Last week I had the chance to sit down with Jim Rishwain, the Chair of Pillsbury, in their New York office just off Times Square. He’s been chair since May 1, 2006, following the high-profile Mary Cranston, and when he assumed the role six years ago it had not been all that long since Pillsbury, Madison & Sutro, of San Francisco, had merged with Winthrop Stimson of New York and with Shaw Pittman of Washington, DC. The firm had also had a relatively disappointing year immediately prior, compared with its peers, and I was curious to learn how Jim had managed since then, how he viewed the firm today, and where he sees its future.
Jim had a swift ascent at the firm: Three years after making partner (in 1991), he was head of the real estate practice, which became the most profitable practice area in the firm, ahead of even litigation (I asked). He also soon had roles on the compensation committee, firm recruitment, and was managing the LA office. As for being chair, he said “I can’t say I was trained for it,” but said he learned quickly that a large part of the chair’s job was to communicate and build trust: “Make people feel they’re part of something vs. having something happen to them.”
Jim began by enumerating the firm’s three “guiding principles:”
- building trust
- inspiring confidence
- elevating performance.
He immediately volunteered that the two combinations created opportunity but that the firm was not operating as one firm, and clients and others seemed confused about who the firm was.
Bruce: “So where is the firm today?”
Jim [all comments of Jim’s are paraphrased unless explicitly in quotation marks]: We have global aspirations, but as a fully integrated firm; there is no headquarters, no central office. I spend each week in a different office (I have offices in many of them) and my schedule is posted and regularly updated and available to anyone in the firm. I meet with one or two clients a week, 50 to 70 a year, which reflects our “client-informed” culture. Lots of firms talk about client focus or being client-centric, but we live it.
We also are big believers in technology as a way to leverage our talent and enhance integration. We have no office P&L’s, and in terms of practices, we look at them based on lawyers not geography. All of our practices that touch overseas and international offices probably account for almost 25% of our revenue, but only 5% of our lawyers are actually abroad. For example, our Japan practice [they have a Tokyo office–Bruce] includes lawyers in New York, Los Angeles, and London.
Another issue I wanted to tackle when I became chair was talent development. We needed to make better use of our alumni network, and we wanted to make sure we provided growth opportunities for everyone. We never wanted a lawyer to leave Pillsbury and say it was because they didn’t have an opportunity to do more here. We actually call it our “one step before you’re ready” program. Now, when attorneys leave, we want it to be on good terms, and we’ve worked to develop a strong alumni network.
“How do you communicate with the firm – aside from the rotating office weeks, obviously?”
Jim: I have a regular communications schedule: Monday is for partners, Tuesday associates, Wednesday staff, Thursday practice group leaders, and Friday the Board. The communication is always by email. People have come to expect it, and count on it.
Another change was to our committee structure; we used to have huge committees, but now we’re more focused on giving individuals accountability. That gives them more work to do, but I don’t believe in co-chairs or divided responsibility.
“Describe the firm’s overall strategy.”
Jim: We try to focus on sectors where we see an intersection of (a) client needs; (b) the capabilities of the firm; and (c) global growth opportunities. What that means for us is these sector focuses:
- Energy: We want to be a global market-leading energy firm with work that spans all fuel lines: Oil, gas, coal, minerals, solar, wind, nuclear, all of it.
- Financial services: With a heavy emphasis on major banks: Bank of America, Wells Fargo, Citi, UBS – but not just for financial services work, also for IP, executive compensation, all of it.
- Technology: Specifically (a) emerging growth – where Pillsbury is on pace to be one of the top law firms handling IPOs this year, especially issuers in the semiconductor sector. Did you know that Pillsbury has done more IPOs than any other firm in that sector in the past 10 years, including Wilson Sonsini [based on data from IPO Vital Sign]; and (b) IP, which is 10% of the firm’s revenue
- Outsourcing: Serving the Fortune 500, but with a distinctive business model, in that Pillsbury offers both consultants and lawyers. Jim observed that this cut them off from having legal business referred from non-Pillsbury consultants, but felt the integrated offering justified this in terms of differentiating Pillsbury in the marketplace. [Note: I was subsequently informed that their Global Sourcing practice has become a top-tier national and international practice in third-party rankings such as Chambers.]
- Real estate and construction, which many firms have gotten out of, but which Pillsbury finds valuable, particularly as it includes overlap with their environmental and crisis management practices.
Indeed, as Jim was describing these foci of the firm, one aspect of what he believes came through clearly: Different practice areas lend expertise to other practice areas. This may sound a statement of the obvious, but I haven’t heard it expressed so directly for a while.
“When you became chair, you clearly had some ‘integration’ issues to deal with: Pillsbury, Winthrop, and Shaw Pittman; how did you tackle that?”
Jim: You have to start by getting away from the two “L” words: Lateral and Legacy. When I started as chair, there were a lot of side deals with different partners. We honored the deals to conclusion, to be sure, but no new ones. You cannot make exceptions; if you do, there’s no going back and no stopping point. “If him, why not me?”
“And how do you select, recruit, and retain laterals?”
Jim: We’re looking for a fit: People used to say synergies, we say “fit.” A strategic fit: What industry sector; what region; what client base; what practice base. We’re looking for a mutual path where the individual’s or group’s client following will be able to benefit from our platform.
Second, we’re also looking for people with an ability to look at the Pillsbury client base—our connections, which are broad and deep—and do more with it.
Third is culture, shared values: Finding individuals with a commitment to client service and a fit from a personality standpoint.
Then of course there has to be a business case for it. We’ve actually studied the profiles of individuals and groups that have done very well and those that haven’t. We, and they, need to understand where the individual or group will slot in to our compensation system once they’ve settled in.
“What can you tell about candidates the day they come in the door that’s predictive of future success?
Jim: There needs to be a short-term path to success. If people achieve early success, it inspires confidence and they generally end up doing very well in the long run. On the other hand, if they lack traction off the bat, for whatever reason, it does not inspire confidence within the firm and bodes ill for the long run. So that said, we work extremely hard on integration to ensure those early successes.
We have a Director of Hiring and Integration; we have people responsible for and in charge of integration. Now, as for compensation, it’s integral in the sense that we look at lateral candidates from the perspective of where they would slot into our normal compensation system. We’re conservative in terms of base compensation, and if there’s any upfront bonus or guarantee it’s very time-limited and it’s clear that it’s not part of your base going forward.
“There’s a spectrum from command and control organizations to Quaker meetings; where is Pillsbury on that?”
Jim: It all comes down to trust; if you don’t have trust, you can have Quaker meetings and people still may not be satisfied. But of course with a global footprint Quaker meetings aren’t feasible. So if you build up trust, by reaching out to people who will feel the impact of decisions before you make them, they feel engaged. They don’t need to win but they need to feel heard. And sometimes you make a decision and you’re roundly criticized, but it may only be from 10-15% of people, yet they’re the ones who are vocal. It’s tough to understand that at first because they may be the only people you’re hearing from, but if you change the decision based on what you’re hearing you’re wrong. But it does come back to trust; the more you have, the more leeway you gain. This is something I learned to do better after I became chair.
You have to make hard decisions, but give people an opportunity to be heard.
“What is, after all, the firm’s strategy? What is its identity in the marketplace?”
Jim: First of all, we have tremendous stability; there’s very little attrition among people we want to keep. Second, our balance sheet is much cleaner; we haven’t borrowed anything since 2008; our debt is very low ($11-million), and we’re paying it down. Third, we’re successful in hiring lateral candidates: We’ve brought in 17 new people in 2012 alone, and profitability is moving up.
In the US, we’re in NY, DC, Houston, and Northern and Southern California, and we believe in investing more where you are: Focus on where you are.
There are two platforms that will succeed: The globally dominant firms and the regional or practice-specific strong firms.
Not the middle, and we don’t intend to be in the middle.
“How do you avoid the temptation to be all things to all people? How do you tell partners, ‘No.’?”
Jim: Being selective is a foundation of the firm’s leadership. We recognized we were doing too many things for too many people, so the answer is being “centered, strategic, and focused” [Jim repeats those words for emphasis—Bruce]. Partners are aligned around this and they’ve bought into it because we’ve explained it in an inclusive, not an exclusive, way. They understand the benefits to the firm and to themselves in the long run.
“What’s your overseas strategy?”
Jim: Now, we’re also in London, Shanghai, Tokyo, and Abu Dhabi, but only 5% of our lawyers are overseas, yet 25% of our revenue touches overseas offices. For example, our Japan practice is $50-M/year but it’s served not just out of Tokyo but New York, Los Angeles, and elsewhere.
We enjoy strong international reach, and we have global aspirations. Our clients are deriving more revenues from outside the United States, and we will continue to expand the size and scope of our services for them.
In short, our strategy is to build international practices that are multi-office and multidisciplinary in nature, leveraging our sector strengths. In London we want to grow our English law capacity, since that’s increasingly the law of international and cross-border transactions and projects, and have robust English and New York law capability.
Our key challenge is to be strong enough in high-value markets, including New York and Washington, DC.
“For 25 years, the AmLaw 100 median PPP has been rising at mid single-digit rates; have partner expectations gotten out of line with what the market environment will support?”
Jim: This may have been an underlying theme as to why certain firms have struggled or even failed recently, but we’re very careful about managing expectations and moving the conversation away from PPP itself to investments we want to make for the firm’s second 140 years [the firm is 144 years this year, —Bruce. The predecessor to the firm’s NY office was founded in 1868]. Partners appreciate the longer view. Yes, of course we recognize that a competitive PPP is necessary to do the things we want to do, but we try to remind people that fundamentally we’re all doing very well, and profitability is a shared concern.
“Has the world for BigLaw fundamentally changed, in a macro-economic, secular way, since 2008?”
Jim: First of all, change is necessary, but second, lawyers resist-their first question is always “Which other firms are doing this?” If every other firm were doing it, it wouldn’t be a change and it wouldn’t be healthy for our industry.