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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."

I recently had the chance to sit down with Jay Zimmerman, Chairman of Bingham, to discuss the changes he's seen over his career, and to talk about the future of the legal industry and Bingham. Herewith a synopsis.

Jay (Harvard, Harvard Law) started his career in New York at Debevoise, but within a couple of years moved to Boston and joined what was then Bingham, Dana, and Gould. Making partner in 1986, he relocated with his family the following year to London to manage what was just about then the tiniest office imaginable for Bingham--one partner and one associate--and ended up staying seven years. (Since Jay's transatlantic stint, the London office has grown to 45 lawyers, focused on financial restructuring and financial regulatory practices.) Enjoying the quintessential ex-pat experience, Jay got to the point where he never expected to return. But of course he did, to lasting effect.

"Are you sorry in any way that you left London? Obviously there's a school of thought that London has or will overtake New York as a financial capital."

"Well, I wouldn't write New York's obituary quite yet!" Nor, he volunteers, would he worry about the "New York elite" firms who haven't yet invaded London to a material degree. They have the resources and the will to do so when they see fit, he opines. "It's a problem lots of firms would like to have."

The firm he returned to relied on Bank of Boston (founded in 1784) for fully one-third of its business, and the comfortable relationship engendered complacency (my reading, although Jay would probably be more politic). Sure enough, in the recession of the early 1990's the Bank was challenged: Its share price hit a low of $3. In 1996 (we now know) it was to merge with BayBanks, then to be acquired in short order by Fleet (1999) and finally by Bank of America (2005).

Although Jay and his partners had no inkling of that subsequent history, it was clear that with such extraordinary over-reliance on one key client, and with essentially all of its 200 lawyers based in Boston, Bingham had what was not exactly a business model for durability in a world of change.

In 1994, Jay was elected Chairman and embarked on nothing less than a concerted transformation of Bingham, with no fewer than nine mergers since 1997, and the following results:

Increasing the number of offices from one with three small satellites to 13, across the globe;

• Quadrupling its size and then some to nearly 1,000 lawyers;
• Growing revenue eight-fold; and
• Increasing revenue per lawyer from about a third of a million dollars per year to nearly $1-million.

Last year was Bingham's best on the financial front. As for 2008, Jay reports that the firm is experiencing an even stronger first half compared to last.

How did Jay do this? As he observed drily, "fear is a great motivator."

Other firms have tried to move from a metropolitan or regional base to a national and even international platform, with varying degrees of success. How has Bingham done it?

"Well, for starters, Boston was, second to New York, perhaps the most sophisticated and highest-rate legal market in the domestic US. If you want to try to build a global firm, it helps to begin in what's a relatively high-end home market.

"LA has produced some absolutely terrific firms, Latham, Gibson Dunn, etc., but when you think about it the LA market itself is an uncommon place for very high-end law firms to come from: It's not a powerful financial capital, it doesn't have a lot of Fortune 500 headquarters, and its industries are widely dispersed. But then again, when you look at where other nationally prominent firms have come from (the Midwest, for example, and I say that as a St. Louis native), Boston wasn't the worst place to start."

It's clear to me, I observe, that Jay personally has been a large part of the driving force behind Bingham's decade of expansion. "How do you deal with the challenge of leading notoriously autonomous and independent-minded lawyers? Obviously this is a challenge for any managing partner or Chairman, but when you embark on a course of, essentially, transformation of the firm--not a 'steady as she goes' strategy--you've really upped the ante."

"It's probably a cliché, but it's communicate, communicate, communicate. I'm constantly traveling--in fact I just got back from London and Tokyo--and I meet and talk with as many partners, associates, and staff as I possibly can. I do videotapes. [There's a nice sampling on the firm's website--Bruce] In fact I just did a videotape for the summer associates, who are just starting. But there's no question it's a challenge. You need to be out in front of your partners, but not too far out in front."

And the message is?

"The message is two-fold:

"Number one, this firm is ambitious, and our lawyers need to be ambitious. They need to understand that. When I talk to people we're thinking of recruiting, I try to get a sense of their level of ambition. People want to fit in, and we as a firm want them to fit in. So ambition is part of what we're all about.

"Number two, we love change. You don't hear that often from a law firm, but the fact is that the status quo is good for incumbents, and we're not an incumbent. In change we have opportunity; in stasis we don't. So people here need to be prepared to embrace change."

I observe that law firms can be fragile institutions. Is that something he worries about?

"Of course. We're all here voluntarily. And when you're in the business of assembling a bunch of highly talented people, one of the consequences is that those people have options. The only reason they come back up in the elevator in the morning is because you've presented them with, and continue to present them with, an attractive career proposition. But yes, I pay a huge amount of attention to that. It goes back to communication, and to having people here who fit in and want to fit in."

Is "work-life balance" part of that equation? Part of the task of retaining talent? And how different is "Gen Y?"

"Well, they're really hugely different. The original IBM PC was introduced in 1981 and our new associates were born after that. They've grown up digital; it's not news. But I don't think the term 'work-life balance' is helpful, descriptive, or informative. If you're going to make it here, you need to be committed. What has changed is that commitment takes a different form. When I started at Debevoise, it was all about 'face time.' You needed to be seen in your office at 7 or 8 or 10 pm, and the same on Saturday mornings. But today of course you can work from pretty much anywhere--so long as you do the work.

"But again, the commitment hasn't changed. Look at young investment bankers starting out. They get told, 'Look, you're going to make a lot of money, but you need to be on call 24/7. We're not going to need you 24/7, but you need to be on call.' For our associates, what I tell them is that it's all about realism. If they're realistic about the commitment this profession demands--as well as the rewards, intellectual, professional, and otherwise, that it can provide--then they'll be fine. If they're not realistic, they're in for a rude awakening."

I ask if he's familiar with the industry structure I call the "hollow middle," where consumers gravitate toward either the high-end, high-quality providers, or the mass market, value providers, but not in meaningful numbers to any middle-market providers. This industry structure is remarkably common and seems to be stable--an "equilibrium," as economists would put it. For example (think about whether these don't represent your own buying patterns):

• Apparel (you want Armani or Gap)
• Cars (BMW, Lexus, Mercedes, or Toyota and Honda)
• Alcoholic beverages: Beer, wine, and liquor (fill in the blank)
• Groceries (Roquefort or a dozen eggs)
• Financial services (free checking for life or Bessemer Trust)
• Etc.

Jay thinks it may hold lessons for the legal industry. And we know where he wants Bingham to be.

I realize that I don't have a firm grasp on Bingham's international strategy, so I pose the question bluntly: "Tell me what it is."

Jay says he likes to use the phrase "global relevance." By that he means Bingham attempts to offer a practice focused on one of their core strengths, which is global restructuring and financial regulatory work. They strive to offer this in London, in Tokyo, and increasingly in Hong Kong. "There are a lot of opportunities out there which are very real--they're just not opportunities for us." In other words, Bingham doesn't need to have a dozen offices across the EU, or any offices in mainland China until the financial systems there mature a bit more.

"What makes this strategy work for you?"

"Well, first of all, there are spinoff benefits to other practice areas, including litigation, corporate, and finance work itself. But secondly, we're benefitting--as we have in other areas--from changes and even relative turmoil in the markets. I'll give you an example. Ten years ago in London everything having to do with restructuring distressed companies or distressed assets primarily involved banks: They had extended the credit, their covenants that were being violated, and they were in the driver's seat. Since we didn't have old-line relationships with those banks, we didn't have the connections necessary to attract that kind of work.
"But today lenders are all over the lot: They're hedge funds, maybe private equity, other sources of capital, and bondholders are no longer passive--they're aggressive. This gives us many points of entry, and they're not all the traditional institutional players. As I've said before, it's a different world, and that creates opportunity for us."

And what of the future?

"We believe that as globalization accelerates and the world becomes a more complex place, there will be increasing demand--both in absolute terms and across geographical regions--for sophisticated restructuring capabilities, again, with all the financial regulatory authority interfacing that goes with it. We don't think this practice focus is at any risk of obsolescence."

Regular readers will know that one of the "evergreen" topics here at "Adam Smith, Esq." is what can possibly explain the fact that for the past 30 years essentially 50% of law school graduates have been women and for almost the same period of time only about 15% of BigLaw partners have been women. Neither number is budging. Why, I ask Jay, is this?

"As a father of two grown daughters, I think about this often, so I'd like to take some time to share my thoughts on this. The unfortunate reality of today is that you can't defy gravity, but I am optimistic things will change.   By 'you can't defy gravity' I mean that graduates of our elite law schools, for the most part, marry people with equally promising career prospects. So you have all these couples composed of a pair of high-achieving people starting off.

"When it comes time to have a family, it often makes economic sense--putting aside any emotional issues--for one spouse -- and it is usually the woman -- to focus on raising the kids. If you assume that many of these couples are in a position to live on one income, it's probably not so surprising what we see happening in the workplace.

"This scenario is not unique to law firms. We need to do a better job as a society to ensure that there are equal opportunities for women to pursue their career ambitions -- and not be automatically placed in a position of choosing between starting a family or building a successful career. Ultimately what we can do, and I do believe that we do this at Bingham, is to provide the opportunity for all our lawyers -- men and women -- to succeed.

"For women, we encourage flex- and part-time schedules. It is not uncommon for us to elect women partners who are or have been part-time. We provide an environment where women are encouraged and are given every opportunity to succeed. Our efforts have not gone unnoticed internally as well as externally. We're consistently noted for our positive and supportive work environment by FORTUNE in its '100 Best Places to Work For' issue (for five straight years), and by Working Mother and several regional publications where we have offices."

As we're preparing to adjourn, Jay recommends to me a Harvard Business Review article that has been influential in his thinking, "Strategy as Active Waiting" [only available for a fee, but I've bought it and look for a column about it here soon]. The concept is essentially:

• Keep your priorities clear, but your roadmap fuzzy;
• Test the future; examine your assumptions; keep an eye on the horizon;
• While you're watching, keep the pressure on your day to day competitiveness; don't let up; and
• When you see an opportunity opening up, focus on it with urgency.

As I'm about to get up, Jay asks abruptly if I think leaders can be made.

"No, I don't," I say. "You can 'make' managers, and you can expose people with leadership potential to career-broadening environments (say, sending them to Hong Kong for 3 years), but no, I don't believe you can 'make' a leader out of whole cloth."
"I agree; nope, you can't." (I'm relieved to have provided the right answer.)

There's little doubt Jay has managed Bingham with urgency and focus. The challenge--scarcely unique to Bingham--is now maintaining their strategic focus as they expand internationally. And besting the hollow middle.

Last week I had the opportunity to sit down with Allen Fagin, Chairman of Proskauer Rose. Allen is Columbia BA summa cum laude, and Harvard Law JD cum laude at the same time he earned an MPP from Harvard's JFK School of Government. He's worked at Proskauer for his entire career, and comes from the Labor and Employment Law Department where he was co-Chair.

With Allen, I wanted to hear about the state of Proskauer, his views on the recent past and potential near-term future of the industry, and to explore what he thinks are important changes in our industry.

I started by noting that both he and his immediate predecessor as Chairman, Alan Jaffe, came from the employment department and that to many people Proskauer has a reputation first and foremost as an outstanding labor law firm.

"Our labor and employment practice is extraordinary," he responded, "with a truly world-class brand.  But that practice accounts for less than 20% of our lawyers and revenues.  What the market is now recognizing is all the other things we do equally well."

Allen made clear that a strategic priority for the firm is the growth of its corporate practice, which has seen its revenues increase by $100-million over the past three years. He also reminded me that only three firms in the recently released AmLaw 100 increased their Revenue per Lawyer (a favorite statistic of Allen's, as it is of mine) by more than 15%: Wachtell, Debevoise, and Proskauer (+16%). That increase was almost entirely accounted for by the corporate practice.

Allen said it point-blank: "The whole thrust of our growth has been to build out the corporate practice."

Does that explain your recent opening of a London office?

Yes, that was "following our clients." It's following the practice areas we have in some measure of strength here in New York that can be bolstered by a presence in London:

• private equity, hedge funds, and alternative investments in general;
• finance; and
• mid-market M&A.

What, I asked, was "mid-market" M&A? He replied with bemused candor that it's whatever people say it is, but roughly from deals valued at $100-million to $1-billion or more. Very much in the eye of the beholder.

Is M&A being driven more "strategically," by corporations interested in acquiring capability and integrating, today, as opposed to six months to a year ago when it was more about financial engineering? "Absolutely; and those who can pay cash are the ones where you know the deals will happen."

Proskauer recently opened an office in Sao Paolo, Brazil, I observe; what's that about?

"It's about our Latin America corporate practice; it's almost exclusively outbound work. We don't practice Brazilian law. At the moment it's a small office, and it will remain small, but we find it valuable to have boots on the ground down there." So there's money in Latin America? "Absolutely."

Switching gears a bit, I ask Allen to describe in his own words the "State of the Firm."

"It's healthy, strong, and growing. But don't take my word for it: We just reported our 16th year in a row of higher PPP, and last year [2007] our year-over-year increase in total revenue was +22% and our increase in PPP was +18%: RPL was +16%" [as noted].

Without prompting, Allen continued: "The real question is the same question that any firm that intends to stay in the serious group of 20 to 40 firms (maybe 40 is too high) that will be left standing when the dust settles: How do we ensure we're one of that group?"

And here's where Allen really began to warm to the topic of our conversation.

"There's a critical tension between balancing growth and development, on the one hand, as against stability and the maintenance of values, on the other. That might be my single biggest challenge as Chairman."

What are you proudest of, then, in your tenure as Chairman to date?

"I'm most proud of being able to see the firm grow without sacrificing our values." How do you do that? "It's a constant effort to communicate, of course, talking to everyone in the firm about what we're trying to accomplish in terms of marrying the past and the future."

"You know, you can read any number of articles in the legal press about law firms adopting a more corporate business model. But I'm old-fashioned. I believe law firms need to be partnerships. We need to be partnerships, but we need to do so without sacrificing efficiency, nimbleness, competitiveness, and a sense of collective destiny. This is part of the challenge."

I ask about a topic on which an enormous amount of ink has been spilled: The intertwined issues of associate attrition, the "war for talent," and the much bruited new expectations of Gen Y. "Is this really different," I ask, "than when you were an associate?"

"Yes, it's different; Gen Y is different. It's real." Allen observes that the number of law school graduates have increased perhaps 8% over the past decade, and that the number of top students from the top schools who want to go to the top firms has decreased. This double whammy explains, to him, in Econ 101 supply and demand terms, why associate salaries are as high as they are. [Editor's note: I thoroughly concur.]

Compounding this problem is that the cost of attrition--whatever it actually is, he says, implying healthy skepticism about the often quoted and glib numbers of two years worth of salary, $500,000, etc.--has most assuredly gone up. The only way to deal with it, he said, is through scrupulous attention: "It's a much more difficult retention problem, the issues are more nuanced, and it has made us all think more critically about this."

I ask if he thinks the classic recruiting model of hiring the top X% of students from the top Y law schools still makes sense, and he proceeds to outline Proskauer's and his own vision of what I have called "Associate Moneyball," wherein firms would attempt to determine what characteristics of law students, aside from class rank and name-brand of school, actually correlate with successful and enduring careers. He related the experiment of attempting to always hire the student who was first in the graduating class at Brooklyn Law School's night program: "Now that person, I have to believe, has fire in the belly. And after all, it's all to do with:

• intensity of effort;
• dedication to the quality of the work product;
• and caring for the client."

I cannot disagree.

Proskauer, I note, has a long history of contributing leaders to New York bar associations, and of pro bono work. Where, I ask, did that come from? (Here, Allen became especially animated and fervent.)

"History; it's imbued in our culture." The firm has a long tradition of public service, and it tends in a way to feed on itself. Someone who's chairman of a committee will recommend a colleague to be a member, and soon that colleague will become a more senior member, and so on and so on. But in terms of our pro bono program, we've really tried to formalize and institutionalize it in important ways:

• We have more meaningful partnerships with designated organizations in the community that we therefore get to know better.
• We've coordinated our firm-wide charitable giving program with the pro bono commitments we've made and with the targeted organizations; and
• We've expanded beyond the traditional bastion of pro bono work--litigation--to more transactional and corporate type work including, specifically, counseling on corporate governance.

What all this adds up to is that we get more associates involved, and involved at a higher level of intensity. We can, as it were, "adopt" community organizations and this gives lawyers across all our practice groups the opportunity to serve.

Finally, at an organizational/executional level, we have converted "pro bono" into a practice group in its own right, just like any other, which means that it comes with all the operational and institutional procedures of any other practice group--things like the assignments system, looking to fill holes in experience, and so forth.

As I said, Allen is fervent on this topic.

Also noteworthy is that prominently displayed on their reception area coffee tables are copies of their report on pro bono work, "Break/Through: 2007 Pro Bono Review," a handsome and high-quality brochure with a foreword by Allen that opens with the words, "For many people who face complex legal challenges, it's difficult even to get a break..." Interestingly, the typical self-congratulatory firm annual reports were nowhere to be seen.

Have you policed your reception area lately?

But I digress.

What would your advice be to new associates, I asked.

"It's too late!" (laughing out loud).

Well, then, to college grads contemplating law school?

"Obviously, friends ask me to talk to their kids all the time, and what I say is to talk to as many young associates as you can, so that you really, deeply, understand what you're getting into."

My final question has to do with the unexpected.

What, looking back over the past 10 or 15 years, has been the biggest surprise to you?

Allen thinks, visibly, and there is a long silence. Finally he says:

"The resilience of the billable hour. Ten years ago I would have told you it would be dead, today I will tell you it should be dead, and ten years from now I imagine I'll be telling you it should be dead. It's inexplicable."

"But second [and this is entirely unprompted], equating the compensation of attorneys with their year of graduation from law school." Do you mean '"associate lockstep?" Hasn't Howrey experimented with changing that? "Yes, I do mean 'associate lockstep,' but it's so hard to get away from it." He elaborates that it makes no sense to clients, it doesn't resemble what's done in any other remotely modern industry, and it's intrinsically at odds with the meritocracy that elite law firms hold themselves out to be.

And with that we adjourned.

---

Broadly speaking (gross generalization coming up), managing partners are selected for the force of their personality or the force of their intellect. True, there are the extraordinarily gifted few who combine both, but they're as rare as Lincolns among American Presidents.

Allen is understated, low-key, speaks very softly, and is one of the most truly thoughtful people I've recently met. Lawyers, we of all people, should appreciate the supreme value of analytic rigor and acuity. In fact, the intensity of his thoughtfulness borders on the shocking. We long ago got used to not expecting thoughtfulness in public discourse, and that expectation may, alas, be infiltrating our expectations in private discourse. A few minutes with Allen would disabuse you of your cynicism.

A few days ago after reading about Working Mother magazine's recognition of programs in diversity and work/life balance, I had a chance to catch up with the Managing Partner of Dorsey & Whitney, Marianne Short. 

Now, the list of "Best Law Firms for Women 2007" numbers 50:

• Alston & Bird, Atlanta, GA
• Armstrong Teasdale, St. Louis, MO
• Arnold & Porter, Washington, DC
• Baker & Daniels, Indianapolis, IN
• Baker & McKenzie, Chicago, IL
• Bingham McCutchen, Boston, MA
• Blackwell Sanders, Kansas City, MO
• Bryan Cave, St. Louis, MO
• Chapman and Cutler, Chicago, IL
• Covington & Burling, Washington, DC
• Cravath, Swaine & Moore, New York, NY
• Debevoise & Plimpton, New York, NY
• Dickstein Shapiro, Washington, DC
• DLA Piper US, New York, NY
• Dorsey & Whitney, Minneapolis, MN
• Duane Morris, Philadelphia, PA
• Eckert Seamans Cherin & Mellott, Pittsburgh, PA
• Farella Braun + Martel, San Francisco, CA
• Foley & Lardner, Milwaukee, WI
• Folger Levin & Kahn, San Francisco, CA
• Gibbons P.C., Newark, NJ
• Heller Ehrman, San Francisco, CA
• Hogan & Hartson, Washington, DC
• Holland & Knight, New York, NY
• Howrey, Washington, DC
• Hunton & Williams, Richmond, VA
• Ice Miller, Indianapolis, IN
• Katten Muchin Rosenman, Chicago, IL
• King & Spalding, Atlanta, GA
• Kirkland & Ellis, Chicago, IL
• Kirkpatrick & Lockhart Preston Gates Ellis, Pittsburgh, PA
• Kramer Levin Naftalis & Frankel, New York, NY
• Manatt, Phelps & Phillips, Los Angeles, CA
• Mayer, Brown, Rowe & Maw, Chicago, IL
• McDermott Will & Emery, Chicago, IL
• McGuireWoods, Richmond, VA
• Miller & Chevalier Chartered, Washington, DC
• Mintz Levin Cohn Ferris Glovsky and Popeo, Boston, MA
• Morrison & Foerster, San Francisco, CA
• Orrick, Herrington & Sutcliffe, New York, NY
• Patton Boggs, Washington, DC
• Paul, Weiss, Rifkind, Wharton & Garrison, New York, NY
• Pillsbury Winthrop Shaw Pittman, New York, NY
• Reed Smith, Pittsburgh, PA
• Sidley Austin, Chicago, IL
• Skadden, Arps, Slate, Meagher & Flom, New York, NY
• Sonnenschein Nath & Rosenthal, Chicago, IL
• White & Case, New York, NY
• WilmerHale, Washington, DC
• Womble Carlyle Sandridge & Rice, Winston-Salem, NC

So why did I want to talk to Marianne?   Pretty simple, actually:  Of the 50 firms, Dorsey is the only one that is both in the AmLaw 100 and which is led by a woman.

Before Marianne and I spoke, I had sketched out a few questions (which I shared with her in advance) including:

• What particular initiatives did the firm undertake to accommodate working mothers that are different from or in addition to initiatives it might already have undertaken for “work/life balance” in general?
• Aside from the social, ethical, and other moral/human reasons for such an initiative, what are the business benefits to the firm?  To its clients?
• Did the firm already have in place any policies regarding flex-time, sabbaticals, job sharing, etc.?  If so, why were these inadequate for working mothers?
• Has there been any push-back from  female lawyers who are either childless or who choose not to take advantage of working mother programs, or from male lawyers?

Here's what I learned.

The first thing she reported is that the working mothers/work-life balance initiative has been something the firm has been working on for decades, starting in the 1970's when they drafted their first parental leave guidelines. 

In fact, if memory serves, it probably started when the first female lawyer got pregnant and wanted to continue practicing. (Marianne's own two children are 19 and 24, so some reasonable arrangements were clearly in place when she was with the firm in the 1980's.)

In 1993 Dorsey lawyers participated in a mentoring program for  women, followed by offsite retreats dedicated to networking among women in   1997, and in  2004 a formal task force was created to address flexible work arrangements.

Men, to be sure, can take advantage of exactly the same  programs; indeed, anyone, with or without children, can use flex-time to, say, care for aging parents.  The program has worked particularly well with younger lawyers who grew up computer-literate and can operate independently and professionally from home or elsewhere.  Said Marianne:  "I don't look at it as only women of childbearing age."  The initiative is potentially for the benefit of almost everyone, particularly as two-earner households become ubiquitous. 

What about pushback, I ask:  Has there been any quiet resistance from those on a more traditional track?  "Zero," she replied.   Two expectations are now in play where only one used to be.  The old, and still current, expectation was that you would be readily available to clients no matter what.  The new, and added, expectation is that you can be available from wherever you want to be.  Compromising the quality of work or client service is non-negotiable and always has been, but the ability to work from wherever is new. 

No face-time in the office required?  "No, huge change from when I was an associate.  If a senior person was going to be in on Saturday morning, you were going to be in on Saturday morning; that expectation doesn't exist any more.  The biggest change from the 1970's and 1980's is a complete embrace of different ways of getting work done.  It's the quality and timeliness of work, not the individual lawyer's presence, that counts."

So, fine, all this makes us feel virtuous and flexible and enlightened, but what are the business benefits to the firm and its clients?

"Remember that a large part of what lawyers, especially partners, need to focus on is not just grinding the work out but business development.  That means being active in your community, doing pro bono, serving on boards.  Sure, at the start of one's career there's a certain inevitable and even welcome discipline to learning the craft, but once you have accomplished that, having simple human experiences, reaching out and talking with other people, makes you stronger and helps you build  your business."

In other words, she doesn't see the firm "accommodating" to new expectations; she sees it as "appreciating" the new expectations, which is in every sense good for the firm's business. 

And, the firm is making significant investments in recruitment, retention, training, and mentoring—the "care and feeding" of the next generation.  I mention that one observation I hear repeatedly from managing partners is that, if you truly want a collaborative firm culture, there's no substitute for spending the money to put people on airplanes and get them together in offsite's at nice hotels.  To get away from, as one put it, the "name tag syndrome" at partner meetings.   She agrees emphatically, applying the same "it's an investment not an expense" philosophy to associate training:  "If you believe in your firm's pipeline of talent development, this is a good business model." 

I ask about external pressures, from clients or even courts, for diversity efforts, and she says it's not only an increasing external demand, but a smart internal way to assemble teams.  Marianne's a trial lawyer, and she observes that "when I argue a case to a judge or a jury, I appreciate all perspectives and comments from a diverse trial team, which help me prepare for the little surprises encountered in court."    And, in any event, the drive for diversity has become a non-issue, at least internally to the firm.  "Even if someone doesn't want to get it at first, all they need to hear is that one major client wants it, and that's the end of the conversation." 

How will she know if these efforts are paying off?

She doesn't have an isolated anecdote to tell or a stem-winding paragraph stolen from a campaign stump speech to offer, she has a fact:

• Five years ago, in 2002, 28% of the 5th through 7th year associates were women.
• Today, in 2007, the percentage of the 5th through 7th year associates who are women is 50%.

To me, that's a powerful number.   Maybe you can get there from here.

In 1999, Reed Smith's 610 lawyers generated $168-million in revenue, from 14 offices in the Northeast and Mid-Atlantic states.

At the start of 2007, its 1,500 lawyers are on track to do $900-million in revenue, from 21 offices across the US from California to Chicago to New York, and in the UK, the European Continent, and the Mideast.

In early April I had a chance to spend a couple of hours with Greg Jordan, the Firmwide Managing Partner and Chairman, who was elected to that role in 2000, at the start of that period of astonishing growth. Here's what we discussed. 

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I started by asking if he had a vision for Reed Smith when he was elected that forecast where the firm is today, or if it has evolved.   He recalled that it was a contested election for managing partner, and that his views were summarized in the "Transition Document," which had six or seven key objectives. 

Primary among them was explaining to the firm why it needed to expand out of the Rust Belt, and how it could do that hand in hand with leveraging its relationships with its best clients. Looking at it again today, he says that the firm has pretty much achieved all of them.   To wit?:

• Establishing critical mass in California
• And in London
• Making serious strides in New York
• Expanding beyond the Pittsburgh center of gravity
• Adopting an international, not regional, outlook
• Improving teamwork and industry focus and getting more "share of wallet" from key clients

I remark that I'd been reading another AmLaw 30's "strategy statement" the day before, and that it sounded remarkably similar:  Go for more high-value, "premium" work, expand your geographic footprint, move from commoditizing to high-end practices, invade the key financial centers with meaningful personnel commitments.  So what made Reed Smith different?

If you've never run across Arnie Jacobs, a partner at Proskauer in New York, and a "dean of securities law," I hope the stars may align that you will.  Early in my career as a lowly associate at Shea & Gould, I had the privilege of working with Arnie starting the day I arrived at the firm.  His career has spanned a period during which firms, and our industry overall, have changed to an extent impossible to imagine when he graduated from Cornell with a JD/MBA in the 1960's.

Arnie is both an astute observer of our profession, with an insider's perspective benefiting from his many tours of duty on the executive committee, and a perceptive judge of human nature.  For now you'll have to take my word on that, but if you read to the end of this article I hope you'll have formed your own opinion congruent with mine.

Last month I decided it was time I sought out Arnie's perspective on some of the larger trends he's witnessed, and what he anticipates.  This is a report on our conversation.

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When he started in the '60's, there was no associate movement between firms, much less partner movement—associates could go to clients, or leave the profession, but those were the options.  Arnie believes that the lateral movement of large groups of lawyers has had a profound effect on our industry, "making the strong firms stronger and the weak firms weaker."  He also observes that, from an interpersonal point of view, this might not be what you'd like—innocent people who are not readily mobile on their own can be trapped in declining firms—but "from a Darwinian perspective" it's inevitable.

Of course there are ways to acquire laterals and then there are ways to acquire laterals.  One model, the "revolving door," might see a firm take on 100 laterals and be fortunate to have 75 still around a year or two later.  Arnie is quick to point out this is not a model he endorses, but he observes that it can be successful in the short run.  Successful in the long run?  Both Arnie and I have our doubts.

His own firm, Proskauer, is "at the other end of the spectrum:"  While 60% of their partners are laterals, they do not make as many lateral partner offers as some other firms: But those who come stay.  And like any good lawyer he has the evidence to back up the claim:  60% of Proskauer's lawyers are in its New York office, and over the last 15 years a grand total of two partners (lateral and home-grown) have left for another law firm.

What, then, keeps a firm cohesive?, I ask.

"It's a conjunction of two things:  (1) partners who are great lawyers; and (2) knowing that they're not going to leave."  If you have those two things, you know you can cross-sell your partners' expertise to your clients, that they'll perform, and that they won't try to walk out with the client.

I ask him for his view of the "segmentation" hypothesis, that our industry is moving towards global vs. boutique, with very little in the middle.  He has a nuanced view:  "There will be more and more concentration of talent at the high end, and boutiques will always be with us."  But he also believes that middle market corporate work, middle market litigation, will be a defensible niche.  These firms may not be super-successful, but they will be reasonably successful, and he sees no reason they can't survive for a long long time.

"Every firm says it's competing for the high-end, premium, price-insensitive work:  How much of that is there really to go around?"

Actually, a fair amount, he opines:  When there's a large deal on the table, with lots of money at stake, time-constrained, rates don't seem to be an issue.

One of the most "material" (as we securities lawyers say) changes during Arnie's career has been Sarbanes-Oxley. I ask his opinion of it on several dimensions:

Re the impact it had on his own practice:  "Great!"  It came at a time of a general slow-down in transactional work, and not only did it mean the securities lawyers at Proskauer had to get their arms around the statute, they had to understand the real, on-the-ground, practical ramifications.

For public company clients?  "It's increased their costs, sometimes dramatically; I honestly don't know whether that has been a wise use of resources."  With smaller clients, the costs have been disproportionate; but very few have actually gone private—fewer, Arnie suspects, than the critics of SOX aver, but more than the SEC would like to admit.

What about the partnership ethos within firms?  How has it changed?

Partnerships by and large used to be far more partnerships. Today it's evolving towards more of a corporate model.  Yes, there's a broad range of firms, but this has been the seismic shift:  More command, less collegiality.    He puts Proskauer strongly on the "collegial" end of this spectrum, and tells the story of how he periodically gives a speech about the firm's insistence on, and living of, that value.  Sometimes after he gives such a talk a recent lateral will come and say to him, "You know, I really didn't believe that, but it's true."

I ask Arnie to talk about this a bit more; culture, I've always believed, is perhaps the #1 ineffable whose impact you can actually observe every day.  He reports that 25 years ago the Proskauer culture was decidedly different, but that a real change was driven starting then, from the top—from autocracy to democracy. (He avers that undemocratic management styles can work, as well, but he's discussing Proskauer.)  "It's ironic, but laterals such as me treasure our high 'collegiality quotient' even more than the home-grown partners do:  They've experienced the unhappy alternative."

How does Proskauer maintain this?

"We reject the 800-pound gorillas; that's a lot of it." Even those with a big book of business? "Especially those, if their personalities won't mesh."

What advice would he or does he give to associates?

"Oh, my, the law is a wonderful profession.  As I was riding down Fifth Avenue in a cab this morning on the way to work, looking at Central Park, I had the thought—which I have 3 days a week out of 5—that I'm one of the most fortunate people alive to be able to do what I'm doing.  People think this is hokey, but there's a real intellectual challenge to it; that's tremendously attractive to me.

"And another thing:  In how many professions can one be truly creative at a young age?  Maybe investment banking, certainly research, maybe some doctors, but there are very few.  Lawyers have that opportunity.

"Finally, there's the societal importance, which is deeply satisfying.  Litigation is not all and only about who has the deepest pockets; there's an element of justice to it.  And doing corporate deals actually accomplishes goals for clients.  I look forward to coming in to work every single day."

I ask Arnie for his perspective on how law firms build themselves and grow, since every strategic plan of the AmLaw 100 places that objective front and center.

"Build on your strengths." 

Don't try to work on your weaknesses?  "No—build on your strengths."  For example, Proskauer was active in private equity well before many other firms, but when we decided it was going to be increasingly important in a post-Sarbanes Oxley world, with tremendous liquidity sloshing across the globe, we devoted even more resources to it.   Case in point:  When the Testa Hurwitz firm closed its doors in Boston three years ago, Proskauer picked up a number of that firm's private equity/fund formation specialists, which they could do because Proskauer already had a strong practice in New York:  The attraction was mutual.  Result:  From a standing start (that is to say, zero lawyers) three years ago, Proskauer's office is now the 19th largest in Boston.

Moral:  Concentrate on your strengths; don't try to build something from the ground up just because it's sexy and everybody else seems to be doing it.

"How have the challenges facing law firm management changed?" 

The most obvious change has been the emergence of full-time law firm CEO's, who do not practice at all.  "Twenty or thirty years ago, the managing partner used to 'manage' during his commute, and maintain a full-time practice.  Today people don't do that, can't do that, and shouldn't do that."  The second most obvious change is that more power has been concentrated in the Chairman, with the benefit being that firms actually are run more efficiently and economically.

"Will we ever see a non-lawyer CEO of a law firm?"

No.

First of all, the CEO needs respect from the partners.  He or she must be not only a lawyer, but a practitioner they can respect.   Second, a non-lawyer would lack the knowledge base indispensable to actually understanding a law firm.  Sure, you might get somebody who was familiar with professional service firms in general, but there's nothing more horizontal than a law firm's structure.

So could we ever see it?  Sure, it's possible we could, but I'd wager it would serve as a cautionary tale for other firms not to emulate.

---

I mentioned that I worked with Arnie starting on Day 1 of my tenure at Shea & Gould, so indulge me in sharing a classic Arnie Jacobs story:  That day I arrived, eager as possible, around 8:00 am only to discover that most of the lights were still out and essentially all the offices empty.  At 10:00 am my phone rang with a summons to Mr. Jacobs' office.   Grabbing a pad, I thought, "OK, here goes the next month of my life."

Walking in to Arnie's office, I said, "Good morning, Mr. Jacobs."

"You've already made your first mistake," he replied.

"Sir?!"

"It's Arnie, not Mr. Jacobs."

Some time later that morning, my heart rate found its way back to normal.

One last thing you need to know about Arnie:  His intellectual output is staggering.  From the Proskauer site:

"Arnie is the author of 26 books and numerous articles on various aspects of securities and corporate law. They have been cited by the Supreme Court of the United States a number of times, as well as in hundreds of other cases and authorities. As a result of one of those articles, he holds the world's record for the law review article with the most footnotes (4,824 footnotes, to be exact).

His books are:

• Disclosure and Remedies Under the Securities Laws , a six-volume, 5,000-page treatise discussing what disclosure is required under federal and state securities laws, and the remedies for noncompliance.
• Litigation and Practice Under Rule 10b-5 , a six-volume, 5,000-page treatise dealing with securities fraud.
• Section 16(b) of The Securities Exchange Act , a two-volume, 1,000-page treatise dealing with short-swing profits.
• Manual of Corporate Forms for Securities Practice , a four-volume, 2,000-page treatise setting forth forms to be used.
• Opinion Letters in Securities Matters , a four-volume, 2,000-page treatise dealing in depth with opinions lawyers are to render.
• The Impact of Rule 10b-5 , a three-volume, 1,500-page treatise explaining various aspects of securities fraud.
• The Willliams Act—Tender Offers and Stock Accumulations, a one volume, 1,000 page treatise on tender offers and filings by large stockholders."

And to show that the apple doesn't fall far from the tree, a few years ago his son, A. J., published "The Know-it-All: One Man's Humble Quest to Become the Smartest Person in the World," which was on The New York Times best-seller list for nine weeks (as Arnie the proud father points out), recounting A.J.'s (successful) effort to read the entire Encyclopedia Britannica, A to Z, and thus to "redeem the family honor" given that Arnie had fallen off the bus somewhere in the "B"'s when he tried many years before.

 

"A freezing rain was falling one March afternoon in Tarrytown, New York, and I was thinking about frogs."

Does that sound like the proper introduction for an AmLaw 30 Firm Chair to use for an article with the theme, as he says farther on, that "I expect law firms to change more in the next five years than they have in the last 30 years?"   The author is Ralph Baxter of Orrick, the frogs he was thinking about are the metaphorical ones who will leap out of boiling water but succumb to the same hot water if gradual heat is applied, and the article is here.

Not to be oblique about it, but Ralph thinks law firms are the frogs experiencing the gradual heat, who have not leapt out of the pot because "the simple fact [is] that they have not had to."  In marked contrast, our corporate clients have had to be more nimble, finding ways to deliver more value to their increasingly globalized clients through (a) using technology to improve productivity and service quality; (b) developing new services and appurtenant pricing models; and (c) adapting to the changing work force through more flexible and creative hiring and professional development tactics.

I won't summarize Ralph's article for you—just go read it yourself—but I will supplement his thinking by reporting on a one-on-one conversation I had with him at Orrick's offices here in New York last week.

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Many if not most of you are probably familiar with the growth trajectory of Orrick under Ralph's tenure—a roughly 1,000% growth in revenue, for starters—and we have all seen formerly regional or city-specific firms break out of their home territories and become national and even international powerhouses during the past 20 years.   If you doubt me, ask yourself whether you still assume these firms are provincially limited to these cities:  Foley & Lardner/Milwaukee; Jones Day/Cleveland; K&L Gates/Pittsburgh; Reed Smith/Pittsburgh.

But the question I had for Ralph was, understandable as it might be for those other firms to see the need to bust out of their frankly sclerotic local economies, what was so bad about San Francisco when he assumed the lead at Orrick?  Whence the sense of urgency to expand beyond the familiar base of a then-and-now healthy region?

"I told my partners, the night I was elected to lead the firm, that what they had voted for and what they were going to get was change."  Even if Orrick's position as the go-to municipal finance firm was solid as a rock, Ralph aspired to more. I asked him why, where his drive came from, and he paused, looked at the ceiling and shrugged: "I guess I've always been ambitious; I wanted to be student council president in high school."  So, for Orrick, Ralph wanted a larger stage to play on than that of the Bay Area.

"But," Ralph added, "something David Gergen said [giving the keynote at the Law Firm Leaders Forum in San Francisco the week before, which Orrick had sponsored in conjunction with Hildebrandt] struck me about the critical ingredients of leadership, and it was this:  His first prerequisite for leadership was 'ambition,' but it was ambition for the team, not ambition for oneself.

"The other thing about change?  It seems to make most people deeply uncomfortable:  You know, 'things seem to be going OK, and I'm not dead yet!  So far so good.' But I relish change, I really do.  I think most people, and especially most lawyers, don't."

I asked about how he had grown into the managing partner/firm chair role, and specifically what he did more of and what he did less of than, say, five years ago.

"Terrific question; never thought about it." (Pause.) "OK, I do less day to day management/administrative stuff, and much more communicating."

His pointing up the importance of communication reminded me of a piece of managerial wisdom that I've always valued, albeit having come from an improbable source. So I asked if he knew about the famous Washington political columnist Walter Lippman's advice to Presidents about press conferences, namely to hold one once a month, with no agenda and no time limit? 

No, he said, so I explained Lippman's thinking:  The idea was to instill policy discipline in the cabinet.  If anything and everything could come up in the unscripted press conference, the President had to be briefed on, and concur with, the policy positions of Treasury, State, Defense, etc.—and all those departments and more had to be sure they had defensible, supportable, credible positions across the board.  Even if the press conferences never occurred, the discipline they would instill was invaluable.

I observed that most managing partners have almost no staff to help them discharge their duties, and he responded that he'd actually become increasingly attuned to the need for a strong group to help him accomplish what he aspired to do.  "I've learned, and the group has gotten better and better as we've re-aligned people to fit what actually needs to be done." 

That is exceptionally unusual among law firms—no solitary "I can do it all" figure at the top—but if you're into process (as any good lawyer will be), you intuitively  understand the result of having talented senior staff.  They get things done that you can't do yourself.  They follow through on initiatives you launch.  They get back to people.  They don't let things fall through the cracks.  They return emails and phone calls, delegate whenever possible and escalate when unavoidable.   They work while you sleep.

I asked Ralph for his views on the mergers trend in our industry: Has it peaked, just gotten started, or something else altogether?

Attuned to the possible overtones his reply might have with respect to the recently and conspicuously cancelled Dewey/Orrick merger plans, he began undefensively by admitting that mergers between proud and autonomous law firms with decades of history were intrinsically complex. 

But on the larger question of the merger trend within the industry—accelerating, decelerating, or none of the above—his view is that M&A is here to stay; there's no a priori reason to think it will drastically pick up or fall off.  And he does emphatically predict that we will see mergers of "strength and strength:"  Two firms, neither of which has to merge, but which choose to in order to create a platform neither could achieve alone in such short order.

It seems indisputable that US firms have had better success launching offices in the UK than UK firms have had launching offices here. Why did he think that was?

First of all, he said, don't underestimate the amount US firms have had to "invest" (or if you prefer, the less euphemistic "lose") to get their London beach-heads up and running.  "We've lost money there to begin with, I think everyone's lost money there to begin with, but we've lost less and less every year, and many firms are finally making money now.   As for the UK firms not having had great success here, I think their compensation systems, which skew towards lockstep, aren't ideal for penetrating new markets; you need better incentives for sticking your neck out.  But I think they'll make it here sooner than some people expect.

"As for Orrick's commitment to London, you have to realize you're in it for the long haul.  You do need to make the investment, and be prepared to stick with it, or else you're not serious about it."

Is Orrick in a "war for talent?"  Absolutely.  And Orrick isn't competing just against other law firms, it's competing against investment banks, management consultancies, private equity and hedge funds, all of which can pay multiples of what even the most astutely-run law firms can pay. 

I noticed that Ralph had a copy of this post of mine in front of him, as he pointed to it and observed that the "hostilities" of the latest associate salary spike to $160,000 for first-years was very much a challenge to firms just shy of the top tier. They would have to swallow hard before matching—or not match.    It's yet one more pressure point on those firms.

Finally, what did he see, if he'd thought about it, life for him would hold after Orrick?  "Something interesting!  I'll never be done; I'll never quit.  I'm too curious; you seem to be as well."

I started this piece by saying that almost all of us are familiar with the trajectory of Orrick over the past 15 years, and we understand it at an intellectual, financial, quantitative, and rational level; one week ago at this time I certainly shared that understanding. 

But I now understand at a visceral level how the dynamic interaction of Ralph Baxter's personality and vision, and Orrick, have combined to create a new platform in 2007 which would be unrecognizable, and unimaginable, to an observer in San Francisco in 1989.

The question I couldn't ask, because there's no one yet to ask it of, is how to follow Ralph's act.

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Update: 4 April 2007:

A reader who is General Counsel at a Fortune 500 company writes:

“As the old saying goes, "I may be crazy, but I'm not alone".  I agree with Ralph that firms have not changed because they have not been forced to. That’s not surprising because, as lawyers, they are inherently and highly resistant to change.  In addition, most firm structures simply get in the way of such necessary change because, at least in part, they are essentially built on rewards for inefficiency. 

"Firms, despite being billed as LLP's or professional corporations, retain the essential character of collections of individual contributors -- these might best be thought of as hotels where similarly inclined itinerants stay. 

"As individual contributors, partners stay as long as they like the mint on the pillow and they leave when some new property appears more attractive.  Perhaps most distressing, however, is the observation about newbie lawyers.  If law firms are in a war for talent, they aren't asking their clients if it's a war worth fighting.  While I'm certainly prone to hyperbole, I can't imagine a first year associate in the world that is worth $160K/yr to a corporate client. 

"So long as the firms insist on trying to pass those costs on to the client, then we have a very real interest in the unreasonableness of those costs.  These are unilateral costs incurred and accepted by the firms -- that unilateral decision to increase costs justifies neither rate increases nor other forms of cost pass through. 

"That being said, we in the in-house community do have an interest in the long term sustainability and therefore the ultimate profitability of our law firm service providers.  As such, we need to instead work with our firm to reduce their costs of providing services while sustaining profitability.  That means stopping the focus on top line revenue growth and instead focusing on profitability. 

"With that in mind, firms might think twice about increasing their cost structures through unilateral decision.  Perhaps the ultimate answer is in working together to change attorney licensing requirements.  Before we start paying associates outrageous sums perhaps we should send them to a "farm team" (the legal equivalent to residencies or apprenticeships) to see if they've got the right stuff to be useful counselors as opposed to body count to feed the billable hour machine.”

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My thoughts?

I think our General Counsel friend is, in truth, exercised about junior-associate billing rates and not about their salaries: At least that's what I'd be exercised about were I he. After all, it's not his job to run Orrick, and if Orrick thinks going to $160K for first-years is in its rational self-interest, it's entitled to make that decision and live with the consequences.

This is how rational consumers behave: If I were in the market for a BMW (which I'm not), I wouldn't care how much BMW paid its factory workers, or its CEO, for that matter. I would care whether, on the whole, I perceived the BMW model I was eyeing delivered compelling value for its price.

But his other point, that clients and law firms should work together to figure out how to ensure they indeed deliver "compelling value for price" is one I heartily endorse. And, I intuit that he's thinking of fixed fees, not the billable hour. I particularly appreciate his point about having a long-run interest in firms’ financial health.  Whenever lawyers tell me that if they shifted to fixed fees clients would cut their margins to zero I tell them that no sane company wants its key suppliers to go bankrupt.  They act as if  such a thought had never crossed their minds.

Last month I had a chance to sit down with Pete Kalis, Chairman and Global Managing Partner of K&L Gates, for nearly two hours—and don't think for a moment that we even scratched the surface of all we wanted to discuss. The pretext for our meeting was the January 1st formal closing of the merger of K&LNG with Preston Gates & Ellis, but our conversation ranged far beyond that.

If you don't know Pete, he comes from the same West Virginia roots as Ralph Baxter of Orrick and Greg Jordan of Reed Smith; there must be something in the water. After getting his BA at West Virginia University, he was a Rhodes Scholar at Oxford, and he pursued that laid-back and unambitious course with a JD at Yale Law, where he was Editor-in-Chief of the Yale Law Journal. Continuing on the same elevated plane, he clerked for the late J. Skelly Wright of the US Court of Appeals for the District of Columbia, followed by clerking for the late Associate Justice Byron White on the Supreme Court.

What did we talk about? Globalization and consolidation, the war for talent, the difficulty of cracking the New York market, and the challenges of managing a global law firm in the 21st Century. For starters.

That said, Pete is as self-deprecating and engaging as they come—until he off-handedly drops a perfectly chiseled insight into the topic at hand with such casualness that you need a moment to comprehend the distilled truth that's just been revealed.

Suffice to say, the meeting was far too rewarding not to write up: So you, Dear Reader, get to be the ex post fly on the wall and read all about it.

Lest you doubt whether it's interesting, early on in our conversation Pete floated this thought experiment:

Q:   How will we know when law firms have truly evolved to the corporate model? 
A:  When they look outside their own four walls for a firm chair.

But as they say, just go read the whole thing.