Monthly Archives: May 2012

Dewey Leboeuf bursts its walls

“When a law firm fails, it’s like a dam bursting. It starts with a trickle of partners leaving, and what’s coming in isn’t enough to cover expenses, and the trickle speeds up.  Soon, the leaders start leaving and it bursts and floods.”

Becoming synonymous with the “world’s largest legal failure” can’t be very cheering for lawyers of old, Mr Dewey and Mr Leboeuf, God rest their souls.

The firm known as Dewey & LeBoeuf, based in New York, listed debt of $245 million and assets of $193 million when it filed for bankruptcy on Monday 28 May 2012. It was a massive firm consisting of 1,300 attorneys in 12 countries and it had only been going for 5 years.  It was the result of a 2007 merger of Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & McRae LLP. Now there are 150 employees left in the US to wind it down.

It’s a depressing story: Between Jan. 1 and March 30 about 20% of the firm’s equity partners resigned or left. So what happened? The main facts seem to be:

  • Massive revenue – in 2011 they made $935 million, up 25 million from a reported figure of $910 million for 2010
  • A lack of clarity on how these numbers were arrived at: Richard Shutran, a senior partner at the firm, later admitted in interviews that the revenue numbers publicly reported used a “different” method, acknowledging the controversy, stating, “They’re just not comparable numbers. That’s something people like to pick on
  • the firm’s financial difficulties and indebtedness became public in 2011
  • an investigation by the New York District Attorney into alleged false statements by firm chairman Stephen Davis led to his leaving the firm (forcibly I think)

On the flipside, the firm appears to have had a good reputation in certain areas.

Dewey & LeBoeuf has long valued diversity, seeing it as one of its core strengths. The firm was presented by The Minority Corporate Counsel Association with the Thomas L. Sager Award in recognition of its commitment to diversity in 2008 and 2009. The firm also received a perfect score on the Human Rights Campaign‘s 2008 and 2009 Corporate Equality Index. It was named as one of the Top 20 law firms in America in 2011 and also ranked amongst Vault’s “20 best law firms to work for”.  Who creates these awards? What constitutes a “top law firm”?

I’m curious as to how a firm winning these types of awards goes “bang” shortly thereafter.

Jonathan A. Mitchell, the firm’s restructuring officer, gives the reason for the firm’s failure as follows:

 “Dewey & LeBoeuf was formed at the onset of one of the worst economic downturns in U.S. history. These negative economic conditions, combined with the firm’s rapid growth and partnership compensation arrangements, created a situation where the cash flow was insufficient to cover capital expenses and full compensation expectations.”

When I looked at the website for the SA office of Dewey I found this:

Dewey & LeBoeuf succeeds thanks to the ambition and excellence of its people…

How sustainable is ambition as a value? According to the work of Richard Barrett, author of Building a Values Based Organisation, which is now backed up by case studies and surveys of 1000’s of businesses, ambition is a potentially limiting value. It’s situated as a level 3 value – the level of an organisation’s self esteem. I wonder to what extent this overriding ambition – to be the biggest law firm, with offices in the most countries, led to Dewey’s downfall?  One newspaper article says that the firm acknowledged that its grand ambitions for growth and lucrative pay guarantees it doled out to high-profile lateral hires in an effort to achieve those ambitions were also to blame. The evidence suggests this was not a vision led and values driven law firm.

Some observations being made in the press:

“The combination of outsized debt and widely spread pay guarantees divorced from performance put the firm in a situation with almost zero margin for error.” And yet despite the pay guarantees to its partners, it appears Dewey wasn’t paying its janitors:

“ a unit of ABM Industries, which provided janitorial services at Dewey’s offices at 1301 Avenue of the Americas in New York sued the firm for about $300,000 in unpaid bills”

Mine is not an expert opinion. I haven’t even scratched the surface of what happened at Dewey but I’m going to watch as the stories unfold because they affect all lawyers. Because it is events like this that cast a shadow across the entire legal profession:   A profession that was once regarded as a “public service” rather than a trade.

Somewhere between tales of corporate greed  on one side and pro bono work (Dewey represented Caster Semenya and Oscar Pistorius) on the other, lies the truth.

Perhaps the greatest irony is that “The firm’s collapse is expected to be the subject of years of court proceedings, and a number of former partners have already retained lawyers to represent them.”

Law and order exist for the purpose of establishing justice and when they fail in this purpose they become the dangerously structured dams that block the flow of social progress. 

Martin Luther King

The important thing is how we are going to learn from Dewey’s mistakes. I can only hope that some law firms, somewhere in the world, will look at the demise of Dewey and wonder how they can practise law a little more consciously.

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What do you consider your greatest weakness?

Here’s an article on how to answer the question “what is your greatest weakness” in a job interview. But to be honest, I don’t really agree with much of what the author says. You can read the whole article here if you wish, but essentially it gives the advice:

Prepare an answer that is true, trivial, brief, and not a fault. Some examples:

  • My biggest weakness is that my professional network is in San Francisco, but I am looking for a job in Boston to be with my fiancé.
  • My biggest weakness is that my undergraduate degree is from a college that has a good reputation in the East, but is not well-known in the Midwest.
  • My biggest weakness is that while I’m great at advocating for something I believe in, I find it uncomfortable to talk about myself.

I don’t think this is useful. As one of the readers of the article points out:

Interviewers aren’t stupid – they know when someone is trying to skate around the issue.  The question is designed to see if the person will admit they have a weakness because someone who won’t can be difficult to work with.  A “weakness” is a personal trait, not lack of training on some type of software, not where your network is, not setting high standards, and not seeing the positive side.  

Another reader suggests this:

An excellent statement is “I love to get involved with tasks that I feel I may have worthwhile input but I have a problem accepting responsibility for my achievements over that of the team.”

NOOOOOOO. Firstly, it sounds rehearsed. Secondly, it sounds like politician-speak where you’re unable to simply make whatever point it is you’re trying to make. Thirdly, there’s a passive aggressive undertone to the notion of “worthwhile” projects that would immediately make me wary of this candidate. Finally, it sounds like a suck-up job “I value teamwork over individual achievement” is usually not true and just the type of thing someone spouts in an interview in the attempt to sound like a team player.

The most useful contribution to this issue, in my opinion, is the one offered by a reader who calls himself “iamdm” below.

Here is a way to ask the question about weakness in a more indirect way, but with a very direct result. As corporate trainer I coach interviewers to ask behavioral based questions. For example:

When I speak with your previous supervisor (this statement implies that you plan on do a thorough back ground check) what area of your job will they say you need improvement in?

You can also ask them to site recent reviews or development plans in current or previous positions.

After years of doing interviews that were in hindsight, polished and rehearsed I have adopted a method that makes it really hard for the candidate to prepare for. I don’t want answers by a script. I want to find the behaviors that support my organization and the position I’m trying to fill.

I start every question with:

  • Can you tell me about a time when…
  • Can you give me an example of…
  • Describe how you have handled… in the past. 

The reason for this approach is to get past what the candidate thinks I want to hear to reveal past behaviors. Behaviors are the key to abilities, productivity and success.

This is the closest I can find as a link to the person who posted the above comment, which I think is valuable advice to interviewers.

For candidates – use commonsense. Don’t shoot yourself in the foot by going into a diatribe about your inadequacies. This is chance to show you’re self-aware and that you work on your weaker areas. A true leader is not someone who doesn’t have weaknesses, but one who is aware of their weaknesses. Hopefully you’ve had a chance to assess your strengths and weaknesses at some point. If not, then see what’s out there.  There are many tools that help develop this awareness – the one that I’m familiar with and have been asssessed in and can offer to others is the LVA, or Leadership Values Assessment, designed by the Barrett Values Centre.

The LVA is a powerful coaching tool for promoting self- awareness, personal transformation, and an understanding of the actions a leader needs to take to realise his or her full potential. The LVA compares a leader’s perception of his or her operating style with the perception of their superiors, peers and subordinates.  Emphasis is placed on a leader’s strengths, areas for improvement, and opportunities for growth.

The LVA reveals the extent to which a leader’s behaviours help or hinder the performance of the organisation, and to what extent fear influences decision-making. 

Something quite profound shifted in me when I had my LVA done. Shout if you want to know more.

Finally – I loved this!

I was interviewed for a CEO post last year. My answer was ‘the range of my limitations is broad and detailed, covering almost every feature of professional and human endeavour relevant to this position. Alas there is insufficient time to do that vast array of imperfections justice in the time we have available.” I got the job. To be fair, I had already dealt reasonably well with the questions in the previous hour up to that point. They had asked about faults but got a message about sense of humour and confidence under pressure.

This guy seems self-aware enough to send up the question without mocking the interviewer, and give a sense of who he is in the process. I get the sense if they’d persisted he’d have been able to give a few examples.

If you’re interviewing or being interviewed…Good luck! Remember to be real. Life is not a dress rehearsal.

It has always been frowned upon to feed lawyers

It has always been frowned upon to feed lawyers, but it was always considered worse to interact with lawyers. To touch lawyers. But for me interacting with lawyers is the only way to truly show what lawyers really are, and they are beautiful and amazingly intelligent animals. These interactions are opportunities to share with the world the other side of lawyers. A curious playful animal that sometimes enjoys a nose scratch just like many other species of animals do. The bottom line is people will save what people love, and with lawyers’ current image, it is hard to love lawyers. But what if there was a way to show the world that lawyers are capable of being loved? Well that’s what my life’s journey and work is all about…

Ok, so I plagiarized the above paragraph. I’m sure you’re smart enough to figure out what the original paragraph was about.

Thinking that all lawyers are aggressive, out to make a quick buck, and are morally dubious is an example of what Edward de Bono terms “Adversary Thinking”.  With adversarial thinking each side takes a different position and then seeks to attack the other side. Each side seeks to prove that the other side is wrong. This is the type of thinking established by the Greek Gang of Three (Socrates, Plato and Aristotle) two thousand four hundred years ago.

Let’s not fall into Adversary Thinking.  I don’t want to engage in this debate at the level of “you are wrong and I am right”. In other words you say “lawyers are sharks” and I say “lawyers are not sharks”. Instead let’s engage in Parallel Thinking, described by De Bono as follows:

With ‘parallel thinking’ both sides (or all parties) are thinking in parallel in the same direction. There is co-operative and co-ordinated thinking. The direction itself can be changed in order to give a full scan of the situation. But at every moment each thinker is thinking in parallel with all the other thinkers. There does not have to be agreement. Statements or thoughts which are indeed contradictory are not argued out but laid down in parallel. In the final stage the way forward is ‘designed’ from the parallel thought that have been laid out.

Let’s agree that some lawyers are sharks. No doubt about it. There are indeed morally bankrupt, devious, greedy and exploitative lawyers out there. Let’s move past this to a full scan of the situation and begin to ask why the profession in general tends to be so misaligned. Let’s ask how current situations might be contributing to creating money-hungry and unscrupulous lawyers. Let’s widen our view not only to include ‘good’ lawyers and ‘bad’ lawyers but some of the categories in between: intimidating lawyers, obnoxious lawyers, incompetent lawyers.  Let us ask questions, all manner of questions to learn more.

  • What might we be missing in the way we educate lawyers?
  • In what way might the structure of various parts of the legal profession be contributing to this problem?
  • How are lawyers affected by the fact that most law firms still resemble the form of law firms in the United Kingdom 100 years ago?
  • How might the fact that law is still a largely male-dominated profession be contributing to the problem?
  • In what way does the dominant thinking pattern in law, black & white, right or wrong leave very little room for new forms of legal solution, such as mediation?
  • It’s understood by many that being wrong in the legal world is seen as failing. How might this mindset prevent lawyers from exploring their full creative potential when drafting contracts or looking for ways to resolve clients’ disputes?

Like it or not, the average Joe is going to have to have contact with lawyers in his lifetime. You will have to feed the lawyers at some stage whether it’s getting an ANC drawn up, buying a house or starting a business. You may find that actually dealing with a lawyer is an opportunity to change your mindset about lawyers in general. But perhaps not. More often than not people hold a construct or belief and then look for evidence of it. Beware of what negative views of lawyers you may be holding when you walk into that consultation.

I’m hoping that the work I do around the transformation of law will allow me to dive deeply. To probe the depths of this habitat of “sharks” and develop an understanding of why they act as they do. I’m ready to dive. Without a cage. 😉

Why a conscious approach to law is needed

  1. Law is fundamental to the continued existence of organised society. I believe it’s Utopian to maintain that should the legal system disintegrate entirely, man would work things out with his fellow men. In brief, society has become too complex for us to survive without laws. We are so completely interdependent on each other for food, water, building of shelter that by necessity we’ve created a highly complex legal system to help us co-ordinate ourselves.
  2. The more complicated the legal system becomes, the more lawyers we need to run it and to serve as brokers between this system and those that need to use the system. There is a growing realisation that the concept of “progress” is a lot more complicated than we originally thought. Statistics show that as infant mortality declines (just one indicator of progress or “civilization”) the carbon emissions of that country go up. In brief, as we save the people we’re destroying the planet. We produce genetically modified crops to feed the millions and in the process we wreck the eco-system. As society changes, law needs to change to keep pace.    From the simple “do not intentionally take the life of another” law we now have to work out laws on cloning people to harvest their organs and how that fits into our definitions of murder. We have atomic bombs which, in an instant, ended the lives of 250 000 to 350 000 people. How do our murder laws deal with this?  They become increasingly complex.
  3. Civil law or contracts between people, have likewise become increasingly complex. Whereas law once provided for who had legal responsibility for the children born to a man and a woman, now we have so many variations on this theme, from test tube babies, to surrogates, to same sex parents, to frozen embryos of women now deceased – it’s COMPLICATED!  This has required lawyers to specialise in niche areas of law.  The amount of legislation in each area of law makes a general practice unthinkable.
  4. Law firms still tend to be based on a now antiquated notion that law is simply a public service. It is a public service but it’s also a way of earning a living. History shows that in the UK lawyers once considered it an insult to have law considered a “trade” but today we must acknowledge that it is very much a trade and that much of what lawyers now do is inseparable from other professions such as financial advisors. Legal advice cannot be neatly put in a box – it’s too intertwined with finance, economics, psychology, medicine, biology…
  5. We need to think about law in a new way. We cannot solve the problem at the same level of thinking that created it. (Einstein) Therefore we must re think the notion of lawyers as a separate profession and start looking at a more integral, multi-disciplinary approach to legal matters and legal training.

Law is fundamental.

Law is complicated.

It’s time for lawyers to embrace some of the advances in other professions, whether it’s different ways of thinking about things (De Bono), systems for creating values based organisations (Richard Barrett) or business models other than the traditional partnership model, for profit or not for profit (see John Lewis Partnership).  Including lessons on ethics, morality and leadership in law school curricula should be a no-brainer, as all advanced business programs have already realized.

There are only going to be more laws and more lawyers.  It’s time for a conscious approach to transformation in law.