Oregon State Bar Bulletin — MAY 2015







“It’s hard to get people to show up at social events. Everyone’s too busy.” Dave Bartz tugs his iPhone out of his shirt pocket. “We spend way too much time on these devices.”

Affable and plain spoken, Bartz has been Schwabe, Williamson & Wyatt’s president since 2001. In 2008, he and managing partner Mark Long led the Portland firm through the worst recession since the 1930s — an experience that has permanently changed the practice of law, Bartz believes. Many of the changes, such as the speed and pace of legal work, had already begun; the recession accelerated them. The “universal experience,” according to Bartz, was “working harder for the same money.”

In many Oregon law firms, that experience changed more than the way lawyers practice law. It changed the firms’ very cultures, often from a friendly and congenial workplace to one where competition prevails over camaraderie. At Schwabe, a large regional firm with 165 attorneys and five offices, the firm’s culture and philosophy have traditionally — if informally — been described as “work hard, play hard.” Dave Bartz admits that he feels a shift: “Now it’s more like, ‘Work hard, not so much play.’ If making money becomes the focus, that leaves less space to do other things that are satisfying. It’s harder to be happy.”

Working More for Less

At large law firms, where for decades it was “difficult not to make money,” the current state of affairs is “more for less,” writes U.K. law professor, author and blogger Stephen Mayson, describing the recession’s aftermath. “Law firm partnership: the Grand Delusion,” posted Oct. 9, 2012 at http://stephenmayson.com/2012/10/09/law-firm-partnership-the-grand-delusion /. The same is true at Oregon’s smaller law firms. Josh Newton, a partner in Bend’s 18-lawyer, single-office firm, Karnopp Petersen, says the recession left a “contraction” of the total work in the outside counsel market. Clients became — and in many cases remain — less willing to pay for law firm lawyers, more likely to do without legal work or take it in-house.

“We’re just more mindful now that we’re a business,” says Newton. “Before the recession, the primary strategy was simply to raise rates. Now, firms have to pay more attention to controlling the costs of production, which is a positive development for clients but requires a different way of thinking for firms.” One such cost was the firm’s annual holiday party, its traditional festivities downsized to a small, in-office gathering. Schwabe, Williamson & Wyatt, too, moved its 2009 holiday party from the University Club to its own lobby to save expenses. Other law firms have scrutinized expenses and made cut-backs by cancelling or trimming down firm parties and retreats.

Other cost-cutting measures are deep and systemic. In a book published this year by the ABA, Finding Bliss: Innovative Legal Models for Happy Clients and Happy Lawyers, authors Deborah Epstein Henry, Suzie Scanlon Rabinowitz and Garry A. Berger point to “new legal models” to cut costs in the face of a shrinking market for legal services. For example, savvy clients who have traditionally turned to large law firms are instead “outsourcing” work to a variety of legal service providers. Dedicated discovery firms and document review firms, such as Novus Law, can help businesses save money on major litigation, compared to the cost of paying for the law firm to perform the same services. For time-intensive legal work, some companies have began to rely on “Legal Process Outsourcing,” or “LPO” firms, where the work is usually shipped off to a “lower cost jurisdiction such as India, China, Israel, or the Philippines.” Bliss at 17 (American Bar Association 2015).

Another trend Bliss notes is the “virtual law firm,” in which lawyers work from home, saving the “largest overhead expense for any traditional law firm” — real estate. Virtual law firms range from the nation’s largest, VLP Law Group LLP (see sidebar), to solo practitioners who eschew “bricks and mortar” offices in favor of low overhead and greater flexibility.

Law firms without offices, the outsourcing of legal work and the cancellation of firms’ social events have two common elements. First, they help with the bottom line. Second, they make collegiality more challenging.

Collegiality and Culture

When Steve Hall finished law school in 1996, he had a job lined up at a firm in his home state of Michigan. But then he and his family visited Oregon: They decided to relocate. Knowing nothing about the Portland legal market, Hall “basically got out the phone book and sent a blizzard of letters.” Having secured interviews at the city’s five largest firms, he devised a decision-making strategy: At each interview he posed the same question, asking his interviewer to rank the next best law firm in Portland. The responses were uniform. “Everybody’s number two was Stoel Rives,” Steve reports. With offers from all five firms, he accepted the one from Stoel.

With nearly 400 attorneys spread across 12 offices, Stoel Rives is Oregon’s largest law firm. Prestige is part of the firm’s brand and integral to its culture. Its self-described values include “excellence,” “specialized expertise” and lawyers of the “highest caliber.” But the firm’s culture is more subtle than the copy on its website. One former Stoel Rives partner — whose departure stemmed in large part from a fundamental “shift” in the firm’s culture and collegiality — remembers starting as an associate in the 1990s: “What I found refreshing were smart, competent lawyers who did not take themselves too seriously.” In those years, Stoel Rives attorneys were confident, proud of the firm’s long history, secure in its place in the community. Within an atmosphere of fairness and mutual respect, lawyers felt the occasional prank, parodic memorandum or mocking of firm administration to be utterly appropriate. Stoel Rives LLP: A History, published by Tom Stoel and George Fraser in 2005, catalogs and collects much of the firm’s internal satire. “The firm fostered an atmosphere of humor and pride,” write the authors, who themselves infuse A History with dry wit: “Throughout the firm there was an easy feeling that your peers were available for assistance at any time. Whether you won or lost a case or transaction, you could expect to celebrate or commiserate with your fellow lawyers. You were allowed one day to bathe in success and two days to recover from defeat.”

By the time Chris Heaps hired on as an associate in the fall of 2006, the atmosphere was changing. Heaps remembers a sense of desperation that grew until he finally departed in 2009, at the height of the recession. His experience was grim:

“The Catch-22 of Stoel Rives was the message that you have to bill 1800 hours, which means you sit at your desk for seven and a half hours every day. Associates were walking the halls looking for work. Everyone was hoarding it. I tried to go out and drum up business, but I had no access to big clients, and when I found smaller clients, start-ups, they couldn’t afford Stoel Rives rates. When I asked the firm to offer a discount, the answer was no. It made it impossible for me to succeed.”

But Stoel Rives partner E. Walter Van Valkenburg, who manages the Portland office, does not believe the pressures of the Great Recession “cost our firm its collegiality.” He calls it a “continuous challenge” to preserve a collaborative atmosphere and sense of teamwork, but in his experience, “Partners generally view each other as collaborators and not competitors.”

To articulate the “culture” of a law firm is a subtle and elusive undertaking. Perhaps “culture” is simply the glue that cements the partners in a partnership, an adhesive mixture of collegiality and loyalty. In his Law 21 blog, Edge International partner Jordan Furlong writes, “Culture is what people at the firm actually do every day.” As for collegiality, Furlong posits that it “deserves a closer look, because almost every law firm insists that it maintains a ‘collegial’ atmosphere.”

Regrettably, law firm partners often begin to understand the importance of collegiality — the glue — only when they feel its absence. It is worth exploring the forces that destroy camaraderie among law partners, for those forces seem to have mustered years before the Great Recession. In his 2011 article, “The Changing Cultures and Economics of Large Law Firm Practice and Their Impact on Legal Education” (70 Maryland L.R. 341, 349 (2011)), Neil J. Dilloff cites three factors to explain waning collegiality at law firms: mobility, instability and distrust.

Mobility, Instability and Distrust

Dilloff cites the “era of free agency” as a force eroding collegiality in large law firms, where lateral movement among firms has become commonplace, firms consequently lack stability, and partners can no longer trust one another with important, potentially portable clients. Stoel Rives’ Van Valkenburg sees “more movement of lawyers among law firms than there was 10 or 15 years ago.” As recently as 2001, larger-scale defections could still garner attention in the press: When two land use partners and one associate left Stoel Rives on a Friday to join a rival Portland firm the following Monday, the shocking news appeared in the Oregonian and the Business Journal.

At Seattle’s largest and oldest law firm, Bogle & Gates, the unthinkable had happened two years before: Sixteen lawyers left to form a Seattle branch of Dorsey & Whitney, and the rest of the firm crumbled in 1999. In 2003, San Francisco firm Brobeck, Phelger & Harrison imploded after a slow revenue year and massive flights among partners. In the fall of 2008, Heller Ehrman, another San Francisco-based law firm, voted to dissolve after a slow 2007 and the departure of more than 30 partners.

In “The Death Spiral of America’s Big Law Firms” (The Atlantic, April 2012), Jordan Weissmann attributes the mobility of partners among firms to the “permanent pressure on profits” in the overall legal market. Firms seek a competitive edge by “poaching” profitable attorneys, and Weissmann believes this practice has “turned into an attack on the basic partnership model itself.” When partners leave, it affects the firm’s revenues — but
more importantly, it undermines its confidence in itself as a
partnership.

The forces of mobility, instability and distrust inevitably intertwine. As revenues decline, partners compete for a smaller slice of the pie. Dissatisfied partners may depart or become susceptible to poaching. When departures reach critical mass, the law firm itself faces destruction. As former Heller Ehrman partner Bruce Jenett put it, “There is a point at which so much muscle mass is lost that the body cannot continue to function.” (Tom Abate and Andrew S. Ross, “Heller Ehrman law firm to dissolve Friday,” www.sfgate.com .) Partners distrust one another, hog work and clients for themselves, and lose sight of the firm’s long-term interests and identity. Stephen Mayson notes: “The sense of stewardship or custodianship for future generations that used to characterize the more collegiate of law firms has been sacrificed on the daily altar of chargeable time and client billings.”

Not all firms have suffered the same loss of trust and stability. At Karnopp Petersen, Josh Newton reports that the firm turned the years from 2008 to 2010 into an opportunity to “reinvent ourselves,” transforming the firm’s administration and dividing attorneys into practice groups. As a result, Newton believes there is more collegiality at Karnopp than before the downturn. “Our trust in each other grew because we developed a shared vision, of the firm and of our place in the community,” Newton says.

Community involvement was part of the strategy. In the lean years, Karnopp encouraged its attorneys to “do good things” in the community. “We can’t compete in terms of marketing budget with the Bend branch offices of big Portland firms,” says Newton, “so we equalized the disparity by offering our time.” In September 2011, Karnopp hosted the first “Business 20/20” event, a breakfast with keynote speaker and panelists designed to “convene important conversations” within the Bend business community. The Business 20/20 program, which continues, distinguishes Karnopp from other Oregon firms, Newton believes. “People find value in it.”

But former Stoel Rives associate Chris Heaps, now a successful solo practitioner in Bend, remains critical of the large firm as a business model: “A great deal of what they’re asking clients to pay for is overhead and lifestyle, and I believe those services are overpriced. I provide the same service, but I charge less because I’m not living the lawyer lifestyle.”

Looking Ahead: Is the Future Smaller?

In a permanently smaller market for legal services, Finding Bliss outlines the lower-cost alternatives to traditional large firm representation. Many “legal provider innovations” come from “large law firm ‘refugees’ ” like Chris Heaps. Heaps offers flat fees for “anything transactional” — even posts them on his website. He maintains an office (not a lavish one), but many solo practitioners work from home to save the cost of renting or purchasing office space.

Working alone may suit many in the legal profession, who value autonomy. Lawyers are much more likely than the general population to be introverts (see sidebar). Studies show that working independently, in solitude, has the greatest potential to foster innovation, creativity and productivity. Susan Cain, Quiet: The Power of Introverts in a World That Can’t Stop Talking 74-94 (Random House 2012).

But even though Dave Bartz continues to notice sparser attendance at social events, he sees value in sharing a common enterprise. Citing Daniel Pink’s 2009 book, Drive: The Surprising Truth About What Motivates Us (Penguin 2009), Bartz stresses that people are motivated less by money and more by other incentives — such as a sense of purpose.

In Drive, Pink recounts how second-year MBA students at the Harvard Business School created the “MBA Oath” at the height of the economic crisis in 2009. The pledge, ultimately signed by a quarter of the graduating class, begins with a statement of purpose: “As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone.” (Drive 138.) In “Law Firm Partnership: the Grand Delusion,” Stephen Mayson defines a “collegiate” firm with similar sentiments: They “make decisions in the long-term best interests of the firm, they are collaborative, and no individual is more important than the firm.”

Is there space for collegiality and loyalty in law firms after the Great Recession? Ellen Grover, a Karnopp Petersen partner, thinks the firm’s culture has adjusted to become “very entrepreneurial,” but that the partnership will preserve its collegiality even as its leadership shifts to younger lawyers. “We’ve all been through a pretty challenging period,” says Grover. “We’ve supported each other.”

Modeling corporations such as Google, Schwabe, Williamson & Wyatt held a retreat to focus on mindfulness training. Dave Bartz says this helped Schwabe lawyers reduce stress, increase resilience and lower reactivity.

Wally Van Valkenburg sees the Great Recession as only the “most immediate cause” of challenging times for law firms. “The profession,” he says, “has changed for all sorts of reasons.” As for the recession’s aftermath, Van Valkenburg is optimistic about collegiality at Stoel Rives: “Is it more challenging now? Sure,” he acknowledges. “But we’ve done a pretty good job of agreeing that we’re all in this together.”

 

ABOUT THE AUTHOR
Jennie Bricker, herself a “refugee” from a large law firm, is a Portland-area attorney in private practice (Jennie Bricker Land & Water Law, jbrickerlaw.com) and also a freelance writer doing business as Brick Work Writing & Editing LLC. She can be reached at (503) 928-0976 or brickworkwriting@gmail.com .

© 2015 Jennie Bricker


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