But How Do You Turn It Into Work?

I am endlessly fascinated with the financial crises.  Not just watching my 401K go down the tubes, but I love the complexity and twists and turns of the entire process.  Having been involved in the financing of a number of the players in the commercial mortgage back securities area, I have a better understanding of the situation than many of my contemporaries.  The problem with that fascination is that I need to figure out how to turn it into business.

With the credit crunch my lending work has frozen solid for the moment.  That give me time to study the intricacies of the credit crises including swap contracts that are broken and interest rate caps that have disappeared when the counter party disappears into bankruptcy.  The problem is that none of that so far has lead to real paying work.

I know that at my stage of life I should be thinking about retirement, but all of this action in the legal and political arena, and my falling 401K, make me anxious to do something besides sit on the sidelines and observe.

Since my background is in bankruptcy and work outs, everyone thinks I must be busier than ever, but it is not the case.  We are not really a debtor shop and most of my client’s do not seem to be having a lot of bankruptcy issues just yet.

I have been trying to keep myself visible at work by circulating anything of interest on the bailout, swaps etc, but it is not billable and I know that the lack of billable hours will be a problem when my contract comes up for renewal.

I have also tried to organize groups at my firm to start refocusing on the next round of business problems, so we can get in front of the right types of potential clients.  That is on going work and sometimes I get very frustrated that it is not moving forward faster.

Patience has never been much of a virtue for me.  I like the action and I like to be busy.

I realized this afternoon that it has been months since I have posted anything to this blog and I have missed the exercise of writing.

We certainly live in an interesting moment in time.  I will be sharing more of my thoughts but in the meantime good luck to all of us.  As the saying goes “In chaos there is opportunity”.  I hope that is true because we certainly have the chaos.

What Next?

Having just passed 61, I know inevitably my very nice mid sized firm will start to think of retiring me.  The problem is that I still have a lot of lawyering left in me.

I have started to think about what life will be like after the twice monthly pay checks stop.  While I have always fancied myself as a very self reliant soul and have built and re-built practices at a number of mid sized firms over the years, I harbor some anxiety about the next step in my checkered career.

I try to use this blog to give advice, but I am afraid I don’t have a lot of advice for myself on this subject.

My fantasy is that I will be able to work out of my condo and borrow or rent conference room space when needed.  My mix of bankruptcy, workout, commercial lending, franchise work, commercial real estate and general corporate work hopefully will be saleable in the marketplace,

Also while I live a stones throw from Boston, I think about whether it makes sense to actually continue to have an office in the Hub.  There is the issue of staff or no staff.  Malpractice insurance is an issue that I have never had to deal with directly.  Lots of decisions to make.

Then there is the issue of timing.  It appears that the firm by and large starts to ease people out at 65 to 67.  That gives me 4 years or more before making the move.  The question is if I am better off making the move in the next year or so or waiting until the axe actually falls.

Lots of questions and no answers for the moment.

Why Do I Still Get So Anxious

You would think that after 35 plus years I would have the emotional side of legal practice down.  Not so, I still get very nervous before every  contentious conference call or negotiating session, and I particularly get nervous about going to court.

I am not sure this is personal or whether most attorneys feel the way I do.  I know much of my nervousness comes from my early experience as a lawyer, being buffeted by unkind judges and very surly counsel on the other side.

I have learned how to hide my anxiety in most cases.  I think a lot of it stems from being a very competitive person.  I try to remain cool, but in my heart I don’t want to screw up and don’t want to lose.

Unfortunately  in this profession losing is part of the game.  I even once lost an uncontested motion for a default judgment as a young lawyer.  The judge knew I was unprepared and it showed.

I do it less now, but I always used to critique every conversation I had with anyone.  I would go over what I said and what they said over and over again.  I always found more fault with my side of the conversation.

Unfortunately, I think being anxious about every word and action is part of the lawyers disease.  While it has not been great for my peace of mind it has been a great motivator.

I can understand why many of my contemporaries want to leave private practice or any legal work behind as they enter their 60’s.  The level of stress that is part of the profession is constant and largely self imposed.

I have developed some tricks to deal with my anxiety including meditation,  but it all comes down to being overly prepared.  My problem is a tend to go over things while I am trying to go to sleep and in the shower.  I actually like off the cuff speaking, but not off the cuff negotiating or court room work.

The problem is that I still get a kick out of the actual process even though it does drive me crazy sometimes.

As the generation behind me starts to be worn down by the stresses of private practice, it is going to be interesting to see how they react.  My feeling is that in 10 years or so there is going to be a crises in law firms as whole generations of attorneys retire rather than follow the old path of dying at your desk.

It will be interesting.

Law as a Business

I have spent my career watching a change in the approach to managing law firms and lawyers that I call “law as a business”. When I started you were expected to work hard, but the goal was to be a good lawyer and become a partner.  Marketing was primitive and consisted of lunch and golf once in a while, but mainly if you were a good lawyer work came to you.  Quaint to put it mildly.

The idea of profits per partner was really not a measurement of a firm rather it was what happened when the profits were divided up at the end of the year among the partners.

While we did have our “star” producers it was always assumed that a lawyer would be able to afford a solid upper middle class existence, but not more.  Our clients were the rich people that we served.  The business people made the money because they took the risks.  The lawyers got paid for expertise–up front and in cash– but we never thought we deserved to get the ultimate upside.

Some lawyers frustrated with the division between client and lawyer went off to become developers or business people.  The real reason to continue to practice law was not to become a millionaire (when that meant something) but to be a trusted and respected professional.

We were professionals with all that meant.  You were suppose to go to a firm and some 50 years later die at your desk.  Retirement was for our clients not us, because we were working not just to make money.  Being a partner was a meaningful honor.  It wasn’t so much the golden ring as it was status in the community and security that you would be part of a firm for life.

The firm for life thing ended early in my career , when the first firm I worked at engaged in a couple of very bad mergers with smaller practices that did not work.  I knew the jig was up when one of the partners told me that “You may have bet on the wrong horse.” after a parnters meeting.

That firm is long gone, merged into another firm and all of my class of associates moved on before that merger.

I was an associate at another larger firm that after an uprising of associates for better “life style” conditions and more input in the partnership, (this was the 70’s) fired the trouble makers for performance reasons and hired a bunch of us who were grateful for the job and were willing to put in the hours.

But even that firm offered the possibility that if we drones worked hard enough, partnership was at the end of the rainbow.  It being the late 1970’s and early 1980’s, a time of tremendous growth in law firms, partnerships were offered in abundance.  Still the pot of gold was modest and the idea of status and security were the goals.

Nostalgia is great, but not the point.  These were not the good old days, but rather a transition period where the idea of a large law firm being less than 100 lawyers was starting to change and the ability to act as a true partnership was starting to fade.  I don’t think that with the rapid growth in firms and the law the old model could have held, but I do think that the idea that a professional organization can be run as a corporation does not work either.

As I always say lawyers were the kids in kindergarten marked down for “does not play well with others”.  In that environment a strict corporate culture does not work.  It encourages the least creative and least ambitious to stay the course, and with partnership being just a title subject to removal at the whim of a management committee, discourages the very people who will continue a firm into the future from putting up with the labors of being an associate.

I am sure it is impossible to run a firm of 1000 plus attorneys as a real partnership, but the current model which leads to a Caldwalader situation
can do nothing but damage the future of any firm.

While marketing and management have to change, that change should be focusing on breaking down the old model of solo practitioners herded together into a firm, into developing a model where each individual is allowed to develop fully.  Sounds a little new age, but current profits per partner as the only focus is very short sited and will lead to more mergers and dissolutions of firms in the future.

More in future blogs.

What Do You Do With An Older Lawyer

There has been a lot of press in the legal world lately about abandoning mandatory retirement.  Our firm starts to transition lawyers ( a polite way of talking about mandatory retirement) at age 67.  One firm I am familiar with requires that lawyers start transitioning their clients to younger attorneys at age 60.

There is a bubble coming of partners in their early to mid fifties making mandatory retirement a problem in the next ten years.  This bubble has a lot to do with the extrodinary growth of the ranks of partners in the 1980’s and the contraction in the number of partners being made from 1990 on and the decreasing number of associates who are choosing to stay through their entire career with a firm.

This leads to a real question of what do you do with older attorneys in a mid size to large firm.  This goes to one of my pet peeves about lawyers.  They generally were the kids who were marked down for “do not play well with others”.  Because of that most executive committees of law firms still look on performance as if the firm were a band of solo practioners.  Despite the best efforts of consultants to convince law firms that group effort and group responsibility is important.  I have been impressed by the efforts in this regard of  David Maister .

In this fast moving economy any attorney over 60 years old probably has lost a number of contacts either to retirement or layoffs.  Connecting to the 30 and 40 year olds who make up the core of many clients is difficult for the senior attorney.

What a senior attorney has not lost is the ability to practice very good law.   It strikes me that there is a role for the senior attorney to train and motivate mid level associates, senior associates and even young partners,  who are just getting their bearings and making the transition from service provider to the firm to trusted advisor.  Not to sound like a fan boy for David Maister but his excellent book “The Trusted Advisor” is a must read for any associate thinking of making it as a partner.

My pitch to any firm with a group of lawyers over 60 is to change how they are evaluated from dollars brought in on matters they originate to dollars brought in and realized through there efforts with mid level and senior associates and young partners.

While this is a self serving pitch, I think it is correct.  The bottom line will always be the bottom line, but unless law firms start looking at the senior resources as resources and not disposable, the coming bubble in over 60 attorneys is going to being down many a mid sized firm and damage many larger firms.

From the American Bankrutpcy Institute

I survived the cocktail party and a dinner given by one of the program sponsors.  Both were actually fun, other than the fact the there is not enough parking at Ocean Edge for the attendees who could not get a room at the resort.

It was good seeing old friends.  I have now joined the fraternity of the old timers.  People my senior come up to me and greet me like a long lost relative.  There is something about a familiar face in a changing world that is very comforting.

I noted that there were not a lot of younger lawyers in the crowd.  The average age appeared to be in the early 40’s.  One of my buddies pointed out that a many firms will not pay for the younger people to come to these programs.  That is a shame because personal relationships are very important in the bankruptcy area.

You really need to know whose word is to be trusted and developing a friendship outside of court has always paid off for me.  Having a reputation as being a person of your word can make a big difference in a difficult negotiation, and bankruptcy, while much more formal then it once was, is still about negotiation.

I am working in the hotel room trying to keep a few clients happy and then back for a dinner at Ocean Edge. Hope I can find parking or at least the valet doesn’t hide my car.

American Bankruptcy Institute

I am off to Cape Cod tomorrow afternoon for the annual Northeast Conference of the American Bankruptcy Institute.  Even though my practice right now is less bankruptcy work then in the past, this is sill the group I grew up with as a lawyer.

Some of the attendees are people I have know for over 25 years, including former partners and a rath of consultants I have worked with or brought into cases.  Actually,  I physically look a lot like one of the local Bankruptcy Judges, which makes for some fun conversations at the convention until people realize they are speaking with the wrong person.

My first experience in Bankruptcy Court was in RI in 1973.  Until about 1992, I spent a great deal of time at the Bankruptcy courts of MA and RI.  Since then my practice has taken a turn away from actual bankruptcy work, but I still have fond and frightening memories of dealing with the members of the bankruptcy bar.

For some reason these folks have always been the people I have been drawn to as friends.  In fact, the world of workouts and insolvency has been a fascination of mine ever since my first boss in 1973 asked me if I knew any bankruptcy law.  I said yes and immediately ran to the RI State Law Library and started reading the volumes of Collier’s on Bankruptcy( no web based resources then).

I can only stay for part of the conference, but I look forward to seeing people who I really think of as friends, even though on occasion they have been quite cutting to me in the Bankruptcy court.

I will try and blog from the conference if anything strikes my fancy.

Working From Home=Sleeping

Jay Fleishman’s post  “I Don’t Have a Home Office”
got me to thinking about why all of the firms I have worked were never comfortable with my working from home during the week.  Jay and I did tweet on the subject and I loved his analysis that most mid sized firms equate working from home with sleeping or doing the laudary.

I have always maintained a very extensive computer set up at home, including VOIP and Skype both in and out.  I have my scanner, printer, fax etc and my Apple MacMini seems to be able to handle most things well.

Additionally, we have RDP connectivity to the office, and I tend to think that working from my office at home (its own separate room) on a day I don’t have to go to court or meet a client is an efficient solution to the pain of commuting.  More importantly I have the company of my two yorkies.

The problem is that everyone at my mid sized firm, and actually at every firm that I have ever worked at, assume I must be ill if I am working from home on a workday.  I get the “sorry to disturb you” no matter home many times I tell them that I am just spending the day in my home office rather than my downtown office.

I think that people do need separation in their lives and sometimes setting up office versus home is a way of trying to segregate the two.  I had a friend years ago who could forget all about the office once he walked out the front door and until he returned. I am terrible on separating the two.  I am not recommending this as a way of life, but it is my craziness.

Actually no one questions working from home on the weekend, and in fact, it is expected since most people do not come into the office over the weekend anymore.  Also working from some resort or beach while on vacation is a sign of a true lawyer in the eyes of many of my colleagues.

I understand that old habits are hard to break, but with high power computers, remote access and the high cost of gasoline, I thiink that the time has come to stop looking down on those of us who choose to work from home from time to time.  Anyway it is harder to catch a  nap at the office.

Lawyers and Business Decisions

One of the great mysteries of being a lawyer is when you should and should not become involved in the business decision of a client.  I remember as a very young lawyer receiving a call from a client’s wife shouting at me for letting her husband buy a property at a foreclosure sale.  My only answer was that he is an adult and I was just there to help him with the process.  That did not stop her yelling.

The problem of course is that while I think that a lawyer should always work to accomplish the client’s goals, not all client’s really know what those goals are or should be.

Unfortunately, my track record as a business person, even in managing my own practice, would not put me high on anyone’s list as a business consultant.

The most useful thing that I think that a lawyer can do is bring experience in similar transactions to bear on the issues in a deal.  Documenting any business transaction is a balancing act.  You want your client to bear as little risk as possible for a bad outcome and the other side wants the opposite.  If you have experience you can help a client understand the risks and if the risk can be shifted.

Once I have helped a client to understand the balancing of the risks (from a legal standpoint), I think that the most useful thing that I can do is to keep the client focused on the outstanding unresolved issues in the deal.  Business people like to see the big picture, get the deal done etc.  The problem is that it is the details that kill you in most business deals.

I also hope to bring to a client an understanding of the other side’s position and whether based on my experience it is legitimate or just covering up a problem.

While most lawyers have very large ego’s, in the end the client has to make the final decisions.  My goal is to educate my clients so that I feel that they have the information to make the decisions, but I certainly don’t want them to substitute my judgment for theirs.

What About the Billable Hour

I have struggled my entire career to try and understand and make sense of the billable hour.  Actually the billable hour was an invention of the late 1940’s and early 1950’s as a way of fairly billing each lawyer on a transaction.  Before then retainers were collected at the beginning of each year and sustained the firm for the year( long before my time).

Here is my question.  Does anyone else feel like billing your time by the tenth of an hour feels like you are selling pieces of your life?  Also is every hour you spend working on a matter worth the same amount as every other hour?  There is an interesting survey in Above the Law of associates as to why they want to go inhouse and getting away from the billable hour is part of the draw,

I understand that we need someway of measuring the appropriate charge for the work that we do.  The clients can certainly abuse an attorney’s time and generally need to be educated that every telephone call costs a tenth of an hour.

Many of my clients (particularly lenders) have solved this problem by forcing us to not only bid on work but holding us to that bid.  That certainly starts a very interesting dance.  Since your firm still insists on your keeping your hours and the associates are judged by the number of hours they bill, either you have to explain why you can’t meet the estimate to the client or explain to the collection committee of the firm why you can’t collect the full amount of the time

Every firm I have worked at has a different approach.  Some want the work in the door and feel that a billed hour, even if discounted, is a good hour.  Others keep pushing you to find that work that will carry the full billable hour.

Some firms take the number of lawyers multiply that number by a required number of required billable hours per year by each lawyers billable rate and base their entire yearly budget on that number.  Works in good times, but not in bad times.

I read every article I can lay my hands on on this subject, but I have yet to find one article with the “answer”.  I know that I don’t have the answer, so I will turn on the timer and hope I don’t blow the estimate.