Managing Partner Discussion

Strategic Issues in a Challenging Environment

Partner Categories • Full equity partner• Partial equity partner• Income or non-equity partner• Recent trend of, and rationale for, higher

percentage of income partners

Terry ConnerManaging Partner Haynes and Boone, LLP 2323 Victory Avenue, Suite 700Dallas, Texas 75219214.651.5604214.200.0408

Basic Systems

• Lock step• Objective or formulaic performance• Subjective performance

Key Systemic Variables

• Prospective or retrospective• Period over which partner’s performance is

evaluated• Top-to-bottom ranges• Evaluation factors and weighting

Key Systemic Variables

• Limitations on maximum upward or downward adjustments in a given year

• “Open” or “closed”• Annual or bi-annual determination.• Bonus pool, or not

Procedure and Administration

• Which group evaluates compensation? • How is the group selected?• Use of consultants• Partner written submissions?

Procedure and Administration

• Objective or “system” data reviewed• Gathering information from partners on their

[and others’] performance• Approval of partner compensation• Appeals

Discussion Issues

Reinforcing Firm Culture and Goals

• Business development, productivity• “Beyond the numbers…” e.g.,

– Moving work to right lawyers; leverage– Teamwork and collaboration– Mentoring, diversity, bar activities, community

involvement, etc.– Supporting an “investment” culture

Business “Origination Credit”

• “Origination” variables• Challenge: motivating teamwork in eat-what-

kill systems• Challenge: assessing business generation in

subjective systems

Bonus System

• Business case for bonuses• Bonus system variables• Bonus award criteria and administration• Issues

“Transition” Slotting

• Lateral partners• Entry-level partners• Senior partner wind-down transitions

Other Issues

• Relevance of work “profitability”• Geographic “scale” differences• The “Tyranny of Profits per Equity Partner”• Melding systems in law firm mergers• Multi-national law firm compensation issues,

alternatives

Stites University

Continuous Learning

T. Kennedy Helm, IIIChairman Stites & Harbison, PLLC400 West Market Street, Suite 1800Louisville, Kentucky 40202502.681.0449502.587.6391

Why?• The traditional means of training and assimilating new

attorneys don’t work– Time pressure to be “billable” – Even Socrates has to meet his

productivity target– Clients’ demand for efficient delivery and no “OJT” at their expense –

No one wants to pay for the Socratic method– Diverse associate base – What if Socrates’ pupils don’t speak Greek?

• The law firm/associate business bargain has changed• The cost of attrition is staggering

Our Response: Stites University

Stites University: What Is It?

• Umbrella that covers all methods of attorney learning at all experience levels

• Immediate focus is on associate learning

What Are the Goals for Stites University? • Attract and retain the best and the brightest

– Increase # of wins in recruiting top talent– Ensure unwanted attrition is not tied to the desire for a better learning

environment (saving economic & non-economic costs)

• Accelerate atty productivity & profitability (higher revenues earlier in career)– Accelerate learning & skill mastery across a wider variety of knowledge

& legal practice skill sets– Increase depth of knowledge & skill– Decrease write-offs & drive higher realization rates

• Improve client service & reduce client disruption due to unwanted attrition

• Improve associate morale• Improve leadership development• Improve supervision, delegation, & feedback

skills of supervising attys

• Stronger entrepreneurial spirit backed by marketing/selling know how & superior service

• Wider, deeper leadership bench• 360° learning culture

Marketing & Selling Skills

•Building Your Brand•Presentation Skills•Networking•Targeted Marketing Plans•Building Relationships/Trust•Selling the Invisible•RFPs & Client Pitches•Cross-selling•Business Intelligence•Strategic Conference/CLE Attendance•Contact Follow-up

Client Service Skills

•WINIT & Quality Service•Internal & External Communication•Maintaining/Growing Relationships/Trust•Client Interviewing•Client Counseling•Practice Management (files; record keeping; docketing; ticklers, etc.)•Delegation/Supervision•Teamwork•Difficult Clients•Case/Matter Management•Ethics & Professional Responsibility•Billing

Firm, Civic & Professional Contribution

Skills

•S&H Service & Leadership Tradition•Strategic Investment Time•Committee/SG Service•Civic Involvement•Pro Bono•Board Service•Planning & Running Meetings

Ownership, Leadership &

Management Skills

•Law Practice Economics•How the Firm Works•Receiving & Delivering Feedback•Self Management•Managing Stress•Time/Priority Management•Leadership Skills•Management Skills•Strategic Planning•Ownership Benefits & Responsibilities•Risk Management

Industry & Practice Specific Skills

Legal Skills

•Core Skills (Litigation & Transactional)•Legal Writing/Drafting•Negotiation•Technology

How Do We Do It?

Stites University

The Five Colleges

Stites University

How We Teach & Learn the College Skills

Work Assignment

s

Assignment ProcessTask ListsPro Bono

Feedback

Task/Project BasedAnnual Evaluations & Reviews

In-house programmin

g

By Exp. Level & Practice AreaSG Mtgs.SWIFTMthly/Qly Lunch & LearnsElectronic, self-paced/just-in-time

Orientation/Academy

SAFALateralNew MembersAcademy One (Y2)Academy Two (Y4)Academy Three (Y6)LeadershipFirm Retreats

Outside CLE

NITAOther

Mentoring/Coaching

GroupTraining TeamsIndividualLex. Mentoring ProgramNash. Mentoring Pilot Group

Stair-Stepped Curriculum• Curriculum based on competencies/skills needed at:

– Entry– EOY2– EOY 5– EOY 7

• Competencies/skills progress to “making partner”• Evaluation process integrated with progress in

developing the competencies

•Consistently exceeds internal & external client expectations for quality service•Consistently inspires confidence of internal & external clients•Demonstrates proficiency handling difficult clients•Demonstrates proficiency delivering “bad” news to clients•Demonstrates familiarity w/& working knowledge of team management in case/matter setting•Demonstrates proficiency interviewing & counseling external clients re complex matters•Consistently takes appropriate ownership & adds value to client matters•Demonstrates proficiency facilitating client understanding of legal issues•Demonstrates mastery handling all but the most complex written or oral communications w/external clients, including client interviewing & counseling•Takes active steps to demonstrate client & industry specific knowledge by anticipating client needs & understanding the business context in which legal matters are occurring•Demonstrates proficiency delegating to & supervising junior associates•Demonstrates mastery delegating & supervising AA, paralegals, & staff•Demonstrates mastery of individual time & priority management•Demonstrates mastery using ticklers, docketing document & file organization to ensure matters are handled timely & info is located quickly•Proactively & professionally addresses internal & external client service errors•Exhibits professional & ethical behavior, including ability to address potential conflict or professional responsibility issues w/guidance of appropriate attorneys•Knows how & when to make referrals, including within our firm networks•Captures time effectively & releases time according to firm policy•Billing entries rarely require edits or trigger additional inquiry by attorneys or clients

•Understands basic concepts of quality service; quality of work & communication supports 10 Imperatives•Inspires confidence of internal clients•Proactively & professionally addresses internal client service errors•Smoothly handles client contact & basic client communications, written or oral•Exhibits professional & ethical behavior; recognizes potential conflicts & professional responsibility issues & brings them to appropriate attorneys attention•Demonstrates familiarity w/& working knowledge of delegation & supervision techniques; delegates & actively supervises administrative assistant.•Demonstrates familiarity w/& working knowledge of individual time & priority management•Demonstrates proficiency using ticklers, docketing, document & file organization to ensure matters timely handled & info located quickly•Captures time effectively & releases time according to firm policy•Billing entries require few edits & entries meet client requirements

By EOY 2

•Consistently exhibits behavior supporting quality service & 10 Imperatives•Consistently inspires confidence of internal clients, including cross-office clients•Takes appropriate ownership & adds value to client matters•Proactively & professionally address internal & external client service errors•Demonstrates proficiency handling written or oral communications, including client interviewing & counseling•Demonstrates proficiency facilitating client understanding of legal issues•Demonstrates understanding of specific client’s business & industry•Knows how & when to make referrals, including within our firm networks•Exhibits professional & ethical behavior, including ability to address potential conflicts and professional responsibility issues w/guidance of appropriate attorneys•Demonstrates familiarity w/& working knowledge of delegation & supervision of junior associates•Demonstrates proficiency delegating & supervising AA, paralegals, & staff•Demonstrates proficiency with individual time & priority management•Demonstrates mastery using ticklers, docketing, document & file organization to ensure matters are handled timely & info is located quickly•Captures time effectively & releases time according to firm policy•Billing entries rarely require edits or trigger additional inquiry by attorneys or clients

By EOY 5

By EOY 7

College of Client Service

Client Service Skills Development

By EOY 2

By EOY 5

Stair-stepped Curriculum

College of Contribution

Firm, Civic & Professional Contribution Skills Development

•Demonstrates familiarity w/& working knowledge of planning & using investment time strategically•Demonstrates willingness to support firm goals by participating in firm recruiting, attending firm functions, & working on firm activities•Demonstrates familiarity w/how to get involved in bar or civic organizations by beginning to engage in those activities•Demonstrates an understanding of the firm’s commitment to pro bono by engaging in & supporting pro bono efforts

•Demonstrates proficiency planning & using investment time strategically•Demonstrates a willingness & ability to follow through on internal firm commitments•Demonstrates commitment to internal firm investment through active SG or committee contribution•Demonstrates a willingness & ability to assist w/ad hoc firm projects•Involved w/community, industry, or bar & is on a path to leadership•Demonstrates familiarity w/non-profit board member responsibilities•Demonstrates familiarity w/& working knowledge of planning & running effective meetings•Invests in & supports pro bono efforts

By EOY 7

•Demonstrates a willingness & ability to continue the S & H tradition of leadership & service to the profession & community•Demonstrates mastery planning & using investment time strategically•Demonstrates a strong & consistent commitment to internal investment in the firm through active, reliable, and thoughtful contribution•Demonstrates willingness & ability to assist in the training & integration of less experienced attorneys•Has a leadership position in the community, industry, or bar•Demonstrates a strong commitment to civic involvement & community service•Demonstrates proficiency w/non-profit board member responsibilities•Demonstrates proficiency planning & running effective meetings•Demonstrates a commitment to pro bono service by meeting the firm’s recommended hours of service

•Develops & uses an individual marketing plan•Actively grows a robust internal client network within their office•Demonstrates familiarity w/& basic ability to “work a room”•Actively building an external network of contacts through event follow-up•Understands importance & basics of “Getting Known” & taking active steps to do so•Understands basic marketing & selling concepts & the differences between each type of activity

By EOY 2

By EOY 5

By EOY 7College of Marketing & Selling

Marketing and Selling Skills Development

•Demonstrates familiarity with & working ability to read people•Gathers, analyzes & uses business intelligence to support individual & SG marketing efforts•Demonstrates familiarity with & working knowledge of what clients seek & how they choose attorneys•Demonstrates familiarity w/uncovering cross-selling opportunities•Demonstrates a working knowledge of RFP & client pitch processes•Develops & actively uses an individual marketing plan aligned with SG goals•Actively grows a robust internal client network within & across offices•Demonstrates proficiency working a room•Strategically uses industry conferences/CLE to extend external network•Consistently uses strategic follow-up w/external contacts

•Attracts or demonstrates the ability/potential to attract new clients that are able to pay firm rates•Consistently incorporates targeted marketing & selling in ongoing activities•Demonstrates familiarity & growing comfort w/the “ask for the business”•Demonstrates proficiency understanding what clients seek & how they choose attorneys•Acts upon & works w/appropriate attorneys to capitalize on cross-selling opportunities•Demonstrates proficiency uncovering cross-selling opportunities and collaboratively works to expand the firm’s business•Demonstrates proficiency w/the RFP & client pitch processes•Demonstrates mastery working a room•Demonstrates proficiency connecting with people•Gathers, analyzes & uses business intelligence to identify & qualify prospects in support of individual, SG, & firm goals•Maintains a robust internal client network across offices•Develops & uses an individual marketing plan aligned w/SG & firm goals•Strategically uses industry conferences/CLE to extend & maintain external network•Consistently uses strategic follow-up w/external contacts

College of Ownership, Leadership & Management

Ownership, Leadership & Management Skills Development

By EOY 2

•Demonstrates proficiency navigating SG work allocation processes•Demonstrates working knowledgeable of firm strategic plan, including diversity action plan•Demonstrates working knowledge of firm organization & management structure•Demonstrates familiarity with & working knowledge of law firm economics based on individual productivity•Demonstrates familiarity with & working knowledge of soliciting, receiving, and acting on feedback effectively•Demonstrates familiarity with & working knowledge of stress management strategies•Understands the associate evaluation & review process

By EOY 5

•Demonstrates mastery navigating SG work allocation processes •Demonstrates proficient knowledge of firm strategic plan•Demonstrates proficient knowledge of firm organization & management structure•Demonstrates proficient knowledge of law firm economics based on individual productivity•Demonstrates proficiency soliciting, receiving, and acting on feedback•Demonstrates proficiency with stress management strategies•Demonstrates familiarity with & working ability delivering direct, respectful, candid feedback (positive & constructive)•Demonstrates familiarity with & working knowledge of emotional intelligence competencies (self-awareness, self-management, social awareness, relationship management)

By EOY 7

•Demonstrates familiarity with & working knowledge of common leadership principles•Demonstrates familiarity with & working knowledge of different leadership styles•Demonstrates working knowledge of strategic planning at the SG & firm level•Demonstrates proficiency providing direct, respectful, candid feedback (positive & constructive)•Demonstrates proficient knowledge of law firm economics based on individual productivity & familiarity w/basic metrics of law firm & SG profitability•Demonstrates proficient knowledge of firm organization & management structure•Demonstrates willingness & working ability to mentor/coach junior associates•Aligns professional activities to SG & firm goals & strategic plan•Demonstrates mastery of stress management strategies & can work well under pressure•Demonstrates mastery soliciting, receiving, and acting on feedback•Demonstrates mastery navigating SG work allocation processes

College of Legal Skills

Litigation Skills Development

By EOY 2

By EOY 5

By EOY 7

Handles routine litigation matters without necessity of close supervisionDrafts basic documents requiring little revision Demonstrates mastery of docket management, calendaring, PDA, & mobile technology Demonstrates familiarity with: ¤ propounding case-specific written discovery ¤ arguing motions & pleadings ¤ drafting sound settlement documents ¤ drafting sound jury instructions & motions in limine ¤ taking & defending lay depositions ¤ interviewing & taking witness statements ¤ conducting client interviews ¤ preparing case management & case discovery plans ¤ preparing case reports & evaluations ¤drafting appellee & responsive briefs•Demonstrates familiarity with & working knowledge of: ¤ complaints, answers & affirmative defenses ¤ routine discovery motions ¤ essential terms & conditions of settlement ¤ basic negotiation principles & strategies ¤ basic trial preparation steps & documentation ¤ document production, privilege, & e-discovery rules ¤ appellate rules Demonstrates familiarity with civil & evidentiary rules Demonstrates familiarity with ADR options

Demonstrates ownership of case matters by:¤ proactively advancing the matter, developing strategy, proposing solutions, etc.

Demonstrates industry specific/practice niche substantive knowledge & litigation expertiseActs as 2nd Chair at trial or as active participant on trial preparation teamArgues motions & pleadings w/confidence & high % of positive results when expectedDrafts complex documents requiring little revisionDemonstrates familiarity with drafting appellate briefsDemonstrates familiarity with taking & defending expert depositionsDemonstrates familiarity with & working knowledge of evidentiary motions, including Daubert motionsDemonstrates familiarity with & working knowledge of firm litigation technologyDemonstrates proficiency taking & defending lay deposDemonstrates proficiency conducting: ¤ client & witness interviews ¤ basic negotiations, including settlement negotiations ¤ mediations / arbitrations•Demonstrates proficiency preparing: ¤ case management & case discovery plans ¤ case reports & evaluations ¤ lay witnesses for depositions•Demonstrates proficiency drafting: ¤ sound settlement documentation ¤ dispositive motions ¤ sound jury instructions & motions in limine•Demonstrates proficiency handling & drafting: ¤ complaints, answers, & affirmative defenses routine ¤ discovery motions ¤ case-specific written discovery ¤ trial preparation & documentation•Demonstrates proficiency with: ¤ civil & evidentiary rules ¤ document production, privilege, & e-discovery ¤ appellate rules

Demonstrates overall quality lawyering & practice excellence through outstanding technical skills, judgment, oral skills, savvy, and advocacyDemonstrates industry specific/practice niche substantive knowledge & litigation expertiseDemonstrates ability to develop comprehensive case strategies in complex matters, & translate expertise in one area to other areas of litigation practiceWrites clearly & persuasively, drafts effectively, & analyzes multifaceted legal issues & complex factual situations efficiently & accuratelyDemonstrates ability to lead & manage the work of others in litigation mattersActs as 1st Chair at trial or as active leader of trial preparation teamDemonstrates proficiency drafting appellate briefsDemonstrates proficiency taking & defending expert depositionsDemonstrates proficiency with evidentiary motions, including Daubert motionsDemonstrates proficiency using firm litigation technologyDemonstrates mastery taking & defending lay witness deposDemonstrates mastery conducting: ¤ client & witness interviews ¤ basic negotiations, including settlement neg. ¤ mediations / arbitrations•Demonstrates mastery preparing: ¤ case management & case discovery plans ¤ case reports & evaluation ¤ lay witnesses for depositions•Demonstrates mastery drafting: ¤ sophisticated settlement documentation ¤ sophisticated jury instructions & motions in limine ¤ dispositive motionsDemonstrates mastery handling & drafting: ¤ complaints, answers, & affirmative defenses ¤ routine discovery motions ¤ case-specific written discovery ¤ trial preparation & documentationDemonstrates mastery of: ¤ civil & evidentiary rules ¤ document production, privilege, & e-discovery ¤ appellate rules

College of Legal SkillsTransactional Skills Development

By EOY 2

Demonstrates proficiency handling routine business & transactional matters w/out close supervisionUnderstands & demonstrates working knowledge of the choice, formation, & organization of major types of business entities, including:

¤ corporations ¤ general partnerships ¤ limited partnerships ¤ registered LLPs ¤ LLCs ¤ PSCs ¤ PLLCs

Effectively uses firm transactional resources & forms to prepare initial draftsDemonstrates proficiency drafting basic business & RE documents, including: ¤ real estate conveyancing docs ¤ business organizational docs ¤ commercial lending docs ¤ merger & acquisition docsDemonstrates proficiency participating in transactional due diligence & analyzing investigation resultsDemonstrates understanding & working knowledge of basic negotiating levers & techniquesDemonstrates understanding & working knowledge of steps & components to close a transaction:

¤ authorization¤ third party consent & approvals¤ substantive agreements¤ closing mechanics & funding¤ basic due diligence

Demonstrates familiarity w/& working knowledge of basic areas of law to counsel organizational business clientsDemonstrates familiarity w/& working knowledge of ethics rules as applied to transactional practice

By EOY 5

•Demonstrates proficiency handling unusual transactional matters w/out close supervision•Demonstrates understanding & working knowledge of the governance, corporate finance & tax treatment of major types of business entities, as well as trusts & tax-exempt organizations•Accurately prepares drafts & effectively conducts negotiation of terms and conditions of complex business documents, including:

¤ commercial RE develop. Transactions¤ business organizational documents¤ corporate finance documents¤ commercial credit agree. + ancillary docs¤ stock/asset purchase agree. + ancillary docs¤ private equity financings

•Demonstrates mastery handling due diligence investigations & effectively manages others efforts•Demonstrates proficiency & increasing effectiveness negotiating in complex situations through effective prep & use of info, deep understanding of adversary’s perspective, & the effective use of risk, price, timing, & parties’ perspectives to resolve issues•Demonstrates mastery of basic negotiation situations•Demonstrates proficiency closing significant transactions, requiring only modest supervision•Demonstrates proficiency counseling organizational clients faced w/complex issues in areas including:

¤ entity governance¤ bankruptcy & creditors rights¤ contracts & UCC¤ RE & land use law¤ environmental law¤ corporate finance & tax

•Demonstrates mastery handling routine business & transactional matters•Demonstrates mastery of choice, formation & organization of major types of business entities•Demonstrates mastery drafting basic bus. & RE docs•Demonstrates mastery and confidence in applying ethics rules to transactional practice

By EOY 7

•Offers sophisticated structuring advice re technically complex transactional & business matters without close supervision•Demonstrates mastery providing advice & implementing the choice, formation, & organization of major types of business entities•Structures and negotiates the terms and conditions of transactions and supervises the work of others in preparation of business documents•Demonstrates mastery creating due diligence plans & supervising investigations performed by others•Demonstrates mastery closing complex transactions & effectively supervising others on significant transactions•Demonstrates ability to effectively counsel organizational clients on all major issues relevant to business ventures•Demonstrates proficiency leading negotiation of legal terms of complex transactions by preparing client & adversary goals & risks, developing & executing complex negotiating strategies; inspires client confidence in substantive role played in negotiation•Demonstrates mastery negotiating in complex situations through effective preparation & use of information, deep understanding of adversary’s perspective, & the effective use of risk, price, timing, & parties’ perspectives to resolve issues•Demonstrates mastery handling unusual transactional matters with minimal to no supervision•Demonstrates understanding & mastery of the governance, corporate finance, & tax treatment of major types of business entities, as well as trusts & tax-exempt organizations•Demonstrates mastery handling routine business & transactional matters•Demonstrates mastery drafting basic business & RE documents•Demonstrates mastery and confidence in applying ethics rules to transactional practice

Stites Academy Launched in 2010

• Associate Academies– Academy I for Y2 & Y3 associates

• April 2010

– Academy II for Y4 & Y5 associates• June 2010

– Academy III for Y6 & Y7 associates• November 2010

Value Post Recessionand

Alternative Fees

Alan T. RogersManaging Partner Balch & Bingham LLP 1901 Sixth Avenue North, Suite 1500Birmingham, Alabama 35203205.226.3486205.488.5819

Association of Corporate Counsel

• 26,000 Members• 10,000 Organizations• 75 Countries• 52 Chapters

• Founded 1981

PROBLEM

ACC believes that many traditional law firm business models and many of the approaches to lawyer training and cost management are not aligned with what corporate clients want and need: Value driven, high quality legal services that deliver solutions for a reasonable cost and develop lawyers as counselors (not just content providers), advocates (not just process-doers) and professional partners.

Problems: Wants/Needs:

• Traditional law firm business models

• Traditional approaches to lawyer training

• Traditional approaches to cost management

• Value driven, high quality legal services

• Deliver solutions• Reasonable cost• Develop Counselors (not

just content providers)• Develop Advocates (not just

processors)• Develop Professional

Partners

Mission

• Promote Dialog• Develop Methodologies & Metrics• Create Tools• Enhance Awareness

Goals

• National Dialog• Tool Kits• Recognition by Senior Management• Client Community• Law Firms training, retaining talent• Mutual satisfaction, pride, and identified leaders to

promote change• Better Alignment Clients & Firms

ACC Value Index

• Understands Objectives / Expectations• Responsiveness / Communication• Legal Expertise• Predictable Cost / Budgeting Skills• Efficiency / Process Management• Results Delivered / Execution

Ratings: 1 (Poor) ------- 5 (Excellent)

AFA’s

Survey of 453 General Counsel:

“Value based fee arrangements are becoming institutionalized and will likely increase

steadily year over year.”