The Business of Law and Women: Managing the Challenges

WeirFoulds LLP | AUGUST 5, 2011
Lisa Borsook

This paper was written for a panel entitled "Women Supporting Women" and delivered at the National Conference of Women's Bar Associations, 2011 Women's Bar Leadership Summit: Strength Across Borders.

I am the current Managing Partner of WeirFoulds LLP, a law firm located in downtown Toronto, the professionals of which are evenly divided between litigators and business lawyers.

I did not have a business background when I commenced the practice of law. My practice development was carefully mentored at the firm; my business development – not so much. I practice in the area of property development and private company law – so, over the course of my practice, I have learned how to read financial statements, how to finance a business, how to prepare a budget. My understanding of tax law is somewhat limited – I rely on accountants and tax lawyers for advice. In fact, I rely on advice from a pretty broad cross section of professionals in my management position – administrative, financial, marketing, human resources, library services, associate and student development – to name a few. And including my colleagues, who have opinions on a lot of issues (not surprisingly). I have read everything I can get my hands on about the topic of the business of practicing law. I am a relatively quick study (don't we all have to be?), and I believe that I know enough to ask the right questions and, hopefully, recognize the "icebergs" floating around.

Also, I am a woman. I am used to keeping a lot of balls in the air at one time (I have a theory about multitasking and gender) and there is no question that my being a woman in this position does affect the way I approach all of the business issues with which I have to deal. It does, inevitably, affect the topics about which I have strong opinions.

What does it mean – the business of practicing law? It is clear that those of us practicing law have business issues that are dramatically different from those operating businesses. By and large, we cannot manage our businesses from the top down; our partners have a say in what we do. We not only have shareholders, but shareholders whose sole vote may in itself be sufficient to require us to change course. Building consensus is a pretty important part of my job and, in my view, a fundamental prerequisite to implementing change. Also, in the course of my career, it has become clear that there are certain issues with which we, as lawyers, are constantly grappling – associate compensation; high-cost lawyers; high-cost clients; client loyalty; competitive pressures; to name a few. There are other types of issues – conflicts; employee retention and loyalty; equity and diversity. These are issues that are thought-provoking, from a moral and strategic perspective to be sure, but also significant business issues with which all firms must seriously contend.

In my experience, the training of law students and associates with respect to the business of practicing law – in particular, how we go about doing it; the real costs associated with it; the business of getting clients; our expectations, reasonable or otherwise, with respect to compensation; the different ways that different types of firms deal with these issues – these are topics that law schools generally don't teach. How do we keep our costs down when we are competing with law firms around the world for the best and the brightest, and keep our rates reasonable? Is our investment in technology reaping dividends? Outsourcing is an option, or is it?

I would identify three areas in which I foresee the biggest changes and the most significant challenges.

1. The Billable Hour. Only the most profitable and progressive law firms can hope to attract the best and the brightest from the law schools and be able to afford to pay them. How will law firms remain profitable and continue to attract the brightest in circumstances in which other careers might offer the promise of higher compensation in a shorter period of time while simultaneously remaining flexible enough to accommodate the different values, culture and demands of women and young associates generally? As clients become increasingly more conscious of what it is they spend on lawyers, the practice of hourly billing is bound to change. This challenge to firm culture – and finding a way to balance what would appear to be competing interests, particularly at the mid-sized law firm level – will demand change in the ways that law firms are managed in order for law firms to thrive.

2. Technology. Technological change has had the single biggest impact on the way that law is practiced in the past decade. What changes will come with the next decade are difficult to imagine, but I suspect that all law firms are going to have to come to terms with adapting to them, and paying for them. It may be that technology will help us solve some of the problems associated with problem number one above, by providing us with more flexibility in terms of work arrangements, sharing of assistants, etc., thereby reducing costs and eliminating redundancy. I expect it will certainly impact on the speed with which legal services are delivered; and it goes without saying that e-discovery is a fundamental issue with which every litigator must now contend. I would like to think that technology is a way for mid-sized firms to keep per capita expenses at a reasonable level and assist us in the retention of employees looking for alternative work arrangements.

3. Client consolidation and conflicts. With more and more firms competing for a smaller domestic pie, and Canadian businesses being hollowed out and directed from the United States, the EEU and elsewhere, competition for clients at all levels will become increasingly intense. Distinguishing ourselves from the rest of the pack (and communicating these distinctions to our clients and employees) is especially important at the mid-size level, demanding that we focus even more on the specialized services that we offer, to satisfy our clients' needs and assist us in avoiding significant conflict issues.

And now we have something new to think about – economic slowdown. Many of us now practicing law do not remember the last time there was a significant or enduring economic slowdown. The state of affairs that so many of us have come to expect – that our plates will always be full, that eventually we will get paid for what we do (within reason), that our clients will always need our services – will not likely survive a prolonged downturn.

These three areas of challenge are, of course, only the discussion stepping stones leading to issues with which law firms have been dealing for as long as I can remember. According to what I have read, the legal profession does not have a particularly high level of job satisfaction. Finding the right balance for our colleagues in the context of the economic realities associated with running a business is a difficult thing to do. And that low level of job satisfaction, it would seem, extends from the top to the bottom.

In particular, there is a generational challenge of which managing partners must be aware. Associates frequently talk about the extraordinary demands placed upon them by firms almost from the commencement of their tenure. Most of us have encountered the challenge of properly communicating our expectations to our associates, particularly in the context of our clients' ever increasing demands. Given the cost of training an associate and given the significant financial investment that law firms must make in their young lawyers, years before there is any prospect of their being profitable, it is not surprising that law firms are demanding more of their associates. Associates are unlikely to accept a salary reduction or give up the perks of their position in connection with their demanding jobs. Nonetheless, they do still seem to harbour some resentment of those demands.

Partners have a different set of demands. Partners need to be good at an astounding number of things in their professional lives – being first-class lawyers, business generators, collection agents, word processors, researchers, educators, mentors, firm administrators and activists – to name but some of the functions that many of us perform. And the legal profession seems to attract people who are used to trying to meet everyone's highest expectations. We are not well known for having set reasonable expectations of ourselves or of each other.

So, how do we improve lawyers' job satisfaction in light of all of these challenges? At the end of the day, most law firms are remarkably similar in what they have to offer to their lawyers – the prospect of practicing law in a relatively hospitable environment for clients whose problems are generally interesting. And most law firms also have in common the basic profit principle – they must get an extraordinary number of billable hours from their professionals at an hourly rate that more than covers the high overhead and related costs associated with practicing law in circumstances in which our client base is increasingly discriminating and cost conscious. We are easily distinguished from one another by our size, the number of offices that we have and the range of the services that we offer to our clients. These are important differences that will affect who is interested in being associated with the firm and perhaps overall job satisfaction is not amongst them.

Apart from these obvious differences, the factors that distinguish one firm from another, and its lawyers' level of job satisfaction from that at other firms, are subtle. Over and over you read that most lawyers want to be part of an enterprise whose core values can be articulated, and whose actions resonate with them. And if you give them the opportunity to participate in the formulation, articulation, and implementation of those core values, while earning a fair income, then job satisfaction ought to be the result. The challenge is to find a way to articulate and implement a strategic vision for the firm – one that marries the firm's culture with its partners' profit expectations and one that will resonate with its employees, associates and partners.

What are the factors that firms consider in plotting their strategy?

  • Clients. Either focussing on the clients that fit the firm's service providers or endeavouring to enhance the firm's client base by changing the services it provides.
  • Sophistication. The theory goes that the more sophisticated the firm's services, the more likely it is that the firm's services will be attractive to a broader range of clients and can be charged out at a higher hourly rate (or by using an alternative pricing model that will nonetheless increase profitability). Sophistication in services can be achieved in a variety of ways – but primarily by increasing the number and quality of lawyers practicing in a particular practice area. It goes without saying that a firm's strategy may involve lack of sophistication – but that takes us back to strategy number one above.
  • Practice Management. Allocating resources to practice areas that have the greatest potential to generate fees for the greatest number of lawyers in the firm.
  • Firm Culture. This usually involves striking the balance that works for the firm amongst various competing factors – firm profitability, commitment to the profession, lifestyle choices, etc.

In the words of Henry Ford, "You can't build a reputation on what you are going to do." And we all know that all change involves disruption, even if it is change for the better. So, having selected a strategy, or some combination of factors comprising the firm's strategy, there are at least two difficult challenges that immediately arise. The first is building consensus. It goes without saying that you can't please all of the people all of the time. But if there is transparency in decision-making, and a clear articulation of what underlies the decisions that are being made and how the day-to-day decisions underpin the firm's strategy – then it may be easier to make progress.

The other challenge is, of course, implementing the strategy. By way of example, if the strategy centers on a client base, then a firm may have to commit to a marketing program, to improve the firm's profile and refine its image. Charting out that marketing program, articulating it to the firm so that the firm's members can articulate it to others, gaining acceptance of the costs associated with it, and implementing the marketing program – these are time-consuming processes. The firm also has to ensure that its lawyers are committed to being part of that strategy and the firm's compensation formula must reward behavior that is fundamental to the implementation of its strategy. If growing and enhancing the firm's client base is the strategy, then rewarding client origination is, logically, a fundamental component of that strategy. Creating a system for rewarding client origination can be complicated – how much emphasis is to be placed, how to avoid duplicating compensation for a single set of fees, sunset provisions to inhibit complacency – what a tangled web we weave. And of course, those lawyers who mine the files, who improve on existing client relationships, need to be recognized as well.

How is of all of this going to affect how we as women lawyers deal with the business of practicing law? There is no question that the issues that have befuddled managing partners with respect to women – how to retain them, the differences in perception of the male partners to that of the female lawyers as to whether or not the environment in which we work is hospitable, the lack of senior women mentors and senior women managing partners, the failure of men to participate in the dialogue about women's issues altogether – will continue unabated.

I have come to the conclusion that, while law firms must have incentives to prevent women from departing, and that the costs of those incentives are, within reason, a business expense well worth incurring, there is precious little that we, as law firms, can do when a woman is grappling with whether to practice law or stay at home and raise her children. The maternal instinct is, in and of itself overwhelming, and for many women, the only option is to sacrifice their career to it, at least for some period of time. However, in a world in which the divorce rate is so high, it seems prudent for women to be self-supporting. And as the task force notes, the issue is not how to get women into law schools and articling positions or to become associates – we have all accomplished those tasks most successfully. The issue is to how to bring women back to the full-time practice of law, how to engage them in the firm's administration and how to train them to be profitable lawyers and rainmakers – after their children no longer require their substantial day-to-day attention.

Coincidentally, I recently attended a talk given by Dee Dee Myers, former White House Press Secretary and author of a new book Why Women Should Rule the World.1 She is a terrific speaker, very entertaining and insightful, and while I have yet to read her book (the title was intended to be provocative and controversial), her thesis is that if women ruled the world, everything would be different. Her analysis goes like this: women will never be as good at being men as men. So, throw out the conventional wisdom that women can fill men's shoes as capably as they can. I don't know a woman who isn't going to be perfectly fine with that insight. As most men know, women are not particularly interested in men's shoes generally, or in filling them.

Her view is that women are hardwired differently. We respond to circumstances differently. By way of example, it is her view that men in stressful situations either take flight or stand and fight. Women, on the other hand, prefer to clean up the mess – literally – we clean the room, make fresh coffee, sort everything into piles. Then, we contact a group of our confidants – to discuss and resolve. It is her view that the world (and in this regard, she is particularly interested in the political world) should embrace the way that women react to events, and that but for certain external and internal obstacles, there is no reason why we shouldn't stand side by side with men in resolving the world's problems and leading the next generation.

What are the internal obstacles? In a nutshell, women don't take ownership of their successes the way that men do and correspondingly, are less likely to reach for the brass ring. What are the external obstacles? Ms. Myers is of the view that women are judged differently from men. Women have higher standards to live up to, first of all, in respect to our appearance – we are always seen before we are heard. And second, for reasons that she does not understand, people think that little children and big jobs don't mix well. And yet, it is her contention that nothing makes women better qualified and better trained for management roles than raising children.

Raising children teaches women to prioritize, not to sweat the small stuff, to seek balance and, perhaps most importantly, gives women conflict resolution skills that makes them better at their jobs.

If Ms. Myers is right – if failing to find ways to re-integrate women back into the workforce is a tragic loss of talent – and I, for one, am certainly of the view that that is the case, then how do we create incentives for women to return to work that make financial sense? How does a law firm, taking into consideration both biological and cultural realities, ever hope to succeed in re-engaging its women, and at what cost? These are the essential questions with which all businesses, and in particular, all law firms must grapple. And the issue is particularly difficult given the generally reported low levels of job satisfaction amongst lawyers.

There are no easy solutions to these kinds of issues. The one thing of which I am certain, however, is that flexible work arrangements that are financially sensible are only part of the solution to the problem. The longer-term solution involves creating a work environment in which lawyers are engaged, financially and emotionally. I know that self-esteem is connected to not only a job well done, but a job for which satisfaction will grow as time goes on. And since comprehensive job satisfaction has to be the strategic objective of any firm for all of its lawyers, it should be possible to meet the objective of retaining lawyers generally while simultaneously achieving the firm's overall strategic objectives.

Operating this business is simple in concept and complicated in execution. It is a "people business" in every way. Arguably, in one way or another, we are by our very nature ill-suited to it. It is not what they taught us in law school and so, not surprisingly, we have all got to be trained and retrained – largely by self-teaching – to do it well. But if one thing is absolutely clear to me – in this competitive world, with clients who are becoming increasingly sophisticated purchasers of our services, ignoring the business side of what we do is bound to detrimentally affect our success at doing it. It doesn't matter if you are the best and the brightest; it doesn't matter if you are also the hardest-working. At the end of the day, if you can't simultaneously balance your books and provide a stimulating environment in which to work – you are going to fail at the business of practicing law.

The devil, of course, is in the details.

1  From Why Women Should Rule the World by Dee Dee Myers. © 2008 by Dee Dee Myers. All rights reserved. Courtesy of HarperCollins Publishers.