A Class for Change

Adjunct Professor Silvia Hodges in The Am Law Daily, December 09, 2009

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The Talent

A Class for Change
By Silvia Hodges
December 9, 2009 5:50 PM

We are painfully familiar with client complaints that large law firms charge too much for new associates who know too little about the practice of law to be worth it. The clients may have a broader complaint. For all their glittering academic records, these young lawyers not only don't know much about the realities of the practice, they know even less about the business world.

The economic crisis gives us the opportunity to fix that. But what is the proper educational forum? Should we leave it to law firms? Or should law schools step into the breach? I prefer the latter, and not only because I teach a combined business and management course at Fordham Law School.

At the moment, law firms have their hands full training newcomers to be lawyers. Some firms recently initiated changes to associate structures that include apprenticeship programs at lower salaries and less pressure to bill, designed to accelerate competence. In many ways, this bold step is a reversion to traditional apprenticeship under the wings of a seasoned professional.

Law schools have also started down this road. Some have long offered joint J.D. and MBA programs but as a practical matter that effort is too long and too expensive to attract all but the most obsessed. Instead, by my count, at least 17 schools have created courses that purport to teach basic practice management concepts.

As consultant David Maister sees it, the real need is "to understand some basic business concepts as they apply to clients, and [pick up on] some clues about the economic and political structures of law firms so that students understand the world they are entering."

What would a model "law business" survey course include? Many things, from a taste of business concepts and strategy to finance and economic indicators, from firm governance and organization to firm ownership. Students also need basic knowledge about law firm economics, client relationship management, marketing and business development, as well as human resources. (All this in 14 weeks.)

To give future lawyers an idea of their future clients' and future law firms' points of view, the course needs to be a blend of business and management. Students should learn how legal decisions fit into the larger business framework that clients are confronted with every day. They need to understand that businesses face many challenges, legal problems being one of them, but certainly not the only one. They need to develop a level of common business sense: Is it a good idea to initiate litigation that will potentially cost the client over $100,000 in legal fees on an issue worth $75,000? Obviously, not.

The lessons could begin with business concepts such as value and competitive advantage, as well as business strategy and planning. The students would learn how businesses work, including lessons on financing, marketing, and operations. And the students would explore the necessary processes for commercial success, to think critically about business trends, strategies, and tactics.

In regards to law firm management, the course should discuss governance, organization, and ownership issues as well as law firm economics and lawyer compensation. How do firms make money, and what does a 10 percent discount do to the firm's bottom line?

Students should also be introduced to human resources aspects, such as managing the legal staff. (A few partners might benefit from taking this class as well, but I digress.) Last but not least, they should learn about marketing and business development, from keeping and developing existing clients to finding new ones. They should understand which metrics are important indicators of long-term success and which ones are just short-term signs. (The mere fact that they know to ask for metrics will put them ahead of their peers and some of their masters.)

Granted, this tall order means the course would not be much more than a basic introduction. The idea is to deepen this introduction later with additional law school or business school courses, with training from law firms, and with further personal study.

The financial collapse of 2008 has given this discussion new urgency, and a do-or-die burden on legal practitioners. The young generation is called to take a fresh look at their profession and how they approach client needs, because, to vary the cliché, it's the business model, stupid. And no one wants a stupid lawyer.

Silvia Hodges, Ph.D., is a full-time faculty member at Emerson College in Boston, where she teaches professional/legal services marketing. She is also an adjunct associate professor of law at Fordham University in New York. In the spring of 2010, she will begin teaching the course "Law Firm as a Business: Managing Lawyers, Clients, and Careers."