Law People

Women Leaders and What Sabotages Them

Ronda Muir — Tue, 15 May 2012 19:15:16 -0500

Are women really worth a damn as leaders? Or is the diversification effort--from those cozy women's initiatives to the hard-headed firm strategies to avoid sexual harassment suits--simply political correctness writ large?

There's been a lot said from both sides of the aisle recently. And from some surprising corners.

The Hay Group recently announced that, from a series of in-depth interviews with dozens of executives and managers, they had determined that leadership traits like empathy, conflict-management, self-awareness and influence (components of emotional intelligence) were consistently tied to successful business outcomes within matrixed organizations. And who scored highest in those attributes? Hay Group’s Emotional and Social Competency Inventory--which includes information on the emotional intelligence of more than 17,000 individuals worldwide--found these traits to be more prevalent in executive-level women in general management roles than in their male peers. For example, the strengths of:

-- Empathy was found in 33% of women, compared to15% of men (making it more than twice as prevalent in women).

-- Conflict management was seen in 51% of women, vs. 29% of men.

-- Influence was found in 32% of women, compared to 21% of men.

-- Self-awareness was strongly evident in 19% of women, but just 4% of men.

“Hay Group research has found that high levels of emotional intelligence are critical in matrix work environments, where individuals are required to lead by influence, rather than lead through direct authority,” says Ruth Malloy, global managing director for leadership and talent at Hay Group.

So what's a matrix work environment? The name comes from its resemblance to a table (matrix) where every element is included in a row as well as a column--that is, a hierarchy where authority flows sideways across departmental boundaries as well as up and down the ladder. In other words, like most law firms.

"As organizations become more global and the matrix environment becomes more common, their success will hinge on their leaders’ ability to leverage collaborative approaches," according to Malloy.

And why is it that women are the ones with more of these skills?

“Women often face barriers throughout their careers that require them to develop these [emotional intelligence] skills to excel and advance in their organizations, in effect better preparing them for the challenges and complexities of leading in a matrix,” says Malloy.

While you're still thinking about the matrix issue, let's go to the results of another recent study published in the Harvard Business Review entitled "Are Women Better Leaders than Men?" In a 2011 review of over 7,000 leaders in an array of occupations and a broad swath of organizations, women outperformed men across the board, from forepersons to senior managers. In the category of top management (including executive and senior members), for example, 67.7% of women were judged effective leaders versus 57.7% of men.

"The women's advantages were not at all confined to traditionally women's strengths. In fact, at every level, more women were rated by their peers, their bosses, their direct reports, and their other associates as better overall leaders than their male counterparts--and" --wait for it, all you managing partners who are still not convinced--"the higher the level, the wider that gap grows."

Which of course means that most law firms today are arguably led by less effective leaders than they might be.

"At all levels, women are rated higher in fully 12 of the 16 competencies that go into outstanding leadership. And two of the traits where women outscored men to the highest degree—taking initiative and driving for results—have long been thought of as particularly male strengths. As it happened, men outscored women significantly on only one management competence in this survey—the ability to develop a strategic perspective." Strategic perspective being a vitally important competency, we would all agree, but one that doesn't differ by gender in this data once you get to top management.

Yet, as the report points out, the majority of leaders (64%) are still men, and the higher the level, the more men there are. In this survey, men made up 78% of top managers, 67% of the next level down (that is, senior executives reporting directly to the top managers), and 60% at the manager level below that.

"As leaders in organizations look hard to find the talent they need to achieve exceptional results, they ought to be aware that many women have impressive leadership skills. Our research shows these leadership skills are strongly correlated to organizational success factors such as retaining talent, customer satisfaction, employee engagement, and profitability."

For those of you thinking that law leadership is a different matter altogether, in a followup article analyzing this research on the basis of roles, women outperformed men as effective leaders specifically in law too—59.4% compared to 54.7%, respectively. (Interestingly, men beat out women in effective leadership in the category of administrative/clerical work. Go figure.)

Say the authors: "It's hard not to conclude that when it comes time for promotion, some — many — highly qualified women are being overlooked The good news about this research isn't that women are better than men. It's that both men and women can develop their leadership skills and abilities, and no area need be reserved for one or the other."

So what is it that is holding back our law firms and law departments from having the most effective leadership?

According to a new whitepaper based on research by The TRACOM Group and DeLaPorte & Associates, versatility—closely related to emotional intelligence—predicts managers' diversity and inclusiveness behaviors. Versatile people are flexible, responsive and adaptable--people with high versatility outperform their lower-versatility counterparts across a broad spectrum of performance measures, adjusting their behaviors in each situation in order to interact effectively and gain support of co-workers and others to maximize productivity.

The study of 143 managers found that managers with high versatility were significantly more effective at promoting diversity and inclusiveness than managers with lower versatility. These managers, rated up to 17% more effective than low versatility managers, were more likely to engage in pro-diversity behaviors, such as actively trying to understand others' experiences and perspectives, recognizing employees' contributions, fostering a welcoming environment for the team, and valuing different opinions. In other words, they showed strengths in some of those same areas that the Hay Group study found critical for leadership.

Perhaps combining those two studies can give us some insight into why women, if such effective leaders, are nonetheless not the ones leading even some of our law firms. If it takes managers with emotional intelligence to promote diversity and inclusiveness, and men, who are our dominate leaders, often come up short on that measure, it would follow that women aren't as likely to be included in firm management.

As the HBR article concludes: "What it takes to develop great leaders, whether male or female, is their own willingness to develop, being given opportunities to grow through challenging job assignments, and support through mentoring and coaching from senior leaders."

So is the leadership vacuum at the top all the fault of those men?

What about the multitudes of programs across the country aimed at making women feel welcome and supported? Some of the responses recently on this subject has come from women who think that's all a bunch of hokum, even though it is women who often conceive and run those programs.

But also the CareeristIn "Are Women's Initiatives Distractions?", Vivia Chen quotes Sallie Krawcheck, one of the country's leading female executives, as saying: "If you look around Wall Street and corporate America, we're putting women on diversity councils; we're putting them in mentoring programs; we're giving them special leadership training, telling them how to ask for promotions—but we are not promoting them. My goodness, we're just making women busier."

Chen also cites Patricia Gillette, a partner at Orrick, who has her doubts about these initiatives: women often "let firms off the hook" by participating in these "soft" projects, giving firms the illusion that they've fulfilled their duty to diversity "because women are in charge of the women's initiatives." Meanwhile, according to Gillette,"the leadership roles that influence firm policy continue to be filled by men."

Subtitled "Latham & Watkins’ Women Enriching Business (WEB) programme has caused a stir after arranging a canapé-making evening for its members," The Lawyer reports on Latham & Watkins' attempt to schedule a cooking event in the UK as part of a women's initiative. Similarly, Freshfields Bruckhaus Deringer made national news in March for celebrating International Women’s Day with a ’Bake Off’. While one assessment was that such events "are better than nothing," others think they "sell women short." Do women know what they want?

Then there's the role of women in helping or hurting their own. While reporting that women lawyers are not really helping other women, Vivia Chen also says she's not sure women make better leaders.

For Mad Men fans, last week's episode about Megan Draper's decision to quite the ad agency where Peggy Olsen, the rare female copywriter, had been coaching her may strike home. Are women more on the Peggy Olsen track? Driven to success and willing to do all it takes, and more, to achieve it? Or the Megan Draper track? Not so sure this is their dream job?

Embracing The Next New Thing--Or Getting Run Over By It?

Ronda Muir — Thu, 03 May 2012 18:58:30 -0500

Speaking of the industry being "over-lawyered," one of the reasons that that conclusion is being reached is because of the impact of incoming new technologies, which are not even yet being fully felt in the industry--technologies that both raise the hope of more targeted and cost-efficient client service while at the same time spelling the demise of many back-office, data slogging, routinized legal jobs.

The current market size of legal process outsourcing companies (LPOs), the most established industry adjuncts using technology to facilitate and speed routine legal work, is hard to estimate, but it is likely between $500 million and $900 million in revenue, with forecasts, acccording to Sylvia Hodges, director of research services of TyMetrix Legal Analytics, of $2 billion in 2012 and $4 billion in 2015. Already the three leading LPOs' market share has grown significantly over the last few years-- CPA Global and Integreon were the only LPOs in existence in 1998, with Pangea3 being formed in 2005--at a time when many traditional law firms have been suffering negative to flat growth.

Another fairly entrenched technologically-based legal adjunct is LegalZoom, founded in 2001, which Forbes warned "[j]ust as Craigslist decimated the newspaper industry by taking away its low-end but profitable classified-ad business... targets the high-volume, low-cost business of providing basic consumer and business documents."

Then last year Google Ventures announced it is part of a group investing $18.5 million into Rocket Lawyer, the "fastest growing online legal service." For $9.99 to $39.95 a month, basic personal and business documents are reviewed by a real lawyer and further on-call legal advice is available at no additional cost.

If you are thinking that these services target the kind of business your firm is not providing, that your advice is more nuanced or complex than any online service can offer, be aware that technological creep, or perhaps an avalanche, is heading your way.

At a class at Georgetown University Law Center this year called Technology, Innovation and Law Practice: An Experiential Seminar, students used a new technology platform developed by Neota Logic to provide on-line generated expert answers to various complex problems that would require a real-life associate hours of research and interaction with a client to duplicate.

[Full disclosure: I once practiced law with Michael Mills, formerly a partner at Mayer Brown and for many years the Chief Knowledge Officer at Davis Polk & Wardwell, who is currently CEO of Neota Logic, and from whose insights into the tech side of the practice of law I benefit greatly.]

The six expert systems designed in the class were:

Business Entity Adviser
Copyright Navigator
Palagora: The Online Marketplace of Legal Vendors
Protective Orders Made Easy: On the Beat - Automobile Search Warrant Adviser
Same-Sex Marriage Adviser
The Citizen Adviser

The Citizen Adviser won Best Iron Tech Lawyer 2012. The Same Sex Marriage Adviser won for Excellence in Design and Copyright Navigator won for Excellence in Presentation.

Neota Logic touts its expert systems as the solution to business operations that generate a steady flow of questions in an area that is important or complex enough to require advice of counsel, yet repetitive or frequent enough that continutally consulting counsel isn’t practical or financially sustainable.

According to Neota Logic's publicity material, it is "a unique form of publishing, in which law firms... build applications that companies can deploy on their intranets or embed in compliance, HR, trading and other systems," enabling law firms "to create innovative, differentiating services that, first, solve problems for clients that can’t otherwise be solved cost-efficiently, and, second, leverage the firm’s expertise more effectively than can be done via billable hours alone."

Neota Logic applications deliver "legal and regulatory guidance to business people when and where they need it—while business is being done, 24/7, anywhere. As one general counsel said, 'No more memos . . . we want answers.'”

As examples, the company can help provide real-time answers in financial services as to netting and collateral enforceability in cross-border transactions, an issue with daily balance sheet impact, and in human resources, it can advise line supervisors on employees’ entitlement to family leave under federal and state law, a frequent source of litigation when decisions are made poorly.

Do these sound like any part of your practice?

The other upside to such a technologically driven expert system is a better quality of practice for young lawyers. When asked by a reporter if she worried about competing with a computer program, one of the class participants answered:

"No, because this is our ally. This is basically our associate and we’re the partner. And the associate gathers all the information for us at a cheaper rate, and then they come to the partner, and the partner can give them all the tailored advice they need." Which of your associates wouldn't rather be the partner to a data crunching, law searching computer program than the fodder in lieu of the program?

As Law Professor Tanina Rostain, who developed the seminar contends, "technology is most likely to eliminate boring, routine legal work, the kind of stuff lawyers hate to do. What’s left is the creative legal work computers can't do."

Of course, every firm risks the downside too--the elimination of inefficient lawyering that punishes your bottom line if other more efficient services are not being offered.

As Ms. Hodges points out: "The intelligent use of purchasing has already helped companies rein in rising legal fees by separating legal services into commoditized segments, including paralegal and research needs, and creating sourcing strategies for each individual segment. Rather than emphasizing the firm's quality legal services (this is assumed), and the relationship with the GC, firms need to get their own metrics right, benchmark themselves against industry-best and develop robust pricing models and business practices to support them. That's what counts. The new litmus test is: 'Does it make good business sense to work with you (your firm)?'"

Management guru Tom Peters, author of In Search of Excellence, pointed out years ago that "excellent firms don't believe in excellence—only in constant improvement and constant change."

Is yours a firm of excellence or is others' excellence going to run your practice over?

Downsizing the Legal Industry

Ronda Muir — Tue, 24 Apr 2012 18:06:54 -0500

In case anyone questions whether the legal industry is undergoing a fundamental transformation, you might consider some of these developments:

The number of US law school applicants is down almost 25%, or over 200,000 applicants, over the last two years.
Which might be in part because the Bureau of Labor Statistics estimates that over the next ten years only @ 73,000 new legal jobs will open up, mostly to replace retiring attorneys.
Which means that given the current rate of graduating 45,000 law students a year, less than half (@48%) can expect to find a legal job.
The lucky half that do find a job will, with the rising demand for low-paid contract attorneys and outsourced attorneys of various sorts, have an average salary that is not sufficient to pay off their average law school -related debt.
Of those making it to a big firm and then sticking it out to partnership, the odds of becoming an equity partner, while never good, have gotten worse. After years of significant growth, the number of equity partners is falling. Nonequity partners at NLJ 250 firms — as reported this year in The National Law Journal's list of the largest US 250 firms by attorney headcount — climbed 7.8%, but the number of equity partners fell by 1.6%.
Even for those who have grabbed the golden ring of equity partnership, the gold is starting to look a little tarnished. It's been reported that one of the sources of partner fallout at Dewey & LeBoeuf, one of the country's biggest law firms, is that 10% of the partners, primarily lateral hires with large guarantees, are gobbling up 80% of the firm's profits, leaving many partners with not much more than an IOU.
And partners in smaller firms are not doing much better. While last year the larger firms were able to raise billing rates as much as 5%, smaller firms have not been able to follow suit, producing an even greater gulf between the two in terms of profitability and compensation. According to a recent report, partners in the top 25% of hourly billers boosted their average rate to $873 an hour last year, while partners in the bottom 25% charged an average of $204, up just 1.3%,
Leave it to the Brits to put a point on it. In the UK. research by the Royal Bank of Scotland suggests that "insufficient fee-earner capacity has been removed from the market" and that a further downsizing will be required in 2012. The RBS suggests cutting an additional 5% (@6000 jobs) from the UK lawyer workforce in order to right-size attorneys to demand, even after almost 15% of legal jobs were eliminated during the recession. "The U.K. market remains over-lawyered," says the report's author.

The state of the industry? "Over-lawyered."

Practical Practice Tips: Lawyers Lusting After Clients and Their Spouses

Ronda Muir — Wed, 11 Apr 2012 19:11:27 -0500

In our Practical Practice Tips: The Art of Ending Work Relationships, we concluded by promising another entry on the thorny problem of conducting personal relationships with clients and/or their spouses.

This is a temptation that seems to be irresistible to many, with legion stories cataloging bad behavior and worse-- everything from the divorce lawyer who got caught in the courthouse literally with his pants down with his mentally unstable client seeking custody of her three kids to the criminal lawyer who "loved" her poor, black diminished capacity client onto death row and a lethal injection. Even "The Good Wife," one of the best portrayals of the legal workplace to hit TV, took on the subject last year when Diane Lockhart of Lockhart & Gardner took as a client her flirty ballistics expert and then proceeded, between protestations about ethics, to take him as a lover as well.

So what in fact are the ethical rules about the matter?

Here's a little pre-history summary provided by Richard Komalko: Up until 2002, not a single state had a law that explicitly prohibited attorneys from sleeping with their clients [or their clients' spouses]. And while most states do have such laws today, they are pretty watered down. Rule 1.8(j) of the Model Rules of Professional Responsibility says that "A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced." In other words, you can take your lover as a client, but you can't take your client as a lover. [Hence, Lockhart's protestations.]

By comparison, the rules of professional ethics for doctors are far more stringent. The Hippocratic Oath, written about 2,500 years ago, forbids physicians from having sexual relations with any patients or even family members of patients... The American Medical Association, the American Psychiatry Association, the American Psychological Association, the National Association of Social Workers, the American Counseling Association, and even the National Certification Board for Therapeutic Massage and Bodywork all strictly forbid their members from having sexual relations with clients/patients under any circumstance.

To its credit, the American Academy of Matrimonial Lawyers, in its Standards of Conduct in Family Law Litigation, prohibits absolutely "a sexual relationship with a client or opposing counsel during the time of the representation" (§ 2.16 [1991]). The ABA's Rule 1.8 (j), while a "per se" (without exception) prohibition, still embodies the exception mentioned above--not to worry if you already have such a relationship with the person before taking him/her on as a client. This is an odd bit of arcana that has survived repeated questioning, particularly since many experts consider sexual relations with a client of any stripe (whether former lovers or not) prohibited in the first instance by conflict of interest and breach of fiduciary rules.

ABA Rule 1.7 Conflict Of Interest: Current Clients declares it unethical to accept a client when... (a) (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. Although Rule 1.7 allows the representation to take place anyway with the client’s consent as long as…(b)(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client. A difficult judgement to make with your knickers on the ground.

There are distinctions that currently exist among states that should be taken note of. Evidently California, Florida, Iowa, Minnesota, New York, North Carolina, Oregon, West Virginia, Utah, Wisconsin and Maryland have adopted express prohibitions in some variation of the ABA rule. Alabama, Arizona, Massachusetts, Michigan, New Jersey, Oklahoma, Texas and Washington either considered or are presently considering a similar rule. And at least one state, Georgia, considered a bill to criminalize attorney-client sexual contact. Colorado, Georgia, Illinois, Indiana, Kentucky, Kansas, Louisiana, Michigan, New Hampshire, New Jersey, South Carolina, Ohio, Rhode Island, South Dakota, Hawaii and Texas have issued disciplinary decisions holding that such relations during representation violate the rules of professional conduct. Alaska and Pennsylvania have issued ethics opinions advising that the relationship is unethical.

While this list may not be entirely up-to-date, the clear trend among states is toward specifically prohibiting consensual attorney-client sexual contact during representation.

For those who feel they can't control the impulse, knowing the variations in rules and punishments in these jurisdictions can be critical. In California, for example, evidently an attorney may sleep with his (or her) clients so long as the attorney does not make sex a condition of representation. And punishments range from a slap on the hand to disbarment. As Vivia Chen, the Careerist, points out, "the trick is for the libidinous lawyer to pick locales where the punishment is light. Here's the surprise: Some of the Bible Belt states [like South Carolina and Mississippi] seem to be more forgiving about adulterous lawyers than a relatively liberal state like Michigan."

WHO the lawyer may not have sex with also varies. The American Academy of Matrimonial Lawyers rules specifically rule out opposing counsel as well as clients. Rule 1.8(k) of the Minnesota Rules of Professional Conduct has been interpreted to mean that in the case of clients that are organizations rather than individuals, an attorney may not have sexual contact with any member of the client organization directly overseeing the case. The South Carolina Supreme Court held that a sexual relationship with a current client 's spouse is a per se violation of the conflict-of-interest Rule 1.7 "as it creates the significant risk that the representation of the client will be limited by the personal interests of the attorney."

With a full cast of media and legal commentators looking on, members of the State Bar of Texas recently rejected a proposed change in the ethics rules that would have barred sex with clients.The rule-- banning sex between lawyer and client unless they are married, or engaged in a consensual relationship that began before the representation, according to a summary--was rejected by 72% of the lawyers voting.

“We will be one of the few states that doesn’t prohibit having sex . . . with clients," SMU law professor Linda Eads told Texas Lawyer, a contention disputed by others who believe that conflict of interest and breach of fiduciary duty rules are sufficient.

Suffice it to say that personal relationships with clients, their spouses, opposing counsel, the General Counsel of your client--all of these pose not only a challenge to delivering adequate legal representation but may also potentially ruin your career. A cool weighing of the postives and negatives might be in order.

Whether unethical or not, once the relationship is established, the procedure for ending it is not that dissimilar from ending a relationship in the office, unless the other party--client, spouse, etc.--is not so keen on ending it, in which case the threat of disbarment may really slow that disengagement down. This might be the time to engage your own counsel.

And remember. There's always Washington D.C.--a jurisdiction that doesn't bar such conduct. No doubt because it never really comes up.

Updates Galore: Hospitality, ABSs and Law School Hell

Ronda Muir — Thu, 29 Mar 2012 15:05:04 -0500

There's so much going on in the legal world these days, it's hard to keep up. Here are some updates on topics we've covered recently.

Hospitality

In connection with our entry Bringing the Hospitality Mind-Set to the Law is this recent inquiry into what makes a small hotel with no designer touches or fancy perks like restaurants or fitness centers the best rated hotel in New York City:

The staff, selected for personality over experience, is constantly drilled in the fine art of looking a guest in the eye and inquiring after her comfort. The pièce de résistance? No pesky fees. Mr. Kallan says he doesn't claim to run the best hotels in the city, but he delivers what he promises: "There are no surprises." Doesn't sound like much, but in New York, decency and courtesy make a big impression—and allow for premium pricing.

Note both the importance of hiring for attitude over experience (see our discussion of Hiring for Attitude), eschewing add-ons, delivering on a basic promise and once again the direct link to premium pricing that such service allows.

ABSs

With Australia and the UK wading deeply into Alternative Business Structures (ABSs) that allow some degree of non-lawyer ownership of law firms (see our The Commencement of the UK Tsunami), back in the USA a federal judge a week ago rejected a constitutional challenge to New York's ban on non-lawyer equity ownership of law firms, and the New York State Bar ethics committee followed that up by opining that an attorney employed by an out-of-state firm with non-lawyer owners may not practice in NY.

It is, let us say on the record, only a matter of time before those decisions, which create distinct marketing disadvantages for US lawyers, are reversed.

Law School Hell

While plans are afoot for 20 more law schools (in addition to the outstanding 14) to be sued in class actions alleging fraud in connection with schools' data on graduates' success, at least New York Law School is breathing a sign of relief. A suit by 9 graduates contending that NYLS had misled them about post-grad job prospects and seeking $225 million in damages, representing the difference between the perceived inflated tuition and the "true value" of their degrees, was dismissed last week by New York Supreme Court Judge Melvin Schweitzer, who noted: "The court does not view these postgraduate employment statistics to be misleading in a material way for a reasonable consumer acting reasonably."

Which arguably makes those law students look pretty weak in the judgment department. Others, though, are voting with their feet--applications to law school have been decreasing and now are down over 15% nationally, with the largest drop in those applicants with the best credentials.

The ABA's response last week to demands for more transparency with regard to law school graduate info? Well, there's one thing they won't be requiring be disclosed any time soon: law graduates' salaries. Maybe all the better, since the average is not going up any time soon either.

Stay tuned for our look at the evolving Dewey & LeBoeuf debacle crowding the media--how DEWEY not?

Bringing the Hospitality Mind-Set to the Law

Ronda Muir — Tue, 20 Mar 2012 14:45:53 -0500

Speaking of hospitality, during the 6th Annual HR in Hospitality Conference & Expo in San Francisco last month, Chip Conley, the founder of the hotel chain Joie de Vivre, said that most leaders have strong IQs, but far fewer have EQs—emotional intelligence—to match, and that can be detrimental to business.

Why?

1) Emotions are more contagious than viruses, so that leader-induced anxiety, anger and frustration eventually reaches the customers, making CEOs not so much chief executive officers as what he calls "chief emotion officers" who act as “emotional thermostats” for the entire organization.
2) Emotions left unchecked can hinder good decision making. “When you make any decisions in that emotional state of reactivity... we lose 10 to 15 IQ points,” he said, noting that some of us can't afford to lose that many points.
3) Leaders who have low EQs lack the ability to help their associates find meaning in their profession. Conley quotes Southwest Airlines CEO Gary Kelly as saying that “When we make decisions as a company, we ask ourselves what’s going to be the effect on line-level employees facing the customers.” Because the emotional tenor of those employees is what is going to leave the primary impression on customers.
4) Perhaps most importantly, leaders with low EQs don't recognize guests' (or clients' )expectations and needs—the needs they may not even know they have.

Wouldn't this be a novel approach to leadership and customer satisfaction for the law business? What would happen if law leaders focused on trying to to help their lawyers experience a meaningful career and address the distress that plagues them-- the ones who are on the front lines interacting with clients every day--with the ultimate goal of also improving client service and satisfaction?

What does that have to do with bottom-line profitability?

Conley's talk brings to mind one of Jordan Furlong's recent blog entries, "Pricing to the Client Experience," from which I quote liberally below:

The nature and value of how your client receives your services can be the basis of your pricing... Law, as usual, lags behind other sectors in this regard. In any other service business, how you are served is a differentiator, if not a full-scale driver, of pricing.

If the way you treat your clients is cheerful, responsive, quick, inquisitive, memorable, and genuinely focused on their interests, you can charge for that. In the legal marketplace, in fact, it’s such a huge differentiator that you can probably charge a lot for it. You can charge for hiring people obsessed with client satisfaction. You can charge for returning calls within 24 hours. You can charge for giving clients 24/7 access to their files and billing status. You can charge for entering your clients’ birthdays into your CRM system and sending them a card on the big day. You can charge for asking, “Is there anything else, anything at all, that we can help you with today?” For crying out loud, you can even charge for not charging by the hour! These are real client benefits. They make clients’ lives easier or happier. And most lawyers don’t offer them.

The price of almost every lawyer product ... will decrease over the coming decade. But the price of a lawyer’s service — the personal, customized, convenient, anticipatory, strategic, counseling, caring way in which the client is treated and their interests looked after — will hold steady and will very probably rise.

We’re all smart and knowledgeable and hard-working. But we’re not all great at service. We don’t all care the same about our clients. We don’t all engineer our billing methods and matter management and client communication so as to maximize the client experience... Markets reward scarcity. Great client experience in the legal market is scarce.

How might we make this terrible and audacious transformation from being the epitome of righteous rectitude in knowledge delivery to a client-oriented, empathic service provider?

Mark Murphy, author of Hiring for Attitude, which we have mentioned before, says Southwest and companies such as Apple, Google and Ritz-Carlton are great organizations to illustrate the idea of hiring for attitude and training for skill, despite the attitudes and activities required at each company being quite different. These are organizations who know who they are, know their clients inside and out, and who don't let anything keep them from delivering first-rate service. Again we see Southwest Airlines. And again we see a well-respected player in hospitality--Ritz-Carlton.

We can't turn down the sheets or leave chocolates, but there's a raft of other things lawyers can do to make their clients feel comfortable and appreciated. Are you in the hospitality frame of mind? It could well be a profitable one.

International Women's Day: Women and the Paris Bar

Ronda Muir — Mon, 12 Mar 2012 17:52:30 -0500

At first glance, you as a woman lawyer might be tempted to pull up stakes and take yourself to Paris: according to a report by the Paris Bar, after rapid increases in the number of female law graduates there over the last few years, the number of registered women lawyers now outstrips the men, the women start practicing at a slightly younger average age than men, and one large Parisian firm, Lefèvre Pelletier & Associés, boasts female partners comprising 40.6% of the partnership.

Mon Dieu! That's pretty hefty compared to the average US law firm, where only @ 16% of partners are female.

The less-than-good news is that approximately 15% of women lawyers in Paris are partners, while 36% of male lawyers are, with larger firms having proportionally fewer female partners than small ones. Parisian Big Law Gide Loyrette Nouel (at 10%), Darrois Villey Maillot Brochier (at 9%) and Veil Jourde (at 6%) all have fewer female partners than the average, according to The Lawyer's European 100 Survey.

Women lawyers in Paris also receive lower pay than men. The average income for female lawyers in 2011 was €57,818 compared to an average of €96,536 for men, which the study noted can be partially accounted for by the fact that male lawyers are collectively older, more female lawyers are associates and they also tend to work in less lucrative practice areas. Nonetheless, the Parisians determined these explanations to be "insufficient,” with the resulting plight of women lawyers a disgrace to the profession. Paris law firms were asked to sign a resolution encouraging working arrangements that would allow women lawyers to make more progress in law.

Conducted by the Paris Bar Association, whose recently-elected president, Christiane Féral-Schuhl, is only the second female president in its 800-year history, this study was released just in time for a conference in Paris March 8 celebrating the 101st International Women's Day.

The United States first held a national Woman’s Day in 1909. After an initial International Women’s conference was held in 1910, an official International Women's Day was established in 1911 at which rights to suffrage and discrimination in the workplace were discussed. The day is now recognized by over a 100 countries.

International Women's Day is just one of the ongoing attempts worldwide to draw attention to the inequality of women in the workplace--the Geneva-based Inter-Parliamentary Union, an international organization of parliaments established in 1889, has set the minimum benchmark to ensure a critical mass of female parliamentarians at 30%--the world average is 19.5%. In 1979 the United Nations Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) was passed.

There have been many women in history who wielded enormous power. Deborah from the Book of Judges led her people to victory over the Canaanites. Theodora, Empress of Byzantium in the sixth century, was arguably more influential than her husband, Justinian. Cleopatra was the last Pharaoh in Egypt 50 years before the birth of Jesus Christ, and women continued to hold positions of authority through the millennia. At the close of the 19th century, Empress Cixi of China was said to be more powerful than her contemporary Queen Victoria. Then there were the Iron Women Golda Meir and Margaret Thatcher.

Today there are 18 countries with women leaders, including Chancellor Angela Merkel in Germany, President Cristina Fernandez de Kirchner in Argentina, President Dilma Rousseff in Brazil, President Laura Chinchilla in Costa Rica, Prime Minister Julia Gil-lard in Australia, Prime Minister Helle Thorning-Schmidt in Denmark, President Pratibha Patil in India, Swiss President Eveline Widmer-Schlumpf and Prime Minister Yingluck Shina-watra in Thailand. Women also head the government in Liberia, Iceland, Bangladesh, Kosovo, Mali, Slovakia, Lithuania, and Trinidad and Tobago.

Heading a government is not the only avenue to power and influence. Three percent of the US's Fortune 500 companies are headed by a woman and the most powerful woman in Europe is arguably former Baker & McKenzie managing partner and International Monetary Fund chief Christine Lagarde, a French woman who was honored at last week's International Women's Day conference n Paris and spoke on the same day at the Women in the World Summit in New York City.

In New York, Lagarde noted that “the degree of risk taking among women is significantly lower” than among men. She suggested that in the corporate world “that balance that is provided by sensible women should be compensated and should be valued,” not just the macho male gambling, which may or may not pay off for investors.“[I]f Lehman Brothers had been a bit more Lehman Sisters ... we would not have had the degree of tragedy that we had as a result of what happened.”

Bottom line? The news from Paris appears to be encouraging, and yet their female lawyers, as those elsewhere in the world and women generally, have a ways to go before they arrive at that level playing field.

What was it that Sextus Empiricus said back in the third century? "The mills of the gods grind slowly, but they grind exceeding fine."

The Challenges of Lateral Hiring

Ronda Muir — Mon, 05 Mar 2012 19:49:45 -0500

The American Lawyer has just issued its Report on Laterals 2012, in which it found that in the 12 months ending September 30, 2011, 2,454 partners left or joined Am Law 200 firms, for a 22% increase over 2010, when there was the lowest number of moves since 2000. "This year's figure was consistent with the annual average of 2,458 partner moves from 2005 to 2009 and was higher than the number of lateral moves in 2007, when 2,423 partners moved. Even without the 208 partners that the March dissolution of Howrey added to the 2011 total, there was still a 16% increase in partner moves over the previous 12-month period."

Big losers of 30+ partners include K&L Gates, McDermott Will, Hunton Williams, DLA Piper, Latham & Watkins, and SNR Benton. The gainers of 30+ partners are in some cases the same: DLA Piper, Jones Day, K&L Gates, Greenberg Traurig, SNR Denton, Baker & McKenzie, Winston & Strawn, Perkins Coie, Dewey & LeBoeuf, Kirkland Ellis, Polsinelli Shughart and Reed Smith.

But, as the report points out, "this year's uptick in lateral churn does not mean the boom years are back." Both transactions and litigation are down, so the increase in lateral movement seems more an indication of failing firms being dismantled by growing ones. With the gap between the haves or hope-to-haves and the don't-really-haves growing even bigger.

The troublesome part continues to be the lack of success in making these lateral hires productive members of the team. A UK survey reported earlier this year by The Lawyer found a staggering percentage of laterals simply failed to take. In a study of nearly 2,000 lateral hires over a five-year period, 33% left their new firm within three years and 44% left within five years. While no definitive data exists regarding US laterals, various reports provide some clues: in Altman Weil's 2011 Flash Survey Law Firms in Transition 92% of firms surveyed intend to grow through lateral hires, there was a median 90% retention rate of laterals over 5 years, and @ 70% success in laterals meeting financial goals. Our anecdotal reports of retention and financial success are not at all that rosy--they are more consistent with the UK data, if not worse.

But however disingenuous or optimistic firms reporting to Altman Weill were, the conclusion was still that "Clearly many law firms can improve their return on lateral hires. Considering the time and money firms invest in the process, a baseline benchmark for lateral success should be at least 80%. In the future, we expect firms to devote more attention to the specifics of lateral portfolios, including detailed profitability analyses, and to manage their recruitment, integration and cross-selling efforts more rigorously."

The list of pitfalls in lateral hiring is long, as many commentators have pointed out--and centers on the many unknowns and unknowables that haunt both the incoming partner and the firm hiring him/her, such as why the move is really being made, what book of business the new firm can truly expect, what practicing at the new firm will feel like to the partner and vice-verse, and how well the firm can integrate the partner.

And the potential exposure is not limited to the lateral simply not working out, although given the expenses and time involved in landing a lateral, those costs are high. While making some changes from one workplace to the other only requires perusing the employee manual, major differences often exist in both the form and substance of practice, some of which are not easily communicated. Differences in administrative matters, like conflict checks and intake procedures (which candidates from the corporate world rarely have experience in), can impact bottom lines and expose firms to significant liability. Similarly, bringing in laterals from defunct or soon-to-be-defunct firms who bring work with them can trigger liability to the old firm's creditors under the unfinished-business doctrine.

The other fall-out from lateral hires is one that is harder to quantify but which has a real impact on firm culture and success. The deal given laterals is highly scrutinized by the-partners-who-have-been-there-along. The individual reactions to the firm's offer of (usually) rich deals can end up being corrosive--critical assessments of what is so attractive about the lateral, whether they are competition or support for the other partners in the firm, how they appear to be delivering on financial promises and how they interact (arrogantly?) with existing partners can make or break a culture, regardless of any bottom-line improvement. Specifically, spread in pay is one of the insidious results of lateral hires. And our compensation systems that prize individual performance not only fuel competition but enable laterals--both to come to your firm and leave from your firm.

So don't underestimate the importance of firm-wide as-complete-as possible-buy-in for incoming laterals--and active problem-solving before the personal tensions get to a breaking point. Finley Kumble, Howrey and Heller Ehrman all had other problems, but adding laterals ineffectively, and eventually, toxicly was certainly toward the top of the list of their sins.

Nonetheless, we proceed apace with the old "solutions" that resulted in those debacles--DLJ Piper hires the $5 million lateral with great fanfare and follows that up with hiring its Global Co-Chairman laterally. Frank Burch, who serves as DLA Piper's other global cochair, assures us that "[W]e didn't hesitate for a second and worry about the fact that the guy was not in the firm." Yet I can assure you that regardless of the managing committee at DLJ Piper's worry-free hire, there are a lot of partners there who aren't as serene. And who are also wondering why their pay is only a fraction of the $5 Million Man.

Anger, resentment, jealousy. These are the things that Finley Kumble, Howrey, Heller Ehrman and others were made of.

Dan Bowling, a former Big Law partner and Global Head of HR for Coca-Cola Enterprises, points out that law firms could use some of the advice in Hiring for Attitude by Mark Murphy. “Eighty-nine percent of the time, if a new hire fails, they fail for attitude, not for skills,” according to Murphy. While we could go into the finer points with Murphy of how different lawyers are from the rest of the hired herd, we might also benefit from looking at what companies across the country have learned--that attitude and other interpersonal characteristics matter when it comes to forging a successful hire.

Pre-hire assessment and post-hire integration are both critical, not just to realize the financial goals a proposed hire promises, but in some real sense also to save your firm. Let us help you size up your candidates--both their attitudes and those of the partners they will be joining--and help you ensure that your time and efforts in lateral hiring pay off.

Practical Practice Tips: The Art of Ending Work Relationships

Ronda Muir — Thu, 23 Feb 2012 19:29:21 -0500

Much space here is devoted to building professional and profitable relationships at work. But there are also work relationships that should end and some that end in any event. While not minimizing the trauma and suffering often associated with divorce and other relationship losses outside of the office, the end of work relationships pose unique difficulties with potentially damaging repercussions over the long term, both personally and for the firm as a whole.

Ending Professional Relationships with Clients

Perhaps the hardest thing for a firm to do, particularly in this economic climate, is to terminate a client relationship. Knowing who should and shouldn't be clients is the touchstone of a successful practice and one that your firm should have a clear bead on. And also one that is enforced.

Once you have decided that a client relationship should end for whatever reason, knowing how to effectively end it can be critical.

Taking a client by surprise is always a mistake. Hopefully you've planted a few seeds along the way as to why this is not an ideal arrangement. If not, start tilling.
Give the client fulsome and honest feedback. Explain what policy or change in policy or what circumstance or behavior on their or your part has prompted the termination. If the firm's intake process was not working on all cylinders, acknowledge that.
Show your gratitude for their initial confidence in you and recognize any difficulties they may encounter in finding suitable alternative counsel. Making the transition easier for them may win you a reference for life. And avoid a lawsuit.
Follow up with questions about their transitional experience and how they've managed on the other side of your representation.

Perhaps even more traumatic can be the loss of a client that you don't want to see go. Interestingly enough, the above tips still apply, though sometimes in mirror image: good communication on your part should mean you are not taken by surprise by a client's dissatisfaction; asking for feedback is highly important --this may be the only chance you get to hear what really isn't working well at the firm; and gratitude, assistance and follow-up continue to be worthwhile even if it seems like they are throwing you out on the street.

Best is to have a specific protocol for departing clients of all stripes that procedurally smooths the way and officially demonstrates your continued interest in their feedback and their business.

Ending Professional Relationships with Colleagues

Separating the chafe from the wheat is what many firms are doing these days. Even when the chafe is a hard worker whom many in the firm like and confide in. What can you do?

Again, if evaluations are being done right, this should not come as a surprise.
Acknowledge their strengths as well as their weaknesses and their various contributions to the firm.
Keep your message professional and not personal.
Give them time to transition and help with their job search as possible. Use this transition to turn them into a client or at least a booster.
Include them in alumni activities and encourage colleagues who are personal friends to stay in touch--this isn't a witch burning, just a change in professional affiliation.

Ending Personal Relationships with Colleagues

What is certain is that there is plenty of personal relationship-building going on at the office. CareerBuilder reports that almost 40% of workers admit to having had at least one affair with a co-worker. And in almost 30% of those cases, it was with someone up the ladder. Although the hospitality industry apparently wins the co-worker dating sweepstakes, the legal workplace's "mixer" culture of bright, ambitious Type A's working long hours together without much of an outside social life has often proved to be a romantic hotbed. (Working long hours together is number 4 in CareerBuilder's list of top catalysts to co-worker relationships.) And tips on how best to snare legal colleagues of various stripes abound.

The official firm position on these in-house relationships has morphed over the last 20 years, from what was initially no prohibitions to the more recent, sometimes draconian directives inspired by the specter of sexual harassment lawsuits. While we won't go into the legal liabilities here, achieving the appropriate balance of professional to personal with a former lover who you see regularly requires working much harder than if this were a breakup after which you saw the person twice a year for lunch, where big hugs and detailed, personal catch-ups and even a little flirting can be both friendly and appropriate.

So what to do when the Valentine's Day chocolates are all eaten and the end arrives, whether the relationship was publicly known or entirely private? (Almost 40% in the CareerBuilder's report said they had to keep the affair under wraps.) Keep the tears and confrontations strictly out of the office, regardless of how badly either of you behaved or are behaving. Avoid all temptations to badmouth, complain or declare your undying devotion within earshot of anyone you work with. Your goal is to wring every ounce of intimacy out of your professional interaction. And a good place to start is in the private sphere--that means no late night confessional calls or early morning regrets. Some habits die slowly but they will die.

If you have to fob off contact with the person in question in connection with one or more matters onto another lawyer, for either the short or long term, in order to maintain civility and/or professionalism, do so and do so graciously. It's worth the trouble. Also, recuse yourself from any position that involves evaluation of the other person, their work, compensation or billing. Sure, you think you are objective, but not everyone does. And don't indulge in "friendly" lunches until the breakup is way past. It's too confusing to everyone and could start the cycle all over again--it's third on CareerBuilder's list of catalysts to co-worker hookups.

Finally, if you think no one knew, you are wrong--a common self-deception by those who are inside the lovers' bubble. Consider apprising the appropriate management people of the situation whether there are policies against the relationship or not. After all, it's over. And they can help smooth the transition to less and/or more appropriate contact. Plus, they have a legitimate interest in assessing and managing any threats of firm liability for real or perceived discrimination. In any event, fessing up is much better than being outed by someone else in the firm or by a lawsuit.

Stay-tuned for a discussion of the thornier but nonetheless recurring problem of personal relationships between lawyers and their clients--and their clients' spouses.

The "Blame It On Law School" Controversy, or Unrequited Law Students

Ronda Muir — Tue, 14 Feb 2012 15:20:15 -0500

Perhaps the only players in the legal world getting a harsher strafing these days than law firms are law schools. The biggest complaints are 1) financial: that they unfairly entice students into their folds on promises of big payday legal jobs that most will never have a shot at and that the law schools do so at tuition rates that impose mortgage-sized debt (without the house) that will be hard to pay off even if their graduates do get one of those plum jobs; and 2) professional: that law schools are academic ivory towers that don't prepare their graduates with either the professional or personal skills needed for a successful and happy career.

These issues have provided the normally buttoned-up legal world with some major drama, like hunger striking law students, a Congressional inquiry, lawsuits against law schools across the country for, among other things, fraud, false employment data and unfairly low grades, predictions of law school closings and deans resigning in disgrace. And also a runaway YouTube sensation.

The financial data is fairly straight forward. Law school tuition has risen dramatically faster than inflation while at the same time high-paying (as well as other) legal jobs are less available, a situation against which even the ABA warns potential law students. The employment rate for new graduates last year was 87.6%, the lowest it has been since 1996, according to the NALP, with only 68.4% having jobs that required passing a bar exam. In order to afford paying back the $100,000 that most students leave law school carrying, their salary should be over $65,000, which only 40% of new graduates who report on their salaries (a population which is therefore likely to overstate average income) make.

When even the ABA is reporting that compared to technical schools, law school is not a good financial bet, it's no surprise that the number of applications to law school are down.

The drumbeat about the lack of professional skills of most young lawyers and the distress many are suffering is harder to verify. Many clients today refuse to pay for first and second-year lawyers, which perhaps attests to the first. And even before the recession fully one-third of 3rd year lawyers said they wanted to leave the profession, not just their job, which speaks to the second.

The pundits are all over these issues, with the biggest growth in this industry probably being among angry law graduate bloggers. Law schools are portrayed as primarily pursuing their own profit motives on a model based on a symbiotic relationship with big law firms: it is the firms' outsized salaries that provide the carrot that attracts all those willing to pay such high tuition, and in return law schools gratefully feed a few of the best performers into the ever-open maul of big firms.

What are law schools doing about this public thrashing? Well, there's the raising-the-grades-instantly gambit to try to make their graduates look more attractive. And some law schools are canceling those evening classes. And there's always the cook-the-numbers approach to getting a better (or better-looking) quality of study body. But none of these schools is porposing anything that changes the old fundamentals.

The suggestions being made to reform law schools run from relatively minor tweaks like changing some of the curricula to eliminating law schools altogether. One author goes so far as to argue that ideas hatched in law school by the legal intelligentsia are "catastrophically bad for America." Some think law schools should offer money-back guarantees to their graduates who can't get a debt-paying job. Steven Harper, a respected ex-big-law-partner, professor at Northwestern Law School and active commentator, wants colleges and law schools to stem the flow of law school applicants by disclosing what the reality of law practice in a big firm will be: indentured drudgery and unhappiness.

There are lots of calls for more transparency. Forbes magazine has announced that it will start rating law schools based on their graduates' legal job results, if that information can be culled from the non-legal jobs and jobs offered by the law school to its graduates that skew the results. U.S. News & World Report and the ABA both have insisted that future rankings will reflect more accurate information.

But there is this nagging feeling that law schools are possibly taking the hit for an entire marketplace shift that has made the old pyramid up-and-out business model a thing of the past, a model which firms and clients are still grappling to replace, while in the meantime the lives of countless professionals and their careers are being disrupted.

Law graduates with ever more expensive degrees are entering a marketplace with fewer jobs, where average pay isn't keeping up with the tuition escalations. And still those being kicked out of law school are trying to claw their way back.

Who's to blame for this dislocation? Being able to identify the guilty ones would clear a lot of consciences.

Wouldn't it be better for the whole circle of players to cooperate in reinventing the career trajectory of those who want to love the law? But are having a hard time feeling it these days.

A Book on Emotional Intelligence and Lawyering: What's Your Reaction?

Ronda Muir — Sun, 12 Feb 2012 13:54:11 -0500

Ronda Muir of Law People Management has concluded a contract with the ABA to write a seminal book on emotional intelligence and lawyering. Before everyone scatters, could you please send your reactions to the juxtapositions of those two topics and any anecdotes that might be informative to info@LawPeopleManagement.com.

All responses will be acknowledged and a select few will be included in the book, with attribution if you would like.

Bring it on!

The Commencement of the UK Tsunami

Ronda Muir — Mon, 06 Feb 2012 12:33:35 -0500

Speaking of the flood of mergers consolidating the legal marketplace, another new wave is also just now hitting that promises to further dilute the piece of the action that law firms have traditionally enjoyed.

At the beginning of this month, the UK’s Solicitors Regulation Authority officially opened its doors to at least a dozen applicants, including law firms, claims management companies, major retailers, accounting firms, loss adjusters, private equity houses, legal expense insurers, banks, will-writing companies, and even in-house law departments, wanting to become Alternative Business Structures (ABSs) under the long-anticipated provisions of the Legal Services Act.

So commences the tsunami that is likely to quickly reach our shores and shake up the American legal market--producing even more avenues for consumers to get legal services outside the old traditional law firms. And therefore reducing even more the little growth in legal industry dollars that such firms can hope to lay claim to. The ABA has already planned an endorsement of limited, lawyer-controlled multi-disciplinary partnerships, states are proposing statutes that allow ABSs, and a lawsuit has been launched by Jacoby & Meyers against the existing restrictions in the US prohibiting non-lawyer ownership of firms.

Commentators have noted that even without the the ABA's blessing of ABSs, investments into competitors of traditional law delivery firms are already promising an impact on the market. For example, Google and other investors recently made an infusion of capital into RocketLawyer, an extensive library of self-help legal documents along with a database of registered lawyers available for consultation as needed, or perhaps not needed.

Which furthers the necessity of knowing what your firm brings to the consumer particularly well --not only now but also after the effects of the tsunami start rolling in.

Consolidation and Competition in 2012

Ronda Muir — Mon, 30 Jan 2012 18:15:26 -0500

The reports are in for 2011 on mergers and acquisitions in the law firm biz-- the pace is picking up-- and the prospects for 2012 look to be the same.

US Mergers

Hildebrandt reports that 45 mergers that involved U.S. firms were completed last year, a 67% increase over 2010, with the Midwest being a locus of activity, With 11 U.S. mergers already announced by the first week of 2012, almost double the number (6) announced at the same time a year ago, "merger activity appears to be heading back towards pre-recessionary levels which typically saw 55+ mergers per year... [W]e predict this trend will continue in 2012." Hildebrandt notes that by their tally mergers outside the U.S. jumped to 54 in 2011 compared to 44 and 48 in 2010 and 2009, respectively.

Altman Weil counts 60 law firm mergers and acquisitions announced in the United States in 2011, up 54% from 2010 and at the highest level since 2008, according to Altman Weil MergerLine, while the number of cross-border mergers involving US firms declined in 2011 after increases in 2009 and 2010. “We think the trend toward larger deals will continue and the pace of mergers could accelerate in 2012.”

The largest merger in 2011 between two U.S.-based firms was the combination of Kilpatrick Stockton and Townsend Townsend and Crew to create Kilpatrick Townsend & Stockton, followed by the acquisition by Edwards Angell Palmer & Dodge, a 500-lawyer Boston-based firm, of Wildman, Harrold, Allen & Dixon, a 160-lawyer Chicago firm, creating Edwards Wildman Palmer effective October 1.

Faegre & Benson, headquartered in Minneapolis, merged with Indianapolis-based Baker & Daniels to form nearly-800-lawyer Faegre Baker Daniels on January 1. Bryan Cave, a 900-lawyer firm based in St. Louis, acquired 59-lawyer Denver-based Holme Roberts & Owen as of January 1. Ice Miller in Indianapolis also combined with Schottenstein Zox & Dunn in Columbus, Ohio effective January 1. Bingham McHale, an Indianapolis-based law firm, merged with Louisville-based Greenebaum Doll & McDonald to form 250-lawyer Bingham Greenebaum Doll effective January 2.

So the industry must be starting to take off again, right?

What is not always apparent from the data is why those mergers are taking place. In some cases, the acquisitions are of law firms that were in deep trouble. For example, Bryan Cave acquired Holme Roberts & Owen after it suffered a string of partner defections and staff layoffs, while Arnold & Porter merged with San Francisco’s Howard Rice after Howard Rice had lost nearly half its lawyers over the preceding decade. The negotiation of the Edwards Wildman Palmer merger has been scrutinized recently for having been tainted by the personal agenda of a managing partner, since replaced, rather than having been executed with the best interest of the firm in mind.

So when the predictions are for more mergers in 2012, one has to wonder if that is an indication of further distress as much as growth in the industry. Dissolutions of law firms took place throughout 2011, starting with Howrey LLP and continuing with smaller and midsize firms throughout the year. Clearly a lot of firms are having a tough time adjusting to the new marketplace, with some firms not even making it to the acquisition stage.

Asia Arising

Perhaps the greatest event in the law firm merger market recently is one that has largely gone unheralded-- the announcement of the merger of China’s King & Wood and Australia’s Mallesons to be effective March 1. Becoming the largest law firm based in the Asia-Pacific region, with more than 1,800 lawyers, King & Wood Mallesons will be a combination of one of China's largest law firms with one of Australia’s biggest, most innovative firms. But that is not where the Chinese are stopping. The two largest law firms in China, Dacheng and Yingke, are opening offices in London and a small Chinese firm, Broad & Bright, is in merger discussions with Clifford Chance. Has the rest of the international legal world taken note of this wave of Chinese competition starting to lap at its shores in this year of the Dragon, the most auspicious of all of the Chinese years to start a business or execute a strategy?

Where does all that leave us? As Patrick Lamb of the Valorem Law Group reminds clients: "The turmoil in law firms created by merger talk, rumors of merger talks, rumors of departures, rumors of de-equitization or personnel reductions DOES affect the work on your matters. Don’t be naive enough to think your work is immune!"

Where we are is in a quickly expanding legal services universe that no longer revolves around the pyramid that you grew up with. It is a universe that requires innovative, forward-thinking strategies to first identify your market, build an effective delivery system to keep and expand your client list and finally adapt your practice to the ever-changing future.

Practical Practice Tips: Taking Control of Your Schedule

Ronda Muir — Wed, 18 Jan 2012 18:03:49 -0500

So here is the typical routine: clients that demand not overnight but one-hour turnaround, associates that don't hand in assignments on time, working into the night to deliver a reasonable product (see the first two), phone conferences scheduled for 6 am, which turn out to be at 3 am in California, where you are that week, except that the number you have is wrong so you are still late to the call after getting up at 2 am, the managing partner on your case repeatedly for missing committee meetings or failing to finish firm administration projects, a significant other who complains about the unfair burden he/she has to carry while you sit in meetings at wee hours, kids or other family members who chide, ok snarl, about how infrequently you make it to family events, no consistent exercise since last year in spite of your second new year's resolution, drinking a little too much on the late side and getting up a little too early (or too late) on the early side, all of which can coalesce into an angry showdown with any one or more of these players--unless you succeed in your attempts to avoid them all.

Does that sound like your life or someone else's you know?

The first step in taking control of your life is being able to actually see how your life is currently organized. Can you accurately say when you arrive for work and leave most days and how much time you spend evenings on work? And how much you spend on personal and/or family time? Do you shave off a little time when you tell the family what time to expect you or when you estimate time charges for the client? Are you plagued by back-to-back meetings, half of which seem unnecessary? Do you admit to friends and family what your workweek really looks like or do you downplay the time demands and the stress?

Pretend you are talking about someone else and write down your real schedule for all aspects of your life, your actual conflicts and stresses and, while you're at it, your free time (short list). Would your colleagues and significant other/s agree?

Once you can honestly see your life, the second step is coming to understand whether your life is the way it is on purpose. Or because you are unconscious of your choices. Do you honestly know which parts of your workday are enjoyable and which are not? Are you always apologizing to others for those early phone calls, swearing under your breath at how exhausting they are? Or is it possible that you actually like how they get you up and off to a good start on a busy day? Make you feel important that others need your input before they can proceed?

So next to your typical day's activities, write down whether they are enjoyable (possibly another short list) or not, and to what degree for each--neutral, somewhat, very.

Now comes the time to figure out how you can reduce the amount of time spent on the most unpleasant parts of your schedule, and increase the amounts of time spent on the most pleasant ones.

Which is not to say that your choice can be to bypass all the hard personal stuff, lob off on your associates the difficult client stuff or be excused from getting enmeshed in the partnership stuff. But you can make your preferences known as a first step to finding a balance between what we have to do and what we want to do.

You would think that lawyers with their reputations for combativeness would be the first to say what they want and how they want it. But the reality is quite different. Most lawyers loath confrontation, particularly in what they consider to be non-critical areas like scheduling, and thereby deprive the players in their lives of important feedback on what would make their lives better, and therefore their work better. Or, they take it for so long, victims of incompetence that they are, and then lash out in an angry fit.

You don't have to be the 300 pound gorilla to start putting some order into your life. You simply have to think about possible alternatives, articulate those to the people involved and then take steps to move towards those alternatives that seem workable.

Of course it's helpful to know the other players' proclivities--another exercise in awareness. Does your secretary sometimes switch numbers in a date or phone number? Does your associate take long lunches and work later at night? Do your clients prefer face-to-face instead of telephone/email advice? Is the managing partner fond of early morning pow-wows?

Once you have others' proclivities clear, start informing everyone of your preferences. Have you given your assistant clear guidelines on when you want phone calls, who is to be included, who should proofread the meeting invites, and when to give reminders? Have you explained to your associates that due dates are sacrosanct and while everything can be discussed, something responsive has to be on your desk at a certain time of the day in any event? Do you explore with clients several possible times and dates for meetings or conference calls or do you feel you have to jump on the first suggestion? Have you told the committee chair or managing partner the best dates and times for you to meet? Here's one: have you worked out with your significant other if there is a day during the week that s/he would prefer that you make it home earlier than midnight?

Then you have to abide by the guidelines and boundaries you yourself have asked for--no approving a late meeting after a day of meetings, no excusing a 3 am phone call, no extension for the associate's due date, even if you may have to replace him/her. And you can't hit the reschedule button less than 24 hours before that special home date you've set up for the week.

If you don't affirmatively provide guidelines and boundaries to the players in your life, your staff, colleagues, clients and family will push and push until they meet resistance. It's like ballroom dancing--a good partner gives some resistance to the other person to lean against--and to know how far to go. If you don't provide any resistance, you could and probably should get mowed down.

The first part of this endeavor is all in the mind--building an accurate awareness. The second part is in the muscle--keeping promises to yourself and others. While communicating your way through it all.

The key here is to be living on purpose and not by default. Yes, everyone has to make compromises and your life will not suddenly be a bed of roses, but any small improvements in how you feel your life is lived will make you more empowered and productive and the people you deal with more supportive and engaged.

Profitability in 2012--or Not?

Ronda Muir — Wed, 11 Jan 2012 10:47:26 -0500

One of the obligations of commentators at this time of year is to give an end-of-year roundup and a new year prognostication. So let's start with profitability, a subject dear to all our hearts.

Citi Private Bank's Law Firm Group serves some 600 law firms and 58,000 lawyers in the United States and the United Kingdom, and surveys them quarterly about their financial situation. The most recent survey results-- for the third quarter of last year-- are skewed toward AmLaw 100 firms – “44 Am Law 1–50 firms, 36 Am Law 51–100 firms, 49 Second Hundred firms, and 54 additional firms"-- but nonetheless give a pretty interesting picture about the law business and its profitability in 2011 with indications for what 2012 holds.

Citi's conclusions: As a result of work put on hold during the third quarter (and therefore unbillable) and intimations of a continuing decline in demand in the fourth quarter, Citi projects that PPEP for 2011 will fall to low-to mid-single-digit growth--less than 2010's 7.5%, and that 2012 will get off to a rocky start.

For the details: Citi found that law firm collections for the quarter were strong, but expenses continued to rise at a faster rate than earnings. Perhaps more disturbing is the report that corporate demand for legal services continued to decline for the third consecutive quarter, with WIP also declining.

"Cumulative growth in demand for the first nine months was 1.5 percent, down from 1.8 percent during the first six months. This indicates that growth in demand slowed to only 0.9 percent for the third quarter...The slowdown has hit Am Law 50 firms... particularly hard."

Because there is simply less demand, income partners and of counsel are working fewer hours, while equity partners and associates continue to carry the ball. At the same time, leverage is declining generally, particularly the ratio of associates, who carry a higher profit margin, so the pyramid system only survives in theory.

Citi went on to note that rate increases remained steady at 3.7% and realizations were strong. But it also cautioned that:

"Expenses, which had already risen by 4.7 percent during the first half of 2011, continued to gain momentum during the third quarter, as they have now increased 5 percent across the industry for the first nine months of this year. This was driven by a continued increase in operating expenses—and in compensation expenses, since we saw a slight uptick in head count during the third quarter, likely due to the entry of first-year associates."

Obviously, with rates increasing by 3.7% and expenses increasing by 5%, most firms are slowly losing ground on both the profitability and productivity fronts.

"Looking at the 100 most profitable firms from 2001–2010 in our database, we saw a discernable decline in the percentage of associates represented in the leverage composition and a significant growth in the income partner, counsel, and of counsel categories. The result is a much more expensive leverage model, which would be fine if these more expensive lawyers were as productive as equity partners and associates, but they are not. In looking at average annual lawyer productivity from 2001 to 2010, income partners and counsel worked about 150 hours less than equity partners and associates."

"This modest increase in associate head count, combined with the slowdown in demand in the third quarter, translated into a decline in productivity gains—from 1.6 percent growth for the first six months of 2011 to 0.9 percent growth for the first nine months."

Collections were so strong in the third quarter that revenue growth outpaced expense growth, the reverse of the mid-year situation, so profit margin pressure was eased for the moment. However,"the push for collections...along with the slowdown in demand, resulted in a significant slowing in inventory growth... " with WIP at " 3.6 percent for the first nine months (versus a cumulative growth rate of 6.3 percent for the first six months). The last time we saw the third-quarter inventory growth rate slowing from the first-half rate was in 2008." And the obvious implication for 2012 first quarter revenues is not pretty.

The result of these trends, Citi notes, is flat to negative equity partner growth in virtually all market segments and a preference for bringing in laterals over making internal promotions. (More on the state of lateral hiring in a future entry.)

Hildebrandt's quarterly "Peer Monitor" index for the third quarter of 2011 dropped 6 points to 56 (anything below 65 is deemed a negative operating environment)– breaking a string of three consecutive upward quarters.

"While rates strengthened slightly, demand growth weakened. Most significantly, the rise in expenses continues to accelerate. In the third quarter, increases in expenses ran well ahead of slowing revenue growth, sharply curtailing profitability. Growth in demand for legal services was positive, but slowed to 0.8 percent, its weakest reading so far this year. Rates firmed slightly, up 3.5 percent compared with the same period a year ago. But the worrisome trend in expenses that PMI has been tracking continues to worsen. Both headcount and overhead expenses rose to their highest levels of the year. In short, the market continues to grow – albeit at a lethargic pace. But expenses will need to be brought under control if demand does not pick up. Achieving topline growth and balanced expense controls will be the key themes for firms for the balance of 2011 and into 2012."

"Following widespread cost reductions in 2009 and 2010 (reflecting primarily significant reductions in headcount), expense growth turned positive early this year. As 2011 has worn on, costs have steadily accelerated to the point where they are now easily outpacing both demand and rate growth, thus impacting profitability. Until recently, firms had generally been doing a good job of balancing their headcount against slowly growing demand. But firms have stepped up their hiring in recent months in a modest return to traditional seasonal hiring patterns. While firms have been hiring, however, demand has slowed as the year has progressed, widening the gap between law firm capacity and available work. Whether this trend continues will depend on the performance of the broader economy and whether we see continued recovery in litigation and transactional work."

While in this survey, stated rates were up a comparable 3.5%, "realized rates have resumed the long‐term downward trend that has been in place since 2008, and reached another all‐time low in the third quarter. A similar story is unfolding in collections. Following a slight rise earlier this year, net collected realizations fell to a new all‐time low of 85.4 percent."

Some of these themes were evident in the results of The American Lawyer's ninth annual survey of law firm leaders, as summarized below:

"Only 20% of respondents expect to see revenue growth in their corporate practices next year, compared to more than one-third of respondents last year. And clients are taking longer to pay their bills, according to 43% of the respondents. Billing rates are continuing to rise, with 93% of firms expecting to increase rates by 5% or less.

Cautiously optimistic, firms are holding steady on the size of their first-year associate classes, with 58% keeping their class size the same as in 2011. More than one-third of respondents expect to reduce their equity partnership ranks and 49% of firms have made efforts to align partner compensation with a willingness to cooperate in new initiatives such as project management.

Leaders are not as optimistic about profits per partner as they were last year. The majority (58%) of survey respondents expects PPP to grow 5% or less, which is higher than the 41% who responded last year. A healthy 26%, however, expect profits to increase by more than 5%, although this is down considerably from last year’s 38%."

For even more confirmation on the bleak 2012 growth outlook, here is Goldman Sachs' Chief Economist predicting that 2012 will see average global GDP growth of 3% and US GDP growth of 2.5% or less, with early 2012 growth in the US particularly sluggish--slower than the last half of 2011.

An AmLaw Daily Business Review article published in mid-2011 to which Muir contributed (and which you may have to upgrade your membership in order to read), discussed the big differences in profit margin among the various AmLaw 100 firms. A five-year analysis (spanning the boom year of 2007 as well as the bust of 2009) "shows a striking chasm between the highest- and lowest-margin performers," ranging from 63% for Wachtell and 62% for Quinn Emanuel to 19% and 22% for Edwards Angell and Squire Sanders, respectively.

What did that analysis find distinguished high profit margins from low?

Under-leveraging, of both associates and non-equity partners--those firms with higher than average profit margins in any given year (including the booms) had lower than average associate leverage, with an inverse correlation in leverage the higher the profitability went. Similarly, lower numbers of non-equity partners translated into higher profit margins, with a high of 46% compared to a low of 27%.
Low rates of lateral hires--those with the most restraint in lateral hiring were in the top quartile of profit margins (with fewer than 4% lateral hires), while those in the bottom quartile laterally hired an average of 18% of their equity partners, with the three firms with the largest percentage of lateral partners (K&L Gates, SNR Denton and Duane Morris)reporting profit margins of only 26-27%.
A global presence while limiting non-strategic offices--those firms with large numbers of offices tended to have lower margins (34%) than those with only a few (46%), unless those offices were mostly outside of the US, in which case margins went up (to 41%).

So in terms of profitability, we have a bleak growth prognosis ahead while the old saws about how to improve profitability are proving wrong.

Last year at this time, our entry on Where Will Profits Come From in 2011? concluded by saying what remains true today:

"The writing on the wall is pretty clear Profits are unlikely to come from general demand in the market. And there is only so much of your expenses and partners that you can cut and still survive as a thriving firm."

If your firm is one of those that are trying to sail through these tough times using outdated business development and people management approaches, the waters ahead look pretty treacherous. Now is the time to embrace that scary word--innovation--and begin understanding how to achieve a new law practice that fits the new economy.

Freud and Emotions

Ronda Muir — Wed, 04 Jan 2012 18:37:27 -0500

In honor of the endings and beginnings at this time of the year and the personal and professional resolutions that each of us aspire to for the future, it is fascinating to look to the life of the founder of modern psychology, Sigmund Freud. A recent entry in "The People's Therapist," a blog by a former S&C associate, Will Meyerhofer, who is now a therapist to lawyers, recounts some interesting information on Freud's relationship to strong emotions, which is summarized below.

Oliver Sacks notes in his book "Musicophilia: Tales of Music and the Brain" that Freud was known to not like music, quoting his nephew, Harry, who claimed Freud "despised" music.

Freud himself wrote about his reaction to music in the introduction to "The Moses of Michelangelo":

"I am no connoisseur in art...nevertheless, works of art do exercise a powerful effect on me, especially those of literature and sculpture, less often of painting...[I] spend a long time before them trying to apprehend them in my own way, i.e. to explain to myself what their effect is due to. Wherever I cannot do this, as for instance with music, I am almost incapable of obtaining any pleasure. Some rationalistic, or perhaps analytic, turn of mind in me rebels against being moved by a thing without knowing why I am thus affected and what it is that affects me."

His friend, Theodor Reik, wrote that Freud feared giving himself over to the mysterious effects of music on his emotions. Reik felt that Freud's resistance to music amounted to:

"[a] turning-away...[an] act of will in the interest of self-defense...[and the] more energetic and violent, the more the emotional effects of music appeared undesirable to him. He became more and more convinced that he had to keep his reason unclouded and his emotions in abeyance."

Let's see. Super-analytic type who is uncomfortable with strong emotions determines to not let himself "give in" to those emotions, but to remain as fiercely rational as possible. Sound like anyone you know?

While it is reassuring to know that even the grand man of psychology struggled with understanding emotions that overwhelmed him, his strategy of dealing with them is less than heartening. It is no wonder that when Leonard Woolf, along with his wife Virginia, visited Freud in London late in his life, Woolf described Freud as "a half-extinct volcano... sombre, suppressed, reserved."

Only a few months later, at the age of 83, Freud arranged for a morphine overdose to end his life.

Sometimes the hardest thing to do is the challenge that yawns most scarily right in front of us, the one we least understand and most want to avoid.

Meyerhofer points out that "the word 'freude' in German means 'joy.' The word 'dream' comes from the Middle English word 'dreme,' which means 'joy' and 'music.'" He suggests that Freud may have retreated into joyful musical dreams at night, even if he wasn't able to embrace them during the day.

Perhaps there is a hint in this etymology as to why Freud was so driven by his fascination with deconstructing dreams, dreams which like music reflect abstractions of emotions that he personally couldn't fully understand or give himself up to. If only analysis and rationality could provide all the answers.

Another rift on the etymology is that Freud possibly never truly lived up to his name because he wasn't open to the full panoply of emotion, wasn't able to experience the roller coaster that both plummets us into the depths but also raises us up to the highest heights--a mysterious and sometimes painful ride that nonetheless informs every aspect of our feelings and ultimately our intelligence.

Happy Holidays and A Prosperous and Peaceful New Year!

Ronda Muir — Fri, 09 Dec 2011 16:36:48 -0500

No, Virginia, there is no Santa Claus, but thankfully there is gratitude and hope, which I wish for all my subscribers during this holiday season and throughout the new year! With these twin gifts come prosperity and peace--let us work together to make sure you are beneficiaries in the coming year of both.

The Law People Management Gang

It's That Time of Year Again: Bonuses

Ronda Muir — Wed, 07 Dec 2011 09:05:47 -0500

Last week The Wall Street Journal reported that Cravath, Swaine & Moore, the industry pacemaker in this matter, announced that it will keep associate year-end bonuses for 2011 the same as last year--$7,500 for a first year associate up to $37,500 for the most senior associates. Not only are these bonuses far below 2007, when first years received a total of $45,000 and seventh-years a total of $110,000 (in each case including a second year-end bonus), but the fact that that they are not being raised at all this year from low bonuses last year also indicates the continuing weakness of the legal industry, according to the article.

[It might be pointed out that early this year Sullivan & Cromwell offered associates a second bonus for 2010 ranging from $2,500 (first-years) to $20,000 (seventh-years). Cravath and others followed suit and even raised S&C, which could possibly happen again.]

Commentators have busily sunk into a slug-out over whether these bonus rates are fair to associates when at least some firms, including Cravath, are reporting increased partner profits. According to The American Lawyer, in 2010 the overall average equity partner profits for the Am Law 100 of almost $1.4 million returned to pre-recession levels, while Cravath’s PPP has risen from $2.5 million in 2008 (sharply lower than in 2007) to $2.7 million in 2009 and $3.17 million in 2010. It's enough to prompt at least one commentator to militate for an Occupy Big Law movement.

There is a lot that is distinctive about law firm bonuses--they are totally transparent within firms and outside, matched to the dollar by competing firms, and presume that law students and young lawyers are not able to compare firms on any basis other than raw compensation. In most cases, they are dished out in automatic response to whatever the last competitor has done. In an era of severe client cost pressure and increasing competition from alternative legal providers, such a reflexive approach to compensation seems, well, unbusinesslike.

And there is also good reason to believe that it's a waste of money--according to an analysis by the American Lawyer of their survey of midlevel associates.

"An examination of the results of our 2011 Midlevel Associates Survey shows that there is no statistically significant relationship between associates' ranking of their compensation and benefits and their expectation that they will still be at their firm in two years... Our finding echoed a 2007 study that Indiana University Law professor William Henderson did based on our 2004 Midlevel Associates Survey—he also found that the relationship between compensation ratings and the expectation that associates would stay two more years at their firm was close to zero."

The correlation between the second bonuses given in the spring of 2010 and how associates rated their compensation was also tenuous, with the associates at S&C--the firm that started that round of bonuses--giving lower marks to their firm for satisfaction with their compensation than two firms that didn’t award spring bonuses.

So maybe we shouldn't be so presumptuous after all? The highest paying, largest law firms still lose 18%+ of their associates every year, according to NALP.

The challenge is to understand the positives and negatives of differing approaches to compensation--lock-step, merit, semi-merit--in this market environment. How do these approaches affect recruitment, attrition, productivity, teamwork and work environment? It may be easier to just blanket repeat what Cravath has done, but there are much greater rewards for taking a more thoughtful and current tack.

Practical Tips to Beating Back the Depression Demon

Ronda Muir — Fri, 25 Nov 2011 17:51:41 -0500

Lawyers suffer from a high rate of depression--the highest of all professions--and the peak time for depression to hit is around the holidays. Add to that the stress that many are feeling now over the economy and whether they will have a job come the first of the year, and you have a recipe for poor performance, strained relationships and general year-end blues.

Positive psychology is the study of what drives optimal functioning. It focuses on the positive emotions, individual traits and institutions that improve productivity and satisfaction and that also have been determined to lengthen longevity by 20%. But lawyers are world-class pessimists, a trait so clearly aligned with their profession that law students who score the highest on pessimism also have the highest grades. So practicing positive emotions seems sentimental and unrealistic to many lawyers.

The proof, however, is in the pudding. Don't let moping through the holidays be your "realistic" approach. Here's a list of things that positive psychology research has found can help you beat back the depression demon. Even though it may sound too much like kittens and flowers and light, you might just find that one or more things on this list can help make your holidays happy.

Keep a gratitude diary. Spending even 5 minutes a day writing down what you are grateful for has a demonstrated positive impact on satisfaction, physical health and energy levels. For a bigger kick, send a note to someone you are grateful to.
Start the day with a smile. If you can maintain a positive attitude through the first hour, you have a much better chance of keeping it all day. Research shows that even if you don't feel positive at first, the positive feelings will follow that physical smile. Laughter is good for you too, And a positive mood is contagious.
Perform an act of kindness. One daily act of kindness, regardless of how small--like complimenting a coworker, bringing someone coffee, or large--volunteering at a food bank, mowing an elderly neighbor's lawn, builds strong connections and adds a sense of purpose and meaning to life.
Spend time with friends and family. Plan regular time together. And even if a late brief or closing keeps you physically away, phone calls and emails can keep you connected in the meantime.
Replay those special moments. When you're stuck in a conference room late at night, give yourself a break to replay those special memories you have--visualizing the moment and exactly how it felt. It's a mini-vacation in the mind.
Manage your physical health--eat well, sleep well, exercise and stretch daily. The positive effects of good physical health--on your immune system, heart and dopamine levels--is the foundation for high functioning and lasting satisfaction.
Just minutes of meditation daily for as few as 6 weeks, using music or chanting to further the relaxation, has proved powerful in developing the ability to cope with stress and lighten mood.
Visualize! Imagine vividly your goals and aspirations. Write down the specific details of your ideal life and incorporate them wherever you can into the life you have now.
Upgrade your self-talk. Stop trash-talking to yourself--remember to congratulate yourself for your accomplishments and remind yourself of your strengths.
Release yourself from responsibility for what you can't control or change. Keep a discerning eye on what those things are and don't beat yourself up over what you can't do.
Forgive. Staying angry is like trying to kill someone else by drinking poison. It only hurts you in the end. Unburden yourself from the weight of resentment and anger over what others have or haven't done. Forgive their weaknesses, their bad intentions, their failure to be who you thought or want them to be. Then embrace your lightened life.

Happy holidays!

Goleman on Emotional Intelligence; Could It Be Your Blood Pressure?

Ronda Muir — Tue, 08 Nov 2011 19:58:43 -0500

Goleman Clarifies

In the emotional intelligence ring, there have long been two theories—those who think that EI counts for 80% of success and those who don’t. Daniel Goleman’s 1995 blockbuster book Emotional Intelligence: Why It Can Matter More Than IQ is the source of much of this scrapping—he asserted in the original edition that IQ accounts for 10-20% of business success, leaving a big 80% gap attributable to other factors. Many think that EI fills that entire space—some contending that Goleman himself essentially said that at the time.

As we have reported, over the years there have been a number of rounds on this question, with Goleman saying that he has been misinterpreted and others accusing him of retreating from his own findings. This past week, Goleman finally came out firmly with the declaration that “people seem to jump to the conclusion that EQ alone makes up that 80% gap—and it does not… As the person who put the concept on the map, I can tell you that they are dead wrong.”

While chastising consultants for over-selling emotional intelligence, Goleman also restates the importance of EI in the business world:

“It typically takes an IQ about 115 or above to be able to handle the cognitive complexity facing an accountant, a physician or a top executive. But here’s the paradox: once you’re in a high-IQ position, intellect loses its power to determine who will emerge as a productive employee or an effective leader. For that, how you handle yourself and your relationships — in other words, the emotional intelligence skill set — matters more than your IQ. In a high-IQ job pool, soft skills like discipline, drive and empathy mark those who emerge as outstanding.

Companies know this. Corporate surveys find that more than two-thirds of major businesses apply some aspect of emotional intelligence in their recruiting, in promotions, and particularly in leadership development.”

Emotional intelligence is critical to productivity, effectiveness, leadership. And businesses are smart enough to recognize that in their recruiting, professional development and leadership development. Except of course in the business of law.

Is It Your Blood Pressure?

In another corner of the EI world comes results announced last week of an interesting study : "the emotion-recognizing ability [is] reduced in people with high blood pressure, even after taking into account medication use and other factors." Leading to "emotional dampening," hypertension evidently "reduces the ability to recognize anger, fear, sadness, and other emotions in people's faces."

According to the authors of the study, published in the journal Psychosomatic Medicine:

"In complex social situations like work settings, people rely on facial expressions and verbal emotional cues to interact with others. If you have emotional dampening, you may distrust others because you cannot read emotional meaning in their face or their verbal communications.You may even take more risks because you cannot fully appraise threats in the environment.”

The authors believe emotional dampening also may be involved in disorders of emotion regulation, such as bipolar disorders and depression.

This theory of emotional dampening also evidently applies to positive emotions.“Dampening of positive emotions may rob one of the restorative benefits of close personal relations, vacations and hobbies."

While there is no hard data on this that I am aware of, I would put bets on our lawyer population having outsized blood pressure, consistent with the pressure, stress and demands of the job. And then there are those well-documented low scores in emotional intelligence that lawyers historically get.

Lack of trust, risky behavior, depression, heart disease, lack of close personal relations and little or no restorative time?

So that's it!