The New Face of Law Firm Management Starting your firm's leadership strategy at the recruitment level BY ERIN BRERETON

Finding attorneys who will act as influencers both within the firm and externally to attract new clients can be crucial to a firm's success. A significant number of law firms have backed up that belief with a monetary reward: 65 percent of attorneys cited business originations as the most important factor in determining compensation at their firm in a 2012 survey from legal search firm major, Lindsey & Africa and ALM Legal Intelligence. However, entrepreneurial-minded leaders aren't always easy to find.

In fact, attracting and retaining talented employees to grow profitability was one of the top challenges law firms anticipated facing this year, according to a 2012 survey of more than 700 managing partners and chairs from legal consultant Altman Weil. Firms also expressed a desire to expand strategically, balancing long-term goals with client needs. Yet roughly 60 percent of firms expressed a moderate or high level of concern about their leadership succession policy, according to Altman Weil. "Either hiring 10 new associates, or searching for lateral hires — that's where real leadership comes in, when you have a plan and get everybody to buy into it," said Joseph Luzinski, Senior Vice President at legal, accounting and finance management consulting firm Development Specialists, Inc.

But before you can begin fostering future leaders, you need to find them. Starting a firm's leadership strategy at the recruitment level can encourage employees to mature with the firm — and help with retention efforts. Firms that don't actively cultivate their brightest and best can eventually find themselves in a management crisis. It may be time to ask: Is your firm effectively protecting its most valuable leadership assets?

Conveying a firm's advantages can help it locate lateral hires, partners looking to make a move, and administrative and other job candidates with strong leadership potential. A few parameters to keep in mind:

New recruits want opportunity. Emphasizing the size-related benefits your firm offers can be a strong sales pitch. Some firms, like Texas-based IP law firm Klemchuk Kubasta LLP, for example, may give younger associates exposure to high-profile cases. "Associates we hire get client interaction right out of the gate," said Senior Partner Darin Klemchuk. "That's attractive to associates, particularly ones who come from a firm where they don't get much interaction until they reach a certain level of seniority."

Smaller firms, on the other hand, sometimes offer variety and faster promotions. "You may do some litigation, some transactional work — [and may be able to] make sure you're doing what you want to do," Luzinski said. "And it can make a big difference in your opportunity to advance."

Offer candidates the chance to help the firm grow. Instead of solely beefing up pre-existing practice areas, Jim Taylor, Principal at Greater Yield, a consultant that helps legal and other professional service firms improve hiring and efficiency, suggests firms expand their staff to fulfill future needs.

The former PriceWaterhouseCoopers partner advises finding employees who can help the firm expand into new fields, instead of just filling empty staff positions. "Firms really need to determine which priorities are the most critical and match the people with the right skill sets to the needs of the firm," Taylor said.

Accurately describe the position. "[Firm leaders should] work with the hiring manager to identify what is special about the organization and ensure you're doing the proper marketing to find the right talent," Blanchard said. To identify what terms qualified job candidates will look for, examine keywords that other industry members are using to describe similar work on social media sites like LinkedIn.

Searching online for potential hotbeds of activity — such as a concentration of firms in a region that employ specialists in the field — may also help firms target their recruiting efforts, according to Blanchard.

Look for candidates who suit your firm's structure. After commercial law firm Chamberlain, Hrdlicka, White, Williams & Aughtry's profit went from $34 million in 2004 to its current $75 million level, the higher returns helped draw new employment hopefuls to the firm. But all applicants weren't an immediate match. "The question was whether or not they fit our culture," said Chamberlain Hrdlicka Managing Shareholder Wayne Risoli.

The 60-shareholder firm tries to have as many firm members as possible interview each candidate, particularly if the position involves a lateral hire. "The candidate gets to see what the personality of the firm is in collective form, and we determine whether there's enough enthusiasm to hire that person," Risoli said.

Compensation structure. Luzinski has run several law firms in trustee and other positions, including Dewey & LeBoeuf, which filed for bankruptcy in spring 2012. (An august 2012 New York Times article cited a "partner exodus" as a central cause of the firm's demise.) In summer 2012, a former partner sued the firm's management team, alleging that some partners' hefty compensation packages had caused the firm's financial issues. In a closed system, "relying on a strong leadership or committee to give everybody a fair shake breeds a lot of potential for discontent," Luzinski said.

Circulating a list of employee salaries won't fix the problem. Clearly defining the actions that will result in specific financial rewards, however, may help firms that give merit-based bonuses to promote a sense of equality. Some rising stars may still deserve — and quietly be paid — more than the system suggests. "[But as a starting point] you'll be able to compare them to the average high and low for everyone else," Luzinski said.

Adequate resources. "If you don't have the administrative structure to accommodate strategic growth, you can't expand very quickly," Taylor said. If a firm provides ample practice support so that an attorney feels s/he can do good work and be compensated, valued leadership-level lawyers and associates on the rise may be less likely to leave with clients — and a chunk of the firm's revenue. "When partners jump ship, oftentimes, it's because of money, [or] it's client-related," Luzinski said. "Sometimes attorneys will do what's in the best interest of clients, even though it can cause a lot of havoc with their old firm."

Leadership instruction. "Training and development can really help drive employee engagement, which is so important to long-term productivity," Blanchard said.

Firms stand to lose experienced leaders as the Baby Boom generation retires. Fifty-four percent of firms ranked their level of concern about the impending loss of expertise as moderate or high, according to Altman Weil's 2012 survey. "Firms bring people on and promote them based on their skill sets, but we forget to train those lawyers or accountants on how to be leaders as they move up," Taylor said.

He suggests employees obtain leadership skills through external classes if their firm doesn't offer a management program. Firms can also have speakers discuss leadership traits at company events. "Leadership skills can be taught," Taylor said. "Most professional firms don't put enough emphasis on that."

Help handling areas of difficulty. Instead of just urging shareholders to improve their collection rates, chamberlain Hrdlicka decided last year to work with a dozen who were having the most issues. The firm offered instruction on creating a dialogue with clients about fee expectations and getting the client current. "Within four months, the situation turned around completely," Risoli said. Chamberlain Hrdlicka's new 97 percent collections recovery rate has had a positive effect: net profit is up 23 percent. As a result, the profit distributed to equity shareholders grew by 78 percent from 2011 to 2012. Associate bonuses were up, too, rising from $815,000 in 2011 to $1,107,000 in 2012.

Quelling client's fears. "It's definitely a concern if all the partners I'm dealing with are 70 years old," Taylor said. "[clients may think], do I see any younger staff coming up?" as the current leadership starts to retire, clients may wonder who'll be left to handle their work. "there might be a need for a senior partner to allow a junior partner to participate in client development," he said. "That [can calm] worries about how clients might be serviced in the future."

Publicizing your firm's supportive work environment — while training associates to be rainmakers. "When I'm trying to get business, I actively sell our culture because it I think it helps," Klemchuk said. His firm, Klemchuk Kubasta, encourages attorneys to go on social outings with clients and has also showed several its green guide, a handbook distributed to new employees with information on the firm's service- and innovation-oriented core values.

Klemchuk also believes in on-the-job sales experience, which gives clients a chance to observe the firm's culture first-hand. "If I'm making a pitch or talking to a client, I often bring an associate along to see how we interact," he said.

Emphasizing the savings your pricing model offers. Consider stressing your firm's younger staff as a value. A firm with varying degrees of attorney experience may be able to offer fee levels that better suit client needs. "You then have a more flexible approach instead of, ‘my rate is $645 an hour, regardless of who you are,'" Taylor said.

Having rising stars sell your firm. Encouraging the firm's most dynamic members to participate in events like conferences and panel discussions can help attorneys gain industry credibility — and attract new business for the firm. "Medium- to small-sized firms or companies that hire law firms are not only looking for expertise in a certain area, they're also looking for a personality click," Taylor said. "So much of that service is based on relationships."

Compatibility is also a key component of employee satisfaction, and although there's no universal leadership formula that will work at every firm, offering high achievers the chance to grow, both independently and with the firm, can have a long-lasting effect. "From a leadership perspective, it all comes down to people," Luzinski said. "Part of it is compensation, part of it is mentoring — and part of it is having a career path in place."

Erin Brereton specializes in writing articles and white papers about the legal industry, business management, finance and other topics. You can reach her at brteretonerin@gmail.com or through her website www.chicagojournalist.com.