It's Not Whether You Win or Lose, it's Whether Your Scorecard is Balanced

Seminal business/management books are few and far between, although you'd never guess that walking into your typical Barnes & Noble and knee-capping yourself over the inevitable piled-high/piled-deep table displaying the combined wit and wisdom of wannabe guru's.  My own pet theory as to the prodigious and perennial output in this genre is that far far more are bought than are read.  If you then discount the small percentage actually read by the minute percentage managers actually attempt to implement, you begin to understand deforestation.

Our text for today, however, is, I believe, an exception.  A decade after it was published, it has staying power, and if  you're not familiar with it, my purpose here is to remedy that.  "It" is The Balanced Scorecard:  Translating Strategy into Action, by Harvard Business School Professor Robert Kaplan and his colleague David Norton.

Caveat lector:  The Balanced Scorecard reveals its quasi-academic roots in a modest degree of indulgence in jargon and overly complex non-Anglo-Saxon phrases to describe intuitively simple concepts; but it's worth going back to the primary source, as it were, to fully understand the insights on display. 

The starting point is two-fold, and simple:  First of all, there is more to measuring organizational performance than the purely financial metrics we're all familiar with.  Intangible relationships, professional development and satisfaction, prestige and esteem, for example, are all genuine elements of a "high-performance" firm.  Thus senior management should strive to give the firm a "balanced scorecard"—one incorporating more than one-dimensional financial measures.

Second, once the "balanced scorecard" is constructed, you need to move from using it as a measurement tool to using it as a managerial tool.  Professional development being short-changed?  Client satisfaction not being rigorously and unblinkingly evaluated?  Now that you know, you need to do.

That's The Balanced Scorecard in a nutshell.

Now, ten years later, The Harvard Business Review interviews Kaplan and we learn how his thinking has evolved.

Evidently, his goal is to help explain how to make the high-level concepts in the original book concrete, operational, and programmatic. 

He starts by observing that every high-functioning organization seeks "synergy" between its parts, but that achieving that "require[s] more than a concept and a strategy."  It requires, in a word, "alignment:"  Alignment between the high-level strategy and the way the firm actually operates and gets stuff done.

How do you achieve that Holy Grail?  (Lawyers will like this answer.)  By processes, carefully designed and faithfully implemented.  The alignment discipline should be:

• cyclic (think budgeting cycles);
• top-down driven;
  • from executive committee/managing partner
  • to practice group leaders
  • to partners
  • to associates
  • and to staff

Kaplan claims, not without justification, that "Organizations that master this process can create competitive advantages that are difficult to dislodge."

In the interview, Kaplan, ever the Harvard Business School professor, proceeds to a case study, of a firm called Sport-Man, Inc., and how it evolved from a waterproof work-boot manufacturer in the 1920's to the supplier of choice for boots for the US Army in WWII to a mall-saturating retail giant in the late 20th Century.  Suffice to summarize that, using the balanced scorecard, Sport-Man was able to pull out of a saturated-marketplace threat to its competitive position, and slump, in the mid-1990's by embarking on its first diversification effort in 30 years.

But back to the premise:

• Organizational performance cannot be summarized in the unitary dimension of $$; and
• Once you define what the other, less tangible, factors are (the "balanced scorecard"), you can not just measure them but manage by them.

If you delve into the original, you should also know there's a sequel published in 2000, The Strategy-Focused Organization.  I haven't read, and cannot vouch for, the latter.

GE & Harvard On How To Pick Your Next Managing Partner

We know from life in general that people excel differently depending on the circumstances.  Some are natural schmoozers, some highly analytic, some of us lone wolves and some of us can't work without a crowd.   Does the ghastly cliche "finders, minders, and grinders" come to mind?

Here's your next challenge:  Put this truism about human nature to selection of your next managing partner. 

Can't be done, you expostulate?!   It's all politics, all the time; or it's seniority, or it's those intangible factors that can't be adequately summarized in generalizations?  Then consider this:  GE, in combination with Harvard Business School (neither organization intellectually challenged when it comes to organizational dynamics) studied the resumes of GE managers to categorize them into the following categories:

• cost cutters
• growers, or
• cycle managers.

For example?  At GE, the appliance and lighting businesses, in mature industries with union work forces predominant, called for the cost-cutter mentality.  On the other hand, aircraft engines, power systems, and transportation systems were and are cyclical, requiring careful stewardship of capital.  Finally, GE Capital, plastics, medical systems, and NBC were growth areas.

Now the acid test:  Using twenty GE managers who were hired away into different companies, they compared the executives' profile they had on h and to S&P industry reports categorizing the new company they were hired into.  Nine of the 20 were deemed a match, the other eleven a mismatch. 

Ready for the bottom line?

• Among the "matches," the average annualized "abnormal" (different than trend) returns were +14.1%
• And among the "mismatches," the same figure was -39.8%.

Thanks; glad I got your attention.

Case studies follow:

• Paolo Fresco, who at GE had spearheaded growth into Europe, became chairman of Fiat in 1998, a firm not, to put it mildly, cost-competitive.  Pursuing investments in web presence and acquisitions aimed at diversification, he helped push the firm into an extended liquidity crisis which he proposed to solve by:  Divesting the automotive business!  Resigned in 2003.
• John Trani, leader of GE Plastics long growth trajectory, left in 1997 for Stanley Works, the tool and hardware manufacturer with flat sales and cost control the order of the day.  Three years later his abnormal annual return was -10%.
• Carlos Ghosn, not a GE alum but included because of his extraordinary visibility, earned the moniker "le cost killer" for his role in the Renault turnaround, having already instilled similar discipline at Michelin, is now a legendary success at integrating Nissan.
• Lastly, Steve Bennet, EVP of GE Capital, was hired as CEO of Intuit in 2000 to drive growth by energizing and focusing the decentralized, consensus-driven Intuit culture; over his first five years, he delivered average annual revenue increases of 17% and annual income increases of 24%.

If you like those numbers, why not pick your next managing partner based on what your firm needs based on where it is in its growth trajectory and among its competitive set?  Who among your senior leadership—and don't tell me there's one and only one obvious choice (unless you've already gone through the above exercise)—has the skills best matched to your firm's needs for the next five to ten years? 

Not all skills are a match.

Your Post-Merger Checklist

Mergers, globalization, consolidation: I've heard all about it. Time to tell me something new. Is that your feeling?

Then let's talk about post-merger leadership, and what you could actually do to make a difference if the seemingly-inevitable comes to pass.

For starters, the state of the art in corporate-land is fairly highly refined at this point. As McKinsey puts it, integrating two firms following a merger has become a "sophisticated exercise in recent years. Businesses are more disciplined and systematic about identifying and capturing the available synergies. Project tools and techniques are now more subtle and refined." Moreover, senior management is less concerned about wildly overpaying or about ignoring the fundamentals of integration.

The problem is that even mergers that look smart and savvy in the short term—providing real complementary reinforcing strengths, and cost savings—can end up leading to professional defections and eroding client loyalty in the longer run. McKinsey decided to study the problem, and, McKinsey-esque, undertook research:

"Our research, involving a detailed survey of 167 deals and in-depth conversations with nearly 30 CEOs who are veterans of the merger scene, has convinced us that what's often missing is a well-defined, imaginative, energetic, and outward-looking role for the CEO and senior managers."

Permit me to reiterate that point: "a well-defined, imaginative, energetic, and outward-looking role for the CEO and senior managers."

In other words, you matter.

And how, precisely, can you "matter"? What separates the winners from the losers, after the initial cheering has died down and the integration teams have gone back to their day jobs, are rising to these challenges:

• Building—fast—a new senior management team (not to be confused with the short half-life integration teams)
• Crafting and delivering a believable and inspiring "story," since we human beings respond to stories viscerally, and to facts and figures only intellectually
• Insisting on and reinforcing a performance-oriented culture (to avoid the temptation to engage in a period of internal navel-gazing that is death in these circumstances)
• As a complement to the external performance focus, stressing the importance and benefits of the merger to clients, prospective clients, and recruits
• And lastly, and perhaps most subtly, striking the magic balance between speed of execution in integration and lasting time to develop the wisdom to reflect on the value of the newly created entity.

Exhausted yet? Well, guess what: You have no choice but to step up to this particular plate.

Isn't that obvious, however? Perhaps surprisingly, even though it should be blisteringly obvious, in McKinsey's experience with post-merger integration "senior managers so often fail to define a high-impact role for themselves" that they actually had struggle to understand why.

The "most fundamental" reason is that too many senior managers simply don't understand what they can contribute to add real value. The complexity of the task seems overwhelming, and faced with what feels like managing through cotton batting in a fog, these un-visionary managers preoccupy themselves with attending steering committee meetings and dealing with the ad-hoc'cracies as they arise. This begs the question: Why did we think this was such a spiffy idea to begin with?

A second cause of failing to articulate "the vision thing" can be arrogance—most corrosively, arrogance towards your very merger partner. (In which case, look for it to be promptly reciprocated.)

Finally, you can view the post-merger integration as "merely" a technical challenge, best delegated to people lower down the food chain in HR, IT, finance, facilities management, and so forth, who are familiar with all the messy details and protect you from having to get your hands dirty or finding yourself in a position where operational-level ignorance might be exposed.

I personally will never forget the near-scarring experience of asking the two CIO's (jointly, by the way) of two AmLaw 100 firms in the process of a merger what "strategic direction" they had received from the top in terms of what the combined IT infrastructure should look like, and being greeted with a near facsimile of the quizzical and bewildered look portrayed by your faithful dog when you've just said something incomprehensible, but which clearly calls for action on their part. And when the answer inevitably came, of course, it was "no guidance whatsoever."

Job 1, therefore, is to establish a crystal-clear definition of who will be calling the shots at the top, even before the task of implementing the integration begins. This can, let's face it, be the toughest part, but you can brook no indecision or lack of clarity: Ruffle feathers if you must, and get it over with, or else you'll find your firm(s) at sea several months down the road, and not only those who needed to be given bad news will be unhappy, the rest of your partners will be as well.

Real integration cannot be superficial, and differences cannot be glossed over. Again, address them unblinkingly now or face corrosion from the inside later. As one (un-named) manager who'd been through this put it later with chagrin: "For months we were really two teams and we knew it. But we just didn't want to deal with it, so no one raised the issue." And as hard as this can be at the top, the genuine integration needs to go all the way down. Experience seems to demonstrate that the best way to deal with this is to turn people's focus from the internal issues to the external: Clients.

Your indispensable ally in this campaign will be the compelling, unmistakable, logic of the merger itself. ("What?!," you say, "it might not be obvious"? Back to Square One.)

"As UBS president Peter Wuffli (whose global bank has grown on the back of a string of acquisitions) observes, "One of our criteria for a deal was that it had to be strategically obvious—not just explainable but obvious.""

Assuming—perhaps an heroic assumption—that the overriding logic of the combination speaks for itself, your next task is to build a new, and unified, "performance culture." This over-used phrase

is, however, something you cannot avoid. Since you already have a vision of why the new organization should exist (you do have that, don't you?), focus everyone's attention on that goal:

• Avoid us vs. them; it's not about who won and who lost, or who was the acquirer and who the acquiree.
• "Survival of the fittest," or defaulting to what you think is "best of breed," mixing and matching essentially unchanged Lego blocks from each firm, is rarely the answer either
• Your true focus, again, needs to be external, on clients and delivering unparalleled service.

And it starts with you and the senior team. As the CEO of Suncorp puts it:

"You can't just stand up there and tell people what the new culture is going to be. You have to define in your own mind what you want the new culture to stand for, do it for a little while, and then talk about what you have done."

Above all, it cannot be reiterated too often, focus on your clients. Navel-gazing just invites competitors to start poaching. Here's a wonderful phrase that encapsulates it:

As 3Com's Eric Benhamou cautioned, "'Acquiring customers' is a very arrogant phrase. The customer has to want to be acquired."

Which puts us back where we began. Focus on these things, and win merger integration war:

• Your top team
• The story
• A performance culture
• Clients, and
• Learning through the integration itself.

And bonne chance.

A Prosaic Topic? Guess Again

Today we visit the prosaic topic of conflicts-checking.  I've come to believe it's not so prosaic after all.

Consider:

• The highly-publicized referral to the UK's Law Society Regulation Board of two senior Freshfields partners, announced last week, culminating a two and a half year investigation into Freshfields' representation of the corporate raider Philip Green when he attempted (unsuccessfully, in the event) to take over the fabled UK retailer Marks & Spencer.  What was the problem?  Simply that Freshfields had previously advised Marks & Spencer on a retainer basis, which Marks & Spencer pointed out to the court within days.  This is how Legal Week summarized it 10 days ago:

  "Today - finally - after well over two years of deliberations, the Law Society has announced that Barry O’Brien, the partner who led on the deal, and UK head of corporate Tim Jones have been referred to the Solicitors Disciplinary Tribunal (SDT) “over the claim that Freshfields were conflicted”.
  
  "O’Brien and Jones are two of City law’s biggest names. O’Brien was a contender for the Freshfields senior partner job before he decided to step out of the race because of the ongoing threat of a tribunal referral. Jones is regarded by many Freshfields partners as a potential senior partner. The embroilment of two such high-profile and respected City figures in a SDT hearing is unprecedented."

  
  Freshfields' defense? Essentially, as recounted here, that its prior work for M&S was not material and that they'd erected an internal Chinese wall in any event.   All that can be said at this point on the ultimate question is, "We shall see," but the notoriety of even an alleged conflicts offense is something no one needs.
• In a conversation I had with an AmLaw 25 partner recently, he recounted with fervor his frustration at his own firm's conflicts-checking system, which took three days to respond to what he thought was a "drop dead simple" analysis of a potentially major litigation representation.  After three days, the potential client lost patience and went elsewhere.
• Three out of three CIO's of AmLaw 25 firms to whom I posed the question in the past few weeks have said they believe that conflicts-checking is one of the most complex tasks firms face because, as one put it, "it cuts across every facet of the firm—absolutely everything."
• When I'm asked if I can envision the legal industry evolving towards a structure really like the accounting firm structure (i.e., a handful of behemoths and no name recognition below that), my answer is always, "No," for a variety of cultural and economic reasons (including the intense localness of law, especially litigation, and associated national, regional, and provincial traditions), but the most non-negotiable fact of life distinguishing our profession from accounting is our conflicts rules.  Simply put, the bigger your firm, the more likely you're going to start tripping over conflicts.  Who among our clients—and who among us—would prefer a future of only half a dozen firms to choose from?

If (a) conflicts matter; (b) many firms manage them poorly; and (c) their importance is only going to increase, then what is anyone doing about it?

One answer is to enhance the power of "enterprise search," which means the ability to search across all the various databases inside a firm—finance and billing, document management, human resources, marketing, client contact systems, etc.—from one unified interface.  (To be sure, each of those databases is individually searchable today; enterprise search means being able to search once across all instead of searching once for each.) 

Firms providing the ability to do this include, for example, Recommind and Autonomy.  I happen to have had personal experience with the products of each and, by and large, they perform as advertised:  Once, and that's a big once, they've been tailored to appropriately "hook into" each of your disparate databases.  (And while we're on the topic of tailoring appropriate hooks, don't overlook the reality that those other databases will change, be upgraded, come out in new versions, etc.) 

Another option is to look to outside providers such as Legal Key, to provide services that attempt to look across internal and external data sources (such as Dun & Bradstreet).

But what is to my mind the single most important issue raised by the "conflicts-checking" exercise is a strategic one:  Is this client/matter one we want? 

• Does it fit with our long-term practice migration goals?
• Would it foreclose us from accepting business from a specific potential client we're ogling jealously?
• Is it in a low-rent district (commodity practice area) we want to escape from or minimize going forward?
• Even if this particular matter is small potatoes, can it provide us entree to a sexier world?

"Conflicts," in other words, while it may be all about database searching and green eye-shade yawn-inducers, can be one of the most critical issues for senior management to attend to.  It is, by its normal name in corporate-land, "new business intake."

Need I remind you that if you get it wrong, you may be making the close personal acquaintance of Messrs. O'Brien and Jones?

Canada's "Law Times" Interviews "Adam Smith, Esq."

Canada-based Law Times is out with an interview of yours truly in its current issue.

When the reporter and I met, some weeks ago here in Manhattan, I thought that through my persistent questions I had learned more about the Canadian legal marketplace than he had learned about me, but the piece is wonderfully written and, I am pleased to report, an extremely fair and professional overview and summary of my thoughts on topics such as:

• The reasons I created "Adam Smith, Esq." to begin with.
• The ongoing transformation of the structure of the legal industry.
• The ineluctable pressures for firms to move towards (but not to) a more corporate-like managerial model.

The reporter's contribution is to provide perspective on the Canadian marketplace today, including these fascinating "comparables:"

"Yet our firms [in Canada] are as large as many of those in the AmLaw 100. Even assuming Canadian law firms bill 20 per cent less than their American counterparts, it's likely a number of the biggest firms have revenues upwards of $400 million. Those figures would put them in the 300th position in terms of the largest companies trading on the TSX, just behind Tim Hortons and ahead of Torstar Corp., JDS Uniphase Corp., and most income trusts. Or it places them as the 184th largest private company, ahead of Citibank Canada, but behind Rockwell Automation.

"With operations like that, I agree with MacEwen that professional management is only a stone's throw away. We're already seeing it in the way law firms have built out their support structures like IT, marketing, and human resources. Better management practices are essential to manage such growing operations."

All in all, Canada is in many ways a microcosm of the US:  The same span of multiple time-zones, the same multi-metropolitan area centers of activity and influence (as contrasted with, say, the UK, where London is the beginning, middle, and end of the story).

How our north-of-the-border comrades evolve will be fascinating to watch.

"$500,000 Is the New $5-Million"

Within 24 hours of each other, both The Wall Street Journal and The New York Times wrote pieces on "then and now" re the dot-com bubble.  Surely unintentional as it was, I think they provide nice counterpoints to each other, and also give us a small window into what "innovation" means.

Since the WSJ's piece was first (yesterday), let's recap its highlights:

• Recent economic research suggests that "rather than having too many entrants, the period of the Web bubble may have had too few; at least, too few of the right kind."
• The "right kind" were precisely those startups that eschewed the reigning wisdom of the day, summarized by the slogan, "Get Big Fast."  After all, there's only room for so many Amazon's, eBay's, and Yahoo's.
• The most successful startups—survivors today—were niche spots like wrestlinggear.com, which sells equipment to high-school and college wrestlers.  But by definition it's never going to "get big," and certainly not "fast."
• "It turns out there were lots of nooks and crannies for entrepreneurial action," says Prof. Kirsch. "But those nooks and crannies might have been $5 million or $10 million businesses -- well worth doing, though not necessarily for VCs."  ("Prof. Kirsch" is David Kirsch, professor of management at the University of Maryland's business school and one of the authors of the study.)

Today, the NYT weighed in with "For Start-Ups, Web Success on the Cheap," which recounts the now-familiar (to me, at least) contrast in startup costs today vs., say, in 1999.  Using the cross-platform IM company Meebo as an example, they recount that it was started by the three founders each contributing $2,000 from their credit cards.  A month after its debut in September 2005, it was getting 50,000 log-ins daily and needed more servers:  Angels then stepped forward with $100,000, and only after it was well on its way did a "real" VC firm, Sequoia Capital, get a seat at the table.

Likewise, Joe Kraus, founder of the hot/not Excite.com during the boom, said it took $3-million in servers and software to get Excite launched, but his latest, JotSpot (just acquired by Google, terms undisclosed) needed a mere $100,000.   The primary reason?  Dirt-cheap open source software running on commodity Intel (or AMD) hardware, as opposed to Sun Solaris server farms with proprietary everything. 

Of course, not everyone's happy with this plum state of affairs:  The VC 's, in particular, are suffering a disconnect between the scale of their business model and the scale of today's startups.  Here's the problem in a nutshell:

"The problem is that as a VC, these companies don't soak up enough capital," [Paul] Kedrosky [a venture capitalist and blogger] said.

To succeed, a firm with a $250 million fund needs a handful of investments from $10 million to $15 million that can return payouts of $150 million or more, Mr. Kedrosky said. But even a twentyfold return on a $1 million investment will not do much for the success of a large fund, Mr. Kedrosky said.

For smaller funds, the economics are far different. For starters, those who manage them do not earn huge management fees. Instead, they are almost always among the largest investors in the fund, so they will earn a return if the investments pay off. “I think large venture funds in this economic model have a challenge,” said Josh Kopelman, managing director of First Round Capital.

Or, as Michael Maples, himself head of a $15-million venture fund that targets small footprint investments, puts it, "I came to the conlcusion taht $500,000 was the new $5-million."

All well and fascinating, you are probably saying to yourself about now, but what has this to do with law firms and innovation?

This:

• Successful innovations are by and large not Big Expensive Bangs, but small, niche experiments—"nooks and crannies," as Prof. Kirsch puts it.
• "Fail early and small" beats "fail late and big."
• Likewise, "win early and small" tends to lead to "keep winning, incrementally bigger and bigger."

So when you're considering "innovation" at your firm, let a thousand flowers bloom.  But have the discipline of the steel-nerved trader (the only ones who survive):  Be merciless about cutting your losses, but be profligate about letting your winners run.

Successful innovation, in other words, is for agnostics. Admit that you don't know in advance what will work.  (If you did, would you be practicing law?)  In the long run, only the market (your partners, your clients) will tell you whether an innovation is a hit or a dud; so the more experiments you can seed, the better your odds of some significant victories.   And then, sure, you can say, "I knew it all along...."

The 18th Century Is Alive & Well in New York

A few months ago an online flurry of commentary erupted over proposed amendments to the rules that govern lawyer advertising in New York.   Among other things, the proposals would define the term "advertisement" extremely broadly as any public communication made "by . . . a lawyer . . . about a lawyer."    Interestingly, it explicitly includes all online communications, including websites, emails, and instant messaging.  There is no requirement that the speech be commercial or related to the lawyer's practice.

The rules also require that every time a site (such as "Adam Smith, Esq.") is modified—every time I publish a new piece, presumably—it must be printed out in hard copy, stored for one year, and an additional copy mailed to the New York attorney disciplinary committee for its records.  As if this weren't antedeluvian enough, the site would have to be branded with the words "Attorney Advertising" in a font at least as large as the largest font on the page (so, about 60 points to match the banner title).

There are also draconian restrictions on TV and print advertisements, which fortunately don't concern me, but which would be laughable if they weren't so bizarre:  No client testimonials; no images of judges, courtrooms, or courthouses; no use of "nicknames, moniker, motto, or trade name[s]"; and God forbid nothing "about results the lawyer can achieve [or] statements describing or characterizing the quality of the lawyer's or law firm's services."

After you've picked yourself up off the floor at the news that 18th-Century thinking is alive and well (and pre-Bill of Rights 18th-Century thinking, at that), you might take a look at my letter offering comments on the proposal.  Comments close November 15, and should be addressed to:

Michael Colodner, Esq.
Counsel
Office of Court Administration
25 Beaver Street
New York, New York 10004

We shall see whether sanity, or medievalism, triumphs in New York.

---

Update:  Thursday November 9, 9:10 am

Charlie Green, co-author with David Maister of "The Trusted Advisor", is, I'm pleased to report, a regular reader of "Adam Smith, Esq.," and he wrote concerning this piece as follows:

Wow.

(And here I thought the 18th Century was the age of enlightenment, ha ha).

Your comments are well-taken (and well-written). But what I find even more interesting are the implicit assumptions I read into the proposal. In particular, it seems to me the legal profession has a profoundly arrogant view of its clients.

What I see as implicit in advocating such wide-reaching proposals are the ideas that
a. people are incapable of judging legal performance,
b. lawyers are inherently out for no good unless they are restrained,
c. "selling" is a dark art that is inherently manipulative, and
d. when said dark art is in the hands of said evil lawyers, clients are at huge risk.

Leaving aside the temptation to make jokes based on point b., all of them reflect a view that lawyers have huge influence and clients must be protected from information about them--for their own good, I'm sure.

What little faith in the market for services! Somehow people navigate the waters of auto and life insurance; figure out how to express preferences for physicians; manage to hire accountants, and choose spiritual advisors. But an MD is not considered a requirement to select a doctor; lack of a CPA doesn't keep us from making intelligent assumptions about accountants. In fact, it is precisely our content ignorance as clients which makes us want to hire an expert; if we knew enough to technically evaluate them, we wouldn't need them in the first place.

This is why a market in free speech, aka sales, is so helpful in selecting professionals. What makes lawyers think that open dialogue, the presentation of the equivalent of "bedside manner," or the opportunity to see and experience a lawyer as a working human being is somehow a negative? It is, to the contrary, precisely how most of us would prefer to choose a lawyer.

Good practitioners these days are a million miles away from the hustler peddler cartoonish caricatures of old. Clients are perfectly capable of making intelligent, nuanced decisions based on complex assessments of trust, the lawyer’s ability to comprehend the clients' problems, and ability to manage client expectations while navigating the legal world.

Why deny clients the ability to make up their own mind? Arrogance, no matter what the dressed-up, snooty motives of "it's for their own good," is arrogance nonetheless.

Clients just want to be free to choose.

---

First of all, Charlie:  Thanks for your insights.

And I emphatically chime in:  The fundamental philosophical fault with the Neanderthal attitudes so conspicuously on display at the New York State lawyer disciplinary authority is profound distrust of both lawyers and clients, and a lowest-common-denominator assumption that, left to their own devices, these p eople will do self-destructive things. If that's  your approach—what I like to call, "managing for failure"—then disarming everyone in the room is indeed logical.

"Clients just want to be free to choose," indeed.  Informed, knowledgeable, rational choice.  Can't we all just be adults here?

The "Adam Smith, Esq." Monthly Book Review: "The Authentic Adam Smith," by James Buchan

James Buchan, The Authentic Adam Smith (W. W. Norton & Company, Inc.: New York, 2006) has recently come out and it is an irresistible selection for this month's "Adam Smith, Esq." Monthly Book Review.  I hope you understand.

Buchan, a Brit, lives in Norfolk, England, and has been a foreign correspondent for The Financial Times as well as the author of Frozen Desire, an examination of money through history, as well as Crowded with Genius, a study of Edinburgh during the Enlightenment.  Better credentials for profiling Adam Smith are hard to imagine.

Which Buchan does succinctly:  In the small span of 145 not-large pages (not counting extensive endnotes).  And what story does he tell?  Essentially, a more complex and sophisticated view of Adam Smith than those ideologues of left and right today who would denounce or embrace him as a fairly one-dimensional proponent of laissez-faire, free markets, and limited government. 

Smith, in fact, viewed himself not as an economist (the term had barely been invented), but as a moral philosopher.  Buchan stresses the importance of The Theory of Moral Sentiments, which predated The Wealth of Nations by 17 years, and implicitly critiques too-casual "followers" of Smith today who invoke his name in ignorance of what Smith actually wrote.

As for Smith's personal life, it's safe to say he was an eccentric preoccupied with the life of the mind.  He never married and lived much of his life as an adult with his mother.  Although he became wealthy through tutoring the Duke of Buccleuch through a multi-year tour of the European continent, followed by a lifelong retainer of £900/year (more than the most highly-compensated Scottish judges at the time), and considered himself "as affluent as I could wish to be," it was only after his death that we learned he gave away most of his wealth to charitable causes.

An unexplored—or unknown, hitherto, by me—aspect of Smith's thinking were his views on maintenance of the British Empire, and specifically on control of the American colonies (recall that Wealth of Nations was published in the almost preposterously apropos year of 1776).  Smith's view, in a word?  Set America free.

He came at this both through his economic analysis of matters, and from his experience of military affairs.  The second first:  As Buchan puts it (p. 112), "Smith, who like many Scotsmen of his social class had wide connexions with military officers, was able to see that an American militia, once it had served long enough to achieve military discipline, might be a match for the redcoats."

And as for the first? He believed that Britain's attempt:

"To prohibit a great people, however, from making all that they can of every part of their own produce, or from employing their stock and industry in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred right of mankind."

And there's more:  He foresaw the United States eclipsing the mother country economically. 

"Such has hitherto been the rapid progress of that country in wealth, population and improvement, that in the course of little more than a century, perhaps, the produce of American might exceed that of British taxation.  The seat of the empire would then naturally remove itself to that part of the empire which contributed most to the general defence and support of the whole."

As the expenses of the American war effort escalated, Smith became convinced of "the real futility of all distant dominions."

Smith died in Edinburgh on Saturday, July 17, 1790, aged 67, after a few years of declining health.  In February of that year he remarked:

"I meant to have done more; and there are materials in my papers, of which I could have made a great deal.  But that is now out of the question."

The night before he died, he took leave of his friends at dinner saying, as he left the room, "I believe we must adjourn this meeting to some other place."

Pick up Buchan's book; you'll learn much in short order, and may even, familiar as you believe you may be with Smith, learn something new.  I did.

November 6, 2006

November 3, 2006

November 1, 2006