Tag: Lawyer

Lawyer/businessman’s niche: rent-a-lawyer business

Fresh out of graduate school in 1992 with a dual degree in law and business administration, Karl Schieneman figured he could write his professional ticket.

But it didn’t work out that way, despite his master’s from Carnegie-Mellon University’s prestigious Graduate School of Industrial Administration and his Law Review credentials at the University of Pittsburgh’s School of Law.

Schieneman wanted to stay in Pittsburgh because his wife, Olga, established in a career here, but contends that he couldn’t even land an interview at a local law firm because of a saturation of lawyers in the market.

So he took a job at accounting firm Price Waterhouse for 13 months before he got his foot in the door at Marcus & Shapira, a Downtown law firm that hired him on a contract basis to work on the huge Phar-Mor financial scandal.

The firm eventually offered Schieneman a full-time position – which he accepted – but the experience of working as a temporary planted the seed for the business he would help launch in 1995: Legal Network Ltd., a placement service for temporary and contract lawyers.

Since last year, Schieneman, 34, has been running Legal Network as its managing director.

The company has about 50 attorneys placed under contract and counts a database of 2,000 lawyers and 500 paralegals it can tap for assignments.

Clients that use temporary legal professionals are generally law firms that need help on big projects or during peak business times; and corporations that want to outsource legal work or give an attorney a tryout period before making a full-time offer, Schieneman said.

Among its corporate clients are Wheeling-Pittsburgh Steel Corp., Armco, Allegheny Power and General Nutrition Companies Inc.

Legal Network charges clients between $20 and $100 per hour for its attorneys depending on the length of the project, the attorney’s expertise and other factors that vary from case to case, according to pricing information on its Web site.

For paralegals, it charges $12 to $35 per hour.

Legal Network keeps a cut of the fee clients pay, but Schieneman declined to disclose the percentage.

He expects total revenues this year to reach between $1.5 million and $2 million. Besides placement fees for legal help, future growth may come from adding placement services for professionals in health or engineering fields, Schieneman said.

It’s also considering opening satellite offices and perhaps merging with other firms.

Legal Network has already made one strategic acquisition this year. In August, it bought the Pittsburgh operations of Oxford Legal Associates, a Philadelphia placement firm, in a deal that added several hundred professionals to

Legal Network’s database.

Schieneman drafted the business plan for the company while working at Marcus & Shapira because he saw a niche for a business that would “provide a way for lawyers to break into a tough market,” Schieneman said.
The other founders, who also hold a stake in the business, are Pittsburgh attorney Brad Franc, and Lawrence

Kolarik, a computer specialist who works for Automatic Data Processing.

Originally based on Babcock Boulevard in Ross, Legal Network in April relocated to the Regional Enterprise

Tower, Downtown, (the former Alcoa Building) “to be close to the legal community,” Schieneman said. It employs three full-timers

Schieneman considers his job to be an ideal mix of his business and legal backgrounds and contends that he doesn’t miss practicing law because he’s exposed to so many legal trends and issues through placement assignments.

Although he grew up in Englewood, NJ – where he attend his high school prom with future Academy Award winner Mira Sorvino – Schieneman has made Pittsburgh his adopted home.

The Hampton resident and father of two coaches his daughters’ soccer team and recently joined Pittsburgh Urban Magnet Project (PUMP), an organization of young Pittsburgh professionals that he sees as a critical force in growing the city’s business community.

Schieneman credits Olga, his wife, a sales information manager for Kraft Foods, Inc., with extreme patience and support as he shifted from accounting to law and finally, to running his own business. “She stood by me . . . and I’ve always had macaroni and cheese to fall back on,” he quipped.

To Maximize Appeal to Clients, Lawyers Should Develop Basic Knowledge of Business and Business Practice

To Manage or Not To Manage
Legal organizations often suffer from a lack of knowledge of and focus on the business and management issues of their clients and of their own firms. That should come as no surprise. Lawyers are not taught business or management principles in law school. They are generally not encouraged to develop business knowledge or management skills until well-into their careers, if ever. Indeed, any exposure to true and effective business management most lawyers have (especially those in private firms) is most often accidental.

This lack of exposure has definite consequences. While the price paid may differ somewhat depending on whether one is considering a private firm or an in-house corporate law department, it is a cost which can mount over time and which can result in lost opportunities. In the worst cases it can lead to serious problems. These are prices that need not be paid.

The Private Law Firm – Missed Opportunities
Law firms often miss or forego opportunities to build and maintain their client base by failing to fully understand and appreciate business processes in general as well as the specific business of their clients. Too often, firms fail to invest the time and effort necessary to develop their base of business/management knowledge. As a result, they are unnecessarily limited in their ability to appreciate their clients’ business objectives and how the firm might best help in achieving those objectives. These points are echoed by James Sander, General Counsel, GNC who observed:

Firms that gain our repeat business are those who have a basic understanding of our business and our business goals and a business practical legal strategy. These are the firms we believe will be able to provide practical advice, help us quickly and most effectively, and manage to do so within an established budget.

Law firms need not learn, in great detail, the business of every single client or prospective client. But in order to maximize their appeal to clients – especially corporate and other business clients – they would do well to develop within their ranks a basic knowledge of business and business processes and a more intimate knowledge of their most important clients and those with whom they hope to develop a broader relationship. They should demonstrate an appreciation that the matter(s) assigned to them must be addressed within the context of a set of business objectives and, even if the business plan is not fully shared with the firm, those within the firm should understand the business context within which they must operate.

Private firms will also enhance their appeal to business clients by managing themselves as a business. Generally, associate turnover rates are relatively high (especially in a strong economy), morale is low, and there are often internal struggles which partners mistakenly believe are not seen by those outside the firm. These problems all affect the firm, its performance, its appeal to business clients and ultimately its bottom line. They can also be attributed, at least in part, to management issues.

Law firms may effectively manage discrete legal issues, legal projects and litigation, but overlook the opportunities presented by having a reasonably well-developed business plan, and promoting meaningful internal leadership which seeks to develop, coordinate, and carry out some discernable overall “firm” strategy. The fact is that clients — especially corporate clients – are much more likely to develop broader and longer-lasting relationships with firms that are well-managed and well-led. These firms are, most often, those that, among other things:

Develop and maintain an internal leadership and compensation structure that encourages, even demands, the development and execution of an overall plan/strategy and a culture (yes, culture matters) that facilitates the plan’s execution.

Tend to work well among themselves, using the entire pool of resources available to the firm to most effectively represent their clients’ interests. These firms will almost always have more than a single point of contact with its significant clients versus a contact point consisting of a single partner and maybe his/her secretary.

Seek to develop internal leadership (as well as legal) talent at all levels and thus have relatively low turnover rates among associates and support staff.

Understand the client’s business objectives and develop and maintain well-thought out systems to monitor client relationships and satisfaction and to react to the results.

Most business and corporate clients understand that, with few exceptions, low cost lower service legal services are widely available. In order to obtain the kind of broad and practical service they need, these clients will increasingly engage firms who understand business processes, who understand or have the demonstrated capacity to understand the client’s business and who treat their firms as business enterprises that require the same level and kind of attention as other businesses. Those firms can often provide high quality results at cost effective prices. This results in repeat business to the firm. Firms that miss this point and opportunity run the risk of losing business from existing clients (or gaining new clients referred from their existing clients), sometimes without even knowing why.

Corporate Law Depts.

In-house corporate law departments can also pay a price for a lack of business and management focus. That price often takes the form of a perception by the rest of the company that the lawyers, (collectively and individually) are detached, unapproachable and even obstructionist and arrogant. The business managers may perceive the lawyers as gate keepers to the “no sales department” who perceive their job as avoiding any and all risk to the company and who thus fail to provide practical and workable business alternatives and solutions. As a result, managers may avoid consulting the in-house lawyers, subjecting the enterprise to unacceptable risk or worse.

True, legal risks should be identified and assessed. Indeed, in-house counsel sometimes must simply draw the line between what can and cannot be done legally. But the vast majority of situations do not require an “all or nothing” approach. In most cases, in-house counsel’s job is to ensure that legal risks are properly assessed AND to work with the business manager to develop and implement a business strategy which allocates, avoids or contains that risk to the extent possible, consistent with the business objectives.

In order to fill this role, in-house counsel must be fully engaged in the business itself. This means at least that in-house counsel must be:

–Intimately knowledgeable about the business itself as well as the competitive and regulatory environment in which it operates so that issues are identified and dealt with timely and effectively. This, after all, is the core value of in-house counsel.

–Available to and approachable by the business managers. It’s not enough to simply be in the building or on the premises. In-house attorneys need to avoid being closed off or separated from their business brethren.

–Involved in the development of business strategies and tactics..

Most importantly, in-house lawyers must win and keep the trust of the business managers that he/she is committed to advancing the commercial enterprise that employs them. That does not mean that counsel escapes any obligation to prevent illegal activities or even activities which represent some acceptable level of risk. It does mean that in-house lawyers have a much more demanding job than simply approving or disapproving all or part of some business plan.

Corporate law departments that miss the opportunity to properly counsel their business managers on business practical legal alternatives risk being by-passed by the business mangers whenever possible.

Effective management of legal service organizations – whether a private firm or a corporate law department – is essential. Providing adequate or even good legal service is simply not enough.

By Jim Jarrell, Esq., Legal Services Consultant with Legal Network and a former General Counsel with 21 years managing sophisticated legal departments and a purchaser of a large volume of legal services from law firms.

How To Hire And Retain Lawyers: It Does Not Need To Be So Expensive

A chief complaint from mid-size to large law firms is there aren’t enough good lawyers to hire. This comes at a time when law school applications continue to rise, and there are around a million lawyers working. It’s difficult to believe they’re aren’t enough good lawyers, given the oversupply of attorneys. Perhaps the traditional law firm hiring structure and career path does not accommodate the abundant supply of lawyers. This article will analyze traditional law firm staffing, the supply issues it raises, and offer some alternative strategies to finding more good lawyers.

The Issue

A balanced law firm requires a blend of lawyers who are workers, “cerebral” technicians and rainmakers for sustained success. Too many or too few of any category can be a disaster for a law firm and clients. How can firms recruit all three types of lawyers?

The Traditional Law Firm Hiring Model No Longer Works

Currently, law firms hire attorneys with the view that they should become owners in order to build a career with the firm. The process starts with hiring lawyers out of law school at often loss generating starting salaries caused by the high salaries. 1 Over the years, this starting class of lawyers will earn similar raises and after three years, when the attorneys become profitable, half of them have left. 2 The remaining trained lawyers work increasingly long hours for eight to eleven years when they are considered for partnership often based on their ability to generate revenue for the firm. Talented lawyers who are not rainmakers will be passed over for partnership. Some lawyers are pressured to find new employment in agonizing decisions for a firm that values their ability, but needs a revenue generator. The traditional hiring model excludes many good workers from successful careers and puts incredible training costs on an organization that constantly must locate “cream of the crop” talent.

Another characteristic of the traditional law firm hiring model is the class system. Lawyers are hired and evaluated based on a graduation date from law school. This class year system results in underpaying the best of the class to afford overpaying the middle of the class and bottom of the class. It also sets the profile for how firms often hire their lateral attorneys. Does any other organization in corporate America hire with the understanding that the year you graduate from school determines what role you will fill in that organization? A better solution might be to examine the role the associate will fill when making hiring decisions.

The Players

Many entry level and younger associates are viewed as workers on manual intensive projects and trained to be Technical Lawyers. Technical Lawyers staff document productions, document reviews, and due diligence projects. They prepare pleadings, present motions, and perform basic research and other functions. They are the “Worker Lawyers”. More experienced Worker Lawyers handle files, manage discovery and due diligence projects, draft agreements, and evaluate cases. Law firms lose money on Workers until their third to fourth year. 3

Despite the fact that newer associates are not profitable, they receive salary increases. Last year salaries increased anywhere from 20 – 40% at the largest law firms in reaction to dot.coms on the West Coast. 4 Partners at virtually every single firm in the city have expressed concern with the salaries they have to pay. 5 “It isn’t the rising star who graduated at the top of the class that hurts. It’s the B+ student who needs much more polishing.” commented one partner. That associate is grossly overpaid and as a result, most in this situation are not given a fair chance to become Technical Lawyers.

The Solution

What is the answer? One answer is to have two types of entry-level associates. One group is the top of the class and is hired at premium salaries based on law school credentials. These attorneys have a strong pedigree. Given the appropriate training, a good work ethic, and some luck, they will become lawyers who look great in Martindale Hubbell as Technicians. If they can become Rainmakers, they can be superstars in the firm. Every firm needs a supply of these attorneys.

The second group of the associates filling Worker Lawyer roles could be hired at a lower salary and offered the chance to be trained and develop at the law firm. This type of lawyer had a B or B+ average in law school, attended a second tier law school, and/or is looking for a change in career direction. These attorneys should be hired under the understanding they must work hard, be team players, and show on the job that they can learn the practical responsibilities of law in order to advance.

A lower cost group of Worker Lawyers can be hired when actual need merits additional attorneys. Contract attorneys can control firm overhead by eliminating the need to maintain a staff of Worker Lawyers and add attorneys as needed. More importantly, Worker Lawyers can be profitable immediately because of the lower salary. Firms can now afford to train and mentor lawyers based on work ethic and personality. There is also no requirement that these lawyers be entry level, only that they are willing to trade hard work and toll in the trenches, for a paycheck and possibly an opportunity to advance. In fact, this broader approach to hiring opens up larger law firms to many more candidates, suitable to become Worker Lawyers who might also be able to develop into Technical Lawyers and Rainmakers.

Some skeptical partners have reacted to portions of this strategy by pointing to the morale risk of creating a firm with different classes of lawyers. 6 Why build barriers? Law school does not create great lawyers. Law firms do. If a lawyer shows over time that they can perform, have a great attitude, and a desire to improve as an attorney, why would any firm wish to hold that attorney back as a Worker Lawyer?

Successful law firms utilize paralegals to reduce costs. In the 1970’s, the idea of bringing in non-lawyers at reduced costs was far more controversial than this idea of hiring attorneys at different salary levels. Few lawyers would question what a success the introduction of paralegals has been. In addition, what client has ever asked for a lawyer’s GPA, LSAT score or what they published on Law Review? General Counsel for local corporations overwhelmingly responded on a recent survey that they would prefer contract attorneys staff projects as Worker Lawyers to higher priced young associates. 7

In fact, some corporations are now taking a hard look at how firms staff their Worker Lawyers. Recently, a Pittsburgh based Fortune 500 company put out an RFP requesting that law firms consider contract attorneys to reduce the cost of the project. Although the RFP was sent to very reputable law firms; this unusual step of suggesting how the law firm staffed a project indicates this client did not feel traditional law firms were staffed to offer Worker Lawyers at fair hourly wages.

The successful law firms needs both Workers and Rainmakers. The current hiring model locates only the pure technician who now get a disproportionate amount of attention during the hiring process at large law firms.

Up and Out Revisited

Technical Lawyers are needed to research, draft and polish briefs, learn and evaluate complex regulatory rules, set legal strategy and solve complex problems. These lawyers become Technical Lawyers after working hard to learn complex material. But they do not always generate new business. Some law firms are now offering severance packages or terminating technically strong lawyers because they aren’t generating new business to offset starting salaries for new recruits, technology investments and opening new offices.

The “up an out” mentality is flawed. Given the prohibitively high starting salaries, it is cheaper to find or retain a trained lawyer who can fill a role, than hire a newly minted lawyer and train them. Hiring skilled lawyers with 15-20 years or more experience to fill a technical role is recognized at national firms such as Akin Gump. 8 This structure has become known as the “Diamond Structure.” These attorneys are hired laterally or tested on a contract basis to ensure their work product and fit within a firm’s culture. They can also be brought in on special projects as contract attorneys when peak periods occur to round out a firm’s practice. Law firms recognizing the value and need for this technical skill can avoid the dilution of firm profits from carrying too many technical equity partners by categorizing technical skills into several levels of competence as opposed to class years. Each level of technical competence results in higher salaries based on the enhanced value the attorney’s billable hours generate for the firm. This is fair to both the owners of the firm and the technical lawyers.

One innovative firm, Washington, DC based Dickstein, Shapiro, Morin & Oshinsky, has three levels of attorneys after the first two years and no class years. 9 There is no need to advance further than any particular technical level. Clients are told that the lawyers placed on the engagement have a certain skill set that justifies the billing rate. This approach is more efficient than an “up and out” mentality. This approach also allows for retention of technical lawyers and makes it easier to justify billing rates to clients.

Rainmakers

The last group of lawyers are the Rainmakers who bring in the business. Law does not offer much training for generating business. Law firms can help in this regard by attempting to hire more rounded lawyers instead of focusing largely on law school grades. Before salaries spiraled out of control, law firms could afford to hire and train lawyers with people skills. Look at the partnership roster of any large firm. A large proportion of the partners have good academic records that may not meet the minimum hiring requirements that law firm places on new hires. This illustrates the weak correlation between grades and partnership ability. Law firms are missing a huge number of the potential partners by betting huge salaries only on top law students.

A second element to growing Rainmakers is to make the law firm competitive from a cost standpoint. By controlling overhead and salary structures, and staffing up with interim staffing, law firms become more profitable without asking anyone to bill an additional hour. As a result, young lawyers working in these efficient firms can generate work that does not seem insignificant to an overhead laden firm. They also can compete for clients with lower billing rates if overhead is reduced.

There are some problems in overemphasizing hiring for Rainmakers throughout the organization especially when the local region is only growing 4%. 10 It is well known that more business can be created by internal cross selling than from pulling lateral partners from other firms.

Conclusion

Today law is extremely competitive. Firms which fight for talent purely on hiring the best and brightest at the highest salaries are creating very expensive firm structures which do not fulfill all the work needs of a firm. Creative approaches lend a better result and a more efficient law firm. The present slow down in the market may be a great time re-examine how to do a better job in staffing a law firm’s operation.

By Karl Schieneman, Esq. (MBA) & Jill Bertani Horner, Esq. of Legal Network. Legal Network is a full service legal placement firm headquartered in Pittsburgh, PA.