 By John Ryan A lot has changed over the 30 years Tom Clay has provided consulting services to the legal industry. But one fact remains: Trying to get lawyers to adopt more business-savvy and efficient means of managing their firms and practices is a difficult challenge. It always will be. The Altman Weil principal, who is based out of the firm’s office in Newtown Square, Pa., has an advantage. In addition to his stellar reputation, Clay has worked with some of the same clients for 10 or 20 years. His practice focuses on large “AmLaw 200” firms and can include firms with headcounts as low as 150. Clay provides a range of high-end strategic planning services, including a hefty amount of advice related to law firm mergers and acquisitions. Clay also is passionate about his consulting work related to practice group management and leadership development. He spearheaded Altman Weil’s leadership development model, an extended training and evaluation program the firm establishes within law firm clients to build new leaders. If there’s a thread to Clay’s work – and a lesson from his decades of success in the industry – it’s the need for law firms to avoid complacency. Even the most profitable firms need to constantly change and improve to remain competitive in an increasingly challenging marketplace. Lawdragon: You’ve been doing this for a long time, so I take it you enjoy working with lawyers. Tom Clay: I appreciate the fact that the work and people are interesting, and that it’s challenging all the time. I work with good people. Law firms and lawyers are generally good to work with. And the environment has changed so much over 30 years that it’s just made it so much fun. LD: What’s one of the biggest changes you’ve seen over the past 30 years? TC: Clearly one of the broader changes, and what many of the more senior lawyers lament, is the change from a profession to more of a business. That’s something that’s been at the center of what we do. We try to bring business thinking and strategies to the profession to make it more efficient and more effective. Most lawyers recognize the need for this approach because it’s a competitive market these days, but some really don’t like it. LD: Is that frustrating? TC: The practice of law is what I call “a very mature profession and an immature business.” That’s been not so much a frustration as much as a challenge that's always been there -- the resistance to want to make change. The challenge is getting them to the “why” of it: “Why should I do this?” To be honest, the legal profession was, and is, a very lucrative profession. Lawyers make lots of money, so why should they do anything different when they’re doing so well? LD: How do you answer that? Many of your clients are law firms where partners earn well in excess of a million dollars a year. So why change? TC: That’s a hard question to answer. There’s the old Satchel Paige quote, “Don’t look back; they might be gaining on you.” You can’t be satisfied with where you are. The market is dynamic and always moving. You might be in good shape, but you never want to get caught or passed. There’s another saying, “You may be on the right track when the train runs over you.” You need to be asking how we can do what we do better every day. You can’t just sit there. That to me is the “why” of it. If you’re not getting better each day, the market just might blow right by you. LD: Have clients come to trust you on that? TC: Well, some of the people I’ve worked with for 20 years, so you think there would be a pretty good level of trust. Managing partners mainly get it; they understand the need to change strategy and to think better. The challenge is not so much with them, but with getting a wider cadre of people within the firm to come around and support changes that need to be made and develop a consensus. A big challenge we face is trying to get clients to think out in front and really be innovative. If we propose something, clients might ask: “Well, how many other firms are doing this?” But the answer is “Nobody else.” That’s the idea – nobody else is doing this. That’s not a comfort zone for lawyers, to do something that is different. It’s not something they normally want to do. LD: What’s an example of that in your career? TC: One example, which is long ago enough by now, is that we really were the first to get law firms to do client surveys. It was unheard of, but we really pushed it. The initial response from firms was, “We can't ask clients to do this. They’ll think there’s something wrong with us.” But we try to be out front on things like that. Now a lot of firms are doing them. LD: It seems like we still read about firm mergers or proposed firm mergers almost every day. Will this continue? TC: We don’t see any slowing right now. The market is still of the mind that bigger -- and getting bigger more quickly -- is generally a good thing. We track this information quarterly, but even just using our consulting practice as a barometer, we don’t see anything slowing at all. We see the merger and acquisitions trend as having least another four to five years to run, then maybe it will taper off if firms get to the position where they think that want to be. LD: Why so many? It seems like lots of them don’t work too well. TC: The statistics, at least in the business world of M&As, really are poor. Every study indicates that far fewer than 50 percent of mergers meet their objectives, such as increasing value for shareholders. It's a different measure with law firms. When two firms merge, what is the definition of success? Are we making more money? Is it better for our clients? There’s not really a key definition out there. You might just be a bigger version of the same thing after a merger. You have to ask yourself, “Is that any better?” Just being bigger and doing the same sort of thing, in terms of the economics and whom you represent, doesn’t make a lot of sense to us. LD: Tell me more about this leadership development model. What spurred you to do this? TC: Most firms didn’t have enough qualified leaders. We thought a lot about what best practices would look like. It’s not a CLE model, a two-day course, which is hogwash. We spent 18 months looking at what is the best model in developing leaders in law firms. A model that would anticipate skill building, evaluating how new leaders are doing in their jobs while continuing to coach them. We can help firms develop a capable model for a 100-lawyer firm as well as a 1000-lawyer firm. We have to look at resources the firm has. We send them through a year-long program, matching it to what they’re doing internally from a professional development perspective. We want to help them use internal resources as much as possible. Once the program is installed in the firm, it's not Altman Weil running it -- the firm has to do it. I get pretty passionate about it. The training of leadership skills is more important than anything else. If you have a number of qualified leaders, a firm can do anything. LD: This may be obvious, but if the lawyers are good lawyers, why is lack of leadership such an impediment to success? TC: If you ask managing partners why a certain practice group is not doing well, the answer is going to be that the leader is not very good: “I would replace him, but I just don’t have anybody else. I just don’t have enough good skilled people in leadership.” LD: What are the challenges of consulting on improving practice groups? TC: I could go on for days about this. You have to understand what the practice group was conceptualized to be, and a lot of firms don’t really get it. A practice group is an externally focused business unit. When explaining it, I sometimes talk about a product line. It’s externally oriented. It’s not there to make sure time records are filled out or CLE is completed; that’s for others to deal with. What practice groups are trying to do is compete against others making the same product line. Firms have to make sure they’re delivering services better; the marketing has to be very precise and rigorous. You have to think in those terms. You need leaders in the practice group to actually do things that make the firm more competitive. It’s not so much the firm as whole. The firm is the mother ship. The practice groups are what carry the product out into the market. What I try to get them to understand is the need to be externally oriented. Don’t burden yourself with internal management jargon. I’ve seen job descriptions for practice group leaders that list priorities over 15 or 16 pages. That’s where law firms screw up the practice group issue; they don’t understand what they should be doing. The ones that do are terrific at it. LD: How close are we to seeing law firms really run like corporations? TC: For a long time, we’ve seen firms make progress, but we also see them continue to operate differently from ways that corporations and businesses are run. Lawyers in their practices tend to be very independent in their thinking, both in handling legal matters and in their relationships with clients. There are a lot of relationship dynamics that push back against it being a purely business-driven model. If firms were run like corporations, there a lot of things lawyers would hate. Getting to more of pure corporate model, it's just hard to see that happening very quickly. In Australia we have seen firms go public. Some people are looking at that. If law firms do go public and sell stock, you now have enormously different dynamics, with boards of directors and concerns about proper returns to investors. That’s would change a lot, and it would be interesting to see if lawyers would want to work in that environment. I happen to think a lot would not. Page: 1 of 1 pages for this article
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