Like a wounded bull

Stephen Warne has drawn my attention to an interesting article in Justinian, a subscription only journal for lawyers. In the article, the author draws a comparison between pirate ships and law firms:

US economics professor Peter Leeson…recently wrote a paper on The Law and Economics of Pirate Organization.

Pirates created highly successful criminal organisations, and Leeson says that:

“Contrary to most people’s images of pirate crews, they were quite large. Based on figures from 37 pirate ships between 1716 and 1726, it appears the average crew had about 80 members … crews of 150-200 were not uncommon…

“Unlike the swash-buckling psychopaths of fiction, historical pirates displayed sophisticated organization and coordination… They successfully cooperated with hundreds of other rogues. Amidst ubiquitous potential for conflict, they rarely fought, stole from, or deceived one another.”

Leeson also observes that pirates considered theft aboard their ships especially heinous, and he quotes an observer who said, “great robbers as they are to all besides, [pirates] are precisely just among themselves”.

Modern law firms invite comparisons with these pirate organisations, with law firms appearing to have improved the business model.

…

Modern lawyer piracy is not constrained by the law either, but for different reasons.

Lawyer/pirates control the wording of the law. They make sure it can’t easily reach out to them.

On top of that they are in charge of decisions to prosecute. Better still, unlike ordinary pirates, lawyers CAN rely on the judicial institutions to help them.

The judiciary is full of “successful” former lawyer pirates, who find it difficult to criticise others for doing what they themselves used to do.

There is a lot of camaraderie and “collegiality” in the legal profession, but perhaps the best devices of the lot are “disciplinary tribunals” actually dominated by current or former lawyer pirates, which contain a smattering of “lay” people to support claims of independence from the profession.

When lawyers are caught committing lawyering crimes, they can be shunted off to friendly tribunals instead of the ordinary criminal courts.

Last month NSW lawyer Leon Nikolaidis was sentenced to two years jail for criminal fraud, having been found guilty by a jury in an ordinary criminal court.

Unusually, this jailing of a lawyer was not for a trust account defalcation. NSW Legal Services Commissioner Steve Mark…said it was one of the few occasions when a solicitor had been convicted of criminal fraud within a legal practice. He said:

“There is a perception that a lawyer acting in a professional capacity attracts conduct charges, but not criminal charges… Even serious misconduct issues almost never lead to criminal prosecutions.”

There is one big exception. As with those old time pirates, thieving off other lawyers is regarded as particularly heinous.

Theft by lawyers from trust accounts is a bit like thieving off other lawyers, since it frequently results in claims against fidelity funds which the other lawyers have to keep topped up from their own pockets.

This fits in precisely with a discussion Stephen and I were having in the comments section of a previous post, wherein we noted that the ethical breach which is seen as particularly heinous by the profession is the trust defalcation. Our theory was in part that such breaches are easy to prosecute, dealing with numbers rather than thorny questions of ethics, and the prophylactic nature of the fiduciary obligation ensures that any defalcation will be a clear breach. But this article provides another explanation for the prevalence of trust defalcations as an ethical breach: essentially, lawyers who defalcate from trust funds steal from other lawyers, and therefore are treated particularly harshly.

Whereas lawyers stealing from clients…well, who is to judge? Other lawyers.

Services are a hard thing to give a monetary value. And the situation gets particularly thorny when one represents a client, and the client loses. Strangely enough, the client doesn’t feel like paying the bill any more, even though the lawyer may have done the best possible job in the circumstances.

I think a lot of the problems with billing arise from six minute billable units, which were the subject of my second post on this blog, so obviously they’ve been a bugbear of mine for a while. I was trying to explain the concept to some non-lawyer acquaintances who were simply agog at the notion. “What, you charge for every six minutes you spend on a file? Doesn’t that rack up awfully quickly?” said the non-lawyers. Well, yes. And that’s the idea. But further to that, one’s promotion within a law firm depends on the number of billable units one racks up.

So six minute units provide an incentive to:

(a) be inefficient;

(b) be a workaholic and work insane hours to get ahead; and/or

(c) lie about how long something took you.

Unfortunately for me, both (a) and (c) are totally against my world-view. And once I had a family, I had no desire to keep on being a workaholic. So I quit being a solicitor.

I’m sure there are a lot of lawyers who are less scrupulous than I with regard to fudging the figures. They figure everyone does it, and if they just massage it up a little bit, who’s going to notice? The satirical book Hell has Harbour Views features lawyers who routinely bill 27 hours a day (even if they’ve stayed up all night, it has to be false, think about it). I couldn’t laugh too hard at this – too close to the bone.

The difficulty is in judging when a bill is too large. Little increases are hard to pick up. Of course, as I noted in my earlier post, the Legal Practice regime in Victoria seeks to ensure solicitors go into an immense deal of detail in their bills. And it requires solicitors to offer an effective invite on the face of the bill for the client to complain or sue. This doesn’t really fix the problem. A poor old client has to get involved in further litigation. Why not try to stop the incentives to overbill by abolishing six minute billable units?

Obviously, there’s a need for something to change. As I said in another very early post, I think legal services are beyond the range of many ordinary people. And this may lead to the high volume of litigants in person in the court system, who believe that they are better off running their own case. In some instances, they may be right: I’ve seen some terrible lawyers out there.

If the legal profession wants respect in the community, it has to look at legal ethics as more than just trust defalcation. Good legal ethics also means charging clients a fair price, and doing a good job. I believe that if we deemphasise billable hours, this would improve morale and efficiency in law firms, and take away the incentive to “fudge the figures”.

Any comments welcome.

“Team building” exercises

I enjoy working in a team with intelligent and motivated people where communication is clear and there is respect between the members of the team. But I think I may have mentioned before on this blog that, in some respects, I’m not a team player (at least insofar as the concept is conceived of by HR departments). I hate work retreats. My attitude has always been: I spend all week with these people, and while I like most of ’em well enough, I can’t wait to spend the weekend with my family. But what I really hate are “team building” exercises.

This dislike has gone back many years, but I think it was exacerbated by a particular event. Once, longer away now than I care to remember, I was a little articled clerk, full of enthusiasm and naivety. On our first or second week, our group of articled clerks was sent on some kind of “leadership” or “team building” exercise. I don’t know what exactly the point of the exercise was, but the end result was appalling. By the end of the week, we had gone from being a friendly bunch to a group with massive schisms, full of suspicion and dislike. It certainly didn’t build a “team” mentality; in fact the very opposite. Luckily, I was a bit older, and I’d already been working full-time for over a year before then, so I didn’t take the whole thing very seriously. I have always just wanted to do my job well and go home.

One can get help from some exercises – for example, I found it helpful to do the Meyers-Briggs test, which disclosed that I was an extrovert – and almost everyone else in my family was an introvert. This helped me understand why everyone had been saying, “Why do you talk so much all the time?” since I was knee-high to a grasshopper. I feel the need to talk to work stuff out, whereas almost everyone else in my family feels the need to go away and mull over things to work stuff out. I’ve even married an introvert. Fortunately, my daughter is an extrovert from what I can see so far, so I have a fellow extrovert with whom I can talk until the cows come home. At the moment the main things she says to me are “Cat! Meow! Jump!” (her new game is pretending to be a cat, and I have made her a “tail” out of an old stocking and some newspaper). But I’m sure we’ll have more to talk about soon.

Team building exercises worry me where they are supposed to help you resolve “issues” with colleagues. I’m happy to talk with friends whom I trust about my personal problems and issues, but work colleagues? If I ever raised problems I had with a colleague, I’d prefer to keep that very, very private, strictly professional, and definitely one-on-one. I think it can be very confronting to talk about personal issues in a group of colleagues. I had a friend who did some kind of weird life skills course or something like that. He described to me how participants in a group exercise were talking about occasions where they had been physically and sexually abused, and crying. He said that he thought it was very positive and cathartic for them to talk about this in a group situation. On the contrary, the very idea appalled me. I think that for some people it can be a profoundly negative experience, and indeed, if not well handled, it can exacerbate any latent mental problems. A psychologist friend of mine once said, “It’s easy to take people’s heads apart and find out what’s bugging them, it’s far more difficult to put their heads back together. If you’re not careful and clever, you might unleash some stuff and be unable to resolve it and fix it.” You have to be so careful.

I couldn’t help thinking of all of this when I read a recent post by Marcellous, entitled A sad case. The case, MacKinnon v Bluescope Steel Limited [2007] NSWSC 774 is indeed very sad. To quote from Marcellous:

…[I]n extreme summary form, in 1996, Dr McKinnon, then aged 35 and a doctor employed by BHP (now called Bluescope Steel), attended a residential leadership course run for employees of BHP. The course was a fairly intense experience. At some stage during the course, McKinnon suffered something which in lay terms might be described as a nervous breakdown, from which he has never recovered. The case concerned whether BHP, or possibly the people who ran the course breached some duty towards Dr McKinnon and so caused this breakdown so that they should be required to compensate him for the consequences of this breakdown.

The amount at stake was substantial. The lost earning capacity for the rest of his working life of a doctor aged 35 is a considerable amount of money. Altogether there were 93 hearing days: 89 in which evidence was heard and a further 4 days for closing submissions.

Poor old Dr MacKinnon lost the case. He could not prove that BHP or the organisation which ran the course had breached their duty of care, and in any event, the trial judge formed the view that even if there had been a breach, he would have been unable to prove that the breach caused the injury. It seemed he had already been stressed before he attended the course, and had had some clashes with his then-boss. A number of incidents during the course exacerbated the tension between him and his boss, such that the plaintiff became mentally ill. But he was not forced to attend the course, or to continue attending it. There had been various measures put in place to try and monitor the mental health of the employees by both BHP and the organisation which ran the course. Dr MacKinnon had shown signs of increasing distress as the course went on, but the defendants had tried to alleviate and manage this.

I wonder whether companies will reconsider these kind of “team building” exercises in light of cases such as these? Even though BHP won, it must have been expensive to defend a claim like this. Personally, I won’t shed too many tears if courses like these go the way of the dodo!

Performance anxiety

Leon Gettler has a post about performance reviews on The Age blog. It struck a chord. I’m not the greatest fan of performance reviews. I don’t think I’ve ever had one which has been helpful. Most of the time, they have been “rubber stamp” affairs, with bosses ticking various boxes just so that we can say that we’ve gone through the process (thus keeping the HR department off our backs).

Gettler cites a study by Personnel Decisions International (PDI) which found that, where employees report to multiple bosses, the employees’ performance ratings were inconsistent, and sometimes bosses gave wildly varying ratings.

In a study of 5,970 employees reporting to two bosses, employees who were rated “Outstanding – one of the best” by the first boss, were rated lower by the other boss 62% of the time and only “Somewhat above average” or less 29% of the time.

“Unfortunately, the concept of rater bias is something that almost every company encounters,” explains Brian Davis, executive vice president, practice areas at PDI. “This basically means that bosses are rating employee performance through their own biases. Some bosses tend to rate employees on how well they like them, rather than how well the employee performs. Other bosses tend to have their own rating systems where, for example, they rate everyone well. The problem with rater-bias is that it takes away the organization’s ability to objectively use data from performance evaluations with any validity.”

Apparently part of the problem arises when performance assessments do not address specific competencies or criteria.

“When two bosses are involved, it is crucial to use common standards for rating employee performance,” Davis continued. “By knowing which skills and competencies are important for the work and what types of behaviors constitute an ‘average’ rating compared to an ‘above average’ rating, for example, the entire validity and value of performance evaluations greatly improves.”

“When standards are not used, you can’t count on the objectivity or accuracy of a performance assessment and you have no differentiating data that allows you to make confident decisions about promotions, training or leadership development,” Davis continued. “Today’s best companies simply cannot leave their talent management decisions to chance. They need to know that the time and effort put into performance evaluation have a return on investment of making better talent management decisions.”

Even if there are standards, some performance criteria are useless. What does “communicates well” mean? “Communicates well” with whom? Clients, co-workers or bosses? I’ve spoken before about the problem of people who are very good at managing upwards (communicating with their bosses) but may be very bad at managing downwards. Nonetheless, because it is the boss’ impression which counts, these people move on up in an organisation, even when their bad management style leads to massive attrition. “Must be the junior employees’ fault – no backbone or loyalty,” think the ultimate bosses or partners.

The problem is that promotions and salary increases may depend on these ridiculous exercises. Bad practices can filter through the whole organisation. If you see someone promoted on the basis of personal friendship, despite the fact that he or she is not qualified for the job, it is absolutely demoralising. You begin to wonder what you are doing at the organisation or firm.

It has always seemed to me that if your manager is competent, you don’t need to have a performance review. You have an idea of how you are performing and what your duties are. You know whether you are likely to progress and that your work is appreciated.

Unfortunately, real life ain’t like that most of the time. It’s probably good to force people to think about how they manage their junior employees, as well as giving junior employees a chance to tell management of any problems. But I think that the “check the box” performance review is a poor way of doing it.

Corporatisation of law firms

Jim Belshaw has written a great counterpoint post to the post I wrote about Slater & Gordon’s move to list on the stock exchange.

Put shortly, Jim’s contentions are that the move to corporatise law firms comes about to remedy fundamental inefficiencies in the way in which partnerships operate:

• Senior partners are also senior managers. As Jim points out, partners are not necessarily good managers, and one does not become a partner because of one’s management prowess.
• Partners have a jumble of roles: managers, owners and professional advisers. Jim proposes that it is necessary to separate equity returns from payment for work. Then the definition of roles and the remuneration to be attached to those roles could then be dealt with using conventional job analysis and remuneration principles
• Abolition of goodwill. Firms no longer treat the brand name, intellectual property and staff of a firm as something valuable. They focus on short-term cash-maximisation rather than long-term growth.
• Acquisitions. Listed firms can offer shares in a company without the problems that can be involved in slotting new partners into a partnership structure. Staff shareholding schemes can be used to reward staff for growth (as is occurring at Slater & Gordon).
• Risk management. Corporate structures can quarantine risk (whereas a failure of one part of a partnership can threaten the whole). If firms can quarantine risk, they will be able to expand into new areas and different disciplines more easily.

I found this very interesting, as I had not looked at the issue in this way. Being a litigator, my first thoughts were of course about how everything could go wrong…

Do have a read of Jim’s post and his more recent post on the topic.

All’s fair in love and law

I was reading Mirko Bagaric’s post on lawyers and depression with interest. It’s a topical issue right now. Bagaric’s argument is that lawyers are driven by status and desire for material things to work long hours. He says:

Still there is even scope for lawyers to crank up a smile. The key rests with working shorter hours, not personalising uncertainties brought about by the actions of their clients and working in areas of law which cohere with their intrinsic interests and provide them with a sense of civic fulfilment.

Why am I a lawyer? As I have described in a previous post, I do actually love the law. Let’s look at why:

• I love figuring things out. Being a lawyer gives me the same kind of pleasure that doing a cryptic crossword brings. There’s a sense in which being a lawyer is like being a historian or an archaeologist – searching through the past to build a picture of what happened and why.
• I love words. Law is all about words, nuance, what is said and what is written. I love telling stories.
• I love debating. I like to think of both sides of the story, to look at things from different angles and then put it all into an argument.
• I love fixing things for people and helping people. I like it when a case ends well, when justice is done, when an outcome is fair. I hate to see people bullied, and I really hate seeing people lose out because they have less legal resources than the other side.
• I love knowledge. I like the fact that I have the skills to research the law and to understand it. I like the fact that I can use this to help others.

Unfortunately, working in a law firm only occasionally involved the things mentioned in the bullet points above. I liked the people I worked with, but I don’t miss the work.

I think Bagaric is right. Lawyers lack control over their own destiny. They are pushed and pulled this way and that – by the client, by changes in the law, by partners (if they are junior lawyers), by judges (if they are litigators) and by the demands of the market. One of the things which made me most miserable about being a solicitor was that I couldn’t work in the way I like to work (which is spurts of enthusiasm followed by a period of “thinking” before I send anything out). Because of the six minute billing regime, I had to fill every minute of the day.

Often, my plans for the day would be totally thrown out because some other person above me in the hierarchy had mismanaged their day – “You need to drop everything and do this, the client needs it now!” I would be punished for the failure of others to manage the workload properly. What could have been done properly would end up being a rushed job.

At one point in one of the firms at which I worked, morning teas were banned because they were cutting into billing time. This attitude is disastrous for morale, and does not help productivity. By pausing and smelling the roses, you can get everything in perspective. You can talk to your colleagues and see if they have any solutions or suggestions for a difficult file.

All too often, my job involved just mechanically going through the motions and doing jobs that required no brain power at all. My strength is not in the mechanical, but in research and in being creative. I felt my strengths were not being utilised to the full.

Bagaric suggests that shorter hours would help. Shorter and more reasonable working hours are an important part of the puzzle, but not the only piece. Part of the problem is that modern technology and expectations mean that a client thinks that a lawyer should be contactable any time, anywhere. A firm has to be strong and resist the psychos who stay at work for 15 hours a day because they have nothing else to do. Unfortunately, because of the way in which high billing levels lead to promotion, these are the kind of people who get promoted, and then expect others to work in the same way.

Part of the battle is to know how to react when conflict and stress come up, to know how to manage junior staff, administrative staff and senior staff, and to be honest about your own weaknesses. I know that I’m not so good on mechanical stuff, and so I tried to manage that by putting in place various tactics to stop me stuffing up through sheer boredom.

I don’t think, that the lawyer blues are all down to material greed and status. Certainly, some lawyers are like that, but others just get stuck in the treadmill and don’t know what else to do. So they keep going up the chain, miserably, as their enthusiasm for the law is squashed from them bit by bit.

I am not interested in material gain or status. Well, let’s not go overboard…I want to have enough to live and eat, and have the occasional treat. One day it would be nice to be able to afford a house, but I’d rather be happy and renting than unhappy with a house.

One thing I have found very fulfilling is volunteering at a community legal centre. I like being able to help people who can’t afford to pay for legal advice and don’t know what to do. For any lawyers out there who are wondering whether being a lawyer does any good for the world, I thoroughly recommend it. I also like teaching people about the law – both in my present job and by writing this blog. I think it’s really important to empower people by letting them know what the law is all about.

To those lawyers out there who are feeling blue – you are not alone – but hopefully, if enough of us get together and change the way things are, there will be a change in the profession.

Postscript

Jim Belshaw has also written two good posts on the issue, with an emphasis on the way in which management can deal with depression in the workplace.

Managing up and down

A friend of mine was telling me about his problems at work. “The problem is,” he sighed, “my immediate boss is very good at managing up but terrible at managing down.” This comment really struck me – I don’t think I’d ever thought about it in such graphic terms before.

It has always been obvious to me that good management is all about communication. If people don’t know why they are doing a task, or don’t have any stake in the outcome, they will not proceed with the same level of enthusiasm. Recognition of good work is also essential; people who work hard for no praise or reward tend to get resentful, and not care so much. Constantly criticising a junior employee can make his or her work worse rather than than better. Any criticism has to be constructive. That doesn’t mean you have to be praised constantly: I once worked for someone who only praised sparingly, but when he did, you knew you had done a really good job, so it was doubly pleasing.

But sometimes you really wonder how people came to a position of management, and how they manage to stay there. My friend’s boss is apparently not respected by any of the junior employees. They all think he is appalling: he doesn’t communicate with his staff, and tries to shift blame onto other people when something goes wrong. He cannot communicate his requests adequately. He doesn’t plan well, and thus tasks are always urgent. He has been on numerous management courses, but to no avail. One junior staff member resigned from the section last year, and told the ultimate manager exactly what she thought of it all. The ultimate manager couldn’t see the problem with this guy. Why not? Well, he has managed her expectations very well, and ensured any mistakes look like they are the fault of others. That’s how he has managed to stay there, despite a massive staff turnover in the section. And no one has wanted to face up to the reason for the high attrition rate.

I suppose the problem is that just because you are a good lawyer, or a good architect, or a good scientist (or whatever) doesn’t mean that you are necessarily a good manager. I can only comment on law firms, but it has always seemed to me that rising up the ladder in a law firm has nothing to do with management skills at all, and everything to do with billing targets and getting in new clients. So as long as you look like you are working hard, charging like a wounded bull and still keeping the clients happy, it doesn’t matter whether you treat your junior employees appallingly. After all, there’s plenty more cannon fodder where they came from…

Except that it costs a lot of money to train new people up and to wait until they become familiar with a firm’s systems. It just seems immensely wasteful; but I suppose firms reason that it’s cheaper to lose a constant stream of junior employees rather than get a partner’s nose out of joint by suggesting he or she should do something differently. What if the firm loses a major client because the partner then moves elsewhere?

Still, I tend to think that someone’s performance should not just be judged on reaching targets and being able to soft-soap the ultimate boss and clients. It should also be judged on how well a person manages junior employees, because by managing junior employees badly, a manager costs the firm a lot of money. Of course, there will always have to be compromises (a manager can’t keep everyone happy) but it’s important to recognise that being a manger is not just about managing up, it’s also about managing down.