At the end of one year and the beginning of a new, it’s fitting that I offer to you all a report on the state of "Adam Smith, Esq."
As Presidents intone at the start of their State of the Union address (I believe utterly without fail), I can report that the state of "Adam Smith, Esq." is very good. The community of readers has become larger, the level of interest is clearly higher than ever, and the traffic level in unsolicited emails I receive from utter strangers and old friends alike is also at an all-time high.
Lest you wonder, this is all profoundly gratifying, and I thank you—the reader community—for your implicit and sometimes quite explicit endorsement of what I’m trying to achieve here, which is, simply put, to provide the most intelligent, wide-ranging and yet focused online publication addressing the economics of large law firms.
On both a personal and intellectual/professional level, the most satisfying result of "Adam Smith, Esq." has been the opportunities I’ve had to meet many of you, in venues ranging from New York and San Francisco to London and Hong Kong, in the past year. Lest you doubt it, you are a remarkably sharp, engaged, curious, reflective, and yes, humorous, assembly of crack professionals. My personal New Year’s resolution is that I get ever more chances to meet and work with more of you in 2008 and beyond, in the context of my consulting practice.
Finally, a quick "advertisement for myself:" Yes, I do have an active consulting practice, focusing on:
- strategy, be it at the firm-wide level, or the office or practice group level;
- financial issues, particularly compensation, since the economist in me is a firm believer in the long-run power of incentives; and
- M&A among firms—both "pre," evaluating potential acquisition candidates for economic and cultural fit, and "post," assessing integration, the progress (or lack thereof) towards the Platonic ideal of the "one-firm firm," and advising on tools and techniques to improve fit.
The energy I derive from and bring to consulting stems from being able to engage with genuinely thoughtful, and highly articulate, people about complex and even gnarly challenges central to their professional lives. I can report that it’s the most fun thing I’ve done in my life that simultaneously pays.
If you want to toss some ideas around, the doctor is in. Shoot me an email and we can start a little conversation. I would most sincerely look forward to it. And separately, aside from consulting per se, I regularly speak at conferences, partner or practice group retreats, and so forth, on topics ranging from the challenges of the 2008 landscape to integrating laterals to the impact of "Web 2.0" on law firms to the increasing segmentation of the AmLaw 200. Let me know if there’s something you’d like my thoughts on.
And now, as they say, "let’s go to the videotape." The information and statistics that follow are largely drawn from our third annual reader survey (thanks again to all who participated!—hundreds of you) and of course to the ubiquitous server logs.
Visitors to "Adam Smith, Esq."
I’m extremely gratified to report that traffic to the site remains strong, as evidenced by the totals of monthly page-views, which are now solidly north of 300,000. ("Page views" is the statistic most favored by advertisers to measure site traffic, so I take their word for it that it’s intrinsically meaningful. "Hits," which is a more technical term, is quite meaningless although if you’re interested it’s in the millions/month.)
In terms of who you all are, suffice to say you’re an august and distinguished group! In particular, the readership strongly skews ("overindexes" is the more technical term) towards relatively senior people in law firms. For example, the proportion of readers who are partners vs. associates is much higher than the actual partner/associate ratio in the real world, and among partners the proportion who are on the executive committee or even managing partner is likewise much higher than a straight cross-sectional measurement would produce.
Who You Are
Of interest—but not in the least surprising or disappointing to me—is how few inhouse lawyers follow "Adam Smith, Esq." As you know, they are simply not my target audience. When a friend asked many months ago why not, I responded that "there’s no ‘P’ in their P&L."
Similarly, you skew towards the larger firms: Again, nothing surprising about that:
If you parse the numbers a bit, you can infer among those of you in US-based firms (and thus eligible for the AmLaw ranking), 62% of readers are from an AmLaw 200 firm. I can also report from experience and analysis that readers in non-US firms skew heavily towards the Magic Circle, and the UK and Global 100.
Finally—on the quantitative part of the survey at least—for fun I asked what your practice specialties are. Here are the results:
This probably, at least in a rough and ready fashion, reflects about the distribution of practice areas in the real world, although I suspect IP specialists are slightly more heavily represented than their actual numbers (based on nothing other than raw surmise, anecdote, and personal speculation).
This takes us to the qualitative part of the survey.
Here’s where it gets really interesting.
More About You & What’s On Your Minds
First, a few data points of interest about you all, selected somewhat randomly:
- nearly two-thirds of you have a home office;
- almost one-fifth have a second home;
- more than a quarter have a wine collection and nearly half regularly purchase "premium" liquor; and, lastly, my own personal favorite
- more than half of you (54%) have traveled internationally for leisure in the past 12 months.
For your non-work pursuits, you’re a civic and culturally minded group. Your top five "off the clock" pursuits, in order:
- spending time with family and friends; and reading, in a virtual dead heat for first and second;
- coming in third, cultural activities (theater, dance, opera, museum-going, etc.),
- and in a near tie for fourth and fifth, showing perhaps that we enjoy eating but also want to stay fit: outdoor activities and sports, and cooking/wine/restaurants.
But now let’s get serious. One of the questions I’ve asked in each of our three annual reader surveys is, "What is the most pressing strategic, business, or financial issue facing you or your firm?"
Here are some of your responses, which I find in almost all respects remarkably candid, insightful, heartfelt, and, as with many human assessments of their current situations, ranging from the confident to the poignant. Hence, in no particular order, and with anonymous thanks to all of you willing to share some of your thoughts (all comments verbatim except for my occasional notes in brackets):
- Profitability [that was the sum and substance of this particular answer–someone after my own heart, no doubt]
- Being squarely in the Hollow Middle
- "Mid Market Mush"
- Recruiting premium talent directly out of law school
- Mid-level associate retention–the pyramid scheme has become an hour-glass
- Associate retention
- Associate retention
- Associate retention
- Associate retention
- Associate retention
- Insane associate salaries
- Employee morale; eat what you kill model
- Low revenue per lawyer compared to those we consider to be our competitors
- Post-merger integration
- Fighting the natural inertia firms have to keep doing things the same way.
- Shifting the culture of a firm that has always been very successful, but risks a gradual (but very real) erosion of its market share/position. Our past success/prestige has bred a certain level of complacency, particularly among our more senior ranks. [This strikes me as a particularly astute analysis; there are perhaps a dozen or two firms in this position, and I hope to have more to say about it in general in 2008.]
- Lack of alignment between (perceived or wishful) strategic growth initiatives and cultural anchors of the firm. The gap produces lots of talk but little serious action because the strategic initiatives put forward are never filtered through the realities and constraints of the firm’s culture and operating model. [Another especially trenchant observation, of far more widespread application than the observer’s firm alone.]
- Ineffective management. Rainmakers are not always the best communicators or managers
- 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.
- The competition between billable hours and doing the other things that are necessary to have thriving practices. If there is enough time to actually plan a strategy, following through is quite difficult due to time pressures. The bigger the practice, the more non-billable things to do. If you do them yourself, you get crushed for time; if you hire folks to do them, you add overhead. The billable hour is not working for me.
Quite a mouthful–and I picked only a small handful of responses, and condensed some of those.
If these concerns are any indication as to the levels of pain, uncertainty, and anxiety out there, then we shall have a very interesting year here on "Adam Smith, Esq." indeed.
I’ve said it before, but I can’t say it too many times: This online publication owes its strength to you, the readers, and the quality of the discourse you inspire. Thanks.
In closing, a few comments in response to my final question: "Any other editorial comments/suggestions/criticism? Should I cover more of X and less of Y, for example? Candor, please." I’ll keep the self-congratulatory observations to myself, but suffice to say they were many, and evidently heartfelt. A selection of some others:
- The things I find most interesting are all part of a common thread that I can’t quite sum up succinctly. The items are: billable hours, billable rates, associate compensation/bonus, PPP, work/life, partnership prospects, partner retirement, and any miscellaneous generational conflict issues that run through most of these.
- The interviews are always interesting, even the ones where I care not a wit about the interviewee or the subject.
- More analysis of the fate of the great middle.
- You have not done much on the "image" issue. How do firms raise their profile in sectors. What is the role of the business press and how does one manage the media to generate the most "buzz" for your firm or practice area?
- You rock, thanks! [OK, couldn’t resist inserting just one]
- Your interests seem about right for my taste. Of course, you could always add a little sex and murder to go along with the money.
- You do a great job. By way of suggestions, I’d be interested in more critical and comparative discussion of firms. How they differ in culture, strengths, strategies, and prospects for success. I know you do a considerable amount of this, but I’d like more. For example, I’d be interested in your capsule opinions on each of the AMLAW 50 or 100 firms. Also, please be candid and critical. You usually are, but, occasionally, I get the impression that sometimes you are trying to flatter the Chairperson of a particular firm. [Fair enough, indeed touche. I’ve consciously shied away from criticizing firms by name, although I would like to think that I do my fair share criticizing short-sighted, self-serving, and otherwise generally stupid managerial practices. But should I call firms on the carpet, as I see it? Your input would be most valuable.]
- What about the simple pleasures of practicing law? Is that an uneconomical consideration in this day and age?
I can imagine no finer note on which to end this Annual Report to my Readers than that last comment.
No, it is not only and always about the economics of law firms. It’s about the romance (if I may say so, having been there myself), the challenges both in terms of IQ and "EQ," the intellectual commitment and discipline, of the practice, and of serving clients. May it always be thus.
