Being the boss isn’t always easy.
Since taking over as chair of McDermott Will & Emery in January, Ira Coleman has been working on how to make the firm more profitable, while holding onto all of its clients and rainmakers — basically the triple crown that any law firm leader dreams about.
But at McDermott there’s also some expectation the firm will return to where it was a decade ago: In 2006, it ranked as the 26th most profitable firm whereas in 2017, it was 45th, according to its reported profit per partner figures.
First and foremost, Coleman has tried to refocus the firm on a few core areas where he thinks it can excel — including tax, private equity, M&A, private wealth and big ticket litigation. He’s also had to make tough choices about who does and doesn’t fit into those areas, and ensure their production levels merit entry to McDermott’s equity partnership. Never an easy thing to do, this year, about three dozen lawyers were either de-equitized or helped to find new jobs elsewhere, according to the firm.
“This is about getting us back into the AmLaw 25,” said Coleman, of The American Lawyer’s list of top 25 most profitable law firms. “We were probably kinder and gentler [to partners] than we should have been over a period of time.”
A Miami corporate lawyer whose emails carry the sign-off “Make it a great day!!”, Coleman replaced former co-chairs Jeff Stone and Peter Sacripanti this past January.
Coleman inherited a 977-lawyer Chicago-based law firm with 21 offices throughout U.S., Europe and Asia whose clients include Honeywell, HIG Capital, TeamHealth and UHS. In 2016, it grossed $908 million in revenue while its profits per partner reached $1.6 million — a 23 percent increase from the $1.3 million it posted in 2006.
Part of his plan is to balance the focus on profitability with morale-building.
In January, Coleman held a summit to discuss women’s issues at the firm; in April he threw a partner retreat in Colorado Springs where — in breaking with tradition — family members were also invited to attend; and in May, he convened a global town hall soliciting feedback about the direction of the firm, where financial data was shared with associates and staff.
He also created new committees to insure that leadership keeps a line of communication open with income partners. And he recently gave associates the ability to weigh in on how their bonuses are divvied.
His is not the first firm to tinker with its equity structure.
Last year, it was Shearman & Sterling that was in the news for proposing a new tier of partners for junior lawyers to join the partnership on a non-equity basis — a move that can boost how much equity partners earn.
McDermott already had a two-tiered partnership but has essentially demoted partners into non-equity roles such as of counsel in a range of practices and geographies. Big Law Business first reported the firm’s round of de-equitizations and layoffs in July, a series of decisions that affected a number of geographies and practices, including in intellectual property, litigation and transactions.
“It really should mean something to be an equity partner at McDermott,” said Coleman.
Part of reason he is talking so aggressively about change is that the 2008 financial crisis caused a shift in the way general counsel engaged with outside counsel. They brought more work in-house and began aggressively seeking alternative billing arrangements.
Earlier this year, Georgetown Law School reported it found law firms now effectively bill 80 to 90 percent of their work on something other than a billable hour basis.
“There is sort of an angst in Big Law about what is the role of law firms,” said Jane May, an executive committee member at McDermott. “It’s not a situation anymore where clients sit in their office and lawyers sit in their office and [clients say] ‘I have a specific legal need and let’s find a lawyer.
May said she has personally agreed to work with junior lawyers at corporations, training them for free instead of using firm associates.
“Never would have happened when I was first practicing law,” said May.
John Yoshimura, the former chief operating officer from A.T. Kearney, who now holds the same title at McDermott, has also been a leading figure of change at the firm.
He’s introducing a so-called Net Promoter Score with clients — a score card typically used by airlines and other companies to evaluate customer feedback on a 1 to 10 rating.
“We, as law firms, don’t really measure this, but we think it’s important to start measuring it,” said Coleman.
Coleman also suggested the possibility of using such a system to evaluate compensation.
“Everyone wants to say clients love them, but we’ll see,” said Coleman.
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