ABA Section of Business Law

ABA Section of Business Law
Business Law Today
May/June 1998

Shortage of associates?
Now that the hiring freezes of the early '90s have thawed out in the nation's business law firms, many practices are scrambling to find new associates as they feel the heat to increase productivity.

Smock Management Consultants suggested in a recent report that the current rush to find new talent is actually the product of shortsighted business decisions at the beginning of the decade. "They sacrificed long-term growth for short-term partner profitability," said John Smock, president of the firm. While stagnant growth made sense eight years ago, it's left firms playing catch-up as business booms.

To avoid repeating this feast or famine hiring mentality, Smock suggests that firms hire more lawyers than they think they need, to compensate for turnover; pay associates more; look at a broader range of law school grads; and view associates as valuable firm resources. All this sounds like good news for recent grads. This time, it may be the partners who are left out in the cold.

Online losses
As corporate America's reliance on technology has grown, so to have incidents of cybercrime. Online security breaches, thefts and fraud have turned the Net's virtual reality into cold, hard fact to the tune of $137 million in losses reported last year.

Online business may make the job easier for many, but this online reliance often raises the stakes for companies that haven't mastered computer security, according to Computerworld magazine. San Francisco's Computer Security Institute and the FBI took a look at 520 Fortune 1000 companies' activity in 1997 only to discover that 88 percent had suffered a security breach; 75 percent suffered financial losses totaling $137 million; 44 percent had been hacked by an outside source; and 14 percent had networks and data sabotaged.

The mostly costly incidence of online rip-offs came from the theft of proprietary information — $33.5 million. Telecommunications fraud cost $17.2 million and financial fraud $11.2 million.

Constant comment?
For a growing number of American workers, the "we never talk anymore" lament has sneaked out of marriage counseling sessions and made its way into the office. Today, employees want more feedback from their bosses, according to a study by OfficeTeam temporary service, and managers who talk about job performance with employees are likely to see morale go up as well. In fact, the survey found 66 percent of the workers said job appraisals boosted their motivation on the job. But once-a-year get-togethers are not the way to go, according to OfficeTeam Executive Director Diane Domeyer. "Open and regular communication is a major ingredient in creating a positive corporate culture," she said.

Now, if you could only get your spouse to put down the newspaper at the breakfast table.

Lawyers following orders
Lawyers behaving badly? It's hard to believe, but a University of North Carolina professor has actually written a book about lawyers' moral shortcomings, which he believes are behind the public's disdain for the legal profession. In fact, Professor William Rand Kenan and co-author Paul G. Haskell so have their fingers on the pulse of the public, that they perceive the behavior of O.J.'s legal team and the tactical cadre flanking Monica Lewinsky have actually added to the public's antipathy toward lawyers. (Wow. Does Court TV know about these guys?)

Mercifully, in his book, Why Lawyers Behave as They Do, Kenan doesn't blame the lawyers themselves for their ethical missteps. After all, he says, they're just following orders. "Lawyers' reputations are not good with the public, and that's understandable because of what lawyers are required or permitted to do," Kenan said. What they are permitted to do he explains in a laundry list of indictments of the legal profession, which includes discrediting honest witnesses, delaying justice, lying and using blackmail. Of course, you can count on Kenan's book, published by Westview Press, to be extremely well researched — it just wouldn't be ethical to make such sweeping generalizations about a profession otherwise.

Hear them roar
Women may be roaring into boardrooms at higher numbers these days, but once there, many find that they are still easy to ignore. The boardroom gender gap, long seen as cavernous, appears to be closing, according to Korn/Ferry International. In fact, the firm found that 71 percent of companies it surveyed now had at least one woman on the board — a 25 percent increase in the last 10 years.

And this tide doesn't show signs of ebbing. Women currently sitting on boards are recommending other women for seats, with 36 percent of the companies electing another woman to the board since the first one joined.

Still, Korn/Ferry found that women board members don't feel their opinions have as much weight as their male colleagues' in the areas of management succession and executive compensations.

For most other issues, however, women felt their voices were heard — Helen Reddy would be proud.

"I'll take that clerk"
Running to the store for milk and eggs is passe for many American retail managers, who now scour the competition's shops, having added quality salespeople to their list of things to buy.

According to a recent USA Today article, the current 24-year low unemployment rate has put good workers at a premium and brought "retail headhunting" into the mainstream. Retailers nationwide are sending managers on reconnaissance missions to competing stores to find salespeople at the top of their game. After a sly exchange of business cards, the manager returns to corporate home base. Within a few days, a call is made to the sales target and the courting begins. While hardly cloak-and-dagger espionage, the headhunting game has employers on the defensive, the article said. "I won't say we don't have managers giving out cards," said Marcy Jensen of Best Buy, "but the competition also comes in and watches our employees."

Some retailers even encourage their employees to scout out talent. The Reserves Network staffing service in Cleveland offers a $100 bonus to an employee who refers a worker.

Who's next?
Even Buckingham Palace has seen some nasty spats over succession, so it's no wonder your client's company could end up a royal mess unless you start looking for heirs apparent even before there is a vacancy. According to Norelli & Co., a business consulting firm, every business should include a succession plan as part of its annual strategy.

Without clearly defined procedures for filling vacancies and without accurate information on the movers and shakers within the company, corporate power struggles can make filling a vacancy problematic. "Don't wait until it has to be done," said Norelli CEO Ronald A. Norelli. "It is far better to continually address the issue as a routine part of planning."

While Norelli admonishes nonfamily-owned companies for consistently dodging the responsibility of creating a succession plan, he probably has it a little easier in his line of work since it's his name on the letterhead.

Women's high ground
Women take the moral high ground in corporate America when they first enter the work force, but the longer both sexes are on the job, the more likely men are to join women at the higher altitudes, a study published by the American Psychological Association found. Newly hired women, according to the study, were likely to perceive rule-breaking and using insider information as unethical, whereas their male counterparts did not. "On average, men and women go into the work force out of college with different perceptions," said Dr. Deborah Crown, author of the study. Over time, however, men start to mend their errant ways, the study showed, gradually shifting their definitions of ethical behavior. The authors of the study believe that men go through this attitude adjustment because "with work experience comes a better understanding of what is appropriate and inappropriate behavior." The most interesting part of the study however, may be finding out exactly how Crown got men to admit they were wrong.

— Heather Brewer