Heller Ehrman – Victim of Mushroom Management Style?

I want to point out an excellent comment made by a Hellerite over at the Above The Law blog.  As I’ve said before, much of the name calling and finger pointing that some people feel must be done should be done over at ATL.  But this comment was an anamoly for ATL’s usual sophmoric and frathouse type comments.  After I read it, I realised it really should have been made here at Heller Highwater.  No matter – I am just glad the person had the courage and patience to put the demise of the S.S. Heller Ehrman in perspective and could craft a well-structured comment.  Read below and see if you agree.

And I appreciate the props the commenter gives Heller Ehrman support staff towards the end.  He/she points out what I call the mushroom method of management: mushrooms grow best when they are kept in the dark and you keep feeding them manure.  All I have to say to my fellow mushrooms is: “Cross over children. All are welcome. All welcome. Go into the Light”

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Disclaimer:

I worked at Heller for well over 7 years. When I arrived at Heller they were on the top of the charts and I watched, sadly, as the firm slowly collapsed. This commentary is based on what I saw and experienced while being employed there. I worked in both an administrative capacity and as a general employee.

Experience:

I have/had worked at law firms for nearly 15 years by the time I landed at Heller. I have worked at large law firms and small law firms and my previous employment at a satellite office of a large firm, though enjoyable, left me feeling like I was a small cog in a big machine. The managing partner did not know my name and the rumors of merging caused me to jump ship to Heller.

The early years:

My entrance into Heller at the initial outset was a good one. They were riding high and doing great business. My office (I was, again, in a satellite office), was the “jewel in the crown” and it was not uncommon for the shareholders and associates to bill well over 100% of their time. During this period of growth, the office I was in was able, due to its success, to allow Heller to expand in other cities and provide a cushion, if you will, for those offices that were having a slow time “ramping up.”

During these years the office I was located was basically allowed to do what we wanted. We were able to suggest policies and procedures and many of our ideas were accepted as firm-wide policies.

The shift in business:

Then came what I felt was the downfall of Heller. In 2003, if I remember right, I was in a meeting of all the attorneys. It was announced at this meeting that the firm was going to “shift” its priorities. The new direction was to focus on those big clients. Become a “one stop shopping” for them. The firm was going to spurn small businesses – deals under $50,000 or so and pass those off to other firms we had relationships with. The thinking was that we did 75% of our business for the top 20 clients. The plan was to bring in other attorneys, special counsels, etc. and start “selling” ourselves to the clients: “Why take your business ____ when we can do it here?!”

Two problems with this:

1. Heller had/has a mindset of billable time that doesn’t fit in terms of market. You can charge X amount of dollars in New York but you can’t charge the same X amount of dollars in Seattle or Anchorage and, soon enough, there were issues with the “Special Billing Rates” or, “Sprates” as they became called. The Client might not mind spending $300 per hour for Heller to do litigation but they might have an issue of spending $300 per hour for Heller to do tax research. This was a CONTINUAL problem with the office as more “Sprates” became the norm. This also caused issues in the head office in terms of resentments between offices. As much as Heller always did a great job of cross pollination of offices and getting attorneys involved – the issue of billable hours and what was charged was a bur under the saddle of the accounting department. This was an issue that, I don’t think, ever got resolved.

2. Heller did not take into account the relationships these clients had with other offices. And though they expected (hoped?) that the client would be more than willing to shift their other types of business to Heller – it did not really happen. Thus some of the Special Counsel attorneys or associates hired specifically to provide that service quickly found themselves out of billable work to do.

The Associate Problem:

This new focus had a quick adverse affect on the associate core. Soon after this announcement I met with a well liked long time shareholder who was in the process of leaving. I asked him his opinion and gave him my own. In all the years I’ve worked in law, there was a standard operating procedure in terms of the “shareholder” or “partner” track. Basically it was this:

1. Get out of law school and enter law firm.
2. Work on cases, assist Shareholder/Partner in the process of work.
3. Shareholder/Partner mentors the Associate on the rules of law and how to navigate the law firm mentality.
4. Shareholder/Partner shows Associate how to drum up business, create client networking opportunities, work the system and create long lasting fruitful relationships.
5. Associate starts to bring in a small book of business.
6. Associate’s book of business starts to provide more business for the attorneys in the firm.
7. At some point the Shareholder/Partner Committee looks at what the Associate as brought to the firm and after careful evaluation they decide to make the Associate a Shareholder or Partner.

With this change of focus in the Heller mentality, this was no longer a viable methodology. To what, then, were the Shareholders going to judge the associates? The only thing they could really track, and that was billable hours. So, basically, if you wanted to become a Shareholder at Heller you better bill a helluva lot of billable hours. If you wanted a life – don’t look at Heller.

When I posed this scenario to the exiting Shareholder he confirmed that I was, indeed, correct in my thinking.

I was not surprised when quite a number of associates left soon after this change of thinking went into play. And who could blame them?

Creation of Practice Groups:

Or, what I refer to as: “Putting square pegs into round holes.”

Within a year or two of this re-thinking of client support, the market had seemingly collapsed and Heller was in a state of disarray. It began to shut down some offices and the billable hours were no where near the “glory days” of over 100%.

When something bad happens, you usually return to those things that make you feel stable. Whether it’s Mom, Apple Pie and Baseball – Law Firms go back to hunkering down and re-thinking. And that re-thinking was to try and regroup into one juggernaut firm.

Thus the creation of Practice Groups.

Though they had been around in some way shape or form for some while the firm made a push to implement them in a more forceful way thus creating a layer of bureaucracy that had not been in existence.

And if you’ve got a litigation practice group, and a business practice group, why not create practice groups for departments, too? Marketing department, Records department, Accounting department, Human Resources, etc. Suddenly creating a level of middle management that had not been there before.

In all my years of working in law the one thing I’ve seen of most middle managers, though not all, is that they spend their time doing “job justification” instead of actually doing their job. “Job justification” is usually defined by creating work that is neither important nor needed but sounds good. Implementing policies that either aren’t thought through, or don’t work. And then forcing un-thought-through processes on the very people they are designed to help. Causing untold anger and friction.

What about the Shareholder Bonuses?:

Ahh, yes, the final nail in the Heller coffin. Doesn’t it always come down to money?

By late 2006 the firm had begun looking for ways of bringing in more business. Sending attorneys around the country, trying new things, creating more relationships. Or attempting to. With little success.

It was the goal of the managing shareholder to provide bigger bonuses to the shareholders. But how? The easiest way was to shrink the people taking pieces of the pie but you can’t just layoff workers who provide such important support. Nope? You find a way around it. You out-source them.

Within two years most every support department (not counting Secretaries and Paralegals) had been outsourced and the rumor of million dollar bonuses was being spoken about in certain circles.

What this did, though, was create another layer of disconnection between staff and attorneys. Where everyone was “in this together” – a sudden “us v. them” mentality started to be created. For those who had NOT been outsourced, the interaction of employees that were Heller and now were no longer Heller but still roamed the halls was viewed as: “Well, that’ll be me in a couple months.” Employees who had been outsourced felt more like numbers instead of names – not only were they treated differently, they were not able to participate in some things such as “staff appreciation” or “holiday bonuses” – thus creating another level of discontent. The outsourced members felt like “second class citizens.”

Don’t underestimate the brains of your employees:

When I was still at Heller (I have since left) the staff knew everything that was going on. As much as the management and shareholders tried to keep them in the dark – the staff knew far more than the management realized. Suzie Secretary didn’t get where they were with a 50 IQ. But, sadly, management continued to treat the staff like they were idiots. (Case in point, before I left there was a “mandatory” meeting with some of the upper management that didn’t bother to tell everyone what the meeting was about – turns out it was a “tell us your issues” meeting – but it left more people frustrated and angry than “listened to.”) Staff gives up their lives for a company – the company needs to respect them enough to be honest with them – damn the ramifications.

Final comment:

Heller WAS good place to work. I will miss it and my many friends who worked there. But I will not miss incompetent middle managers who did nothing.

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8 Responses to “Heller Ehrman – Victim of Mushroom Management Style?”


  1. 1 Yet another ex-Hellerite 1 October 2008 at 10:26 am

    At least JJ has left the building. Good riddance.

  2. 2 Sorry-ex 1 October 2008 at 10:54 am

    I didn’t write this comment, but I could have. It is typical of what many people were going through. Like most though we had little ability to influence as this was above our pay scale. It was these type of issues which made me re-evaluate my employer and I departed in 2005 (after being there 6 years).

    People like Jean Jones and Bruce Wright were brought onboard to “streamline” operations and administration (read screw employees) and they did a good job at it. No doubt their salaries were structured in a way that they got more vis a vis the more they “saved”. I feel that the director of administration in SF was the most important and powerful position in the firm. Yet the policies, procedures and decisions which flowed down from this position had the most to do with employee discontent. What was even more disappointing was that when complaints were made to shareholders this was usually met with “I can’t do anything to change administrative decisions.” Bullshit! And to now hear Larrabee and Hayden say they are really concerned for staff and focused on finding them jobs is hollow in the extreme! The time to act was 5 years ago! You were warned, you ignored those warnings and hence you failed. Turns out everyone else was right and they were wrong! I sympathize with all Heller staff, but as a word of caution to other law firms… Director of __________ at Heller Ehrman should be enough to preclude them from any positions for which they apply. I continue to have many friends from my Heller days, needless to say, none of them are from management.

  3. 3 HELLboy 1 October 2008 at 11:54 am

    It’s a scenario adopted by many firms: clueless HR rules the staff. What I don’t understand is why wounded beasts like Pillsbury totter on, while Heller bites the dust…

  4. 4 stryder 1 October 2008 at 6:17 pm

    I almost made two years here at Heller. I’ve worked as a legal secretary in SF forever, particularly at large firms, for shareholders. I suppose it’s as good a time as any to air my frustrations with middle management. An innocuous request for information from accounting invariably turned in to a three/four day email string always involving no less than five people. A simple request for numbers, numbers a client had requested, couldn’t be done. It just couldn’t get done — until, sadly, I involved my shareholder! Voila, it’s done. I suppose not knowing “someone” in accounting was the problem, but should it be? It astounded me everytime I was in this position. I worked at a firm for 15 years, where telling somebody “I don’t know” or “it’s not my job” just wasn’t done. What was acceptable: “I’ll find out and get back to you.”

    That’s a small sampling of my trials and travails at Heller. I’ve heard things had changed, but sadly I never knew the Heller of yore.

    I am truly saddened by these events. SF is losing an iconic figure. I wish I had come earlier, before things changed.

  5. 5 Clueless 1 October 2008 at 7:25 pm

    Comment to Sorry-Ex, you are correct with what you say, but Bruce Wright was not one of the bad guys. He was let go because he was one of the good guys. You must remember who came next – Blinky. Now that was a nightmare. When secretaries got their “reviews” that year, Blinky took it upon herself to add her own idiotic remarks like, “she rolls her eyes too much”, or “he was 4 minutes late turning in a timesheet”. And to think she made 6 figures to do that. Disgusting. Does anyone know where she may be at these days? I certainly do not want to end up there – wherever that is!!

  6. 6 Soon-to-be-unemployed 2 October 2008 at 4:57 am

    HELLboy – nah, this wasn’t HRs doing. They never had much of a say on any of the real important issues anyway. They’re in the same boat as the rest of us.

  7. 7 hellerdrone 2 October 2008 at 5:47 am

    I usually don’t weigh in here but I am going to agree with Soon-to-be-unemployed: the people in HR, at least in my experience, have been great and they are for the most part in the same boat as we are. They had the unfortunate circumstance of having to carry out short-sighted policies set by Heller management.

  8. 8 HELLboynomore 2 October 2008 at 12:10 pm

    Fair enough. HR is only the ugly outermost visage of mismanagement, short-sightedness and mendacity by the puppet masters. Obviously they’re not pulling the strings. I find all these business-model postmortems amusing- they forget to mention the one component that informs all the headlines these days– Heller… SIVS, bank crashes, credit freezes, dissembling world markets and the coming Depression (oh yes) — GREED.

    Tip ‘o the hat to E. Von Stroheim.

    I’m off to the bread line…


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