Pro Bono is Profitable: A CFO'S View

What is your law firm's definition of “pro bono?” Seems like a simple enough question, but ask any two lawyers or law firms what “pro bono” means to them, and you are likely to get two or even several different answers.

“Pro bono” derives from the Latin term pro bono publico, which means, literally, “for the public good.” The American Bar Association Model Rule 6.1 defines a lawyer's pro bono commitment as follows:

“Every lawyer has a professional responsibility to provide legal services to those unable to pay. A lawyer should aspire to render at least 50 hours of pro bono publico legal services per year. In fulfilling this responsibility, the lawyer should provide a substantial majority of the 50 hours of legal services without fee or expectation of fee to 1) persons of limited means, or 2) charitable, religious, civic, community, governmental and educational organizations in matters which are designed primarily to address the needs of persons of limited means.”

Motivational Challenges

Administering a successful pro bono program for a large law firm can be challenging. What motivates a senior partner at a prestigious, large law firm to oversee 400 different AIDS victims cases? What motivates the general counsel of a Fortune 100 company to appear in court monthly in a protection-from-abuse action? Will every lawyer have the same level of commitment? Will every law firm permit that level of commitment?

In its July 2003 Am Law 100 article, The American Lawyer published pro bono statistics for the 100 largest law firms in the country. The results are strikingly uneven. While many law firms contribute mightily to the pro bono cause, 70% of the top-100 law firms average less than the 50 hours per lawyer proposed by ABA Model Rule 6.1.

Adding to the challenge is the negative financial connotation that is sometimes associated with a pro bono commitment. Ask many law firm managers what “pro bono” means to them, and all too often you get the wrong answer. Many will take the short-term perspective that a pro bono commitment will cost too much time and money. We have to have xxxx billable hours first! How can we motivate a lawyer to perform non-paying work? How can we reward lawyers financially for non-paying pro bono work? This short-term perspective is counterproductive, even financially, for a number of reasons.

Taking the Long View

Yes, in the short term there will be a cash investment cost to a pro bono commitment, because a law firm will have to fund certain costs of the pro bono engagement. And, yes, there will be a short term opportunity cost in the lost billable hours you otherwise would have collected, provided there is paying work at the ready. But one must look to pro bono work as a long-term commitment to understand the positive effect a pro bono program can have on a law firm's profitability.

Clients care. First, and perhaps foremost from a financial perspective, a firm's long-term commitment to pro bono work matters to clients. Just as diversity is becoming increasingly important to the client community, so is a law firm's pro bono commitment. Clients will take notice whether or not a law firm is meeting its professional obligation, and any law firm leader would agree that losing an esteemed client would be a lot more harmful to the bottom line than the short-term investment in pro bono activities. Further, pro bono activities can provide an excellent opportunity to strengthen an existing client relationship by partnering with clients on pro bono initiatives. Such partnering activities can also serve as a great training device for young lawyers at both the law firm and the client, thus strengthening not only the client relationship at the highest levels, but also building relationships at the youngest levels.

As further evidence that pro bono activities matter to the client community, there has recently been an increasing trend for prospective clients to seek information about a law firm's commitment to pro bono activities in “requests for proposals” for legal work. A law firm can certainly explain its commitment to pro bono in proposals; however, what really helps to win new clients is listing the awards that a firm has received for its outstanding work in the pro bono field.

Lawyers care. Second, in the long term, pro bono matters to lawyers, because many lawyers take their professional obligation very seriously. To be financially successful, any law firm must be able to attract and retain the best and brightest attorneys possible. You do not want to lose a star lawyer or a potential rainmaker because of a lack of commitment to a pro bono program.

From an associate-retention perspective, one must understand that the single largest hidden cost to any law firm is attorney attrition. It is not unusual for a large law firm to lose money on every first-, second- and third-year associate. And, while a fourth-year associate may become profitable, the law firm doesn't instantly recoup the losses from the earlier years. On a cumulative basis, the firm doesn't really profit until an associate reaches his or her fifth year. So if the firm's pro bono program helps retain even a single associate into and past the fifth year, the long-term profitability impact will be substantial. Similarly, landing that premier lateral associate or law review editor who noticed your firm has won distinguished awards for its pro bono activities will reap long-term rewards.

Development benefits. Third, in the long-term, pro bono also matters because of the training and professional development opportunities it provides to junior lawyers.

A well-managed pro bono program can provide a wide variety of high-quality skills training at a relatively low cost; at the same time, it affords junior lawyers greater autonomy while still being supervised by senior attorneys. This is crucial because the economic demands of the current legal environment don't provide the same “second chair” training grounds of the past. What junior lawyer doesn't want to get into a courtroom? What junior lawyer wants to toil in document privilege review sessions for long periods without looking forward to some different, challenging and “fun” project? Sprinkling in the occasional pro bono experience will keep your junior lawyers happy, engaged and looking forward to a brighter future. Associate morale will be enhanced. And, again, retention of just one junior lawyer will reap long-term financial rewards.

Morals and morale. Fourth, again in the long term, pro bono matters because it's right and because it feels good. This may sound trite, but there is no warmer feeling a lawyer can experience, particularly a junior lawyer, than when a victory is secured in a protection-from-abuse case, a landlord-tenant dispute, or any other important legal matter where the victim otherwise wouldn't even have been in court due to financial limitations. The “feel good” work that pro bono opportunities present for junior lawyers can occur much more frequently than victories in the client community and therefore will result in higher morale for all involved; and that is always good in the long term.

Boosting Pro Bono: A Coordinated Approach

In today's increasingly competitive legal environment, how can we as law firm leaders make junior lawyers feel good about performing pro bono work? How can we make them feel that their non-billable time is not wasted? How can we make them feel that they will get the same level of support and training on a pro bono matter as a client billable matter?

There has to be a clear, top-down strategic mission statement from the law firm indicating that pro bono matters. This mission statement must have the following characteristics if it is going to be taken seriously:

• Associates have to know that their pro bono time counts, that they will get rewarded for it, and they will not be penalized in any way for it. This is particularly important given the billable hour environment all lawyers live with today. Meeting this goal is easy enough, though: pro bono hours should count the same as billable hours, within reason.
• Associates have to know that their pro bono activities will be supervised, reviewed and evaluated by senior associates and partners, just as any client billable work would be.
• Not every junior lawyer can find a pro bono matter on his or her own. The firm must set up an organizational structure that seeks out pro bono opportunities, matches those opportunities with the appropriate lawyers, and mentors and supervises the junior lawyer to the conclusion of the matter.
• Partners have to buy into the mission statement. Beyond committing to fulfilling their own pro bono obligation, partners should also be called upon to supervise junior lawyers. Partners must understand that mentoring a junior lawyer on a pro bono matter is every bit as important as mentoring a junior lawyer on a client matter.

How can a law firm get general buy-in and acceptance from the partnership at large? Measure the partners' commitment to pro bono, report it, and compensate for it (or at least make it be known that there may be compensation implications for those partners that don't perform).

• Lastly, as evidence of the firm's commitment to pro bono, the firm must continually monitor and report on its pro bono efforts to ensure the firm's goals are being achieved.

Conclusion

In the long run, a successfully administered pro bono program will have positive financial benefits for any law firm. Those financial benefits may not be easily quantifiable ' eg, how can one gauge the “newfound” profits generated by a great young lawyer who decides to stay at your firm ' but for those firms committing to a long-term program, rewards will become fully evident over time.

[Editor's Note: I'm pleased to report that the author has already begun preparation of a follow-up article on some advanced pro bono topics.]

What is your law firm's definition of “pro bono?” Seems like a simple enough question, but ask any two lawyers or law firms what “pro bono” means to them, and you are likely to get two or even several different answers.

“Pro bono” derives from the Latin term pro bono publico, which means, literally, “for the public good.” The American Bar Association Model Rule 6.1 defines a lawyer's pro bono commitment as follows:

“Every lawyer has a professional responsibility to provide legal services to those unable to pay. A lawyer should aspire to render at least 50 hours of pro bono publico legal services per year. In fulfilling this responsibility, the lawyer should provide a substantial majority of the 50 hours of legal services without fee or expectation of fee to 1) persons of limited means, or 2) charitable, religious, civic, community, governmental and educational organizations in matters which are designed primarily to address the needs of persons of limited means.”

Motivational Challenges

Administering a successful pro bono program for a large law firm can be challenging. What motivates a senior partner at a prestigious, large law firm to oversee 400 different AIDS victims cases? What motivates the general counsel of a Fortune 100 company to appear in court monthly in a protection-from-abuse action? Will every lawyer have the same level of commitment? Will every law firm permit that level of commitment?

In its July 2003 Am Law 100 article, The American Lawyer published pro bono statistics for the 100 largest law firms in the country. The results are strikingly uneven. While many law firms contribute mightily to the pro bono cause, 70% of the top-100 law firms average less than the 50 hours per lawyer proposed by ABA Model Rule 6.1.

Adding to the challenge is the negative financial connotation that is sometimes associated with a pro bono commitment. Ask many law firm managers what “pro bono” means to them, and all too often you get the wrong answer. Many will take the short-term perspective that a pro bono commitment will cost too much time and money. We have to have xxxx billable hours first! How can we motivate a lawyer to perform non-paying work? How can we reward lawyers financially for non-paying pro bono work? This short-term perspective is counterproductive, even financially, for a number of reasons.

Taking the Long View

Yes, in the short term there will be a cash investment cost to a pro bono commitment, because a law firm will have to fund certain costs of the pro bono engagement. And, yes, there will be a short term opportunity cost in the lost billable hours you otherwise would have collected, provided there is paying work at the ready. But one must look to pro bono work as a long-term commitment to understand the positive effect a pro bono program can have on a law firm's profitability.

Clients care. First, and perhaps foremost from a financial perspective, a firm's long-term commitment to pro bono work matters to clients. Just as diversity is becoming increasingly important to the client community, so is a law firm's pro bono commitment. Clients will take notice whether or not a law firm is meeting its professional obligation, and any law firm leader would agree that losing an esteemed client would be a lot more harmful to the bottom line than the short-term investment in pro bono activities. Further, pro bono activities can provide an excellent opportunity to strengthen an existing client relationship by partnering with clients on pro bono initiatives. Such partnering activities can also serve as a great training device for young lawyers at both the law firm and the client, thus strengthening not only the client relationship at the highest levels, but also building relationships at the youngest levels.

As further evidence that pro bono activities matter to the client community, there has recently been an increasing trend for prospective clients to seek information about a law firm's commitment to pro bono activities in “requests for proposals” for legal work. A law firm can certainly explain its commitment to pro bono in proposals; however, what really helps to win new clients is listing the awards that a firm has received for its outstanding work in the pro bono field.

Lawyers care. Second, in the long term, pro bono matters to lawyers, because many lawyers take their professional obligation very seriously. To be financially successful, any law firm must be able to attract and retain the best and brightest attorneys possible. You do not want to lose a star lawyer or a potential rainmaker because of a lack of commitment to a pro bono program.

From an associate-retention perspective, one must understand that the single largest hidden cost to any law firm is attorney attrition. It is not unusual for a large law firm to lose money on every first-, second- and third-year associate. And, while a fourth-year associate may become profitable, the law firm doesn't instantly recoup the losses from the earlier years. On a cumulative basis, the firm doesn't really profit until an associate reaches his or her fifth year. So if the firm's pro bono program helps retain even a single associate into and past the fifth year, the long-term profitability impact will be substantial. Similarly, landing that premier lateral associate or law review editor who noticed your firm has won distinguished awards for its pro bono activities will reap long-term rewards.

Development benefits. Third, in the long-term, pro bono also matters because of the training and professional development opportunities it provides to junior lawyers.

A well-managed pro bono program can provide a wide variety of high-quality skills training at a relatively low cost; at the same time, it affords junior lawyers greater autonomy while still being supervised by senior attorneys. This is crucial because the economic demands of the current legal environment don't provide the same “second chair” training grounds of the past. What junior lawyer doesn't want to get into a courtroom? What junior lawyer wants to toil in document privilege review sessions for long periods without looking forward to some different, challenging and “fun” project? Sprinkling in the occasional pro bono experience will keep your junior lawyers happy, engaged and looking forward to a brighter future. Associate morale will be enhanced. And, again, retention of just one junior lawyer will reap long-term financial rewards.

Morals and morale. Fourth, again in the long term, pro bono matters because it's right and because it feels good. This may sound trite, but there is no warmer feeling a lawyer can experience, particularly a junior lawyer, than when a victory is secured in a protection-from-abuse case, a landlord-tenant dispute, or any other important legal matter where the victim otherwise wouldn't even have been in court due to financial limitations. The “feel good” work that pro bono opportunities present for junior lawyers can occur much more frequently than victories in the client community and therefore will result in higher morale for all involved; and that is always good in the long term.

Boosting Pro Bono: A Coordinated Approach

In today's increasingly competitive legal environment, how can we as law firm leaders make junior lawyers feel good about performing pro bono work? How can we make them feel that their non-billable time is not wasted? How can we make them feel that they will get the same level of support and training on a pro bono matter as a client billable matter?

There has to be a clear, top-down strategic mission statement from the law firm indicating that pro bono matters. This mission statement must have the following characteristics if it is going to be taken seriously:

• Associates have to know that their pro bono time counts, that they will get rewarded for it, and they will not be penalized in any way for it. This is particularly important given the billable hour environment all lawyers live with today. Meeting this goal is easy enough, though: pro bono hours should count the same as billable hours, within reason.
• Associates have to know that their pro bono activities will be supervised, reviewed and evaluated by senior associates and partners, just as any client billable work would be.
• Not every junior lawyer can find a pro bono matter on his or her own. The firm must set up an organizational structure that seeks out pro bono opportunities, matches those opportunities with the appropriate lawyers, and mentors and supervises the junior lawyer to the conclusion of the matter.
• Partners have to buy into the mission statement. Beyond committing to fulfilling their own pro bono obligation, partners should also be called upon to supervise junior lawyers. Partners must understand that mentoring a junior lawyer on a pro bono matter is every bit as important as mentoring a junior lawyer on a client matter.

How can a law firm get general buy-in and acceptance from the partnership at large? Measure the partners' commitment to pro bono, report it, and compensate for it (or at least make it be known that there may be compensation implications for those partners that don't perform).

• Lastly, as evidence of the firm's commitment to pro bono, the firm must continually monitor and report on its pro bono efforts to ensure the firm's goals are being achieved.

Conclusion

In the long run, a successfully administered pro bono program will have positive financial benefits for any law firm. Those financial benefits may not be easily quantifiable ' eg, how can one gauge the “newfound” profits generated by a great young lawyer who decides to stay at your firm ' but for those firms committing to a long-term program, rewards will become fully evident over time.

[Editor's Note: I'm pleased to report that the author has already begun preparation of a follow-up article on some advanced pro bono topics.]