In the News Law Firm Governance

Money Can't Buy Commitment

As human capital investors, associates, like entrepreneurs, will invest in a firm only when the potential returns are both valuable and meaningful for them. When the financial rewards are the same at other comparable firms, associates look for different kinds of returns, such as great training, opportunities for advancement, or the power to shape their own work experience. For entrepreneurial associates, control over their careers is especially appealing. Kirkland & Ellis and Fenwick & West attract such associates through a "free-market system" that gives them the right and responsibility to choose their own work assignments. These firms do not assign associates to particular cases, clients, or partners. Instead, associates are assigned either to litigation or transactional practices, where they then choose the kind of work they want to do and the partners with whom they want to work.

The free-market system is integral to the culture of both of these firms. Kirkland & Ellis is a century-old Chicago-based firm of 650 lawyers that represents such stalwart corporate giants as General Motors, Colgate-Palmolive, Dow Chemical, and Brown & Williamson Tobacco. The firm consistently rates among the top law firms on associate satisfaction surveys. In 1998, the firm ranked fifth in the nation among the American Lawyer top 100 law firms, and in 1999, its Los Angeles and New York offices both ranked first in their respective cities on American Lawyer midlevel associate surveys. In comparison, Fenwick & West is a fast-paced, 270-lawyer Silicon Valley firm less than three decades old. Its clients reflect new and emerging Internet and e-commerce companies such as Excite@Home, Exodus Communications, and, as well as established technology giants like Cisco Systems, Sun Microsystems, and Apple Computer. In January 2000, this firm was named one of Fortune Magazine's "100 Best Places to Work," and it was the number one firm in Palo Alto in the 1999 American Lawyer midlevel associate survey. Fenwick & West has a remarkably low 14 percent attrition rate. This rate is low by any law firm standards, but is especially noteworthy in Silicon Valley, where many neighboring firms experience turnover rates of 40 percent or more.

Both of these firms share a common philosophy: They believe that lawyers should do the work they want to do and enjoy the work they do. Both firms provide exciting, high-stakes, high-profile legal work that offers associates early and extensive responsibility. The firms allow associates to pick the assignments they want, which means that partners have to find associates willing to staff their cases. At Fenwick & West, partners must recruit and secure associates to work on a new client matter before the firm will accept the engagement; if the partner cannot find sufficient staffing, the firm will turn down the new business. Partners at both firms are accustomed to having associates say no to proffered work. The reason doesn't matter; associates may be too busy, have no interest in the client or the type of work, want to work with a different partner, or simply hope to do something other than what is being proposed. So long as they are being productive, associates do not have to explain or justify their refusal. Under this system, associates exert a direct influence over their work environment. Partners who have uninteresting work, are poor mentors, or are difficult to work with have a hard time finding associates.

The free-market system can be daunting for some associates, so both firms take measures to help associates help themselves. Two of the supportive efforts at Kirkland & Ellis are an extensive year-round training curriculum and an elaborate associate evaluation process. The training curriculum includes the Kirkland Institute for Trial Advocacy (KITA) and the Kirkland Institute of Corporate Practice (KICP), each of which is offered twice a year. In these learning-by-doing training programs, associates have opportunities to practice skills and receive critiques and feedback from many senior attorneys in the firm. In the associate-evaluation process, associates are assigned a partner with whom they do not work. That assigned partner reads the written evaluations submitted by the associate's supervising attorneys; elicits the associate's concerns, explanations, and self-assessment; promotes the associate's interests before the Associate Review Committee. Both the training programs and the evaluation process ensure that associates receive clear and accurate feedback about their standing in the firm, and guidance that helps them make intelligent decisions about the future work they choose.

One important area of support at Fenwick & West involves conscientious career planning. The firm encourages associates to think critically about what they hope to achieve and the kind of practice and career they hope to have. It does not require or direct associates to move in any special work or practice direction, but suggests that associates choose "major" and "minor" practice areas in which to concentrate. In this way, associates can select appropriate partners and assignments, and partners can seek out associates for work that meets their designated areas of interest.

Fenwick & West also sets out written criteria for career development, advancement, and partnership. They give associates extensive, detailed forms to help them direct and track their work experience. One set of forms (called "Corporate Expertise and Practice Affinity Inventories") lists the work experiences required to become proficient in general corporate skills and in the specialized areas of the firm's corporate practice (i.e., start-ups, mergers and acquisitions, and public offerings and securities). For each experience listed, associates record their level of expertise (from "complete novice" to "be able to complete without supervision"), the number of times they have had the experience, and whether they liked the work or not. This last factor is enormously helpful for an associate who is deciding what kind of practice to pursue.

The voluntary way that associates get their work at both Fenwick & West and Kirkland & Ellis fosters attitudinal and internal commitment by promising a high return on their human-capital investment. Associates choose to work with partners with whom they are compatible and who can give them the experience they need. Partners make an effort to understand the returns associates want and provide these returns through stimulating work experiences and mutually respectful work relationships. The results for both firms are higher productivity, retention, and professional satisfaction.

Although the free-market system functions successfully at these two firms, this kind of system works effectively only if the firm's culture embraces it fully. Some firms profess to have free-market systems, but in fact coerce associates to take undesirable work or penalize associates who say no to a proffered assignment. The free-market system works best for associates who are ambitious, self-directed, entrepreneurial, and eager to be responsible for directing their own work experience and career development. Yet even the most independent associates need some firm support. Associates often struggle with decisions about what work to take, which partners to work with, and the impact such decisions will make on their careers. Some fear being stigmatized if they turn down work from certain partners or clients, and many have a hard time saying no to work that interests them. Either way, they accept too much work and have difficulty managing their time. Without guidance from the firm, talented associates may find the responsibility for making work decisions overwhelming. In spite of these risks, a free-market system that recruits carefully and provides guidance and support as well as freedom and autonomy, can create a high-return work environment for high-performing associates.

Reprinted with permission from Law Firm Governance, Autumn 2000

Published by Aspen Law & Business, New York, New York