Category Archives: Law firms

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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It’s possible to do things differently

I just read an article called “Can there be ‘good’ corporations?” by Marjorie Kelly. She is busy writing a book called Owning Our Future: The Emerging Ownership Revolution. The article is REALLY good. Please read it. It points out some very interesting things around the rise of new forms of business, alternatives to the old “shareholders earn all the profit” model. It also explores the story of the John Lewis Partnership, the largest department store chain in England which is 100% owned by employees. I’m blown away. I’ve been into these stores hundreds of times and never known how radically different its underlying structure is.

Here’s an excerpt from the article:

  • 1. There is an alternative to capitalism. This is the heresy that the keepers of the temple do not wish us to utter. It is possible to organize a large, sophisticated, modern economy that tends toward fair and just outcomes, benefits the many rather than the few, and enables an enduring human presence on a flourishing Earth.
  • 2. Getting there is not only about regulation but about emergence. As organizational change theorist Margaret Wheatley writes, “emergence” refers to what happens when local actions spring up and connect through networks. Without warning, emergent phenomena can occur, such as the rise of the organic food movement. Such movements rely not on central leadership but on shared vision.
  • 3. The generative economy is not a legal exercise but the embodiment of an emerging value system. Companies in the generative economy are built around values; the John Lewis Partnership’s core value is fairness, while Organic Valley’s core values are sustainability and community.
  • 4. Generative values become enduring through the social architecture of ownership. The generative economy is built on a foundation of stakeholder ownership designed to generate and preserve real wealth—resources held and shared by our communities and the ecosystems we live in. These enterprises don’t have absentee ownership shares trading in a casino economy, but ownership held in human hands.

More people need to know that it is possible to do things differently. South Africa is an incredibly entrepreneurial country but young entrepreneurs need to know the alternatives or else they will simply create businesses modelled on the corporates of old which are out of alignment with the rising consciousness of current generations.  What worked for the Baby Boomers does not work for Generation X and Y. We need to do things differently. So read this article and go tell your friends that run their own businesses or might one day want to start their own business, to read it. It’s possible to do things differently.

Tragic Shooting At a Law Firm

I’m not sure what to say about this week’s triple murder and suicide in the conference room of a Pretoria law firm. Surprisingly many people I have spoken to in the last 2 days had not heard about it.

It’s sad and it’s shocking.

Briefly, the facts are that there were 6 people in the room, 4 clients and 2 lawyers.  Martin van Deventer was on the one side and on the other were 3 directors of Mayborn, a property development company, namely Griessel, Erasmus and Van Heerden and their lawyer.

Griessel, Erasmus and Van Heerden bought Van Deventer’s farm for a property development. Half of the purchasing price was paid over to Van Deventer at the time of the sale, while the rest would have been paid at a later stage. At the meeting, the three buyers allegedly told Van Deventer that they could not pay him the rest of his money at this stage.

At this point Van Deventer got up and shot the 3 men, at point blank range, before he turned the gun on himself.

The lawyer for the 3 men, at whose office this took place, said: “I don’t know what went wrong. The meeting went well. The next moment he was shooting my clients.”

I don’t know what to make of that. The lawyer thought the meeting went well? Surely there must have been signs of enormous distress coming from Van Deventer? I know everyone cannot be deception experts like Dr Cal Lightman, but I can’t believe no one noticed anything at all until 4 people were dead.

Without much understanding of the dynamics I am hesitant to make any judgment. I  will say that I believe lawyers should be trained to handle client’s distress. I believe strongly that law cannot be separated from other disciplines such as psychology and economics. Entering into a commercial contract is essentially about an economic exchange, accountability and managing fear. That’s why people ask for a contract – they are fearful the other side will not behave as they have agreed and that they will suffer as a result.

I can only hope this serves to highlight the vulnerability of clients in legal negotiations and that some lawyers may be motivated to learn more about how to manage such processes with compassion.

Wherever right or wrong may lie in this story, it seems a terrible waste that four lives were lost.

PS. The comments of readers on the news24 website where I read about this incident are shockingly unconscious. The shallow level of engagement with this sad event really makes for frightening reading. I despair for our country when I read stuff like this.

Core Values vs Aspirational Values

Here is something I think is quite useful from Jim Collins, author of Good to Great, on core values vs aspirational values:

“People frequently confuse timeless core values—what you truly believe and have always believed at a deep core level—with aspirations of what you’d like to see the organization become in the future. You may have such an aspiration, but if you are honest with yourself and it is not a core value for the people in your breakout group, the place to put it is in the vivid description aspect of the Envisioned Future. Do not mix future aspirations into your true and authentic core values, as this will create justifiable cynicism and destroy the power of your core values. For example, a group that has never held innovation as a core value should not put innovation into its list of core values, even if it sees innovation as a vital strategy for its future. Instead, it should make innovation part of its Envisioned Future a quality that it wants to stimulate progress toward.”

Jim Collins has some great exercises for organisations to determine their values which you can find on www.jimcollins.com. I can see that incorporating the methodology of Richard Barrett would take these exercises to a new level because it makes sense of the values. Barrett situates all values within a framework of individual and organisational consciousness. It is far more powerful to have context.

For example, using Barrett’s 7 Levels of Organisational Consciousness, the organisational value “trust” is a level 5 value, the level of internal cohesion – which is about building an internal community, with shared values and vision. “Professionalism” on the other hand is a level 3 value, the level of self-esteem. This level is about building performance, so it’s about systems and processes and best practices.

If a company has undertaken a Cultural Values Assessment (CVA) one of the primary Cultural Transformation Tools of the Barrett Values Centre, then it’s much easier to ensure relevant values are chosen. A CVA provides a clear picture of the employees’ individual values and of their desired values for the organisation. This can be used to ensure there’s alignment with who the people are and the type of organisation they want to work for, when the executives choose the values. This is essential for alignment. I will talk explain the 4 types of alignment necessary for a values-driven organisation, in another post.

For now, suffice to say, that the current trend of executives rushing off on a breakaway, and returning with a set of “new values for the company” is very old school and ineffective. At the very least, failing a company-wide survey (cost is of course a factor in these matters), the executives should each undertake an IVA – Individual Values Assessment – which can be used to ensure that these individuals, who will be responsible for espousing and living the values, are in fact capable of doing so.

If undertaking any sort of values journey, I highly recommend you read Richard Barrett’s Building a Values Driven Organisation. While Good to Great is on every list of “books every entrepreneur should have read”, Barrett’s book is just a little more exclusive.  Jim Collins for a business exec is like having Deepak Chopra on your bookshelf if you’re a self-help fan. (there’s no note of condescension here, we should ALL be helping ourselves, those who don’t are just painful). But if you want to learn about values the smart way, the way the cool kids are doing it, read Building a Values Driven Organisation. It’s not a laugh a minute but it’s profound. Or you can get a Barrett consultant, like me, to run you through the book’s contents in a few hours. Either way, two bits of advice:

1. don’t pay for a values session until you’ve looked into Barrett’s work

2. Do not try to inculcate the organisation’s values by chanting them in unison at company meetings. Ever.

“Here today no human heart was trampled”

I’m considering how to bring the work of Nancy Kline (author of Time to Think) to law firms in SA. Perhaps there are law firms somewhere embracing the Thinking Environment…please let me know.

Regardless of the industry you work in,   Time to Think is a beneficial read. It deals beautifully with the concept that our ability to listen to others has a direct affect on their ability to think.

I believe the methodology in Time to Think is very well suited to solving some of the issues that stifle the quality of lawyer’s thinking.  There are studies on the way that lawyers think (will definitely write more about this and cite sources)  which suggest that the fear of ever being wrong results in very little creative thinking. Creative thinking involves risk and lawyers are very risk-averse.  Another facet is that law so often works on a precedent based system. We have a precedent based judicial system which has been in operation for hundreds of years. Also we use “precedents” meaning previously drafted contracts whenever clients want  a contract.  Although there are various arguments in favour of these systems which I shan’t deal with here, we need to consider the downsides too.  One such downside is the constant shutting down of opportunities for creative solutions.

While I’m not suggesting we abandon the precedent system, I do believe we would do well to heed the words of Albert Einstein (he was pretty smart in his approach to things)

“You cannot solve a problem from the same consciousness that created it. You must learn to see the world anew.”

Some of the reasons that innovative thinking is not cultivated or celebrated in law firms include:

  • The emphasis on always being right
  • Solutions must be found fast or alternately…
  • Billing by the hour means it’s not in the firm’s best interest to solve problems fast
  • Clients often have the best solution to their issue, sometimes subconsciously, but lawyers do not know how to listen to their clients and clients are often intimidated by lawyers and cannot express their thinking.

To better understand Nancy’s concept of a Thinking Environment, here are some extracts from an article she wrote called The Thinking Environment Organisation that I highly recommend (2 pages long)  that you can read in its entirety on the Time to Think site.

If you worked in a Thinking Environment Organization, you would know as you walked in the door each morning that people would be interested in what you really think on issues big and small…

You would know that as you spoke, you would not be interrupted, You would value that so much that you would take responsibility for being succinct so that everyone could have a full turn, too. You would know that the generative effect of these uninterrupted turns to think and speak would raise the energy of the group. You would look forward to the pleasure of a work day with so much positive, not frenetic, energy.

In organizations in which people truly value each other’s thinking and truly listen to each other, targets get met better, budgets get set better, products and services get delivered better, the quality of work increases. But, more importantly, other things increase: things like self-respect, inspiration, innovation, confidence.

This is because when we know our thinking is valued, we know our very core is, too.

And in such an organization, you would get to the end of your day, close the door behind you, and be able to say to yourself,

“On my watch, people thrived. Here today no human heart was trampled, and no human mind was wasted.”

Can you imagine a law firm like this? Personally I find it mind-blowing.

5 Problems with Law Firms in South Africa

  1. Their business models are ancient. Most firms still structure themselves the way law firms of centuries ago were structured.
  2. There is generally a lack of transformation in terms of making firms hospitable to women. This would mean finding solutions to issues such as childcare, working remotely, dawn meetings etc.
  3. There is generally a lack of understanding of how powerful it can be to have men and women understand the ways in which they think and act differently and harness these differences in the workplace.  Female attorneys will only get ahead when they are able to act like their male counterparts.
  4. Many law firms have embraced the trend of having values – yet like many companies, do not know the first thing about living their values.  They have no idea how to ensure all their policies and procedures from remuneration to billing clients, are aligned with their values. This means the values just make good wallpaper.
  5. Law firms are mostly oblivious to the fact that as a result of their restrictive and hierarchical cultures, only a certain type of person will be able to thrive in a law firm. This means that of the 10 graduates who join a firm, after a decade only those whose personality profile is very similar to all the attorneys higher up the chain, are likely to still be around. This makes for homogeneous attorneys and is not actually good for business or the profession.  The line up may look diverse – some men, some women, different races but in terms of personality profile, they’ll probably represent only 10% of the population. If that.

PS the photo I found on Google. It’s an Aussie firm I believe. I might be sued for using it without permission. It just seemed too perfect an illustration of point 5 to resist. I’m gobsmacked. Are those women in uniforms? Or did they get a memo saying “black skirt suit, 3 cm above the knee, white shirt, black peep toe heels”?. Notice only the woman on the far right is able to wear sexy boots. Because she’s been there for 20 years, she earned the right to show her individuality. Just the boots mind you. Frightening stuff.  This is just my personal opinion.

The Smorgasboard of Workplace Tools

How does one choose between the thousands of emotional/ social/ relationship/ multiple intelligence tools aimed at corporates? Many are trademarked and most are expensive.

I came across Relationship Systems Intelligence™ this week.  You can download an article on it here. It’s got me thinking about the proliferation of this stuff on the market and how one can assess it.

I’m still forming my thoughts about this but so far I think the effectiveness of any training will depend on:

  1.  the level of consciousness of the facilitator
  2. the participants’ willingness/ readiness to learn the tools being offered.

Of course “consciousness” is a complex term. I’m trying to find some way to capture the concept of multiple intelligences here, rather than using the word “intelligence” because I’m not referring to cognitive ability. There are plenty of smart people useless at facilitating or teaching. My old maths teacher was one of them. Clearly she understood the maths, but most classes she looked at us in bafflement and said “what do you mean you DON’T understand?”.

On the one hand I applaud the multiplicity of new products!  Rather than roll our eyes at another seminar or tool that develops emotional intelligence, we should celebrate the fact that a term like “emotional intelligence” has become mass market. Yes, it is a GOOD thing. Yay for Daniel Goleman! Sure he may have got rich in the process, but his books (bless the publishers) are on the shelves of some of the most neanderthal managers and headmasters out there!   Emotional intelligence is being ever-increasingly recognised  as a vital aspect of successful relationships, and of corporate life, even of government decision making and this is wonderful.

I suppose my “distaste” is the capitalist aspect of trade-marking various products for commercial gain. Billions of leadership courses, values courses, psychometric testing tools – all with clever names and acronyms and the little TM sign…the cynic in me says the sign stands for “we want money for this, even though we’ve kind of just taken a lot of thinking out there and re-packaged it”. But the cynic in me is tempered by the idealist who is aware that many of these tools create leaps in consciousness for many people personally and for the organisations in which they work. This is good for us all – it is good for humanity, it is good for our planet.

So what am I saying? Perhaps we have to examine the integrity with which these products are created.  But integrity is a nebulous concept,  so hard to measure or define – how can you look at a new product or programme and evaluate its integrity? I think as a civilization we haven’t evolved to that point yet – so I would probably use good old common sense and intellect to determine whether I believe a product has integrity (very subjective, yes) and then maybe use kinesiology to calibrate the product’s consciousness.

Whoa, yes, I lost some people there. Applied Kinesiology is considered way out or “new age” now, but could quite possibly be in common use in 100 years time. Only once humanity stops thinking we can figure everything out through our senses. But I don’t want to get lost in a discussion of that now.

I’ve spent some time looking at different organisational development consultancies and each has their own products though many are very similar. Perhaps it’s just an aspect of how this industry functions within the legal constraints of today’s business environment. You’re not allowed to use others ideas so everyone is forced to re-package and make a “new” product.  It’s all about marketing.

I admit that my thinking today is influenced by the wonderful lecture I attended recently by Prof Henry Mintzberg, and also by the week-long facilitation course I’ve just completed. The course included a 200 page manual, repeating stuff from a bunch of books on facilitation. Both have, in different ways, inspired me to eschew mediocrity and continue to question whatever is put before me.

So my advice, if faced with a smorgasboard of tools that will enhance employee engagement and develop leadership potential is this:

  1. read it, learn it, absorb it. Reflect.
  2. See what else is being offered that is similar.
  3. Don’t believe the hype “our product has been proven 78% more effective than all our competitors”. Mostly it’s bollocks.  This stuff is highly subjective.
  4. Choose the smartest, most switched on, conscious facilitators for any programme you do decide to offer – you cannot solve a problem using the same level of thinking as that which created the problem.
  5. Have a look into Spiral Dynamics – it may help you meet your employees where they are. There are many boardrooms where any mention of meditation or kinesiology will have eye balls rolling so far back you’ll think you’re in a roomful of Zombies.  Assess the culture and worldview of your employees and pick a product that’s aligned.

PS when I try to sell your company my DEEP (Deeply Engaged Employees Programme*) next month, don’t laugh. Just go back to the 5 points and decide for yourself!

*real name withheld to protect programme’s identity.

** this is a joke. I don’t have a programme…YET.