When Civil Charges Expand
May 5, 2010 | Filed Under Criminal Liability, Investigations
Governmental scrutiny that starts with civil liability and threatens to become more serious makes coordinating the corporate response very difficult.
Professor Peter Henning writes in the New York Times that the expansion of civil charges dramatically complicates things for executives, directors, and their counsel.
This can make the standard “we are cooperation with the governmental investigation” almost impossible. Two points from Professor Henning.
First, for a target:
There are significant potential risks for someone asserting the privilege against self-incrimination during a corporate criminal investigation. An employee who takes the Fifth Amendment and refuses to cooperate risks losing his job because the employer may try to curry favor with the government by showing that it is unwilling to tolerate those who will not provide assistance.
Then, the issue of D&O coverage for an employee refusing to testify:
[a] … company’s directors and officers liability insurance policy may preclude an employee from being reimbursed for the costs of retaining a lawyer during an investigation, making it prohibitively expensive to defend oneself.
The business press sometimes equates criminal inquiries with a likelihood that charges may be forthcoming. Lawyers know that this is not the case, that investigations take time, and criminal charges are rare and difficult to prove.
In-house counsel also know that that the time lag between inquiry and resolution, and the public and financial concerns that it raises, is perhaps the most significant risk of all.
Value Doesn’t Have to be Virtual
April 15, 2010 | Filed Under Value, Law Firm Trends
There’s another article about former big-firm lawyers practicing in a smaller-firm environment.
This time it’s in the UK, and the firm is Temple Bright.
It sounds like there’s an office, but no staff or paper. (I always wonder about that last item…).
The three founders:
… have deliberately shunned the classic law firm pyramid structure, with Mr Summers saying SME clients are increasingly unwilling to pay for plush offices and large teams of junior lawyers and administrative staff.
“The market for legal services in the UK is worth £25 billion,” he said. “But how much of that is actually spent on the high quality legal advice clients need to make critical business decisions or conduct their transactions?
(Note: SME is small and medium-sized enterprises).
That’s probably one of the best ways to describe what clients are looking for. If a modest office in a less-pricey neighborhood helps get and keep clients or attract good people, it works. With technology, it’s not like you have to be at the office to practice every day. You could even be meeting with the client, face-to-face, something that many lawyers rarely do anymore.
As the value mantra works its magic on the legal industry, firms will work however good clients want them to and will pay for. The fact is that many large firms have legacy costs and delivery models that were supportable only by high fixed rates, applied topically daily. Even if they are fortunate enough to be busy and able to charge higher rates now, they understand that their clients have choices, and are more open to change than ever.
And there is one thing that any law firm doesn’t want to turn out be virtual: clients.
Law Firm Mergers: or the Lack Thereof
April 7, 2010 | Filed Under Law Firm Trends
Altman Weil has updated their scorecard for law firm mergers in the first quarter. (The MergerLine page is here, and it was picked up in the press here).
The news is not surprising: no big deals were announced. In fact, one of the “targets” on the list involved two attorneys.
The lack of major acquisitions can be attributed to a lot of things: slow economy, an even slower pipeline of new work, major clients shedding law firms, and even old-fashioned issues like conflicts.
It’s probably never been easier for healthy firms to attract partners or practice groups from firms that are wavering. The real challenge for law firm managing partners and their advisors is this: what is a firm or large book of business worth in the new legal economy? Traditional metrics (e.g. revenues, profits, work in process) can’t be as reliable today, when major clients are demanding rate reductions and new staffing models. Some of this staffing doesn’t involve law firms at all, and if those initiatives (like legal process outsourcing or commodity legal offshoring) are even mildly successful, that work isn’t coming back.
Large mergers used to be seen as a sign of strength. Today, I’m not sure that’s always the case. It can be compelling in the international arena. But in the United States, how does a new multi-office bi-coastal law firm differentiate itself?
To me, the bottom line is this: two law firms merging is rarely strategic. As usually practiced, it a tactic, albeit an important one. One of my favorite definitions of strategy is attributed to Bruce Henderson, founder of the Boston Consulting Group:
Strategy is a deliberate search for a plan of action that will develop a business’s competitive advantage and compound it.
In an era of value pricing and services unbundling, a robust strategy may ultimately be rarer than a large merger.
Cultivating an Opening Day Mindset
April 5, 2010 | Filed Under Change, In the News
Today is officially Opening Day for Major League Baseball. (Last night’s Yankees/Red Sox game was exciting, but all true fans know that Opening Day means day).
Among the great things about Opening Day is the fact that all teams and players start even, all have at least a chance to appear in the World Series. (Well, maybe not the Nationals…)
So here are three ways I think Opening Day can serve as time for reflection (and perhaps even optimism) for lawyers facing unrelenting change and the attendant uncertainty:
1. Strive for precision, not perfection. (The best lawyers have setbacks, too).
“Baseball’s best teams lose about sixty-five times a season. It is not a game you can play with your teeth clenched.” — George F. Will.
2. It is possible to do good work if you’re not overly focused on the meter. (Results, not effort, are what matters).
Baseball is infinite. It has no limits of time or space. There is no clock. The foul lines extend indefinitely beyond the field of play. Even the outfield wall is only there for convenience. — Bruce Hoffman
3. It’s not about brute strength, but also perseverance and agility. (Law is the great equalizer, and a source of fairness in an unfair world).
“There is no sports event like Opening Day of baseball, the sense of beating back the forces of darkness and the National Football League.” — George Vecsey
Most current discussions about the law and the legal industry are understandably serious. Baseball reminds us that sometimes you can see things as more of a game (play outside and have fun) and still be OK. So here’s a bonus thought from one of baseball’s best announcers, who wasn’t talking about the law, but could have been:
“I love the game because it’s so simple, yet it can be so complex. There’s a lot of layers to it, but they aren’t hard to peel back.” — Ernie Harwell
The Law Firm Model - April Fool?
April 1, 2010 | Filed Under Pricing, Law Firm Trends
No, it’s not a joke: it’s an appropriate day for some law firm leaders to speak candidly.
In the New York Times, what starts out as another look at associate pay actually gets to the root of the problem.
Rather than the usual platitudes provided to the press, we have two insights on the traditional law firm model:
First, Douglas Cogan of Fenwick & West says it was:
“…invented by lawyers who were not very good at business.”
Ouch.
Next, Robert F. Ruyak of Howrey goes further, admitting the underlying “talent” fallacy (based upon the pretext of partners hiring associates who would work toward partnership on an eight year track):
“But they weren’t really selected for that purpose,” he said. “They came in and did rudimentary work for two or three years. Clients were overpaying enormous amounts for that work.” He added: “Associates were thrown in to sink or swim. Maybe they got good work, and maybe they didn’t. Maybe they worked for partners who cared about their advancement, and maybe they didn’t.”
Double ouch.
So 20 years of the BigLaw model are effectively demolished in two paragraphs.
The cherry on top of this upside-down cake is provided by Cisco GC Mark Chandler:
“…the attitude at firms has always been, ‘We can have every cost we want and simply pass it along to the client, then rely on our leverage model to produce the profits we need.’ ”
The NYT writer, Dan Slater, summarizes how this is playing out in some circles:
When the recession pinched corporate budgets, in-house legal departments were told to cut costs. Chief legal officers, in turn, called for reform at law firms.
To be clear, however, GCs have been focused on costs for the better part of the last decade. It’s just that all the low-hanging fruit was grabbed years ago. To keep costs in line with competitive pressures, GCs have to look hard at long-standing law firm relationships, improve some and end others. This opens the door for different firms, new service providers, and creative process improvement.
The first part of change is admitting you have a problem. While some firms “get it,” you can’t under-estimate the challenge in changing a culture. And it’s more than that. Most large law firms will have to change their business model.
And that’s the hardest thing: it has to be done on the fly, with a bloated cost structure that has staffing, offices and other overheads better suited to 1980 than 2010. And through it all you need to keep productive partners in the fold (who are weighed down with all the overhead) and valuable associates in the queue (who see little chance of “partnership” in the historical meaning of the term).
That’s change you want to believe in.
So give a kind word today to your friendly neighborhood managing partner. He or she will appreciate it.
Search
Powered By
Links
| ||||
 | ||||
| ||||
| ||||
|
||||
