James N. KramerOrrick, Herrington & Sutcliffe LLP
1. Multiple law firms have reported a reduction in their billable hour requirement. Have you made any similar changes? If so, what was the incentive behind that?
Here at Orrick, we don’t have a billable hour requirement. We have what we call a target, which is designed to provide associates with a sense of how many hours they should be spending on billable and non billable projects Also, billable hours for Orrick don’t just include the hours worked for a client. We also count pro bono hours 100% toward the firm’s billable target. To answer you question, we haven’t seen any change in the targetlevel, but what we have done is gotten people more focused on what they should be doing in those hours, and focused on the quality of those hours. What we mean by that is, rather than just have a lot of hours go to document review or mundane aspects of the practice that might not advance an associate’s career, we have put in place the Talent Model. You might have heard of this; the Talent Model is a model that does away with the old methodology where every year you advance with our regard for your professional development, every year your salary goes up, and every year the client gets charged a higher rate. Instead, what we have done is we tiered the associate at three levels: Associate, Managing Associate, and Senior Associate. We’ve tied those different levels to the achievement of specific skills, the achievement of specific targets, and developing skills we think you need to advance at the law firm. As part of that, we provide specific guidance to the associates on the types of things they should be doing with their hours. For example, if you’re a Managing Associate, most of your time should be spent on managing cases, on actually taking discovery, taking depositions, writing motions, and being exposed to clients. As a result, associates at every level have are provided with a clearer sense of how they should be spending their time.. A critical component of the Talent Model is the assignment of Talent Model mentor to each associate. This person visits with the associate regularly to asses what the associate’s experiences been in the past few months. The Talent Model Mentor then lines up these experiences with the Talent Model guidelines, and works with the associate to insure that they are getting the right level of experience and to assist in obtaining new assignments that will permit the associate to achieve his or her professional goals .
2. Due to the recession, many law firms have been hiring fewer people. Has a limitation in new hires changed the qualities that you are looking for in applicants?
The answer is no. We still look for people who show that they can perform the work academically, and can rise to the challenges that clients present to us. We are becoming more focused on making sure there is a geographical fit and on making sure that the candidate is sincerely impressed with Orrick, our strategy and vision. We see many candidates who are interested in practicing at a “big law firm” and then moving on to something else. And while that is fine, in this tough market, we are becoming increasingly more focused on hiring candidates who are interested in long term caeers in our firm. . Put simply, we want everyone we hire into the Summer Program to convert to a full time associate at Orrick. And then we want every full-time associate to move up to the talent model and eventually become a partner at the firm. It is important to realize that’s not necessarily realistic because people’s views on what they want to do professionally change, but we really try to look hard at the applicants and ask, is this a good fit for Orrick? Is this a good fit geographically? And is this someone that really wants to practice with us?
3. In a similar vein, with fewer positions available, one would expect an abundance of highly qualified applicants. With greater degree of choice, but fewer positions to offer, how has diversity been impacted?
We continue to focus significantly on diversity, and I actually have some statistics here from 2011 summer class, the class we just hired. 44% of our 2011 summer class is diverse based on gender, race, ethnic background and sexual orientation, which is a strong number, and a reflection of the firm’s conscious effort to reach out to law students, to reach out to specific law schools, and individual students who we feel well help us achieve our diversity goals. Here at Orrick, diversity goes beyond the statistics. We hire people from all walks of life, from all over the world. Achieving greater diversity has always been important here at Orrick, and we continue to focus ondiversity even in a tough market. So when you meet people at Orrick, they don’t all look the same. Students often say that with some firms hire students and lawyers who fit a particular mold. We are the opposite. Orrick is so diverse that we don’t have a one person who fits the image of Orrick. I’m actually quite proud of that.
4. An increasing number of firms have been following a trend of promoting more social engagement among employees and community involvement. Has your firm instituted any similar programs? If so, what was the rationale behind this investment when employers appear to have the leverage in this economy?
For as long as I have been associated with Orrick, community involvement has been taken very
seriously; this is not a new phenomenon. Every single office in this firm has a Community Responsibility Program where each office reaches out to and connects with local businesses and local non-profits and tries to give back to that specific community. It’s not people in San Francisco or people in New York deciding what happens in Los Angeles or Silicon Valley. Each office gets to decide how to give back to the community. Here in San Francisco, Orrick works very closely with the YMCA and supports the Bessy Carmichael Afterschool Enrichment Program. Bessy Carmichael is a primary school in an underprivileged area of San Francisco. There are a large number of students that have nothing to do after they get out of school at 1pm, while their parents are working. Orrick works with the YMCA through a multi-year grant, and we sponsor an afterschool program. We hire teachers through the YMCA, we fund the program. The students get help with their studies, they learn interpersonal skills and conflict resolution. That’s just one example of what we do. I know that a lot of firms are doing that more now, but it’s something that has always been important here at Orrick.
5. Some schools are revamping their legal education by moving from a more lecture-based, theoretical approach, to an experienced-based, practical approach. Are you paying attention to that when you decide to go to a school for OCI? Or do you focus on the more traditional factors, such as a pre-existing relationship between your firm and certain schools or school rankings?
I would say both. We have strong relationships with many law schools and there’s a legacy to that. That legacy is created by the fact that we see very good candidates from these schools. In recent years, as more law schools have shifted toward a clinical-based teaching model, we’ve broadened the schools that we focus on. One good example of a school that falls into this category is Northwestern. By the same token, Stanford Law School, with which we have a strong relationships, has also become increasingly more focused on offeringclinical opportunites for its students. We’ve actually grown our relationship with schools like Stanford by helping sponsor some of these programs. We sponsor a corporate fellowship at Stanford Law School which allows students to go out and practice corporate law with non-profits that we fund. We fund an IP clearing house, where students compete in IP challenges and get real world experience. I would say that most law schools are seeing the importance of this, and it is certainly something that we look at when we go out to hire. Doing things beyond just studying in the library and taking tests are important considerations when we aretrying to evaluate potential candidates.
6. Has the recession changed the way you advertise, both towards potential clients and prospective employees?
It’s changed the way we think about client relationships. Historically, if you had a world leading practice in a particular substantive area, you would get cases by calling people up, interviewing, and getting hired. Those opportunities are fewer and farther between because most big law firms have someone in that practice area that can do that area of law. It becomes harder to differentiate the expertise. We as a firm, as a result of this, have become focused on developing and growing client relationships. We have an amazing list of clients that trust us with their most important work. Rather than trying to get new clients to come to us and saying ‘Let’s hire someone new and different to do our legal work,’ we focus on our existing clients, the ones that already come to us, and we say, ‘Let’s deepen the relationship; let’s broaden it.’ We may be doing some work for them in San Francisco, but maybe there’s a way to grow the relationship and do some work for them in New York, Germany, France, or in Asia. The firm has, in the past couple of years, focused its resources on growing the client relationships and it’s working. We had many clients that 5 years ago that were very small and we were helping them in one practice area, and now we are working for them in eight or ten different practice areas, in nine or ten offices around the world. I think that firms are going to have to focus more on the development of client relationships, and redirect resources there rather than trying to get new clients.
Importantly, we do not endeavor to be all things to all clients. Some law firms want to do everything for their clients. We have specific areas where we do very high value work and that’s what we focus on. Typically that results in us being retained by entities, but we do represent a lot of individuals, as well. They tend to be high profile, for example, white-collar criminal cases. It is really driven by the type of expertise that we have, and that’s how we segregate what we want to do. It wouldn’t make sense for us to take a slip-and-fall case, and it wouldn’t make sense for someone to hire us for that. We try to line up our clients based on the practice areas and geographies that we have and see if there is a good fit. We’ve noticed that clients in recent years are focused on rates. They are happy to pay the rates, but they want to pay the rates for the high-value work. So, one thing we have become focused on is disaggregation. Disaggregation is separating out the high-value work from the mundane work. By disaggregating, we can charge very low rates for things like document review, but we maintain our standard rates for the high-value work. One tool that has been instrumental in allowing us do this is our Global Operations Center in Wheeling, West Virginia. The cost of employing people there is a lot less, but there is a very highly educated workforce. AT our Global Operations Center we have a dedicated document review team of lawyers with whom we have worked for many years. This team allows us to offer our clients document review for the same price as contract-lawyers, but with the benefit of being able to manage the people and have our lawyers teach them cases and answer questions. It allows us to maintain the control, while giving clients the benefit of a much lower rate. This all feeds back into building the client relationship because it allows clients to come to us for all of these things.