Wednesday, February 28, 2007

The Tail Is Wagging The Dog!

The Tail Is Wagging The Dog!

Backwards. That is how many people describe the way law firms operate and the billable hour. The tail is indeed wagging the dog. What I find very interesting is the direct link between low professional satisfaction (not just in hours worked, but in terms of the "type" of work that legal professionals do and the billable hour model.)

All of the best management books tell you that the best companies and managers legislate the ends, not the means for their people. This is how they get the very best out of them. I completely agree with this. After all, which boss would you rather work for a boss who tells you what to do? Or one who tells you what goal you have to achieve? What management experts say quite clearly is that you can NEVER get the best out of your people by legislating the means. . . it is just poor management. Consequently, an organization that does so is destined for mediocrity. What does this all have to do with the billable hour, you ask? EVERYTHING. The tail is wagging the dog, and the billable hour is to blame. Allow me to lay the foundation and you will see!

Everything is about cause and effect, right? When you do something, make changes to policy, choose to promote someone, it all has an effect on the organization. Well, implementing the billable hour model certainly did. In the 1960's the legal industry was full of general practitioners. Even those who had specialized expertise had a broad enough knowledge to be useful in a few areas. Prior to the institution of the billable hour in the late 50's and early 60's clients were buying outcomes . . . RESULTS. Then, those whom we served were legislating the ends and letting the attorneys use their talents to achieve the best result for the client. Then came billable hours . . . we started to sell units of time. Clients don't want time, they want results, but if all we are selling is time then what do you think is going to happen? All of a sudden, you are making it your clients business what you do with every bit of your time, and by the way, they will want everything done faster (I don't blame them! I don't want to buy time either). Cause: Billable Hour, Effect: Pressure to get it done faster, which is the cause of the super-specialization of attorneys who then go back to clients and claim that through their infinite wisdom they can get it done faster (though a 3x the rate). CAUSE: Super-specialization EFFECT: The dumbing down of the legal profession by way of over specialization. Like in manufacturing, in order to claim to be faster you get people who do the same task over and over again, suffering from intellectual atrophy and doing work well below their competence level just to tell the client they can go FASTER. They have commoditized themselves and made talent and skill irrelevant and Tail is Wagging the Dog! We have created a model where clients, who really want results, are forced to legislate the MEANS and not the ends because attorneys insist on billing time. They scour over your bills and start picking at what you do with every minute of your time . . . because you want to bill time . . your clients are running your business . . . . your clients are managing your people . . . and the Tail is Wagging the Dog!

What, then, becomes of the unique talents and skills that attorney might normally use to effect a winning result for a client? NOTHING! Why? Because you have to justify "value" to the client who is not present with you in 6 minute increments on a timesheet that is presented often months later. It is not only nonsense, it is simply ridiculous. As a firm that does not bill by the hour and gets results every time, I can tell you that the most value added activities we can do for clients are not ones that a traditional firm would consider "billable." Most attorneys do not want to do one thing and only one thing for the rest of their lives. Attorneys are people too, who find meaning in diversity of work, challenge of work, and the freedom to set free their talents to achieve "you can't get this anywhere" kinds of results. They are people who do not want to be slaves to a model that dictates what they do with every minute of their time, wondering if that 6-minute increment they are on right now will end up with a red line through it on the clients bill! That is no way to live. . . it is no way to manage and develop your people and it is certainly no way to run a business. Our well-rounded attorneys use every bit of their unique skills everyday and combine them in ways that get results for clients that cannot be found anywhere else. Clients do not want to buy our time. They want results. They do not care if we have a team meeting to strategize their case (they don't care if there are 5 attorneys in the meeting because we are not billing them for 5 attorneys x $400/hr). They care when the business deal is done, when their dreams come true, when the battle is won. And our people? They care that they are building an organization that cares about result, not tasks. One that let's its people leverage every unique bit of who they are to achieve a positive end for the client, and one who does not artificially force them to over-specialize for the sake of doing the same repetitive task again and again and again. It is time for the Tail to Stop Wagging The Dog! At Exemplar, this happy dogs wags its tail to the end of the billable hour tune! Wanna play?

Monday, February 19, 2007

Managing People: Taking a Close Look at Yourself!

As our firm is growing fast, there is a critical need to make sure that measures are in place to ensure that we are being good managers, not just that our new team members are performing. Why is it so important? (Other than the obvious). Well, if you think of it . . . it is the same reason that the logic for starting a firm like Exemplar is so compelling. How do you know there is a compelling problem that needs to be solved? Look around at what everyone in the marketplace is complaining about and writing about. As for Exemplar, you need only Google the words "billable hour" and see pages upon pages of clients and lawyers alike complaining about how it is the bane of their existence. Problem? Clearly! Solution? Exemplar. So by this time you are asking yourself what all of this has to do with managing people, right? It has EVERYTHING to do with managing people. The next time you go to the book store take a stroll down the business section and take a look at how many books are out there on managing people. Book after book (and, not surprising, person after person that I know) complains about how bad managers tend to be at managing people. Problem? Clearly! Solution? Well, here is what I propose:

1) We need to have an open and candid environment among our managers to talk about our strengths and weaknesses in our own management process and "look in the mirror" every once in awhile so that we can improve our management process.

2) We need to not only make sure that direct reports are empowered and performing, but also that our managers are not just managers because they stuck around long enough, but because they are GOOD MANAGERS. To me, this means trusting them and treating them like partners from the START rather than being skeptical and treating them like they are on trial. . . you have to be in idiot to think that your people can't feel the difference. The rules of psychology apply!Make success a self-fulfilling prophecy for your people. This is not a chicken or egg theory problem. Believe in your people FIRST and you get performance. If you don't, then at least you will know for sure that you got a dud! :-)

3) We need to sit down with each new person and set goals together with them. Then, we need to do everything we can do empower them, position them to stretch and leverage talents, and get the heck out of the way. At the end of the day, we want our people to have every reason to perform (and the only way to do that is to ask ourselves the tough questions . . NOT to look at them and wonder why they are not performing. . . I guarantee you, much of the time the answers become clear by taking a critical look at the management process) It is only when we do everything that we can that we can then look to our direct reports for accountability!

4) We need to pay close attention to each new person in order to identify the difference between each member's strengths, non-talents, and weaknesses. Do you know the difference?
-- Strengths: You are great at these. It may not be as obvious as it sounds, because someone who is not performing may be non-performing because they are not positioned by their employer to leverage their strengths. Are you? After all, I think it is our job as employers to make sure we position our people to leverage their strength before we can hold them accountable for performance. You can't expect better performance out of someone who sucks at something. With talents, it is our job as employers to look at each person and find out just how much we can get them to focus on these strengths, create stretch goals that are dependent on leveraging them, and doing what we can to support them

-- Non-talents: Often confused with weaknesses, these are areas where there is no natural talent or significant skill development, but where performance is average at best. If the skills need to be developed, this is where we set goals with them to work on the skills that they need to perform in a well-rounded job.

-- Weaknesses: You suck at these. The worse companies with the worse managers in the country have managers that always focus on people's weaknesses. They get you on these stupid "weakness improvement programs" which the employees absolutely dead. After all, most people NEVER want to be good at a weakness! This is a symptom of 1) POOR MANAGEMENT, and 2) an organization that is destined for mediocrity, because winning organizations focus on people with leveraged strength, not strong weaknesses. What kind of company do you work for?

5) We need to do everything we can to educate our organization that being a manager is a job unto itself, and that it comes with responsibilities, accountability, and tremendous power to influence the future of the organization. The largest Gallup study of profit centers ever showed that people do not leave companies, they leave managers!!! Does this surprise you? It shouldn't'! In big law firms, every time an associate walks out the door it costs them more than $250,000! On the other hand, the best companies in the world use good management as a tool to develop the future of the company in a way that makes them millions of dollars each year.

6) Finally, at the end of each day, we need to take a close look at ourselves, ask ourselves "did we do the best we can to position our people? How can we communicate better with our people? What can we do better to inspire each other to greatness? As managers, we have more power than we understand. Most have no clue what to do with it.

Those are the human capital goals to which I aspire. Ambitious? Certainly! Nonetheless, you never go higher than you aim. As Excellence is a core value that must never ring hollow in the halls of Exemplar, I will certainly do my part and expect our great people to to aspire to the same level of Excellence in management . . . a standard that, if set, will define the future of law practice as we know it.

Tuesday, February 13, 2007

Fixed-Pie Thinkers Need Not Apply

Some people go through life thinking it is a zero sum game! They have a fixed-pie mentality. It is like they are born this way . . . with fixed-pie-disease! Sometimes life throws these people little crumbs of bread . . . and they all stomp on each other like pidgeons to get a bigger piece of the crumb. Sometimes when I walk down the street I throw pennies and watch people with fixed-pie-disease rush to pick them up for fear that someone else might get them. Half of them are lawyers, I'm sure. These people don't know a thing about value creation. The one's I like are the ones who pick up my pennies while whistling to a tune, feeling like it was their lucky day. They understand value creation. You see, my penny wielding experience is proof that value creation exists and that the economy is chugging along in a healthy fashion. For me, the reason I throw the pennies is because it is worth more than a penny to me to either 1) watch people infected with fixed-pie-disease frantically chase my pennies as they bounce happily down the street on their ends, OR 2) enjoy that warming feeling of watching someone who appreciates value pick up my penny and feel lucky, if only for that moment! For them, it was clearly worth more than a penny to bend over and pick it up. . . it was almost the principle of it! Value creation is such a beautiful thing.

Every day infected lawyers go to work and fight over origination credits, pad their time sheets or try to out-bill their colleagues in order to get one of the "fixed" number of partnership positions at the firm. Firms get into bidding wars over the "fixed" number of graduates in the top 2% of their class (as if such a designation were the ONLY redeeming quality of significance to a firm). What are you working for? There are only 24 hours in the day . . . the game is "fixed" folks! You don't win in a competition where the prize for the pie eating contest is . . . well . . MORE PIE! That is, unless you are infected with fixed-pie disease. Somehow they just never learn. . . and so I will continue to watch them chase down my pennies much to my amusement (fortunately for them . . I mean my pennies . . . they will never be out of a job!) Life will continue to throw these poor souls crumbs of bread and the rest of us will watch them posture for their crumb slices as those of us who truly understand value create loaves of bread from air!

Monday, February 05, 2007

Changing Lives . . One By One . . Until We're All Done!

Several months ago I ended my blog post with a statement that people who think Exemplar is just about fixed pricing have missed the point. I went on to say that Exemplar is about changing lives, one by one, until we're all done. While many posts have been about the economic theory behind our pricing model, psychological barriers, and mechanics of fixed-pricing, I wanted to take a moment to talk about what we are really about. . . changing lives. This journey called Exemplar has changed my life . . . it has given me meaning in what I do as a professional. I am personally connected to the outcomes that we help our customers to achieve every day. I have not in two years counted my time, my "effective" hourly rate, and I actually have no clue how many hours a work a week. I know only one thing: I am truly happy and I would not trade a moment of this experience for anything. What does all of this mean? For me, this model is about giving professionals meaning in their work, valuing people, leveraging talents, inspiring our young, giving back, loving life, and doing well by doing good. At first, it may not be clear how connected the billable hour really is to the problems of our profession, but a closer look reveals that they are hopelessly intertwined. For instance, I see the following:

I see attorneys who's practice is all about going from crisis to crisis. They live their lives this way. It desensitizes them and it takes a crisis to get their attention. They let their personal lives reach a point of crisis before they pay attention to it . . . many of them getting divorced or falling apart altogether. These professionals either face enormous pressure to "Bill time" to meet quotas or they feel tremendous pressure to "fill time" by "billing time" when work is light because of the beauty contest that our industry has created by comparing the "spreadsheet" of numbers of each attorney against one another as means of determining their value to the firm.

I see attorneys who are so entrenched in counting their entire lives in 6-minute increments that they go home to their loved ones and think of time with their family as an "opportunity cost." These people know exactly how many billing units they are giving up by attempting to have a work life balance, and the very attempt to balance life is offset by a cloud of guilt and worry, knowing that they simply cannot beat the clock.

I see minority attorneys at large firms who readily state that they feel like "tokens" and are ONLY invited to client meetings when the client is of the same race. Since all attorneys are treated as fungible billing units, their unique value is not considered or leveraged. At the same time, the white-male partnership is ignorant of the fact that their own people feel this way and have yet to make meaningful headway in valuing diversity in their firms.

I see the most wonderful and talented female attorneys leaving the practice of law because of an inflexible business model that values "putting in more time" rather than "being effective for the client." At least these women are smart enough to vote with their feet and stand up for what they believe in when they realize that work-life balance is not and never will be a priority of their firms when profits, by definition, are increased by "billing day and night." This has been happening for YEARS and only reinforces that fact that firms are not addressing the real issue! They just keep hiring new young female attorneys to keep their "statistics" up so that they look good in the beauty contest!

I see young lawyers suffering from low professional satisfaction due to under-delegation, low client contact, competitive-individualistic work environments, little to no mentoring, and a partnership that is NOT grooming the next generation to be leaders of their firms tomorrow. The signal they are sending to their young is loud and clear . . . they would rather take their clients to the grave with them than pass on relationships to maintain viability of the firm in the future.

I see a traditional partnership model full of ego-driven, bottom-line oriented (to the exclusion of all else), untrusting professionals who have all but abandoned the next generation when it comes to professional development and addressing the needs of today's workforce. . . clinging on to a dying billing model that is based on a long-refuted economic theory. If you did not know the definition of "Lip Service" when you read this blog, look at a partnership. Nationwide, the partnerships have made promises to embrace diversity, be sensitive to work-life balance, address client-hoarding, mentor their people, and give their people a clear sense of what it takes to make partner, when they will be evaluated, and help them to achieve that goal. What has come of the their promises? Their lips are moving but nothing is coming out!

These are only a few of the things I see in our profession. What I see I do not like. I read a quote in the book The Firm of the Future that read "the people who get on in this life, if they do not find the circumstances they are looking for, they create it." and it really resonates with me. This is an appropriate month to quote Malcolm X, who said "If you are not a part of the solution, you are part of the problem." It is revolutionaries like these who make change by first believing it is possible, and then taking a stand with an uncompromising conviction to succeed in creating the new vision. Exemplar is about a new vision, founded on a faith in what we can be and do together, and grounded by our conviction, our values, our character, and our unending desire to do well by doing good. We are changing lives indeed . . . one by one . . until we're all done!