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Passion, People and Principles

Warlords and Dickensian Factory Owners

post # 4 — January 23, 2006 — a Strategy post

Ellen Ostrow, who is a coach/consultant with a Ph.D. in psychology sent me this question:

I just came back from a meeting on work/life balance in law firms and had an extended discussion with the managing partner of a large firm. His point of view was essentially that if a firm were to implement work/life policies, profits per partner would go down and as a result big rainmakers would leave, thus devastating the firm.

The discussion was particularly interesting since there were two senior Booz Allen managers present who commented that their business model would never give that kind of power to individuals.

I’m not an economist – not even a lawyer. I’m just trying to understand why all the research on employee satisfaction/engagement resulting in greater profitability does not seem to apply to law firms? Can you please help me understand this?

My own lawyer told me pretty much the same thing, Ellen. “We all know we’re making enough money, but it’s a race to the bottom. We’ve got to keep the average per partner profit going up or the powerful guys and the bright, aggressive young lawyers seeking to get to the top of the profession will leave.”

This all reminds me as nothing so much as a dark ages warlord terrorizing the villagers into compliance, while forcing them to pay tribute or they will be left to defend themselves against the roving bands of rogue bandit knights.

There’s another aspect to this. Lawyers have discovered, like the Dickensian factory owner, that you can, in reality, make a lot of money if you work everybody very, very hard and really slash your costs, and don’t give a gosh-darn about the how people (partners, associates or staff) feel about their work-lives.

But as I analyzed in a 2005 article called Are You Abusive, Cynical or Exciting?, while it’s an approach to riches, it can be proved that it is not the approach to riches. “Let’s succeed by working more hours with ever decreasing amounts of support” is not the most sophisticated piece of business thinking I’ve ever heard. Yet it’s exactly what most law firm partners tell me (and you, Ellen) that their firm is doing.

Why do law firms find it so hard to understand that a feudal warlord system forcing everyone to work harder is not the height of mankind’s achievement in civilization? I have spent twenty years trying to say all professions look similar and can learn from each other, but I’m finally prepared to concede that lawyers are different – and it has nothing to do with economics.

Peter Rouse, a UK legal profession consultant, drew my attention to a fascinating quote from Martin Seligman in his book AUTHENTIC HAPPINESS: “Lawyers are trained to be aggressive, judgmental, intellectual, analytical and emotionally detached. This produces predictable emotional consequences…he or she will be depressed, anxious and angry a lot of the time”

People like that are unlikely to be natural democrats, happy to work in a collaborative society. Depressed, anxious and angry? Sounds like a bunch of feudal villagers (and their oppressors) to me!

It only changes, just as history teaches us, when a courageous William Tell or Joan of Arc rallies the common people and forges them into a principled, mutually committed force that can throw off the oppressor and craft a more civil and economically functioning society. I’m proud to say I’ve played a small part in making that happen in one or two places, and not embarrassed to report that, on other occasions, I have not been invited back because I’m viewed as too disruptive and idealistic. Guilty as charged! I continue to believe there’s a better way, and to believe that lawyers are not condemned to follow the model they currently favor.


Patrick McEvoy said:


Your article is right on…but as usual…no one is listening. I read a survey in November last year indicating that annual chargeable hours were expected to climb to 2,300 this year!

By the way, great looking new website!

Patrick McEvoy


Rainmaker Best Practices


posted on January 23, 2006

jld said:

You asked, I’m just trying to understand why all the research on employee satisfaction/engagement resulting in greater profitability does not seem to apply to law firms?

The answer is that law firm profits come from what economists can the tournament,” not from factors that can be traced to employee satisfaction, etc.

There is a pretty good explanation in the Michigan Law Review about 6 years ago. The writer, a woman, now teaches at a law school in law school in California.

Bainbridge of UCLA has also written about touraments and how such impact the behavior of business executives.

Basically, touraments result in higher profits than one would find in a competitive market where employee satisfaction is more important.

Because of these economic rules, there is no better way. Your views, sadly, are disruptive and idealistic; lawyers are condemned to follow the current model.

posted on January 24, 2006

Sebastian Carey said:


I am not sure I agree with your statements somehow demonizing partners at law firms. I feel that you should make an effort to see them more like victims of the business model (billable hour) that has been imposed to them.


posted on January 24, 2006

Lars Plougmann said:

With a background in management consulting, with about half of my time spent consulting for the legal industry, I too am prepared to say that the legal profession is different from other industries.

But being different probably doesn’t maximise profits in the long run. Problem is that any change is going to reduce profits per partner in the short term hence nobody is prepared to evolve the business model. It makes a lot of short term sense to make the most of the current model – until fundamental change sets in. A change that will be driven by clients rather than from within law firms.



posted on January 26, 2006

David Maister said:

Which raises the question. Lars, as to WHY you think law firms are particularly resistant to incurring cost to invest in their future? Doesn’t everyone have to face that trade off? Why is the response of lawyers different (if it is.)?

posted on January 26, 2006

Joe Reevy said:

Well, I take a slightly different stance. I thnk you CAN square the circle, by looking at in-work behaviour and process. Most of the firms I deal with, effectively waste 20% of their time. Sort that one and you are home free. Also, most firms do not properly grade clients, so the fee-earners spend a lot of time on work of marginal value to the firm. Again, bigger profits for less work in the medium term. Looking at these tow areas were the best two things I ever did in nearly 20 years of practice and I get all my law firm clients to look at this at the beginning. It works.

posted on January 26, 2006

Joe Reevy said:

I think there may be two main reasons, David:

1) They usually have a rather rudimentary understanding of investment models, whihc is exacerbated because they are very much driven by short term cash-flow (fees) considerations.

2. When a partner is coming up for retirment, they are doubly against investment the benefits of which come after they have retired and the costs of which come before, reducing their partnership capital. It is a big weakness in the partnership model.

posted on January 26, 2006

John Flood said:

I agree that law firms are unique. If E. Lazega in “The Collegial Phenomenon” is right, then law firms are interlocking niches of resource hungry sets. This means the internal competition in the firm can sometimes prevent an external viewpoint from emerging and stabilizing. Hence, the warlord analogy is spot on because it is these factions fighting for associates, client control, and remuneration. In this way there can be no overarching control to dictate what the “best” mode of practice would be. I would question whether there is an optimum size for law firm partnerships, or perhaps any partnership. Once firms become so big, eg, Clifford Chance, they become unwieldy and the partnership concept is being coerced into the corporate body. On the other hand, firms like Wachtell Lipton have retained the concept of partnership by staying small.

posted on January 31, 2006