Category: Legal Consultants

How To Hire And Retain Lawyers: It Does Not Need To Be So Expensive

May 24, 2018

A chief complaint from mid-size to large law firms is there aren’t enough good lawyers to hire. This comes at a time when law school applications continue to rise, and there are around a million lawyers working. It’s difficult to believe they’re aren’t enough good lawyers, given the oversupply of attorneys. Perhaps the traditional law firm hiring structure and career path does not accommodate the abundant supply of lawyers. This article will analyze traditional law firm staffing, the supply issues it raises, and offer some alternative strategies to finding more good lawyers.

The Issue

A balanced law firm requires a blend of lawyers who are workers, “cerebral” technicians and rainmakers for sustained success. Too many or too few of any category can be a disaster for a law firm and clients. How can firms recruit all three types of lawyers?

The Traditional Law Firm Hiring Model No Longer Works

Currently, law firms hire attorneys with the view that they should become owners in order to build a career with the firm. The process starts with hiring lawyers out of law school at often loss generating starting salaries caused by the high salaries. 1 Over the years, this starting class of lawyers will earn similar raises and after three years, when the attorneys become profitable, half of them have left. 2 The remaining trained lawyers work increasingly long hours for eight to eleven years when they are considered for partnership often based on their ability to generate revenue for the firm. Talented lawyers who are not rainmakers will be passed over for partnership. Some lawyers are pressured to find new employment in agonizing decisions for a firm that values their ability, but needs a revenue generator. The traditional hiring model excludes many good workers from successful careers and puts incredible training costs on an organization that constantly must locate “cream of the crop” talent.

Another characteristic of the traditional law firm hiring model is the class system. Lawyers are hired and evaluated based on a graduation date from law school. This class year system results in underpaying the best of the class to afford overpaying the middle of the class and bottom of the class. It also sets the profile for how firms often hire their lateral attorneys. Does any other organization in corporate America hire with the understanding that the year you graduate from school determines what role you will fill in that organization? A better solution might be to examine the role the associate will fill when making hiring decisions.

The Players

Many entry level and younger associates are viewed as workers on manual intensive projects and trained to be Technical Lawyers. Technical Lawyers staff document productions, document reviews, and due diligence projects. They prepare pleadings, present motions, and perform basic research and other functions. They are the “Worker Lawyers”. More experienced Worker Lawyers handle files, manage discovery and due diligence projects, draft agreements, and evaluate cases. Law firms lose money on Workers until their third to fourth year. 3

Despite the fact that newer associates are not profitable, they receive salary increases. Last year salaries increased anywhere from 20 – 40% at the largest law firms in reaction to dot.coms on the West Coast. 4 Partners at virtually every single firm in the city have expressed concern with the salaries they have to pay. 5 “It isn’t the rising star who graduated at the top of the class that hurts. It’s the B+ student who needs much more polishing.” commented one partner. That associate is grossly overpaid and as a result, most in this situation are not given a fair chance to become Technical Lawyers.

The Solution

What is the answer? One answer is to have two types of entry-level associates. One group is the top of the class and is hired at premium salaries based on law school credentials. These attorneys have a strong pedigree. Given the appropriate training, a good work ethic, and some luck, they will become lawyers who look great in Martindale Hubbell as Technicians. If they can become Rainmakers, they can be superstars in the firm. Every firm needs a supply of these attorneys.

The second group of the associates filling Worker Lawyer roles could be hired at a lower salary and offered the chance to be trained and develop at the law firm. This type of lawyer had a B or B+ average in law school, attended a second tier law school, and/or is looking for a change in career direction. These attorneys should be hired under the understanding they must work hard, be team players, and show on the job that they can learn the practical responsibilities of law in order to advance.

A lower cost group of Worker Lawyers can be hired when actual need merits additional attorneys. Contract attorneys can control firm overhead by eliminating the need to maintain a staff of Worker Lawyers and add attorneys as needed. More importantly, Worker Lawyers can be profitable immediately because of the lower salary. Firms can now afford to train and mentor lawyers based on work ethic and personality. There is also no requirement that these lawyers be entry level, only that they are willing to trade hard work and toll in the trenches, for a paycheck and possibly an opportunity to advance. In fact, this broader approach to hiring opens up larger law firms to many more candidates, suitable to become Worker Lawyers who might also be able to develop into Technical Lawyers and Rainmakers.

Some skeptical partners have reacted to portions of this strategy by pointing to the morale risk of creating a firm with different classes of lawyers. 6 Why build barriers? Law school does not create great lawyers. Law firms do. If a lawyer shows over time that they can perform, have a great attitude, and a desire to improve as an attorney, why would any firm wish to hold that attorney back as a Worker Lawyer?

Successful law firms utilize paralegals to reduce costs. In the 1970’s, the idea of bringing in non-lawyers at reduced costs was far more controversial than this idea of hiring attorneys at different salary levels. Few lawyers would question what a success the introduction of paralegals has been. In addition, what client has ever asked for a lawyer’s GPA, LSAT score or what they published on Law Review? General Counsel for local corporations overwhelmingly responded on a recent survey that they would prefer contract attorneys staff projects as Worker Lawyers to higher priced young associates. 7

In fact, some corporations are now taking a hard look at how firms staff their Worker Lawyers. Recently, a Pittsburgh based Fortune 500 company put out an RFP requesting that law firms consider contract attorneys to reduce the cost of the project. Although the RFP was sent to very reputable law firms; this unusual step of suggesting how the law firm staffed a project indicates this client did not feel traditional law firms were staffed to offer Worker Lawyers at fair hourly wages.

The successful law firms needs both Workers and Rainmakers. The current hiring model locates only the pure technician who now get a disproportionate amount of attention during the hiring process at large law firms.

Up and Out Revisited

Technical Lawyers are needed to research, draft and polish briefs, learn and evaluate complex regulatory rules, set legal strategy and solve complex problems. These lawyers become Technical Lawyers after working hard to learn complex material. But they do not always generate new business. Some law firms are now offering severance packages or terminating technically strong lawyers because they aren’t generating new business to offset starting salaries for new recruits, technology investments and opening new offices.

The “up an out” mentality is flawed. Given the prohibitively high starting salaries, it is cheaper to find or retain a trained lawyer who can fill a role, than hire a newly minted lawyer and train them. Hiring skilled lawyers with 15-20 years or more experience to fill a technical role is recognized at national firms such as Akin Gump. 8 This structure has become known as the “Diamond Structure.” These attorneys are hired laterally or tested on a contract basis to ensure their work product and fit within a firm’s culture. They can also be brought in on special projects as contract attorneys when peak periods occur to round out a firm’s practice. Law firms recognizing the value and need for this technical skill can avoid the dilution of firm profits from carrying too many technical equity partners by categorizing technical skills into several levels of competence as opposed to class years. Each level of technical competence results in higher salaries based on the enhanced value the attorney’s billable hours generate for the firm. This is fair to both the owners of the firm and the technical lawyers.

One innovative firm, Washington, DC based Dickstein, Shapiro, Morin & Oshinsky, has three levels of attorneys after the first two years and no class years. 9 There is no need to advance further than any particular technical level. Clients are told that the lawyers placed on the engagement have a certain skill set that justifies the billing rate. This approach is more efficient than an “up and out” mentality. This approach also allows for retention of technical lawyers and makes it easier to justify billing rates to clients.

Rainmakers

The last group of lawyers are the Rainmakers who bring in the business. Law does not offer much training for generating business. Law firms can help in this regard by attempting to hire more rounded lawyers instead of focusing largely on law school grades. Before salaries spiraled out of control, law firms could afford to hire and train lawyers with people skills. Look at the partnership roster of any large firm. A large proportion of the partners have good academic records that may not meet the minimum hiring requirements that law firm places on new hires. This illustrates the weak correlation between grades and partnership ability. Law firms are missing a huge number of the potential partners by betting huge salaries only on top law students.

A second element to growing Rainmakers is to make the law firm competitive from a cost standpoint. By controlling overhead and salary structures, and staffing up with interim staffing, law firms become more profitable without asking anyone to bill an additional hour. As a result, young lawyers working in these efficient firms can generate work that does not seem insignificant to an overhead laden firm. They also can compete for clients with lower billing rates if overhead is reduced.

There are some problems in overemphasizing hiring for Rainmakers throughout the organization especially when the local region is only growing 4%. 10 It is well known that more business can be created by internal cross selling than from pulling lateral partners from other firms.

Conclusion

Today law is extremely competitive. Firms which fight for talent purely on hiring the best and brightest at the highest salaries are creating very expensive firm structures which do not fulfill all the work needs of a firm. Creative approaches lend a better result and a more efficient law firm. The present slow down in the market may be a great time re-examine how to do a better job in staffing a law firm’s operation.

By Karl Schieneman, Esq. (MBA) & Jill Bertani Horner, Esq. of Legal Network. Legal Network is a full service legal placement firm headquartered in Pittsburgh, PA.

Lawyers For Rent

February 16, 2018

How Legal Networks Ltd. is helping free-lance lawyers and local businesses by providing technical, niche-oriented legal service projects that bring the two together cheaply

By Daniel Bates

When the former Ben Franklin Technology Center of Western Pennsylvania faced massive mismanagement and a government investigation into other improprieties, the government leapt into action.

It fired the top management and all but closed the local state-funded program that was supposed to spur economic development by funding the commercialization of new technology.

But then the completely revamped center, now called Innovation Works, found itself with a rather odd and cumbersome legacy: more than 400 funding contracts with local technology developers, in which the recipients promised to pay royalties to the center if and when the technologies became revenue generators. The problem was, few had ever paid royalties. Worse, nobody had monitored or enforced the agreements.

Enter Innovation Worksı corporate counsel, Klett Leiber Rooney & Schorling. According to Doug Goodall, director of Innovation Works, the law firm acknowledged that someone needed to review all of those contracts to make an assessment of who might owe what.

That someone needed not only legal expertise in the area of contracts but also a technical understanding of technology transfer and development ‹ as well as the time to commit to such an enormous and unusual project. This wasnıt something Klett Leiber wanted to tackle ‹ nor could this government program afford to pay its hourly rates for the project.

This was a job for Legal Network Ltd.

Legal Network Ltd. is, in effect, a temporary services firm that gives companies access to a database of more than 2,000 attorneys who either work as sole practitioners or have been downsized out of their corporate counsel jobs and decided to free-lance their services. Clients pay between $50 and $100 an hour to rent an attorney, who is hired on an hourly or project basis. The firm then pays each attorney an hourly rate, but only for number of hours worked.

This alternative form of practice gives attorneys the freedom to pick and choose assignments without having to hustle new clients themselves. In fact, many on file are sole practitioners who use the service to fill in the gaps during slow periods. As Karl Schieneman, managing director of this 5-year-old firm, notes, the attorneys best suited for this kind of work are ³not the rainmakers in law firms.² Rather, they often are the ones with the best technical expertise who are good with document review, research and other sometimes tedious legal work.

For clients such as InnovationWorks, the service gives them access to a large pool of attorneys with often highly technical niche expertise, without having to pay the much higher prices of a large law firm with lots of overhead expenses.

Michael Betts, a Blawnox-based sole practitioner who specializes in commercial corporate litigation, often turns to Legal Network to help fill the legal ranks in particularly large projects.

³It works very well for me because Iım able to manage my overhead a lot better than if I had to hire other lawyers,² Betts says. ³I use the services when I have a major or more complex matter that requires more than one lawyer, or if things have to be done in a certain timeframe. A lot of those projects are cases where I need a lot of document review or research.²

Legal Network Ltd. is the brainchild of Schieneman, an attorney who earned a masterıs degree from Carnegie Mellon Universityıs Graduate School of Industrial Administration in 1992 and a law degree from the University of Pittsburgh. His partners in the firm are Brad Franz, an attorney with Houston Harbaugh, and Lawrence Kolarik, a national accounts manager for ADP.

Schieneman came up with the idea while working as an associate-on-contract with Pittsburgh law firm Marcus & Shapira. He had been hired on contract specifically to help with a large lawsuit against Phar-Mor during its sizable financial scandal.

³No. 1, it got me through the door without having to go through a difficult hiring process,² Schieneman says, ³and my performance is what opened up new doors.² The idea of being hired on contract to work on a project, he says, ³appealed to my background of being a businessman and a lawyer.²

While continuing to work for Marcus & Shapira, he formed Legal Network in 1995, and by 1996 was breaking even. In 1997, the firm experienced 200-plus percent growth in revenue over the previous year.

³I thought we were catching the national trend at that point,² Schieneman says. ³After all, itıs the fastest-growing segment of the professional services industry. Itıs a $500 million industry that is growing at a rate of 30 to 40 percent.²

At the same time, he found it more and more difficult to manage on the side. So he ³took the leap.²

Today, the firm employs three full-time people and maintains an active database of more than 2,000 lawyers. Active lawyers, he says, likely will earn between $60,000 and $100,000 a year, annualized. Schieneman says the firmıs revenue this past year was expected to climb to between $1.5 million and $2 million, although he would not be more specific.

³But thereıs no overhead involved here,² Schieneman says, except for the small office space his firm occupies in the Regional Enterprise Tower in downtown Pittsburgh.

Back at Innovation Works, Doug Goodall says he liked Legal Network because it has ³a cadre of specialists who are available on a free-lance basis.²

For its contract project, Innovation Works hired attorney Patricia Koehler, whose background was in technology transfer and development, through Legal Network. She set up shop full-time in the organizationıs offices, offered an initial assessment of the scope of the problem, then set out to scrutinize every one of more than 400 contracts that had been established over the past 10 years.

As a result of her work, Innovation Works has secured a commitment from the funded companies to pay back nearly $600,000 in royalties, and Goodall expects that number to increase as the organization moves forward in its effort.

³It not only was a legal issue but a technology issue,² Goodall says. ³And [Koehler] did a masterful job for us.²

So masterful, in fact, that, when the Legal Network contract between Koehler and Innovation Works ended, the organization secured her services directly for future projects.

Says Schieneman of his success: ³Itıs a fun business when youıre helping lawyers and helping businesses solve their problems.²

How to Judge Your Agency

January 25, 2018

There are many reasons why you should consider finding an agency to market your services for any type of legal position. A qualified agency will have targeted marketing strategies and possess established contacts in their legal community. Agencies quickly fill positions with qualified candidates without the time and expense associated with evaluating hundreds of resumes. These advantages cause clients to bypass advertising positions, relying on agencies instead to find qualified employees.

Criteria to Remember When Selecting an Agency

Fees

Be wary if an agency tries to charge a fee for accepting an application. The industry standard is for agencies to earn their fees based on placements with the fee paid directly by the client. Legal Network never charges its placements a fee of any type.

Qualified Oversight

A credible agency will have appropriately skilled placement directors who analyze the qualifications of their candidates. If not, the candidates resume may be sent to inappropriate jobs resulting in a waste of time or the agency will flood job inquiries with dozens of resumes, diminishing the odds for a qualified candidate to be placed. Our Placement Directors are attorneys who employ a rigorous three step evaluation process in matching attorneys to potential positions. Paralegals and legal secretaries are evaluated by a similar three step evaluation process over seen by a placement director active in the Pittsburgh Legal Administrators community.

Technical Capabilities

Even the best evaluation process means little if the agency is ineffective in quickly identifying you as a candidate. The probability on being placed diminishes if your resume ends up in a file cabinet, subject only to the recall abilities of the agency’s placement staff. Legal Network employs a state of the art database, which captures information about our lawyers based on their initial review and allows us to run sophisticated searches for the best candidates.

Agency’s Reputation

If you haven’t heard of the agency, many potential employers haven’t heard of it either. Legal Network has been the placement leader in Western Pennsylvania since 1995. We are owned and operated by attorneys who are fully knowledgeable about the marketplace. The organization has pioneered interim legal staffing, had numerous articles written about its services and appeared on local television shows. Legal Network employs an extensive mailing campaign supplemented by targeted advertising.

Compensation

The salaries being offered by legal organizations vary widely. Legal Network has been published based on our analysis of salary trends in the region. You can look to Legal Network for guidance on whether salary offers are reasonable so you’re not short changed when taking a new position.

There is also wide divergence among temporary placement companies in terms of compensation offered. At one time it was common for placement companies to keep upwards of half of what the client was paying. Therefore it is important for candidates considering a placement agency to ask; “How are you paid?” Is your compensation low? Are you receiving any benefits? Legal Network recognizes its employees as stakeholders in the organization. We employ a strict pricing formula that enables placements to earn a wage comparable to what they would make as employees in a mid-sized law firm. Furthermore, Legal Network provides a wide range of benefits including vacation bonuses and a 401K plan.

Confidentiality

Will you be contacted before your resume is ever sent out on a job? Your name and reputation are important commodities. Don’t let an agency indiscriminately mail your resume to potential employers. Too much exposure could reduce your marketability in the legal community. There is also the risk of embarrassing situations if positions in which you have no interest receive your resume. Legal Network never releases any resume until you have been contacted and consented.

Professionalism

How does the agency handle your inquiries? Are they professional in their response to your resume? Are they knowledgeable about the field and able to answer your questions? If not, they probably make the same impression on potential clients. Legal Network emphasizes sales training and professionalism in how it conducts business.