A formula for happiness
Whether lawyers can "have it all" is a question often debated by those in the profession. Matthew Stutsel shares his experience from both a top-tier law firm and a big four accounting firm to
Whether lawyers can "have it all" is a question often debated by those in the profession. Matthew Stutsel shares his experience from both a top-tier law firm and a big four accounting firm to define just what lawyers need for satisfaction and success
The 2011 Tristan Jepson Memorial Foundation Annual Lecture proposed the question: "Profit,Success & Happiness: Can you have it all?"
I was in the audience but was asked by the MC, Julie McCrossin, for three recommendations I would make to managing partners to improve resilience in the legal profession. My suggestions were collegiality, leverage and education, and my answer to the lecture's question is below.
Having been a partner of a major law firm for more than 10 years before moving to KPMG in the middle of this year, I want to draw from some of my experiences in both those practices and the way they reflect on my suggestions.
One of the great things about being a solicitor is spending time with colleagues: building networks within teams and with people from other teams throughout the firm helps to strengthen a firm's culture and develop a young lawyer's understanding of the firm's whole practice. The pressure of achieving billable hour targets makes that interaction more difficult for employed solicitors.
As a partner, the pressures are different and encourage different behaviour. Lawyers are judged on their contribution to the firm. One of the difficulties with any remuneration system is measuring and rewarding behaviour that the firm actually wants to encourage. Consequently, many firms assess partners using a complex series of financial metrics (where the data is relatively easy to collect and compare objectively) with an overlay of 'softer' contributions (such as profile with clients, contribution to knowledge management, impact on staff).
While employed solicitors argue that their billable hours don't properly reflect the whole of their contribution in determining their salary, partners argue about a whole range of these metrics.The message partners believe they hear is that they need to maximise the relevant financial metric in order to maximise their own share of partnership profits; and usually these metrics are based on individual performance.
Ultimately, this can put partners in competition with each other: a competition that can result in claims of client 'ownership', 'squirreling' work and promoting 'silo' behaviour. This isn't a problem with the metrics themselves, and I don't mean that a lockstep model will answer all these problems, as it can create its own problems. But using the metrics as part of a remuneration system that better considers team, rather than individual, behaviours could drive performance at the same time as encouraging collegiality.
“I am surprised I didn’t make the move years ago. Partly it was my arrogance in thinking that real lawyers work only in law firms, whereas at KPMG I am surrounded by people with legal qualifications”
This requires more than merely looking at the metrics of the individual. I have a t-shirt from a team building function many years ago that has on one side, 'The strength of the wolf is the pack' and on the other side, 'The strength of the pack is the wolf'.
Rather than sitting in your office alone, going to client meetings alone and trying to solve all their issues alone, aren't the more satisfying times when you are working as a team to solve issues, or presenting to a client as the "A" team not just the "A" type?
At "baby partner" school my left brain was suckled on David Maister's model of profitability: (1 + L) x (BR) x (U) x (R) x (M), where L = Leverage (ratio of solicitors to partners) BR = 'Blended' hourly billing rate U = Utilisation (billable hours recorded) R = Realisation rate (revenue divided by 'standard value' of recorded time) M = Profit margin (another formula that takes account of costs) The large law firms have generally focussed on "M", improving profit margin by reducing costs, including reducing the lawyer headcount.
Unfortunately, this also reduces "L" (leverage). Without leverage, the easiest factor to manipulate to improve profitability is "U" (utilisation), potentially giving staff impossible targets for recording billable hours.
Increasing leverage allows a trade-off against such high utilisation targets. Larger teams also maintain a similar average hourly billing rate despite higher 'rack' rates because clients and partners encourage delegation, giving junior team members more involvement in matters and more interesting work.
This feeds into more work within a team; more collegiality.
Now something for those waiting for me to be more controversial. I think that to help promote resilience in the profession it is critical that we educate our colleagues about the issues of depression and anxiety. I was delighted that the Australian Human Resources Institute recently recognised the work of Freehills, Mallesons, Blakes, Allens and Clayton Utz in developing the [email protected] educational program as the most outstanding initiative to promote the health and wellbeing of employees.
But I think there is an earlier educational step we could take: to help law students narrow the gap between their expectations and their experience of legal practice.
Did Ally McBeal (from the television show) spend years locked in a room doing litigation discovery, proof reading banking documents or comparing product disclosure statements? While it still may not satisfy Ally McBeal, my observation as a stamp duty partner at a major law firm and now as the national head of state tax at KPMG, is that the solicitors in revenue law seem to start with a narrower gap between expectation and experience: the work they do is more like what they are trained to do in law school.
When you add the greater leverage that advisory firms typically use and the impact that has on collegiality, I am surprised I didn't make the move years ago. Partly it was my arrogance in thinking that real lawyers work only in law firms, whereas at KPMG I am surrounded by people with legal qualifications.
My daily experience now involves detailed discussion about complex legal issues. My personal observations of working at KPMG so far are: better legal work, better life because of the impact of leverage on utilisation and collegiality, and therefore better work-life balance.
And, yes, I do think you can have it all.
Matthew Stutsel is the national head of state tax at KPMG