Last week I had the opportunity to sit down with Allen Fagin, Chairman of Proskauer Rose. Allen is Columbia BA summa cum laude, and Harvard Law JD cum laude at the same time he earned an MPP from Harvard’s JFK School of Government. He’s worked at Proskauer for his entire career, and comes from the Labor and Employment Law Department where he was co-Chair.
With Allen, I wanted to hear about the state of Proskauer, his views on the recent past and potential near-term future of the industry, and to explore what he thinks are important changes in our industry.
I started by noting that both he and his immediate predecessor as Chairman, Alan Jaffe, came from the employment department and that to many people Proskauer has a reputation first and foremost as an outstanding labor law firm.
"Our labor and employment practice is extraordinary," he responded, "with
a truly world-class brand. But that practice accounts for less than 20%
of our lawyers and revenues. What the market is now recognizing is all
the other things we do equally well."
Allen made clear that a strategic priority for the firm is the growth of
its corporate practice, which has seen its revenues increase by $100-million
over the past three years. He also reminded me that only three firms in the
recently released AmLaw 100 increased their Revenue per Lawyer (a favorite
statistic of Allen’s, as it is of mine) by more than 15%: Wachtell, Debevoise,
and Proskauer (+16%). That increase was almost entirely accounted for by the
corporate practice.
Allen said it point-blank: "The whole thrust of our growth has been to build out the corporate practice."
Does that explain your recent opening of a London office?
Yes, that was "following our clients." It’s following the practice areas we have in some measure of strength here in New York that can be bolstered by a presence in London:
- private equity, hedge funds, and alternative investments in general;
- finance; and
- mid-market M&A.
What, I asked, was "mid-market" M&A? He replied with bemused candor that it’s whatever people say it is, but roughly from deals valued at $100-million to $1-billion or more. Very much in the eye of the beholder.
Is M&A being driven more "strategically," by corporations interested in acquiring capability and integrating, today, as opposed to six months to a year ago when it was more about financial engineering? "Absolutely; and those who can pay cash are the ones where you know the deals will happen."
Proskauer recently opened an office in Sao Paolo, Brazil, I observe; what’s that about?
"It’s about our Latin America corporate practice; it’s almost exclusively outbound work. We don’t practice Brazilian law. At the moment it’s a small office, and it will remain small, but we find it valuable to have boots on the ground down there." So there’s money in Latin America? "Absolutely."
Switching gears a bit, I ask Allen to describe in his own words the "State of the Firm."
"It’s healthy, strong, and growing. But don’t take my word for it: We just reported our 16th year in a row of higher PPP, and last year [2007] our year-over-year increase in total revenue was +22% and our increase in PPP was +18%: RPL was +16%" [as noted].
Without prompting, Allen continued: "The real question is the same question that any firm that intends to stay in the serious group of 20 to 40 firms (maybe 40 is too high) that will be left standing when the dust settles: How do we ensure we’re one of that group?"
And here’s where Allen really began to warm to the topic of our conversation.
"There’s a critical tension between balancing growth and development, on the one hand, as against stability and the maintenance of values, on the other. That might be my single biggest challenge as Chairman."
What are you proudest of, then, in your tenure as Chairman to date?
"I’m most proud of being able to see the firm grow without sacrificing our values." How do you do that? "It’s a constant effort to communicate, of course, talking to everyone in the firm about what we’re trying to accomplish in terms of marrying the past and the future."
"You know, you can read any number of articles in the legal press about law firms adopting a more corporate business model. But I’m old-fashioned. I believe law firms need to be partnerships. We need to be partnerships, but we need to do so without sacrificing efficiency, nimbleness, competitiveness, and a sense of collective destiny. This is part of the challenge."
I ask about a topic on which an enormous amount of ink has been spilled: The intertwined issues of associate attrition, the "war for talent," and the much bruited new expectations of Gen Y. "Is this really different," I ask, "than when you were an associate?"
"Yes, it’s different; Gen Y is different. It’s real." Allen observes that the number of law school graduates have increased perhaps 8% over the past decade, and that the number of top students from the top schools who want to go to the top firms has decreased. This double whammy explains, to him, in Econ 101 supply and demand terms, why associate salaries are as high as they are. [Editor’s note: I thoroughly concur.]
Compounding this problem is that the cost of attrition–whatever it actually is, he says, implying healthy skepticism about the often quoted and glib numbers of two years worth of salary, $500,000, etc.–has most assuredly gone up. The only way to deal with it, he said, is through scrupulous attention: "It’s a much more difficult retention problem, the issues are more nuanced, and it has made us all think more critically about this."
I ask if he thinks the classic recruiting model of hiring the top X% of students from the top Y law schools still makes sense, and he proceeds to outline Proskauer’s and his own vision of what I have called "Associate Moneyball," wherein firms would attempt to determine what characteristics of law students, aside from class rank and name-brand of school, actually correlate with successful and enduring careers. He related the experiment of attempting to always hire the student who was first in the graduating class at Brooklyn Law School’s night program: "Now that person, I have to believe, has fire in the belly. And after all, it’s all to do with:
- intensity of effort;
- dedication to the quality of the work product;
- and caring for the client."
I cannot disagree.
Proskauer, I note, has a long history of contributing leaders to New York bar associations, and of pro bono work. Where, I ask, did that come from? (Here, Allen became especially animated and fervent.)
"History; it’s imbued in our culture." The firm has a long tradition of public service, and it tends in a way to feed on itself. Someone who’s chairman of a committee will recommend a colleague to be a member, and soon that colleague will become a more senior member, and so on and so on. But in terms of our pro bono program, we’ve really tried to formalize and institutionalize it in important ways:
- We have more meaningful partnerships with designated organizations in the community that we therefore get to know better.
- We’ve coordinated our firm-wide charitable giving program with the pro bono commitments we’ve made and with the targeted organizations; and
- We’ve expanded beyond the traditional bastion of pro bono work–litigation–to more transactional and corporate type work including, specifically, counseling on corporate governance.
What all this adds up to is that we get more associates involved, and involved at a higher level of intensity. We can, as it were, "adopt" community organizations and this gives lawyers across all our practice groups the opportunity to serve.
Finally, at an organizational/executional level, we have converted "pro bono" into a practice group in its own right, just like any other, which means that it comes with all the operational and institutional procedures of any other practice group–things like the assignments system, looking to fill holes in experience, and so forth.
As I said, Allen is fervent on this topic.
Also noteworthy is that prominently displayed on their reception area coffee tables are copies of their report on pro bono work, "Break/Through: 2007 Pro Bono Review," a handsome and high-quality brochure with a foreword by Allen that opens with the words, "For many people who face complex legal challenges, it’s difficult even to get a break…" Interestingly, the typical self-congratulatory firm annual reports were nowhere to be seen.
Have you policed your reception area lately?
But I digress.
What would your advice be to new associates, I asked.
"It’s too late!" (laughing out loud).
Well, then, to college grads contemplating law school?
"Obviously, friends ask me to talk to their kids all the time, and what I say is to talk to as many young associates as you can, so that you really, deeply, understand what you’re getting into."
My final question has to do with the unexpected.
What, looking back over the past 10 or 15 years, has been the biggest surprise to you?
Allen thinks, visibly, and there is a long silence. Finally he says:
"The resilience of the billable hour. Ten years ago I would have told you it would be dead, today I will tell you it should be dead, and ten years from now I imagine I’ll be telling you it should be dead. It’s inexplicable."
"But second [and this is entirely unprompted], equating the compensation of attorneys with their year of graduation from law school." Do you mean ‘"associate lockstep?" Hasn’t Howrey experimented with changing that? "Yes, I do mean ‘associate lockstep,’ but it’s so hard to get away from it." He elaborates that it makes no sense to clients, it doesn’t resemble what’s done in any other remotely modern industry, and it’s intrinsically at odds with the meritocracy that elite law firms hold themselves out to be.
And with that we adjourned.
Broadly speaking (gross generalization coming up), managing partners are selected for the force of their personality or the force of their intellect. True, there are the extraordinarily gifted few who combine both, but they’re as rare as Lincolns among American Presidents.
Allen is understated, low-key, speaks very softly, and is one of the most truly thoughtful people I’ve recently met. Lawyers, we of all people, should appreciate the supreme value of analytic rigor and acuity. In fact, the intensity of his thoughtfulness borders on the shocking. We long ago got used to not expecting thoughtfulness in public discourse, and that expectation may, alas, be infiltrating our expectations in private discourse. A few minutes with Allen would disabuse you of your cynicism.
