Success in 21st Century Private Practice: Retooling for an Enterprise Culture
by Martha Ann Sisson '85 and Amy Leafe McCormack '89
A tangible but elusive era of change is emerging in how private sector lawyers provide services and receive compensation. The very definition of success — what it will look like, how it will be measured, and the feasibility of annually replicating it — are in flux.
This article is written from the perspectives of two former practicing attorneys who are now legal recruiters. Our goal is to identify the qualities necessary to achieve success in 21st century private practice. We believe, at a minimum, these qualities will include the initiative, innovation, and responsibility required by an “enterprise culture.”
Until 20 years ago, it was easy to measure success: attend a prestigious law school, get a clerkship that leads to employment at one or two AmLaw 200 firms, and become a partner or member of a Fortune 500 legal department. You used your legal skills to get work from (and develop relationships with) the firm’s longstanding institutional clients. In the corporate world, the guarantee of uninterrupted employment with a stable and growing company fostered avenues of career diversification. This was the path for many UVA Law alumni.
The paradigm changed in the early 1990s when the onset of vibrant economic growth and greater financial transparency in law firm economics caused a major upheaval. The American Lawyer’s annual publication of the AmLaw 200 and its analysis of profits per partner awoke a sleeping giant. Grumbles arose from the ranks of law firm attorneys who wanted to share in the wealth they helped create in emerging growth companies. In-house attorneys questioned whether the trade-off in lower pay for more predictability in schedule and job security seemed naïve in the aftermath of corporate failures, relocations, and industry consolidations.
In the 1990s and continuing until the last few years, law firms and corporate entities grew through lateral hiring at the associate and partner levels. Successful partners began to operate as free agents. If the needs of their practice, their personal economic shares, or their management goals were being stymied in their present firms, they could enter a hiring environment that rewarded movement and change. Firms accepted the premise that someone who had not thrived in one firm could succeed in a different environment. And, if things did not work out in the new firm, profitability really was not affected, and the attorney would simply move on.
The emerging world of private practice since mid-decade provides a sharp contrast to those days. Law firms now define success by economic contributions made by members in much the same manner as their commercial clients examine sales figures. In short, “What have you done for me this quarter?”
The current obsession with immediate return has crowded out long-term planning. In time, the need for immediate returns and investment in the future will balance; individuals and institutions will be more agile, able to respond to economic challenges and opportunities in a manner more reflective of successful businesses. Achieving and maintaining success in 2010 and beyond requires a new approach.
Creating an “Enterprise Culture”
Historically, firm affiliation branded the quality and nature of work performed by its lawyers. With increased lateral hiring and firm mergers, however, this quality-by-association branding has been diluted, resulting in the current client trend of hiring individual lawyers based on their professional reputations rather than their law firm affiliations. We believe that specialized expertise will continue to be in demand, but that individual lawyers must now identify and market to clients the transferability and relevance of their experience rather than rest on the accomplishments of their firms. This means that attorneys need to approach their career development as a special enterprise, an effort nurtured by their law firms but created and directed by each attorney individually.
Indeed, although experience has always been recycled or expanded for new engagements, creating an “enterprise culture” within a firm or practice group is one of the most promising ways an attorney can obtain specialized skills, practice diversification, and client exposure. This “enterprise culture” describes an environment that encourages and rewards the initiative and commitment that are critical to every lawyer’s professional growth and success.
To create an enterprise culture, attorneys need to become more self-reliant by seeking out new skill-building assignments and client interactions. Such singular focus does not necessarily eliminate a collaborative or teaching culture, but requires active initiative in mastering necessary skills and taking control of one’s own professional development. While a firm may try to be all things to all clients, the “enterprise” lawyer and her team will proactively identify and offer a skill set tailored to fit each client’s individual needs. We are unable to predict whether these skills will appeal more to mid-market, regional, global, or boutique firms, but the trend toward customized skills is clear.
Personal and professional accountability to clients and one’s professional growth needs to take the place of passive acceptance of the law firm’s traditional way of training attorneys and bringing them into the client fold. A successful personal enterprise culture will yield happy clients, happy law firms, and satisfying personal professional paths.
On Thinking — and Acting — Like the Client
An enterprise culture embraces market principles— one assumes responsibility for one’s professional welfare, share of overhead, and contribution to profits. Over the years, we have heard many lawyers muse that they would have attended business school if they were not math-phobic. Achieving success, however, requires overcoming old fears and perceived deficiencies. Law firms are businesses, and lawyers must understand that the current economic distress and instability have brought renewed focus on “the numbers.” Weak demand for legal services, overcapacity in head count, unpredictable and often declining rate structures, lowered profitability, and personal productivity measured against cost have all affected the bottom line, and firms are focusing on managing costs as clients request lower or outcome-based fee structures.
Businesses routinely face competitive pressures and disadvantages and react according to normal business principles; they dust themselves off, cut where they can, and make do with what they have while positioning themselves for what lies ahead. Lawyers and law firms must mimic their successful clients’ nimbleness. Those who do will reclaim or expand market share. Clients face these daily pressures themselves, and if you seek the role of valued advisor and business partner, you need to walk the walk.
An in-house practice offers an attorney the opportunity to benefit from the efforts of a larger enterprise. Internal counsel understand (more than their highly compensated outside counsel) that it is a good thing to be viewed by the company as a business resource capable of adding strategic value, reducing costs, and generating revenue.The same holds true within a law firm. In this current economic environment, developing an enterprise culture and the skills that encourage success requires going beyond what is comfortable and safe. Law firms must foster the elements of entrepreneurship and individual “enterprise zones” within a practice. Providing legal advice is merely one component of the value attorneys contribute. They cannot remain above the mundane practicalities of price structures and competitive economic positions and still partner with clients as strategic advisors. To remain vibrant, law firms and legal departments must understand their clients’ unrelenting business pressures and respond in kind. Lawyers, firms, and corporate counsel who demonstrate flexibility and innovation will be the ones considered “successful” in the 21st century.