Is your firm a litigation powerhouse?

September 24

MarketingBusinessDvpt.jpgIn previous posts, we discussed the alarming trends related to the staffing structures in many small to mid-sized firms. We approached this issue from an economic and age demographic perspective. In this post, we would like specifically to discuss the consequences of another trend we see, which is a diminished capability to litigate in the younger ranks of many firms.

 

With all of the conversation regarding the need for lawyers to have business development skills, the ability to try cases is often overlooked. Depending upon a firm’s practice emphasis and the level of the complexity of their assignments, the need for real litigation experience varies. A staffing structure that includes relatively few superstars that can develop business and litigate is typical in a small to mid-sized firm.

 

An honest assessment of most practices will indicate that three to seven practices are supporting a typical firm. Unfortunately, this issue becomes painfully obvious when considering a succession plan, or when a superstar is unable to perform. Firms must prepare for the reality that clients may choose a better-staffed competitor.

 

There is often a debate about whose actual responsibility it is to ensure a firm does not fall into this trap. Is it the responsibility of the individual lawyers, the originators, or the firm? The obvious answer is that it is everyone’s but from different points of view.

 

Individual lawyers who are accountable for their careers realize that their career will level off if they are unable to try cases. Originators should realize that they will not be young forever and that clients eventually become concerned with the firm’s depth. The firm should be concerned with the level of their litigation capability and what message is being communicated to the market by the demographics and depth of the firm’s trial experience. Firms should consider inserting promising lawyers into trial situations even if the client won’t pay for their time invested.

 

At this point, it would be useful to consider the factors, four in our estimation, which impact a firm’s ability to maintain a competitive litigation capability for a sustained period. These factors are:

  • Economic incentives
  • Cultural Bias
  • Training Issues
  • Motivational issues

Economic Incentives

There are several pressure points that promote a concentration of expertise and experience within a firm. From a client’s perspective, and particularly when rates are tightly managed, the differential in the rate between a senior partner and a junior partner, for example, is not large enough to incent the client to use a Junior Partner. What is the real return for the client’s perceived risk associated with a relatively small incremental cost of using the most experienced Senior Partner?

 

As any firm wants to maintain a client’s work, they are incented to comply. Clients have made clear that they do not want pay for training. As client-attorney relationships are increasingly viewed through a short term prism, the notion of investing in a younger lawyer who will potentially add future value is rarely considered. In their quest to squeeze as much cost out of their legal spend, clients are driving firms to incur these costs as overhead.

 

Compensation systems that too heavily weight individual production are a significant contributor to this weakness. As additional unintended consequence of emphasizing partner billable hours, relates to clients becoming conditioned to partner staffing on their cases. Billing rates should incent clients to encourage younger talent staffing where appropriate, but as mentioned earlier, the rate differential is often not enough for a free market approach alone.

 

Hourly rate structures often do not account for training costs. Clients have been resistant to incurring training costs for a number of years, which reveals itself in the billable hour performance and realization rate for associates. Not all firms struggle with developing new lawyers, but a hiring strategy that seeks only lawyers with experience is commonplace.

I do not believe it is a reach to say that short term earnings considerations overwhelmingly prevail.

 

Cultural Bias

A measure of work ethic in many firms includes individual billable hours, and they are, but I believe that to be much more important at the junior levels. Priorities change when a lawyer becomes more senior. Considerations beyond billable hours are necessary. At the junior levels, billable hours are also a measure of experience; the more time an associate spends practicing, the greater the opportunity for skill growth.

 

Firms having a culture of high individual accountability should redefine their performance metrics to consider the value of training contributions. In some senses, it is the originator’s interest to develop a quality team, but a healthy dose of recognition of these contributions will pay dividends.

 

Training Issues

In my experience, training is stressful. It seems easier to just do the work than to delegate and train. I understand that trained employees are more marketable and may leave prematurely, but an alternative that includes an untrained staff is far worse. Those that stay pay huge dividends.

 

Alternatively, those that do not train or provide weak training are doomed to their fate. How is it better to have a senior associate functioning at a low level? Yes, they will stay, but that only ensures that the mediocrity will continue. Firms and partners should realize that training is best-accomplished in a supportive environment that considers training as both moral and economic imperatives.

 

Motivational Issues

It would not be fair not admit that there are serious motivational issues related to a lack of a lawyer performance or progression. Firm’s that have put in an honest effort to train and expose an underperforming lawyer to career building opportunities should not prolong the relationship. Firms that are willing to replace unmotivated attorneys will have better economic performance and provide their clients with a higher level of service.

 

Firms also need to consider their environmental factors when dealing with motivational issues. The demand for attorneys has been weak in many markets, which has reduced turnover. This reduced turnover has not equated to increased job performance or satisfaction. Interestingly, it has exacerbated attorney dissatisfaction as they feel trapped in an unhappy situation. Firms are reluctant to fire attorneys, hoping that unmotivated and underperforming attorneys are hired by the competition.

 

Honestly evaluating your staff, identifying those who are most likely to succeed and investing heavily in these people will set the firm on a positive course.

 

To assess whether how a firm is doing, I like to start with a simple capability and capacity analysis, followed by a detailed evaluation process.