Tuesday, 7 December 2010
Two weeks ago I spent 3 days in
New York City interviewing candidates for the position of the FT's first in-house attorney. It was an eye opening experience into the state of the US legal market and the sentiment of young attorneys who represent it's future. US
We barely advertised the position and certainly didn't pay for advertising nor use a recruitment consultant. We used a combination of the FT's "Careers at the FT" website, a few Tweets and LinkedIn notices and word of mouth. Nevertheless we received well over 100 applications in an approximate 3 week period.
We interviewed 13 of those candidates once, and four of them a second time. We have been fortunate to meet a range of very high quality applicants and it has been very tough deciding who to take through to second interview, harder still who to hire.
The demand for the position illustrates that the GFC has had a major adverse impact on the
US legal market, certainly compared to the market. I know there have been job losses in UK UK firms over the last two years but my sense is that they have been nothing like the scale seen in the , or at least on Wall Street. US
I don't know the
US legal market well enough to surmise why it may have been harder on that side of the pond, but one thing I have learnt during the course of this interview process is the sense of disenfranchisement many young US attorneys have with the private practice model in the . And I'm not talking here about jobless candidates who may not have cut it in the US juggernaut firms. I'm talking about quality candidates who either still are in situ at those firms or who have done reasonable stints there before moving on to good in-house roles, okay, yes, in some cases because they were "let go", but in others because they chose to leave. US
Of course the fact that young
US attorneys seek to move from practice to inhouse does not distinguish the US market from the . But what does, I think, is the way in which those attorneys articulate and rationalise their decision in a more informed and thought through way than their UK counterparts. Or maybe that's the wrong distinction, perhaps UK attorneys are just happier to tell it like it is without an affliction of British reserve. Or maybe US attorneys genuinely are less happy than New York associates. UK
When I interview candidates in the
and ask those practising in firms why they want to move inhouse, the answer is invariably the same: "I want to get closer to the business side of things". A fair if predictable answer, I expect I gave it myself in 2000 when I made the move. And whilst this was an answer given in the UK US, it was invariably supplemented with some commentary as to why the private practice model is, in the words of one candidate, "broken". US
Broken. That's a fairly emotive word and clearly not entirely accurate, at least in terms of profitability and ability to provide first class legal services. But why did the people I met think that the private practice model was breaking, if not broken? Well, these were the reasons they gave me:
1. The hours. I came across none of the faux-macho lunch is for wimps aggression you might expect from young, ambitious lawyers. These attorneys were, simply, fed up of working their long long hours. Of post-midnight taxi rides being the norm, not the exception. Of the devotion required to "the firm". Resigned to the fact that it isn't worth getting to work until 10am because work goes on all day and all night whatever time you arrive. And I want to impress that those we interviewed were nothing else than model professionals, not workshy law school drop outs.
2. The work is abstract. The more junior associates are so far away from the deal and the client ("you're always six questions away from the client" one interviewee memorably put it) they cannot see that their work is delivering anything tangible. Another spoke as being "removed" from the client. Those that had experienced the panacea of client contact spoke of the fact that they were allowed to meet clients as a source of real pride rather than something that should be the norm.
3. The work is boring at junior associate level. Much of the work is processing of standard forms and filling in blanks, "paper shuffling" as one of the candidates said.
4. Reaching partnership isn't what it used to be. The pressures do not ease after the race to the top, they get worse because partners have to maintain their position at the top of the pyramid, and that does not necessarily engender a team spirit.
5. A lack of role models. Or as one candidate succinctly put it, "I don't want my boss's job".
One interviewee said that succeeding in a
law firm is not so much an intellectual challenge, but a physical endurance test. Manhattan
Whether these perceptions are true I don't know. It's over 10 years since I left private practice and I've never worked in a
practice, so I'm not qualified to say. But it doesn't matter if the perceptions themselves are true. What matters is that the perceptions exist at all, and certainly with the level of commonality that I found. US
Of course, the arguments exist that no-one goes to work in a Manhattan law firm without knowing the sacrifices that will be involved; that lawyers straight out of law school don't get paid $150,000 upwards for working 9 to 5; that lawyers are in the service industry and clients demand the level of service they pay for; that the nature of legal work is such that deadlines exist and documents have to be drafted; and yes, that Manhattan lawyering is not for the faint hearted, there are egos at play.
But do these arguments justify making associates miserable or disenfranchised about the places they work? No, of course not.
Why do I care about this?
I'm not an inhouser who is an anti-outhouser. On the contrary. Inhousers in small to mid size teams like mine need to partner effectively with outhousers to deliver a full service internally. I can deliver a better service by working when I need to with my outhouse cousins. I want to see private practice thrive (with the footnote, as long as it's not thriving solely for the benefit of partners at the expense of clients! That’s for another post). And therefore, I think the most troubling issues are numbers four and five above. The lure of partnership just 'aint there for many. As clients, do we want the future leaders of the law firms we work with to be those individuals who succeeded the physical endurance test of being an associate and sacrificed anything even remotely resembling a normal personal life in order to get there? I'm not sure I do, I'd rather be doing business with real people. Law firms will not be well rounded environments if they only employ those who can "hack it" or " take their medicine" at the expense of a more balanced existence.
I also care, because I think it is a shame if associates are leaving their firms in droves because they are unhappy. It's a shame that the debts they incurred at law school, which are substantial in the
, were incurred all to chase some false idea of practising law. I care because unhappy lawyers make bad lawyers. Because unhappy lawyers make tired lawyers. Because unhappy and tired lawyers make even worse lawyers. US
Three more anecdotes in support of the case for the prosecution. Three Christmases ago a partner at a
firm rang my mobile on Boxing Day chasing my payment of a bill. Last Christmas Day I received 2 or 3 emails from a different US firm regarding a transaction we were working on - these were substantive emails attaching revised transaction documents, not two-liners pinged from a Blackberry for the sake of appearing busy. And in the late summer of this year, a US firm partner I know told me had only taken 4 days holiday in the last year. Now, even accounting for the fact that the Manhattan does not recognise Boxing Day and that the lawyers who emailed me on Christmas Day may have recognised different religious festivals, I think these anecdotes go some way to explaining the perceptions held by the attorneys we interviewed. US
I need to caveat some of this. First, I know that 17 meetings with 13 people doesn't make me an expert on the
legal market. Second, I know that it's impossible to reach firm conclusions based on such a small amount of research. And third, I'm privileged to know some successful US attorneys happily working in US firms who not only manage to be great lawyers but are also great people. So I'm not arrogant or stupid enough to think that any firm should make any decisions based on my musings. US
But what would be nice, is if one, two or even three partners in large US firms (or even UK firms) read this, stopped for a minute (come on, write the lost billing unit off to pro bono or client development or something) and asked themselves the question: "if I worked for me, would I want my boss's job?". If the answer is "no" (or for the more radical, anything other than an unequivocal "yes") I'd suggest it is time for a good hard look at the firm's structure and culture. Any comments below are welcome, particularly from associates or partners in US firms - have I called this right or wrong? Let me know.....
Thanks for reading. Now go feed the fish at the end of the page, they're hungry.
Friday, 12 November 2010
An issue I've always found tiresome since I became an in-house lawyer is the frequently poor quality of supplier contracts (in my case, where my employer is the client acquiring services from a supplier). In this post, I look at the problems caused by poor quality supplier contracts and offer some solutions for those of us acting on the buy-side. Along the way I hope to persuade suppliers why they should view their contract terms and the contract process as equally important to both the initial pitch for business and the ultimate service implementation.
In the majority of cases, supplier contracts fall into three buckets:
1. Non-existent (literally); or
2. So poor you cannot believe they were drafted by a lawyer (and maybe they weren't); or
3. Thorough but unreasonable and unfair.
I'm not going to deal with bucket 3 because fellow in-house blawger, Legal Bizzle, recently dealt very well and rather amusingly with a similar issue at http://legalbizzle.wordpress.com/2010/10/27/wheres-the-love/.
At the risk of this posting becoming a series of lists, to go along with my three buckets here are five reasons why I don't like being handed one of the first two buckets in supplier negotiations:
1. It lengthens the sale/buy cycle. Most supplies of goods and services are not complex or expensive transactions. A simple and fair contract short-cuts unnecessary legal time spent drafting re-drafting the contract. (Quicker sales cycle) = (happy supplier + happy salesman + happy client).
2. It is not the job of the client to spend their own time and/or money improving the quality of (or even creating) their supplier's contracts. By requiring clients to do so, suppliers are actually reducing the value of the service they hope and claim to provide, by an amount equivalent to the time spent by the client's in-house team or external lawyers getting the supplier contract up to scratch.
3. It suggests the supplier may not know what they are doing. If the supplier has not taken the time to put together a contract that reflects the service they are providing, how can the client be confident in the services of the supplier? A poor supplier contract always rings an alarm bell with me for this reason, and in my view it is a role of the legal function to ask questions internally as to whether this supplier is an appropriate choice. If you are on the supply side you might wonder what the supplier selection decision has to do with the client's in-house team. Well, unfortunately for you, a lot of us in-house lawyers are quite nosey and like to poke said noses into decisions like this.....
4. It often results in a very unfavourable contractual outcome for the supplier. Why? Because faced with a poor document which needs a wholesale re-write, the client is likely to throw the kitchen sink into the re-draft out of expediency, rather than spend the time considering and taking a more measured approach. And what is the problem with imposing onerous contractual terms on lazy suppliers? Well I prefer to be confident that a supplier has both thought about what it can and cannot comply with under a contract and has also thought carefully about its risk position. Because if the supplier is unwilling to take the time to do those two things as part of the contract negotiation, then it may not think too hard about those issues in the context of service provision to its client, which ultimately is bad for the client.
5. I've left the most selfish reason until last. Which is about internal perception of the in-house legal function. In my experience, most of my colleagues appreciate the value the in-house legal team brings to a strategic supplier negotiation, where the client is buying a business critical or game-changing service. No-one minds too much spending the time on these contracts. But when it's your Marketing department trying to enter into a low risk services engagement, or your IT department wanting to buy a few days of IT consultancy, or your Comms team wanting to appoint an agency, then it does not reflect well on the in-house legal team for these kinds of contracts to take a disproportionate amount of time to conclude. But take time to conclude they will if the poor (total objectivity here of course) in-houser has to work themselves to the bone (more objectivity) sorting out a contractual mess before the purchase can be concluded. This reflection is unfair to us as buy-side in-house lawyers because the time lag in buying the services isn't our fault, but unfortunately perceptions sometimes are unfair and difficult to overcome.
So having ascertained the problem, are there any solutions?
The most obvious one is to introduce a generic procurement contract for use with such suppliers. I've always resisted doing this, not least because generic procurement contracts are designed for widget selling, tend not to be fit for purpose and I hate being on the other side of them myself. In my experience it tends to be either public authorities or large financial services organisations who favour the one size fits all approach generally over 30-40 pages of dense and irrelevant type. However, perhaps they are the lesser of two evils, compared to the contracts sitting in my first two buckets above.
Another solution is for clients to vote with their feet and only deal with suppliers who have a seamless sales process: from evaluation of client needs, to providing a detailed and thought out proposal, to conducting business on reasonable standard terms, to professional service implementation. In truth, it's not that easy for the Legal function to determine which suppliers are appointed by individual business units, although as lawyers we can and indeed should seek to influence the decision. If this approach can be successfully adopted, then the market dynamics of supply and demand should dictate that suppliers up their game.
A more radical alternative is to go with the flow and sign whatever flimsy document the supplier has handed you as the client. Whilst it may not describe the services you think you are acquiring very well, on the other hand it may not actually adequately protect the supplier's own position on issues such as liability. On balance the contract may be more favourable to the client than it is unfavourable. I find that lawyers (including me) find it very unnatural and unnerving to take this kind of approach in practice. We tend as a profession to be document perfectionists and find it hard to take a cheap and cheerful approach and sign-off a document that we know has holes in. One amendment leads to another and drafting pride kicks-in, and before you know it you have re-written the document you were trying not to re-write. I think this is an issue worthy of more consideration and will return to it in a future post.
The final alternative that I will put forward is to grin and bear it and spend your in-house's team's time doing the re-draft, knowing that the time expended on doing so will improve your own position as the supplier's client. Perhaps it is just part of the role and we have to get on with it and stop moaning.
No single solution is the right one and as clients we have to take a horses for courses approach. I've certainly convinced myself when writing this post that I should adopt the widget procurement contract routine for low risk low spend engagements, even if it is far from a perfect solution itself.
I'll end this post with a plea to suppliers. Try not to put your clients through this process and you will find that you sell more of whatever it is you sell quicker than you currently sell it.
Proof? Kudos to a recent supplier who the FT engaged to carry out some project management work. They provided a 10 page contract, which even incorporated their own response to tender document as part of the contract. Service description was clear, termination provisions flexible and liability position fair. Result? Contract agreed speedily, services due to commence, client about to pay supplier, legalbrat home earlier that evening, beautiful sunset over the Thames on my walk to the station and train arrived on time (last bits are clearly untrue, just getting carried away).
Proof then that it's really not that difficult for suppliers to get this right, for everyone's mutual benefit.