Back in March, the sky seemed to be falling. COVID-19 has transformed from background noise into an seemingly all-consuming problem overnight. Companies have suddenly faced the process of instantly and securely moving attorneys, employees, and practices into long-term remote work. The economy has stalled, and no one knows what will happen next week, let alone next month or next year.
Since then, at least in the legal industry as a whole, it seems like things have gone kind of, perhaps, maybe okay. Difficult modern statistics are hard to come by, but it appears that most medium-sized and large-sized companies have been able to avoid a disaster. The industry-wide Q1 has given most companies momentum to carry through the initial uncertainty, and many seem to have tightened their group schedules to bring in revenue faster and cover the gaps caused by COVID-19 in the second quarter. With the economy reopening at frequent intervals across the country, many companies saw their new theme and revenue numbers pick up after a tough recession.
But while the 30,000-foot width might indicate that the industry has seen a gentle tumble and a smooth recovery, as we zoom in we see a dramatically more varied experience that has seen some practices and lawyers blossom their books. If Zoom’s outside attorney legal spending hasn’t increased since March, I’ll grab my hat.
Other practices weren’t so lucky. Lawyers may have seen their biggest clients lethargic or even go out of business. Some entire training areas are inactive. It doesn’t take a rocket scientist to know that 2020 might not be a landmark year for hospitality, commercial leasing and aviation attorneys.
Managing this volatility and diversity has been a huge challenge to assertive leadership in the past several months, with some practice groups struggling to stay afloat while others ignite the dough. These issues are set to really reach their peak as we reach the end of many corporate fiscal years and enter compensation and bonus season.
Dolla Dolla Bills, Y’all
Deciding how to divide a company pie is both controversial and painful in its best years. The 2020 compensation season is shaping up to be one of the toughest since the Great Recession. While companies haven’t seen overall the same revenue shrinkages they saw in 2008, the volatility and uncertainty around COVID-19 make up a different, but equally challenging, combination.
Lawyers who have gone through a bad year due to the Coronavirus, are in a difficult situation as their book was blown up by an act of God. Nobody wants to admit that they caused a net loss for their company in the year, let alone a wage cut in the next year. Some might justifiably expect a major rebound or even a boom in 2021 as things return to normal. These attorneys will argue for a long time and will have a hard time keeping their companies from getting cut.
But every dollar paid to currently underperforming lawyers is a unavailable dollar to reward those people who made the company’s bank despite or perhaps because of the pandemic. These attorneys will definitely want to see the bonuses and will claim a higher core company number heading into next year. Those who do not meet their demands could genuinely threaten to walk out the door of a company that would be happy to pay them more.
And we can’t forget that COVID-19 requires an enormous amount of company leadership and employees. Hours and hours of non-rechargeable time fundamentally reshaped the way our companies operate. Without this massive surge, many companies would have faltered. Seldom are more attorneys and personnel required on the administrative side of the law. These efforts to keep the ship afloat should be rewarded, right?
All this takes place against the backdrop of some of the most mysterious times in living memory. Many management teams will see this uncertainty and want to slash the compensation budget to counteract any further damage to the economy. Even in situations where this is a wise move, some leaders will see this as politically untenable and may choose to roll the dice and close their eyes, hoping that 2021 will end better than Many economists predict.
Money is not the answer
The point of money is that there isn’t enough of it. Our markets are built on this principle of scarcity. That’s why we’re so excited Work for the Benjamins. Even in the biggest boom years, where each partner in a practice smashes their revenue records, there will be fights over who gets their share of the pie. The fights will continue because attorneys will always want to debate their case, do a better job than their neighbors, and get a lot closer to retirement funding / kid’s college / new sports car / upcoming golf vacation. The primary problem in defining annual companies is not something that can be solved with money.
For company management, the way out of this mess is to find a way to expand our attorneys’ definition of success into something more than mere dollars. There will always be an irrational bidder in the market ready to lure our partners with more money than we can offer. The best companies to make it through the coming months are those that have long been developing their inner culture and sense of camaraderie. By making our current situation a great place, a place that we can call home, we are making everyday company life better and ensuring our teams stay together.
Culture development does not happen overnight. It requires evaluating the contributions of everyone in the company, from practice group leaders to night watchmen. It takes knowing who we are and what we do, communicating the mission, and getting everyone involved.
If we do not teach our people to appreciate one another, all they have left is the value of their salaries. This is a losing proposition for any management team.
Take care of your people first. The rest will follow.
James Goodnow He is the CEO and Managing Partner of NLJ 250 Finmore Craig. At the age of thirty-six, he became the youngest known CEO of a large law firm in the United States. He holds a Juris Doctorate from Harvard Law School and dual business administration degrees from the Massachusetts Institute of Technology. He is currently studying at the University of Cambridge Business School (UK), where he is working towards his Masters in Entrepreneurship. James is the co-author of Motivating Millennials, Which ranked first on Amazon in the New Business Edition category. As a practitioner, he and his colleagues created and managed technology-based The practice of the plaintiffs And business model. You can reach out to James on Twitter (JamesGoodnow) or by emailing them at James@JamesGoodnow.com.