Last week I had a chance to sit down with Tomasz Wardynski, founding partner
of Wardynski & Partners,
based in Warsaw, which is now a firm of close to 250 people including 137 lawyers
with 22 partners, of whom 9 are equity and 13 are salaried or limited partners.

I
was looking for perspective on the Eastern and Central European markets, and
Tomasz was more than prepared to oblige.

“2010 will be very very tough,” he began.  “There is no more
inertia” remaining in the system from the end of the boom.  Therefore,
he opined, the challenge for senior management is to “change the partners’
attitudes.”   Tomasz was pellucidly clear that it was not optional
for partners to decide whether to go along.

“For the first time in my firm, the equity partners will need to make substantial
investments of capital.”  And if someone resists making the capital
contribution?  “Well,
then, they won’t be an equity partner, will they?  That is always their
choice.”  And:  “It’s really very simple:  You need
to make sure you have fewer people than there is work to do.”

Recently the firm has shifted to pure lockstep compensation of partners.  Previously,
there had been a small retention, which was then distributed in the discretion
of management, but they decided to end it because “it involved too much emotion: not
worth it.”  Progress through the lockstep is based on a subjective
evaluation of performance plus an expectation of 2,000 hours/year, “which is
not very demanding, after all.”

“How do you train people?”

“Well, this is an issue because the universities are not very good at it.  It’s
a combination of watching, lectures, and the firm’s own ‘development center.'” Training
clearly represents a substantial investment by, and commitment on behalf of,
the firm.

The path to partnership is 8 to 10 years, during which associates are paid
based on merit:  “Some of them make more than limited partners.”

How does he feel about media coverage of the legal industry?

“Rankings are put together by smart media outlets to play to the vanity of
lawyers.”  And, he added in emphatic words, those rankings are extremely
detrimental to the profession.  “Perhaps the only media phenomenon that’s
more destructive than rankings is the American Lawyer profits-per-partner numbers.  This
is simply awful; they have transformed the profession,
and they claim innocence.  Preposterous.”

Clearly, Tomasz believes the AmLaw PPP numbers are not only a caustic influence
on behavior, but borderline fraudulent.  The problem with the PPP numbers’
accuracy?  “Running
a law firm is a cash business.  But if I want to inflate profits by accruing
some expenses and some revenues, I can come up with any numbers you like.”

Tomasz expressed a strong belief in highly professional management of his
firm.  “Five years ago we started introducing professional management
systems into the business–human resources, information technology, knowledge
management, and coaching for all lawyers.”  Surely not all lawyers,
I interjected?  “Well, yes, all.  And we have a very strong
CFO who manages our finances extremely closely.”

What’s your biggest management challenge in this environment?

“The hardest problem to deal with is people who are very talented but who
don’t have enough work to do.  That’s the hardest by far.”

What else are you dealing with that’s new?

“Last year we decided not to pay out profits from the firm above the level
of partners’ standard draw.  This is a protective measure.”  And
how long will you keep this in place?  “I foresee a downturn in
the shape of an ‘L,’ not a ‘V.'”

Let’s step back, I suggest:  Why did you decide to start the firm?

“I had no choice but to start the firm.  I had clients needing to
get deals done.” 

And did you envision its growing so large?

Without missing a beat:  “Yes.  We were clearly in the right
place at the right time.”

What other issues are you facing today that are new?

“The next issue will be whether clients can pay.  The challenge
of course is that you can’t really protect yourself because you can’t demand
payment up-front, and you can’t sue clients.”

What else?  How about keeping the talent pipeline flowing?

“Yes, absolutely!  You cannot stop recruiting, so all you can do
is to share the risk with people, to the extent they can bear it.  This
recession may last a long time.”

Other worries?

“That state intervention–not just in Eastern Europe, but in the
US, the UK, conceivably even Asia–may suppress investment and entrepreneurship.  The
very notion that some institutions are ‘too big to fail’ is monstrous.  Failure
is what some of these banks richly deserve; they have it coming to them.  The
namesake of your site would be apoplectic.”

How’s the regional CEE environment?

“Poland actually has +0.8% growth this year; it’s not great, but it’s
greater than zero.

“Hungary has been suffering for two years.

“Latvia is very bad.

“Ukraine:  Disaster!”

But overall Tomasz remains an optimist: 

“Life is strong, and it will
continue.  The economy will be boiling again in places where it seems
unimaginable today. 

“What really counts at this moment is discipline.  People have
to be mobilized.  You cannot lose…[he appears to be momentarily, and
uncharacteristically, searching for a word].  You cannot lose speed!

“Even the strong-willed, independent, and autonomous partners have to believe
in central management in this environment.  It’s too dangerous not to.   Not
only our livelihoods, but the welfare of our families and our children are
at stake.

“Life is not a fairy-tale.”

Tomasz

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