The annual "Adam Smith, Esq." Reader Survey is actively in progress, and I sincerely urge those of you who haven’t taken the two to three minutes it takes to complete it to do so right now.
The point of the survey? Two-fold: I want to learn more about you, so as to better tailor the content of the site to your interests, and you get to tell me both what recommendations you’d offer me and, perhaps more importantly from your perspective, what the most pressing/important strategic, business, or financial issue facing you or your firm is. Let your voice be heard; take the survey now.
Meanwhile, an interim report on what we’ve heard on precisely that last question, which reads verbatim thus: "The most pressing/frustrating strategic, financial, or business issue facing me/my firm is." Herewith follows a distillation of what you’ve been telling me.
Associate retention is a tremendous challenge for many of you. Comments include (all exact quotes):
- associate compensation: lockstep or merit?
- the position of associates in BigLaw, of course
- insane associate salaries
- and many many others who just said "associate retention" and left it at that.
This has been an issue I’ve devoted extensive—but perhaps still insufficient—attention to on "Adam Smith, Esq.," and I’ll vow to do even more about it. Fair warning: I have no snappy answers on this one. To a large extent we are facing a collision between an irresistible force and an immovable object whose constituent components are attitudinal, generational, and financial, and which is perhaps not susceptible of an enduring resolution absent a re-examination of underlying business models. In short, this has been long in gestation and may be long in solution.
The War for Talent is an ongoing challenge, perhaps more pressing now than ever. Comments included "Finding and attracting top-level talent to a small boutique firm," and "attracting talent at the salary levels our firm pays."
Knowledge Management was mentioned by a large number of you, as something that firms have to do well but that very few in fact are managing to accomplish. Technology and upgrades of same were a close second in this area.
Business development and marketing are perennial points of pain, and "some things never change." The only fault with the bromide that "some things never change" is that in this case it’s false: This is getting worse. Here are some more direct quotes:
- Business Development. Almost all law firm management issues are ultimately directed toward growing the top line (associate retention, training, marketing, strategy, etc.) It would be good to hear about this at both the individual level (aside from the standard cliches of “write articles, give speeches, network, and ask for business from all your friends,” what other business development strategies do partners use) and at the firm level (what steps have been taken by national firms such as Latham and Kirkland to become more prominent and self-sustaining; how do firms organize and manage their practices and partners to maximize business opportunity).
- Continual pressure on fees and use of procurement.
- The pressure from clients for ever more efficient, lower price, better quality services compounded by the impact of procurement officers who don’t understand and show little inclination to want to learn.
Just last week I learned of a Fortune 100 company whose panel for evaluating outside counsel consists of three people: An associate general counsel and—two purchasing managers. This is indeed only getting worse, and I’ll try to bring back tales from the field that may be helpful to more of you.
The Hollow Middle haunts some of you. Faithful readers of "Adam Smith, Esq." will know what the hollow middle refers to, but for those who don’t a quick refresher. An increasingly prevalent industry structure sees firms migrating both to the high end, high-value, premium quality level, and to the no-frills, low-end, commodity level, with little comfortable territory remaining inbetween. For example:
- Cars: Toyota, Honda, Nissan, Chevy vs. Lexus, Audi, Mercedes, BMW, Ferrari, Porsche
- All wine/beer/spirits: Budweiser vs. micro-brews, generic vodka vs. single-malt Scotch, magnum generic "chardonnay" vs. subscriber-only "Screaming Eagle"
- Financial services: No-fee free checking for life from Wachovia vs. private wealth management from US Trust.
And you get the idea. My hypothesis is that our market is going in the same direction. Here are some verbatim comments reflecting that same point of view:
- What happens to mid-sized firms in Europe – will they disappear over the next ten to fifteen years as a result of the inflow of US and UK firms? What should our US strategy be, with many former sources of referrals now setting up shop next door? And if mid-tier firms are to stay, what will their role be?
- The polarization of the market (the shrinking middle with more and more work being classified commodity/low fee or bet-the-company/high fee
- "Mid-Market Mush" or "why bother with a platform that’s mediocre?" Our practice group is very strong and we’re not sure whether we should be a boutique or stay in the firm.
Since this is already a theme I have been sounding for some time, expect to see more coverage of it here as its impact spreads.
Finally, we have what emerged as the most important concern of yours by far—head and shoulders above anything else I’ve mentioned until now. And that is:
Management. Law firms are intrinsically complex to manage, and you are painfully aware of that. (Indeed, the truth of that observation might be said to be one of the foundational reasons why "Adam Smith, Esq." exists.) The theme that emerges is that lawyers just plain are not predisposed to cooperating in the management imperative.
Aside from seeming to have been inoculated with some vaccine that provides lifelong resistance to management in general, the presumed structure of rewards for partners today—divvying up all the profits at the end of the year and leaving the firm’s balance sheet essentially back at zero —works strongly against investment, a long-term outlook, or a strategic perspective.
Here are some of your comments and worries:
- Ineffective management. Rainmakers are not always the best communicators or managers
- 1. Lack of firm leadership; 2. Partner apathy in “running a business” beyond simply collecting a bonus; 3. Lack of strategic planning
- Persuading lawyers to understand that hiring a consultant is not (always) an admission of failure, but can be a way of creating / seizing an opportunity
- Transition from older partners to younger partners and division of income amongst the same.
- Continuing to find ways to motivate all of our partners and to have them recognize we’re all in a state of continuous change.
- Firms competing in a global economy. Firms realizing they have to act more like corporate America
- The lack of real understanding as to how law firm organisations need to change to get the best out of people; the impact of globalisation on law firms.
[And finally, perhaps my favorite:] - Balancing the desire to grow as a firm versus the desire not to change. Our firm is looking to grow, and most everyone supports the notion, so long as nothing changes for the individual.
Much food for thought. One implication is clear: I shall never lack for topics to discuss here on "Adam Smith, Esq."
Your comments have been remarkably candid, serious-minded, insightful, and just plain human.
As I’ve written before in various contexts, I believe our profession is currently undergoing a sea change in the structure and composition of the industry that will transform it in ways that will endure for essentially the remaining working careers of most of us.
You have, if anything, confirmed the strains, pressures, and uncertainties of being in the center of this rapid transition. The settled certainties of our parents’ world are indeed long gone.
Having some inexplicable instincts alerting me to this coming vortex many years ago, I continue to find it fascinating beyond measure. Please continue to share your thoughts with me, either through the Survey or, more directly, by email.
