Monday, March 31, 2008

The Lateral Partner Power Play

Are law firms spending too much time and money branding the firm? We argue that in the age of the portable professional, strategies for promoting, retaining and attracting lateral partner talent — similar to the investment services model — is the path to long-term success.

How does a firm attract top lateral partners with large portable practices and at the same time retain its rainmakers? The solution is the same for both—demonstrate to potential and existing partners that the firm is focused on their success.

Wall Street clearly gets this. When Goldman Sachs reportedly paid out more than $16.5 billion in bonuses, The New Yorker explained, “talent is the most precious commodity on Wall Street; it’s what they sell, so it’s also what they have to pay for.”

At law firms, like all professional service organizations, talent is everything. But consider the difference in how much firms spend branding the firm versus what they spend branding the powerful business generators that are their individual partners.

Firms with genuine respect for their partners—and clients—never lose sight of the fact that clients hire the lawyers they trust, as opposed to law firms with letterhead they recognize. To this end, firms likely to succeed in today’s fluid market are those that view themselves as “brand marketers” rather than the “brand.”

Think of the way the Coca-Cola Company markets Coke, Diet Coke, Sprite, Dasani, or how Apple creates marketing campaigns for iPod, iTunes, and Mac. Just as General Motors bestows a hefty budget to its premier brand, Cadillac, the lateral that has been heavily wooed should expect, upon joining a new firm, to receive marketing dollars devoted to significantly increasing their value during their first year there.

Working with new laterals to develop and implement strategic, sophisticated marketing campaigns enhances their likelihood of success—and sends a clear message to other potential laterals that the firm is dedicated to helping its professionals grow their practices.

Law firms spend millions in branding campaigns in attempts to attract and institutionalize clients. Down the hall, the recruiting department, operating under the assumption that lawyers and their books of business are portable, has little or no marketing support devoted to recruiting partners.

Free agency has created a strong sellers’ market for laterals. Consider that The American Lawyer reported that between October 2005 and October 2006, 2,429 partners changed firms among the AmLaw 200—an average of 12 partners per firm!

This situation exists because clients control the state of play. As long as clients agree, lawyers are free to move as often as they like. To some extent, the legal market has always operated this way. Time and time again, in-house counsel say they hire lawyers not law firms. To avoid this attrition and client instability, firms must recognize where client loyalty lies. The key to obtaining and keeping top clients is keeping their lawyers happy.

When clients say they hire lawyers not firms, we know that practically speaking, what clients really mean is they hire great lawyers who work for “safe” firms. But what makes a firm safe? Safe means a firm with an established reputation for success; a reputation obtained by the results its individual lawyers achieve over time. By devoting marketing dollars to helping laterals solidify and expand their reputations, firms will find that clients come and stay too.

Smart firms should demonstrate to highly sought-after laterals that when they join the firm, an aggressive, sustained, customized marketing campaign will be immediately initiated on their behalf. This is an appealing commitment that’s hard to ignore.

Savvy candidates understand the importance of marketing support, and include marketing expectations in negotiations. They ask questions such as, “how many seminars will you help me produce this year?” And “how will you position my practice in the media?” And, “what will my personal branding budget be?”

Though the acquisition of lateral talent represents a significant investment in time and resources, oddly, many firms fail to engage in much business strategizing at the outset of the recruitment process. Firms frequently do not provide recruiters with enough guidance on the type of candidate likely to add true value to a firm’s current service offering.

In considering potential laterals, firm managers should carefully examine their long-term marketing plans, and identify and select candidates based on these needs. Procter & Gamble would not have purchased Gillette without a strategic marketing plan in place to leverage it. Smart firms ask difficult questions such as: “Where is our practice going, and what talent do we need to make it stronger?” “What will the debt market look like in five years, and who do we need to capitalize on that?” “What business could we get with partner ‘X’ that neither of us can get on our own?”

In an era of free agency, talent is everything. The firms that do the best job of articulating why lateral superstars will fare best with them—and then back up their plans with strategic, focused marketing support, will find they are able to successfully institutionalize the talent they need to attract the clients they want.

Is Schwarzenegger Serious About Taxing Lawyers?

California Gov. Arnold Schwarzenegger has a $16 billion budget deficit dilemma on his hands. He insists he doesn't want to cut education. But he proclaims with equal fervor that he won't raise taxes.

So what's a post-partisan governor to do? Close tax loopholes, of course.

Now one governor's loophole may be another politician's tax increase.But according to two media outlets, Schwarzenegger told the audience at a Pleasant Hill, Calif., budget forum last Wednesday that the state should consider closing tax loop-holes and in his mind that includes the lack of a sales tax on professional services -- including legal services.

"We have to look at the way we are taxing," Schwarzenegger is reported as saying. "There's whole new economies that are developing,service-oriented economies."

Asked about the comments on Thursday, finance department spokesman H.D.Palmer said the governor was just explaining that there are a lot of deficit-eliminating ideas "out there."

"Basically, it was in the context of we ought to have everything on the table as we ought to be having discussions about them sooner rather than later," Palmer said. "But we're not carrying a bill in our back pocket, if that's what you're asking."

Law Firms Opening Up to the Idea of Attorney Re-Entry

Shari Solomon was going on her fourth year as an associate in the commercial real estate department of Wolf, Block, Schorr and Solis-Cohen in 1995, when she had her third child. While she was already accustomed to juggling life as a mother and a lawyer, her newborn required extra medical attention -- so much so that she couldn't imagine working again any time soon.

But 10 years later, with all of her children in good health, Solomon was ready to return. The problem was, she didn't know if the law firm world was ready to take her back.

"I did not presume that I would be returning to my practice after that many years out," she says. "It's not that I didn't consider it. But I couldn't imagine that after that many years out, it would be an option."

She was wrong about that. When she started searching for a job, Solomon invited a WolfBlock partner she had remained friendly with to lunch. The meeting resulted in an offer to take up where she had left off a decade before, as an associate in the Philadelphia office of the firm.

But it's not as easy for everyone to come back as it was for Solomon.

While most law firms offer some form of maternity leave, it's the rare firm that guarantees jobs for more than one year. The New York City Bar Association's Committee on Women in the Profession recently surveyed 43 legal employers on parental leave and found that almost all grant some form of maternity leave, with the majority of surveyed law firms providing 12 weeks' paid leave. Many firms also offered additional unpaid time off.

By and large, however, women who want to take off more than one year often sacrifice whatever job security they have to do so. When they want to return, they face a host of formidable challenges, say industry observers.

The most significant is simply convincing a law firm to hire them even though they veered off the conventional linear law firm up-or-out path. In addition, many who left before the technological revolution worry about their computer skills. Further, re-entering lawyers also must come to grips with psycho-social factors, most significantly the fact that they're older than their fellow associates while their contemporaries are their bosses.

The ranks of women seeking to re-enter the practice of law have grown large enough that law schools and other groups are now addressing the issue. Pace Law School and University of California, Hastings College of the Law, have started programs aimed at helping attorneys return to practice after lengthy absences. Additionally, the New York City Bar recently kicked off a re-entry initiative aimed at assisting people who left the profession and are considering returning.

For firms looking to increase the ranks of women partners, reaching out to former employees is seen as one way of potentially recruiting experienced female lawyers. Some law firms have been mulling programs aimed at connecting with ex-employees since at least 2005, when a Harvard Business Review article about women in the workplace suggested that companies should maintain ties with off-ramped employees through alumni programs.

Skadden, Arps, Slate, Meagher & Flom recently started a program, Sidebar, which allows attorneys to temporarily leave the firm for three years. During that time, they're still welcome at continuing legal education classes and other firm-sponsored events on the premises.

Attorney General: IP Crimes Increasingly Funding Terror Groups

Attorney General Michael Mukasey warned March 28 that the huge profits generated from piracy and counterfeiting are increasingly flowing into the coffers of terrorist groups.

In remarks to Silicon Valley executives at the Tech Museum of Innovation, Mukasey said the economy and national security of the United States are increasingly threatened by violations involving copyrighted software code, patented inventions and trademarked properties.

Terror groups are taking their cues from organized crime and increasingly funding their operations from counterfeiting and piracy, he said.

Mukasey said his department is devoting more resources to prosecuting intellectual property crimes, which led to a 7 percent increase in the number of IP cases filed in 2007 over the year before and a 33 percent increase over 2005.

"Criminal syndicates, and in some cases even terrorist groups, view IP crime as a lucrative business and see it as a low-risk way to fund other activities," Mukasey said. "A primary goal of our IP enforcement mission is to show these criminals that they're wrong."

Before Friday's speech, he met privately with representatives from companies including Apple Inc. and Adobe Systems Inc.

Mukasey did not elaborate on the topics discussed in that meeting. The attorney general also met with entertainment industry executives in Los Angeles a day earlier during this three-day California trip, and did not discuss those talks.