Fourteen years ago, Greenberg Traurig wasn’t in the AmLaw 100, and today it’s #10. Their CEO during this entire period–until he stepped down lastweek–was Cesar Alvarez, now age 62. When he became CEO of the firm, it was a “small but prestigious Miami law firm known for corporate and real estate,” according to this interview with the Miami Herald, and now is 1,750 lawyers in 30 offices with annual revenue of $1.2-billion.
But you know this. That’s not why I’m writing.
When someone with Cesar’s perspective and accomplishments steps down, it’s worth listening. (Naysayers in the audience–and I know you’re out there, admit it!–who think that the Greenberg Traurig model is intrinsically flawed, or that it’s a flash in the pan, or that it’s unsustainable, or that it’s [insert miscellaneous pejorative here], just stay with me. We all know GT is a “polarizing” firm, in that people tend to love it or hate it. That’s a topic for another day.)
So let’s listen for a moment.
He said two things that struck me:
- “Without our blind compensation system [only Cesar knows what each partner earns], we never would have been able to build this firm;” and
- “Q: What do you know now that you wish you knew years ago?
“A: How important the culture of a firm is. Sometimes people tell you how critical culture is. When I started, I said culture is a nice thing, but unless you drive success, culture won’t mean anything. In fact, I know now that it is the opposite. You need to drive the culture, and culture will drive success.”
How could a “blind” compensation system ever work? Isn’t more disclosure, more “transparency,” today’s Holy Grail? Well, not so fast. As Warren Buffett has famously said:
Our experience is that envy, rather than greed, is the key driver. If you give someone a $2 million bonus but their co-worker got $2.1 million, they’re miserable. Of the seven deadly sins, envy is the most useless – it makes you miserable and you lose a lot of sleep.
I couldn’t agree more (with Warren, if I’m not yet entirely convinced by Cesar). Few things are more corrosive than the envy of small differences, and we all know that the most visceral rivalries are local.
Does that mean the “blind,” cone of silence, system is necessarily right for your firm? Not at all. The answer to that depends on the historic path your firm has taken. For sure, if it’s always had an open and “transparent” system, now, and perhaps not ever, is the time to change. But if there’s needless neck-biting and back-stabbing thanks to minimal differences in compensation, you might start thinking about migrating in that direction.
But enough on that.
The truly fascinating comment of Cesar’s was his about culture, and its primacy over financial performance.
In this environment, people are who are considering lateral moves are not considering them because of, or certainly not only because of, financial performance, but almost exclusively because of culture–the compelling lack thereof.
But “culture” is too often confused with such bland bromides as “collegiality,” “support,” and “team spirit.”
Evidently, that’s not what culture means to Cesar, although he doesn’t explicitly make the connection. Culture, to Cesar, is a culture of high performance.
First, as to internal expectations (and forgive the extended quote, but it’s required to deliver the context and import) (emphasis supplied):
Q: If a young associate comes to talk to you about work life balance, what do you say to him?
A: When I was an associate I wanted to do as many deals as I could as a corporate securities lawyer. I worked a lot of hours: Monday though Sunday. Ultimately you have to sell two things — for the client to trust you as human being and as a lawyer. If you haven’t been at these deals you won’t be able to sell yourself to the client. My point to young associates is you have to invest in yourself. What you get paid in the first few years is insignificant.
Today associates want the outside life. You have to remember they have to choose to lead the life of a lawyer, not be here to have the lifestyle of a lawyer. If they want lifestyle without being a real lawyer it will not work long term. It’s a business that requires a lot of experience.
Q: Does it require major personal sacrifice to be good lawyer today?
A: Absolutely. Nothing has changed from that perspective. This is difficult profession, period. It requires a lot of time and effort. There are wonderful rewards, but you cannot substitute time and effort, not when someone else is putting in the time and effort.
Many associates still don’t believe it. Now they are feeling the recession, the uncertainty. They have never felt the uncertainty. They have always been in a system that rewarded them again and again even when their hours were going down.
Q: Have you seen a change in attitude?
A: Definitely. They realize they are lucky to have a job and are more focused on what they need to do to have their career.
And second, in terms of client expectations:
Q: Do you think the legal profession as a whole will address client expectations brought about because of technology?
A: I think you have to be connected to the client all the time. We’re in the business of solving problems. Problems aren’t just legal issues. The great lawyers know how to handle problems. You want to be an advisor, not just a technical lawyer. You have to spend time understanding the business of client. You have to invest time and stay connected.
Finally, he has some shockingly clear-eyed observations, firmly grounded in economics, on what’s going to happen to the next few years of law graduates and young associates. Specifically, when asked what’s going to happen with the “tremendous number of unemployed lawyers,” he responds with a clarity worthy of Adam Smith:
The economy deals with supply and demand. The adjusting mechanism is price — what they will be willing to be employed at and what we can charge a client for them. Once that comes into balance again, you will have a different issue. […]
If I were a young lawyer and displaced from a large firm, I would be going into one of new areas and be at the ground floor. I’d be learning energy policy and how it works. A few years from now you will become very valuable to law firms. You could come back at a high level if you focus on areas that are new. Firms will always be buying expertise.
So:
- Consider the corrosive effects of envy.
- Economics matter, but a high-performance culture matters more.
- And this profession demands hard work: Always has, always will.
And one last consummately clear-eyed Cesar-ism (from a personal conversation, not this article): When asked about the PPP arms’ race, he cogently observed: “The only thing that matters is profits per me.”
Thanks, Cesar.
