four actions for 2018After I finished wrapping presents and baking my annual cheesecake, I spent part of the holidays reading through the generally excellent end-of-the-year reports on the state of Big Law. Here’s some of what I learned:

  • Citibank expects another year of modest revenue growth and continuing generational tensions. Will the baby boomers stay too long; will there be enough nose-to-smartphone-screen millennials to replace them? (Also, one amazing finding: According to the report, “only a small number of the over 100 U.S. firms in London are covering all their costs.”)
  • BTI predicts that general counsel will spend an extra $3 billion in 2018—good news, though barely a ripple in our $300 billion legal business market.
  • The ALM legal research group found that five Big Law mergers in the middle of the decade had produced improved profits per partner for their new firms, a reassuring conclusion from a group that in March had reported on the mediocre to dismal results of mergers dating back to the turn of the century.
  • Jason Furlong declared that law firms that are serious about innovating need to abandon their addiction to billing for time and turn to other meaningful measures of value.
  • And, from my friend Mark Cohen, writing in Forbes, I learned that “an emerging global legal community”—one fluent in technology, collaboration, and other interdisciplinary skills—is busy being born and will “ultimately replace” today’s flawed system.

Ultimately, of course, may take a while; sort of like turning a profit in London. Apart from admiring these valuable contributions to the discussion about Big Law, what can individual lawyers or their firms do with these thoughtful observations? To my eye, these reports suggested at least four specific initiatives for 2018.

 

Get some business

We know that even in the face of flat demand, some firms and some lawyers have outperformed others over the last decade. The Citibank report reminds us again that the market continued to segment last year. As a result, the more successful will continue to have advantages in talent retention and overall reputation, two factors that will reinforce the segmentation. It’s a virtuous circle for the few lucky enough to be included.

Citibank also reported two superficially disparate facts. First, the percentage of equity partners in the Am Law 200 has remained essentially flat, even as the percentage of income partners and counsel has grown. It was never easy becoming an owner, but since the Great Recession, the odds of becoming an equity partner have become longer. Second, nearly one-third—32 percent—of equity partners in the Citibank survey were 55 or older; roughly half of that cohort was over age 60.

This suggests that over the next decade, we may see a once-in-a-generation wave of equity partner promotions. I say “may” because it’s not clear how many of those who leave or slow down will be replaced. Their departures will lead all firms to assess their leverage models. Some will be tempted to “right-size” by sharply restricting the number of equity partners as a way of boosting leverage and jacking up profits. Others will adopt at least a one-for-one equity partner replacement policy. And a precious few will grow their equity ranks.

Who is most likely to be promoted? You don’t need a weatherman to find the answer: those with client business or the realistic prospect of generating new engagements. When law firms talk about wanting a “compelling business case,” that’s what they mean.

Generating business is also a matter of self-preservation. ALM found that in five mergers between Am Law 200 firms that occurred between 2007 and 2011, the merged entities had improved their rankings on the profit tables by “sharpening their focus.” That turns out to be a polite phrase for reducing their partnership ranks; it wasn’t only their focus that had been honed. Merged firms generally have fewer inhibitions about dealing with partners they regard as “underperforming.” After a decent interval, partners without desirable business are invited to sharpen their focus somewhere else.

A version of this up-or-out phenomenon can also be found at firms that never merge. Citibank reported an increase in “de-equitizations and departures” of partners across its survey. So, what can a partner without business do to avoid an involuntary honing? Learn how to build client relationships, find another job, or hope that no one in authority cares.

In my view, the first choice is the best, even though it may be the most difficult. Let’s be realistic: If you haven’t generated a farthing of work by age 50, the likelihood that you’re going to turn into a client magnet is slim. But everyone can do something. And if you don’t know what to do first, start by hiring a coach. If you don’t want to ask your firm, contact me. I can recommend several excellent people.

Depending upon your personality and what your firm values, you may work on business development, or you may work on becoming far more valuable to existing clients, the next best thing to developing your own. If you’re fortunate enough to be at a firm laden with institutional clients and uninterested in six-figure accounts, you need to become one of the lawyers that keep clients sticky. Given the trends in the market, don’t delay. If you don’t feel a sense of urgency, you’re not paying attention.

 

Talk with some clients

BTI reported that in-house lawyers plan to shift $3 billion in spending to outside firms in 2018. That may prove to be good news for law firms generally, but in this market general information is not helpful. Useful information would be answers to these questions: What are your clients planning for the New Year, and how, if at all, might you help them? For that, you need to ask them.

In my experience from talking with big-firm clients, they like being asked. In fact, most find a personal call from a relationship partner, the firm’s chair, or an outsider hired for the purpose to be a valuable time to review the nature of the relationship, discuss the strengths and weaknesses of your firm and those of your competitors, and outline their plans for the future.

This is harder, of course, if you are a lawyer who does not have clients. But, again, everyone can do something. Anyone reading this has some connections with clients, even if they don’t have responsibility for the account. Now is the time to reach out to those contacts. You’re not looking to make a sale. You’re trying to understand their needs, looking for a little intelligence, and, in a crowded market, reminding them that you exist.

Or, you can wait for some of that $3 billion to fall on your desk like pixie dust. While you’re waiting, I suggest you make a call.

 

Experiment with some technology

Mark Cohen and Jordan Furlong are correct. Technology will change the practice of law as meaningfully as it has changed, say, the practice of medicine. Those of us of a certain age have already lived through the first iterations; Westlaw, LexisNexis, and the wonders of e-discovery have been fully absorbed in the legal ecosystem. But we still don’t know when the Cohen-Furlong disruption will take place. Law has moved more slowly than medicine—the market is smaller, the investments are thinner, and the impact of outside influencers (insurance companies and regulators) is barely noticeable. Nonetheless, change is in the air, and law firms, including many of the biggest and best in the world, are deeply committed to riding close to the cutting edge.

In 2018, you need to be in this game. For one thing, it’s intellectually engaging. What might a machine do better? And how can I turn it to my client’s advantage? These are worthwhile and professionally sound inquiries. For another, many clients expect to hear about how your firm is upgrading processes and rethinking service delivery models. Are your clients in that group? Have you asked?

Technology is too important to be left to the coders. We’ve all seen too many prototypes that fix imaginary problems or rest on fanciful premises. Also, advances in technology need not be confined to practice initiatives. Are your firm’s operations fully in the 21st century? Have your marketing, pricing, and business development teams taken advantage of modern data analytics? Could your administrative team benefit from your collaborative efforts?

 

Perform some public service

Like many of you, my holiday dinners and parties were full of fervent conversations about the public life of our nation. It’s hard not to respect—and even be a little daunted by—the unleashed passions. And it’s also hard not to worry about the unintended consequences that we will reap. This is a moment when all sides need careful, measured leadership and reminders to respect the rule of law. In other words, this is a time for lawyers to step forward and participate in the important issues roiling our communities.

This suggestion does not grow out of the end-of-year reports. Rather, it comes from listening to great lawyers talking about their careers and where they made valuable contributions. And it comes from having a healthy respect for what lawyers can accomplish when they put down their own cares for a moment and take on the burdens of others.

Yes, it’s important to build a practice, serve clients, and imagine tech tools that will rock your world. But too many of us spend too much of our time worried about those issues. Law is a business, but it remains a profession too. Part of the lawyers’ obligation is to serve those who cannot afford their help and to help the nation preserve an orderly system of justice. That’s a mission that every lawyer can take on in 2018. You, and we, will be better for it.

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