By Roy Strom
When Vince Sergi started in his role as national managing partner of Katten Muchin Rosenman in 1995, the job took up about 40 percent of his time.
Since then, the firm grew its ranks by way of mergers, lateral acquisitions and foreign expansions so that its roll call now includes about 600 attorneys.
Managing such a large organization became "all-encompassing," Sergi said, and he gave up actively practicing law.
As law firms grew into complex, global businesses with hundreds or thousands of highly skilled employees, the law firm leader role not only took up more time, but also became more important. Their travel itineraries continue to expand. They analyze markets and economies to determine how to grow the firm.
They look for ways to motivate and promote their talented employees. They develop plans to kick-start troubled areas of their business. They try to create a more diverse legal community so that one day a picture of Chicago's leading lawyers won't look so homogenous.
Chicago Lawyer discussed firm leadership strategies with leaders from eight of the largest firms in Illinois: Mayer Brown, which ranked No. 3 in theChicago Lawyer2012 Law Firm Survey in terms of the number of Illinois lawyers; McDermott Will & Emery, which ranked No. 5; Katten, which ranked No. 7; Hinshaw & Culbertson, which ranked No. 8; Schiff Hardin, which ranked No. 9; Seyfarth Shaw, which ranked No. 10; DLA Piper, which ranked No. 11; and Jones Day, which ranked No. 14.
Chicago Lawyer asked each of these lawyers the same questions related to managing a law firm in today's world.
What are some of the metrics, market research or interior analyses you consider when planning for strategic growth?
Like their clients' CEOs, managing partners survey trends in the economy and legal markets to determine where and what parts of their firms they should attempt to grow.
Jeff Stone of McDermott Will & Emery
McDermott Will & Emery's Co-chairman Jeff Stone said his firm first looks at its internal supply and demand calculations to determine which practice areas might require more lawyers.
"Where are our lawyers the busiest? Where do we see needing additional capacity to meet the existing demands of our clients?" Stone said.
Then, he asks questions about geographies and practice areas that might need more legal services in the near to middle term.
For example, he said, "What does the rise of the middle class in China mean for the demand of health-care services in China?"
That leads to a question about implementation: "Should we try to extend a premier brand of health-care practice to Asia?"
McDermott added 14 Illinois lawyers since last year's survey to employ 315 Illinois attorneys in 2012, the Chicago Lawyer survey says.
But new areas of demand for legal services can't always be predicted years in advance, said Ron Safer, managing partner of Schiff Hardin, which employs 242 Illinois lawyers, the survey says.
To quickly take advantage of new legal demand, law firms need to possess a mixture of insight and being in the right place at the right time, Safer said.
For example, Safer said the firm built a white-collar crime practice because the firm saw it as a "hot area" and internal investigations can lead to "large, bet-your-company" cases that law firms benefit from.
Ron Safer of Schiff Hardin
"Could we predict 10, 15 years ago that (Foreign Corrupt Practices Act) investigations would spike the way they have? Probably not," Safer said. "But again, because we saw this area as a hot area, we were prepared to capitalize on the form that growth in the area took."
Sergi, from Katten, which the law firm survey says employed 264 Illinois attorneys in 2012, said excelling in new legal markets often results from a groundswell of attorney interest and expertise in that area rather than a managing partner's directive.
"You want to have partners that have a passion for the practice within their area of specialization," Sergi said. "I don't think you can just jump into an area and say now we're experts at it."
For example, Katten earned a lot of legal work as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It got that work because it already did business with many of the banks, stock exchanges and other financial institutions impacted by the new regulations.
"Sure, we will jump on a thing like Dodd-Frank, but if we were not into that space, just learning Dodd-Frank doesn't do enough because it's not connected to all the other things we're doing," Sergi said.
"If you don't have a financial services practice you can't just build one because you're ahead of the curve on researching Dodd-Frank, because you don't have the clients and other personnel to make it relevant."
Developing an expertise in a legal field takes time, Sergi said.
"You can't just go out into the market and hire 10 new people and all of a sudden everything is better and everything is stronger," he said. "That's not necessarily the case."
Bert Krueger of Mayer Brown
For Bert Krueger, chairman of the management committee at Mayer Brown, placing lawyers in booming cities proves to be the best way to position his firm for growth.
"We need to be in the major commercial centers" around the globe, said Krueger, whose firm counted 387 attorneys in Illinois in 2012, the survey says.
He said this strategy drove mergers with large firms in Asia, the United Kingdom and other European countries.
"We're not looking for outposts; we're looking for high-quality, top-tier, full-service firms in those marketplaces," Krueger said.
When his firm develops a presence in a city known for a particular business cluster (energy in Houston, for example), he said he looks to increase that practice area in other parts of the world.
He also focuses on building the firm's insurance practice in the U.S. after a combination with an insurance-heavy U.K. firm about a decade ago.
Stephen Poor, chairman and managing partner at Seyfarth Shaw, which the survey says employed 219 lawyers in Illinois in 2012, said his firm tries not to recruit lawyers "that are islands."
"It's always important to us that practices have connections to what we're trying to achieve and that facilitates collaboration," Poor said.
"You also have to understand who you are as a law firm and how you can extend your brand and continue to build off that brand in the markets that will play to your strengths. And for us, a strong component of that is how services are delivered."
Lee Ann Russo, administrative partner for Jones Day's Chicago office, said her firm filters almost everything they do through "client focus." She said growth proves no different for the firm, which employed 178 attorneys in Illinois in 2012, the law firm survey says.
"We look at the markets where our clients are and plan for growth in those areas," Russo said.
For example, the firm recently opened an office in Dusseldorf, Germany.
"Many of the clients we service needed us there and we also thought that there may be other opportunities to attract more clients there," she said.
Bill Rudnick, co-managing partner of DLA Piper's Chicago office, said he once read a quote from a managing partner who said they would bring on any lawyer that "had $1 million in business."
"That, I suppose, is a strategy, but it's not our strategy," said Rudnick, whose firm grew to 216 Illinois lawyers in 2012 from 198 in 2011, the survey says.
He said his strategy involves considering how a prospective lateral's clients can use DLA Piper lawyers in new geographies or practice groups.
On the other side, the law firm needs to consider what kind of legal services a new partner can bring to the firm's current clients.
Don Mrozek, Hinshaw & Culbertson's chairman for the past 23 years, said his firm pays closest attention to new legal needs of its current clients. Hinshaw reported 245 Illinois attorneys in 2012, the survey says.
"Adding a practice is going to be almost always driven by needs of current or reasonably hot prospective clients." Mrozek said.
"Or we're looking to expand the client base and a particular lateral can bring additional clientele to your firm."
He spends time gauging legal needs that seem likely to arise. But, "in the moment," adding a practice group or lateral hire tends to result from a client's need.
If you see a practice group underperforming, how do you approach maintaining attorney morale while also trying to boost its performance?
Like a CEO trying to boost a business unit's profitability, managing partners sometimes need to fix ailing practice groups.
"The first thing we do is try to figure out why," Hinshaw's Mrozek said. "You can't really address the issue until you can figure out why it's occurring. And the 'why' will tell you the different tools you have to address the situation."
If the "why" turns out to be a lack of work, Mrozek said he motivates that practice's attorneys to seek more work while getting them as much help from within the firm to assist their effort.
If profitability — not the amount of work — seems to be the issue, Mrozek said he looks at how the group staffs its work.
"Instead of one associate hour for every two partner hours, you switch it," Mrozek said. "You look at the leverage. You look at the cost involved."
Stephen Poor of Seyfarth Shaw
Seyfarth Shaw's Poor said diagnosing a practice group's ailments will provide clues for the right remedy. But firms should be wary of axing numbers in uncertain times.
"It's always better to find a way to help people achieve success or regain success," Poor said. "That should be the guiding principal to begin with."
For example, the firm's real estate practice of about 180 lawyers experienced a severe dip when the 2008 to 2009 recession hit.
"We couldn't guess when the real estate market was going to rebound," Poor said. "But, by and large, our objective was to hang in there and our partners used that time to build and strengthen relationships in the industry so when it rebounded, which it has, they have come back stronger than ever."
Katten kept strong numbers in its real estate and transactional practices despite those areas seeing a lack of work in the recession, Sergi said.
By reducing associate pay to 80 percent of a typical salary, despite cuts in associate ranks, the firm kept more associates than some other firms, Sergi said.
"We gave them a smaller cut, and we were able to save jobs and preserve strong practice groups," he said.
Also, lawyers in the real estate practice transitioned to work on restructuring, which saw a bump during the recession, Sergi said.
Mayer Brown's Krueger said he holds discussions with practice group leaders along with poring over data of aggregate legal demand in any ailing practice area.
"We measure everything," Krueger said. "We try to understand what's driving the business, through the number of hours, the rates, whether they're collecting bills on time.
"We review client economics. We really drill down and try to understand what the problems are and whether we might need more resources in a particular area or whether we have too many resources there."
Lee Ann Russo of Jones Day
Russo, from Jones Day, said her firm stresses that practice groups need to reach out to struggling groups of lawyers and look for ways to get them work.
"You have to look at your practice, potentially, in another way, and it might involve tapping the resources of another practice," Russo said.
Because Jones Day "does not foster competition or hoarding," lawyers become incentivized to help grow business even across practice groups, Russo said.
Still, personnel changes can be the answer to a disappointing practice group if the wider legal market in that practice area remains strong, said Safer from Schiff Hardin.
"It might involve attracting somebody with a particular expertise that we don't have the same level of expertise in," Safer said. "It might involve attracting somebody with particular experience that we don't have in-house."
Developing a plan to become a "better institution" can be one of the most important aspects of any company, law firms included, said Stone from McDermott.
"I don't know of any institution that is persistently great that doesn't spend time thinking about how do we get better," Stone said.
For a law firm, "getting better" means improving financial performance, attracting talent, retaining talent and "creating glue that goes beyond the financial ties that hold a firm together," Stone said.
Rudnick said law firms possess "no stick" when trying to heal practice groups.
"It's all carrot," Rudnick said. "And the carrot is looking at how can we restructure the practice group? How can we increase the profitability? How can we cross-sell the services this practice provides?"
What have you done to promote diversity within your firm?
Diversity "is the issue, probably more than any other, that is responsible for (me) entering firm management," said Safer from Schiff Hardin.
Law firms must pay attention to diversity, he said, because "left to our own devices, we will, for the most part, work with people who look like us and sound like us and have our backgrounds."
This means implementing a "top-down" imperative to attract minority, female and LGBT equity partners, Safer said.
"You have to have real role models with real power and real success," Safer said. "Once you do that, then you can build organically from the bottom up. Now you can attract, retain and promote minority, women, LGBT attorneys."
He said, "There (is) no more important goal to this law firm than diversifying. Having said that, I said I would step down as managing partner of this law firm if we failed to make progress."
Seyfarth Shaw's Poor said diversity "is an absolutely critical challenge for this industry."
A minority or woman head two of his firm's five practice groups, he said.
"We're proud of that, but we, like the rest of the industry, need to do a lot better," Poor said. "There's no magic wand. I wish there was."
Vince Sergi of Katten Muchin Rosenman
Sergi, from Katten, said his firm looks for talented women, minorities and members of the LGBT community to promote to partnership and management positions. He said the firm does well promoting women, but could do a better job with minorities.
Promoting and holding onto minorities can be difficult because talented minorities are in high demand, Sergi said.
For example, David Kelly, a black attorney, recently made partner at Katten and left the firm to become the general counsel of the NBA's Golden State Warriors, he said.
"It's such a cool job, and I'm so happy for him," Sergi said. "But he's leaving, and you think, 'Oh man, he's somebody we really thought we were going to move up.'"
He said the firm employs a full-time diversity leadership partner designated to look for opportunities for promotions or hires of talented, diverse attorneys.
Mrozek, from Hinshaw, said his firm employs a diversity officer who spends the majority of her time ensuring diverse partners and associates receive the work, mentorship and other help needed to succeed at the firm.
McDermott's Stone said law firms need to be constantly committed to creating an environment of inclusion. For example, he said his firm "was one of the first" to give tax benefits to LGBT couples.
Bill Rudnick of DLA Piper
Rudnick, from DLA Piper, said a more diverse law firm will provide more diverse legal advice when approaching client problems.
"Having a different set of questions will give you more depth to the answers as to what that client's goals are," Rudnick said.
Mayer Brown's Krueger said he remembers his firm being considered diverse because it "was a conference of Christians and Jews."
Obviously, conversations about diversity now sound much different, Krueger said, but he hopes that today's concerns about diversity one day sound just as strange.
Russo, from Jones Day, said her firm's statistics on hiring diverse lawyers "are as good or better as anybody else's in our profession."
She said the firm hopes to improve on those numbers by promoting the legal career to high schoolers and college students who might not otherwise think a legal degree can be obtained. Still, increasing the minority presence in law firms proves difficult, Russo said.
"We all compete for a smaller pool of minority lawyers than we would like there to be out there," Russo said. "There are ways of increasing that pool that all of us as lawyers, and I think professionals in general, need to be better at."
How much time do you spend devoted to your practice versus firm management?
Safer of Schiff Hardin said with a laugh that he spends about 80 percent of his time managing and 50 percent practicing law.
"If you want to maintain a practice, and I think it is wise to do so, you have to expand the day," Safer said.
McDermott's Stone said he spends about three-fourths of his time managing the firm. Keeping an active practice helps him better understand the current environment that his lawyers practice in. It also helps him keep in touch with the economic situation his clients face, he said.
Don Mrozek of Hinshaw & Culbertson
Mrozek of Hinshaw said he initially kept his practice to gain credibility when he became the firm's managing partner. After 23 years though, he continues to practice for a different reason: "I enjoy it."
While those three managers choose to remain in practice, managing partners at Katten, Mayer Brown and Seyfarth Shaw do not keep an active practice.
Mayer Brown's Krueger said the amount of travel he does makes it hard to maintain a practice.
Sergi of Katten said easing into a managing role proves to be an effective way to develop as a managing partner. For example, Sergi first became co-managing partner at a time when a founder of the firm kept the same title.
"He sort of eased me in and over time did exactly the thing he should have done, which was backing away and letting me take on more responsibility," Sergi said.