Tag Archives: law firm management

Cardinal principle of law firm management, the inverted yield curve, Heaven’s Way

Demographics are key to midsized law firms. And as Baby Boom lawyers enter their 70s, the yield curve demands deft management.

Mandatory retirement policies don’t work well in midsized firms. Nobody likes them, and they do a poor job of realizing the value of senior lawyers. Experience, judgment, and client relationships last, but at some point, the yield curve inverts. At some point, diminished stamina, the potential for disabilities, and cussedness kick in.

How to maximize the former and minimize the latter?

The Sixth Century Chinese sage Laozi gave thought to the problem. He observed:

“Stretch a bow to the very full,
And you will wish you had stopped in time;
Temper a sword-edge to its very sharpest,
And you will find it soon grows dull.
When bronze and jade fill your hall.
It can no longer be guarded.
Wealth and place breed insolence.
That brings ruin in its train.
When your work is done,
then withdraw! Such is Heaven’s Way.”


-Laozi, Dao De Jing

The principle goes beyond midsized law firms.

Two words lawyers hate most: “mandatory” and “retirement”

Observations made in the field over the course of decades confirm that the two words most abhorrent to the greatest number of practicing lawyers are “mandatory” and “retirement.” (The former is virtually universally despised.)

Recent surveys report that 73% of lawyers in the United States plan to “die at their desks.” Seventy-seven percent (nearly 78%) of law firms have no retirement policies.

Is there is a law firm management problem here? If you die at your desk, were you doing your best work just before?

After age about 60, some issues become statistically significant for everybody:

  • stamina
  • mental fluidity
  • dementia
  • disability
  • mortality.

For most people the statistics are not alarming. But 9% of people between ages 65 and 74 will encounter some form of disability. It gets worse later.

So, lawyers thinking about their lives and careers must face INELUCTABLE facts. At some point, you will not be able to do some things as well as you did when you were younger. Deal with it.

And, while individual lawyers in good health may find a 9% chance of disability a reasonable chance to take, their firms don’t have the same luxury. Sixty percent of law firm partners are older than 55. In that context, a 9% dysfunction is a strategic issue. How many partners does a firm have in the 65&up zone? Multiply by 9%. Adjust for 75&up.

What are the implications of this? Dying at your desk is problematic. “Mandatory” and “retirement” are not getting the job done. Problems are growing as Baby Boomers burgeon into their “maturity”. Strategic problems.

Some thoughts about this anon.

MidLaw among the mortals

I am back from Quebec where I was invited to present again my topic from last year in Vienna, “The Aging of the Professions and How to Stop It.”

Again, I brought my message of aging, disability, and death.

By some accounts, 25% of the legal profession is 65 years old and older.

And I bring this further insight: the older you get, the more you depreciate. If you are 60, it’s time to start counting.

Yes, I know.  Actuarially, your life expectancy actually begins to lengthen modestly after a certain point on the principle that, if you survive for long enough, then that implies that you will continue to survive modestly longer than what the projection might have been earlier.

But (in the end) life expectancy is really death expectancy, and it never goes away.

Of course, this insight, that the older you get, the more likely you will experience the depredations of age, has major implications for individual professionals (“Old Lawyers Not Fade Away“). But in Quebec and Vienna, my point was that there are different implications for the management of professional firms that demand separate attention from the implications for individuals.

More than that: BigLaw has options — mandatory retirement, client succession, senior status — that may not be open to MidLaw. And, increasingly, small firms and solo practices have options to sell that are not open to mid-sized firms.

So, the issue of aging in mid-sized law firms demands separate, different management. The issue is strategic and the solutions are not as simple as the terms “mandatory” and “retirement” may imply.

A different discussion ensues.

Old Lawyers – Not Fade Away

For reasons we can discuss at another time, I’ve been reading materials about retirement lately.

Most recently, I’ve read: Aging Well, by George Vaillant, which somebody told me is the best book about its subject (it presents Vaillant’s conclusions arising out of the Harvard Study of Adult Development); and Managing Oneself, by Peter Drucker, which is Drucker’s celebrated article on knowledge workers, a big chunk of which is titled “The Second Half of Your Life”; and a recent article that appeared in the NY Times. The Times article is “Asked About Retiring, They Have a Simple Answer: Why?

Each piece advises: stay engaged, keep up connections to others, sustain a sense of purpose, exercise, and don’t drink too much. These are the keys to aging well.

And each of those pieces points to selected lawyers as their best examples of persons who are aging well.

One is amused.

Lawyers themselves at this moment are identifying aging and the retirement (or non-retirement) of the Baby Boom Generation as great challenges facing the legal profession.  Lawyers who stay too long are seen as a growing problem. Bar institutions are beginning to examine age-related infirmities, to offer programs on aging, and to form support agencies to counsel with lawyers about retiring, transitioning their practices, and managing disabilities. In law firms, many are more direct: they want advice about how to get older lawyers out of the way. And consultants are queuing up to meet the demand.

So, what are lawyers: models or problems?

Let’s get one thing out of the way. The lawyers cited by the Times and in Aging Well are really judges. The Times poster-senior-citizen is Judge Jack Weinstein. Judge Weinstein is 96 years old. “I’ve never thought of retiring,” he says. He is a senior Federal District Judge for the Eastern District of New York. After he exercises, he goes to work every day at 7 AM. He hears motions in the morning and tries cases in the afternoon.

No doubt about it, the picture of going full bore to 96 is a great image.

But the guy is a Federal District Court Judge. He has a lifetime appointment. It’s guaranteed by the Constitution. That’s bound to affect how you retire. And remember, judging is unique. It’s one of the few jobs that is commonly done by sitting in an upholstered chair, often with your eyes closed, listening to other people talk. And it’s a job best performed by experienced, deliberate practitioners who are adept at recognizing patterns of behavior and applying time-tested responses to them. It’s the perfect old-guy job.

And remember too, this guy is Judge Jack Weinstein. For Judge Weinstein, if he’s limited himself to hearing motions and trying cases, then he has retired. Years ago, he was Chief Judge, he was handling a huge load of the most complex litigation in the country, and he was writing one book and article after another – including a major, multi-volume treatise on civil procedure. If what he’s doing now is limited to motions and trials, then, for him, that’s cutting way back.

Maybe the best lesson here is that Judge Weinstein is still engaged, still connected with other people, and still grounded in a sense of purpose. And he exercises every morning at 5:30 AM.

Well, the rest of us are not Weinsteins and we’re not judges.

Our energy, stamina and mental fluidity begin their decline in our 20’s. In our 60’s, susceptibilities to disability, cognitive impairment and mortality become statistically significant. But the fund of our experience and relationships, our ability to recognize patterns, and the wisdom of our judgments continue to grow – up to a point. Troublesomely, that point is different for every person.

Traditionally, lawyers have had many choices and good options for navigating these waters. Practicing law was never a job. It was a career. And lawyer’s careers have had an arc that corresponds in large measure with commonly recognized stages of adult development.

In broad terms those stages can be characterized as (i) developing mastery of the profession, (ii) connecting developed skills with purposeful work, (iii) making a contribution (Vaillant: “generativity”), (iv) playing a role in conserving cultural and institutional values (Vaillant: “keeping meaning”), and ultimately (v) growing into an integrated and meaningful life (Vaillant: “integrity”).

Peter Drucker characterized the careers of knowledge workers in parallel ways. He observed that “knowledge workers are not ‘finished’ after 40 years on the job, they are merely bored.” He said,

At 45, most executives have reached the peak of their business careers, and they know it. After 20 years of doing very much the same kind of work, they are very good at their jobs. But they are not learning or contributing or deriving challenge and satisfaction from the job. And yet they are still likely to face another 20 if not 25 years of work.

Drucker envisioned these accomplished, but bored executives as either developing a second career, or parallel career or becoming “social entrepreneurs.” And, like Vaillant and the Times, Drucker pointed to lawyers as examples of professionals who do this well.

For Drucker and Vaillant and the Times to lift up lawyers was no mere coincidence. Unlike business executives, lawyers in the 20th Century were not, like organization men or women, trapped in “jobs.” Their productivity was not (at least, not entirely) measured in terms of narrow productivity metrics. And, as lawyers’ careers developed, they moved naturally through those development stages, from mastery to purpose to generativity. Many lawyers became leading conservers of cultural and professional values. For many, their continuous transition through those different roles was baked into careers at a single firm. Over their careers, they evolved in place, and there was room to do that. Ultimately, rather than retire, lawyers could gradually “cut back.”

In effect, lawyers could retire in place. They continued to inhabit their identities as lawyers but reduced the levels of their engagement apace with their personal circumstances.

That alternative was not open to people with jobs. People with jobs can’t cut back. Jobs are cogs in organizations. They are measured by productivity. More is better and less is rarely a choice. The job extends beyond an individual’s career and the organizations must provide for the continuation of the job. So, after holders of jobs reach a certain point, they must go so the job can stay. Their organizations think of productivity and succession and transition.

Until the advent of large firms and practice groups and specialization, practicing law was not fraught with these concerns. Lawyers shaped their work to their lives.

Today though, lawyers are much more likely to have jobs. Lawyers in private practice are likely to be members of firms. And most firms are intent on surviving as organizations beyond the careers of their current members. So the context in which today’s lawyers are aging is changing.

For those lawyers who have jobs, they must plan for retirement like other knowledge workers who have jobs.

Lawyers in firms must accommodate their firms’ larger concerns. As lawyers age, their firms will be focussed on client demands, which are more likely to run to responsiveness and efficiency (even youth) than to deliberation and professionalism.

Internally in firms, the interests of senior members must be balanced against the expectations of younger ones. Firms must manage the advancement and retention of younger lawyers. They must provide training, experience, client development, and compensation for younger members. They must grapple with a changing profession.

All this means that choices are narrowing for older lawyers. Increasingly, traditional career patterns no longer suit. Latitude to align law practice with personal circumstances is shrinking.

But, like all Americans, lawyers today are remaining active and living longer than in the past. And lawyers are no more interested in retirement now than before.

So new models are needed, new ways of cutting back. The best of lawyers in the best of firms are not yet entirely job holders.

Law firms: consider the pilot fish and the shark

pilotoceanic_whitetipFor all the well-known reasons, aggregate demand for legal services delivered by traditional law firms is flat. That has been pretty well documented. (In fact, enough already.)

So, the firms that are succeeding are the ones taking business from others (they are taking business from other law firms and taking it from alternative legal services providers, as well).

Here are three opportunities for midsize firms in this jungle:

Midsize firms can take business from big firms when clients elect to hire smaller firms where (i) the service is equivalent or better, (ii) costs are lower, and (iii) firm principals are more directly engaged in direct client service.

Midsize firms can take business from small firms where the midsize firm can bring broader and deeper capabilities.

Midsize firms can take business from anyone, anywhere, any time a midsize firm can provide experience-honed legal judgment delivered person-to-person by empathetic, seasoned professionals.

But “taking business” from others need not be all tooth-and-claw. Think instead pilot-fish-and-shark.

Artful midsize firms can build lasting, mutually beneficial relationships with other firms — large and small — law firm and alternative provider —  by networking, collaborating, complementing.

Midsize firms are uniquely apt for networking.

Job description for the midlaw managing partner

He was writing about something else altogether, and suddenly, there it was. Somehow, he had written the best job description I know for the managing partner of a traditional, mid-size business law firm in the 21st Century. He said,

Organizations are complex systems, in which cause-and-effect is nonlinear, path-dependent (history matters), and often unknowable in prospect. Deciding what to do (or not do), and how and when to do (or not do) “it,” is a matter of judgment and experience, as managers try to accomplish short-term objectives while keeping their longer run options open.

David K. Hurst, Why Business Books Still Speak Volumesstrategy+business, S+B Blogs (November 17, 2015).

RabJust now, law firm management starts from that place (that is, from the place of nonlinear, path-dependent unknowability). The same may also be true for other kinds of organizations (maybe all of them, as the author says), but just now it is more true of law firms than almost anybody else. Indeed, to the extent that this proposition is not true of a law or legal process organization, then – to that extent – I say it is not a law firm. Instead, it is probably best characterized as a “legal services organization.”

Firms in which cause-and-effect is linear and for which management outcomes are predictable, likely are process managers, and likely to be replaced one day by machines. Members of those firms are likely not seasoned and rounded “attorneys and counselors.”

The task of the manager of a law firm is to understand the path upon which the firm is dependent; to find the opportunities that path has created in the present; and, to identify new domains of uncertainty, ambiguity and complexity, toward which to boldly go. Yes, keeping options open.

More grandly, the same writer says, “we all need narratives.”

Data is not the same as knowledge; information is not, in and of itself, insight. As humans, we need narrative “centers of gravity” to make sense of our experience.

* * *

Although the advent of big data calls for a good deal of calculation, it also demands more judgment — “big” judgment, which will require more and better-disciplined analogies to help us synthesize our experiences and grasp their meaning.

Such is the nature of strategic planning for non-linear, path-dependent professional services organizations. The process is sometimes described as “herding cats.”