I’m delighted to be delivering a keynote address to the Spring 2011 conference of the Chambre Des Notaires, the governing body of Quebec’s more than 3,300 notaries, in Quebec City on April 1, 2011.
I still remember the story told by a friend of mine who quit his job at a large national law firm. The income, of course, was great. But he had become increasingly unhappy with the work he was doing, the people he was doing it for, and the culture of the firm for which he was doing it. After a lot of internal debate and many discussions with his wife about their financial future, he finally made up his mind, secured a position in-house, and went — with some trepidation and perhaps still a touch of doubt — to have That Conversation with the practice group partner. After hearing the news, the first thing out of the partner’s mouth was: “Can we offer you more money?” There went any last doubt whether he’d made the right call.
I’ve seen this scenario repeated many times, not only in law firms but certainly with unusual frequency there. The instinct to solve a problem by throwing more money at it — or more accurately, to interpret dissatisfaction primarily as something more money can cure — emerges with remarkable ease and frequency within law firms. Hardly surprising, since virtually every internal and external metric of success for law firms, and almost every major decision about strategy and tactics, involves revenue in the here and now. Money motivates. Money galvanizes. Money is why we’re all here, why we show up every day. So if you want something done in the firm, if you want to maximize your chances of success, just add money. Not happy? Here’s more money.
Yet while this belief holds firm inside partnership meetings, and seems to constitute the philosophical foundation of a remarkable number of law firms, a somewhat different picture emerges when you step outside that hothouse environment. The American Lawyer‘s most recent associate satisfaction survey (which, by the way, recorded its lowest levels since 2004) does highlight associates’ desire for salaries to return to pre-recession levels. But as Northwestern’s Steven Harper points out, the higher-ranked firms scored very well on factors such as “relations with partners and other associates, interest in and satisfaction level of the work, training and guidance, policy on billable hours, [and] management’s openness about firm strategies and partnership chances.” Associate salary does not drive associate satisfaction; there’s more to it than money.
Move outside the law firm world altogether and the evidence becomes more compelling. A widely circulated study of multiple Gallup polls found that on average, an annual salary of $75,000 correlates with the high point of people’s “day-to-day contentment.” Salary increases beyond that point improved people’s broader satisfaction with their place in the world, but it had no effect on their daily emotional well-being. The actual figure can be debated — it would certainly be higher or lower in various cities or industries — but the fundamental takeaway is that past a certain point, compensation fails to move the needle on happiness. Throwing more money at unhappiness is a waste of good money.
Then there’s the work of Daniel Pink, whose new book Drive explores what motivates people to do their best. His TED presentation on this subject is a masterwork. He describes extensive studies showing that people desire workplaces that give or encourage autonomy over their work, mastery of their subject and higher purpose behind their efforts. And he demonstrates not only that these intrinsic motivators are more important than extrinsic motivators (including money), but also that for certain types of work, increasing monetary rewards actually reduces people’s effectiveness. What types of work? Pink describes them as “right-brain, creative, conceptual kinds of [tasks, where] the solution, if it exists at all, is surprising and non-obvious.” That describes, among other tasks, most legal work of value. Monetary rewards narrow people’s focus, which is ideal for straightforward, mechanistic tasks. For creative problems, where the solution is on the periphery, monetary motivation does more harm than good.
This all matters if your firm wants to be successful for its clients and be competitive for legal talent in the 21st century. The factors that keep lawyers satisfied and that positively affect their ability to do their jobs are changing as we speak. Law firms that continue to act as if everyone and everything has their price, and that money is the fuel that drives performance, are going to struggle to keep the best talent and deliver the best results, and they’ll wonder why.
Now, of course money plays a role in satisfaction; but in most cases, what matters to people is less how much they make and more whether they’re being treated fairly. We all like to complain about new lawyers in large firms pulling down six-figure salaries that they “don’t deserve.” You hear the same criticism of professional athletes, whose income is wildly disproportionate to their actual societal contribution. But the measure to look at isn’t the stand-alone denominator of salary, but its percentage of the overall profitability of the company or industry: when pro athletes complain, it’s because they see the overall pie growing to mammoth dimensions and they want a proportionate share. Similarly, associates know exactly how profitable their law firms are. But when they see colleagues laid off and their own workload doubled while watching multi-million-dollar partner profits grow, they start to have understandable doubts about whether the firm is dealing with them in good faith.
So compensate your lawyers fairly, in the context of their contribution and your profitability. But once you’ve done that, turn your attention to ways in which you can improve their performance, illuminate their career path, and increase opportunities for communication. Focus on intrinsic motivational drivers of the best performance and attitude. And learn to de-emphasize the role of money in your efforts to motivate and satisfy your lawyers — especially if they’ve just walked into your office for That Conversation.
I’m extremely pleased to announce that another world-class consultant has opted to join the Edge International partnership! John Plank specializes in personal communications and speaking skills for managing partners, practice group leaders and trial lawyers.
In addition to providing John’s services in leadership development and executive coaching, Edge is now the exclusive provider of John’s internationally acclaimed “Commanding Presence” program of advanced communication and presentation skills for lawyers. Customized “Commanding Presence” workshops will now be available in-house to law firms and bar associations worldwide.
A professional coach for more than 25 years, John has a Master’s degree in voice and speech and served as a director of workshops and actor training at the Stratford Shakespearean Festival. A Scot currently residing in Canada, John coaches national leaders, senior executives and professional broadcasters; he is currently performance coach for CBC Television.
You can learn more about John by consulting his biography at Edge’s website. On behalf of all Edge’s partners and friends worldwide, please join me in welcoming John Plank as a partner with Edge International!
The start of the school year is upon us. You can tell from the firestorm of written commentary in the legal press and blawgosphere about the function, fitness and future of legal education.
Fanning the flames hardest is Brent Evan Newton, an adjunct professor at the Georgetown University Law Center, who has written an article with a title that (almost literally) says it all: “Preaching What They Don’t Practice: Why Law Faculties’ Preoccupation with Impractical Scholarship and Devaluation of Practical Competencies Obstruct Reform in the Legal Academy.” Newton’s piece does not, how you say, adhere to the traditional measured tones of academic discourse. Some excerpts, courtesy of the ABA Journal:
These “impractical professors whose chief mission is to produce theoretical legal scholarship” feel indifferent towards—and sometimes outright disdain for—practicing lawyers and faculty members with a practical bent, he writes…. “Especially at law schools in the upper echelons of the U.S. News & World Report rankings, the core of the faculties seem indifferent or even hostile to the concept of law school as a professional school with the primary mission of producing competent practitioners.
But Newton’s article is just gasoline poured over an already robust conflagration. Here’s what else the last two months have produced:
- The New York Times revealed in June that several US law schools have retroactively inflated their students’ grades, ostensibly to “help these students find work in a difficult economy,” but perhaps equally if not more so to protect their own rankings and reputation. (Personally, it’s not clear to me how a school’s reputation is enhanced by pumping up grades the way a third-rate used-car dealership rolls back odometers.)
- The University of Michigan’s law school has started including job offers from Indian legal process outsourcing companies on its career page. Fairly or not, Above The Law does kind of capture the zeitgeist of this one: “If you go to a top ten law school and end up having to go to India to find work, your law school … should forgive all your debts and furnish you with a public apology.”
- While demonstrating the absurdity of the US News law school rankings — Stanford could have perfect admissions standards and still not attain the #1 ranking unless it spent another $350 million on salaries and textbooks — University of Indiana law professor William Henderson delivers a hard truth: “I don’t think even one law school in the US News Tier 1 has reached even 10% of its potential to educate and solve problems. Too many one-professor silos. Too much ego.”
These are the signs of a legal education system in the process of breaking down, a subject I canvassed in a recent column for The Lawyers Weekly newspaper: “Law school and the risk of irrelevance.” That column in turn prompted a dynamic discussion of the subject at Legal OnRamp started by Stephanie West Allen, who posed the key question facing those of us with an interest in the future of the profession: “What is the role of law school?” Many insightful comments followed, but I was especially struck by an excellent observation by Michael Stern, a partner at Cooley Godward:
Law school is the worst of both worlds–a lousy trade school and a lousy graduate school. Law school does not prepare practitioners to practice, and lacks intellectual rigor (it’s remarkable that a discipline founded on the interpretation of texts pays virtually no formal attention to hermeneutics and only outsiders like Stanley Fish, with his background as an English professor, ever write about “theory”; few law schools offer any courses providing any historical or sociological context for the evolving role of common law in capitalist society). Three years of reading cases is the equivalent of spending three years in an English Ph.D. program doing nothing more than reading random sonnets as ahistorically as a new critic might have done in the 1950s. And the idea that graduate students are the gatekeepers for the field’s professional journals is really nuts–proof of the vacuity of most legal “scholarship.”
This is an important point. When we criticize law schools for failing to teach practical skills, we’re essentially criticizing horses for not giving milk — it’s not what they’re set up to do. Absolutely, there ought to be practice and business training for new lawyers, but it’s pretty clear at this point that the schools aren’t going to provide it. So we might as well take the stool away from underneath the horse and go look for fresh pastures, so to speak — novel and better ways for lawyers (new and not-so-new) to learn skills that serve clients (I recommend Solo Practice University in this regard, by the way).
But when we say that law schools don’t teach practice, we unconsciously assume that what they do teach is theory — and I think Michael’s observation is correct, that that isn’t actually what most of them teach at all. Law schools do provide a grounding in jurisprudence and some legal theory, but that’s mostly in first year — from then on, it’s Basics of Tax and Intro to Family Law and Criminal Procedure 101 and so forth. This isn’t theory. When you take a class in Evidence, you’re not learning the philosophical underpinnings of what can and can’t be proved. You’re learning about the very real rules of evidence that are applied in real courtrooms to real people with real consequences. You can quibble with the effectiveness of an Evidence course in terms of its success at cross-examination training — but you can’t call it theory.
Michael asserts that law is a lousy graduate school — but I think we can go farther and state that in fact, law is not a graduate program at all. We call it “graduate school” because in most cases, you need to have an undergraduate degree to get in. But the term “graduate school” also suggests academic rigour, extensive scholarship, and detailed research into a subject’s fundamental nature, usually with a major thesis or dissertation requirement. That’s not law school. Invariably, those who take a graduate degree in a particular subject have already achieved an undergraduate degree in the same subject. That’s not law school, either — law school is our first exposure to the subject. Law school is a Bachelor’s degree.
Here in Canada, at least, we’ve always recognized this. Most Canadian law degrees are LL.B.s — Bachelors of Laws — even though you usually need to have an undergrad degree before you can enroll. American schools, by contrast, grant J.D.s, and I’ve never understood how what is basically the same degree is given the title “Juris Doctor” — in no way does a law school degree deserve the comparison to a doctoral program. But “J.D.” sounds great, so much so that several Canadian schools (including my alma mater, unfortunately) have switched the name of their degree from an LL.B. to a J.D. without making any substantive changes to the program.
This reminds me: during my own law school tenure, many of us would hang out at the Grad House lounge. At one point, the real grad students — the Masters and Doctoral candidates — complained about all these “baccalaureates” coming into the graduates’ building and taking all the good seats. I dismissed it at the time as petty rivalry, but I now wonder whether they didn’t have a point. When you get right down to it, your average law school curriculum is basically half Intro to Law and half Bar Exam Prep. You can call that a lot of things, but you can’t call it a “graduate program” without doing some serious damage to the generally accepted meaning of the phrase.
I think it would be great to see the current J.D. or LL.B. degree reconstituted as an undergraduate degree, the same as a Bachelor of Arts or Commerce. Four years of undergraduate work would be enough to provide a healthy grounding in legal theory, legal history, aspects of justice, all the things that law schools now teach, in a mixture with Torts and Contracts and Business Associations and so forth. In fact, a four-year Law undergrad would be a terrific grounding for any number of disciplines — don’t we always tell law students that a law degree opens up vast new career horizons to them? Better yet, students in other fields could minor in Law, or even take a handful of law electives. Think of the boost that would give to legal literacy among university graduates of all kinds, and to public legal education as a result.
How would we train practicing lawyers, then? Well, schools could create an MLP degree, a Masters of Legal Practice to mirror the Masters of Business Administration. You’d require an undergraduate degree in law to ensure the student had thoroughly learned the theory and the basics, to which you would add business skills, professional responsibility training, client focus, project management, and the other hallmarks of a competent practitioner. Or the local Bar could set up a training program, perhaps as a joint venture with the private sector, perhaps funded directly from the dues of licensed members. There would be separate streams for corporate, consumer, litigation, and single-client (i.e, government and corporate department) practice, all structured in consultation with state bars and courts and accreditation authorities. This is pretty much how legal education proceeds in the UK, and they seem to have done pretty well with it.
It’s a fair question whether we could handle such a radical recalibration of the teaching of law — it may well be that we’ve gone too far and too long down the current road to go back and try something new. (Although the University of Western Ontario, following the lead of the Carnegie and Best Practices Reports for legal education reform, is hosting a Canadian Clinical Legal Education conference next month). But at the same time, it looks increasingly as if some kind of radical treatment will be prescribed for legal education sooner or later. The awkward, neither-fish-nor-fowl nature into which law schools have evolved just isn’t sustainable in a legal marketplace where everything else is now subject to intense re-evaluation.
It’s my tremendous pleasure to announce that Pamela H. Woldow, one of the world’s top legal consultants and an unparalleled expert in legal project management and alternative fee arrangements, has joined Edge International as our partner and general counsel.
To those of you who read this blog regularly, Pam requires no introduction: you’ve seen me reference her work and her expertise here several times over the past 2 1/2 years. But if you’re not as familiar with Pam, let me briefly sketch her accomplishments (for a complete list, please see her full biography at the Edge website):
- Pam has served as Chief Counsel of the Pennsylvania Department of Insurance and Deputy General Counsel of Pennsylvania.
- She has worked as Director of Litigation Management for a $2 billion public financial services company.
- She has practised complex commercial and environmental litigation with Sidley & Austin, Duane Morris & Heckscher, and a respected environmental litigation boutique.
- She has been designated by the American Bar Association as a “Legal Rebel” – a change catalyst leading innovation in the practice of law.
- She has served as a leading consultant to law firms and especially to general counsel for several years, providing advice and counsel to some of the largest in-house law departments in the world.
Pam’s written work includes some of the most incisive commentary available on AFAs and project management in the legal services marketplace, and her accomplishments and observations have received much legal media attention. We couldn’t be happier to have a consultant of such magnitude, and a person of such stellar character, join our partnership.
And there’s more good news: Pam has joined the blawgosphere! Please visit her new blog At The Intersection, and read her opening post about the corner at which general counsel and managing partners meet. And as always, you can still follow Pam’s excellent Twitter feed at http://twitter.com/pwoldow. On behalf of all Edge’s partners and friends worldwide, please join me in welcoming Pam Woldow to Edge International!
Last month, a BBC investigative program called Panorama exposed a wide range of illegal and unethical practices by “will-writers,” advisors who help people prepare wills and who are not lawyers. One result of that broadcast could be a significant clawback of lawyer regulatory power over the legal services marketplace in the UK, with implications for the future of this marketplace globally.
Here are some detailed accounts of the Panorama broadcast and of the resulting controversy. Briefly: the program uncovered several instances of will-writers who exploited their clients through massive overcharging, shoddy workmanship, and even outright fraud. The abusive will-writers were neither lawyers nor (evidently) members in good standing of one of the professional will-writing associations that have evolved with the 2007 passage of the Legal Services Act. That statute divides legal services into “reserved legal activities,” which are exclusive to lawyers, and “legal activities,” which are not exclusive to lawyers and are not otherwise subject to specific regulation. Will-writing is not included in the former category and, therefore, is considered an unregulated activity.
In the wake of the broadcast and the public recriminations that accompanied it, the relevant authorities are now under pressure to take swift action. The Legal Services Board, the overarching regulator of all legal professionals in England & Wales, has promised to fast-track a debate and decision regarding whether will-writing should be added to the list of “reserved legal activities” and given exclusively to lawyers. (The Law Society of Scotland is already pushing such measures forward.) An interview with two officials from the Law Society of England & Wales sums up lawyers’ concerns with the current situation (which will be familiar to all advocates of lawyers’ role in legal services provision):
It is the presence of untrained and unregulated people working in the area that has led to a range of problems that can adversely affect consumers, Clarke and Roberts insist. “A lot of clients don’t understand making a will can be a complex process. They think it should be simple, but often it’s much more involved due to the presence of step-children, property and other assets in other countries and lots of other issues which are a part of modern life,” Roberts notes.
Unregulated will writers who lack legal training often fail to understand the legal complexities themselves. “One I know was going to make a will for a large estate which would have been involved, so he merely suggested everything be left to a trustee who could sort it all out as he saw fit. All solicitors are not infallible, but experienced solicitors will understand how to deal with complex estates and take account of all the eventualities so the testator’s wishes will be realised and the estate can be properly managed,” says Roberts.
You can see where all this is likely to lead: to the designation of will-writing as a reserved legal activity under the Legal Services Act. In one respect, it’s difficult to argue against this turn of events. The abuse of unsophisticated consumers, many of them elderly or impoverished, is repugnant and needs to be stopped in its tracks. Solicitors, as noted, aren’t perfect, but they come with a guarantee of education and training and they are backed by insurance funds that can reimburse clients who’ve been poorly served. Wills and estates, in many cases, are not cut-and-dried matters and they can require sophisticated advice, especially at a time of generational change when demand for estate law help will only rise.
Given all that, making will-writing a reserved legal activity seems like a no-brainer. And yet, there are good reasons for the Legal Services Board to proceed with caution here.
To begin with, it’s not entirely accurate to call will-writing an “unregulated activity.” Consumer protection laws are in force precisely to protect the buyers of commercial services that fall outside specific regulatory schemes; moreover, the last time I checked, fraud is still on the books in Britain as a criminal offence. Provisions already exist in Acts and regulations to protect people from the incompetent and unscrupulous and to prosecute such predators where necessary.
Secondly, the current absence of a specific regulatory system for will-writing doesn’t mean that the only alternatives are full lawyer control or unfettered market freedom. The Institute of Professional Willwriters, one of the recognized will-writing groups, will happily remind you that it is the only organization of its type whose Code of Practice has been approved by the Office of Fair Trading. Self-regulation by the will-writing industry down the road is not out of the question, nor is the creation of a specific will-writing regulatory scheme that doesn’t restrict this area of practice to lawyers.
Thirdly, access to justice issues arise whenever a decision is made to restrict an activity to the legal profession. Part of the reason for the huge upsurge in will-writing services in the UK is that less than half of Britons have a will; considering that lawyers have had every chance to exploit this latent market and have failed to do so, it’s hard to make the case that they should now have exclusive rights to this practice area (especially since lawyer regulation tends to drive up costs). The legal profession and the government jointly own responsibility for a failure to educate the public in this area, with the result that, for example, 67% of consumers wrongly believe all will-writers are solicitors.
Fourthly and most importantly, the whole question of what should constitute a “reserved legal activity” hasn’t received nearly enough scrutiny. That’s the conclusion of a just-released report sponsored by the Legal Services Board and written by Stephen Mayson, the widely respected director of the Legal Services Policy Institute. In his report,
Mayson said he had found the origins of the six activities currently reserved to be “remarkably obscure,” with “little basis for suggesting a common policy rationale that justifies their existence”. For example, he discovered that the conveyancing monopoly came about in 1804 when Prime Minister Pitt the Younger wanted to appease a profession unhappy with his plans to increase taxes on articles of clerkship and practising fees. Professor Mayson said it would be “unwise to consider any particular legal activity for inclusion or exclusion in the absence of a broader set of criteria that could be generally applied.”
So there are good reasons for England & Wales to think twice before reflexively placing the writing of wills under the exclusive authority of the legal profession. But if you’re a North American lawyer who practises something other than wills and estates, and you’ve made it this far into this post, you’re probably wondering what possible relevance this has to you. I’d argue it has great relevance, because this looks like the first major skirmish in what will be a decade-long war over a crucial question: what should be classified as “lawyer services” and what can be classified merely as “legal services”?
We’ve tended to use “legal services” and “lawyer services” more or less interchangeably over the years, such that “legal services” has become a virtual synonym for “the practice of law” (lawyers have not hesitated to encourage this blurring of lines). But the will-writing controversy forces us to think about law-related services that, for reasons of both marketplace efficiency and access to justice, could and perhaps should be kept outside the strict ambit of the legal profession. Granted that a Wild-West free-for-all wills market serves no one’s interests: is the opposite end of the spectrum, wills kept under lawyers’ lock and key, the best alternative? Isn’t the middle ground worth at least some exploration and settlement?
Consider another example, a growing force coming from the opposite direction: legal process outsourcing. Three recent articles explore the impact of LPOs on the traditional big-firm business model, and I recommend a thorough reading of all three:
- Steven Harper of Northwestern University Faculty of Law suggests that outsourcing is The New and Improved Business Model Law Firms Need;
- Bruce MacEwen of Adam Smith Esq., describes LPO’s challenge to law firms starkly, as Innovators at the Barricades; and
- Ron Friedmann of LPO Integreon asks: Will Legal Outsourcing Drive Law Firm Innovation?
If I can try to summarize the thrust of three lengthy and insightful pieces, it seems to be that:
- LPOs and other non-traditional legal service providers are taking a growing amount of once-profitable associate-level work from law firms,
- the unbundling model upon which these new providers are based is changing client expectations about where and how certain types of legal services are purchased, and
- the result will be law firms with work of less quantity but higher quality, which will inter alia benefit the quality of a legal career generally.
LPOs, essentially, are forcing law firms (and their clients) to ask the critical question of our times: is a lawyer really the best choice to do X? The answer in many cases is yes, especially when the job calls for the kind of judgment, nuance, skill and wisdom that lawyers bring to the best of their work. These are “lawyer services.”
But in many other cases, the answer is no: all or parts of tasks such as document review, due diligence, electronic discovery, document drafting and production, small-claims court representation, and basic transactions like house purchases, straightforward divorces, and as the current situation in England & Wales suggests, wills and estates, don’t always need a lawyer’s attention. Should the providers of these services, whomever they are, be qualified and trustworthy? Of course. Must they always be lawyers? I think the answer is: of course not.
As time goes on, “legal services” will come to mean “commercial services related to the exercise of law-related rights and the fulfillment of law-related responsibilities,” without the necessary inclusion of lawyers. “Lawyer services” will be a sub-category defined as “legal services that, for reasons of required skill and/or public protection, are provided exclusively by lawyers.” “Legal services” will be offered by a wide variety of domestic and foreign providers, none of whom need to be lawyers; their regulation will be specific to the competence required, and access to these services will be available more widely than when lawyers offered them more or less exclusively. “Lawyer services” will be the cream of what we now consider to be the very deep crop of lawyer activities, only the most challenging and the most valuable to clients.
There’s nothing novel about this kind of distinction in professional services.
- Richard Susskind quotes the statistic that 4% of health-care services are provided by doctors, while 50% of legal services are provided by lawyers. We accept a distinction between “health” services (delivered by nurses, physiotherapists, massage therapists, psychiatrists, and many other “health practitioners”) and “medical” services (delivered by medical doctors — the word “medical” itself is derived from the Latin for “physician”).
- When we go to have our teeth checked, we usually spend most of our time with a “dental assistant” and only the last few minutes with the “dentist.”
- We use “architects” and “engineers” to design our homes and buildings, but we hire “contractors” and “tradespeople” to implement designs and renovations through actual construction — the heavy lifting, literally.
We accept all these situations as normal because the markets for these professional services have evolved to allow the most skilled professionals to do the highest-end, highest-value work and an army of other professionals, para-professionals and skilled craftspeople (usually under specific regulatory or quasi-regulatory regimes) to carry out the rest of the work. Doing it any other way — requiring medical doctors to give flu shots, obliging dentists to deliver teeth-cleaning, requiring engineers to lay bricks — would result in massive system backlogs, huge price increases, and widespread dissatisfaction by both the professional and the client — in other words, pretty much the situation we have now in the legal marketplace.
The legal marketplace, whether some lawyers like it or not, is heading towards the same kind of stratification as other professional fields, to a massive “sorting out” of what lawyers need to do and what they don’t need to do. It’s immaterial whether this is brought about by regulation or the marketplace; in the end, these two forces will be working in virtual lockstep to effect change. There will be a period of disruption, maybe even chaos, as we figure out how certain legal services are best delivered by non-lawyers; it won’t be a tidy process, and there will be damage of the kind suffered by will consumers in the UK (and associates in large law firms). But every marketplace has had to go through this, and if doctors could see their way clear to allow non-doctors to take on the sacred duty of preserving life and promoting health, I think lawyers can bring themselves to make a similar commitment.
This is what the next decade will bring: a Great Sorting Out of demand for legal services, as the market reviews its choices and decides where and from whom it wants to acquire what it needs. As time goes by, the category of “legal services” will grow by volume, while “lawyer services” will shrink by volume; but both categories, paradoxically, will grow in quality. Lawyers in particular will benefit from a task list that requires more sophistication and higher-level skills. For that reason alone, but also because of the ultimate interests of clients, we should be working to narrow our focus on the highest-level work while simultaneously supporting the development of practices and regimes to oversee the more basic work we used to do. It’s anyone’s guess whether our profession will step up to that challenge.
I’ve been an active contributor lately to a number of other blogs and periodicals, so I thought you might be interested in checking some of them out. Here are six articles I’ve written at other legal sites recently.
1. “Letting the client decide,” Slaw: Brand new this morning, my newest column looks at a UK firm whose portfolio of alternative fee arrangements includes an offer to give the client the right to set the final price.
2. “Rethinking the case law update: who are you talking to?“, Law Firm Web Strategy: one of two recent columns at Stem Legal‘s blog, this one asks why we still rely on that old legal publishing standby, the case law update.
3. “Talk to me: putting an end to canned conversations,” Law Firm Web Strategy: My second Stem Legal column continues the recent theme of “lawyer communication” issues by examining voice mail in law firms.
4. “Associate compensation meets the merit system,” The Lawyers Weekly: The first of two recent columns at The Lawyers Weekly reviews the latest developments on merit-based associate pay systems.
5. “Law schools and the risk of irrelevance,” The Lawyers Weekly: This column generated a lot of Twitter activity and direct emails, which tells me the disconnect between law school and law practice is hitting a nerve.
6. “The 21st-century law firm,” CBAPracticeLink: Finally, an article published at CBA PracticeLink pulls together several diverse strands of lawyer innovation and marketplace evolution into a model of the future law firm.
Even if former JetBlue flight attendant Steven Slater didn’t plan his famous chute-deploying resignation in advance, he seems ready and willing to exploit the moment, perhaps to land a reality-TV hosting gig. If it does turn out that his Big Quit was staged (like that of Elyse Porterfield, the “Dry-Erase Girl” whose hoax didn’t even last 24 hours), it will be a salient reminder to all of us about things that seem too good to be true.
But what’s real, and what remains, is the widespread public support these figures received and what they represent: a daydream about the courage to quit a job that treats you with less respect than you deserve. And it underlines a serious trend in the workforce to which law firms should be paying close attention. As Daniel Gross explains in a Newsweek commentary, “the poor labour market and workers’ antagonism toward employers and customers are actually connected”:
“The economy has been growing for a year, and corporate profits have surged — Standard & Poor estimates that income of the S&P 500 rose nearly 52 percent in the second quarter of 2010 over the same period in 2009. Much of that impressive growth has been driven by the remarkable gains in efficiency and productivity that corporate America has notched since the recession took hold. Last year, productivity — the ability to produce more with less — soared 3.5 percent, up from 1 percent growth in 2008 and 1.6 percent in 2007.
“Yes, companies have embraced the Gospel of Cost Cutting with missionary zeal — printing on both sides of the page, eliminating bottled water, turning off the lights. But most of the gains came straight out of payroll. Companies slashed salaries and curtailed benefits, all while asking shellshocked veterans to pick up the slack for downsized colleagues. Even as business picked up, companies have been extremely slow to hire; the private sector has added just 630,000 jobs so far this year. And when it comes to wages and benefits, corporate America’s bean counters could make Scrooge blush. Many of the firms that slashed pay or cut 401(k) matches haven’t restored them even though their balance sheets and profits are now healthy. …
“The last couple of years have been a golden era for employers — they’ve found that they can hire whom they want at lower wages, and that it’s easier to retain folks without having to boost salaries. But at some point, companies that want to grow will have to break down and hire new people, or turn part-timers into full-timers, or put contractors on the payroll. Many employers are treating existing and potential employees as if they’re desperate for work. And plenty of Americans are. But desperate times can lead to desperate measures. Push your workforce too hard without adequate reward, and someone just might tell you to take this job and shove it.”
I was reminded of this observation when reading the latest financial report from a large law firm: “Profits rose, revenue dipped at Baker & McKenzie in fiscal 2010.” I’ve seen a couple dozen of these stories in the mainstream legal press over the past few months, breathlessly announcing what amounts to the same thing over and over: firms are bringing in less money, but partners are reaping higher profits. That happy result comes from the important middle step that the headlines don’t include: “Revenues down, costs slashed in a surge of panic, profits up.”
We all remember the bloodletting committed by large law firms in the wake of the financial crisis, as staffers and junior lawyers found themselves out on the street. The firms that threw their most vulnerable over the side then are the same firms reporting rising profits now. It was ever thus — that’s how businesses work, chopping assets (including people) to ensure continued or improved profits for shareholders. But when you chop and chop, making abundantly clear that employees will always be let go at the first sign of profit trouble, then you also risk the full-scale alienation of your talent pool.
Tens of thousands of 2008-10 law schools grads are still deeply in debt and struggling to find law jobs to stay afloat, even to the point of moving to India to work for an LPO. Many law firm partners, I think, have forgotten just how frustrating and humiliating it can be to have no job and no prospect of finding one — and they never had to look for work in an economy like this, where unemployment shows every sign of becoming chronic. And to rub salt in the wound, the law firms that cast off their young lawyers love to blame the victim, castigating new grads for their “sense of entitlement” and “lack of work ethic.” This can’t continue without inflicting real damage.
There are plenty of archaic traditions in the legal profession that have no place in the 21st century. But one tradition that deserves its place of pride is the responsibility to help usher in the next generation of practitioners. The recognition that today’s juniors are tomorrow’s leaders was sufficiently widespread that firms took care of their people as a matter of course. As stewardship in the legal profession has faded, first gradually and then dramatically, lawyers’ trust in the firm and the partnership has faded with it. This isn’t just something we should feel bad about. This is a collective decision to exploit legal talent at the worst possible time.
Throughout this coming decade, we are going to see the continuous rise of lawyers engaged in legal services but employed by non-lawyer entities. Legal process outsourcers, e-discovery providers, document assembly companies, legal project management experts, legal knowledge professionals, and many other entities outside the law firm world will be hiring experienced lawyers to populate their offices. Law firms that took care of their people in the tough times will have nothing to fear; those that didn’t will be astonished and appalled at how easily their lawyers and legal professionals will be poached. Steven Slater’s real-life jump, no matter how contrived it might have been, reflects employees’ economy-wide readiness to jump from jobs that treat them as fungible, exploitable, and expendable. If that’s how you’ve treated your people, you can look forward to the day when they return the favour.
There’s a story told about Jack Welch, former GE president — it might be from one of his books, or it might be apocryphal; quite possibly it’s both. The story goes that soon after he took over the company, he called in his vice-presidents and other senior people and advised them that countless smaller companies and start-ups were out there gunning for GE, hoping to take down the top dog by finding the chinks in its armour and exploiting them. He directed his people to locate these companies, identify the disruptive innovations they were coming up with, and prepare defences against them.
Two days later, Welch called those same people back into the boardroom and told them he’d changed his mind. When his VPs and senior leaders found these companies and figured out what they were doing to destroy GE’s business, they weren’t to prepare defences against those innovations. They were to adopt them.
In a nutshell, that describes the challenge facing companies in virtually every industry today, especially legacy industries like music, automobiles and publishing where complacency has led to ruin. Very rarely, companies rise to the challenge: consider The Atlantic magazine, which is meeting this innovator’s dilemma by doing exactly what Jack Welch prescribed: reinventing its business model before competitors force it to do so. In the words of the company’s media president:
“‘If our mission was to kill the magazine, what would we do?'” said Smith, who added that a digital competitor was going to do that anyway, so they did it themselves.”
The article continues: “There are so few companies that realize this needs to be a key element of their strategy. Someone else is out there trying to kill them. So do it yourself and reap the rewards. … [The Atlantic] recognized that digital wasn’t just an adjunct to the print product, but a core element of the brand and the publication. So, they … looked for ways to make the digital product be fantastic on its own. And, now, nearly 40% of the brand’s revenue comes from its online properties….
What GE and The Atlantic saw and responded to, most lawyers and law firms cannot or will not see. Most lawyers are blissfully unaware that they’re in the cross-hairs of numerous entities outside the legal profession, entities that have set their sights on the legal marketplace intending to own some or all of it. These entities know the history of this market very well, and they know that lawyers and law firms own a near-monopoly on legal services thanks mostly to ancient regulatory circumstance. They believe those accidents of history have run their course, and that the field will belong in future to whoever best delivers what the market wants and needs.
Accordingly, these entities are now sizing up the legal profession, looking for weaknesses and soft spots to exploit. They have several advantages, including financing, business savvy, and patience. But their most powerful weapon is their attitude: unlike most lawyers, they believe there’s nothing natural or pre-ordained about lawyers’ domination of the legal services marketplace, and they believe it can be ended within the decade. Very few lawyers believe this, and very few law firms are taking the Jack Welch approach of both knowing your enemy and adopting its methods.
So here’s a primer on your enemy and its reconnaissance efforts. When these entities sit around a table and say, “How can we kill off law firms? What key weaknesses can we exploit?”, here are three answers they’re most likely to come up with, the jugular veins they’re aiming for.
1. Price. Simplest and easiest. Clients of all types and sizes will tell anyone who asks (a group that rarely includes lawyers) that they dislike what they perceive as the high price of legal services and the uncertainty surrounding what the final price will be. Competitors outside the profession have looked at this carefully and concluded that lawyers’ prices are high for two reasons: (1) lawyers are incredibly inefficient, the equivalent of candlelight-workers in the electric age, and (2) lawyers are accustomed to a certain income and lifestyle and, in the absence of real competition, charge high prices to maintain them.
These new entities are hyper-efficient, partly because they come from start-up tech-aligned backgrounds, and partly because they never worked in law firms and weren’t raised in all the assumptions by which lawyers operate. And because they’re outsiders, hungry and ambitious, they start from a much lower level of “necessary income” expectations (it helps that they’re not burdened with tens of thousands of dollars in law school debt from the start). Lawyers can rattle off many reasons why we charge what we do, failing to recognize the fundamental marketplace rule that customers don’t care, not one inch, how much it costs you to provide a product or service. Price is a gaping strategic exposure for lawyers, and competitors have already locked onto it.
2. Intelligence. I don’t, of course, mean this in the sense of raw brain power; lawyers are plenty smart. (One of lawyers’ strategic weaknesses, by the way, is our failure to recognize that we’re not the only or the most gifted smart people in the room). I mean this in the sense of industrial or competitive intelligence, the ability to understand and manipulate the ways in which we and our competitors do business and the costs at which that business is carried out. Most lawyers and law firms have only a rudimentary grasp of these things: business is done the way it’s always been done, from our forefathers’ time: it works and it makes money, so what’s not to like?
Law firms with rich intelligence capacities would know how much it costs them to deliver their services, how much their rivals charge and why, what knowledge its people and systems collectively possess, and how to apply that knowledge in a systematic way. This describes very few actual law firms; but it describes perfectly the competitors now entering the marketplace. They employ elementary principles of business process engineering and more advanced methods of project and knowledge management, they have a knack for getting work done both cheaply and well, and they know their clients and other competitors cold. The legal profession’s counter-intelligence efforts in this regard have been virtually zero, and we are terribly vulnerable as a result.
3. Responsiveness. This concept has several different dimensions, some of which will be familiar to lawyers from client complaints. We don’t call clients back quickly enough or stay in touch often enough; no matter what we may believe of ourselves, client surveys consistently state that as far as our customers are concerned, we’re pretty terrible communicators. It also applies in the sense of lawyers’ failure to properly immerse ourselves in clients’ worlds and priorities, such that our services could be provided in a more timely, appropriate and targeted fashion. These are not insurmountable obstacles: these are simply choices lawyers have made regarding how to go about our work. These new entities, seeing an opening, are choosing otherwise.
But even more fundamentally, “responsiveness” describes a category of weakness that applies to our whole approach to the marketplace. If there’s one thing that strikes competitors from outside the profession about our marketplace, it’s this: why don’t lawyers care that 75%-80% of the population, civilian and corporate, can’t afford lawyers’ services? Never mind the moral argument: what kind of industry or profession is content to let so many fields lie fallow? How can you possibly not care about billions of dollars’ worth of legal service opportunities that go begging to be met (with more to come, as the economy surely worsens)? The legal profession, from all outward appearances, is either clueless about or indifferent to the latent legal market. Rest assured, our new rivals are not.
How do you kill a law firm? Assuming the firm doesn’t die of natural causes or commit suicide, you identify its weaknesses and you exploit them mercilessly, over and over again, until the firm is helpless to defend itself or its client base. Believe me when I say that as targets go, most law firms present themselves as fat, immobile, complacent victims-in-waiting. It’s not too late to prepare defences, and it’s not impossible, no matter how it might seem from the inside, to take the necessary, disruptive-innovation steps to turn your firm into the kind of world-beating champion your rivals hope to become. But time is running very short. Jack Welch took two days to change his mind. How long will it take you?