What’s Surprising About Millennials in Large Law Firms

A recent survey conducted by Major, Lindsey, and Africa and the American Lawyer explores attitudes of millennials at large law firms.

The unspoken premise of such surveys seems to be that generations of workers are different enough such that we need to really know what makes them tick. I’m old enough to remember when my cohort, Generation X, conducted such surveys.

So let’s see what’s new in this survey.

It’s a non-scientific questionnaire filled out by over 1200 respondents. The respondents were not randomly selected. And the description of its methodology doesn’t tell you how they were selected. So it’s possible that some folks responded more than once. Stat-heads would tell you that such survey results from respondents who are not randomly selected are of no predictive value. Here, the results don’t necessarily tell you anything about the broader population of millennial lawyers.

So with this significant caveat let’s explore what the survey said.

When deciding what factors are most important to selecting which law firm to work at, millennial men care most about money. And millennial women care most about work-life balance followed by money. Interestingly, the survey does take a non-binary approach to gender identity. The respondents self identified as follows: 52.3% Male, 44.1% Female, o.8% non-binary Third Gender, 0.5% Prefer to Self-Describe, 2.3% Prefer Not To Say.

When asked why they would change firms only 1.7 percent of respondents selected diversity as their most important factor.  This is a contrast to 28.6 percent who selected compensation and 20.0% percentage who identified work/life balance as their most important considerations.  Apparently, a very small percentage of respondents cared a lot about diversity and many cared very little when deciding where they should work.

When asked about their career goals, 40% said their goal was to make partner at their current firm. Is that a sign that millennials are more loyal, or that they are ignorant about their real chances of making partner?

One of the survey responses that has garnered the most media attention relates to compensation. Nearly 75% of respondents reported that they would trade a portion of their compensation for more time off, a flexible work schedule, or a cut in their billable hours requirement.  This seems like a new attitude, but it’s not clear that it is.  As a consultant to lawyers and law firms, most of the associates I have talked to have indicated that they would accept a reduction in pay for a reasonable decrease in work. This seems to be the most common opinion for the last fifteen years or more, and doesn’t only apply to millennial associates.  It’s probably been true of all associates for quite some time.

A majority of associates (50.9%) also see the large law firm business model as broken. And guess whom they see as changing that model for the better? Not clients or changes in supply in demand or regulatory rules but themselves. They see themselves as changing the system.
But it is easy to underestimate how difficult it is to change systems. And not only in law firms. A recent report in the Guardian reveals an anecdote about one of the first encounters between Senator John McCain and Jared Kushner.  The two were discussing military procurement reform and McCain asked how Kushner intended to do that. Kushner is quoted as saying that McCain should not worry, because “we’re going to change the way the entire government works”. To which McCain reportedly said, “good luck with that, son.”

Good luck indeed–to millennial associates as well. Fewer of you will make partner than you believe, and the chances of you bending market forces to suit your desires are questionable at best.

In other words, this non-scientific survey may have inadvertently shown that millennials are not as different from prior law firm generations as most people, including law firm leaders, believe.

Five Common Misconceptions About Selling Your Law Practice

If you are thinking of walking away from your practice and want to get paid for it, you are not alone.  More lawyers are looking to sell their practices.  This is especially true in consumer-facing areas such as family law, immigration, and estate planning. 

Too many lawyers harbor misconceptions that hinder their ability to take full advantage of their opportunities to monetize their practices. 

Misconception #1: Lawyers Seek to Sell Their Practices Because They Are Struggling Financially.

In my experience as a consultant to law firms, lawyers who have small or financially struggling practices are more likely to just walk away and close their doors without trying to sell it.  Some walk away because they didn’t fully realize that they even have the option of selling their practice.

Many of the calls I receive are from lawyers with more than 20 years of practice who want to sell because they are more business savvy than the average attorney and are looking to cash out. And while it’s not a scientific random sample, the small firm lawyers who call typically generate annual revenues in the range of $400k to $1.5 million in the calendar year before they seek to sell.  Lawyers are less likely to pay for a financially struggling practice.

Misconception #2:  It’s easier to sell than to find an internal successor.

Many attorneys who want to part with their practice mistakenly assume that they need to sell it.  But it is often easier transition a practice as part of a succession planning scenario.  This is especially true if the departing lawyer wants to make sure that members of the staff can continue in their present roles.  An outside lawyer who buys a practice is more likely to want to clean house or take a selective approach to retaining staff members.  This is not to say that succession planning is easy.  It isn’t.  And many law firms fail to groom lawyers to take over.  But in many cases, more stars need to align to make an outright external sale work than to make an internal succession work.

Misconception #3: You have to advertise to sell.

This misconception is a corollary of Misconception # 2. Because succession planning is a more viable option than most lawyers realize, they mistakenly assume they will need to advertise their practice to strangers to cash out.  While some business brokers do get involved in the advertising of a law practice, you are more likely to transition your practice to a lawyer or law firm that you already know or have heard about.  It’s often easier to structure a deal with lawyers who already know and like you than to close a deal with a stranger.

Thus, one of the best ways to begin the process of transitioning out of a practice is to put together a list of people you know who might be interested in your practice or know someone who does.

Misconception #4:  The best way to let people know you are interested in selling is to write a letter.

Anyone who will take over your practice and pay for it will need a lot of information.  A brief letter isn’t likely to be useful.  Before reaching out to potentially interested parties you need to collect a wide range of information.  Typically, this involves financial information such as three years of profit and loss statements.  Even when a law firm has a senior associate or non-equity partner in place, and that person has expressed an interest in taking over, they often have no idea about the firm’s finances.  I have been retained more than once to help potential partners review and understand the finances of the firm for which they are working. 

Misconception #5:  The most important part of the sales transition is the sales price.

Selling a practice is often motivated by non-financial factors.  Lawyers are more likely to want to sell because they feel burned out or because they want to ensure that their clients get taken care of once they leave the practice.  And the succession planning process is even more likely to be motivated by factors other than money.

But if money is often not the driving force behind selling a practice or transitioning it to the next generation, what is?

The ability to sell a practice or complete the succession planning process often turns on the extent to which the departing lawyer can craft a compelling narrative about the identity of the lawyer or law firm that would most benefit from buying or otherwise taking over the existing practice.  In essence, this requires the departing lawyer to create a business plan that helps identify which potential buyers should be contacted.  For example, understanding that your practice might be most attractive to law firms who might be interested in expanding to your geographic area will help you craft a narrative that is appropriate for specific firms.  Likewise, bringing in an outside partner to join your firm and eventually take it over may hinge on your ability to identify lawyers who need more than money.  For example, they want an opportunity to control a firm and their destinies.  

The financial terms are, of course, relevant to any sale or succession planning involving a law firm, but don’t underestimate the importance of crafting a narrative that focuses on emotionally impactful factors unrelated to money.

What’s the Scariest Issue Confronting Your Law Firm?

A wise and accomplished financial advisor recently told me that her clients will happily talk about most aspects of their financial reality and goals except for one–cash flow. They will share their dreams of retiring in an exotic locale, funding college for their children and grandchildren, but won’t without prompting mention that they have less than $5,000 in savings. For many individuals, poor cash flow is the problem that is so scary that it often can’t be mentioned by name.

As a consultant to lawyers and law firms I have come across a similar set of behaviors. For some the scary issue is depression. I advised a brilliant lawyer who occasionally became so overwhelmed with running his practice that he couldn’t bring himself to open his mail for weeks at a time. For others it’s the fear that one or more law firm partners will never pull their weight or will otherwise prevent the firm from growing as it should. And like many individual investors, the scary unspoken issue at too many law firms is cash flow. Most commonly, the firm’s payroll is eating a lion’s share of revenues and the senior partners either don’t want to take a pay cut, make a capital contribution, or let some folks go.

The all-too-human response to facing scary issues is to minimize or avoid them until they create an emergency that can’t be avoided. We have all seen it. It’s the person who doesn’t change their diet or lifestyle until after they suffer a heart attack. It’s the difficult matter or client file that is avoided until the client files a malpractice action or a complaint with the state bar. There is a better way.

One way to address the scary issue that can’t be mentioned is to realize just how common it is. When we are in the throes of the scary problem it seems unique. It’s easy to convince ourselves that the partner who needs to be confronted about their unacceptable conduct towards coworkers will react in some unique way. In my experience that does not happen. There are plenty of difficult and argumentative law firm partners. And yes they may even yell and scream and carry on for a bit when you tell them that the firm can no longer afford to finance a contingency fee case that had racked up $400k in fees (or whatever your scary issue happens to be). But ultimately they calm down or leave the firm. I’ve seen both scenarios play themselves out. Either way the issue got resolved in a way that was a lot less scary than was initially anticipated.

Genuinely new scary issues are exceedingly rare. For a vast majority of seemingly scary law firm problems, strategies and techniques exist to help identify and improve the situation. And folks like me who are experienced in dealing with scary law firm issues can help you address them more quickly and less painfully.

You know that client file that you dread and that you have been avoiding? It’s probably located behind you on a credenza or out of sight in a filing cabinet. I learned this tidbit from an investigator for a disciplinary authority. Even the physical location of the trouble making file is fairly predictable.

I hate to break it to you but your scary issue isn’t likely to be unique. Moreover there are almost certainly things that can be done to make the problem go away or at least much less of a problem.

So as we enter a new year, isn’t this the time to take control and confront your scary issue once and for all?