The next small thing

This article in The Recorder is mostly about the free-fall that the real estate legal marketplace in California is experiencing. But my attention was caught by Mark Greene, a real estate lawyer there who diversified his practice at the height of the boom and has seen his foresight pay off:

Wise to the cyclical nature of the real estate practice, Greene began to take on other — and, for him, more nontraditional — projects about two years ago. While the bulk of his practice today continues to center around large institutional clients, work for high-net-worth individuals is making the difference between being busy and not busy, making up about a third of his practice now.

A lot of lawyers spend their time looking for the next big thing — the practice area that’s been quietly building up and is poised to become red-hot. But they don’t spend nearly as much time looking for the next small thing — the practice area that’s about to go stone-cold because of changes in economic, technological, cultural or political circumstances. If that next small thing is part of your book of business, you need to know about it. And if it constitutes a major portion of your work, you have a serious, fundamental issue on your hands.

Greene and others like him were smart enough to recognize the bubbly froth developing in the real estate boom and act on it. It’s easy to say, with hindsight, that any lawyer could have forecast the end of feverish times in their practice area, but not many actually do (Cadwalader, for instance). And even if you’re a short-selling economy-watcher with a keen eye for coming disaster, you can’t always tell which way the impact cracks will branch out from a major economic change. Continue Reading

A few good lawsuits

I’ve glimpsed the future of legal marketing, but WhoCanISue.com isn’t it. A new website that has generated a remarkable amount of publicity for a concept that’s not exactly groundbreaking, WhoCanISue.com allows would-be litigants to share the basic outlines of their potential legal claim with an online system, without divulging confidential information. The site will then provide an assessment of whether the claim is meritorious, and if so, the user will be put directly in touch with a lawyer — the one who has bid the highest amount, on top of a $1,000 registration fee, to be at the top of the list of referrals for that particular case.

There are, perhaps needless to say, a lot of issues here. There’s the company’s name, designed to attract attention from the kind of people (familiar to many lawyers) carrying around a grievance in search of someone to compensate them for it. There’s the question of whether the assessment of the user’s situation, to decide if he has a case worth bringing, will be inclined to have an unusually low “Yes” threshold in order to encourage business. And there’s the fact that the site links the client with a lawyer not based on whether that lawyer really can best serve the client, but on whether she outbid her competitors in an auction for the #1 referral spot.

WhoCanISue.com tells us very little about how online legal marketing will develop. As I’ve said before, the success of future web-based initiatives is going to depend on the degree to which they encourage community and collaboration — a meeting of minds and interests online in an environment of mutual provision and gain that rewards reliability and trustworthiness. Until that sort of community fully develops, start by writing a good blog and posting testimonials from satisfied clients — you’ll get a solid marketing presence online, and for free.

Interestingly, though, I think there’s actually the germ of a good access-to-justice idea here, in terms of an online service that helps people determine if they have a case or not. You’d take the same basic template and have people submit enough details of their case to have its merits analyzed. But the analysis would be done by independent lawyers who wouldn’t be able to take on the case after offering their analysis of its merits, thereby removing the temptation for a lawyer who could derive business from the case to think there’s more to it than there actually is. Continue Reading

Associates and the bad table

The opening words to a sporty 60-second video montage at Cadwalader’s US student recruitment site are: “Make no mistake about it. A career at Cadwalader is not for the faint of heart.” So it would seem, following news that the firm cut 96 lawyers on Thursday, an astounding purge that surpasses Sonnenschein Nath & Rosenthal‘s recent 37-lawyer, 100-staff cut, and comes several months after Cadwalader’s January move to drop 35 lawyers.

The most recent pink slips were handed out largely in the firm’s formerly high-flying capital markets and global finance groups, which have been brought low by the real estate finance and securitization market’s struggles, and were given almost entirely to associates.There’s no small amount of schadenfruede about Cadawalader’s position to be found in the blawgosphere at the moment, much of it based on this February 2007 article in the New York Law Journal, with the built-for-irony title: “Does the future belong to Cadwalader?”

But “layoffs” (read: you’re fired, but it’s not your fault) are likely to become more frequent at the largest firms (DLA Piper announced a few in London this morning) for the totally understandable reason that the really hot parts of the economy that powered these firms over the last few years have gone really cold.

What’s funny, though, is that during these hot streaks, when associates were so hard to find and cost so much, I quite clearly remember many law firms ruing their decisions to chop associates the last time an overheated economy tanked. All those associates we fired, they said, shaking their heads, if we’d held on to them, would be able to help us now. Perfectly right, of course — and yet, now that the short-term pain of lower profits looms again, the long-term gain of associate investment apparently becomes hard to remember.

Coincidentally, today also saw the release of the American Lawyer‘s midlevel associate survey, which paints a bleak but familiar picture of associates’ waning interest in partnership or indeed any long-term law firm goals. Interestingly, though, the fear of layoffs hasn’t much to do with this, nor do issues of salary or even “work-life balance” (a term I intend to put “in quotes” until it goes away). What’s driving associates away from firms is that the work stinks. Continue Reading

Could clients drive firms to do more pro bono?

Australia, the legal profession’s innovation laboratory, is busy delivering another dose of fresh thinking. The state of Victoria is requiring all law firms that take on legal work for the government to perform pro bono work as a condition of the retainer — specifically, to the tune of 5% to 15% of the total value of their government contracts (most choose 15%). According to an article in the May 2008 issue of the New South Wales Law Society Journal, the scheme is now being considered for introduction countrywide.

The idea is not universally popular. Opponents raise two main objections: that reducing pro bono to a commercial consideration undermines the altruistic nature of the work for both provider and assistee, and that it’s unfair to single out lawyers when no other suppliers of professional services to government face the same obligation. Supporters counter that the government is leading rather than mandating, that the requirement is far from onerous, that legal services are uniquely in need of pro bono provision, and that many law firms now take pro bono seriously as a fundamental element of the business, driving up its adoption throughout Victoria.

I think it’s a great initiative, especially because it seems like a work in progress. One of the firms involved in the program suggests two improvements if it goes Australia-wide: that the government increase its legal aid and community legal sector funding, to make clear that pro bono is not and never will be a substitute for legal aid; and that the government continues to be prepared to waive conflicts claims in pro bono cases involving the government as a party. Add these two elements, and this might be pretty close to a perfect system.

In fact, I think it’s exportable — and not just outside Australia. While it’d be great to see governments in other countries adopt this program, I don’t see any reason why large corporate clients couldn’t do the same thing. Continue Reading

Results, not résumés

Professor William Henderson, who teaches at the University of Indiana Faculty of Law and blogs at Empirical Legal Studies, has written a watershed treatise on how large law firms recruit and use associates. The ELS blog summarizes it, the ABA Journal reports on it, and Bruce MacEwen and Gerry Riskin have already flagged it as an extremely significant contribution to the ongoing evolution of the traditional law firm business model. With apologies for a brevity that glosses over some important points, here’s a summary of Are We Selling Results or Résumés?: The Underexplored Linkage between Human Resource Strategies and Firm-Specific Capital, and some ideas that flow from it.

Large US law firms are deeply tied to the “Cravath system” of hiring new lawyers, generally defined as recruiting the most outstanding law students from the top law schools and giving them the best training. This was a great idea when Cravath Swaine & Moore first developed it early last century, because it was a branding strategy: Cravath deserves your business because we hire only the best of the best. But because the firm became so successful — for a variety of reasons — other firms copied its hiring strategy, and the Cravath method, once an innovation, became narrow-minded standard operating procedure.

Today, demand for corporate legal work has skyrocketed, exhausting the talent pool to which firms — because of their adherence to the Cravath method — have restricted themselves when recruiting the associates who do this work. Accordingly, with rising demand overwhelming a fixed talent supply, the cost of new lawyers has risen as high as $160,000 a year, well above the value of the services they provide.

This has numerous negative effects. Firms either pass on these cost increases to increasingly incensed clients, or absorb them in lower partnership profits, leading elite partners to decamp for more lucrative firms. Worse, top clients order firms not to place these overpaid associates on their files, meaning young lawyers are trapped in the most dead-end work from the least interesting clients, hurting morale, exacerbating attrition and damaging the firm’s future leadership development.

The most obvious solution for the firms — increase supply by hiring outside the “elite” group — is verboten, because these firms fear a loss of prestige associated with hiring “second-rate” graduates from “second-rate” schools. (Firms have already conceded ground by digging deeper into the graduating classes of elite schools for new recruits). A recruit’s “pedigree” now holds entirely disproportionate importance in law firms’ hiring decisions, and no major firm seems prepared to risk breaking ranks to try something different.

Henderson proposes something different, a new approach premised on a groundbreaking productivity study at Bell Laboratories in the early 1990s. In a nutshell, the study found that knowledge workers’ productivity was not tied to traditional measures of excellence such as IQ and self-confidence, but to a series of work strategies such as taking initiative, sharing knowledge, and managing work commitments, most of which are trainable. Continue Reading

A message to my legal publishing colleagues

Stop.

Time out. Stop doing what we’ve always been doing. Put aside the deadlines and schedules for a moment. Put down the pen, those of us still using one. Push back from the keyboard, take a deep breath, and close our eyes. Make a mental list of all of our longstanding assumptions about this industry — what we produce, how we sell it, who buys it. Now, throw all these assumptions out, because it’s just about time for us to reinvent this wheel.

Here’s what legal publishers are facing now, or are going to face very soon.

  • Textbook sales drop, as law schools encourage cash-strapped students to turn to faculty-run wikis as reliable, and eventually authoritative, statements of current law.
  • Law reporter series and caselaw databases fade into irrelevance, as court decisions become freely available and searchable on the web.
  • Legal newspapers’ print editions become unacceptably expensive and dated, and online versions struggle to find a business model that delivers familiar profit levels.
  • Legal magazines, restricted to longer features that subscribers won’t read online, remain chained to the print medium and face ever-higher production and distribution costs.

It was ten months ago that I first wrote about legal publishing in the 21st century, and since then, the pace of change has only picked up. Today, Nick Holmes notes the rate at which blogs are becoming the dominant platform for legal publishing, while Stephen Baker raises the remarkable specter of artificial intelligence editing. Most provocatively, Scott Karp draws a parallel between what General Motors is belatedly trying with its groundbreaking Volt electric car, and what newspapers ought to be doing:

The newspaper business is being crippled by competition, which, like Toyota in the case of GM, is doing a better job of delivering what the market wants and needs. GM realized that to survive they couldn’t just catch up to the competition — they had to surpass it — and they had to do so by delivering the holy grail for consumers. … Newspapers need to stop trying to save the old business or searching amorphously for new business models and instead figure out what needs are going unmet in the market for news — and then be first in the market to deliver breakthrough solutions.

Legal publishing also needs to find breakthrough solutions, and that’s going to require throwing out the old assumptions and discovering new rules that will form the basis of new business models. Here are three to get us started. Continue Reading

The innovation arms race

Head over to the College of Law Practice Management’s blog at your earliest opportunity and check out the rolling list of entrants for this year’s Innovaction Awards now being posted. As is the case every year, law firms around the world (and for the first time, an in-house law department) have submitted accounts of their innovations in client service, knowledge management, value billing, legal technology, pro bono, talent management and a host of other critical aspects of legal services crying out for improvement. The decision of the judging panel, of which I’m a member, will be announced soon.

There’s a longstanding belief that lawyers can’t or won’t innovate when it comes to how they manage their businesses, deliver their services, and relate to their clients. And it’s true that law firm culture has historically been inimical to innovation in legal services delivery. Law has been almost the only industry where a challenge to the standard operating procedure was considered bad for business, not just by rival firms, but also within your own organization. The status quo might leave your client dissatisfied and you unhappy, but the way we’ve always done things has kept us in business (and a lot of us in Mercedes), so don’t mess with it.

But what I’ve seen and heard in this profession the last few years has convinced me that this belief is wrong, on two points. First, lawyers themselves, given encouragement and room to experiment, can be really innovative in process, delivery and relationship. Innovation is, after all, the outcome of creativity and competitiveness — two of lawyers’ natural strengths — harnessed towards engineering a better process, accomplishing a more valuable result, and achieving the sheer thrill of being better at something than anyone else. As Bruce MacEwen reminds us, innovation is about never being satisfied with how we did it last time.

Secondly, the defensive circle around the status quo is weakening in law firms — badly, in some. The complacency that helps form the foundation of typical law firm culture, and works to block lawyers’ inclination to innovate, is being eroded by massive shifts in the legal marketplace. “Staying the course” just isn’t posting the kinds of gains it used to — it’s a thin portfolio with little to support it beyond successful results from a far less demanding era than this one. Today, it’s a foolish investment, and lawyers are finally starting to openly acknowledge that.

That’s really why I think we’re at a watershed time for innovation in the practice of law — it’s finally becoming a serious item on law firms’ agendas. If you doubt it, go read the Innovaction entries. They demonstrate that there’s a whole new arms race taking shape in the law — an innovation race — and that if you’re not at one of these innovative law firms, they’re already ahead of you.

Update 7/22: The winners have been announced! Congratulations to our three 2008 Innovaction Award recipients:

Mallesons Stephen Jaques
Sydney, Australia,
Innovation:  PeopleFinder

PeopleFinder is an internally developed web 2.0 application that introduces reliable, accurate and rich presence to the firm’s intranet directory and BlackBerries.  It has resulted each month in over 10,000 more calls into the firm being answered by a person rather than voice mail.

Novus Law LLC
Chicago, IL
Innovation:  Documenting the E-discovery process from collection to production

Novus Law created a system that documents the 864 step e-discovery process from collection to distribution.  Utilizing a globally recognized quality management method, the system captures and documents in order to measure and improve quality; manage and predict schedules and significantly reduce costs.

Pillsbury Winthrop Shaw Pittman LLP
Washington, DC
Innovation:  ValueChain

ValueChain is a novel method of visually displaying clients’ objectives, capabilities, opportunities and risks, so that clients can better understand what impact outsourcing various critical business functions may have on the company as a whole and how best the outsourcing operations and agreements should be designed and structured.

The other talent war

Boston-based Goodwin Procter seems to be one of the more innovative and forward-looking firms out there (how many law firms have not one, but two people blogging on knowledge management?). They solidified that reputation earlier this week by announcing the appointment of a director of professional development and training for professional staff (HT to Legal Blog Watch). Jamie Krulewitz’s job, evidently the first of its type, is to oversee the professional development and training of the firm’s administrative and secretarial staff.

This is self-evidently a good move, because everyone in law firms needs training and development, not just the lawyers (and many firms don’t even provide lawyer T&D). Goodwin Procter recognizes that if it wants its lawyers to operate at their very best, it needs to ensure they can count on equally top-notch staff support. This is consistent with the firm’s refreshing approach to its website personnel listings which, again unlike many others, groups lawyers and non-lawyers together as both “professionals” and “people.”

What’s interesting, though, is to consider that the firm went to the trouble of a press release and announcement for a “simple” staff hire. Firms hire non-lawyer professionals all the time without any public notice, and I’m sure Goodwin Procter normally is no exception. Probably this was simply a matter of endorsing the new person and boosting her morale by giving her a high-profile welcome, consistent with what appears to be the firm’s staff-positive culture.

But try this exercise: read the announcement again, this time not as a press release, but as if it were a recruitment piece for non-lawyer professional staff: Continue Reading

The new brand landscape for law firms

I received a package the other day from a prominent law firm announcing a rebranding, which seemed to consist of a shorter name and a clever new logo. There didn’t seem to be anything otherwise new or different about the firm, so the brochure went straight into the blue box. But I was reminded of a remarkably similar mailing I received, something like eight years ago, from a big firm that, like this one, had shortened its name, come up with an abstract logo, and called it rebranding.

So it might be time to review what a brand is and is not. This is important, because right now, we’re on the verge of a major shift in the law firm brand landscape.

1. A new name and a new logo do not constitute a new brand. A brand is a promise — a guarantee of identity, reliability and/or quality. A brand is what your customers come to expect about your product’s or service’s performance and delivery.

2. Whether your brand is a good one or a bad one depends almost entirely on how well or how poorly you perform that function and delivery.

3. An effective brand is unique, or at least easily distinguishable and differentiable from the competition, and is aligned with your actual conduct. An ineffective brand is one that’s belied by what you actually do — a company that doesn’t follow through on its brand promise hollows out the brand’s effectiveness.

Now, law firms are, generally speaking, terrible at branding, for a couple of reasons. First, most firms don’t stand out from their competition in terms of the services they offer, the solutions they recommend, the rates they charge and the manner in which they bill. So it doesn’t matter how they brand themselves, they all act essentially the same way and are effectively indistinguishable from clients’ points of view.

Secondly, when law firms do make brand promises, they don’t keep them consistently, if at all. Partly this is because their promises are abstract and extravagant — how can every law firm have “top-tier practitioners” with “leading litigation and corporate abilities” who “provide the highest quality legal services” (quotes taken at random from law firm websites)? Here’s a fun exercise — read 50 law firm sites and count how many firms work for “many of the leading corporations and financial institutions in the world.”

And partly it’s because most law firms have no mechanisms to enforce follow-through on their brand. How can clients expect a consistent type of service when every partner is effectively autonomous, project management templates are rare or non-existent, and key talent leaves and enters the firm like a carousel? So most law firms suffer from the twin brand defects of not offering anything uniquely distinguishable from the competition, and not offering it in a reliable fashion.

That’s the bad news. Here’s the good news: the range and types of brands available in the law are exploding as we speak. Continue Reading