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News and Trends--Something Other Than Job Market

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New Associate Evaluation Models- A Trend? Does It Promote

Diversity?

Melissa McClenaghan Martin  New York Law Journal  

We all know there's a problem. Women represent only 18 percent of partners in the nation's largest law firms, 16 percent of equity partners and fewer than 10 percent of managing partners. At every level of firm practice, including partnership, women are leaving at a much higher rate than their male counterparts.

Firms have enacted various measures to address the problem. Diversity committees were created well over a decade ago. Women's initiatives have been expanded, part-time and flex-time programs strengthened and more personnel and resources are now dedicated to diversity.

Yet little has changed. Retention and advancement of women remain problematic for many firms. So what will it take to solve the problem? First, firms need to solve the right problem. "Work-life issues" are not the primary reason women leave firm practice. As numerous studies have shown, women leave firms because they are dissatisfied with stalled advancement and career opportunities, unsatisfying work and "unsupportive" work environments. Work-life concerns are certainly a factor in women's decisions to leave, but they are not determinative.

Can novel approaches to associate development and advancement help stop this drain of female talent?

The competency-based "level" system used to evaluate associates at Husch Blackwell Sanders, a firm with 675 attorneys throughout the Midwest and other locations, seems to suggest so. The firm's level system was created in 2000 at Blackwell Sanders (which merged with Husch & Eppenberger last year). The system provides three levels for associate development, and each level articulates 17 skills and performance competencies. Associates are evaluated twice annually.

A level system makes the associate review and advancement process more transparent than a typical lockstep system. Partners in a level system must make an "affirmative decision about each associate's development" when deciding whether to promote an associate to the next competency level, explained Peter Sloan, a partner at the firm and the author of "From Classes to Competencies, Lockstep to Levels" (.pdf), in an interview.

In contrast, at many lockstep-based firms, associates advance (and are paid more) merely because they are getting older, not necessarily because their competencies have improved. Also, the partnership seldom has to make any substantive decisions about an associate's advancement until he or she is up for partner. As a result, "many associates don't know where they stand" until partnership, Sloan added.

In Husch Blackwell's level system, an associate only receives higher pay when his or her competency level improves. In addition, associates' billable rates only increase when they are promoted to the next level. Thus, both the associate and the firm have an incentive to develop an associate's skills. Because of this shared incentive, associate development programs, including training, mentoring and coaching, are viewed as an "investment in developing our associate talent, not an expense," said Sloan. "Increased associate competency is directly tied to increased firm revenue." Sloan said the level system enables the firm to better retain top talent, including women and ethnic minorities. Before the system, attrition averaged about 30 percent annually. But by 2004, attrition had dropped to 14 percent, and it has remained relatively level since then. In fact, the percentage of women who left the firm in 2005 and 2006 was lower than their male peers, with only 10 percent of women leaving each year. In addition, under the level system, several associates have been promoted to partner earlier than they would have been under lockstep. Half of those fast-tracked promotions were women.

Howrey also has a competency-based system that was rolled out in 2005. The Howrey system details four levels of proficiency, from novice to expert level, for each of its 16 competencies. The firm's competency system has been integrated into firm culture and processes, and its training, pro bono and evaluation programs, as well as assignments, are tailored to competency levels.

To further enhance its competency system, Howrey recently increased the frequency of associate evaluations to twice a year and rolled out a "supervising partner" program where each associate is given a partner who coaches the associate on how to set his or her developmental goals and identify assignments and opportunities that will help improve his or her competencies.

The supervising partner program has helped reinforce the goals of the firm's competency system. "Associates realize we are invested in their growth, and they feel empowered to take control over their career," said Karen Lockwood, a partner at the firm and co-chair of its Women's Leadership Initiative.

In 2009, Howrey will switch to a merit-based compensation system that will reward associates as they progress to higher competency levels.

Howrey's competency program seeks to "individualize the associate experience, in terms of progression, pace to partnership and compensation," said Eileen Billinson, Howrey's chief associate career management officer.

"Flexibility is built into the system," she added, "so if an attorney needs to scale back because of family responsibilities, he or she still has access to the same career resources and opportunities."

THE NEXT GENERATION

Deloitte & Touche USA has long been a leader in its talent management and women's initiative programming. It eliminated its gender gap in attrition years ago and, over the past two decades, has seen a significant increase in its percentage of women partners.

The firm already had robust career development and evaluation systems and flexible work arrangement programs when it decided to launch its new talent management program Mass Career Customization in 2005.

Mass Career Customization formalizes the notion of individuality in career development and pacing, recognizing that employees may want to "ramp up" or "ramp down" at different times during their careers. Under the system, each employee customizes his or her career by selecting, in consultation with his or her managers, options in four "career dimensions:" pace, workload, location/schedule and role. For example, under MCC, an employee may pursue an accelerated pace with a full workload early in his or her career and, later, take a reduced schedule or limit travel ("location" under the system), when he or she has young children.

MCC is incorporated into the firm's comprehensive evaluation process. Evaluations include in-depth discussion of employee past performance, the employee's specific skills and performance goals for the next year and whether those goals are consistent with practice group needs. During the evaluation, each employee also determines their MCC profile.

MCC further enhances the "amount of information" provided through evaluations and provides "transparency about employee choices and tradeoffs" along its four career dimensions, explained Anne Weisberg, senior adviser of Deloitte's Women's Initiative and co-author of "Mass Career Customization." MCC did not open the floodgates for reduced-hour requests. To the contrary, 91 percent of Deloitte's employees in the MCC program did not want to change their career path, and the firm received twice as many requests to ramp up than ramp down. "It's the option value which is incredibly important," explained Weisberg. "Employees want to know they have the ability to customize their career as their professional and personal needs change."

None of these programs is a quick fix for diversity problems. Each program requires a fundamental change in how business is done, a clarity regarding performance expectations and criteria for advancement, a shared responsibility on the part of the firm and the associate to improve the associate's skills and competencies and an understanding that attorneys may choose different paths.

But the benefits are clear: increased attorney engagement, satisfaction and performance. Aren't those in everyone's best interest?

Melissa McClenaghan Martin, a former practicing attorney, is president of Career Women's Initiative, which provides diversity consulting and professional development training to law firms.
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LAWYERS, PROS SAY FLEX SCHEDULE'S TIME HAS COME

Rachel Breitman   The American Lawyer  

Lawyers won't have to be slaves to the billable hour for much longer, according to the panel of experts participating in "Flexing the Workplace," a roundtable discussion held in the New York offices of Davis Polk & Wardwell and sponsored by the National Association of Women Lawyers.

Timed to coincide with NAWL's annual awards luncheon and the release of its study "Actions for Advancing Women Into Law Firm Leadership," the panelists emphasized that now, more than ever, law firms must begin offering more flexible work schedules to its lawyers. If not, they risk losing the young crop of talent needed to secure a successful future.Why the urgency? According to Patricia Gillette, a San Francisco partner in employment law at Orrick, Herrington & Sutcliffe, waves of baby boomers soon will be retiring from partnership positions, and when that happens, law firms will be hard-pressed to replace those lawyers. 

"Law firms are going to feel the push from Generation X and Generation Y lawyers who want a different life," says Gillette, the mother of two. She expects law firms, eventually, will follow the lead of the technology industry and provide alternative work schedules -- including more telecommuting arrangements, job shares and part-time schedules.

"We are driving change through competition," says Deborah Epstein Henry, the founder and president of Flex-Time Lawyers. Henry, a former associate at Patterson Belknap Webb & Tyler in New York and Schnader Harrison Segal & Lewis in Philadelphia, consults with law firms on developing new policies. She also coordinates Working Mother Magazine's annual survey of the top law firms for female lawyers. "Firms know if they want to recruit talent, they may need to change," Henry says. And women lawyers aren't the only professionals demanding this change, she notes, pointing to the Stanford Law School group Building a Better Legal Profession, which demands firms cut billable-hour requirements to improve associates' lifestyle -- and was founded by men.

"These issues apply to anybody," says Bryan Townsend, a summer associate at Davis Polk and third-year student at Yale Law School. Townsend -- engaged and planning to start a family in the next few years -- came to watch the panel because he says work-life balance will figure into his choice of employers. But others were skeptical that there could be drastic changes in the culture at law firms, where overtime is a way of life. "You have to be willing to sleep on the floor of your office to get the good cases," lamented Marsha Redmon, who worked for six years at both a major law firm and small boutique practice. She now runs MGroup Communications to help lawyers and business professionals develop media skills.

If firms want to hold on to lawyers like Redmon, they need to market more to flexible scheduling, said Anne Weisberg -- a lawyer, mother of three and senior adviser to Deloitte Women's Initiative -- who spoke on the panel. "The fact that there is such high turnover in women lawyers is costing firms millions of dollars," said Weisberg, highlighting research compiled by Deloitte on the cost of recruiting and training new lawyers. In order to keep talented women on the job, Weisberg said firms must offer them the chance to customize pace, workload, location and schedule. Some firms already are catching on, trying to improve firm life and tempt young lawyers who are demanding flexibility on the job.

"There is a pool of talented people who might never look at a law firm but will look at you if you offer these programs," said Michael Nannes, a chairman and managing partner at Dickstein Shapiro Morin & Oshinsky and the father of two. Dickstein Shapiro tweaked its policies in 1998, appointing one partner in each group to confidentially advise lawyers about part-time options and allowing attorneys who work at least 50 percent of a full schedule to stay on the partnership track. Today, Dickstein's New York and Los Angeles offices are led by women partners, and the firm has won nods for its efforts from the Washington, D.C., Women's Bar Association and NAWL.
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VLG CO-FOUNDER STARTS VIRTUAL LAW FIRM

Lawyer-entrepreneur Craig Johnson is back, this time with Virtual Law Partners. No associates, no offices. No, really.

Zusha Elinson  The Recorder   

Craig Johnson, the Silicon Valley lawyer-entrepreneur who brought you the Venture Law Group, is onto his next big thing: a virtual law firm. Johnson and 14 other lawyers unveiled the new firm, called Virtual Law Partners, on Friday. The idea is to have more work-life balance, work from home, save on overhead, charge clients less, and forge a new model for the legal industry.  "It just seems like an idea whose time has come," Johnson said by phone on Monday, sitting outside his Portola Valley, Calif., home. "Billing rates at large law firms have just gone up and up -- it's not unusual to find partners in the Bay Area billing $600, $700 or $800 an hour ... They have to pay high salaries for associates, high profits per partner, and they feel they have to have prestigious offices -- it's just a situation that can't continue."

Johnson, 61, co-founded Venture Law Group, or VLG, in 1993. After a strong run representing startups like Yahoo and Hotmail, often in exchange for equity, the firm struggled after the dot-com bust and merged with Heller Ehrman in 2003.

The new firm, VLP, will target all types of companies for all types of legal work aside from litigation. Although working remotely isn't new for lawyers, Johnson said VLP is different because it aims to be like the other top firms in the country, with hundreds of lawyers, just without offices. Peter Zeughauser, a law firm consultant and founder of the Zeughauser Group, said the VLP model may have a place, but it won't be the next big thing.

"I think Craig is brilliant," Zeughauser said. "But I think if you look at VLG, it wasn't the next big idea -- nor is this." Zeughauser said that while the office-less model works for smaller matters and small groups of lawyers, heavier infrastructure is necessary for the type of work done by big law firms.

But at least one general counsel was intrigued by the idea, especially the lower rates. "It's very rare that you go to a law firm these days and have face-to-face meetings," said Alastair Short, general counsel of 3Par, a Fremont, Calif.-based computer storage company. "If what a virtual law firm means is that there's no central office and the lawyers work from home and that would save me money, I would be happy to use them."

NEW MATH

VLP was founded after two lawyers running their own small virtual law firms -- RoseAnn Rotandaro of Armor Legal Counsel and Andrea Chavez of Lion Tech Law -- came to Johnson for advice.  Rotandaro and Chavez -- president and executive partner, respectively, of VLP -- decided to combine forces with the financial backing of Johnson, who is CEO of the new firm. They've recruited other lawyers from law firms and in-house departments. "The people that we've targeted are people that want a work-life balance," said Rotandaro. "They don't have to make a million dollars a year to make them happy."

Johnson and Rotandaro said they're eschewing the normal math that's used by large law firms where one-third of the revenue goes to salaries, one-third goes to overhead, and one-third goes to profits. They're also getting rid of minimum billable hour requirements and high-priced associates. Instead, attorneys will get 85 percent of what they bill. And without having to pay for offices and associates -- the firm will instead employ a few specialized paralegal types with all attorneys being partners -- those billing rates will be about half of what big-firm lawyers bill, Johnson said. Although VLP lawyers can set their own rates, he estimates that an average billing rate might be about $400 an hour.

"The thing that makes it almost a slam dunk is the incredible price umbrella from the big firms," Johnson said. "When you charge $400 an hour and have clients think it's a bargain, how could you not succeed?"

The lawyers who've joined the firm have their own clients. Rotandaro is bringing client PLX Technology, while Chavez does work for patent stockpiler Intellectual Ventures.

As for Johnson, he won't be practicing law. For the past couple of years he's been working at his own venture capital firm, Concept2Company Ventures. But he's excited to be back in the legal mix, having retired from Heller Ehrman in 2005, though he continues as the chairman of the Venture Law Group board of advisers.

Johnson insists VLP is the wave of the future. But even if it's not, it at least might make Big Law squirm a little.

"It's a bit fun for me to tweak the tail of the American legal industry," he said.
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PARENTAL LEAVE

This trend continues as more national firms are providing similar Parental Leave Policies:

Law Firms Across U.S. Are Boosting Paid Leave


Maternity, paternity leaves increased to as much as 18 weeks

Amanda Bronstad  The National Law Journal   

Several of the nation's largest law firms are boosting their paid leave for lawyers who become new parents. In the past few months, about a dozen law firms have increased their paid maternity leave to 18 weeks from, in most cases, about 12 weeks.  Also, many firms have increased their paid paternity leave periods, particularly if fathers become the main caregivers. Firms also are bumping up the amount of time off given to adoptive parents. The moves are the first significant changes to parental policies at law firms in several years. Administrators and lawyers at those firms deny that the benefits are meant to replace salary increases. But they admit the programs are designed to attract and retain associates, especially women, who are steadily leaving the legal profession.

"When you have increases in compensation, there seems to be a domino effect. This is a benefit enjoying a similar domino effect," said Dan Hatch, a partner at legal search firm Major, Lindsey & Africa. "That tells me this particular benefit has struck a nerve."

A COMPETITIVE EDGE

Firms that have increased their paid maternity leave to 18 weeks include Arnold & Porter; Covington & Burling; Debevoise & Plimpton; Hogan & Hartson; Latham & Watkins; Mayer Brown; Paul, Weiss, Rifkind, Wharton & Garrison; Skadden, Arps, Slate, Meagher & Flom; Sullivan & Cromwell; and Weil, Gotshal & Manges. Among the first to jump to 18 weeks was New York-based Sullivan & Cromwell, which changed its policy in July. Most have followed that lead in recent months. "Firms follow because they're trying to be competitive," said Audra Cohen, partner and co-chairwoman of the women's initiative committee at Sullivan. "It was something we thought was important and wanted to do, so we could be a market leader." Janet McDavid, partner and member of the executive committee at Washington's Hogan & Hartson, which increased its maternity leave to 18 weeks in January, acknowledged that recruiting and retention issues are elements in boosting parental leave periods. "But I don't think we were following anyone," she said. "We knew that some other firms were enhancing their maternity leave policies, and that caused us to revisit this." In January, New York's Debevoise & Plimpton increased its maternity leave to 18 weeks from 12, the standard period for about two decades, said My Chi To, a partner who serves on the firm's part-time committee. The firm also gave adoptive parents 10 weeks, adding six weeks to its prior policy. Changes for adoptive parents were significant at most firms. On March 1, Skadden instituted new benefits that allow adoptive parents who are primary caregivers to take up to 12 weeks off, an increase from four weeks, said Jodie Garfinkel, director of professional personnel and attorney development at the New York-based firm. She said the change recognizes new types of families. "It could be an adopted couple where the father is the primary caregiver, it could be a same-sex couple, it could be all kinds of things," she said. In December, Latham & Watkins increased to 18 weeks both its paid maternity leave and paid leave for adoptive parents who are primary caregivers, said Rick Bress, global chairman of the associates committee at the firm. "We felt strongly that the challenges you face when you've got a new child in the home don't depend a whole lot on how the child got there," Bress said. "Whether the child was born to one of the parents in the home or adopted, you still face an awful lot of the same issues."

FATHERS GET A BREAK

Several firms also significantly increased paid leave for spouses who don't give birth to a child but become primary caregivers -- in most cases, fathers. At several firms, that leave jumped from four to 10 weeks.
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MAJOR FIRMS OPEN OFFICES IN THE MIDDLE EAST

More and more national firms are not only opening up offices in the Far East, but many now have launched offices in the Middle East.

Clifford Chance Joins Gulf Rush With April Launch in Abu Dhabi

The U.K. giant has been in Dubai, Abu Dhabi's neighboring emirate, since 1975

Michelle Madsen Legal Week

Clifford Chance is to strengthen its presence in the Middle East with the opening of a new office in the capital of the United Arab Emirates, Abu Dhabi.

The new office is set to open in late April and will be headed up by Clifford Chance finance partner Richard Ernest, who is currently based in the Magic Circle firm's Dubai outpost.

Ernest will initially be supported by three of the firm's Dubai partners. Last year the firm transferred corporate partner Ian Hunter from London to its Dubai arm in a bid to shore up the firm's local relationships with investment banks.

While Clifford Chance has yet to decide on premises for the new office, the firm plans to eventually move its Abu Dhabi operations to the city's new business and finance district, which is currently being developed.

The U.K. giant has had a presence in the U.A.E. for more than 30 years, having opened its Dubai arm, which is now home to seven partners, in 1975.

The firm has advised on a number of major deals in the region in recent times, including the $1.4 billion acquisition of Egyptian Fertilizers Co. by Abraaj Capital -- the largest private equity deal seen to date in the Middle East and north African region.

Clifford Chance's managing partner for the Gulf, Graham Lovett, said moves to open in Abu Dhabi reflected a growing demand from clients and underlined the big four U.K. law firm's commitment to the region.

He commented: "We are looking to bring new resources into Abu Dhabi by combining local experience with international expertise. We have been looking at this move for a while, probably over 18 months."

The news comes with a number of major international firms stepping up their efforts in the Gulf region, with this month seeing Freshfields Bruckhaus Deringer relocating former London finance chief Bob Charlton to Dubai and New York's Dewey & LeBoeuf making its debut in the emirate after a raid on U.S. rival Akin Gump Strauss Hauer & Feld.
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Reed Smith Hires Two to Run Firm as Global Business

The firm filled its chief knowledge officer and global chief people officer positions this week

Kellie Schmitt The Recorder 

Tom Baldwin has to deal with a fair share of teasing about his title: chief knowledge officer."Especially working in a law firm, you get a lot of ribbing from lawyers who say 'You must know everything, then,'" he said with a laugh. "But the point is, regardless of the title, my directive is to look at the firm as a business." This week, Reed Smith announced both hiring the L.A.-based Baldwin from a similar position at Sheppard, Mullin, Richter & Hampton, and the creation of another business-oriented title that might generate some ribbing: global chief people officer, to be filled by Nicola Dingemans in New York. She'll handle such issues as work-life balance and training. The new hires underscore the increasing importance of running a law firm as a business, Reed Smith officials said.

"You see more of this in global companies," said Gary Sokulski, Reed Smith's chief operating officer. "Since we're a people business, it's only natural to have someone who focuses on the people aspect. And, in law firms, knowledge is our business." That's a smart strategy, said L.A. recruiter Sandford Lechtick, founder of Esquire Inc.

"It's just part of the ongoing trend where you have law firms becoming more like businesses, and where you have more nonlawyers in management positions," he said. "It's important to have people that are devoted full time to making firms more competitive, and exploiting businesses opportunities." Focusing on people resources and integration is most important in a firm like Reed Smith that has acquired several other law firms in the past several years, he said, pointing to recent moves in Chicago and London.

Since 2001, Reed Smith has brought in firms from around the world, including in New York, California, Chicago, London, Abu Dhabi, Greece, Dubai, Paris, Hong Kong and Beijing. Its attorney count has increased from 600 U.S.-based attorneys to more than 1,500 worldwide, the firm said. Of the two new hires, the less common position is global chief people officer, Sokulski said. It's similar to a human resources officer, but focused more on employee concerns such as work-life balance, better managing and evaluating talent, and creating higher-level training programs. The firm had a chief knowledge officer, but the post had been vacant for two years. After a spree of mergers, it was time to dust off the position, Sokulski said. The job will involve figuring out whether someone in London needs access to information on a deal in San Francisco, and how many mouse clicks it should take to get it. He said his long-term goal at Reed Smith is to create a system in which lawyers can find all the information they need in "easily digestible formats." At Sheppard, Baldwin was responsible for, among other things, replacing newsletters with blogs -- generating more than 10,000 hits per day. Baldwin said he'd like to target and tailor information to a particular practice group or position within the firm. Certain offices would get relevant information, and accessibility to firm financials would be based on one's position within the firm."That's always been the knock on law firms -- that they aren't run very well," he said. "As you get bigger in scope, you have to start operating and acting like a company, not a loosely-held congregation of partners."
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