Tr.im and the risks of social media

Shortly after starting this blog in January 2008, I copied-and-pasted my first ten posts and emailed them to my parents, who were not blog-friendly but who were very interested to see what I was writing. (Are parents great, or what?) The next month, I emailed another bunch of posts, and from then on, it became a regular thing. By the tenth or eleventh email, I realized that I was inadvertently creating a complete backup of my blog.

Right now, everything I’ve written at Law21 is also stored on Sympatico’s email servers somewhere. I’ve also saved all those messages into a Word file, which is stored on my hard drive and therefore on Carbonite’s backup system too. Later this month, I’ll probably copy that Word file onto a thumbdrive as well. (Printing out all 180,000 words on the blog would require more than 400 pages, so I think I’ll stop short of taking backup to that extreme.)

The reason why I take all these steps was amply illustrated yesterday when URL-shortening service Tr.im shut down with no advance warning. All of the stats it was tracking have disappeared, and all the links it created could be gone by Jan. 1, 2010. If you’ve been following me on Twitter, this could be problematic, since I’ve been using tr.im links for a few months now. (I switched from tinyurl.com and eventually from bit.ly simply because tr.im bought me one extra character to play with,vital in Twitter’s 140-character universe.) It’s a bigger problem for me, though, because I’ve been using Twitter as a micro-publishing tool, so I’ll now need to go back, click on all those tr.im links I posted, and resave them using some other method. That’s assuming, of course,  Twitter keeps my old posts — Robert Scoble, for one, isn’t sure they even exist anymore.

Tr.im’s sudden demise is a wakeup call to every lawyer who blogs, twitters, or otherwise employs social media as marketing, communications, publishing or client relationship tools. (Not to mention those who use URL shorteners for legal citations, as this engaging conversation at Slaw demonstrates.) We all learned this lesson the hard way back in the late 1990s and we may be about to learn it again: the online ecosphere is incredibly fragile.

Massive platforms that appear ironclad-strong from the outside can be hollowed out or ripped up on a moment’s notice. Look at Bloglines, the first and only feed reader I’ve ever used — Michael Arrington notes today that it could be on its last legs. Or look at Friendfeed, which has its devotees among lawyers — it was bought by Facebook yesterday and could quite easily disappear within Facebook’s gigantic digestive system. Twitter itself was taken down with alarming ease last week by a hacker attack aimed at just one blogger (and Facebook didn’t fare much better). WordPress is and has been a fabulous platform for this blog — but if it disappeared tomorrow, what would happen to Law21?

Lawyers are constantly advised to use these new online social tools, as well they should. But it’s easy to forget that Facebook, LinkedIn and Twitter are not permanent features of the landscape — especially since none of them has yet come out with a sustainable business model. You do take a risk when you invest time and money in them. In no way is that risk big enough to justify giving up on these tools and platforms — but neither should you regard them as failsafe. As Scoble says, “whenever you put your data in other people’s, or other company’s, hands, you are taking a pretty significant risk.”

The firms of the future

“Does the future belong to virtual law firms?” That question was posed by an American Lawyer article earlier this week that focused on Virtual Law Partners, a growing firm nominally based in Silicon Valley but in fact operating, well, wherever its lawyers are. Virtual firms — two others, FSB Legal Counsel and Rimon Law Group, are also cited — consist of partners who operate independently, charging rates well below what they would require were they (still) at large firms and profiting by the huge savings in overhead and other costs.

The lawyers operate remotely, but they tap into a larger infrastructure with centralized billing, IT support, marketing, and recruiting efforts. They also share work frequently, communicating through video chat or e-mail as needed. Technology companies and startups were early converts, but the firms have added lawyers with varying expertise, including employment, real estate; FSB has even started a litigation practice.

Answering the article’s eponymous question in the negative was Patrick J. Lamb, who operates a bricks-and-mortar but nonetheless highly innovative firm at Valorem Law. He suggests that virtual firms suffer by comparison to boutiques thanks to one key difference.

The difference?  The ability to aggressively collaborate. Even with the best communication hardware, there is something lost when you can’t go next door and bounce ideas off someone who may have nothing to do with the case but who is vested in its outcome. I’ve experience firsthand the accelerated evolution of ideas from really good to extraordinary when several experienced minds combine their talent and judgment and work through a problem.

Speaking for myself, it’s not clear to me how a partner in a virtual law firm differs meaningfully from a well-connected high-tech sole practitioner. Both run their own practices in a highly personalized and streamlined environment, often rely on cloud-based infrastructure to manage their practices, set their own rules for client relationships, and operate with an unusual degree of autonomy. I think virtual firms aren’t cyberspace versions of traditional law firms so much as they’re loose aggregations of like-minded solos under a common banner that happens to be hung on the internet.

So I don’t think virtual firms are the future. But I do think they’re a future. More specifically, they’re one of a growing number of law firm models that will all be able to flourish in the next couple of decades. That’s because what we’re really seeing here is the demise of the traditional cookie-cutter law firm as the default setting for legal service enterprises.

One of the great things about the current upheaval in the legal marketplace is that the old expectations and parameters of law firms are losing their iron grip on the profession. Look, for example, at FutureFirm 1.0, a two-day competition this past April to take a tired traditional law firm called Marbury Madison LLP and overhaul it for the 21st century. Hosted by Prof. William Henderson at the University of Indiana Maurer Faculty of Law, FutureFirms attracted some of the most innovative minds in practice, the corporate world and academia. The event produced a blueprint for redefining large law firms that includes alternative fees, merit-based compensation and risk-sharing with clients — and they’ll do it again next year.

Or take a look at a forthcoming article in the CBA’s National magazine (which, full disclosure, I edit) titled “2020 Vision,” written by lawyer and Legal Post blogger Mitch Kowalski. It looks back from the year 2020 at the development of a very different (and hugely successful) law firm called BFC Law Professional Corporation that abandoned most of the trappings of the traditional firm. Of particular note for our purposes is the future firm’s “hub-and-spoke” approach to its physical premises:

The Hub
We maintain meeting room space downtown (the Hub), equipped with staff, computers and the like. This space also contains hoteling niches where lawyers have workspace and telephone/internet access. Remember, all our systems are cloud-based, so lawyers and staff can work anywhere. Office management handles all boardroom and hoteling niche bookings.

The Spoke
BFC’s day-to-day legal work is done at a public transit-accessible location outside the downtown core (the Spoke). Not only is rent much cheaper there, our staff and lawyers find the Spoke to be closer to their homes,  which reduces their travel time and increases their quality of life. In the Spoke, we have moved away from separate offices for lawyers,  which allows for the efficient use of smaller rentable space with better HVAC flow (further reducing costs). Small meeting rooms throughout the Spoke accommodate privacy as needed.

What the virtual law firm, Marbury Madison, and BFC Law all have in common is that they’re different and quite realistic visions of how lawyers can come together to offer legal services to the marketplace. They reject, or at least test severely, the standing assumptions about how a law firm should be constructed, both physically in terms of its premises and organizationally in terms of its clients and employees. In doing so, they reflect our evolving understanding within the profession of just what a law firm is supposed to look like.

We have this funny little idea in the law that the nature of your work and the quality of your practice are heavily influenced by the physical environment in which you operate. Are you on the 40th floor of a steel and glass tower in an urban center? You must be doing intricate, high-end, bespoke work for multinational clients. Are you in a nice but inconspicuous brick building with a wooden front door and creaky floorboards in an exurban community? You must be doing basic, commoditized work for unsophisticated clients. Lawyers love to judge people, and the people we love judging the most are each other, using criteria that reveal more about our own assumptions and biases than anything else. What the rise of the virtual law firm really signifies is that those assumptions, at least in terms of law firm structure, should soon be fading away.

In fact, if the form that a law firm takes will be influenced by anyone, it’s going to be clients, not lawyers. Both clients and lawyers — but especially lawyers — are very used to the idea that “they” come to see “us” in a place and at a time of our choosing. That simple unconscious assumption sets the tone for all relations that follow between the two parties. Lawyers have always had home-field advantage over clients, and we like it that way.

Now, the gravitational pull is starting to run the other way. As clients’ influence grows, so too will their ability to draw us to them, rather than vice versa. That doesn’t have to mean house calls — although it might — but it does mean that law firms will feel more obliged to arrange their physical availability in ways that increase convenience to clients. “Lawyers on demand,” a little like time-shifted TV shows? It’s not a preposterous result, and even thinking about it prepares us to better adjust to future client relationships where we don’t get to set all the ground rules from the start.

Yesterday’s law firm selection was a boxed lunch packed by lawyers; tomorrow’s is going to be a lavish buffet with clients standing in line next to you while you choose. For all that we still need to work on diversity within law firms, it’s going to be nice to have a little diversity of law firms as well.

Three hotspots for change

I thought I’d bring your attention to three upcoming conferences that crystallize the enormous changes taking place in the legal services marketplace these days. I aim to attend all three, but if you can get to even one of them, you’ll be exposed to some tremendous insights into what’s happening in the legal profession right now.

The first stop will be Denver, Colorado, from September 25-26, 2009. That’s where the College of Law Practice Management will be hosting its inaugural Futures Conference, as leaders and visionaries of the legal profession lay out their vision of the future course of this industry. Keynote presentations will be made by Ward Bower of Altman Weil, Bruce MacEwen of Adam Smith Esq., and Harry Trueheart, Chairman of Nixon Peabody LLP, with interactive discussions provided by the Fellows themselves. I wrote about this event in more detail here, and I continue to highly recommend it for anyone interested in where the profession is heading.

Next up is Toronto, Ontario, from November 16-17, 2009. The Canadian Bar Association will present its fifth annual Law Firm Leadership Conference, with a focus on change management. There’s an amazing international lineup for this event: Richard Susskind, Bruce MacEwen again, Legal OnRamp’s Paul Lippe, Cravath, Swaine & Moore’s Evan Chesler, Valorem Law Group’s Patrick J. Lamb, top GCs like David Allgood and Gord Currie, and the managing partners of Torys, Fasken Martineau, and other firms. More information and registration details are available at the CBA website.

The third and final leg of the tour is in Washington, D.C., from March 22-23, 2010. The Center for the Study of the Legal Profession at Georgetown University Law Center will host a symposium titled “Law Firm Evolution: Brave New World or Business As Usual?” The call for papers has gone out, and there’s still time to submit your abstract: September 15, 2009, is the deadline for proposals. The Center’s previous symposium, on the future of the global law firm, attracted a stellar cast of managing partners,  leading academics, and professional thought leaders. This year’s symposium figures to be no less insightful and significant.

So there you go: three North American hotspots for talking about and advancing the cause of innovation on legal services delivery. If you plan on attending one or more, please let me know.

All good things…

My newest column is up and running at Slaw, where I’m always honoured it has a place. You can also find it directly below:

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“Eighty percent of the poor in the United States are unable to afford a lawyer or find pro bono help for their civil legal problems, according to the American Bar Association.” That sentence, from an American Lawyer article last month, is not only embarrassing. It’s also an omen.

The article in question, titled “Unmet Needs,” was part of a special series on pro bono in the United States, including AmLaw’s list of the top 100 pro bono-friendly law firms and a powerful critique of big-firm pro bono by Deborah Rhode. The latter piece highlighted how pro bono at many firms is less an exercise in professional and public responsibility than it is an opportunity to enhance associate recruitment and retention and score some easy PR points. The result, Rhode points out, is that the clients most in need — the “sob stories” and “difficult clients” referenced in the article — are the least likely to get pro bono help from these firms.

It reminded me of a conversation I had last year with two senior local practitioners. Both lawyers were partners in national firms; both were also extensively involved in volunteer and community activities. They were lamenting the pro bono culture that had taken hold in law firms, especially among newer lawyers. Young associates were constantly clamouring to do pro bono work for one socially aware organization or another. “What I’d like to see,” one lawyer said, “is a lot more of them go down to family court and help out some of the unrepresented litigants there. That’s where we need pro bono help right now.”

Pro bono assistance of that kind is just the sort of “unmet need” that the American Lawyer article was talking about. The writers spoke with legal aid and pro bono lawyers across the US and identified five “needs baskets” where the demand for pro bono work is great and the supply from big firms is limited:

  1. Representing military personnel
  2. Helping the unemployed
  3. Easing the load in family court
  4. The cracking pro bono infrastructure
  5. Serving the rural poor

The first category might be uniquely demanding in the US (and perhaps also Great Britain) right now, but the other four needs baskets are present in virtually every common-law jurisdiction. AmLaw was focusing on pro bono and large law firms, but it seems to me that this is part of a larger pattern of areas systematically under-served by lawyers.

It’s almost received wisdom in our profession that many practitioners couldn’t afford to hire themselves if they needed a lawyer, a statement that I suspect is at least a little exaggerated. But for many people, especially those in the categories above, it’s no joke: they flatly cannot afford to hire a lawyer for anything more than the most basic tasks. Legal assistance is a service that middle-class people, with help from family members and savings accounts, can just about manage. It’s something that working-class people struggle terribly to afford. But for the poor and unemployed, it’s legal aid, pro bono, or nothing. And thanks to the recession, legal aid systems are being cut back in the US, the UK and Canada, while the number of people applying for legal aid is growing.

If you’re a lawyer with a conscience, that should bother you a great deal. But even if you’re without a conscience, you should still be worried by this trend, because it’s about to dovetail with another trend and lead to some serious consequences: lawyer shortages outside urban centers are starting to become endemic in some countries.

Canada: “43 percent of lawyers practising in [B.C.] are now over the age of 50 … in the last 10 years, the numbers of lawyers aged 51 to 60 has doubled, with an average age across the province of 47 years old. In small communities, the aging of the profession is even more pronounced, with an average age of over 50 years old.”

Australia: “[M]any rural and regional practices do not have enough lawyers to service community needs, with 43 per cent of principals indicating that their practice currently does not have enough lawyers to service its client base. The problem looks set to escalate, with a large number of lawyers – many of whom are sole practitioners – looking to retire from practice in the next five years.”

Japan: “The dateline is Yakumo, a small city of almost 20,000 within a legal district of about 50,000. Journalist Norimitsu Onishi reports that it is not unusual for cities five times that size to have not a single lawyer.”

The root causes of most lawyer shortages are the same: aging practitioners ready to wind down their practices, not enough young lawyers willing to move to smaller communities to replace them. It’s not surprising that the US, a country with more than one million lawyers, doesn’t have many lawyer shortages, but less heavily populated states like Maine and Idaho are reporting such shortages already. Many industrialized countries are facing the prospect of communities without enough lawyers to serve the local population.

So from one direction, we have growing numbers of people in dire circumstances needing but not getting lawyers’ help. And from the other direction comes a growing number of non-urban centers without enough lawyers to meet residents’ legal needs. Without question, the demand for legal services is growing — but the supply of these services, how much they cost, and where and to whom they’ll be delivered all lie within the control of lawyers. And as we’ve seen, we can’t always count on lawyers to put the public interest ahead of their own interest when deciding how their supply will meet that demand.

So how do you think this is going to end? Faced with a legal profession unable or unwilling to provide affordable legal services to clients whom and in communities where they have little economic interest, do you suppose governments will stand idly by? Do you think they won’t wonder why it is that lawyers and only lawyers are licensed to provide the great majority of legal services? Do you think they’ll continue to believe that the Unauthorized Practice of Law is a legitimate restraint on the delivery of legal services? Do you think they’ll ever consider that lawyers are anything other than facilitators of legal services delivery?

If you think all these things will come to pass, that the status quo will roll along unchecked, then more power to you. But if not, then you might yet come to believe that the era when lawyers were in control of the legal services marketplace is drawing rapidly to a close.

Free and the GP

Like Thomas Friedman and Malcolm Gladwell before him, Chris Anderson is becoming known for books that identify and name an evolving trend that connects business and society. You’ve probably read or head about his newest book Free: the Future of a Radical Price. It’s generating a tremendous amount of heat around the idea that the cost of many things is heading towards zero and the price of those things is following. Reviews from established providers have ranged from mixed (The New York Times and The Economist, to name two) to devastating (Gladwell himself in The New Yorker), while reaction from the blogosphere and Twitterati has, not surprisingly, been far more positive.

I try not to talk about books I haven’t read, and Free is still on my to-get list. But I did read the lengthy excerpt published in Anderson’s magazine Wired last February, and it seems to capture the book’s arguments nicely (and for free, no less). The gist is that technological advances have made the cost of creating one more copy of many products (the marginal cost) and the cost of distributing those products so small that they are effectively zero. Content that can be rendered digitally (almost all of it) is accordingly “too cheap to meter,” which in any kind of open marketplace means that competition will cut the price of those products to virtually nothing.

Of course, not everything falls into this category: products like shoes and TVs aren’t heading towards free. And even for products whose marginal costs are nearly nothing, that’s not the end of the story, as the Times review notes:

More precisely, the marginal cost of digital products, or the cost of delivering one additional copy, is approaching zero. The fixed cost of producing the first copy, however, may be as high as ever. All those servers and transmission lines, as cheap as they may be per gigabyte, require large initial investments. The articles still have to be written, the songs recorded, the movies made. The crucial business question, then, is how you cover those fixed costs. As many an airline bankruptcy demonstrates, it can be extremely hard to survive in a business with high fixed costs, low marginal costs and relatively easy entry. As long as serving one new customer costs next to nothing, the competition to attract as many customers as possible will drive prices toward zero. And zero doesn’t pay the bills.

Interesting as all this is, what does it have to do with the legal profession? Potentially, a great deal, as some legal bloggers have noted. Carolyn Elefant and Doug Cornelius both point to innovative new offerings from two well-known US law firms: Wilson Sonsini has set up an online term sheet generator, while Orrick has created a start-up forms library on its website. Both of these products (or are they services?) are entirely free, to anyone (client, non-client, other lawyer) who wants to use them. They’re also products from which these firms and others have traditionally made money. “But there’s a method to Orrick’s apparent madness,” Carolyn writes:

Orrick’s freebies help it capture a segment of the market which either couldn’t afford to hire Orrick or if they could, would not have  been worth Orrick’s time.  Consider the example of a small business — typically the type of client outside of biglaw’s demographic.   The business might download and fill in Orrick’s incorporation form and then say to itself “I’ve already filled out the data.  How much could it cost to pay an Orrick attorney to look this over?”  Likewise, Orrick could charge far less to eyeball a completed form which it prepared itself than if the firm were to begin the incorporation from scratch (in which case, it would have to invite the client to the office, interview the client, gather the data and prepare the incorporation papers).

Meanwhile, Doug points out that many law firms have already adopted the philosophy of Free, in their own law firm newsletters and “client alerts”:

When you had to mail these alerts, there was a dollar cost associated with that distribution. To better phrase that, there was a stamp cost associated with distribution. Now distribution are costs are minimal. The costs are the same whether you email it to 500 people or 50,000 people. The same is true with viewing it on the law firm’s website. … Lawyers and their firms are giving away this valuable legal insight in the hopes that you will hire them to represent you in a matter related to the information in their publication. They use the publications to showcase their expertise, but in the process give away some of their substantive knowledge.

Giving away something for free or ultra-cheap in hopes you’ll entice users to buy your other services is not a new phenomenon, even in law: smaller firms have been using items like wills as “loss leaders” for years. What’s significant here is what’s being given away.

Legal forms aren’t matchbooks or Bic pens — or at least, they didn’t use to be: they were once important elements of the lawyer’s inventory that required a lawyer’s skills. The fact that they’re now customizable and downloadable on the Net tells us that the skill to produce them is now available widely. That implies a lack of scarcity and a consequent inability to charge much of a price. Legal knowledge, as Doug points out, is already being given away free by law firms; now, it appears that legal processes like document creation are following suit.

But it’s not law firms like Wilson and Orrick leading the charge and blazing this trial; it’s non-lawyer entities. Companies like LegalZoom sell forms for low prices; start-ups like WhichDraft give them away for free; most tellingly of all, services like JD Supra encourage lawyers to donate them to the profession at large as, among other things, a marketing tool. “Lawyers need to recognize,” Carolyn notes, “that we are fast reaching a point where the kinds of forms that companies like LegalZoom offer – such as contracts, leases, incorporations and wills – may be available online to all for free.”

Lawyers’ marginal cost of document preparation has always been low, but in the absence of other alternatives for clients, document-focused products could be sold at a profit. Now, thanks to the Free effect, the marketplace value of these sorts of products — their price, in other words — reflects their marginal cost. That’s great for clients; it’s bad for a lot of lawyers. Specifically, it’s terrible news for lawyers whose practices depend on the creation and sale of documents, contracts, agreements and anything else that can be digitized, templated and algorithmed. In other words, for many general practitioners.

Think of the services your typical general practitioner provides: wills, incorporations, divorce papers, leases, standard contracts and so on. If all these things aren’t yet available for little or for nothing on the web, they soon will be. How will the lawyers who rely on this kind of work survive? If they can offer more in-depth services in a given area, they could give away the documents in hopes of attracting that higher-end paying work. Jay Flesichman explains:

Would you prepare the divorce paperwork if you could make the money in another fashion? Say, on a new estate plan for the client? Would you draft bankruptcy petitions at no cost if it would cause the client to pay you for post-petition services and give you the chance to handle all of the lucrative fee-shifting adversary proceedings that come out of the bankruptcy case? … [In bankruptcy,] the consultation is often free as a way to get the prospect in the door.  Maybe the credit report is free.  Perhaps credit counseling is built into the price, making it free.  But not much else.

The thing of it is, though, if you could provide these in-depth services, by definition you wouldn’t be a general practitioner. That’s why the future for GPs looks incredibly grim: there’s just no profit to be had in providing a wide range of basic legal services. And I’m not talking just or even exclusively about solos: urban office towers are filled with lawyers whose working days are spent creating and reviewing corporate forms and documents. They might be exquisitely complicated forms. They might involve huge sums of money. But they’re still forms and documents, and if the wave of this kind of work heading to India wasn’t a big enough clue as to its marketplace value, the people at Wilson Sonsini and Orrick are making it crystal clear.

Inevitably, the term “commoditization” is going to enter this conversation, and Jay Parkhill makes the connection from Free to Richard Susskind. In The End of Lawyers?, Richard is careful to mark five stops on the route from bespoke to commoditized work, including standardized, systematized and packaged work. For legal tasks, he wrote, a commodity is “an IT-based offering that is undifferentiated in the marketplace (undifferentiated in the minds of the recipients and not the providers of the service). For any given commodity, there may be very similar competitor products, or the product is so commonplace that it is distributed at low or no cost.” We seem to have reached the point where legal document work is becoming entrenched in the packaged and commoditized areas.

What this all comes down to is this: if your main source of value is your ability to craft a legal document — if you rely heavily on products with a very low marginal cost — you could be in serious trouble. And it may only have begun: recall the NYT review of Free that noted: it can be extremely hard to survive in a business with high fixed costs, low marginal costs and relatively easy entry.

Law firms have traditionally had high fixed costs — expensive lawyers and prime real estate, principally. Many practice areas have low marginal costs — once you’ve drawn up a prospectus for one client, you’re 70% of the way to drawing one up for the next one. What’s missing from the equation is the relatively easy entry: lawyers still decide who can offer legal services, and we prosecute for the unauthorized practice of law those whom we decide can’t. If that barrier ever falls, look out.

2009 InnovAction Award winners

After serving two stints on the judging panel for the College of Law Practice Management’s InnovAction Awards, I spent this past year as Chair of the Awards. One of the great parts of that job is that I get to contact the winners, which I had the pleasure of doing last week. Now that the College has announced the winners publicly, I can do the same. Here’s the announcement post from the College’s blog — my sincere thanks to the judging panel (Merrilyn Astin Tarlton (Chair), Maggie Callicrate, Thomas S. Clay, Greg Siskind, and Tony Williams) and to everyone who submitted a nomination for this year’s Awards!

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Israeli legal organization New Family is the 2009 recipient of the coveted InnovAction Awards from the College of Law Practice Management, while New York-based legal services provider Practical Law Company, Inc. received the first-ever InnovAction Honorable Mention Award.

For the fifth year, the InnovAction Awards have recognized outstanding innovation in the delivery of legal services, demonstrating to the legal community what can happen when passionate professionals, with big ideas and strong convictions, resolve to create effective change.

Meet our 2009 InnovAction winner!

New Family Organization
Family, Justice and Law initiative

Irit Rosenblum broke fresh ground defending a universal right to family as intrinsic to the practice of law. Rosenblum pioneered a new sphere of legal rights surrounding the family based on the conviction that the rights to marry, divorce, have children, bequeath and inherit assets, and conduct family life are human rights and must be attainable to all regardless of faith, nationality, sexual orientation or status. She founded New Family to fill a critical gap in the practice of law in Israel: to attain the right of every individual to establish a family and to exercise equal rights within it. For the two million people in Israel who are subject to discrimination due to family status, New Family’s achievements have been invaluable.

In addition, for the first time, the InnovAction Awards offered Honorable Mentions to entries that have taken an existing innovation in the practice of law, transformed it in a unique and valuable way, and made it better than before.

Here is our very first InnovAction Honorable Mention:

Practical Law Company, Inc.
Creating efficiency for business lawyers

Practical Law Company (PLC) is changing the way business lawyers work. It employ attorneys with significant experience practicing with the world’s leading law firms and legal departments (e.g. Davis Polk, Skadden, Pfizer, Sullivan & Cromwell) to provide practical, up-to-date resources that help business lawyers practice more efficiently and provide greater value to clients. PLC provides the practical, generic level of information needed by all business lawyers that allows them to get up to speed quickly, stop reinventing the wheel and focus on client and firm specific work. It launched its first US services in December 2008 to wide market acceptance. PLC began in the UK in 1990.

The 2009 InnovAction Awards will be presented on Saturday, September 26, 2009 at a special session during the 2009 Futures Conference held in conjunction with the Annual Meeting of the College of Law Practice Management in Denver, CO.

Chaos in the castle

One of my favourite expressions about innovation is that few revolutions have ever started inside the castle. (I changed it from “no revolutions” after someone pointed out that Mikhail Gorbachev was a pretty clear exception.) The idea behind the expression is that the people who benefit most from the status quo are also the ones most inclined and best positioned to maintain it — as well as the ones least likely to notice when real change is fomenting.

So it’s noteworthy when you start seeing revolutionary flags inside the castle grounds. This thought was going through my head — along with a Tom Petty song (no bad thing) — when reading this item at Legal Blog Watch about the new “Legal Rebels” project now underway. According to its website:

Dozens of lawyers nationwide aren’t waiting for change. Day by day, they’re remaking their corners of the profession. These mavericks are finding new ways to practice law, represent their clients, adjudicate cases and train the next generation of lawyers. Most are leveraging the power of the Internet to help them work better, faster and different. The Legal Rebels project will profile these innovators and describe the changes they are making.

Legal Rebels even comes with its own manifesto, which unfortunately for me appears to be only for Americans. But that’s understandable, because Legal Rebels is an initiative of the ABA Journal. I actually think it’s a very cool idea and a great magazine feature (interactive and wikified, no less) — I kind of wish I’d thought of it for my own magazine, though the InnovAction Awards (which will be announced next week) have occupied me on that score.

But what’s interesting is that Legal Rebels came from the Journal, which LBW refers to as “one of the most mainstream of all legal industry publications.” And that’s not the only example of subversive conduct by leading legal periodicals: The American Lawyer, which has so much influence over the largest US law firms that they’re referred to as the AmLaw 100, publishes in its AmLaw Daily e-zine a regular column by Paul Lippe, founder of Legal OnRamp. It’s called “Welcome to the Future” and it tracks the insurgency underway in the legal services marketplace; the newest column talks about the impending collapse of the BigLaw summer student program.  (The AmLaw Daily also just brought us an article by a Cooley Godward partner with the pointed title “Change or Die.”) Not to be outdone, the National Law Journal asks whether law schools are at a tipping point.

When the pillars of American legal journalism are promoting innovation and cataclysmic change, something’s going on.  But it’s not just the legal media — legal marketplace heresy is breaking out all over the profession’s elite and sacrosanct institutions.  Evan Chesler, presiding partner at Cravath, Swaine & Moore LLP, famously called for the end of the billable hour late last year. Harvard law student Daniel Thies has written a powerful paper about “practical legal education and the new job market.” British Lords talk about being “inundated” by private equity companies looking to invest in law firms. Bar associations, elite law schools and exclusive legal organizations are sponsoring conferences and symposia on the upheaval of the present and the new world of the future.

All of this looks remarkable to those of us agitating from the outside — we’re used to hearing the radicals in the streets, not inside the castle grounds. But as Paul Lippe has pointed out elsewhere, what’s most remarkable about this revolution is that no one’s manning the battlements or guarding the portcullis. No one’s stepping up publicly to defend the status quo of hourly billing and compensation, up-or-out partnership tracks, overworked and underchallenged associates, and so on. That’s because there really isn’t any good defence for them; they’re irrational. What they have been, up until now, is incredibly profitable for law firms. But as their profitability wanes, so does any illusion that they can be justified.

Revolutions fail all the time — they run out of steam, or they’re ground down by entrenched interests, or both. I don’t see either of those things happening in the law right now, and I don’t see this revolution slowing down.

Spend wisely

One of the reasons — maybe the main reason — why lawyers are so risk-averse is that averting risk is kind of the whole point of having lawyers. People hire us for two reasons: (a) to fix a problem that’s already occurred, or (b) to arrange things so as to minimize or eliminate the risk that problems will occur. In Susskindian terms, these are the ambulance at the bottom of the cliff and the fence at the top, respectively.

The idea that we’d be better off with fewer ambulances and more fences is starting to catch on within the profession. But there’s an important question in there: how many fences do you really need? Is it possible you’re installing more fences than can be justified by the reduced risk of accidents? And as sellers of both fences and ambulances, are lawyers sufficiently objective to be the ones making that call?

Ron Friedmann got me thinking about all this with two insightful and provocative posts about reducing corporate legal spend. He argues that institutional clients “need to do a better job assessing risk and deciding what warrants legal attention,” and draws an analogy to the US health care system which, by many accounts, costs so much in part because of rampant unnecessary treatment. If clients took the time to review all their legal spending and figure out what percentage could be eliminated with an acceptably small increase in risk, they could lower their legal spend without dramatically increasing the company’s exposure.

The idea that companies are over-protecting themselves against risk and therefore overspending on lawyers is compelling. Obviously, there are legal costs that can’t be eliminated — if the government tells you to comply with a given regulation or face prosecution, you’re going to comply. But if you separated corporate legal spend into two piles — one for “we need to do this or we’ll go out of business” and “we’d better do this to make sure we’ve covered all our bases” — you might find the second pile a lot higher than you expected. And if you weighed the savings of not covering a given base against its reasonably foreseeable consequences — not the possibility, but the probability of trouble — you might decide you’re buying too much legal risk aversion.

I can see more companies doing just that — figuring out what they can live without in terms of legal coverage and proceeding to live without it. The lawyer’s argument against that, of course, is that even the smallest detail overlooked can lead to devastating liability consequences in court. But as the rise of “good enough” continues, especially in what figures to be an economically difficult period of time to come, I can see rules and regulations being interpreted in similarly “good enough” fashion — threshold standards being lowered slightly, breaches looked upon more leniently, etc. In the aggregate, it could add up to a collective consensus that not every stone needs to be unturned and not every potential risk needs to be run by the lawyers. If that came to pass, the impact on lawyers would be profound.

In his posts, Ron specifically notes he’s excluding consumer legal spending from the discussion. But if anything, I think the reverse applies to the way individuals buy legal services: I think they underestimate risks and under-purchase legal protection. How many people buy and sell a house without using a lawyer, bypassing expertise and institutional protection in order to save a few hundred bucks on a transaction worth hundreds of thousands of dollars? How many people die intestate every year, even with children and extensive assets, because they just never got around to making a will? How many litigants choose to make their own way through our labyrinthine court system?

Individuals’ failure to avail themselves of lawyers isn’t entirely, or even mainly, their own fault, of course. Too often, lawyers have either failed to adequately market the value and importance of their services, or allowed their prices to balloon past the point where many people can afford to hire a lawyer without help from family members or government programs. In my ideal world, you couldn’t get a  driver’s license until you’d filled out even a basic will, and you couldn’t get a marriage license without having to take a basic course in family breakdown, support, custody and access — both at low costs.

Unless and until that comes to pass, lawyers have an obligation — not just for business reasons but also for social ones — to let people know how important these sorts of fundamental legal instruments are and to ensure they’re accessible to the majority of potential buyers. And at the other end of the spectrum, lawyers also have a responsibility to help their institutional clients tell the difference between “need-to-haves” and “nice-to-haves,” and to place the focus of their services firmly on the former. A trusted contractor won’t replace your garage if a repair will do just as well; trusted lawyers do the same.

Over the years, legal spending patterns have become habit-forming: institutions have gotten used to buying ever more risk-avoidance services, while individuals have gotten used to buying only those services that circumstances require them to buy. It would be reasonable, in an extended period of economic malaise, to expect those habits to change. Lawyers who want to stay ahead of dangerous curves like that should spend time thinking about what their clients absolutely require, and changing what they sell — more of some things, less of others — to match.

Legal Research & Writing Pro Tele-Webinar

If you have an hour or so to spare next Thursday and would like to hear what I actually sound like, tune into my appearance on this month’s Legal Research & Writing Pro Tele-Webinar. On July 16 at 3:00 pm EDT, I’ll be sitting down with the LRWP ‘s host, the incredibly bright and engaging Lisa Solomon, for a tele-webinar titled Leveraging the Media: How to Establish Your Name and Expertise in the Mainstream and Legal Press.

Wearing my legal journalism hat, I’ll be talking with Lisa about how lawyers can interact with the media to build relationships and help promote their practices. I’ll be giving listeners the perspective of a legal periodical editor who’s received more than his share of pitches and wishes more people designed these pitches with the publication and its readers in mind. I’ll be talking about the difference between dealing with the mainstream and legal business press, and looking at the impact new media is having on legal marketing and business development.

The full description of the program and information on how to register for it are available at the Legal Research & Writing Pro website, with a copy below. If you’re going to attend and there’s a particular topic you’d like me to touch on, leave it as a comment below and I’ll do my best to get to it during the webinar.

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Who says mass media is dying? As newspapers and magazines migrate onto the web, the reach and brand power of these periodicals is actually going to grow—along with their capacity to promote your practice. With reporters and editors hungrier than ever for low-cost, high-quality copy, there has never been a better time for lawyers to build relationships and leverage their expertise with both mainstream and legal media.

In this course, you’ll learn how to get noticed by, published in, and interviewed by the publications that lawyers—and clients—read:

  • initiating contact and building relationships with editors and journalists
  • establishing your credentials as the go-to person in your area of practice
  • understanding the media perspective: what they need, when they need it
  • writing for print versus web publications; writing for lawyer versus client publications
  • preparing for an interview: setting the ground rules, preparing for surprises
  • turning your media profile into a marketing advantage

Presenter Jordan Furlong is a lawyer, journalist, award-winning legal magazine editor, and award-winning legal blogger. His blog, Law21: Dispatches From a Legal Profession on the Brink, tracks the extraordinary changes underway in the legal marketplace. He is the Editor-in-Chief of National, the magazine of the Canadian Bar Association, and chairs the InnovAction Awards at the College of Law Practice Management.

This program will be presented as a “tele-webinar.” In a tele-webinar, you call in to a conference call line to receive the audio portion of the program. If you have access to your computer, you can follow along with a Power Point presentation as well. There is no need to install any software on your computer. If you will be calling in from outside the office, don’t worry: you can view or print the slides before the program, if you wish.

Join us for this tele-webinar on Thursday, July 16 at 3 p.m. Eastern (noon Pacific).

Your registration includes participation in the live teleseminar and a copy of the program recording (mp3). To register, visit our Products page and add a Silver Membership to your cart.

Time bomb

“This,” says The Economist in a recent special report, “is a slow-moving but relentless development that in time will have vast economic, social and political consequences.” Peak oil? The fiscal crisis? Climate change? None of these  — it’s the fact that the world is aging.

Specifically, people are having far fewer children and living much longer than at any time in recorded history, which means that by the year 2050, 22% of the world’s population (more than three billion people) will be over 60, twice today’s rate. We already knew that in developed countries, the birth rate has fallen to 1.6 children per woman (below the replacement level of 2.1), but some people will be shocked to learn that the birth rate in developing countries — 5.2 children per woman as recently as 1970-75 — has dropped to 2.6.  At the other end of the cycle, worldwide life expectancy will increase 8 years (from 68 to 76) by 2050, reaching an average lifespan of 83 in rich countries. What that comes down to is far fewer workers supporting far more retirees (by 2050, there will be two adults aged 20-64 for every adult 65 or over, half today’s ratio), which figures to result in dramatically lower levels of productivity than we’ve seen for many decades.

As The Economist explains at length, this is an extremely serious issue for every country, with financial consequences that dwarf the expected impact of the fiscal crisis. The legal industry isn’t in the top 100 things that governments will worry about in this regard, but if you have any interest in the profession’s long-term future — which is to say, if you expect to be in practice 20 or more years from now, or if your firm plans to be a going concern in 2050 — you should be thinking today about the potentially devastating combination of demographics and the simple passage of time.  Here are a few places to start.

1. Get ready for the end of retirement, warns The Economist: “few governments, employers or individuals have yet come to terms with where retirement is heading: the end of the whole concept. Whether we like it or not, we are going back to the pre-Bismarckian world, where work had no formal stopping point.” Unless you’ve made a boatload of money by 65 and managed it very well, you should assume you won’t be retiring then or anytime close to it. Picture older partners staying on with a firm indefinitely, starting with those whose investments were decimated in the market crash and can’t afford to retire. Active lawyers in their 70s and 80s will become commonplace, perhaps as Net-connected solos working with select clients from home on a full- or part-time basis.

2. Four generations in one firm will not be unusual. Keep in mind that the Millennial Generation has run its course; since the turn of the century, every new baby has been part of the next cohort — call it Generation Z for the moment. The first Z’ers will enter law school around 2025 and the practice of law by 2030. During the 2030s, law firms will include young Z’ers, Millennial partners, scattered 60-something Gen-X holdovers, and a surprising number of aged Boomers still cranking out work into their 70s and 80s. Generation Z won’t be a huge presence: Millennials will be by far the most numerous and powerful generation in law firms, since the slimmed-down firms of the future won’t require the vast grazing fields of associates familiar from the 20th century.

3. The massive partner incomes of today could well be considered relics of a bygone era, reminiscent of how we now think of railway barons’ fortunes. Partly, this will be because the revolution in the legal services marketplace will take billions of dollars away from law firms, as outsourced practitioners and sophisticated technology snap up formerly lucrative lower-end lawyer work.  But it’s also because there will simply be far fewer working-age adults —  industries of all kinds are going to be smaller and less lucrative than before. There won’t just be  fewer lawyers to do the work; there’ll be fewer clients to provide it.  Barring major breakthroughs in the latent legal marketplace — lawyers learning to sell preventive legal services and good legal health services to clients that competitors can’t — the volume of legal work ought to be lower, just like everything else.

4.  Unfunded pension liabilities could crush some firms well before 2050. Those employees (staff as well as lawyers) who do eventually retire are going to live longer, and their numbers will multiply as the Boomers finally slide out of working life. This will constitute a major ongoing cost center for firms, and if those liabilities aren’t funded, bankruptcy is a real possibility, as a recent ABA Journal article pointed out. The fear of massive pension obligations will motivate firms to cajole their elderly employees into staying on in some paid capacity, if for no other reason than to delay having to provide them retirement benefits. If your own firm hasn’t addressed this yet, it could be in serious trouble.

5. Say goodbye to a lot of law schools. If the coming wave of legal education reform hasn’t already knocked many law schools out of the game, they can expect to be finished off by a simultaneous drop in both the supply of law students and the demand for new law graduates. The profession will have enough trouble finding work for the older lawyers who won’t or can’t retire; there just won’t be a compelling business case for many new hires. And remuneration for new lawyers figures to drop — keep those clippings about $160,000 starting salaries for posterity — making law school a less attractive option. It’s not a stretch to anticipate that half the law schools in your country will be gone by 2050 — a legal education system that grew fat from the Boomer years onwards simply won’t be able to survive a period of scarcity like this.

These won’t be entirely dire outcomes — there are good news stories here. Many lawyers in their 60s have long felt obliged to quit the profession even though they still had contributions to make and wisdom to pass on; the bias against older workers is as prevalent in the law as anywhere else. And the legal profession today suffers from serious bloat; a little demographic-powered surgery would not be a bad thing. But the force and breadth of the upheaval will still come as a shock to us, because it’ll be incredibly different from what we’ve long assumed is normal but is in fact a product of a particular demographic period that’s now ending. As The Economist points out, the US set its retirement age at 65 at a time when the average American died at 62. Lengthy retirement is a very recent phenomenon, and its time is already ending.

So start wrapping your mind around having to work well into your 70s or even later, with associates 50 or even 60 years your junior, for much less money than today’s lawyers take for granted. Unless you’re 50 or older, this likely describes the legal profession you’ll encounter when you reach the soon-to-be-just-another-age of 65 — and even 50-something lawyers should proceed carefully. Of all the trends now acting to change the practice of law, this one might be the most significant — and it’s certainly the only one that’s flat-out guaranteed to happen.