Matthew Kluger Pleads Guilty on Insider Trading

Hands down, one of the most fascinating stories we have ever covered in Law Technology News was our June 2011 cover story, "Catch Me If You Can," about how lawyers and their organizations responded to the astounding insider trading prosecution against Matthew Kluger. (LexisNexis subscribers can access it here.)

In the article, Tam Harbert detailed how Kluger, who worked at four of the world's most prestigious law firms, managed to acquire approximately $37 million (with two accomplices) by simply reading file labels to figure out information about pending mergers and acquisitions.

This week, Kluger pleaded guilty Wednesday to all four counts against him. Check out the report by Tom Huddleston Jr. in The Am Law Daily.

Our package looked at the lessons learned by law firms, and how they are balancing the difficult tightrope between protecting confidential data while still providing as open an environment as possible internally to faciliate collaboration and innovation. In addition to ramping up ethics training and security, one of the interesting themes that emerged was whether law firms may need to rethink the traditional "MYOB" (mind your own business) hands-off posture of dealing with employees, and become more proactive about offering support services (overt or subtle).

While no firm will be able to completely outwit brilliant sociopaths, organizations should watch for red flags that might signal potential employee meltdowns big or small. Especially in the aftermath of the economic earthquakes. A recent PriceWaterhouse Coopers poll of 1,600 adults who make $30,000+/year found that 61% of respondents are stressed about finances, and 49% have a hard time paying monthly bills --- even 36% of high earners ($100K+). As I wrote in my editor's note in June, "No doubt, there is a huge difference between thefts fueled by arrogance and those fed by desperation, but both can lead to tragedy. Perhaps it's time ... to reach out."

Check out my conversation with with Harbert here.

IT Talent Shortfall? Blame it on the Boomers!

Is an IT talent shortage on the horizon? That's what CIO Insight suggests in a recent article by Dennis McCafferty. Just another thing you can blame on the Baby Boomers, who are beginning to contemplate retirement, according to two surveys (CareerBuilder and the National Association of State Chief Information Officers) that will give law firm leaders another reason to reach for the Prilosec. 

Boomers make up 26% of the IT workforce, according to staffing firm TekSystems -- and the first crop hits 65 this year. Despite the icy grip of the recession that makes many folks leery to let go of steady paychecks, the surveys found that worries about finances "are clearly on the decline." 

And the survey of state IT leaders found that about half of them were already have trouble finding staff. Others worry that the won't have enough money to attract the best candidates. 

To help cope with the anticipated departures, some experts are counseling firms to set up "technical talent management programs" so that institutional knowledge "doesn't walk out the door" with the retirees, observes McCafferty.

And managing talent might be focusing more on teamwork and sharing knowledge than creating stars. Another recommendation: cross train! "Let employees trade roles on a temporary basis."

Others suggest that CIOs set expectations at the job interview. "Describe department goals, culture, and day-to-day practices honestly and clearly during the interviews," advises McCafferty. "This way, there are no 'unpleasant surprises' after a new hire comes on board." 

Legal IT

After reading the CIO Insight story, I wondered if our legal community had any specific nuances to this dilemma, so I gave a shout-out to headhunters Michael Potters, of New Jersey-based Glenmont Group, and David Cowen, managing partner of New York City's The Cowen Group.

Potters' advice to firms: "First of all, don't be naive (or wishful), believing that your people will never want to leave your firm." He echoes the suggestion to create "farm teams" of junior people being mentored by veterans, "so knowledge is shared, and culture is improved. This way, when someone leaves, a new person can plug right it."

Further, says Potters, put it in writing! "Document (map) the corporate IT knowledge, including current initiatives, so that if the 'brain trust' leaves, you do not have to scramble to figure things out." 

Cowen observes that law firms tend to be "reactive in their management practices, not proactive," and typically operate quarter-to-quarter. "Firms will not prepare for departures. Firms will react to departures."

The bottom line, says Cowen, is that "legal IT, as well as low- and mid-level substantive legal work will continue to move offshore," especially to India, which "is well-positioned to provide the additional capacity we will want/need to fill the upcoming and growing worker gaps." Do the math, he says. "$125,00 U.S. v. $12,000 India."

Cowen applauds the concept of developing teams with shared knowledge, "but in the AmLaw 200, I cannot think of more than five firms that have executed this type of program (and corporate America is no better). Developing teams is hard work and requires real investment in people, training, and program development, It's a long term commitment. And it costs money — that does not pay off for many years."

Among the findings of the two surveys:

• 65% of overall IT workers 60+ say they're putting off retirement because they can't afford it (72% said that last year).

• 28% of workers 60+ plan to retire within the next 2 years; 27% 3-4 years; 18% 5-6 years, 16% 7+ years. 

• Greatest hiring challenges include security (52.4%), project management (50.5%), app/mobile app development and support (47.6%) analysis and design (42.9%)

Just Do It - Reprise

Bad news arrives from our colleague Vivia Chen, via The Careerist blog, regarding the 2010 survey from the National Association of Women Lawyers, which documents absoluty no movement of women into equity partner posts — it remains at 15%, the same rate it has been for the last five years.

Women, she writes, are barely represented on influential committees at their firms, and there's not a single woman among the top 10 rainmakers. (The study looks at the 200 largest U.S. firms. Click here for survey data.)

What's not surprising to LTN readers who follow e-discovery staffing: NAWL found that 80% of Am Law 100 firms (and 50% of the second 100) employ staff lawyers (non-partnership track positions) -- and more than 60% are filled by women. These are jobs that by definition offer "little possibility of career advancement," Chen notes. (Minorities also tend to occupy these posts, which often do not include benefits.)

  In 2008, when the U.S. Census office reported depressing figures chronicling absurd gender pay discrepancies within the legal profession — women are making only 51% of what men make in comparable jobs —  I challenged "every GC, law firm managing partner, and legal vendor CEO to check their own employee records and remedy this."

It's unacceptable and an absolute embarrassment for the legal profession -- with all our self-righteous rhetoric about equality — to produce such dismal statistics. We need to fix this, now.

Help, Please!

Want to start an heated discussion? Just ask any lawyer how they feel about their firm's IT Help Desk. Or ask IT staff how they feel about the attorneys they serve.

No question about it: It's hard to hire effective entry level IT staff. In CIO|Insight, Dan Resinger cites a York College of Pennsylvania survey of 520 HR professionals/hiring managers to see what they look for (beyond baseline tech skills). The results were obvious, but why is so difficult to find candidates with these traits: 1. Courtesy and respect, 2. communication skills, 3. appropriate appearance, and 4. accepting responsiblity.

A third of respondents said that professionalism has eroded over the past five years; and 60% of hiring managers complain about "a sense of entitlement" among first-year, college-educated employees. And 39% reported problems with IT etiquette among new employees. But maybe the economy has kicked a little, um, er, attitude. Forty percent of respondents said the diminished job market has helped improve the quality of candidates.

Candidates' top concerns: opportunities for advancement, and work/life balance. 

Does success boil down to basic customer service? Castle & Nicholson CIO Erica Greathouse and I recently discussed why law firms sometimes prefer a less-competent IT staffer to an aloof expert. 

What's your take? Lawyers, what is your pet peeve about Help Desk? IT staff, what drives you crazy about lawyers? Post a comment below? 

COWEN GROUP: PM IS EXPLODING

The Cowen Group, a New York-based legal recruiter and consultancy, has announced the results of its 2009/2010 eDiscovery and Litigation Support Professionals Salary Survey. According to managing partner David Cowen, 487 professionals at 100 major firms shared their salary data with TCG for its 5th annual report. The data was gathered between November 2009 and February 2010.

As usually occurs, salaries are highest on the East Coast, lowest in the central part of the country. TCG broke the results into six different categories, with these median 2009 base salaries and projected 2010 East Coast figures:

* analyst $67,500 ($72,000)
* specialist $91,000 ($93,000)
* project manager $115,000 ($125,000)
* regional coordinator $135,000 ($145,000)
* national manager $165,000 ($205,000)
*  firmwide director $267,000 ($295,000).

Biggest trend? Cowen told Law Technology News that he sees legal project management exploding for both attorneys and non-attorneys. Firms are embedding "legalists" (read: attorneys) into lit support, and everybody's comfortable with that model, he says.

Of course, you'd expect a headhunter to say people are the first priority, but Cowen says savvy firms are recognizing that successful e-discovery requires investing in "people, process, and technology" -- all three, not just one or two. He cites Morgan, Lewis & Bockius; Fulbright & Jaworski; Wilmer Hale; and Chicago boutique EimerStahl as among the industry leaders using this approach (none are his clients).

What surprised him? Despite the turbulent economy, most professionals who were pink-slipped weren't out of work for more than a few weeks, and that there was a small uptick in salaries.

And, as George Socha and Tom Gelbmann predicted in LTN last August, one of the biggest 2010 EDD challenges isn't hiring, it's retention. Firms that don't provide coaching, training, and other career growth opportunities may find key professionals walking out the door.

Cowen's bottom line is a familiar refrain to LTN readers: It's all about better, faster, cheaper; transparency; and aligning legal and business goals. "If you are going to be successful in this new, new world to have to engage in enlightened management techniques that have been long established in Fortune 500 corporations. You need to run your firm like your clients' [companies]," says Cowan.

NOT ALL BAD NEWS

Lately, there's been a lot of buzz and angst about the departures of senior folks in important firms and organizations, particularly among IT and e-discovery. But industry analysts suggest that the future may actually be bright for our legal technology community.

The Cowen Group recently predicted that 215 new e-discovery jobs will be created over the next six months, including project managers, regional managers, and EDD attorneys. Billable hours are up at 35% of corporations, 61% of law firms, and 51% of vendors, says TCG in its "Q1 Critical Trends report" -- and 35% of corporations, 60% of law firms, and 65% of vendors plan to add staff in the next three months. TCG received responses from 78 law firms, 47 corporations, and 35 vendors.

The company does recruiting, events, and business intelligence. It is currently highlighting "hot job" positions for a Los Angeles-based EDD coordinator ($155K), a Northeast region in-house EDD manager ($150K- $175K), and a national litigation practice support manager ($225K-$250K).

Michael Potters, CEO and managing director of New Jersey's The Glenmont Group, says jobs for IT and EDD staff are exploding "through the roof," all across the country.

Reasons: 1) bounce back from arbitrary cuts made in the throes of the recession panic, where firms were matching "ratios" of attorneys to support staff; 2) a forecasted explosion in litigation, caused by a) the Wall Street meltdown, b) compliance issues (financial and health), and c) the recent Toyota and BP nightmares.

I still think we are going to see some interesting shifts, however, as firms rethink and reconstruct their IT and EDD models. Keep an eye out as some firms adopt more "repeatable processes" mind-sets, while others look toward creating IT portfolios that are aligned directly with business goals (check out Doug Caddell and Jo Haraf).