The American Bar Association (ABA) Presidential Initiative Commission on Diversity recently released a new report, “Diversity in the Legal Profession: The Next Steps.” The report delivers specific recommendations for increasing diversity in various sectors of the legal profession, including law firms, corporations, the judiciary and government, law schools and bar associations. It is the product of numerous surveys, hearings, summits and workshops that the ABA held throughout the United States during the past year.

The report’s overarching message is that a diverse legal profession is more just, productive and intelligent because diversity, both cognitive and cultural, often leads to better questions, analyses, solutions and processes. To provide a conceptual and normative context, the report articulates and re-emphasizes four rationales for creating greater diversity within the legal profession and draws attention to similar diversity efforts and reporting in the medical profession.

This report is not prescriptive and does not provide a checklist of “to-dos” for the profession. Instead, the report is a tool to challenge assumptions, provoke curiosity, generate conversations, enable dissenting voices and encourage new partnerships and coalitions.

The report’s recommendations reflect and incorporate the multiple experiences and insights that represent the many unique ways that diversity works within different sectors of the legal profession. Each page incorporates the input of dozens of voices and summarizes and synthesizes this multigenerational dialogue about transforming the legal profession by making it more inclusive.

The report is available for download at the ABA Center for Racial and Ethnic Diversity website.

In recent times, bankruptcy and litigation have been growth areas within many law firms, and a new survey shows this trend is likely to continue. In the Robert Half Legal poll, nearly one in three lawyers (32 percent) cited bankruptcy/foreclosure as the area that will experience the most growth in the next three months. Another 22 percent said they believed litigation would exhibit the strongest growth within this time frame.

The survey, developed by Robert Half Legal and conducted by an independent research firm, included responses from 300 attorneys from among the largest law firms and corporations in the United States and Canada. All respondents had at least three years of experience in the legal field.

Lawyers were asked, “In your opinion, which one of the following areas of law will experience the most growth in the next three months?” Their responses:

“Economic conditions continue to fuel demand for specialists in bankruptcy and litigation,” said Charles Volkert, Executive Director of Robert Half Legal. “These specialties are broad in scope, because they are not restricted to specific industries or client types. Their wide reach, combined with the complex financial issues that individuals and businesses face, may result in ongoing demand in this area.”

Volkert added that the need for legal professionals is especially strong within small and mid-sized firms. “The uptick in litigation for insurance defense, personal injury, labor and employment, medical malpractice and foreclosure is driving the need for experienced professionals in these areas,” he said.

The economy is recovering, although not as rapidly or steadily as we would like, according to a recent analysis by Robert Denney Associates Inc. It is already apparent, according to the firm, that this recession will have a far greater impact on the legal profession than any previous recession. In turn, it is time for firm leaders to shift from survival management to recovery and strategic management.

Law firms are facing challenges they have never faced before and for which there are few, if any, precedents. These are some of the areas where these challenges will occur, according to Robert Denney Associates Inc., and where firm leaders should now focus their attention.

Leadership and management. Managers often have a short-range perspective. Leaders, on the other hand, typically need to have a long-range perspective and a vision. They also need to build consensus throughout the firm for achieving that vision. Leadership is different from management. Right now, both are critical.

Firm and practice management structure. The Managing Partner/President/CEO should focus on strategic issues and external factors – especially clients. But, in large and mid-sized firms, this top-level manager should focus solely on running the firm and should not have any personal client responsibilities. There should be a senior management team including an Executive Committee, a Chief Operating Officer (or co-Managing Partner) and Practice Group leaders. All positions should have job descriptions, and the partners in these positions need to be given sufficient non-billable time to fulfill their management responsibilities.

Management compensation. The members of the senior management team should have compensation plans that reward them for assuming their management responsibilities and for their performance as leaders and managers.

Strategic planning. This is more important than ever before. But, in addition to the basic plan, there need to be alternative plans as well, based on “what if” scenarios.

Implementation. Many firms develop plans – firm, practice group, client team, individual lawyer – but never implement them. Plans mean nothing unless they are implemented – and the results monitored.

Fees and providing value. While there is a growing trend toward alternative fee arrangements, the billable hour is not dead. Flexibility and creativity are needed to ensure that clients are comfortable with billing arrangements and believe they are receiving “value” – which, in many cases, just means lower fees or discounts on hourly rates.

Capital. A law firm is a business, and every business requires sufficient capital to support operations as well as growth. Yet most law firms are under-capitalized because they do not require the partners to contribute sufficient capital, either at the time they are admitted to the partnership or as the firm grows. In fact, there are still firms that do not require partners to contribute any capital – i.e., invest in the firm and become true owners.

Partner compensation. A firm’s compensation system needs to recognize not only billable hours or collections, but also each partner’s total contribution to the firm. This requires a subjective review of objective data. Some firms have even recently removed billable hours from the determination.

Profitability. Maintaining or increasing profitability should no longer depend on raising rates each year. Firms must manage their work and operations more efficiently. Leverage is still the principal source of profitability. But leverage now includes not only delegating work to lower-fee timekeepers, but also making maximum use of technology. Outsourcing, even in small and mid-sized firms, can also be a key source of profit.

Succession planning. This has become essential for both client responsibility and management. There should be a written policy that is applied on a case-by-case basis. Gradual adjustments in compensation must be part of the program. (Look for a comprehensive article on this topic in the May/June 2010 issue of Legal Management, ALA’s educational magazine.)

Senior partners. Many partners in their 60s, 70s and even 80s want to continue to be active and can make productive contributions to the firm in various ways. Management should recognize this and take advantage of this pool of talent.

Associate training and development. A small but increasing number of firms have already recognized that lockstep promotion and compensation should be halted. An apprenticeship or similar program should be instituted, followed later by merit promotion and compensation. In turn, firms must provide sufficient time and resources to individually monitor and evaluate each associate’s development.

Indoctrinating lateral entries. Despite the great increase in lateral entries in firms of all sizes, most still do not sufficiently integrate these new partners or associates into their operations, practices and cultures. As a result, cross-marketing opportunities are missed, and some of the most-sought-after laterals subsequently leave for other firms.

Culling the herd. Layoffs serve not just to reduce expenses or increase net income per partner, but also to raise the performance level – and morale – of individuals in the firm. Disruptive and unproductive people – attorneys as well as staff – must be eliminated. This should start with a review of equity partners.

Marketing and business development. Now is not the appropriate time to spend precious marketing and business development dollars on flashy and ego-centric campaigns. But it is time to return to the basics and be certain that the firm and the lawyers are focusing on current clients, target clients, target industries and new practice areas that will grow and be the most profitable.

Robert Denney Associates, Inc.contributed this article for publication in ALA Currents.

What topics are on legal administrators’ minds? Take a closer look at a recent discussion on financial ethics from ALA’s Online Discussion Forums.

Question: From time to time, our office holds office luncheons to commemorate special events (new employees, weddings, etc.). In the state of California, are we required to pay non-exempt employees during the time that they attend these types of events? Are we required to provide them with a 30-minute meal break after attending? Thanks.

Responses:

1. The following is based on actual practices I implemented in California firms, but here’s the usual disclaimer: I’m not a lawyer, and this isn’t legal advice. In California, your non-exempt employees must have a minimum 30-minute lunch break, free from any work responsibilities. There are no exceptions to that rule. When I held monthly staff luncheons at a couple of California firms, attendance was mandatory and generally added to the calendar a month in advance so staff did not plan something that would conflict. Officially, the meetings were scheduled from noon - 1:00 p.m.; however, I did not start the meetings – did not even go into the conference room where the meeting was held – until 12:30 p.m., so that the staff clearly had a work-free lunch break of 30 minutes. That time was unpaid. Employees were not required to attend this portion of the meeting, but the free food usually resulted in close to 100 percent participation.

   I would start the business meeting at 12:30 p.m., and each staff person present was paid an extra 30 minutes that day. Although the meetings were mandatory, inevitably someone had a doctor’s appointment, was out ill, etc. If you physically did not attend the meeting, you did not get paid the extra half hour.

   Your question, however, primarily pertains to commemorating special events. My firm occasionally had what I would call “social functions” where the firm might provide the food for the event, but the purpose of the get-together was not firm business. We also drew a distinction on whether attendance was mandatory or voluntary, but this can be tricky, as a disgruntled employee could always make the claim that even though the firm said participation was “voluntary,” the firm “expected” me to be there. If the event was clearly of a personal nature, such as celebrating an employee’s engagement or a baby shower, in our environment that was a voluntary event and we did not pay non-exempt for their time attending. Similarly, if an employee was retiring, moving out of state or the like, we considered that to be a voluntary event and it was not paid. However, if we had some kind of function to introduce a new employee (and this was typically done only for lawyers), while a social event, we considered this to be more business related, and it should be paid time. To avoid paying overtime, whenever we did have a new lawyer introduction event, we would schedule it for 5:00 p.m., so that it fell within the normal non-exempt paid working day (9:00 a.m. - 12:30 p.m. and 1:30 - 5:30 p.m., a 7.5-hour workday). Staff members were free to leave at 5:30 p.m. and if they did stay later than that at the introduction event, it was on their own time; however, if their lawyers required them to return to their desks and complete some work, the additional work time was paid time (straight time for the 30 minutes between a 7.5- to 8-hour work day and time and a half after 8 hours, per California law).

2. t’s difficult to add much to that excellent response, but I do want to emphasize that whether the time non-exempt staff spend at such events is compensable or not should not be determined by whether or not the function is labeled “voluntary.” If the event is something employees think they are expected to attend or if not attending will in any way put them at a disadvantage, the time should be paid. Whenever I schedule lunchtime events with any sort of work-related component, I ask attendees to take 30 minutes immediately before or after to do something personal off the clock.