January 2006 Archives

I'm on the New York State Bar Association's "Committee on Law Practice Management" and, for the record, I wanted to invite all and sundry who might be in the New York area to our annual meeting Thursday, January 26, 2006, from 1:00—5:00 pm at the Marriott Marquis in Times Square (1535 Broadway @ 45th Street, 7th floor; and I expressly disclaim any responsibility for the selection of venue).

This year the program is titled:  "In Case of Emergency: Emergency Planning and Disaster Recovery for the Law Firm Everyone Needs a Plan," and will address that issue from the perspectives of human resources, finance, records, IT, and physical facilities.  More info here.

Seventeen years before The Wealth of Nations (1776), Adam Smith published his Theory of Moral Sentiments (1759), nowadays a relatively neglected work which, to my mind, is nearly as astute, deserves far greater current recognition, and which not-incidentally puts pad once and for all to any charge that Adam Smith was unsympathetic to human nature or cavalier about the consequences of his theories for individuals.  Merely contemplate the book's very first sentence if you doubt me:

"How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it."

One reviewer nicely summarized its relationship to Wealth of Nations as follows:

"To truly understand Adam Smith's economic masterpiece "The Wealth of Nations", one must understand its moral foundation. Without Smith's essential prequel, "The Theory of Moral Sentiments", the more famous "Wealth of Nations" can easily be misunderstood, twisted, or dismissed."

So, to today:  Harvard Business School's Working Knowledge has a piece positing that the Theory of Moral Sentiments was the original intellectual precursor to what we all know today as Behavioral Economics.  [The HBS WK article refers enticingly to the primary source, "Adam Smith, Behavioral Economist," published in the summer 2005 edition of The Journal of Economic Perspectives, but the troglodyte JEP keeps its online archives under severe lockdown—trust me, I tried.]

The premise of the HBS piece, "Adam Smith, Behavioral Economist" is that Moral Sentiments and Wealth of Nations, which Smith never sufficiently inter-connected during his own life, nevertheless together constitute the intellectual foundation of how human psychology (including incentives, preferences, risk-aversion, and the endless struggle between immediate and delayed gratification) affect how people behave in markets:  In other words, Behavioral Economics.

"Smith's two main works—The Wealth of Nations (WN) and The Theory of Moral Sentiments (TMS)—show him to be a brilliant economist and arguably a brilliant psychologist, but he was never fully able to bring the economics and psychology together."

One of the primary arguments of TMS is that human behavior is driven by passions—fear, desire, and greed among them—but that these passions are moderated by an "impartial spectator" looking out for the individual's long-term interests.  And there's apparently something to the theory:  Using it, the Harvard professors designed a "commitment savings product" for banks in the Phillipines that required customers to sign a contract prohibiting them from withdrawing funds until a certain amount of time had elapsed or a level of principal value had been achieved.   According to them, this "had a large and significant effect on clients' total savings," resulting in increased home purchases, educational investments, and small business-building.

But it's when we come to Smith's bedrock belief,  intimated in the opening sentence above, in the importance of trust, concern for fairness, and reciprocity, that the linkage of human psychology to market functioning becomes most clear.  Smith believed that those values become more, not less, important as markets evolve.  For example, with many of the professions, most assuredly including our own, clients cannot monitor "quality" in real time—and the same goes for doctors, auditors, and financial advisors.  So trust and reputation stand in where cold economic calculus fails.

Likewise with corporations:  Shareholders must at a fundamental level trust management to operate in the shareholders' interest since the range of variables over which management has control or influence is far too vast to specify contractually (and such a hypothetical specification would also be obsolete the moment it was completed).

Finally, Smith recognized, and placed great value upon, "the aerial coin of praise," and social and professional status, as critical motivational ingredients.  Reputation ("the aerial coin") is the flip-side of trust; one trusts those who have earned their blue-chip reputations.  And Smith would have insisted on the most scrupulous care and feeding of reputation, if for no other reason than the dire consequences attendant upon its destruction.

More currently, consider this (emphasis supplied, hat tip to Larry Ribstein): 

"The market is capable of levying harsh penalities [for financial malfeasance] on its own. Recent evidence comes from Karpoff, Lee and Martin, The Cost to Firms of Cooking the Books (July 25, 2005). Here’s the abstract:

"We examine the penalties imposed on all 585 firms that were targeted by SEC enforcement actions for financial misrepresentation from 1978-2002. Consistent with the view that penalties are small, monetary fines were imposed on only 7% of the firms. A larger fraction, 36%, faced class action lawsuits from investors. Overall, however, the penalties imposed on firms through the legal system appear to be small, as the unconditional mean total of all legal penalties is only $14.3 million per firm.

"The penalties imposed by the market, in contrast, are huge. Our point estimate of the reputational penalty - which we define as the expected loss in the present value of future cash flows due to higher contracting and financing costs - is over twelve times the sum of all penalties imposed through the legal and regulatory system.

"For each dollar that a firm misleadingly inflates its market value, on average, it loses this dollar when its misconduct is revealed, plus an additional $2.47. Of this additional loss, $0.18 is due to expected legal penalties and $2.29 is due to lost reputation. This evidence belies a widespread view that financial misrepresentation is disciplined lightly. To the contrary, reputational losses impose substantial penalties for cooking the books."

So next time you're cynically thinking that money is the only motivator, try putting a price on your reputation; Smith would have.

Indiana University School of Law at Bloomington—where my good friend Prof. William Henderson teaches—will be hosting a symposium on "The Globalization of the Legal Profession" Friday, April 6, 2006.  I'm pleased to report that I will be one of the panelists.

On the agenda:

• Law Firm Strategy in a global world, including "What management structures are necessary to govern a global law firm with offices on multiple continents?"
• Relevance of Geography, including "Are some locations, based on longitudinal growth patterns, emerging as truly international legal cities for firms attempting to fit the transnational model?"  Or, phrased differently, why are more firms hoisting their flag in New York, London, and Hong Kong, despite those cities' having among the highest operating cost structures on the planet?
• Convergence, including:  "Can transnational law firms successfully balance the competing goals of higher profitability and professional autonomy? To what extent is the practice of law, and identity of lawyers, converging around certain practices and values? If so, are those practices/values those characteristic of the US legal profession?

The conference will be in a somewhat hybrid format, blending the academic with the practical and hands-on, and all papers and presentations will subsequently be published.

If anyone is interested in attending, please email me; I can testify that hospitality at the Law School is of the highest order.

Last week I met the head of Bloomberg's relatively new "Law" initiative, aimed at putting $1,500/month Bloomberg terminals on the desks of senior partners and general counsel. 

Before I describe what "Bloomberg Law" is about, I invite you to take a look at their brand-new offices (between 58th and 59th, Third and Lex), which are a visual and experiential delight unmatched since "Star Wars"—with the distinction that these spaces actually function.

As we all know, Bloomberg is already The Name Brand in financial intelligence, with over a quarter of a million subscribers to their core business and financial market information resources.  Bloomberg has also long since gone multimedia, with Bloomberg TV and Radio, a suite of magazines and publishing resources, and, lately, podcasts.  So what does Bloomberg Law offer?:

• a comprehensive set of legal, regulatory, and compliance databases;
• news, both real-time and archival;
• rankings;
• company and biographical information;
• legal research tools; and
• of course, all the rest of Bloomberg's financial news, data, and analytic applications.

The head of Bloomberg Law, Constantin Cotzias (a Brit who practiced at Denton Wilde Sapte and elsewhere) is unapologetic about the price of the terminals and unabashed about the scope of Bloomberg Law's ambitions compared to competitive offerings:  "Well, if you want an Audi, you should buy an Audi, but if you want to go nought-60 in 3 seconds, you really need a Ferrari, don't you?"   So what exactly can this Ferrari do for you?

For the co-chair of Orrick's New York bankruptcy group, Lorraine McGowen, it enables her to research and discover companies potentially on the brink of financial meltdown, identify their bondholders and unsecured creditors, and tailor a custom-made pitch letter drawing from (say) the content of actual loan agreements retrievable online, as well as more sophisticated tools such as "relative value" rankings—Bloomberg's rating of the operational strength of a firm vis-a-vis its peer group.  In keeping with Bloomberg's high-quant-quotient roots, here are some of the tools available to analyze likelihood of default:

"Specify whether you want to solve for the Altman Z-score, the Double Prime Z-score or the Hillegeist Z-score. [Prof. Edward] Altman [of NYU's Stern School of Business] developed his original Z-score for manufacturers. The Double Prime model is more suited to nonmanufacturing companies, while the Hillegeist formula generates a probability of default in addition to the Z-score."

Westlaw, this ain't.

For Brandon Becker, co-chair of the securities regulatory practice at Wilmer-Hale in Washington, it permits him to analyze trading patterns in a security tick-by-tick and view breaking company news surrounding those patterns, as well as to see how other companies in the same industry were trading simultaneously.  Armed with this information, he obviously has a far clearer view of whether insider trading is something to be concerned about.  (Obviously, the same tools arm both plaintiffs' and defense attorneys.)

I intend to stay in close touch with Constantin; for people who need bleeding-edge tools, I for one would put my money on Bloomberg without looking back.

Regular readers will know that I'm a firm subscriber to the Law of Unintended Consequences, which is also why I try to exercise consistency in analyzing "dynamic" and not just "static" effects of a proposal.  Clarification:  The "static" effect of Rule X is simply what it says.  "Mandate airbags in cars," for example.  And the static result will be that new cars will come with airbags. 

The "dynamic" effect is how either people's behavior (most likely) or the pertinent environment (less likely, but worth consideration) will change as a result of the new mandate.  With all-but-universal airbags, we now know that drivers perceive the increased margin of safety as license to drive faster or otherwise less cautiously (knowing the consequences of an accident have been, on average, reduced) with the ultimate result that vehicular injury rates remained essentially unchanged—while accidents produced less serious injuries, there were more of them.

A second core, or at least default, belief of mine is that Disclosure Is A Per Se Good.   One reason I gravitated to practicing securities law is that, conceptually at least, I believe the (US) securities laws can be summed up as follows:  "You have permission to do anything, so long as you fairly disclose what you're doing."  (I will not insert any editorial commentary here about whether Sarbanes-Oxley graffiti'ed over that pristine canvas, but will leave it to those who still do securities law and commentary for a living.)

Which brings us to the SEC's newly announced initiative to require complete, thorough-going disclosure of all forms of compensation to CEO's and other top corporate officers—and to do so, for a change, all in one place, that place not to be inscrutable proxy footnotes.

A value will have to be put on everything from stock options and the use of corporate jets to Metropolitan Opera tickets, skyboxes, maid service, and the ugly new duckling on the block, "gross-up's" to pay taxes on all these perks.  As The New York Times' Joseph Nocera puts it:  "All in all, it's going to be a pretty sickening sight."

And we're talking real money here:

"According to Lucian A. Bebchuk, an executive compensation expert at Harvard, from 2000 to 2003, the total compensation of the five best-paid officers of all publicly held companies amounted to 10 percent of corporate earnings."

Ten percent!  You can argue methodology until the cows come home, but whether it was 8 or whether it was 12, it is to my mind "highly material." And: Ethically unconscionable, socially divisive, morally corrosive, economically indefensible, and (by rights) personally humiliating.    Then again, as Graef Crystal, "grand old man of executive compensation critics," observes, "it turn[s] out that when somebody is hauling in $200-million, he's not embarrassable"—even though the current ratio of CEO pay to that of the average worker at the same company is 400:1.

Litany of the caveats:

• No one should gainsay true entrepreneurs outlandish wealth:  Bill Gates, Michael Dell, and our own Mayor Mike Bloomberg deserve everything they've got.  We need more of them, not fewer.
• "It's a free country," and some combination of shareholders, Boards of Directors, and institutional investors could slam on the brakes; the fact that they have yet to do so suggests at least as an initial proposition that the competition for top corporate officers is not a completely malfunctioning marketplace.
• And most importantly, it is not the job of the SEC, Congress, Joe Six-Pack, or yours truly to enforce what might be our own views of decorous behavior on top executives.

Rather than view with alarm (since the facts speak for themselves), and rather than propose any reforms or remedies (see bullet #3, supra), my aim is simply to shed some light on how we got here.

We got here, largely, by trying to shed light on corporate compensation practices in the first place.

Remember back in 1993 when Congress eliminated the tax-deductibility of executive salaries in excess of $1-million?  Two things happened:  First, this added rocket fuel to the growth of stock option grants; but second and even more interestingly, $1-million/year on the W-2, rather than becoming a ceiling, became the new floor.

I fear we're about to re-run the same movie.  Under the new rules, not only will you and I learn that GE is paying for Jack Welch's Red Sox tickets, so will every other current or former CEO.  And if history is any guide, anyone in that club still suffering the indignity of buying MLB tickets himself will be on the phone to their comp. committee in about 30 seconds.  Full disclosure, meet the law of unintended consequences.

Now, what has this to do with law firms?

The American Lawyer's profits-per-partner ranking, is what.  At this point in the industry's trajectory, my own view is that TAL's PPP figures (and all their other financial-performance metrics) are simply a given.  Rightly or wrongly, like them or loathe them, view them as invasions of privacy or refreshing beams of sunlight, we are living with them:  If you don't like it, "Get over yourself," as we say in New York.

That does not mean, of course, that they are without consequence.  While the competitive one-upmanship of our friends (and clients) in the Fortune 500 may be unseemly in the extreme, we are not immune from jealous glances.  Just as corporate compensation packages will be different before and after mandatory disclosure, so our profession's compensation structures are not merely reflected in the inanimate and passive mirror of the TAL figures:  Over time, that mirror profoundly influences the landscape it takes in.

Your firm is dedicated to client service as one of its pre-eminent goals, if not the absolutely highest priority, right?

Not so fast.  Do you have a lawyer serving full-time as "Client Services Advisor," serving as an ombudsman on behalf of the firm's clients and responsible for creating and overseeing more than 60 "client service teams" (and counting)?  Akin-Gump does, in the person of Iris Jones. 

Swell:  What's a "client service team?," you're asking.

Essentially, it's a tool for formalizing and institutionalizing collaboration among the various lawyers serving Important Client X.   An example will aid understanding even better than a description.  Here's how the "Technology-Copyright-Internet" group works:

"The TCI attorneys participate in client service teams with Akin Gump’s patent attorneys, litigation attorneys and other practice groups. This collaborative commitment to client service enables Akin Gump to assist in providing clients with comprehensive counseling in all areas of IP and overlapping areas of the law."

The goal is to approach the client relationship from the perspective of the client's business (and its concomitant legal needs) rather than from the perspective of the firm's legal expertise (which may or may not be germane to the client's business).    My friend Bruce Marcus also describes this approach.

The latter approach—starting from the perspective of the firm rather than the client—is conceptually just plain mistaken. 

In practice, what does this really mean? 

• First, as noted, it requires genuine collaboration.  Teams need to be assembled and re-assembled as the client's business and legal posture changes.  Now the team may need some focused litigators; next quarter an offshore tax expert; and the quarter after that an employment maven.  Iris Jones' job is to stay on top of all this and make sure that today's "A Team" doesn't become tomorrow's "Irrelevant Team." 
  Does this mean partners need to "buy in" with their heart and soul?  Check.
  Yes, this can be the hard part:  We all know that collaboration is not in the law school curriculum.  But never underestimate the power of self-interest to trump training.  As one Akin-Gump partner put it:  "In an increasingly competitive environment, the client service team has been invaluable in [strengthening] our relationship."
• Second, it requires plain old information-tracking.  Call it "Client Relationship Management" if you like, but lawyers must have one centralized repository for everything germane about the client's legal needs and the history of its relationship with the firm.  We've all had the experience of phoning (say) the cable company to ask a service-related question or inquire about a bill, only to find ourselves forced to explain everything from square one with a succession of several different people.  As uninspiring as this is with the cable company, it leaves a positively ghastly impression coming from a supposedly sophisticated law firm.
• Lastly, it means the client service team has to have a vision of where the client fits within the firm's strategic plan—a vision which is both clear and nuanced.  Lest I be accused of throwing around the phrase "strategic plan" loosely, I'll try to define it:  "Strategic plan" in the sense I mean it is not the 3- or 5-year document delivered from the mountaintop and promptly shelved for terminal verboseness or immediate irrelevancy (the latter fate being nicely described by the epithet "OBE," or "overtaken by events").  Rather, a strategic plan in this sense is a continuously evolving awareness of the fit between (i) the marketplace's specific demands; (ii) the firm's ability (or short-term lack thereof) to meet those demands; and (iii) how the firm can develop to most closely align its capabilities and offerings with the evolving market.

Note the focus throughout is on "the client" and "the market" rather than "the firm" or "the lawyer."

We have all known in our heads for some time, even if we have not acted on it with our hearts, that excellent legal skills are merely the price of admission in today's globally competitive market.  That means they cannot pretend to be your distinctive calling card; they're table stakes.

What could provide an enduring distinction, on the other hand, is responding to your clients' business (and, as a follow-on thereto, legal) needs with the same alacrity and professional focus the client itself would apply internally.  Client service teams may not be the only route there, but they surely start at the right end of the service spectrum.

End of an era?

Peter Cornell's decision not to stand for re-election as global head of Clifford Chance certainly feels that way, although as we've argued before, his timing is impeccable. 

Now comes an interview with The Lawyer in which Cornell reprises his five-year tenure and concludes with some words of advice for his (unchosen) successor.  As regular readers know, I subscribe to the theory that individuals forge events, not that events forge individuals, so it's worth pausing to reflect along with Peter at the transformations he's wrought at Clifford Chance.   (Full disclosure:  I've met Peter in person and have the utmost respect for him both as a managing partner and as a human being.)

First, let's review the bidding:  When Cornell took the helm at Clifford Chance in 2001, the firm was, to say the least, fractious and divided.  The recent merger with (acquisiton of) New York's Rogers & Wells left the firm over-indexing on its share of nettlesome and truculent personalities, and the disconnect between Rogers & Wells legacy eat-what-you-kill compensation system and Clifford Chance's UK-heritage lockstep was to prove an expensive, irksome, and distracting mess until pretty much this past year. 

Add to that simmering turmoil Clifford Chance's triumphant-at-the-time swoop in 2002 to gather up many of the people left on the street in Northern California when Brobeck imploded—a classic case of buying in at the top—and Cornell's hands were full.  Nor should we forget the revolt of the Italian partners in 2002, or the infamous leaked memo from associates about the pressure to produce billable hours.  That episode, perhaps more than any other, encapsulates the pressures on Cornell, so it deserves extended treatment:

"The associates' memo - dubbed 'Paddinggate' - was a particularly difficult moment. The memo, which was leaked onto the internet in October 2002, exposed US associates' morale as rock bottom. Even more damagingly, it said that pressure to bill could have led to a situation where bills were being padded. There has never been any suggestion that this was actually happening, but the mere mention of it got the world's business press salivating.

"Arthur Andersen had collapsed just a few months previously, and The Lawyer has spoken to a series of partners who candidly say that many felt they were facing something similar. Most admit that Cornell was admirably calm under extreme pressure.

" "I appreciated very early that we had to take this seriously," confesses Cornell. "It didn't matter that it wasn't a real story: this had legs and could do the firm a lot of damage. We had to close it down.""

So those were the challenges; what is Cornell's legacy?  (Understanding, of course, that there's no such thing as a "legacy" in a people-intensive and people-driven business; there's only, shall we say, a platform going forward from which to attract and retain the right people.)

First of all, Cornell has struck through the Gordian Knot of lockstep vs. eat-what-you-kill compensation with a partnership-approved referendum late last year to establish the principle of three different equity ladders for different global jurisdictions (reflecting inherent profitability differences), and which also puts partners on a triennial evaluation cycle, where they can be "frozen" at their current point-score or moved down and even accelerated to annual reviews.

Note that this was approved after a 2003 failure to get approval of another modified-lockstep proposal; so "coming back to the well" was not risk-averse behavior.   Cornell's reaction to criticism?:  "Criticism? It bounces off me pretty much."  Next time you're considering your own suitability for managing partner, consider this remark.

And the numbers should speak for themselves:  CC's PPP is projected to hit £850,000 this year ($US 1,515,000) vs. last year's £710,000 ($US 1,265,000).

But ultimately, the question of interest is how did Cornell go about achieving what he did?

It comes down to people. 

"Cornell still seems most comfortable talking about the intangibles. If anything, he seems a natural senior partner rather than a managing partner. Not for him the sliderule approach to cost per lawyer and profit margin; rather, he prefers to talk about whether the partnership is… well… happy."

Care to dimensionalize this?

"In a one-on-one situation he's very good," says one partner. "He doesn't get into details. He usually finds something of interest to you and you'll feel good about having the conversation. Pete's style is to absorb other people's views and not to indicate a view of his own."

How many times do we pay obeisance to the bromide that ours is a people-centric profession, but then fail to acknowledge the importance of the viewpoints of our people? Cornell is a counter-example.

So, after having taking Clifford Chance from, if not the rocks, at least the gathering storm, what are Cornell's parting words of advice to those who are, or aspire to, managing partner?  Pithy:

• Focus on the big things
• Extend your network—down to junior partners and associates
• Delegate
• Be consistent
• No bullshit
• Be thick-skinned

To those who still feel called to the challenge, all rise.

Courtesy of The New Yorker:

This is not to either recommend or condemn discounts for valued clients—that's a topic for another day!

The New Jersey Law Journal, with permission, re-published a recent post about Allen & Overy's new "managing associate" and "of counsel" tracks.  Many thanks to Ron Fleury, their nifty editor.

"Adam Smith, Esq." is honored and delighted to host Blawg Review #39; I consider myself in excellent company given the distinguished and talented people who have hosted Blawg Review in the past.  

This week we celebrate:

Epiphany:  n.   1.  From the Greek epiphania "manifestation," often referring to the appearance of a divine being. Christ's appearance to Paul on the Damascus road was an epiphany. The word is used to describe the first appearance of Christ to the Gentiles in the visit of the Magi to the baby Jesus (Matthew 2:1-12), an event celebrated January 6.
2. Epiphany in fiction, when a character suddenly experiences a deep realization about himself or herself; a truth which is grasped in an ordinary rather than a melodramatic moment.

The most famous representation of "The Epiphany" in art history is doubtless Giotto's (more formally, Giotto di Bondone:  Italian, Florentine, 1266/76–1337) from New York's own Metropolitan Museum of Art:

My wife, who majored in art history at Vassar, has indelibly memorized this educational little ditty placing Giotto in art-historical context:

"Giotto, Giotto, Giotto-Giotto:  Renaissance
He paints in the morning and he paints at night;
If it's a Giotto it'll turn out right.
Giotto, Giotto, Giotto- Giotto:  Renaissance."   

Of course, here in New York City we celebrate the end of the 12 days of Christmas with our own tradition:  The annual rite of The Ceremony of the Mulching of the Christmas Trees, jointly supervised by the NYC Sanitation and Parks Departments:

Before we begin our cyberspatial tour, like all accomplished explorers, we need to be well-equipped.  To that end I commend to you Google Pack, a handy-dandy Swiss Army-knife compilation of everything the Prepared Scout of virtual-space needs, from Adobe Acrobat and Firefox to anti-virus and anti-spyware armor.

Let the tour begin!

Alito Fireworks

"Adam Smith, Esq." is resolutely non-partisan and apolitical.  That said, without question the best-quality daytime drama scheduled for this coming week will be the nomination hearings for Judge Samuel Alito to SCOTUS—they promise an extremely high entertainment-value quotient, and I for one intend to Tivo them in their entirety.  But for commentary and observation, I'll turn to those who plow these fields for a living, starting with the newest addition to the Law.Com "Inside Opinions:  Legal Blog Network," the consummately qualified Howard Bashman of How Appealing.

The "Epiphanic Moment" ("EM") from this post is Howard's intimate knowledge of the witnesses who will be testifying in favor of Alito this week: "I know about all of these judges as a result of having handled numerous appeals in front of the Third Circuit over nearly the past sixteen years and having clerked for a judge serving on the Third Circuit for two years before that. Here are my quick insights..."

Our friends at Law.Com have their comprehensive "A Field Guide to the Alito Confirmation Hearings."  You were expecting, perhaps, a red hawk pair nesting above Fifth Avenue?

Meanwhile, over at the Electronic Privacy Information Center, they've a remarkably comprehensive complete copy of a conference report from the Seeley G. Mudd Manuscript Library at Princeton University—the conference in question taking up "The Boundaries of Privacy in American Society," chaired by none other than then-Princeton-student Samuel Alito, who was responsible for putting the conference together, doing the research behind it, and preparring the "remarkable summary that accompanies the final report."   This should have the C-SPAN junkies going back to their Red Bull's for stamina.

NSA Surveillance Fireworks

Also on the late-breaking political newsfront, we have the story that our very own NSA ("No Such Agency") has developed an expertise in data-mining that Wal-Mart would envy, but rather than applying it to how our household purchases index on Crest and Pampers, they've applied it to determine how many degrees of separation lie between you and Osama.

Jay Leno has his own take on this revelation:

According to a new poll, President Bush's approval ratings are on the rise. A lot of these polls are phone polls and people were worried Bush is listening in.

Kierkegaard Lives, a new blog to me, provides a "wire-tapping link repository" aiming to constitute one-stop-shopping for digerati running down primary sources on this. 

For the attention-span challenged, yesterday TalkLeft uncovered a Congressional Research Service report questioning the NSA/White House's authority.  EM from the summary:

"The 44-page report said that Bush probably cannot claim the broad presidential powers he has relied upon as authority to order the secret monitoring of calls made by U.S. citizens since the fall of 2001."

For the record, I do not subscribe to the cynical view of this imbroglio that it's merely a matter of whose ox is being gored—that if you're an upstanding American citizen you have nothing to fear from the snoops, so what's your problem, buddy? Rather, I view the debate as the latest incarnation of the timeless, "no permanent solution" tension between human liberty and free and open societies, and the reality that "the Constitution is not a suicide pact."

Lawyers Behaving Badly

This topic can only be introduced by:  "Where oh where to begin?!"

f/k/a reports on a lawyer who:

"... gets three months in jail for being one of the two major actors in a complicated scheme to steal millions of dollars [$25.6-million, in fact] from people he himself describes as "decent, hardworking people looking for an honest way to resolve their debt issues.""

How is this possible?  Maybe the judge was swayed by character witnesses, or the lawyer's own questionable character:

"Attorney Lisa B. Shelkrot came up with the usual defense gobbly- gook, including: "What stands out [in letters from prominent members of the community] is his selflessness and commitment to service." "It was a fear of destitution, not a high flying lifestyle ... that lead him to this.  Sinnott had a "deeply and tragically" flawed personality."

My EM question to Ms. Shelkrot:  Are you yourself buying that for a second?

And since when does being "flawed" exempt you from responsibility for the consequences of your premeditated actions over a period of years?

We don't apply this standard in dealing with children or dogs, and it's not time to start with grown, bar-passing adults.

More seriously, Jack Balkin asks whether it now "seemed as if there was no legal proposition, no matter how outlandish, that you couldn't get some prominent lawyer these days to defend."  Answering his own question, he writes:

"Lawyers have always, to my knowledge, been willing to come up with clever and ingenious arguments for the interests they represent."

But he's only warming up:

"Put another way, we have all known for many years that lawyers are rhetorical whores; their job is to confuse, obfuscate, and make unjust and illegal things seem perfectly just and legal, or, if they cannot quite manage that feat, to muddy up our convictions sufficiently that we conclude that it's a close case. There is nothing new about this."

"Nothing new?" Meaning it's essentialy an ineradicable and hopeless condition? Well, not quite. EM moment in bold (my emphasis:

"Lest I be misunderstood, I do not mean to say that law and legal doctrine counts for nothing, and that lawyers have no independent role to play other than as political cheerleaders for one side or the other. Rather I mean to say that the law always needs help from other sources in political culture if it is to do its job appropriately. The rule of law, I would insist, is not a purely legal or professional ideal-- it is a political ideal."

TalkLeft decodes what motivates outstanding federal prosecutors to go to the defense side—and questions whether they ever really make the transition.  "The real problem is most of these former high-level prosecutors can't make the mental shift. They don't have it in them."   Or, as former Deputy Attorney General James Comey puts it in a quote so rich you couldn't make it up (EM in bold):

“You go from being paid to do the right thing every day, from having the freedom never to make an argument you don’t believe in, to being a defense attorney, where you are duty-bound to make the best argument you can,” he told the New York Law Journal. “I have a tremendous respect for people who do defense work, and it’s not lying, but in a private moment, sometimes, you say, ‘Geez, this is a bunch of baloney.’”

And you really  anticipate even a soupcon of "zealous representation" on behalf of a criminal defendant from Mr. Comey?   TalkLeft certainly doesn't:  "Pathetic...irksome beyond description."

For a moment's worth of comic relief, the always-reliable Walter Olson at Overlawyered chronicles a Dallas restaurateur who sued the Dallas Morning News over a review of his restaurant, "Il Mulino"—specifically, so it would appear, over the newspaper critic's take on Il Mulino's bolognese and vodka sauce.  I am pleased to be able to report that the matter has been settled without admission of much of anything, it seems, but with a promise of a second review from the newspaper.  "And you're ugly," perhaps?

The serious message here is simply, Who comes off looking worse?  The benighted restaurateur who exponentially increased circulation of the critical review by his action, or the lawyer who took good money from him to help?

Craig Williams, another Scottish lawyer with a penchant for economics, regales us at May It Please the Court with Major League Baseball's claim that it "owns" all baseball statistics.  The party offending MLB's expansive notion of the territorial reach of its intellectual property is one CBC Distribution & Marketing, a fantasy baseball game operator—dependent for the reality of its fantasy upon real-world baseball statistics.  EM of the post:  "Next thing you know, they'll be charging the fans to quote statistics to one another."

Mauled Again kicks off 2006 with a confident prediction:

"The culture of corruption, of bribery, of putting one's own selfish interests above those of the public one is required to serve will also trigger yet another easy-to-predict Top Ten tax story of 2006. At least one politician, one celebrity, and one lawyer will run afoul of the tax law by failing to file a tax return or by failing to pay income taxes."

What's to be done?   You might try starting young:

"It is a challenge getting across to law students the point that when they enter the profession, and even as law students, they are subject to a higher set of integrity standards than those that apply generally to citizens of the nation."

Put that on your refrigerator.

On a less consequential, but equally depressing, note, Matt Homann of "the [non]billable hour" reports seeing a serious-minded piece of advice that clients should not talk to their lawyers until the deal they're doing is completely worked out.   What on earth would prompt such advice?  "Our predominant business model"—the billable hour.

In contradistinction to the billable hour, Greatest American Lawyer advocates serious, candid discussions with clients about budgets.  The goal?  Try, "Truth."   

Over at Houston's Clear Thinkers, Tom Kirkendall writes about "The High Price of Asserting Innocence," and sees a vicious double standard infecting the Enron prosecution, wherein the right to defend oneself has essentially been emasculated by trigger-happy prosecutors and the federal sentencing guidelines' emphasis on co-operation as a get-out-of-jail-free card: 

"Last week, former Enron chief accountant Richard Causey pled guilty to a single count of securities fraud and agreed to a seven-year prison term after vigorously defending himself from multiple charges of business crimes for over two years. Had he elected to defend himself at trial against the charges and lost, he would have faced an effective life sentence."

Yet another triumph of the Law of Unintended Consequences; but lawyers created this injustice. Can't lawyers be expected to fix it?

Part of the problem may be that lawyers can't be expected to fix injustices if they simply can't be trusted in the first place.  To that point, Dennis Kennedy recounts the "baffling" decision of the Florida Bar's Board of Governors to prohibit lawyers from looking at metadata—presumably on the principle that gentlemen don't read other gentlemen's mail.  To my mind, the only conceivable rationale for such (a feckless) rule of "Enforced Ignorance" is that the children can't be trusted near the liquor cabinet.

Is there hope?  Point of Law writes about "Merit-Based Judging" and urges all of us (is the MSM listening, here?) to get the notion out of our heads that judicial decision-making is a clone of the legislative process, where all that matters are results.  Ted Frank comes out decisively in favor of hoping Alito will truly judge matters strictly on the merits, and even though Frank is confessedly pro-business, he argues correctly that "business is better off in the long run with a judge and judiciary that decides cases on the merits"  rather than "a hack judge who makes his or her decisions based on the identity of the parties in the caption." 

Wouldn't it be nice if a greater proportion of the American public (and again, the American media) understood that "decisions based on the identity of the parties" enjoys a one-for-one identity with being "a hack."

Finally, we can all breathe a sigh of relief—inbetween chuckles, anyway—at the extremely welcome news that The Bitch is Back. 

Practice, Practice, Practice

Lest you begin to form the impression that lawyers never get any real work done, we have an eclectic roundup of practitioners opining on their specialties.  I'm not sure any one of this exactly qualifies for an "EM," being, as they are, proudly technical and rational self-contained essays, you hey, you might learn something; I surely did.

• Ever wonder about the extraterritorial application of US Antitrust Laws?  You understand, of course, that ever since Alcoa (1945), it's been settled that they do have some such reach.  Law & Society sets us straight (and I'm personally a sucker for their banner image).
• Patent Baristas educates us on the USPTO's proposal to limit continuations, which have "become the current whipping boy."  (Who knew?!)  PB opines that "this has not been thought through very well," and as part of their argument to that effect notes (and trust me, I quote):

  "Note that proposed Rule § 1.78(f)(2) provides that for applications that fall under set proposed § 1.78(f)(1) above, there will be a rebuttable presumption that the nonprovisional application contains at least one claim that is not patentably distinct from at least one of the claims in the one or more other pending or patented nonprovisional applications. In that case, [etc.]"

  I'm willing to take them at their word.
• Staying in IP-land for a moment, The Invent Blog notes that David Allen's "Getting Things Done" (a collection of techniques I heartily endorse), which relies upon tabbed folders for organization, wouldn't be possible without the handiwork of one James Newton Gunn, who in 1897 obtained a patent for tabbed folders and index cards.  Respect your ancestors, I always say!
• My e-friend Ingo Forstenlechner has just completed his Ph.D. thesis titled "Impact of Knowledge Management on Law Firm Performance - An Investigation of Causality across Cultures" and wants to let you know that you can get a copy directly from him.  I'm sure Joy London already has hers.  Here's an excerpt from Ingo's abstract of the thesis: 

  "The set of cause and effect relationships at the heart of the [balanced] scorecard - referred to as the success map – is at the core of this research, which aims to investigate if the link between managing knowledge and financial performance really exists and – if it does – how it can be influenced." [And his conclusion?] [...]  "This thesis provides the empirical evidence for a link between KM and organisational performance."

• Carolyn Elefant at My Shingle offers very practical advice (##'d 1 through 5, in fact) for people seeking contract work from local attorneys or solos.
• And last, both Carolyn and I contributed to the launch of Law.com's "Career Center" earlier last week.

And The Final Word Goes to The Economics of Law Firms

I hope you all saw that coming.

Patrick Lamb, at  In Search of Perfect Client Service, essays upon "The Essence of Leadership."  The first thing he does, with a hat tip to Tom Peters, is distinguish leadership from management:  "Management has a lot to do with answers.  Leadership is a function of questions. And the first question for a leader always is "what do we intend to be?""

Those of you who were comparative lit majors may be interested to know that I took off from the same Harvard Business School paper Patrick is launching from, in a post of my own, here.

The anonymous Wired GC kicks off the New Year by turning his thoughts to New Ventures, and to the pilot fish that invariably accompany them in schools, your friends the Venture Capitalists, and The Top 10 Lies of VC's as recounted by Guy Kawasaki, who's in a position to know.  My personal favorite is #9 (EM included) :

"Do you know why we all know about Google's amazing return on investment? The same reason we all know about Michael Jordan: Googles and Michael Jordans hardly ever happen. If they were common, no one would write about them. If you scratch beneath the surface, venture capitalists want to invest in proven teams (eg., the founders of Cisco) with proven technology (eg., the basis of a Nobel Prize) in a proven market (eg., ecommerce). We are remarkably risk averse considering it's not even our money."

Gerry Riskin at Amazing Firms, Amazing Practices (who I know well, whom I hope to have breakfast with in New York this coming week, and who deprived the world of stand-up comedy of a potential ace when he stuck to law-land) turns the kleig lights on "old-fashioned bad management" at Dorsey & Whitney's London office, leading the en masse departure of 8 associates. What, Gerry asks rhetorically, does it cost to recruit 8 associates? And what firm would "dare subtract that number from the billing revenue of some maniac in order to determine compensation?" Another rhetorical question.   But the EM is this:  Thanks at least in fair measure to the blogosphere, dysfunctional people cannot remain anonymous.

Finally, the question you've all had in the backs of your minds, especially those of you contemplating hosting another Blawg Review of your own some day: Am I glad I did it?

Yes, I thoroughly enjoyed it!  I had the chance to delve deeper into some old friends, to meet some new ones (as it were), and finally, to point you all towards two of my own post-children of the past week:

• Five Questions (Or Is It Only One?) For Your Firm in 2006, and
• Build on Your Strengths or Tackle Your Weaknesses?

It's good to be King For A Day.  Still, I hope I've done justice to Blawg Review #38's 10 Resolutions for Better Blogging.

And to all a good night, and a most merry and enjoyable 12 Days of Christmas next year.

Blawg Review has information about next week's host, and instructions how to get your blawg posts reviewed in upcoming issues.   Final Note: I'm also interviewed there.

 

Legal Times is asking, "What Five Questions Will Law Firms Face in 2006?"  I'd like to suggest there's really only one question, and these "five" are each just facets of the same phenomenon.

Their five:

1. More merger mania?
2. Soaring compensation?
3. Billing rates topping out?
4. Further cost cutting?
5. Client relationships more critical still?

Mergers:  Although framed as an across-the-board issue, the fact is that merger activity is highly focused on firms establishing, or beefing up, their beach-heads in just two cities:  Washington, DC, and New York.  I've long been of the view that a Washington presence (which need not be jumbo-sized) is de rigueur for a national firm to be taken seriously.  We simply live in regulatory times, and it's almost irresponsible not to have the ability to join the legislative/administrative conversation at its primary source.   (No, I don't own any property on K Street, but I wish I did!)

New York is likewise critical simply because it's the financial capital of North America, as well as hub to industries ranging from publishing and advertising to fashion and—surprise—law itself.  But unlike DC, mere "presence" doesn't cut it here:  Firms need a critical mass in NYC to make it into the serious consideration set.  What's "critical mass?"  Roughly, north of 125 lawyers.

The biggest challenge is that in both cities, the pickings of merger targets are getting slim.   That's why I predict we'll see more and more smaller-bore mergers where national firms opportunistically pick up relatively little firms that have an attractive specialty.  Just as an example, Seyfarth Shaw picked up a Manhattan-centric real estate firm, Mandel-Resnik (specializing in representing co-op's and condos) as of January 1.   Total haul?  A grand total of seven partners—but arguably (and IMHO) an excellent fit, as real estate is a labor-intensive industry and Seyfarth Shaw is definitely a "go-to" labor law firm. 

Look for more of these rifle-not-shotgun targets.  But do not envision "merger mania" as an undifferentiated nationwide phenomenon.

Compensation:  Obviously, here are two "compensation" markets:  Partners and associates. 

As for associates, I predict we will finally see the pent-up dam burst, so to speak, and starting salaries will get the first bump-up (+$10,000 seems to be the number people are using) since the (in)famous dot-com-driven Gunderson-Dettmer pop to $125,000 in 2000.

The partner compensation market is also bifurcated, if you will, into the equity/non-equity market and the lateral market.  In a coincidence, today we also saw the release of the annual summary of financial results for the Top Ten Bay Area firms, and it tells a tale of high (and unsustainable) rates of growth in the ranks of non-equity partners, and extremely parsimonious additions to, or even subtractions from, the equity ranks.  Just a sampling:

• Morrison & Foerster shifted 50 partners—15% of the entire partnership's ranks—from equity to non-equity.
• At Pillsbury-Winthrop, the firm ended 2005 with 10% fewer equity partners than it began the year, despite absorbing Shaw-Pittman.
• Gibson-Dunn, while LA and not Bay Area-based, switched to a tiered partnership last year.
• Wilson-Sonsini is the only firm on the list that remains "single tier," without non-equity partners.

In other words, non-equity ranks are here to stay, or to grow.

As is activity in the lateral marketplace.  Don't think there's a war for talent?  Well, there is, and it's being fought primarily with the weapon of money.  Attractive laterals are not commodities, and the fight to gain and then retain them only escalated last year. 

Billing Rates:    Pressure from corporate clients to cut legal expenses increased last year and will only continue to rise.   So:

"The string of rapidly escalating billing rates has pretty much run its course," says Bruce McLean, managing partner at Akin Gump Strauss Hauer & Feld. "We're going to have to find different ways to improve profitability."

The problem is that just what those "different ways" are is opaque, at least if firms limit their toolset to fiddling with billing rates. "Alternative fee arrangements?" Mostly imaginary. Or, as John Beisner, DC managing partner at O'Melveny, puts it somewhat drily: "There is a challenge to find ones that are broadly applicable."   In other words, plain old dumb discounting remains the order of the day.

Was I harsh with that "dumb discounting" jibe?  Yes and no.  Yes, I was harsh in that long-term, solid, favored clients deserve recognition of their status, and the clearest recognition is a break on fees.  Plus, the firm enjoys economies with established clients in that there's no new-business-development overhead.  But no, I will stand by it to the extent that just saying, "let me take 10% off—'special for you today!,'" as they say in New York, does not engender loyalty and in fact invites the question:  "If you can make nice money at 10% off, what sucker would ever pay full freight?  [And the next question is:  "How about 20% off?"]

The demise of the billable hour has been foretold so often that we've stopped covering it here; at least until there's some tectonic change in the landscape.  Suffice to say that imagination and innovation will ultimately prevail in billing structures.  We'll know it when we see it.

Costs:  Many strategies avail themselves here, and outsourcing seems to be the favorite son.  Far be it from me to disdain outsourcing—indeed, I've often noted that BigLaw can outsource to the Midwest or the South (internal offices or otherwise) without needing to skip 12 time zones away—but the issue of quality, perceived or actual, remains a live one.  If I'm a Fortune 500 GC hiring Cravath or Wachtel, do you think "outsourcing" is an option?

I would argue that same (correct and legitimate) mindset applies to almost any firm in the AmLaw 50, if not the AmLaw 200.  The back office is one thing, but substantive work?  First thing you know, that GC will say to him/herself:  "I'm not paying firm X 90¢ on the dollar to ship their work to Cleveland; I'll hire another inhouse person for 30¢ on the dollar."  Beware false economies.

The article makes pregnant reference to another potential source of "cost savings," to wit practice specialization.  The somewhat ham-handed attempt to make this point gropes at it obliquely by offering that "par[ing] down practice groups" may be "another option."

What "paring down," a/k/a specialization, means, is simply this:  Become a boutique. 

Client Relationships:  Aaah, at last the heart of the matter, and where all of these questions intersect. 

Think about it:  Mergers are driven by the need to offer a more complete offering to clients; compensation is driven by the war for talent, in order to serve clients; new billing initiatives are 110% driven by clients, not firms; cost-cutting matters only in a world where clients demand value for money.

As it should, it all comes down to clients. 

Which leaves us where? 

I suggest, back in the land of virtuous and vicious cycles.  Strong firms will deepen and extend their client relationships by providing a more compelling array of services from highly talented people priced to yield a compelling value.  Weaker firms will lose cost-conscious clients as their talent pool dwindles, billing models stagnate, and practice group offerings ossify.

It's not five questions, it's one:  How can your firm in 2006 get closer to your clients?

Your firm is dedicated to client service as one of its pre-eminent goals, if not the absolutely highest priority, right?

Not so fast.  Do you have a lawyer serving full-time as "Client Services Advisor," serving as an ombudsman on behalf of the firm's clients and responsible for creating and overseeing more than 60 "client service teams" (and counting)?  Akin-Gump does, in the person of Iris Jones. 

Swell:  What's a "client service team?," you're asking.

Essentially, it's a tool for formalizing and institutionalizing collaboration among the various lawyers serving Important Client X.   An example will aid understanding even better than a description.  Here's how the "Technology-Copyright-Internet" group works:

"The TCI attorneys participate in client service teams with Akin Gump’s patent attorneys, litigation attorneys and other practice groups. This collaborative commitment to client service enables Akin Gump to assist in providing clients with comprehensive counseling in all areas of IP and overlapping areas of the law."

The goal is to approach the client relationship from the perspective of the client's business (and its concomitant legal needs) rather than from the perspective of the firm's legal expertise (which may or may not be germane to the client's business).

  The latter approach—starting from the perspective of the firm rather than the client—is conceptually just plain mistaken. 

In practice, what does this really mean? 

• First, as noted, it requires genuine collaboration.  Teams need to be assembled and re-assembled as the client's business and legal posture changes.  Now the team may need some focused litigators; next quarter an offshore tax expert; and the quarter after that an employment maven.  Iris Jones' job is to stay on top of all this and make sure that today's "A Team" doesn't become tomorrow's "Irrelevant Team." 
  Does this mean partners need to "buy in" with their heart and soul?  Check.
  Yes, this can be the hard part:  We all know that collaboration is not in the law school curriculum.  But never underestimate the power of self-interest to trump training.  As one Akin-Gump partner put it:  "In an increasingly competitive environment, the client service team has been invaluable in [strengthening] our relationship."
• Second, it requires plain old information-tracking.  Call it "Client Relationship Management" if you like, but lawyers must have one centralized repository for everything germane about the client's legal needs and the history of its relationship with the firm.  We've all had the experience of phoning (say) the cable company to ask a service-related question or inquire about a bill, only to find ourselves forced to explain everything from square one with a succession of several different people.  As uninspiring as this is with the cable company, it leaves a positively ghastly impression coming from a supposedly sophisticated law firm.
• Lastly, it means the client service team has to have a vision of where the client fits within the firm's strategic plan—a vision which is both clear and nuanced.  Lest I be accused of throwing around the phrase "strategic plan" loosely, I'll try to define it:  "Strategic plan" in the sense I mean it is not the 3- or 5-year document delivered from the mountaintop and promptly shelved for terminal verboseness or immediate irrelevancy (the latter fate being nicely described by the epithet "OBE," or "overtaken by events").  Rather, a strategic plan in this sense is a continuously evolving awareness of the fit between (i) the marketplace's specific demands; (ii) the firm's ability (or short-term lack thereof) to meet those demands; and (iii) how the firm can develop to most closely align its capabilities and offerings with the evolving market.

Note the focus throughout is on "the clienit" and "the market" rather than "the firm" or "the lawyer."

We have all known in our heads for some time, even if we have not acted on it with our hearts, that excellent legal skills are merely the price of admission in today's globally competitive market.  That means they cannot pretend to be your distinctive calling card; they're table stakes.

What could provide an enduring distinction, on the other hand, is responding to your clients' business (and, as a follow-on thereto, legal) needs with the same alacrity and professional focus the client itself would apply internally.  Client service teams may not be the only route there, but they surely start at the right end of the service spectrum.

"Blawg Review #39" will be hosted right here at "Adam Smith, Esq." this coming Monday, January 9th.   If you're not familiar with the concept, Blawg Review is the legal blogosphere's iteration of what's becoming a happy, entertaining, and valuable custom among the digerati:  Creating a weekly digest of some of the "best of" posts of that week in whatever specific topical area is in question.

Many of the weekly topical digests are called "Carnival of the [insert topic here]" for reasons now lost in the mists of internets past.  One of my favorites, which will surprise no one, is "Carnival of the Capitalists."

So I'm asking for reader participation. 

• Legal bloggers:  Send me a link to what you consider one of your smartest, sassiest posts of this week.
• Loyal readers:  Send me a link to posts from your travels in the legal blogosphere that you either think I ought to see, wish you had written, or both.

And thanks in advance to one and all for checking out Blawg Review #39 this coming Monday.

In case you haven't seen the home-page of Law.com today, they are launching their "Career Center":

And this is the article that I'm up there, as it were, alluding to.

Improve on your weaknesses or build on your strengths:  Which one would you focus on to achieve greater success?

If, like 59% of people surveyed by Marcus Buckingham, co-author of First, Break All the Rules, you chose "work on your weaknesses," you're wasting your time, says Buckingham.  At best, focusing a critical eye on your weaknesses might help prevent failure; but it will never help you attain excellence.

More importantly, the same goes, in spades, for people you manage.  What makes a great manager? 

• The ability to find, and then capitalize upon, employee's unique traits.
• The knack for finding an employee's talent and turning it into performance.
• Playing "chess, not checkers"—knowing that employees work differently and have different "moves."
• In short, knowing that you don't have a dozen associates working for you; you have a dozen individuals.

What exactly are an employee's, or an associate's, "strengths and talents?"  Actually, it's not a metaphysical question; it's an empirical exercise.  What are they good at?  What do they seem to enjoy?  What do they learn quickly?  What assignments do they feel are intrinsically rewarding?   Give them more of those things, and less of other things; in other words, capitalize on their natural proclivities.  Swim downstream, not upstream.

How intuitively sensible is this?  Plenty:  Haven't you experienced in your own career the sense that at times you were shadowboxing with cotton wool?  That you couldn't get traction, couldn't be effective, couldn't figure out what you were doing wrong, and at some point didn't even want to know?  (If you've never been there, would you kindly email me the special recipe for your coffee in the morning?)  But at other times you've been in the flow, challenged but not overwhelmed, engaged but not enervated, learning but not struggling. 

Assume others are no different.   As a gross generalization, litigators and deal lawyers have different personality types.   Forcibly transplanting an individual who has found his  niche from one practice to the other will almost surely be an excursion into the veil of tears.

Taking matters a step further, what distinguishes a manager from a leader? 

Let's grant that leaders are fundamentally different than managers.  Buckingham believes the key distinction is that leaders:

• are focused on the future, not the present
• are almost maniacally, unshakably optimistic
• have tremendous confidence in their own suitability for the role as leader, and
• rally people behind a "universal truth."

The "universal truth" must be embraced, above all, with pellucid clarity. 

So, for example, when Rudy Giuliani assumed the mayoralty of the famously ungovernable New York City in 1993, he did not attack problems with the schools and the parks and the municipal unions and crime and the budget, although any and all of these were certainly deserving of SWAT-team interventions:  He focused on reducing crime and improving the overall quality of life by starting with a crackdown on almost perversely minor offenses, from turnstile-jumping and graffiti in the subways to "squeegee men" in the streets. 

And Giuliani consistently tied it all back to a vision of a future New York City—a safe, clean, civilized one.

As Buckingham puts it:  "When you want to lead, start with the future.  Get specific. And get vivid."

As of this morning, there's a noteworthy new kid on the legal blogosphere block: "The Wall Street Journal Online, Esq."

Well, not quite—actually, they're calling it simply their "Law Page," but a "centerpiece" of their new coverage is their new Law Blog.  Grab the feed.

Who's behind this?:

"We've beefed up our legal team with two great journalists: Ashby Jones, our legal editor, was a reporter at The Deal and American Lawyer Media. A former litigator and clerk to a federal judge, Ashby is a graduate of Haverford College and the University of Michigan Law School. He'll be writing The FLaw column.

"Peter Lattman will be writing our law blog. Peter joined the Online Journal from Forbes Magazine. Before becoming a journalist, he was a litigator at a law firm and worked on Wall Street. He is a graduate of Harvard University and Fordham University Law School. The blog will also include contributions from reporters at The Wall Street Journal and Dow Jones Newswires."

A heartfelt "Welcome" to the blawgosphere is in order!   And you thought blogging was going to turn out to be a fad....

What are your New Year's resolutions?  And, of greater interest, what makes you think you might really observe them?

Let's take a step back:  Isn't there something fundamentally irrational about New Year's resolutions to begin with?  After all, if you want to start running five miles a day, getting to work earlier, or cutting out the cheesecake, you shouldn't wait until January 1st to start.

Prof. Thomas Schelling, this year's Nobel prize-winner in economics for his work on conflict, has something to tell us about this:  He's written at some length about the archetypal situation in which a "resolution" may come in handy to change your actual behavior.  He posits a divided self:  One part of us wants to stop smoking, the other part wants to reach for the cigarette after dinner.  One part of us wants to get up earlier, the other part wants to hit the snooze button.  So far, so familiar.

The insight he adds is that these two parts of ourselves exist at different times.  The Angel Part is in control before the decision is actually made; the Devil Part takes over at the moment of truth.  So the question becomes:  Are there tools/techniques/strategies we can employ to strengthen the Angel's ability to constrain the Devil when push comes to shove?  There are some.

• The very fact that you have made A Formal (Written, I hope) Resolution raises the price of non-compliance; if you've also made the commitment public with a spouse or loved one, posted it on the refrigerator and above your desk, so much the better.  Shame doesn't always trump temptation, but you can give it a fighting chance.
• Make bright-line rules, not vague incantations of improvement.  So:  Rather than "eat less," specify "zero carbs."  Rather than "only one cigarette after a meal" (what exactly is a "meal" in today's grazing/snacking society?), "one cigarette only at 1pm and 7pm."
• Physically remove temptation:  If you have to go out to buy dessert, the Angel may have time to reassert control, but had it been ready to hand in the freezer, the Devil starts out on top.
• Bargain with yourself and promise a reward for the pain inflicted by compliance with the Resolution:  If you lose 10 pounds, you can buy a new dress.  Just make sure the incentive is something you really want; make it meaningful, so that its loss would be painful.

So what are my New Year's Resolutions? 

• To connect with more readers of "Adam Smith, Esq." in the real, off-line world—one of the greatest rewards of this site, to me.
• To try to make "Adam Smith, Esq." ever more insightful, carefully reasoned, and just plain intrinsically interesting.  And
• To celebrate everyone's entitlement to one vice of their choosing.