Managing Partner Roundtable: Part 2
A candid conversation between seven managing partners and industry experts during Bisnow's latest Managing Partner Roundtable at Cushman & Wakefield covered how firms are hiring, staffing and billing. (Here's Part 1.) We also discussed embracing change, and which firm compares itself to a jet ski.
Our team of experts: Seyfarth DC managing partner Bob Bodansky; Wiley Rein firm managing partner Peter Shields; Kelley Drye firm managing partner Lew Rose; Foley & Lardner DC managing partner Scott Fredericksen;Morris, Manning & Martin DC co-managing partner Wendy White; Cushman & Wakefield legal sector advisory group chair Sherry Cushman; and Cushman & Wakefield brokerage executive director Malcolm Marshall. (If you're interested in learning more about this private event series, contact Bisnow's Chris Wainwright.)
On the business of law:
Bob: We've adopted Six Sigma, an efficiency process that came out of the manufacturing world. Our client service model is called SeyfarthLean; every attorney at the firm is required to be trained up to the yellow belt level. That's resonated well with clients large and small, in terms of bringing value, efficiency and certainty.
Lew: We hired a pricing analyst, who's involved in every pitch and reports directly to the Director of Administration. He took our e-billing codes and figured out, for instance, everything from how much it costs to file a motion for a preliminary injunction in the SDNY, or defend a deposition in LA.
On alternative billing:
Wendy: Real estate lawyers are transactional lawyers, so if we can't fit right into that budget line-item, the client could choose to go to a different firm that can. It's very tough at a large firm to have billing rates in a transactional practice that continue to go up when the client's budget is staying the same or shrinking. You have to be very flexible.
Lew: We're doing one flat fee for all litigation for the year for one of our top 10 clients, which has been a client for 15 years. We review with them every three months. I like to think the billable hour is dead. When I give reports to my partners, I never talk about what the average number of billable hours are; I talk about revenue.
On the legal sector's largest hindrance:
Sherry: I think generally speaking, the biggest hindrance in the legal sector has been that it is still a democracy. But a major change we're seeing is a lot of real estate decisions no longer being made by the lawyers. Malcolm and I have been at two pitches for Skadden where not one lawyer sits on the other side of the table. It's their global real estate director, it's their real estate committee, someone from HR, a local administrator. They're moving their New York office off of Times Square. In NY, it's "Who's going to do it first?" Skadden is, and now everybody's going to follow.
On law firm size:
Sherry: I compare the big firms to a tanker and the boutiques to a jet ski. Boutiques are very nimble; the big guys have a little more difficulty shifting positions quickly.
Lew: We're about 300 lawyers. I like our size—I know all of my partners, I know pretty much what they're doing. I'm not convinced that the large, global firm has any advantages over what we have, but that's a matter of personal preference.
Scott: We're closer to 1,000 and we continue to look strategically to see if there are opportunities. We have offices internationally because that's where our clients are. Do you need to have an office everywhere? No, there has to be a critical mass. But we believe there are advantages to a larger platform.
Bob: A number of clients are consolidating the number of firms they work with, so they want you to be multidisciplinary. That gets more into expertise than headcount, although for some practices geography does help—real estate in particular, because at its heart, it's always local.
Peter: We're on the smaller side of mid, at 275. We're more the jet ski, and appreciate our culture and nimbleness. It resonates with people who want this platform. It's not the traditional associate leverage model, and it's more sophisticated work.
Wendy: I love being in a smaller firm [after 33 years at a larger firm]. I think of this firm as the Little Engine That Could. In DC, we're a group of 25 lawyers, though it is the largest real estate group in Atlanta and we were recently ranked the seventh "most powerful" real estate group in the country, whatever that means. We are very nimble, I can tell you that, and deciding to come here was about as entrepreneurial as I can get. People here are able to make the firm what they want it to be.
On recruiting strategies:
Wendy: During the recession, there was a strong client push-back against multiple lawyers on anything, and for a while not many firms hired first-year real estate lawyers. So now there is this gap with very few mid-levels. Fitting the right people into the rights slots is critical. The first lawyer I hired when I started at MMM came from a great background: graduated from Cornell Law, spent time at Stroock & Stroock & Lavan and Akin Gump, then left to successfully run a bakery. He's someone who understands business, who understands that the decisions they make have a direct impact on the success of the enterprise.
Sherry: I've listened around the country to recruiting strategies, and there are some firms that won't hire anyone who's not at least a fourth or fifth year. Their view is that they don't want to spend time training them. Others are the opposite and want lawyers straight out of law school so they can train them their way.
Peter: We're hiring into practice groups. We used to have a free market system. We still technically do, but now we're hiring smaller classes and have much more strategic placement. Our groups like it, because our premier practices want to train associates and they want the deep expertise right out of the gate. We find that law students also now expect that dialogue. It used to be that they would leave after a summer and just return a year later. Now there's a lot of conversation—about the practice, how they're going to integrate, and what they should read before they get there. I think they're being very smart about it.
Lew: Our classes are smaller, and we're only hiring first years into those practice groups that can support having a first year associate. Our practice groups like selecting the individuals with whom they'll be working. Probably two-thirds of summer associates' summers are spent working for the group they'll be assigned to when they graduate. In those practice groups where you need to have three, four or five years of experience, we're going out into the marketplace.
Scott: We certainly adjusted our class size after the recession. We're challenged because we're busy, but our class sizes got smaller.
On meeting changing client expectations:
Bob: For a number of large clients, there is a mandate not to use first- or second-year attorneys. What we've done, aside from having a self-selecting alternative track, is to start a fellowship program for recent graduates. We train them pretty much on our nickle. They work at the firm, they get paid, not as much as a first-year associate would get paid, but a nice amount. Addressing client concerns, we don't bill for their time while involving them in relevant projects, allowing them to develop. Hopefully they either stay with us if everyone's happy with that, or they move on having gained solid experience.
Peter: We've done that once during the recession or just after, when people wanted to have the option of not postponing for a year. We placed them in public interest fellowships and paid the salary. We haven't done it since we adjusted our class size.
Scott: We believe that to be competitive we have to always provide value to the client. So we would not think of billing a client for training, but we don't try to train someone on a client. We think our associates should be assigned to appropriate projects that are valuable, and then we watch that, make sure we're billing appropriately.
On adapting to change:
Sherry: When one AmLaw100 firm's DC office moved from an old-school space to glass on glass, the DC MP gave everyone a pad of paper and said, "For 60 days, write down whatever's bothering you." At the end of the 60 days, nobody complained to him. I tell everyone around the country to apply the 60-day rule, because a lot of it is adapting to change, then people see the value in it.
Lew: We embrace the changing expectations of our clients. You can't fight it. It's kind of how I feel when my dog wakes up at 5:30am and jumps on the bed. I could either fight it or I could embrace her, and I've decided to embrace her.