Episode 14 – Michael Moradzadeh: Building Innovation into the Firm’s DNA
Founding Partner and CEO, Rimon, P.C.
What happens when two 3-year attorneys at a white shoe firm decide that their world is ripe for disruptive innovation? Michael Moradzadeh and his partner set-up shop in a house in San Francisco and worked out of the basement, launching just a few months before the great recession hit hardest in 2008. Their firm has grown steadily ever since. Now, eight years later, it has over 50 attorneys and operates under a spherical model, designed to allow for an agile and dynamic team that works closely together to efficiently respond to client needs.
Full Interview Transcript
Michael Bell: My guest today is Michael Moradzadeh, the founding partner and CEO at Rimon P.C., a 50-attorney firm with 16 offices across the U.S. and in Israel. Rimon was founded in 2008 with the intention of being a different kind of firm. And in our conversation today, we’ll talk about what those differences are, and how they’ve led to impressive growth and some high-profile awards. Thank you for joining me, Michael.
Michael Moradzadeh: Thank you for having me. It’s a pleasure.
Michael Bell: You bet. So a great place to start, just for folks who aren’t familiar with Rimon, could you give us an overview? What are the key practice areas?
Michael Moradzadeh: Sure. We are a full-service law firm, corporate law firm. So we do everything from formation to IPOs on the corporate side, on the litigation side. Everything from representing small, even individuals to Fortune 10 corporations. And we do intellectual property, corporate, real estate, employment, private clients, which includes trust and estate work. So pretty much full service across 16 locations, 15 in the United States.
Michael Bell: Right. How did you meet your founding partner, Yaacov?
Michael Moradzadeh: We were coworkers at Ropes & Gray, our previous firm, over in the San Francisco office.
Michael Bell: And as I understand it, you guys were pretty early into your experience of practicing law when you decided to go out on your own. What led to that?
Michael Moradzadeh: That’s correct. Which is, I think, what allowed us to be crazy and take the risk, because we weren’t embedded and already sold on the concept. We were in our third year, and we looked around and said, “This is good, but I think it can be better.” So we left and decided to move in together and work out of the basement. Typical Silicon Valley story. And build a new type of law firm from scratch.
Michael Bell: Right. For folks who don’t know, you’re headquartered in San Francisco? Or Palo Alto?
Michael Moradzadeh: That’s correct. Technically, that’s where the two founders…we both live closest to the San Francisco office, but we don’t have a specific headquarters. We really believe that all our offices are tied through cloud computing. But yes, if we have to choose, I would say San Francisco is our headquarters.
Michael Bell: Got it, okay. What were you after when you left the firm to do this? What were you seeing? What did you think needed to happen?
Michael Moradzadeh: Sure. As I said, we looked around and we thought everything was good, we really did. We loved being at Ropes & Gray, still think very highly of that firm. An excellent white shoe firm, one of the oldest in the country. And all our friends were at other elite law firms. And we thought, “This is wonderful and it’s a great way to practice, and there’s excellent clients.”
But we thought that the time had come, let me put it that way, for something new, something different, something that looked at the realities of society and technology and embraced it as opposed to trying to keep things the way they were. More specifically, we looked around at the fancy office space that people were forced to go to, even when working late at night on the weekend waiting for a document. Or the hierarchy and the committees and the bureaucracy that came with big law.
And we compared that to places we had been in the past, which was more the Silicon Valley startup-type of environments, technology companies, Googles of the world. And we felt that there was a way to embrace technology, embrace videoconferencing and cloud computing to allow for attorneys to have far more autonomy in their practice and flexibility in how they deal with clients, so that ultimately clients get better service. But also, to increase collaboration and teamwork among the attorneys.
So that’s what we set out to do eight years ago. We started off as a purely virtual law firm and purely cloud-based attorneys, working from their homes. Two or three years in, we saw that that was, again, it was good, it was better. But it wasn’t as cohesive as we would like. So we started doing things like having some office space, now about half of our attorneys go into the office every day. The other half kind of circulate around the office, going for meetings and whatnot. We hold regular video meetings, we get together three times a year.
So now, I would say we are a hybrid law firm, somewhere in between the traditional model and the virtual model.
Michael Bell: Okay. What part of the year in 2008 was that? I’m curious relative to the onset of the recession. That kind of came end of 2008-2009. How did that impact that experience?
Michael Moradzadeh: Yeah, it’s a very good point. We started in March of 2008. I mean really, we started at the end of 2007. But we launched officially March of 2008. So before the crash. So I can’t say we saw the crash coming, I’ll tell you that. We did see that the rates were extremely high, where associates were billing out at $600, $700 an hour. And partners were, at that time, starting to bill out $1,000. Now, it’s gone up to $1,500 an hour. And we thought that that was unsustainable. And we thought that the pyramid model, pushing work down to associates, getting as much work as you can at the highest rates and increase profits with partner was unsustainable.
But those were the good days, still. Clients were still willing to pay the big bucks. And so we got lucky, to be quite honest. We started things, and by the time the crash happened…in a sense, we benefited from it because that’s when the clients started to, not just our clients, clients in general, started to look around and say, “Huh, well, maybe, we should look at our legal fees.” For example, Latham & Watkins was asked after the crash to stop putting first-year associates on matters. A lot of big banks started requiring lower rates.
And so, that’s when our model actually became far more attractive, both from the recruiting side and from the client side. The recruits started to say, “I can’t keep these clients if I don’t have more flexibility in billing,” which we provide. And the clients started to say, “Come on, there’s got to be a better way than hourly billing at these astronomical rates. Can we have more not just lower prices, but more tailored pricing?” So our firm really benefited from the crash.
Michael Bell: Right. Can you tell me the story of the first significant milestone that you hit? In other words, so it’s you and your partner, you’re in a house, no clients. What comes next?
Michael Moradzadeh: It’s interesting. It was a very gradual growth, you know? I can’t point to any one day where everything suddenly clicked and everything was wonderful. But I can tell you, the first two years were very, very hard. We brought in clients…to be clear, we had clients at Ropes & Gray, but they were large institutional clients, like Bain Capital, Morgan Stanley. So we did not try to take them away from Ropes. We wouldn’t have had much of a chance anyway at that time.
So we were starting with the early stage startups in Silicon Valley and we were connected in that world, so we were able to get those clients. But it did take a lot of work to build this, to build the foundation of what became Rimon.
In terms of milestones, I would say that, again, there was not one particular, specific client, but we went from doing work at very low, discounted rates, which is how we started, to as low as $250 an hour to get the clients in the door. As with the virtual firm model, we found that that was maybe too extreme. And we moved away from trying to be the cheapest providers in town to being more reasonable. So we raised the prices as we went along. And we found that clients actually valued us more when we did that.
So in terms of specific milestones, again, I can’t point to one specific client. But I can say that we went from doing one-off transactions for early stage corporations, to being the only firm that they worked for. And then we started getting really large clients. I guess Kaiser Permanente was the first one, where it was a very large, multi-billion dollar corporation here in California. It’s one of the biggest employers in California. Reached out to us when we got some great press, I think in the American Lawyer Magazine. That must have been our second year. So that was probably the first name brand client, if I were going to point at one.
And then, another milestone was when Robin Powers joined us in New York. That must have been, again, about two years in. She was our first, first of all, our first partner on the East Coast. And secondly, our first hedge fund attorney. Which we went from being a purely tech firm originally based on startups, to having a significant finance practice.
But again, since then, it’s been a gradual growth now. Then four years ago, we brought in a trust and estate practice, which I never imagined, which is growing and thriving. A year ago, we brought in entertainment practice, which is now a substantial part of what we do. Litigation, that was another milestone. We brought in Scott Raber, our first litigator, about five years ago. And now I think maybe a quarter of the firm is litigation. So a lot of milestones, you know?
Michael Bell: Yeah. So tell me about this spherical model. How does that differ from the pyramid model? What are the core elements of that?
Michael Moradzadeh: Sure. For those who are not familiar with our concept, the spherical model, it’s as opposed to the pyramid, which is the traditional model, also known in the industry as the Cravath System, which came about about 100 years ago in the law firm world.
The traditional model is that you hire summer associates, you spend a lot of money on them, and you almost certainly hire them as associates. And there’s what’s called the “up or out.” If they’re not fired, they get a raise every year. And within 8 years – it used to be 7 years, now it’s more like 10 years – they are up for partner. Either they make partner or they’re out.
And it’s very much a pyramid. It’s definitely a hierarchy with management on top and partners in the middle, and associates on the bottom. And the whole model is based on leverage. So the partners are pushed to push as much work to the associates as possible. And the associates are measured by how much they bill, how many hours they bill.
So that creates, especially nowadays when big law has gone from…it used to be a big law firm was 100 lawyers. By used to be, I mean just 20 years ago. Now, it’s 3,000 lawyers. So that pyramid structure has led to a lot of bureaucracy, very strict hierarchy. It’s kind of like a military model. And it doesn’t allow for much flexibility.
So our model, the spherical model, was a response to that. Which is instead of having a top-down approach, we have a sphere with the partners at the edge of that sphere, they are the ones who are actually interacting with the clients. And they have full flexibility as to how they will work with their clients – the originator does – how they will bill the clients, and which clients they want to take on. And then inside the sphere, you have the associates and the staff, and ultimately the management. And our role is to support the attorneys, give the attorneys what they need.
So in a sense, the attorneys are clients of the staff and the management, or you could say they’re the customers. And the clients are ultimately dealing with the partners, and the partners get the support they need. As opposed to management being the ultimate customer, and the attorneys serving the management.
So it’s kind of flipped it on its head. And the reason we use the sphere is that it’s also very important to us that it’s interconnected and flexible and dynamic like the sphere. It’s not like a flat model like you’re seeing out there with, say, Axiom or others, where it’s clients and one attorney. And yeah, that does cut out management. But it’s not a team anymore, it’s really a one-on-one relationship. Our model really is a cohesive group of attorneys that work very closely together like the sphere.
Michael Bell: So given that concept, I imagine that’s really attractive to senior level folks that you’re trying to entice to join your firm. Has that been the case? Have they really responded to that? Because I see how fast you’ve grown, I assume that’s part of the process.
Michael Moradzadeh: That’s the primary reason attorneys join us in the first place, absolutely, is to have more flexibility not just in building rates, but in the way that they work with their clients, not have to go back and forth with management, or worry about compensation. Our compensation structure is purely objective. So the attorneys don’t have to worry about how they get paid, when they get paid, how they’re being judged, the politics of the firm. That’s the primary reason attorneys join us in the first place.
Now, over the course of the last eight years, we’ve built an amazing team. We’re now bringing in attorneys just because of the fact that we’re a team of excellent lawyers that works closely together because of all the other things we do to increase cross-collaboration and teamwork. But that was the main reason attorneys joined us in the first place, and it’s still a big reason why attorneys leave big law to join Rimon.
Michael Bell: Okay. I’ve been actually having a lot of conversations with folks in these past several days on the very topic of there seems to be an inherent dichotomy between, if you’ve got someone who controls a book of business, what’s the incentive to be open to the team dynamic, to participate in the larger collective? Because it takes a lot of work to maintain that book of business. And that’s what drives compensation in a lot of places.
So you’ve got sort of a conflict that’s just inherent to the practice of being a consultant. So I’m curious what insights you’ve gained just from this process of building a team in the face of those natural tendencies that seem to be part of the landscape?
Michael Moradzadeh: I’m sorry, to restate the question, as I understand the question, you’re saying how are we able to basically incentivize attorneys to work well together as a cohesive team without, I guess, causing them to be protective silos? Is that correct?
Michael Bell: Yeah.
Michael Moradzadeh: That’s a very good question. And I think that every firm has that problem. Some firms do it through lockstep compensation, which is that everybody gets paid the same based on their seniority. Which I think actually works well in two or three firms in the country. If you’re the only firm that does something, and the clients come to you no matter what and you don’t have to develop business, I think lockstep is a good system if you’re a small firm. But that’s very rare. I think there’s only a couple, maybe Wachtell, maybe Cravath is now lockstep.
So nowadays, I think the reality is that you have to reward origination. You have to give attorneys an incentive to go out there and get business. Because as you said, it takes a lot of work to get business. And you have to recognize that. Especially if you want to retain good lawyers.
So our formula, our compensation model rewards attorneys specifically for bringing in business and for cross-selling. So attorneys get paid based on three factors: work they brought in, work that they did, and work that they shared. So that gives an incentive for attorneys to go out there and generate business. It gives attorneys an incentive to do good work for each other, so that they will be on the receiving side. And it also gives attorneys incentives to look for cross-servicing opportunities.
We safeguard attorneys’ origination. An attorney keeps origination credit for life. As long as they’re with the firm, they’re the originator. So clients can’t be transferred. I mean, they can be if the originator gives away origination, but nobody is going to take away origination from an attorney, unless the client, again, unless the client specifically demands it, which has never happened. So that allows the attorneys to feel more open and not have to worry about losing a client.
As a result, we’ve never had, in eight years, not once has there been any dispute over origination or how much someone is owed. It’s an objective formula that works very well.
Michael Bell: Right. Another challenge, too, especially in litigation for high exposure cases, is clients want to go with that person who has a lot of trial experience, and may be reluctant to allow very capable but more junior level people to take the lead on matters. And yet, you as a law firm have this challenge, “Well, how do we get other people that experience?”
So I’m curious, if there’s anything about your compensation that has made the senior first chair folks more comfortable giving more opportunities to the second chair folks. Is that a matter of compensation, or is that really just totally driven by clients?
Michael Moradzadeh: It’s a matter of those two things, compensation and clients. But also, a third thing, which is the culture of the firm. “Culturization,” I suppose is the word. You recruit the right people. You recruit people that, on the one hand, that know how to mentor and trust people, and want to be part of something bigger than themselves. We’ve turned down great attorneys with huge books of business or great reputations because they didn’t have that kind of personality. And we decided that it would be foolish for our long-term growth to look at such short-term gain, so we haven’t brought those people in.
On the other hand, you have to recruit people that are trustworthy, that can do good work. And by trustworthy, I don’t just mean honest, but trustworthy that they’re among the best attorneys out there, even if they are a junior. So that the rainmakers or the first chairs know that they can trust them, and not have to worry about that.
Thirdly, we don’t hire many junior people. Most of the junior people that we bring on come with the senior people. So not only does that ensure that we’re bringing in great junior people, but it ensures that they have a mentor who’s looking out for them and feels comfortable giving them work.
And then there is the compensation aspect, too, which is that the attorneys do make more money when they give work to the less expensive people. Because our compensation is basically there’s an internal market and then external markets. The attorneys that are looking to get more work have a lower internal cost to them, so to speak. So the first chairs in this example can make more money by giving the work to the attorneys that are looking and hungry to get more work.
This is balanced by the client’s expectations. If the client is looking to spend less, then we have less expensive lawyers that can do the work. If the client wants the more experienced people, which actually often costs less, ultimately, then they will specifically work with the more experienced people.
And the way we handle all of that is that the originator has full discretion. And in the case of the first chair, if the first chair is the originator, they know the client, they know the client’s needs. And if they feel that the client is best served by hands-on work by the first chair, even if it’s at a higher rate, they’re the ones who will ultimately hear from the client if the client’s unhappy.
So again, it works very well. We’ve not had, in eight years, any issues with hoarding. None of our attorneys feel that the other attorneys are hoarding work, or that people are taking on work that they can’t do. But that’s part of the culture. The motivation in the firm is also to make sure that we have the right culture. So not only in recruiting, but when the attorneys come in, making sure that we as management know if there are attorneys that are doing things that are not so great for the client.
And we do that mostly through positive acknowledgements, rather than negative. So in the beginning of every meeting, we have two firm-wide meetings every month. We start the meeting with what we call “community stories,” Rimon stories, where we thank each other. So attorneys say, “Thank you to so and so for helping me with that, and thank you to so and so for giving me this.” And that’s more positive reinforcement as opposed to negative reinforcement. And research shows that that’s far more effective anyway.
Michael Bell: Right. And it also just communicates to everybody that the values that you hold highest because you’re spending meeting time on it and recognizing it.
Michael Moradzadeh: Exactly. And it goes back to our spherical structure, as opposed to management or the executive committee or whatever saying, “We like you, we don’t like you.” It’s the person on one side of the sphere telling us another person on the other side of the sphere, in front of everybody, “This person did a really good job for me.”
Now, we don’t say, “This person did a bad job for me.” But it becomes clear if that’s the issue. If it needs to be addressed, then we address it. We want to make sure that we are ultimately doing what’s best for the client, and adhering to the highest level of excellence. And if someone needs to be talked to, then so be it.
But generally, that’s not necessary. Because the people we bring in, these are people who have always, their entire lives, strive for excellence. And frankly they crave the positive reinforcement, you know? And if they’re not getting it, then they’re going to try harder to get it.
Michael Bell: Right. Yeah, that makes sense. So let’s see, one of the other unconventional or innovative things that you’ve done is the B Corporation Certification. And I wonder if you could talk about the impact that that’s had on the firm, and what you think it’s doing. Because I’m sure it takes time and resources to be a part of that.
Michael Moradzadeh: Absolutely, yes. So to those watching or listening who are not familiar with B Corporation, that’s an entity that was created, I think, around the time of the crash, I think because of the crash of 2008, that strives to create what’s called a “triple bottom line.” Which is, by law of corporations, nonprofit corporations only have a duty to increase profits for their shareholders. And if they don’t, they can be sued by their shareholders. On the other hand, you have nonprofits that are purely nonprofit, and they have no right to have a profit, much less an obligation. So it’s two extremes.
So there’s an organization called B Corp came up with a middle of the road, which is it’s great to have profits, it’s great to strive to make money, and that works fine and it works well for the shareholders, but that the corporations should also have other priorities, which includes making sure that the employees are happy. And not just for the bottom line, even if it hurts the bottom line, making sure that you’re doing good for society and for the environment.
And it’s a difficult thing. So the way that B Corp does that is through a certification process. You have to answer a bunch of questions at the end of, I think, every two years, and you get points for everything, including how much you drive your car, how much your employees are flying around. So that’s from the pollution side, but also how much sick leave your employees get, or how much pro bono work you’re doing, and things like that, so how much of your profits you’re giving to charity.
So it’s been really good. I first heard about it seven years ago when talking to a client and he said, “I want to be at B Corp. Can you meet me at B Corp?” And I said, “What is that?” It was brand new. And so, we looked into it and we thought, “This is great. It’s a great idea.”
And we already had those values to begin with. So we were already giving, at that time we were giving 10% of our profits to charity. We as the shareholders still do that, but we’re structured differently now. We were already working through the cloud, our environmental impact was pretty low, and we bought carbon offsets. We already encourage pro bono in all of these things. So it was very at first.
As the years went on and we got bigger and bigger, it got harder. So the impact, to answer your question, was that we started, to get those points, we started doing new things, which has been wonderful.
For example, we give our employees one day extra a year to take off for community service. It’s in addition to vacation and sick leave. If they want to go and volunteer at a homeless shelter, or they want to go do a bike-a-thon or something during a weekday, it doesn’t use up their vacation time or sick leave, it’s guaranteed for them. We use recycled stock paper and all of these things. So it’s really been great. It’s really encouraged us to go above and beyond the obvious. It forced us to research these things.
From a marketing perspective, it hasn’t been huge. We’ve gotten a few clients that like it. We’re in the B Corp communities, other B Corps sometimes reach out to us. We’ve formed a lot of B Corps because it is, ultimately, there is some legal requirement. You have to put some things in your bylaws. But I can’t say it’s been a huge moneymaker for us. It’s been more just a way to keep ourselves on top of things.
Michael Bell: Right. I wonder if it’s part of internal dialogue or recruiting for maybe entry-level employees, if it ever comes up in those contexts?
Michael Moradzadeh: Yes, it does. Those who really care and are really into it, it matters a lot to them. Others, you know, it’s nice. It doesn’t bother them. Nobody has ever been upset about it. I guess maybe we don’t want those people anyway, so it’s never been an issue. I mean, some people ask what that means in terms of liability, but there’s really not a huge problem there, since it’s a certification.
So yeah, I’d say actually you’re right that it’s been more of an entry-level. I think the more senior people have been, I don’t know why, it’s just not as big of an issue for them. Although, there are some senior people who have also been very excited about it.
Michael Bell: Great. The other thing I kind of wondered about, so you set out to forge a different path, and it’s proven to be successful. Have there been challenges that you think maybe exist because of some of the choices you made that you’re not perceiving other law firms are having to face? That’s pretty wide open, but I’m just curious. Like every sort of situation has both the pluses and the minuses.
Michael Moradzadeh: Absolutely. Most of the challenges we have, everybody has. Or most firms that are trying to do what we are, which is excellence through collaboration, have. But some of them are more pronounced or more of a dilemma, in our case, because of our structure.
So one of them is, of course, the fact that we’re distributed. Which means that we’re, ultimately, about 50 attorneys over 16 cities. So we’re not sitting in a room together constantly seeing each other. That’s the most obvious thing. So we have a lot of offices where our attorneys do see each other. But overall, the majority of the firm, there is no place where there’s even a fifth of the firm.
So this has actually been really great for us because this forces us to go out of our way instead of relying on, “Okay, everybody’s in a room. They’ll work together,” which by the way, doesn’t happen. To coming up with proactive ways to bring attorneys together.
So as a result, and this is what I was referring to earlier about going from the virtual model to more actively creating a close, cohesive team, so we started by doing a video conference every month. That became two. So now, we do two firm-wide video conferences every month.
We have team meetings that anybody who wants to can join, and it’s attorney-led. Some are twice a month, some are once a month, some are once every two months. For example, our tax group might meet once every two months. We have a recruiting group that meets once a month. We have an international marketing team that meets once a month by video.
So this creates lots of interactions and they’re very collaborative. We go out of our way to have different people speak, so it’s not just one person talking to the crowd. And since there’s no central office where we have a majority of our lawyers, nobody feels like a satellite, which is wonderful. So no matter where you are, even if you’re in a location where we only have one attorney, you feel like just as much as a part of the team as where we have the largest office, so to speak. So that’s the video conferences.
Then we started building an internal social network, this was about four years ago. It’s kind of like Twitter, but it’s only for the firm. It’s actually Yammer, so it’s an enterprise social network. And that’s very active. So attorneys log in there, see what’s going on, matters that have been created.
It’s secure, so we can talk about client matters without concern for confidentiality or I mean we don’t need to worry about anything getting out. And we also post family pictures and updates, and legal questions, and legal updates up there. So it’s kind of like what I call the “virtual water cooler.” So you could be in Israel, or you could be in Seattle, or you could be in New York, it doesn’t really matter, you see everybody. And I feel like I’m seeing my colleagues every day.
And then when you log in to our system, you can see everyone else who’s logged on and available, and you can click on their name and video conference with them, or instant message with them, which is what I consider the virtual knocking on the door next door to you.
So none of these things are new. You probably use them to communicate with your friends and family. It’s very basic. But we use it institutionally, we’re built around it. So that there’s nobody that’s isolated, and there’s lots of opportunities for people to interact. And then three times a year, we actually physically get together, where we bring all our attorneys together in a different city every time. And those conversations, they’re about three days each, are focused very much on team building.
So ultimately, everybody knows everybody in this firm. Even though, again, we’re distributed right now among 16 offices, hopefully even more in the months to come, it doesn’t matter. We all know each other. Except for someone who just joined a month ago, everybody knows that person because even during the recruiting process, I make sure everybody knows about them, and we introduce them when they join.
As soon as they join, within a month, the whole firm knows who they are and everything about their practice. But the new person will know everybody in the firm within four months because of the get-togethers and everything else.
So that was a challenge. And I think, again, it’s been fortunate for us because it’s forced us to work extra hard to build that cohesiveness.
The second thing that we encounter is that because we are spherical and not a pyramid structure, is that we can’t dictate to attorneys what to do. It’s basically a difference between a democracy and a dictatorship, right? We can’t just say, “We’re going to go do this thing,” and everyone’s going to do it. It’s got to be through a consensus and buy-in.
So that’s a challenge. How do we do that without bureaucracy, without setting? There’s a temptation to say, “Everyone’s going to do this now,” or, “Everyone’s going to do that right now.” And we can’t do that. Which is a major challenge, and it’s something that we’re constantly balancing because you have to, on the one hand, you want to maintain that flexibility and democratic value that we have. On the other hand, you want to make sure that you’re building excellence, and again a cohesive brand.
So we do that through a lot of back and forth and discussion, and making sure that everybody buys in, and that everyone’s on the same boat. And that’s what our Sunday monthly meetings are for. It’s a challenge, but again I think ultimately it’s led to a better product in terms of what our clients get.
Because it’s the same thing, the benefits of a dictatorship are also its downside, you know? You can make a decision, but if there isn’t buy-in, the attorneys won’t do it well. So in our way, since there’s buy-in, everybody feels ownership. And also it’s built by consensus, so there’s debates, internal debate before we do something. So when we do something, we know that it’s going to be good.
Michael Bell: Right. And you as a leader, if you want to make something happen, you have to invest thought, energy, effort, to spread the word and bring everyone on board.
Michael Moradzadeh: Exactly. And generally I think of our attorneys as our brain trust. So we can’t just say, “This is going to be the way it’s going to be.” It’s usually a discussion with lots of feedback from our attorneys. And then there’s discussion, and then there’s convincing.
Now, don’t get me wrong. The way we’re structured is that the management, which is there’s three of us, we are in-charge of day to day. So it’s not like every time we want to do something, we have to get everybody to buy in. But if we’re going to make a major shift, then we need to make sure that we’re doing it right, and that the attorneys agree with us, and that they have ownership over it. And generally they trust us, so it’s not that hard. But it is a process.
Michael Bell: Yeah. I want to ask for an example, I don’t want to get into too sensitive-type stuff, but I’m just curious, is there anything that comes to mind that you can share? Like what’s something that in a traditional firm, you’d just say, “Okay, effective Monday, this is how this is happening,” but instead, you have to go through more of a process?
Michael Moradzadeh: Sure. I can tell you what we’re working on right now. We want to make a client portal, so that our clients can log in – in a dream scenario – they can log in, see all their documents. They can do that now, but they have to ask for permission, right? But that they can just log in anytime they want. As soon as they are engaged, they have access to all their documents, they have access to all their time entries live. And that there’s a project management tool where they see what the attorney’s working on, check the box when it’s done, this kind of thing.
We can already do all of these things, but we do it based on…the clients need to ask for permission, and then we give them permission to view these documents for these time entries or project management tool. And that works fine. But we’re thinking about taking it to the next level and making it automatic.
Another example would be, they would be able to just have the same kind of access we attorneys do, which is click on an attorney and talk to them. Now, that requires a lot of buy-in. Because the attorneys don’t necessarily…they might not have their time entries finalized at any given time. Or they might want to make some changes. Or the originator might want to review things before the client sees what a service attorney put in. Or documents might not be finalized and if a client sees a document midway, it could be embarrassing, and not for a good reason. There’s nothing to be embarrassed about, but it might appear that this document is not good. But that’s just because a attorney is working on it.
So it takes a lot of thoughts to get this right. And I think a dictatorship, so to speak, could just go out there and say, “This is how we’re going to do it. You’re all going to enter your time. You’re all going to do it this way. And you’re all going to only put your most updated documents in this system, and we’re going to have this other system.” And you make it really complicated, and here’s the process, and you’re going to fill out this form and all that. And maybe that will end up good? Or maybe you’ll spend millions of dollars on a system that doesn’t work. So it’s a process. So that’s the latest example.
Michael Bell: Yeah, that’s awesome. Well, are there any lessons that you’ve learned? Because you’ve been managing a rapidly growing workforce, and I’m curious if you’ve identified shifts that have occurred as you’ve gone from maybe one size to a threshold into a whole new experience. What are your most meaningful takeaways as you’ve gone through that process?
Michael Moradzadeh: Well, I think that, first of all, our system, in a way, was built to scale, so we’re very fortunate. Since compensation is based on objective formulas, and since we are cloud-based, it really works very well in large groups.
In theory, this should work just as well in a group of 3,000 as a group of 50. Not to say that we’re going to 3,000 anytime soon. But it would work just as well. In some ways, it would even be easier, because then, you can have more specific group meetings and all that. And so, it’s very dynamic, which is why we talk about a sphere. It can expand and contract very easily. It can move very easily.
So the growth has not been so much of an issue. It’s just been more of an issue of learning how to improve all these things we’ve talked about, and it just happens that it’s going in the same direction and time as our growth. As we get older, we’re experimenting and constantly improving, and we’re also constantly growing. Our growth does enable that. Ultimately, we can do more things with more people. It doesn’t make sense to have a social network if you have four people.
So I imagine that as we grow, we’re going to come up with newer ideas and more exciting ideas. We’ll probably do more regional get-togethers, we’ll probably have more office activities, more set client sector activities. It’ll be fun. And along way, I’m sure we’ll try things that don’t work and reevaluate.
Michael Bell: Great. Well, Michael, thank you so much, really enjoyed the conversation. Just any last thoughts that come to mind before we sign off?
Michael Moradzadeh: No, this has been a lot of fun. The last thought, I suppose, is that law firms are going to…and they have been going through a dramatic shift like every other industry. Societies change and business has changed. And we see ourselves, in some ways, at the vanguard; we’re not the only ones. But I think that we’re going to be seeing a lot of changes in even the most traditional white shoe firms that you can imagine. So it’s going to be a very interesting 10 years, I think.
Michael Bell: And I wonder about this, too. Could a firm that has operated…even a small firm, say a 20, 40-attorney firm, if they’ve operated in the mindset of a pyramid structure, have they got a chance to…can that firm transition into an innovative model, or are they stuck there forever? And certainly, the same question for a 1,000-attorney firm. Is there any way to get to where you’re at if you’re starting from the traditional mindset?
Michael Moradzadeh: There’s always a way to do things. I think that it’s much harder for a big firm to change their DNA. And that’s really what we’re saying. It’s possible to do so. They would have to completely change the way that they evaluate associates and partners. Their compensation structure would have to change. They would have to get rid of a lot of the bureaucrats and the management. So they might do that because they have to.
I think the most likely scenario is going to be…there’s going to be an evolution in the same way that most evolutions happen. You’re going to see a lot of firms go under. And you’re going to see a lot of the smaller ones making the changes and thriving, and taking over. I think there’s going to be slow change at the bigger firms. And I think some of them will be just fine. Don’t get me wrong, I don’t think the Wachtell or Cravath are going to go under. They’ll be just fine. And they’ll adapt; they also are doing innovative things.
But I think that you’re going to see…Dickstein Shapiro just went under. Before that, Bingham, Dewey, WolfBlock, Howrey, Heller Ehrman, Brobeck. There’s going to be more of those and it’s going to, I think, accelerate. And I think the mid-size firms are going to innovate and I think the mid-size firms…it’s a lot easier for them to make changes.
But I do think the top, the biggest firms, the DLAs and the Dentons, I think they’re going to innovate in different ways. I think they’re trying to be the big four. That’s the other thing; I think the big four, the accounting firms, I think are going to take over a lot of the share that law firms have been monopolizing.
So I think the big, huge law firms are going to be competing more with the big, huge accounting firms. So yes, they’ll definitely be innovative, but that’s in a very different way.
Michael Bell: Yeah, that’s awesome…
Michael Moradzadeh: That’s exciting. And we’ll see how artificial intelligence is going to change things.
Michael Bell: I know. You hear about that every day. I don’t think a day goes by that I don’t see an article that says, “Everybody’s going to lose all their jobs.” But it’s hard to go from that perspective to understand how it’s going to play out. How to weave through the opportunities that are going to pop up. I guess you really have to be paying close attention and watching for things as they start to emerge.
Michael Moradzadeh: I think that’s true. And I think as we’ve seen in the last, I don’t know, 100 years, we’re going to see it going bottom up. I think we’ve seen the more routine work go outsourced. First, it gets outsourced and then it becomes computer software. A lot of due diligence, document review, first was off…it first became contract workers, then offshore, and now a lot of it is being done through software. And then first year, second year, third year associate work becoming automated. And I think we’re going to see more of that.
So, I think that that goes back to what you were saying. I think the big law firms are going to change more from the bottom up. They’re going to have to hire less associates. They’re going to have to change the way they do the up or out model. They’re probably going to come up with more titles than two. I think “partner” and “associate,” probably going to have a lot more than that.
And they will. And I think in the next 10 years, a lot will happen, and I think AI is going to cut more and more of the associate work, and more of the commodity work. And who knows? Maybe in 30 years, all lawyers will be out of a job. But I think the people who are now senior partners, I don’t know if it’ll matter for them anyway in 30 years. I think it’s going to affect the people coming out of law school. That’s who’s really going to be affected.
Michael Bell: Right. Well, we’ll see, huh? We’ll do a five-year update.
Michael Moradzadeh: Yes, we’ll see. I suppose maybe we’ll have bigger problems in 30 years than artificial intelligence taking over lawyers’ jobs now.
Michael Bell: Hey, Michael, thank you so much. Really enjoyed the conversation. Appreciate your joining me today.
Michael Moradzadeh: Thank you, Michael. This has been a pleasure and an honor.
- Rimon, P.C.: https://rimonlaw.com/
- 2012 Article in ABA Journal: Moradzadeh and Silberman Maintain High-Tech, No-Pomp Practice
- Yammer: The Enterprise Social Network
- The Cravath System
- Overview of Rimon, P.C. [3:10]
- Deciding to found a new firm just three years into practice as an attorney [3:55]
- Drawing inspiration from the Silicon Valley start-up culture [4:25]
- The market insight that led them to perceive an opportunity for a different approach [5:05]
- Launching in early 2008, prior to the onset of the Great Depression, turned out to be to the firm’s benefit [7:35]
- In the earliest days, the firm grew gradually but consistently [9:45]
- Landing their first multi-billion dollar client was the result of press coverage they received for their innovation practices as a firm [11:50]
- The Rimon spherical model vs. the more typically used pyramid model of law firm management [13:25]
- The primary reason senior-level people joined the firm in the early days [16:25]
- Their recruiting initially focused on their innovative approach to compensation but now focuses just as much on the strength of the team itself [17:25]
- The incentives that allow attorneys to work well together as a cohesive team without encouraging the creation of protective silos [19:00]
- The basic building blocks of their attorney compensation: work they originate, work they do, and work they share [20:08]
- The factors they’ve put in place that encourages partners to develop the skills of the associates [21:25]
- Creating a culture that recognizes and celebrates effective team behavior [25:00]
- Becoming a Certified B Corporation and what that has meant for the firm [27:20]
- As the firm has grown, staying compliant with the B Corporation requirements has been challenging but worthwhile [30:15]
- Being a B Corporation has been a valuable part of the recruiting conversation [31:35]
- The challenges that exist because of the firm’s unique model [32:35]
- Using videoconferencing to overcome the challenges of being widely geographically dispersed [33:25]
- The firm’s internal social network: Yammer [35:20]
- The spherical model means management doesn’t dictate instructions to the team, requiring more time for discussion and collaboration [37:40]
- Relying on all the attorneys in the firm as a brain trust [39:37]
- Exploring the implementation of systems that enable clients to have a view on work-in-process in real time [40:20]
- Building systems to scale from day one [43:41]
- Could a firm that was built on a traditional pyramid structure shift its focus and become spherical? [46:00]
- Michael’s perspective on the next 10 years of law firm innovation [47:10]
- How artificial intelligence will impact law firms [48:42]