Make More Rain : hr, operations

Law Firms Pass On Arbitration In Employment Disputes

Admin — Fri, 04 Apr 2008 07:00:36 GMT

In an article for the upcoming issue of the National Law Journal (NLJ) posted yesterday on their site, law firms are not taking their own advice when it comes to arbitration clauses in employment disputes.

Is this a case of what's good for the goose isn't good for the gander? Why would arbitration be a good idea for other businesses but not good for law firms? The answer brings into question the utility of arbitration.

The arguments for arbitration come from those who have been burned in litigation. Litigation can have you sitting in front of a jury that likely has no experience in the subject matter at hand and may in fact have motives other than the subject matter at hand to deliver a large award to a plaintiff. Arbitrators, on the other hand, are picked from within the industry from which the dispute arises and ostensibly provide a more fair, though equally binding, resolution at less cost than litigation. Where litigation can hinge on perception, arbitration decisions are meant to be grounded in experience-laden fact.

According to the NLJ story, however, only 10% of 200 law firm respondents to a 2003 survey had "mandatory arbitration in place". I assume this means that equity partners were bound by it through the partner agreement and that other employees were bound by it as a condition of employment, though it isn't specified in the article. One reason cited is that arbitration clauses may have a detrimental effect on the workplace. Said a partner with DLA Piper, "Your attorneys can perceive that you are materially changing their position vis-a-vis the firm and attempting to circumscribe the rights they might otherwise have."

I believe that statement holds true to any situation where arbitration exists, not just when applicable to law firms. Any other reason to not have them? The article paraphrased a partner in the New York office of Greenberg Traurig, writing "Arbitration [] no longer offers the benefits of a speedier, cheaper resolution, as proceedings have become bogged down in discovery and quasi-motion work that mirrors litigation."

If that is truly the case, then arbitration has a gloomy future indeed, and not just with law firms. I brought up the article to an attorney I know who defends clients in arbitration and he told me some of his concerns with it:

Arbitration has become very inefficient, with no control over evidence admission (ie, evidence can come in at any time);
The arbitrators do not have the same fear of appeal that judges do and thus are unafraid to ignore precedent;
The quality of arbitrators has declined.

This indicates some serious problems with the arbitation system for dispute resolution. As the attorney I spoke with said, "Our clients used arbitration to get away from runaway juries. Now they are going back to the courts to get away from runaway arbitrators".

We have begun taking submissions for the 2008 Law Firm Economic Survey. If your firm is interested in participating, please contact Brian by clicking here.

9 "Sure Bets For The Future" Attorneys Should Watch

Admin — Thu, 03 Apr 2008 07:00:20 GMT

Nothing in the future is certain, except taxes, death, and that the world will implode from global warming or some other threat that replaces it. That notwithstanding, Harvard Business Online is boldly proclaiming 9 "sure bets for the future":

1. The Almighty Dollar will share its throne with an Omnipotent Euro.
2. Some currently unregulated financial markets won’t stay that way.
3. Energy will cost a lot. All businesses will have to operate under some form of carbon constraint.
4. China’s and India’s share of world markets will grow. A group of 100-million-population countries, like Turkey and Mexico, will grow faster.
5. Spanish and Arabic will become more important business languages
6. Multiculturalism and multiracialism will reshape cultural identity in both the U.S. and Europe. The Plato-to-Nato story will no longer define America’s manifest destiny, if any.
7. Even as intellectual property becomes more valuable, IP rights will erode.
8. Creative business people will invent new frauds.
9. The aftershocks of the Internet Big Bang will continue. Media will converge. Prices will fall. Devices will proliferate. Profits will be redistributed more often than cards on boys’ night out.

Particularly important, if they come to fruition, are those "bets" dealing with regulation, energy costs, business languages, IP rights, and the deflation of the internet economy.

Regulations (typically poorly drafted whether intentionally or not) are treasure troves for litigation and thus opportunity;
Rising energy costs will impact profits, but again, will be opportunity for those who specialize in related areas of law;
Business languages will impact costs of doing business and what markets you target;
IP rights erosion will impact that area of law;
Technology deflation will benefit firms who invest in it.

Read more here: Nine Sure Bets For The Future

We have begun taking submissions for the 2008 Law Firm Economic Survey. If your firm is interested in participating, please contact Brian by clicking here.

U.K. Law Firms Prepare For Change

Admin — Wed, 29 Mar 2006 18:32:10 GMT

I was paging through LegalIT’s February 2006 supplemental issue on Practice Management yesterday. The U.K. perspective is a fresh view of the law firm as a business. Our neighbors across the pond are preparing for a significant change in their business environment.

U.S. law firms with a global eye are already aware of the U.K. government’s intention to radically reform legal services, including allowing outside investors to buy a share in law firms or even purchase them outright. The consolidation of law firms into banks, accounting firms, and other organizations is soon to follow. The change will rip away the protection of the partnership form of ownership and expose law firms to commercial competition. However, I was struck by a familiar refrain. One article read as follows:

“The findings reflect the reality of highly profitable institutions that have previously lacked an incentive to truly maximize their efficiency. Indeed, in an industry where much work is still billed by the hour, it can be argued that reducing the time taken to complete a given task, accordingly reduces the amount of fees that can be charged”

Like U.S. law firms, those in the U.K. are cash-generating machines with very favorable business attributes for the owners. There is a growing realization, however, that the consumer of legal services is paying for inefficiency. So while the law firm partners are happy with their own financial results, the winds of change are building. In the end, law firms that become the most efficient will win.

If you are interested in tracking events in the U.K. including their efforts and progress toward becoming more efficient check out LegalIT’s web site.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

Mid-Sized Law Firms Are Doing Just Fine

Admin — Wed, 01 Mar 2006 19:10:05 GMT

I've spent several days at home recovering from a cold or whatever is going around, which means I have been catching up on some reading. I am always surprised by the passion of those who want to declare that mid-sized law firms are a dying breed mortally wounded by inadequate management. Saying it often and even with passion doesn’t make it so.

The Lawyer Statistical Report by the American Bar Association was published in 2004 and presents data up to the year 2000. The first important piece of information is that there were only 356 firms with more than 100 attorneys. Comparatively, there are 4962 firms with 20 or more attorneys. That number is approximately unchanged from 1990, but grew significantly in the preceding ten years—from 2682 firms to the 2000 level of 4962. Likewise, the overall number of U.S. law firms also grew dramatically in the ten years of the eighties while in the nineties it has been relatively stable. Given the dramatic growth in the ten years prior to 1990, it is not surprising that there has been a settling down period. We have seen a small decrease (less than 5%) in the number of firms ranging in size from 30 to 100 attorneys. This group has been handy fodder for the mega firms pursuing an acquisition growth strategy.

From experience, I can tell you that acquisitions by the mega firms are invariably followed by the creation of several new breakaway firms. It is somewhat like the consolidation in the banking field that results in a surge of smaller, high-service banks rising from the consolidation dust.

Mid-sized law firms are doing pretty well. We would always like to help them do even better. But, they are already a financial success. It is unfortunate that tax laws discourage capital accumulation. This means that law firms have to pay their way as they go and have little reserve dry powder. But law firms are money machines. Why don’t law firms invest more in “management”? It is probably because they are doing pretty well as is, thank you.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com

Law Firm Rainmakers: When Is the Best Time to Make that Call?

Admin — Tue, 28 Feb 2006 18:53:19 GMT

When is it the best time to make a marketing call? Ask any great salesperson and they will give you the same answer. The answer is, “Anytime."

There is no wrong time or better time. Don’t use the pretext that there is a better time as an excuse to procrastinate. Surprisingly, catching someone in the office after hours often impresses the caller that you are still on the job. The same is true during the lunch break. There are a lot of busy decision makers that have lunch at their desk. They view that midday hour as one of the more productive times of the day. The early bird gets the worm. The wise owl does his work at night.

So go for it. Make that call. There is no better time than right now!

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

Associate Salary in Mid-sized Law Firms

Admin — Mon, 27 Feb 2006 19:34:00 GMT

A few days ago I posted an example of an overly worded rate increase letter mailed to clients of a mid-sized law firm. Following that post, I received an e-mail from one of my associates. She had asked two different law firms if they were affected by the recent wave of associate compensation increases in mega firms. One said, "Yes, we have already increased pay.” The other said, "What increases are you talking about?"

These events illustrate the mixed response of mid-sized law firms to mega firm actions and, particularly, to the issue of associate salaries. Even if there is little immediate connection for most mid-sized law firms with their distant mega firm cousins, sooner or later their actions trickle down. Certainly not dollar for dollar, but they clearly set a directional trend.

Given the continuing rise in Associate compensation ($75,000 to $145,000 depending on firm size and location), it is now more important than ever to set targets and measure performance in order to ensure that the firm’s investment will generate a profitable return.

Tax laws discourage accumulation of capital in law firms. All the talk of balanced life aside, law firms have to fund operations from current performance. Associates have to pay their way. That means setting targets for revenue production and holding new additions accountable.

Speaking of targets, if you haven't yet participated in the Law Firm Business Survey for the 2005 year, be sure to do so. By doing so, you will receive a copy of survey results. Those results include the performance benchmarks against which you can compare your own firm's results. When you know what others are doing, you know where you can make changes to increase per-partner income in your own firm.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.