawyers sell time? Sell results, and then learn how to provide them faster and cheaper than your competitors. That's how businesses do it. Our tag line is “results, not hours,” and that is what we sell.
2) Do one thing, and do it better than anyone else. Firms that try to be miniature big firms fail because there is not cross-pollination. A company that hires a small firm for its great litigation practice is not likely to hire the same firm for its mergers and acquisitions or general corporate work, or its tax work or its real estate work. Several years ago, Mike Dillon, then the general counsel of Sun Microsystems, captured our view of this in a blog post about big firms going the way of the mastodon. His thesis was that companies used to need big firms because it was hard to find all the legal pieces the company needed. Now, with the Internet, it is easy to find precisely the resources the company needs, and not just capable resources, the best resources. It is hard for a small firm to be "the best" in multiple areas and harder still to convince others of that fact.
3) Embrace the $60-per-hour-lawyer. Paul Lippe just wrote about the impact $60-per-hour-lawyers are having (actually, you can get great lawyers at a much lower price). You don't need to have these lawyers as employees, you just need to have access to them when you need them, for as long as you need them. We chose to think of a law firm as an accordion, growing by joint venturing, partnering with a legal process outsourcer or other law firm or hiring contract lawyers as needed. In each instance where size was needed, we would obtain, on a temporary basis, the very best resources for the specific need of our client rather than maintain a supply of available resources and try to tell the client that these resources were the best for every circumstance the client encountered.
4) Embrace experience. If you stop selling your time and start selling your achievement for the client, you find yourself not wanting anything to do with young lawyers because they don't add value. They don't help you achieve your desired outcomes faster and cheaper. When you do hire a young lawyer, the level of training they receive is far greater than young lawyers receive at large firms. That's because having young lawyers get better faster is in the economic interest of the New Normal firm. Pyramids are out as a business model. Fred Bartlit, perhaps the dean of the New Normal firms, often says "diamonds are a lawyer's best friend," referring to a model with small numbers of elite trial lawyers at the top, a cadre of great partners capable of doing work-up and second-chair work, and a few young lawyers "in development." We bought into that notion immediately. We are partner-heavy, senior associate-heavy and junior associate-light by design.
5) Cut the fat. A huge amount of work in most litigation is unnecessary, meaning it doesn't change the outcome. If a project doesn't change the outcome, it doesn't need to be done. Efficiency actually improves outcomes because it helps you focus. I keep a handwritten sign on my whiteboard that I look at several times a day: "What difference does it make?" The "it" refers to whatever work I plan to do at a given moment. If I don't have a good answer, I put it aside.
6) Save the politics and intrigue for elected officials. How much real work is being done inside Dewey at the moment? How many closed-door meetings are going on where partners rehash the latest rumors or associates try to figure out whether they will have a job in a few months? The answer is, a lot. Enormous amounts of time and goodwill are lost in firms while partners debate compensation and other political matters. We took compensation off the table—all partners earn the same amount—and you have the difficult conversations immediately in small firms because any distraction is immediately obvious.
7) Use the lessons of business. Lawyers like to think that our profession is special, somehow immune from the rules that govern every other business. We’re not. We’ve been focusing on project management, on pricing issues, on cost of producing results and similar “business issues” since before we opened our door, just as other New Normal firms do.
8) Focus on what matters to your clients. In a recent post on Above the Law, Miami lawyer Brian Tannebaum poked fun at lawyers who do their work at local Starbucks and claim that as their office. If a client gets the result it wants, does anyone think the client cares where the lawyer sat while preparing the winning brief? Everything should be geared to providing your client an unparalleled experience. We have no dress code, let people work from home when they need to and keep “rules” to a bare minimum because those things can get in the way of producing the best work.
9) Collaboration is key. Most large firms, indeed most firms of any size, are a collection of silos—Bob and his team, Mary and hers. There may be some overlap at the bottom, maybe even in the middle as some associates and junior partners juggle multiple team assignments. But Bob and Mary never work together. But the greatest experience and achievement is at the most senior level. We believed that if our senior people brainstormed and collaborated together, great things would happen and we would produce work and results better than any of us would do alone. Because we have an economic stake in every outcome, it was critical to achieve the benefits of collaboration. Hindsight shows that we were right on the money on this issue.
10) Overhead matters and cheap is chic. In days of yore, clients came to their lawyer's office and sat in the partner's office smoking expensive cigars. Today, not so much. Actually, not at all. We designed our offices after studying companies like Apple, and other Silicon Valley icons. Tiny offices, lots of whiteboards and lots of collaborative space to encourage the exchange of ideas.
11) "Let guards play guard and forwards play forward." This is a tribute to Fred Bartlit, and an extra trait for successful New Normal firms to embrace. Fred is a basketball player and frequently uses the game as a source for lessons. By this, he means that each person should not be expected to do everything. To mix sports metaphors, not everyone is a five-tool player. Find what people do best, and have them do it. Don't expect a lawyer who hasn't tried cases to be a trial lawyer. A lawyer who is a brilliant writer should write. He or she might not be partner material in a big law firm, but there is a place for this person.
12) Brand matters. You can be a great grain of sand, maybe even the best. If you happen to find yourself on a beach, though, being the best grain of sand won't help you get noticed or hired. Successful firms have a brand. More people recognize Valorem and know what it stands for than most other start-up firms.
13) It is always about the clients. They have to love you and what you do for them. Without their commitment, you will not succeed. With everything you do, from office design to how you bill, always ask what your clients think about the issue, the idea.
Valorem has had its bumps in the road, and we’ve learned a lot since we started, but these 13 factors have served us well. I am sure that others in successful New Normal firms have still more and likely better ideas about the recipe for the secret sauce. I hope some of them share their ideas as comments below.
It is unlikely a firm confronting what Paul described in his “Dewey Dozen” piece can save the ship and find success. But conversely, a committed group who embrace the “Valorem Dozen” can create success for themselves.
My client, DSW, is a great New Normal company. Its goal is not to be the best shoe store in the country, but to provide the best shopping experience anywhere. The company's values are carved into the wall so that everyone who enters its headquarters sees them: Accountability. Collaboration. Humility. Passion. Those four values may well be the recipe of the successful New Normal firm.
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 recently published book Alternative Fee Arrangements: Value Fees and the Changing Legal Market. He also blogs at In Search Of Perfect Client Service.