May 4, 2010
Merger Preparedness
On May 1st one of the largest international law firm mergers of all time became effective as Washington’s Hogan & Hartson consolidated with London’s Lovells to become Hogan Lovells. It brought about a discussion of the HR and general administrative issues involved in putting together two giant law firms – headquartered in two decidedly different countries. We talked to administrators of firms that have been through comparatively large scale mergers seeking their best advice for the administrative staff members of firms considering a merger. Here is what we heard:
· “If you have any inkling that your firm is considering a merger (e.g., hallway conversations, prior unsuccessful merger talks, strategic plans that involve substantial geographic expansion) make a list of the issues that are abnormal or uncompleted about your HR systems and benefit programs. The more generic your processes, programs and systems, the easier it is to implement a merger.”
· “Initiate conversations about law firm mergers with your secretaries and clerical staff before rumors of a merger starts. You can use the merger of another firm in your city to raise the issue. Focus on the fact that law firm mergers are different from corporate mergers in that there are typically very few layoffs. That was our the biggest fear of our people and we lost some good staff because they thought mergers mean downsizing.”
· “Make an inventory of any non-conforming practices. If you have a lot of people who are independent contractors but don’t meet the state definition, look for ways to adjust their jobs or make them employees. Crazy stuff like that can blow merger talks apart.”
· “Write policies to document any unique practices like Christmas bonuses or TGIF parties if you want to keep them after the merger.”
· “HR staff is judged by the professionalism of their processes. Maintain good, updated position descriptions and compensation structures. You won’t have time to clean things up when the action starts.” Contingent Workers
Clouds often do come with silver linings and, for some law firms, the layoffs of staff and lawyers in 2009 may present an alternative business model that they never would have been able to pursue without the necessity of downsizing. The term we are hearing increasingly from law firms is “scalability,” the ability to rapidly adjust the workforce to the amount of work available. As one managing partner expressed it, “Law firms are designed to have massive amounts of excess capacity. The key is to be able to adjust the capacity to the demand.”
For some firms, the way to do this is to hire back workers, especially paralegals, document clerks and assistants, on a temporary basis. While temporary employees have been used for years on large document cases, for most firms the flow of work is more tied to lots of smaller matters. So staff is hired for a specific period of time with the ability to renew their assignment if the work is available. The key is to be able to adjust the work force to the volume of work without having to go through the trauma of a layoff. According to one Administrator, “The key is to make temporary assignments a part of the normal workforce of the firm rather than something strange.” That requires adjusting pension and health plan eligibility and similar situations to make temporary workers feel a part of the organization. “We view it like substitute teachers in a school district. They are available when we need them but we are not under any cultural obligation to keep them if they are not needed.”
According to a CHRO of a large international firm, “The key to changing the way we look at staff employees was when the recession layoffs pushed secretarial ratios to four to one. Younger lawyers do most of their own work and don’t view having a permanently assigned assistant as a necessity. That gives you a lot of flexibility.” Law Firms Go Green
The “green” movement is likely to be an ongoing issue for law firms – both in responding to clients’ initiatives and to the concerns of recruiting candidates. A recent survey of companies shows that 53 percent (up from 43 percent in 2009) have active formal green workplace programs in place. And this is not just a large corporation issue; the survey done for Earth Day on April 22nd showed almost an equal participation among employers with fewer than 500 employees than there is with Fortune 500 companies.
This is important to law firms because close to 90 percent of companies with formal Green Workplace programs require their vendors to follow Green policies similar to theirs. For example:
- 85 percent use the Web and/or teleconferencing.
- 78 percent have internal green communication programs to reduce paper usage.
- 72 percent use online HR communications.
- 58 percent have internal communication programs that offer employees tips and information on being environmentally friendly.
- 57 percent use online summary plan descriptions.
- 57 percent offer telecommuting.
- 52 percent offer a rideshare program.
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The Value of Confrontation
The value that law firms place on collegiality sometimes has the effect of dampening confrontation, even in situations where addressing a problem is appropriate and important. In fact, a recent survey shows that the most typical options pursued are:
- Ruminated about the problem – 61 percent.
- Complained to others—41 percent.
- Got angry—33 percent.
- Did extra or unnecessary work—32 percent.
- Avoided the person—29 percent.
- Talked around the problem—24 percent.
- Felt sorry for themselves—20 percent.
- Gave the other person hints about the problem—20 percent.
Just 15 percent “held the conversation quickly and well.”
Experts have four recommendations for law firms seeking to engage in reasonable amounts of confrontation when necessary:
- Confront the right problem. The biggest mistake people make is to confront the most painful or immediate issue and not the one that gets them the results they really need. Before speaking up, people should stop and ask, “What do I really want here? What problem do I want to resolve?”
- Rein in emotions. We often assume we know the intent of others. Such assumptions can lead to an incorrect emotional response.
- Master the first 30 seconds. Most people do everything wrong in the first “hazardous half-minute”—such as attacking the other person verbally. Instead, demonstrate that you care about the other person and his or her interests to disarm defensiveness and facilitate open dialogue.
- Reveal natural consequences. The best way to get someone’s attention is to change their perspective. In a safe and nonthreatening manner, give them a complete view of the consequences of their behavior.
Deferral of New Associates’ Start Dates Appears to Continue
NALP reports that most law schools saw deferrals of graduates’ start dates at law firms. For the class of 2009 the average number of deferrals among graduates was 24. Virtually all schools in the Northeast and Mid-Atlantic regions reported deferred graduates.
Not surprisingly, deferrals were generally more likely at the largest firms where over 60% of summer 2008 associates who accepted an offer were deferred. Deferral rates, measured as either the percent of offices deferring or the percent of associates deferred, were lowest in small firms and in the Southeast and Midwest. About half of deferred associates were working for pay or a stipend. The most common work setting was public interest, accounting for 44% of those working. Employers deferring associates overwhelmingly provided a stipend, and almost two-thirds of those providing a stipend reported that it was unconditional. For those who did put conditions on the stipend, most — almost 80% — conditioned the stipend on taking a position with a public interest or government office.
The important question for most firms is what will happen with September 2010 start dates. While there continues to be uncertainty, the number of offers that were made to 2010 grads was down substantially and most students say they have been advised by their firms to expect some level of deferral, especially if they are expected to start in New York, Boston and Washington. Pandemic Benefits
While it appears that the feared world-wide pandemic has been avoided, there may have been a substantial long term benefit. Most law firms instituted policies encouraging employees to stay home if they are sick and installed hand sanitizing dispensers throughout offices. There are no statistics yet available but anecdotal evidences appears to show that the days lost at law firms due to colds and flu were down last winter despite record cold weather. Most firms we talked to indicate that the precautions will continue to be a permanent feature of office policies.
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