Several years ago I heard Wolverine World Wide’s CEO, Blake Krueger, give a speech at an Association for Corporate Growth event. During his speech he touched on a hiring philosophy that started at his former law firm, Warner Norcross & Judd, LLP and continues at Wolverine World Wide. It was premised on the theory of hiring people smarter than you are. Too often law firms hire underlings – individuals who do not demonstrate the potential to blossom into successors. If you hire individuals who demonstrate so much promise that those immediately above them in seniority feel threatened, you are doing it right. Young talent benefits everyone in a firm. It ensures that senior partners will have a viable exit strategy and associates talented enough to perform quality work for the firm’s best clients. It sharpens younger attorneys through healthy competition and it promotes a more vibrant work environment. So the next time you are considering a candidate, ask yourself “Will anyone feel threatened by this hire?” If the answer is “yes” you are on the right track.
I keep two beehives as a hobby. Late one evening early in the fall, well after dark, I went out to check on how they were faring in the cooler weather. I found that one of the hives had just been abandoned. The colony had for some unknown reason lost its most productive and important bee: the queen. I quickly pulled off three of the honey supers that I had intended on leaving for them to get them through the winter. I would retrieve the rest of the honey stores in the brood boxes and the remaining honey super when I returned from a two-day trip I was leaving for the next day. When I returned from my trip however, I found the rest of the hive being raided by the other hive and several other species of bees. There was no honey left to harvest.
I was struck by the similarity between my beehives and so many small to mid sized law firms that are reliant on one or a few big producers. When a hive loses its queen, the bees have a narrow window of 24-48 hours to replace their queen by feeding a substance known as royal jelly to new eggs. This causes the young eggs to develop into queens. The worker bees themselves cannot carry on a hive without a queen. They must instead rear some of their young to become queens. If successful, a new queen will emerge and the colony will continue under new leadership.
Unlike a beehive, a law firm has the ability to cultivate the development of its new leaders over a longer period of time. However, if a firm is not taking the appropriate actions for succession planning, it too is at jeopardy of losing its honey. The worker bees cannot become producers if the firm waits too long to develop its new leaders.
My former law firm is currently going through this same process as most of the strongest client relationships are concentrated in a small number of senior attorneys who are now retiring. In some instances the firm has been successful in transitioning client relationships to junior partners. In other cases, the firm may be at risk. Only time will tell how successful it will be at the conclusion of this transition.
As we wrote in an earlier blog entry, in order to ensure their continued prosperity, law firms need to hire lawyers with the characteristics to become successors to senior attorneys. Proper development begins with hiring the right people then continues with the development of these lawyers into leaders. It takes hard work, proper planning and focus. If your top producers leave the firm next year, are you prepared to save the honey? Have you been feeding the royal jelly to your associates and junior partners or are they just worker bees?
Often to their own detriment, most small to mid sized law firms follow some variation of two basic management models. Under the first model, one lawyer serves as Managing Partner and under the second model the management is run by a small committee of lawyers. Both systems are flawed but yet these models still account for a majority of firms.
The flaw in the first model is that the Managing Partner often tends to be the most or one of the most successful lawyers in the firm. Rather than keeping this lawyer actively engaged in the practice of law and the development of new clients, this model drags the Managing Partner into the administration of the firm. The Managing Partner must manage employee turnover, training, compensation, benefits and retention, associate recruitment and mentorship, partnership mergers and strategic referral relationships, partnership compensation, accounting and tax returns, the firm’s trust account, 401k and profit sharing plans, succession planning, budgeting and spending, firm functions, billing practices, malpractice lawsuits, filing systems, new software evaluation and implementation, the firm’s IT provider, website, marketing initiatives, sponsorships, charitable giving in addition to presiding over partnership meetings, employee meetings and firm meetings. Too often, the Managing Partner’s involvement in these matters can consume 50% or more of the Managing Partner’s time leaving the Managing Partner with little time for client representation and client development.
Often this model will include support staff beyond merely secretarial support. Firms often have an office manager who assists with a variety of management tasks but rare is the office manager who can attend to a meaningful amount of this work without the in-depth involvement of the Managing Partner. In addition, the office manager has to be a Jack-of-all-Trades, a generalist who is not afforded the ability to concentrate most or all of the office manager’s time in areas of greatest strength.
The Managing Partner may also employ various ad hoc or standing committees to assist with the workload. IT Committees, Marketing Committees, Holiday and Summer Party Committees and similar committees are commonly seen.
Even through the employment of such committees however, the Managing Partner must still spend time overseeing the committees and often the net drain on the firm’s economic engine can be greater than if the Managing Partner performed these functions independently.
Compounding the flaws of this system, the Managing Partner is often not compensated at a level that makes up for the sacrificed time. The Managing Partner’s book of business often declines during his or her term of office and can take years to build back up. The overall negative financial impact of this system on the firm is astounding. Yet it is the model that many, if not most, firms choose.
The second firm management model is that of a Management Committee. Instead of one attorney dedicating time to the management of the firm, the task is divided up between a small committee of lawyers. This model brings with it a tremendous amount of overlap as members of the Management Committee attend many of the same meetings and spend significant amounts of time conferring on various firm issues on an ad hoc basis throughout each day. In the end, it carries the same negative consequences as the Managing Partner model but spreads the negatives across three lawyers instead of one.
Increasingly, law firms are seeing the wisdom in hiring a non-lawyer business person to manage or consultants to assist in the management of the firm. Turning to those whose education and experience qualifies them to run or manage a business makes sense. There exist enough non-lawyer management solutions that a better managed law firm with higher net profits is achievable for a firm of any size. Allowing those who may have otherwise been managing the firm to concentrate on serving existing clients, mentoring younger lawyers and developing new clients is the better choice.