A wheelbarrow of frogs

The recent stories of senior City partners and their expenses are not very instructive, although perhaps we should not be so surprised – either at their behaviour or the reaction of their fellow partners. Lawyers are imperfect at the best of times.

What is far more interesting is what this says about managing partner risk in professional service firms, and in particular in law firms (we don’t share quite the same world view as accountants, architects and others).

The crux of the problem is the tension between a firm’s need to manage its partners and the fact that they are “highly educated individuals who require a large degree of autonomy and discretion to be able deliver very personal and highly tailored services to clients” – the quotation is from Too Many Chiefs, a study on decision making in professional service firms by Tim Morris, Professor of Management Studies at Oxford’s Säid Business School.

The problem with autonomy and discretion is not just the sense of ownership entitlement that so often accompanies them, but the risk of partners pushing boundaries when they can (and when they actually see them!). And to compound the problem, this type of behaviour is often culturally acceptable to fellow partners.

And going back to the expenses stories, don’t miss the on-line comments: I particularly liked this from Anonymous on the report in The Lawyer on Hogan Lovell and the allegedly errant Christopher Grierson,

The way that this has been dealt with, and the fact that the police have still not been involved, has simply confirmed my view of City firms as moral vacuums dominated by sociopaths.

I am not sure about the moral vacuum bit, but that anonymous commentator must surely have been reading a 2009 post by Venkatesh Rao (Venkat) in ribbonfarm.com, The Gervais Principle, Or The Office According to “The Office”, in which he identifies the “sociopath” layer as comprising ‘the Darwinian/Protestant Ethic will-to-power types who drive an organization to function despite itself’ and then states the Gervais Principle,

The Gervais Principle is this: Sociopaths, in their own best interests, knowingly promote over-performing losers into middle-management, groom under-performing losers into sociopaths, and leave the average bare-minimum-effort losers to fend for themselves.

So now you know.

And why a wheelbarrow of frogs? I once heard Nigel Knowles describe managing his partners as akin to pushing a wheelbarrow of frogs uphill in the rain.

Countdown to a new dispensation

An interesting piece in this morning’s FT by Jane Croft, Legal firms set for ‘Tesco law’, based on a recent survey by Smith & Williamson on whether, and to what extent, the top 100 law firms will use the deregulation of the legal services sector to raise external finance.

What is clear from this survey is that the top end of the legal market is preparing to take advantage of the Legal Services Act and, if the rumour mill is to be believed, so too are the external providers – whether Tesco, the AA etc. None of this is surprising.

But what about the “squeezed middle”? (Not mentioned by Smith & Williamson).

In my previous Lawslot Redux post, now six months old, I said that in the hurly-burly of practice it is sometimes difficult to take time out to think about what may be needed. I might also have added that the current economic environment is making fee earning work an imperative (no time for posts).

Yet as Giles Murphy of Smith & Williamson notes,

The provision of legal services will change radically in the next five years with consolidation, external capital, new entrants and mergers with other professions; those who are best prepared will be in a strong position to take advantage.

He is talking about using external finance to develop and grow faster than your rivals. And competitive advantage may be obtained in any number of other ways – but I am not convinced that the profession as a whole has yet come to grips with what the Legal Services Act will actually mean for us day-to-day. It is going to be an interesting run up to October.

Twittering the Billable Hour

Why am I on Twitter? The family have stopped asking, and just accept that although I long ago got rid of my BlackBerry and obsession with emails, this has been replaced by an equally worrying (to them) interest in Web 2.0: Twitter, FourSquare, Spotify, Feedly ~ to say nothing of FB and LinkedIn.

It is always easy to justify one’s peculiarities (not least as to you they are not peculiar at all) but lately I have been giving some thought as to whether Twitter is really of any value, other than to boast about my homegrown asparagus. I am quite sure that it is. For me its value lies in the links I find. These may be to legal or management articles or blog posts, be about current affairs, or, very close to my heart, bird sightings. And all delivered (usually with a little help from bit.ly) in 140 characters.

The result is that I have access to an enormous range of thought.

A very good example was a tweet by Patrick Lamb (@ValoremLamb) yesterday, which took me to the Law Society of Western Australia’s website – and ultimately allowed me to download The Chief Justice of Western Australia’s address to the Perth Press Club, “Billable Hours – past their use by date”, given on 17 May to launch Law Week 2010. It is an excellent analysis, given, as the Chief Justice admits, “with a view to stimulating interest and debate, which may in turn accelerate changes which are already evident in some parts of the profession”.

You need to read the speech for yourselves (it’s a pdf on the website). It is pretty even-handed (what would you expect from a lawyer?) and he sets out both the advantages and the disadvantages, which will be familiar to most lawyers here and there. But one particular paragraph caught my eye:

Focuses on hours, not value

Time costing focuses the efforts of the legal practitioner upon the production of billable hours, rather than the production of value for the client. It rewards efforts and not results, promotes quantity over quality, repetition over creativity.

There is quite a lot more like that, but even though the Chief Justice accepts that “time billing has a place in legal service charging” he is quite clear that there are other methods “which encourage efficiency and better allocate risk”.

A moral profession

One (among a number) of the things you are not taught at Law School is the importance of morality in the practice of law.

Instead this is something that most lawyers learn later: whether during the training contract, or in legal practice. And some lawyers learn it better than others. I have posted before, in Professional Unease, about what Bill Knight called the moral dilemma that most of us face at some stage or other in our professional careers, ‘when your client wants to do something which is legal, but which in your view is highly questionable’, and in the doing of it will be looking to you for help and advice.

Earlier in the week in the ft.com/managementblog, Stefan Stern posted about passing the parent test, referring to the remark by Stephen Hester, chief executive of Royal Bank of Scotland, to the Treasury Select Committee: “If you asked my mother and father about my pay they would say it is too high.” Stern went on (and this is what caught my eye),

We should always be ready to explain to close family members what it is we do at work, and why. The FT columnist John Kay prefers this sort of practical morality to any sort of imposed code of behaviour. If you would be embarrassed telling friends or family about aspects your job, the chances are you should not be doing it, he has said.

This is the practical morality that Bill Knight was writing about.

The danger is failing to look beyond our formal Code of Conduct; assuming that if our actions do not infringe the Code, they must be acceptable. This ignores the possibility that certain behaviour may not be professional misconduct but may be professionally unethical. Having said that, the purpose behind Rule 1, as set out in the general guidance, was to ‘define the values which should shape your professional character and be displayed in your professional behaviour’: perhaps the intent behind Rule 1, and I was a member of the Committee that drafted it, has not translated into action as we had hoped. Finally, a formal Code is no guarantee either that lawyers will recognise moral dilemmas, or, having done so, will act ethically.