Steve's Rules with legendary executive recruiter Steve Nelson from the McCormick Group

The Career Road Less Taken: Pricing Professional to Chief Operating Officer

August 30, 2024 • Steve Nelson • Season 2 • Episode 5

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Join us on this episode of Steve’s Rules, where Steve Nelson, Executive Principal at McCormick Group, dives into the evolving roles within law firms, particularly focusing on the rise of professional staff in key leadership positions. We explore the recent trend of hiring COOs from non-traditional backgrounds, such as legal operations, and what this means for the future of law firm management. Whether you're a law firm leader, legal operations professional, or just interested in the business side of law, this episode offers invaluable insights into what’s next for the industry. We will also hear from Steve about what is going on in Washington DC and Texas two of the countries hottest lateral partner markets.

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McCormick Group

Contact Murray
M Coffey

Murray Coffey:

Murray Coffey, welcome to Steve's rules periodic podcast featuring Steve Nelson, executive principal at McCormick group in the law and government affairs practice. My name is Murray Coffey, and I am the principal of M Coffey, a law firm, marketing and business development Boutique. For more information, please visit my website at M coffee.net, Steve has been an executive recruiter for nearly three decades, and without naming names, he is ready to spill the tea on best practices, and maybe a few not so best practices by firms and candidates that he has seen during his career, recruiting some of the most driven and successful professional into highly profitable and growing firms. Steve is a former lawyer and journalist and is a fellow of the college of law practice management and a proud son of Wilkes Barre, Pennsylvania. Full transparency here, Steve has helped my career immensely through the years and has become something of a career shaman to me and I know many others. Hey, Steve, welcome back, Murray. It's been a little while, busy summer, I think for both of us, and congratulations on the newest addition to the ever growing Nelson clan. I understand that you had a, there's a there's a new, there's a new, a new family member, right?

Steve Nelson:

Judah cuffler, Nelson, and cuffler is my middle name, and there's actually those of those of those of you, those of you who know me well, particularly from my early days, might know me as cuffy knows, there's a little insight that people generally don't know, but so the cuffler name is now moved on to the next generation, and he's just a beautiful baby boy. I got to see spend time with his sister, Misha, who's a delight. And you know, got to spend some time out in Northern California. And I'll tell you, it was right when the weather was in its 90s and horrible here on the East Coast. I'm sure it's the same way down, down in Dallas as well. And it was a delight going waking up in the morning it was 60 degrees and it never got over 80.

Murray Coffey:

There you go. Yeah. So, great trip.

Steve Nelson:

Great to see that. Love it. Great to see the new member of the fan.

Murray Coffey:

Well, congratulations. And at some point you have to share some some photos with me. Yeah. So, as we generally do at the beginning of Steve's rules, we will take a look at some of the market intelligence that McCormick group is producing on a regular basis. If you are interested in getting onto the mailing list for this, you can find contact information for Steve and me, but for Steve in the show notes. So please. You know Steve will absolutely add you to their mailing list. I'm on the mailing list for these. They're great. There's always a lot of good intel for those of you who are who are in the business, or those of you who are thinking about getting into the business. But before we do that, I want to just preface this by saying, while we normally spend most of our episodes addressing issues related to lateral partner recruiting, lateral attorney recruiting. We're going to take a bit of a different tack this week and focus in on something related to professional staff, a very unique and interesting take. So I'm not going to, I'm not going to foreshadow it any further. Steve, why don't we talk about the Intel? And then we'll go right into we'll go right into the professional staff. All right, so

Steve Nelson:

what we've been seeing, and it's been interesting since at the first three months of the year, we were thinking that the lateral hiring statistics were going to be pretty flat for 2024 compared to 2023 there weren't a lot of moves in the first three months, both in it was true both in DC and in Texas, which is the two market study in depth. Since then, the market's taken off on in both markets, but much more so in Texas, in DC, it's still pretty flat. Numbers are little behind last year's numbers. Um, but that's mostly due to mostly due to the fact that it's an election year and there's so much uncertainty with regard to what's going to happen in governments once we get into January of 2025, that firms are not making. They certainly aren't making investments in very many government, people out of government, but even in the areas of where they would take somebody from private practice, it's not they're not quite as aggressive, because they just don't know. What's going to happen. So you, let's say you, you think you want to, you know, environmental has been hot. It's been, you know, there's a lot of activity in the Biden administration, but you don't know what's going to happen. You know, it's going to be completely different if it's Trump or if it's Harris. So, you know, I think there's just a lot of uncertainty. So therefore, less, less aggressive. Texas, on the other hand, it's booming. We're seeing a 30% increase in the lateral hiring of partners and council over the first seven months of the year, and that's and that's even take into account that after three months, it was flat. So the last four months has been almost 50% in terms of the numbers of hiring. So are

Murray Coffey:

we seeing more national firms opening in Texas, or is this what, like, what? What do you think is going on now?

Steve Nelson:

There's a little bit of that. I think what we're seeing is we're seeing it filtered down from the big firms, you know, like a couple of years back, it was, you know, was all the big, you know, the national firms, Latham, Sidley, Gibson, Dunn, etc, those, those kinds of firms do want a lot aggressive right now, we're seeing it now. It's now into the second, you know, the second level, 200 so, for example, Spencer Fain, which is growing nationally, lot of hiring right now in Texas, and you know, some other firms as well, who are not, you know, not am law, 50 firms. And so I think we're seeing that a market is now, you know, is, is, is stretching, stretching out a little bit. And again, I think rates are probably producing, you know, some movement. You know that not everybody, you know, not everybody can, you know, charge their clients, you know, $1,200 an hour and higher for their services. And so their clients are saying, No, can't do that, right? And and then the natural reaction is, I've got to find myself a a place where, you know, I could, you know, they can handle the rates,

Murray Coffey:

yeah? So, well, that's Is it mostly transact, on the transactional side, it's

Steve Nelson:

a mix. It's a mix, a lot of energy, energy and corporate, you know, they kind of go together. So, yeah, they didn't corporate lawyer. So that's really a big part of it. But we're seeing a lot of litigation too, um, you know, not a lot of, you know, not a lot of unique specialties, or certainly some IP, um, you know, see too many, you know, unique specialties in Texas, as you do in DC. But you know, it's a, it's a pretty across the board phenomenon.

Murray Coffey:

Okay, that's that's interesting to know and for our listeners. Just so you know, I'm located in in Dallas, and I've worked in the Dallas legal market for quite a while, Dallas and Chicago open markets for quite a while. So been watching, been watching this as well from a different perch, right, right.

Steve Nelson:

Yeah, and Houston and Dallas are, you know, they take turns as being the leading, you know, leading destination. Each month, we've seen a lot of activity in Austin, not nearly as much in San Antonio. So,

Murray Coffey:

very different market, very different market, interestingly, and then we'll move on. When people think about Texas, they often think about Dallas. Think about Houston, they think about Austin. To some degree, they don't really think about San Antonio that much. However, San Antonio is the second largest city in Texas, Dallas is actually the third largest people and people are always surprised. I always think that it's Dallas, Houston and San Antonio. The reality is it's Houston, San Antonio and Dallas, although

Steve Nelson:

I always base it on closer, based on how many sports teams you have in San Antonio only has one, whereas you know, Dallas has, Dallas has two of each three or four. Yeah, Dallas has got all four right star.

Murray Coffey:

And I think there's a new, a new soccer league that just opened, yeah, right, right.

Steve Nelson:

You know, Houston, same thing. So let's,

Murray Coffey:

let's switch our attention now to, uh, to subject this, uh, Steve. Steve has been, been watching this, this trend, and has some real, solid thoughts on this, and, and, and, you know, one of the strong struggles for people who are on the professional staff side, especially those of us who are in the senior level side, is what kind of career progression is there for us? Right? And sometimes it's the career progression is going to a larger firm in the same role. Sometimes it's trying to find a different role. Firms tend to be really sort of vertical in in the roles, and don't kind of think about people in different roles from what they from, where they're coming from. But that seems to maybe be that those walls seem to be breaking down, at least in in one or two areas, and, and, and you know, Steve, you've been watching this for a while, and you've seen a couple of big moves recently, so maybe you can share with folks what we're going to talk about now. We're focusing entirely on professional staff, a particular slice, but professional staff nonetheless, and maybe we'll study. Some other professional staff sides at some point. But I think this is really interesting. Steve,

Steve Nelson:

right. All right. So I think the there was a major development that occurred over the last couple of weeks, which is what led me to, you know, think about doing this as a as a podcast, and that is that Goodwin Proctor, which, of course, is one of the leading firms country, hired a woman named Mary O'Carroll as their new CEO. Now Goodwin Proctor, back in 2014 had hired Mike Kaplan out of Mark he was a like the law law director at Marsh and McLennan companies before that, and they brought him in directly from there to the COO suit suite. So he's coming from in house, but from an in house management role. So he he came in, and he was their CEO for many years, a very visible guy. He left in March and went over to Lowenstein, so Goodwin then, obviously conducted a search, and then, as have hired Mary, Mary spent a number of years in a very similar law department management role at Google, and she was also a founding member, very involved in clock, which Many of you know, you know, it's the corporate legal operations, you know, trade group, so to speak, you know, and talk about things that the corporations are are trying to develop within the community, in terms of the relationships between law firms and so forth. And you know, their their meaning every year is incredibly well attended. And virtually every law firm, you know, a major law firm, is there because, you know, it's the place to be you meet the clients, etc. So, so, so she's the new CEO there, obviously, with a focus. A lot of the focus is on the relationship between the law firm and the end or outside clients, and that, you know, that gets you into things like pricing, pricing of services. It gets into like, you know, the whole all of the outside counsel guidelines that we hear about in terms of how you how could to best apply billing practices. There's a tremendous amount of tumult in terms of, you know how the how to properly bill and get your get your bills out on time and get paid on time. And so therefore, that whole side of the house is really becoming much more important now, for the most part, the larger law firms are still still hiring more traditionally, for the COO role, which is people usually coming out of the CFO role. So the finance is still the most important thing, at least perceived that way. But we're seeing a number of smaller firms, many of whom are in the am law 200 so we're not talking about, you know, really small firm. We're talking about major firms hiring their new CEOs who have a background in law firm practice management, you know, running the practice various practice groups, pricing, legal, project management, everything relating to client engagement. And so we're seeing that that's going to become more and more important as as the years go by. Again, we're not seeing it so far in terms of developing that many new CEOs at large firms, but many of those large firms already have what they would call a chief legal Operations Officer, which is reports, usually reports to the COO, sometimes reports to the you know, the managing partner you know, again, responsible for all of the client facing activities of the firm, the way laws practice that would include knowledge management and AI and everything like that, because then it also includes the pricing, the legal project management, the client feedback programs, often interacting with the marketing departments and The business development departments. So that's the trend that's going on. And we're just seeing a lot of those people. And it seems like over the last year or so, there's been a number of people who've taken on pretty major roles at substantial law firms, although they are not the largest law firms.

Murray Coffey:

Well, that's, that's, that's really interesting. And I you know, it is a growing, we don't call it a trend, maybe a growing awakening at a lot of firms that the client touch point is there's, there's often more client touch points in in the on the professional staff side than there is on the lawyer side. I. And, and so that experience that the clients are having, you know, at every level needs to be really well done and really smart and, and so, you know, this is, this is kind of fascinating, because you really, you really, I mean, as a, as a, as a pricing professional, you really get a good understanding of sort of what the market's telling you about, what the value of your services are, and, and you know that that's a, that's a that's an insight, actually, that even most managing partners don't really have much of in a real way, in a real dollars and cents way, and, and so I think that that, that's, that's, that's unique, so what? So you're okay, so I'm Senior pricing manager, maybe, or senior, senior km, what do I need to be doing today? And then with, you know, with my eyes in the prize of the COO or CLO or something like that, what do I need to be doing right now in my career, to position myself over time, to move into one of these roles, because they're great roles.

Steve Nelson:

So, you know, I say the first thing is, you know, make sure that you've got your MBA. Or, you know, or an accounting degree, doesn't do you that much. Get your MBA somehow, somewhat. I know if you haven't already gotten it, you can get, you know, maybe the Executive Program at Harvard, but you've got to bone up on that and get those credentials so that that you're it's clear that you've got the finance background, because that's going to be crucial. I think most of the people that we run into already have. So it's probably not a major, you know, a major thing, um, the second is, is, you know, sort of understand how your firm interacts with the outside law departments that you deal with. You know, if you're not already involved with them, and many of them are, but if you're not like, find out how that's being done and who's handling it. Because look at it from the perspective of the in house. In house departments, the in house, unlike the law firm, the general counsel will delegate a lot of the sort of work relating to how the handle, how, you know the engagements are being handled, that'll get delegated to that the department Operating Officer, that person's been much more important. You don't see that as much in a law firm where the COO will be the person that deals with the outside client. That's just not the way it works. So because that Operating Officer, yeah, that operating officer wants to talk to partners, they also want to talk to their counterparts within the law firms who handle these who understand, you know, like, I've got this billing guideline, and, you know, your firm keeps keeps violent, you know, keeps violating it or ignoring it, I've got to talk to somebody who I can tell them why we need it and why it's important. And sometimes that for a partner in a law firm or got busy doing nine different things, falls on deaf ears. So they've got to find that person. So you gotta understand, if you're not already involved in it, is that person, I would say, what we're also seeing and this, and a lot of people probably already know this, the lot of law firms are now setting up. They have a different position called the chief legal Operations Office, and that person is handling all of the things I've talked you know, it's the, you know, client feedback, you know, somewhat business, business development, definitely, pricing, legal, project management, km, everything. And so there's usually somebody who's in charge of that sort of side of the house, everything in terms of the management of the law firm, except for facilities, HR, internal probably partner compensation, although sometimes now, some of these people are involved in partner compensation as well. Sure. Um, so, so that person has become a mini coo to begin with. And I think we're seeing a lot of situations come up where the people are very well respected people, professionals in the in this sort of law firm management space are being hired for this CO this chief legal Operations Officer, with a implied promise that they will become the new the next coo firm. And of course, that often depends on the chair and all that. So it's not as easy as you know. As just, you know, like getting a promise, because, you know, it's not worth a whole lot. But still, the idea being that you're getting set up, and we believe that, you know, some of these people who are getting set up, who are already in that particular position, will will be on the market, will be, you know, the next COO at a major, at a major firm, right? Right? I think it's going to come soon. Within the next year, I think you'll have two or three names, though, that people are involved in the legal value network, for example, those leaders are going to be coos at first. I think it's coming, and it's coming soon.

Murray Coffey:

Well, that that's, that's great. And I, I'll, I'll sort of support one point you have in there, one of the points you had in there about the understanding the firm, your the relationship between the firm the clients. So many larger clients these days require firms to agree to a pretty significant and complex set of rules in the General Council, general outside counsel guidelines, I got it out, and I tell you my experience sometimes that General Counsel outside guideline is just sitting in a drawer somewhere, gathering dust, and nobody's paid any attention to it until, you know, the client starts to, starts to say, hey, you know, even we gave you a couple of months, you know, leeway on your billing practices, but they got to change. Or, you know, there's buried within those. And I used to read those top to bottom before I would answer an RFP, because the partners generally wouldn't, and I would say, if you are, if we, if we submit an RFP answer in this we are agreeing to the following. And here's what it here's what it looks like. And and not only are they asking for discounts, they're asking for us to freeze rates for a certain period of time, they're asking for certain kinds of value adds they're asking for certain, you know, there's a lot in those and and I would encourage anybody out there who is in a position to maybe even to raise their hand and take over the somewhat arduous task of of tracking compliance on Those on those outside council guidelines, that will be a massive benefit to your firm, and you'll get many kudos on that, and you're going to learn a lot. You're going to learn a lot. So that sounds great. We all, I'm sure you know, Steve will have some other conversations about our our other professional staff folks over time. I know you've got a lot of insights into the CMO world, into the CFO world, into into some of the other C suite worlds. So you know, we'll tap into that over time. And is there anything else you want to cover before we before we wrap,

Steve Nelson:

not really. I just think it's just a matter of you know that we think this is a growing a growing area, and that we're going to see leadership start to shift towards people who understand how the law is practiced and how the clients interact with the firm. I think we're going to see that that doesn't, I mean, it's not going to be true in every case. I mean, right? See, CFOs are, you know, they're, they're very experienced people, and they, you know, they've done a good job running CEO firm. So it's not, it's every firm's going to have a different view of it, but I think that we're going to see this become an option for firms, you know, in terms of how they how they're managed? Well,

Murray Coffey:

let me write a couple of checks for you then. So those law firm department leaders who are kind of thinking of what's next and sort of what's next for their firms, you may want to give Steve a call just to just to get further insights into what he's seeing and what's happening in the marketplace, and maybe even, you know, talk about the qualifications of of who you would need to hire in this kind of a role, and also those people who are, who are possibly in the in the pipeline, who might be interested in going in, into this direction. I know Steve well, and you give him a call, he's going to call you back, one of the few recruiters who will so encourage you to do that. It's a, it's a one of the things that Steve and mccork group really do well is is monitor the market to see what's what's around the corner. They're great at understanding what the market is today, and more importantly, they've got a good insight into what's coming around the corner. I think this conversation is great example of that. One

Steve Nelson:

of the things that this goes back a few years, but I wrote an article, you know, three or four years ago about this phenomenon where where it's coming and so anybody who would like to get a copy of. Article, drop me a line, send me out to you,

Murray Coffey:

yeah, yeah. And if possible, we'll, we'll put it into the show notes as well. So we'll talk about that offline, Steve. So with that, we'll close another successful episode of of Steve's rules and and happy, happy beginnings of the fall across the country, we are we are excited to see the weather cool off a little bit, at least here in Texas, right, absolutely. All right, Steve, we'll talk soon. All right. Have a good labor day. You too. Bye. Bye.