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Ed Poll
  Week of August 5, 2008

A Broken Management Model

I recently saw statistics stating that, in 2000, 60 percent of associates left their firms within five years; by 2005, 80 percent of associates were leaving their firms within five years. It's undeniable that the business model of large law firms encourages this kind of turnover. Through the annual "culling process," firms get cheap labor (yes, even despite what seem to be high salaries for the young talent) for five, six or seven years. Then, if they don't make partner, they're asked to leave to make way for the next group of law school graduates. In view of the fact that every time an associate leaves, it can cost a firm hundreds of thousands of dollars in lost recruitment, training and client service expenses, this is clearly a sign of a broken management model.
And it's not the only sign. "De-equitization" of partners is no longer unusual; in fact, at least one firm has paid millions of dollars in penalties for firing partners—the EEOC called it age discrimination against employees. Add to that the increasing flow of news stories detailing layoffs of lawyers as well as staff at some of the largest firms. This is not only a result of economic weakness, but also a result of megafirm mergers that created "redundancies" in staffing.
Layoffs, terminating associates and staff, and de-equitizing partners, all raise the question of why these people can't be transferred from their current practices to other practice areas that are still growing. After all, these lawyers are trained in the culture of the firm, presumably are good lawyers (otherwise they shouldn't have been hired) and should be capable of learning new technical skills. Cutting first, without a measured assessment of what and where to cut, eliminates muscle and not just fat. It will likely cause a problem when (not if) the economy recovers and firms must scramble to catch up with client demand after their layoffs. "Retrain and gain" is the motto that may make most sense.
Something is wrong with this picture. Applicable to all firms, irrespective of size, it makes practical business sense for law firms to treat lawyers and staff with the same care that they use in hiring them. If firms want to strengthen their performance, hiring the right person the first time for the right job will create more profits. The most effective tool to do that is to provide extensive education for that person to improve their skills and then involve them in the financial and organizational life of the firm so that they understand and appreciate their role and look forward to the future. Until law firm management "gets it," turnover and turmoil will continue to define how too many firms are operating today.

Ed Poll

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Ed Poll
Ed Poll

Personal Commentary
Earthquakes do happen. I have been rather cavalier about it and wondering why folks in hurricane and tornado country move—after all, earthquakes happen once every 25 years and hurricanes and tornados happen every year!
I've experienced the large earthquakes in Los Angeles in 1973 and 1994 with little concern; today, July 29th, our "little" 5.4 - 5.8 (CalTech yet can't decide on the number) startled me and really got my blood pressure to rise. It seemed that the house kept shaking for a long time (seconds can sometimes feel like a century), something dropped (still can't determine what it was) and my wife, coincidentally, was talking with our insurance agent on the phone, asking about earthquake insurance. As they were on the phone, the agent first experienced the quake and then, only seconds later, my wife felt it.
No major damage has been reported in Southern California. Still a bit shaken as I write this, there have already been as many as 27 after-shocks although I haven't felt them. But, life continues.
Many law firms experience major shocks—some sway and collapse; some sway and stay standing, frequently coming out even stronger. It's essential to have a recovery plan if your firm is going to remain standing after unforeseen upheaval.
Best wishes,
Ed Poll

Ed Poll
Ed Poll

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Ed Poll
Ed Poll

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