Tag Archives: COO/CFO Forum

Highlights from the CFO & COO Forum

Posted on October 21, 2011 by | 1 Comment

This week, the Hildebrandt Institute and West LegalEdcenter are hosting the 10th Annual CFO & COO Forum in New York.  We’ve previewed some of the topics for this event here, here, and here.  We will be discussing the conference in greater detail in the coming weeks, but some of the highlights from Day One are worth mentioning today:

  • Dan DiPietro, chairman of Citi Private Bank’s Law Firm Group, reported that firms are projecting a decrease in recruitment of first-year associates, as many firms focus instead on lateral recruitment.  Yet, it’s not clear that lateral recruitment pays off – DiPietro also reports that for the AmLaw 50, laterals hired between 2005 and 2010 generated only 68% more revenue than their compensation.  Steve Campbell, COO of Dykema Gossett, noted that in terms of return on investment, mergers may be more successful than lateral recruitment.  Dykema has found that firms are more likely to import a book of business through a merger than via lateral recruitment.
  • Speaking of first-year associates, the “first-year dilemma” was raised by a number of panelists on Day One.  Several panelists remarked that they are receiving directives from clients to avoid staffing matters with young associates, a trend reported earlier this week in the Wall Street Journal and discussed here on the blog.  Interestingly, Larry Kleinberg, CFO for Munger Tolles & Olson, observed that even judges are looking for clerks with at least a year of experience.  Which raises the question: if law firms are curbing recruitment of first-year associates, clients do not want first-years to gain experience by working on their matters, and judges are looking for clerks with some real-world experience, just who is going to step in and help train new lawyers?  Large firms like Latham & Watkins and SNR Denton are still hiring and training recent law school graduates, but even at these firms, first-year classes are significantly smaller than they once were.
  • On Thursday, Harvard Business School Professor Emeritus Jack Gabarro led a case study on the skills required for change management.  It’s an important issue for law firm COOs and CFOs making strategic shifts in response to the changing economy.  One difficulty facing firms is the challenge of obtaining “buy-in” from partners, an essential component for making meaningful changes.  This morning, the Chief Strategic Innovations Office for Seyfarth Shaw, Carla Goldstein, demonstrated how it can be done.  Goldstein faced resistance from partners in implementing a process management infrastructure to improve firm efficiency and become more price competitive.  The firm’s M&A group didn’t believe process management would work with them: “Every deal is different.”  But Goldstein and her team pushed through these objections, and asked the group to simply walk them through a deal.  At the end of four hours, with 180 Post-its on the wall describing every task, the M&A lawyers understood the value of the process.  With that buy-in, Goldstein was able to change the way Seyfarth does business for the better.

Posted by Emily Fisher

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Attorney Development: The Problem of “Producing Managers”

Posted on September 21, 2011 by | 1 Comment

With associate hiring levels starting to recover from their post-housing crash lows, many law firms are refocusing on a perennially challenging issue: attorney development.  Some firms are experimenting with business and finance education, while others have adopted the practice of secondment, in which firms loan their lawyers to clients for a temporary period.  But the underlying issue – how best to train new lawyers – remains.

A key difficulty is the fact that attorney development falls on the shoulders of firm partners, who are also lawyers with clients and heavy workloads.  The Harvard Business School’s Jack Gabarro and Thomas DeLong, with consultant Robert Lees, addressed this issue of “producing managers” in their 2007 book, When Professionals Have to Lead: A New Model For High Performance.  In a chapter on professional services firms (PSFs), they explain:

The melding of producer and manager roles creates unique issues for PSFs.  For example, heads of practice groups and office managing partners continue to practice as lawyers, investment bankers, auditors, or consultants in practice-based firms.  Also, “producing managers” typically exist in all but the highest levels of very large PSFs such as the global IT consulting firms, the Big Four accounting firms, and large law firms.  However, even in these large firms, leaders at the client-service-group level are inevitably producing managers.  In this respect, leaders in PSFs are not just providing direction, they are also deeply involved in the execution of client work.  They both execute and direct others who execute.

But as the authors go on to discuss, time and energy constraints often combine with increasing client demands to push producing managers away from management in favor of production.  At law firms, this can result in languishing attorney development.

How then can busy partners make room for their firms’ attorney development, while continuing to offer exceptional service to their clients?  DeLong, Gabarro and Lees propose a solution of integrated leadership, in which professional services managers lead by setting direction, gaining commitment to the direction, and executing, while setting a personal example for associates and junior partners of how to handle client demands and substantive work.

It is that final component – the personal example – that the authors contend is the key to integrating management with client work.  If partners view attorney development as an extension of their substantive work, they may find there is less tension between their dual roles as managers and lawyers.

To elaborate on this issue and other leadership challenges law firms face, Jack Gabarro, an emeritus professor of human resource management at Harvard Business School, will present a case study on Leading in a Time of Economic Uncertainty, at the Hildebrandt Institute’s 10th Annual COO & CFO Forum, October 20-21, in New York, NY.

Posted by Emily Fisher

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The New, Not-So-Conventional Wisdom for Mid-Size Firms

Posted on September 7, 2011 by | 2 Comments

In 2006, there existed a clearly defined conventional wisdom about law firm growth: more attorneys, more billable hours, more offices.  And it wasn’t just large firms applying this simple formula – many small and mid-size firms were right behind the mega firms, stretching to add another regional office or increase associate hires.

Of course, the conventional wisdom of 2006 doesn’t necessarily apply today, particularly for mid-size firms.  Last year, strategy consultant Joe Altonji addressed this issue in a pair of blog posts for Hildebrandt Baker Robbins.  His key take-away?  “Where a few years ago the common wisdom was that law was a revenue-driven industry, most now see the reality long recognized by the rest of the business world that cost of delivery is critical.”

A number of mid-size firms have come to agree, eschewing the old conventional wisdom about law firm growth and embracing new strategies carefully tailored to their market position.  One such firm is Los Angeles-based business litigation firm Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor.  In a recent National Law Journal profile (subscription required), Amanda Bronstad describes how Liner Grode realigned itself after the recession hit and its bread-and-butter cases – large class actions against major corporations for losses to employee pension plans – started drying up.  The firm went from nearly 100 attorneys to fewer than 50, and began focusing more closely on bringing in partners with ready-made books of business.  They also embraced cost of delivery reforms by more aggressively pursuing alternative and contingency fee agreements to help replace the high billables on those class actions.  According to managing partner Stuart Liner, the firm’s smaller size and new focus on alternative fees has offered the flexibility to better respond to market forces.

Liner Grode is not alone among mid-size firms in its decision to realign its priorities in response to a tough economy.  Mississippi-based firm Butler, Snow, O’Mara, Stevens & Cannada has adopted a similar emphasis on growth in alternative fees.  Forty percent of the firm’s business is now based on something other than the billable hour.  And Birmingham-based Maynard, Cooper & Gale has eschewed the practice of opening new offices in order to spur growth, preferring to service its regional and national clients from its existing offices in Alabama.

But where Liner Grode has shed attorneys, both Butler Snow and Maynard Cooper have done the opposite, adding enough new lawyers in 2010 to make their debut appearances (subscription required) on the NLJ 250 this year.  These divergent approaches indicate that there really is no universal strategy in today’s legal market.

On October 20th and 21st, the Hildebrandt Institute will continue to explore this issue for firms of all sizes at its 10th Annual COO & CFO Forum: Balancing Growth and Profitability in Times of Economic Uncertainty.  Latham & Watkins COO LeeAnn Black will be leading a panel called “Divergent Strategies for Long-term Growth: One Size No Longer Fits All,” where law firm leaders will discuss how they have tailored their firm’s strategic plans to respond to current economic conditions.

Posted by Emily Fisher

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