Aligning Associate Training with Client Needs

Practical Law Article 6-503-9914 (Approx. 6 pages)

Aligning Associate Training with Client Needs

by Practical Law The Journal

The Opportunity

"We believe that thinking differently opens the door to us charging differently," says Drinker Biddle partner Doug Raymond, who, along with chair of the firm's Corporate and Securities Group, Bob Juelke, has had a long-standing interest in associate training. "The deliberations we had been having around core competencies and efficiencies seemed to align with the Bell Labs analogy developed by William Henderson of Indiana University," he says, "and we wanted to build on that."

Henderson's 2008 paper entitled Are We Selling Results or Résumés?: The Underexplored Linkage between Human Resource Strategies and Firm-Specific Capital (Indiana Legal Studies Research Paper No. 105) explains why a high quality/fixed costs model is so attractive to the many General Counsel who are charged with lowering legal costs as a percentage of company revenues. It also illustrates the potential gains of human resource strategies by reviewing Robert Kelley's and Janet Caplan's study of engineers at Bell Laboratories and 3M in the late 1980s and early 1990s.

Henderson explains that the core insight of Kelley's and Caplan's work is that, within a certain range, cognitive abilities and various key measures of knowledge workers' personalities and social attributes do not correlate with contributions to organizational productivity. Rather, exceptional performance is a function of work strategies that are teachable. If this research can be applied to sophisticated legal work — and Henderson assumes that it can — the ability to circumvent the persistent associate salary wars, and the excessive cost structure they generate, offers an enormous competitive advantage for a legal services innovator. If General Counsel are buying cost-effective results rather than résumés, law firms built on organizational productivity could be the way of the future.

Another major influencing factor for Drinker Biddle was the existence of practicallaw.com. When Raymond and Juelke saw a presentation about the site, "the light went on." The site offers continuously maintained standard form documents with integrated drafting notes and how-to guides (or Practice Notes) created and maintained by a staff of over 40 US attorneys hired from leading law firms and in-house departments.

Raymond recognized that the Practical Law Company attorney editors were doing a lot of the work the firm's own attorneys would otherwise have to do with raw legal information — filtering, analyzing, putting in context, getting to the essence of how things work in practice. "I could see that practicallaw.com would allow us to operate internally in a more thoughtful way, a way in which we believe our clients trust that we are operating," he says. Juelke agreed: "practicallaw.com was an immediate and cost-effective upgrade to our systems and processes and an obvious way of improving the efficiency of our more junior associates."

The Roll-Out

The firm came up with the idea of an "experiential" training program which would last for several months, during which time the associates taking part would not undertake billable work. The program would be funded in part by a reduction in the salary level of the new associates.

The immediate aim of the program was to fast track the junior associates to the requisite level of competency, allowing them to genuinely add value sooner rather than later. The longer-term business objective was to enable the firm to adopt pay and billing practices that shift the cost of junior associate training from the client to the firm.

Like the programs at many firms, training at Drinker Biddle before 2009 was based primarily on lectures (generally one hour a week over a nine-month period) and a "watch and listen" approach. The new program presents the new associates with a series of real-life problems designed to simulate the seminal experiences that the firm would expect its junior lawyers to have during their first few years of practice. The associates are given extensive feedback regarding their performance on a real-time basis, allowing them to put lessons learned from a training module into practice almost immediately. The goal of the program is to produce experienced, practical lawyers who can proactively deal with new challenges and who will never make a "first-time" mistake on a client matter.

The course for the firm's corporate associates is framed around a series of modules focused on core work types (M&A, Finance, Securities, Venture Capital, Corporate Governance and so on). Partners Matthew McDonald and Scott Connolly took the lead on implementing the program for the firm's corporate group and also acted as instructors on most of the assignments. For each module they devised fact patterns around which the first year associates are assigned specific tasks: mark up a client's draft of an earnings release and prepare a related 8-K, prepare an issues list for an acquisition agreement mark-up, rules check a client's draft 10-K, negotiate an agreement with opposing counsel, prepare a closing and so on (for examples of the various tasks within a single module, see Box, Example Module: M&A 2009−2010).

About 80% of the assignments are based on actual documents and deals the firm has worked on, and all the modules incorporate experiences that the firm's lawyers have had during their careers. And whereas the old training program had been based primarily on teaching technical lawyering skills, the new program allows the firm to focus on training in other categories of the firm's core competencies, such as client focus, execution and professionalism.

Success on the course is measured by how well an associate takes ownership of any project as a whole and translates his or her efforts into client-focused work product. How well an associate accesses available resources is also crucial. Using resources includes not only walking the halls and developing a network of mentors among the more senior associates and partners, but also being able to harness and leverage available online resources.

Practicallaw.com played an important part in the process. "We leveraged our resources," says Connolly, "by providing our associates with access to the many high-quality materials on practicallaw.com, such as forms for several types of transactions, Practice Notes on many topics with real-time updates on the state of the law and the PLCWhat's Market database of deals and filings. As a result, we were able to invest our time in developing effective fact patterns for our training modules and providing intensive feedback on the work product of our associates, rather than preparing extensive training materials."

"We knew," says McDonald, "that the new associates would not come up against a brick wall when looking for useful resources to give them guidance. Having spent some time ourselves reading the practicallaw.com materials, we felt entirely confident that they would give the students practical tips on the issues to look for. The new associates could ask Scott and me and the more senior associates for help, but practicallaw.com helped them identify the questions to ask. Also, the time saving for us and the senior associates was considerable. We didn't need to explain the basics, just the relatively advanced points. In short, practicallaw.com puts the associates way ahead of the curve in tackling new assignments."

With client focus as one of the core competency categories, early access to client-facing situations was high on the list of priorities when the course was designed. The task list on most of the modules included putting in a call to a client, talking the client through an issues list and counseling the client in a negotiation meeting with opposing counsel. The role of the client was played in many of the exercises by some of the firm's senior partners. In the M&A module, the General Counsel of the client corporation on which the module was based, Mike Sherman of Pennsylvania-based Genesis Healthcare Corporation, reenacted his position as the client for the exercises. Another senior advisor of Genesis reenacted the part of the representative of the lender.

The Verdict, So Far

When the program was originally rolled out, the press coverage it generated focused largely on whether the lower salary level offered to participating associates is sustainable in a more buoyant market. Will graduates go for higher salaries elsewhere if they are available?

"We take a long-term view," says Raymond in response. "We are interested in hiring associates who share our vision of how the practice of law is evolving and what clients really value. The idea for this program was born at the firm during the ‘talent wars' period. The slowdown gave us the discipline to commit to it. What we are offering new associates is similar to a Masters degree or the fourth year of law school."

At this stage, with one full round of the program completed and the second year in progress, any benefit analysis is qualitative rather than quantitative. McDonald, who is responsible for internal allocation of corporate associates, observes that he is definitely getting more repeat work requests for first-year associates, in scenarios where he would normally expect the requests to be for more senior attorneys. "The 2009 group of first-years have had client-focused experience that first-years would not normally have had at this stage, including substantive interactions with a client. They are certainly very confident and don't flinch when you ask them to take on a new challenge."

The interim verdict goes to the firm's client, Mike Sherman. He admires the importance the firm places on building out the first-years and was equally impressed with how seriously the first-year associates took the exercise: "They really cared whether or not the deal got done." He also recognizes that the investment will take a few years to play out. "It will be interesting to see whether they will be more useful more quickly as attorneys." Having worked with the first-years on the exercises, though, he was certainly left with a very favorable impression: "I hope some of these associates get to work on my transactions," he says.

Example Module: M&A 2009−2010

In the M&A module, the associates followed an asset purchase transaction, together with the simultaneous related financing transaction, from beginning to end. The scenario and documents used were taken from a transaction previously undertaken by the firm on behalf of the buyer. The General Counsel of the client corporation reenacted his position as the client for the purposes of the exercises. Another senior advisor of the company reenacted the part of the representative of the lender. Specific assignments were allocated, as set out in the table below.

M&A	Letters of Intent	Mark up letter of intent.
	Due Diligence	Review due diligence materials and prepare client memo.
	Acquisition Agreements	Prepare issues list for client after reviewing original blackline draft from opposing counsel. Listen to partner feedback on issues list. Talk client through issues list. Mark up agreement after client feedback on issues list. Break into two teams (Buyer and Seller) and negotiate asset purchase agreement. Draft ancillary agreements for transaction. Negotiate ancillary agreements.
Financing	Credit Agreements	Review agreement to determine whether borrower can acquire another company. Review agreement to identify issues associated with amending it for additional financing. Break into groups (Borrower counsel and Agent counsel) to discuss issues with respective clients. Break into three groups to negotiate issues. Revise agreement based on the negotiations. Draft and negotiate ancillary agreements.
Closing		Prepare closing checklist and attend closing with a paralegal.

During the course of the program, the associates also participated in mock negotiations of an asset purchase agreement with law students from Drexel University's Earle Mack School of Law. The Drexel students were enrolled in the course Law & Finance of Transactional Lawyering, taught by professor Karl S. Okamoto, the director of Drexel's Business and Entrepreneurship Law Program.

Core Competencies

At the heart of the Drinker Biddle training program is the firm-wide system of core competencies.

The system is based on a series of core competencies that each attorney in the firm, from the newest associate to the senior partner, must demonstrate daily. The core competencies provide:

Associates with a road map for focusing their own development efforts.
Practice groups with a framework for evaluating the development of their associates.
A mechanism for rationalizing associate base salary and billing rates.

As associates advance within and between levels, their salaries are increased, with significant increases coming as associates move from one level to the next. At the same time, the associates' billing rates typically increase in recognition of their increasing skill sets and the added value they bring to client matters.

There are four levels of competency, each defined by lists of specific skills in each of the four following categories:

Technical lawyering skills.
Client focus.
Execution.
Professionalism.

The levels are not aligned with years of experience nor is there a standard plan for advancement through the levels. When the concept was rolled out, each associate in the firm was assigned to an appropriate level. Each associate is evaluated individually to determine which level he or she has achieved. An associate must demonstrate a sufficient mastery of substantially all of the skills at each level to advance to the next level. New associates are required to demonstrate mastery of the Level 1 competencies before being promoted to Level 2 and so on. Mastery of Level 4 is effectively partner level performance.

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