The Titan in the Toyota
What is your image of a successful law firm partner? Tailored suits and expensive watches? Multiple country club memberships? A corner office? Do they drive a Mercedes? Anyone who has spent time at a large law firm knows this person. Perhaps you’ve even aspired to their status. Jones Day’s former worldwide managing partner, Dick Pogue, could have easily become this stock character. But one of his most memorable, lovable quirks, striking when set against his professional stature and countless achievements, is his choice of automobile. While I was at the firm, he drove a periwinkle-blue Toyota so unremarkable that I cannot remember the model. The Poguemobile, as I affectionately call it.
Dick Pogue is now well over 90 years old. Reaching one of the legal world’s most prominent and powerful positions, he assuredly made more money practicing law than he can spend on himself. Given his intelligence and reputation for prudence, I would be shocked if he has not saved and invested most of it. He has also been a tremendous force in Cleveland’s civic community, volunteering considerable time and treasure to the Legal Aid Society of Cleveland, The Cleveland Foundation, and many other organizations. If anyone has earned the right to drive whatever ostentatious car they want, it is Dick Pogue. But he does not. He sticks with his trusty Toyota.
For a lawyer interested in financial success, it’s critical to understand the brilliance of a legal titan choosing such an unassuming, sensible automobile deep into his career. That’s because a powerful, unseen force yanks many would-be Dick Pogues hard in another, less productive, financial direction.
The Institutional Imperative
Warren Buffett calls this dangerous force the institutional imperative. It drives decisions justified by the belief that everyone else is doing it. And it denotes a kind of gravitational pull of corporate habit that can lead to mindless groupthink.
Early in his business career, Buffett assumed that decent, intelligent, and experienced individuals would automatically make rational decisions—as he has for over 60 years, transforming Berkshire Hathaway into one of the world’s largest corporations. But quickly, he learned that not everyone thinks like he does, lamenting that “rationality frequently wilts when the institutional imperative comes into play.” One of the institutional imperative’s most insidious qualities—in business and in group dynamics more broadly—is that people mindlessly imitate their peers' behavior. Hence, in law firms, I’d argue that the institutional imperative contributes to parking garages frequently dotted with the same luxury cars, partners in the same city clustering in the same exclusive neighborhoods, and larger and larger paychecks being soaked up by the same mounting expenses: splashy kitchen renovations, second homes, and extravagant vacations, to name a few.
None of these purchases are wrong in themselves. Buying something because you genuinely want it and can easily afford it is a perfectly reasonable use of money. The problem is a different motive: buying something because it feels professionally necessary, or because everyone around you has it, or because it would feel strange not to. That is the institutional imperative at work. It is expensive, and it is especially hard to justify when it strains a budget that, by any objective measure, should not be strained.
The strain comes when you build a professional persona befitting the institutional imperative’s demands. This persona is hard to surrender. It can strike at any time, but it likely happens later in your law career—when you’re established, and when certain forms of spending no longer feel optional. Upgrades to your address, wardrobe, kids’ schools, and car begin to feel more like either hard-won entitlements or boxes to check to keep pace with peers, rather than precarious financial leaps. The situation recalls the scientifically untrue but too apt-to-resist parable of the boiled frog: if you drop a frog into boiling water, it will jump out, but if you place it in room-temperature water and heat it slowly, it won't notice the temperature change and will be boiled to death. Each high-status item, taken alone, seems defensible. Taken together, they can consume an income that, to the untrained eye, looks like it should generate serious wealth.
But if you’re aware of the institutional imperative’s power, you can avoid its most pernicious effects—especially early in your career. After all, the early years at a large firm are, financially speaking, one of the highest-leverage periods most lawyers will ever experience. Without dependents or a mortgage, and with income high relative to obligations, the window is real. Lawyers who use this window to pay down loans aggressively, max out their 401(k), IRA, and HSA, and build a meaningful investment account come out the other side with something rarer in law than a brass ring: options. The option to leave a job that has stopped being worth it, or to take a risk on something new.
What Dick Pogue Understands
Dick Pogue can drive anything. What he wants, or at least what he finds sufficient, is apparently a sensible Japanese sedan. In a strange way, this, like the Goldman Sachs bankers who wear Casio watches, is the ultimate flex.
My point is not that ascetic deprivation is a virtue, or that lawyers should punish themselves for earning well. It isn’t; life and money are meant to be enjoyed prudently. Spend on what genuinely matters to you. Just be honest about what that is, and whether the institutional imperative is doing the choosing instead of you.