The new rules of pricing

Recently, I’m told, several GCs and senior lawyers of large law firms gathered in London for a high-level conversation about new billing mechanisms. One noteworthy observation to emerge from the meeting was the law firms’ insistence that whatever new mechanism was developed, it had to take into account chargeable time invested in the work. I wasn’t there to see the clients’ reaction, but if a few eyes were rolled, it wouldn’t surprise me.

Lawyers are going nowhere in this new marketplace unless they can lose this obsession with the effort-based valuation of work. At the heart of lawyers’ billable-hour infatuation, even beyond the attraction of low-risk pricing and the enablement of perfectionism, lies the basic belief that the harder you work, the more you should get paid. “It took me ten hours to do this, so I should be paid twice what another task took five hours to do.” The nature of the work, its relative simplicity or complexity, the knowledge resources it did or didn’t require, and the value or relative lack thereof to the client — all these variables are considered incidental to the effort exerted, the expenditure of the lawyer’s precious time, to accomplish the work.

Very few marketplaces, however, base price directly on effort and time.  Avatar cost 20 times what The Hurt Locker cost to make and took years longer to complete, yet my ticket to watch either Oscar contender costs the same. One real estate agent might make ten times more effort at finding the right buyers for a home than another, yet they both get the same commission upon sale. I can go to a global craft show and buy a beautiful hand-made shawl that an aged, arthritic, Guatemalan woman spent a painful three days to create for less than a family dinner at the local pizza joint will cost that same night. Price differences can emerge from expertise, or from quality, or from brand assurance, or from customer value — but they don’t emerge from how hard someone had to work to make something. Continue Reading

Ready or not, here come the clients

What’s left to say about the 2000s? What the legal profession (and the marketplace in which it operates) have just gone through was, as Brad Hildebrandt points out, unprecedented in almost every way. I won’t recap the changes — as Law21’s second full year draws to a close, you can read about them in many of the 274 previous posts here. But at a glance, we’ve seen astounding technological advances (primarily online) that change how legal services are accomplished and delivered, the rapid development of service providers outside the confines of national borders and the legal profession, and two recessions, the latter serious enough to trigger a long-overdue shift in the balance of power between lawyers and their clients. By the decade’s end, we saw the first signs that fundamental change in the marketplace, talked about for so long, was finally, really happening.

I don’t know about you, but I couldn’t be happier about what’s taking place in the law right now. That’s because virtually all the changes we’ve seen in the legal services marketplace over the past few years — and most of those to come in the next decade — operate to the benefit of clients and of the public generally. Legal services are gradually becoming more comprehensible, more accessible, and less expensive. Clients (both consumer and corporate) possess more knowledge of and more influence over legal services delivery than they’ve ever had, and both will grow. In sheer numbers, more people figure to have real access to justice in the 2010s than at any time in history. That’s an amazing development, well beyond what anyone could have anticipated as recently as 2005, and justifiable cause for celebration.

The question is, are lawyers attending this party? And if so, are they chatting away at the punch bowl or grumbling in the corner? These advances are coming largely at the expense of the traditional lawyer business model, one that was quite profitable for many years and seldom more so (especially at large firms) than in the early part of this decade. That model is now in its dying days, and whatever eventually replaces it will be more market-sensitive and client-intensive than the command-and-control model lawyers have enjoyed for so long. Not only that, but more sources for legal services, more automation of those services, and more sophisticated buyers all will cut into the profit margins that traditional legal practice generated. In the result, for the next several years at least (and maybe longer), law figures to become both a more challenging and a less remunerative career than it used to be. Continue Reading

The hyperlocal lawyer

You’ve seen plenty of references to the decline of traditional news media here, usually in the context of similar struggles in the legal marketplace. Instead of dwelling on that industry’s problems, however, here’s what looks like one of its future successes, and how it might have potentially profound applications to the law. It’s the rise of hyperlocal news.

Maybe the best way to define “hyperlocal” is to cite new media commentator Max Kalehoff’s question in his blog post: “What is hyperlocal? Can someone please tell me?” We all know what “local” means, he says: content and advertising focused on a specific location or area, rather than on a state, provincial or national level.  City, town, and community newspapers, TV stations, and radio stations all fit the definition of “local,” as do the organizations and subscribers who support them. So what does “hyperlocal” media mean, and how does it differ in a meaningful way from these local media that are dropping like flies all around us? A good answer comes in a comment from Mark Josephson, CEO of hyperlocal news provider

Historically, “local” was defined by city, town or zip. It was very “top down” and assumed that everyone who lived in a certain city, town or zip was interested in the same thing. Now, hyperlocal has come to mean “smaller than city, town or zip” and usually refers to neighborhoods or small town blogs. I think hyperlocal is defined by the individual, built from the ground up; that is, local media, news or information that is personalized by you and YOUR location. Hyperlocal is unique to everyone: what are the places, locations and neighborhoods that are important to you. Continue Reading

Law firms on demand

What if you could take a law firm, carve away all the parts of it you don’t like, and keep all the parts you did? What if, from the client perspective, you could get rid of high and rising prices, time-based bills, gratuitous overhead costs and unfamiliarity with your business? What if, from the lawyer perspective, you could do away with brutal billing targets, inflexible work schedules and long commutes into the downtown core? But what if in both cases, you could keep the high quality of talent and the brand-name assurance that comes with a respected legal services provider — what would that be like?

It’s an intriguing question, but not because of whether it would be feasible — it already is. Firms following this model are blossoming across North America and Europe. They offer corporate clients the services of lawyers with pedigreed credentials (large-firm and law-department experience) who will work from the client’s office or from home, for limited periods of time, at much lower rates than traditional law firms charge. The selling point for clients is the services of an excellent lawyer on the client’s terms, at a competitive price that excludes traditional firm overhead costs and revenue expectations; for lawyers, the challenge of high-end work on a short-term, flexible or even itinerant basis.

Maybe the best-known of this new breed of firms is Axiom Legal, which is closing in on the 300-lawyer mark, but there’s a growing collection of similar operations like Virtual Law Partners, FSB Corporate Counsel, Paragon Legal, Cognition LLP, Virtual Law [UK], The Rimon Law Group, and Keystone Law. They’re often called “virtual firms,” but that’s a little confusing, in light of the growing number of small cloud-based law practices. I prefer VLP’s self-description, a “distributed” law firm, or Keystone’s, “dispersed.” Concerns about these firms usually focus on the scope of their expertise, their value for money, and their KM and quality-control systems, all reasonable worries.  There doesn’t seem to be much question, however, that these firms are sustainable and are already legitimate players in the marketplace.

No, what’s really intriguing about these firms is the fact that they developed at all — that the traditional law firm has become sufficiently unpalatable to the people who retain it (and to some of the people who work inside it) that something new and different can flourish. Dispersed law firms directly challenge the traditional law firm model, presenting themselves as at least a complementary service to what traditional firms offer, and at most, a full-fledged alternative provider. These new firms question the fundamental nature of traditional firms, arguing that the physical concentration of legal talent in a high-priced centralized location with a rigid hierarchy and pyramidic revenue structure is outdated and self-serving. Flexible, project-based, techno-savvy, client-focused law firms are the way of the future, they contend: they’re more efficient, more accessible, and more rational. Continue Reading

The rise of the responsible client

At its recent annual meeting in Boston, the Association of Corporate Counsel dropped a minor bombshell by announcing it had created a law firm rating system. In-house lawyers can now rate their outside law firms on six criteria: understanding of objectives/expectations, legal expertise, efficiency/process management, responsiveness/communication, predictable cost/budgeting skills, and results delivered/execution. Even if these weren’t excellent criteria, which they are, it’s refreshing to see firms ranked on terms that signify value to clients, rather than by how much money they make or how well they score on the latest “Best Employer” survey.

But there are a couple of twists to this system. Larry Bodine points out the first: the ratings are only accessible by ACC members, not by the law firms themselves. That strikes me as counter-productive: a law firm can hardly be expected to improve upon ratings it never sees, so this doesn’t seem like a useful tool to motivate change. But I’m actually more interested in a second aspect of the ratings: they can be made anonymously.  It’s up to the reviewing in-house lawyer whether to divulge his or her identity when delivering the law firm critique. To me, this is more problematic, and it illustrates a flaw in the growing client-rating movement.

We supposedly live in an age of internet-enabled consumer empowerment. Instead of relying solely on what a company tells us about its product or service, we can seek out the collective wisdom of other users. And if the matter at hand is a low-value proposition like whether a pizza place or iPhone App is worth trying, then great: you can afford to look just at the average number of stars out of five bestowed by unidentifiable computer users. But if the purchase has anything more than fleeting value, then you want some weight attached to the review in question — you need to know something about the reviewer. A lawyer review submitted anonymously, whether positive or negative, doesn’t have nearly enough weight to be meaningful. I raised the same objection to anonymous client reviews when Avvo debuted a while back.

Proponents of anonymous reviews could point to wildly successful peer-review systems like Amazon, where users don’t have to use their real names when reviewing products. But even if you post as your cat on Amazon, the system still links to all your other reviews, from which a reader can build a sense of your history, knowledge and biases and decide whether your assessment is worth any attention. Reviews by themselves are just opinions — they only become useful when you know something about the reviewer, when you can critique the critic. That’s the real benefit bestowed by widespread online access: not the power to evaluate, but the power to evaluate those doing the evaluating, to go behind the judgment to the judges. If you can’t do that —  if you don’t know who’s saying great or terrible things about a given lawyer — then you can’t derive much value from what’s being said. People tend to be a lot more circumspect when their opinions are accompanied by their identity.

But the question of anonymous lawyer ratings points up an even larger issue — the fact that clients’ growing power needs to be matched by an equivalent acceptance of responsibility. Clients stand at the threshold of unprecedented choice and power in legal representation — they can hire a lawyer from anywhere they want, order a legal task to be completed by any of a growing number of innovative methods,  demand to be billed in certain ways and up to certain financial limits, and so forth. And it’s all great fun and very empowering for the client, until the ramifications sink in: now they have to work a lot harder to choose their legal services providers and manage their legal affairs more closely.

Clients need to develop sophisticated and defensible systems for selecting and commissioning legal services providers — they can’t just outsource the whole thing to an outside law firm and dust their hands of the details. They need to demonstrate why a particular law firm was chosen over others, or why a law firm is doing a given task at all. They need to understand how legal tasks are unbundled, assigned and workflowed at least as well as their law firms do, and they need to come up with systems to monitor the progress of these tasks and how well they’re proceeding against various time, budget and effectiveness milestones — the process revolution in legal services is underway, but as Rees Morrison points out, many in-house counsel are no better trained at project management than their outside counsel are. Clients will discover that the price of having more choice is the requirement that the choice be exercised justifiably and managed systematically, and that neither will be a picnic.

It’s not so easy to rate a lawyer when your name is attached to the rating, and it’s not so easy to complain about intransigent outside counsel when the question of your own transigence is brought into play. So while it’s true that it’s becoming a lot harder to be a lawyer, I’d also argue that it’s about to become a lot harder to be a client.

The solution or the problem?

Last week brought news of three innovations that, each in their own way, aim to increase access to justice. It’s noteworthy that none of them came from lawyers.

First is a report that for the first time in Canada, a third-party litigation funding company, BridgePoint Financial Services Inc.,  persuaded an Alberta trial judge to allow it to provide funding to the representative plaintiff in a class actionHobsbawn v. ATCO Gas and Pipelines Ltd. The judge’s reasons aren’t known because the ex parte order was sealed, and Alberta’s class actions costs regime is a little different than other Canadian provinces’, but this is still a potentially pivotal ruling. It could remove the chilling effect of brutal costs penalties for would-be plaintiffs, which nominally should increase access to justice. It also gives rise to substantial ethical concerns, and I’m on record as having serious misgivings about treating a civil action as an investment. But there’s no denying it’s innovative, and that it should make it easier for people to get to court.

Also making inroads in Canada is legal expense insurance, as the local arm of worldwide provider DAS inches closer to approval of its offering by the national superintendent of financial institutions. Already popular in Quebec, legal expense insurance could become widespread throughout the rest of the country if DAS is given the go-ahead. For an annual premium of $500, policyholders receive indemnification of up to $100,000 in legal costs for matters like wrongful dismissal disputes, tax problems and personal injury claims — but not, significantly, family law matters, the most common source of access problems. Legal expense insurance also raises the question of who makes the decisions about how a legal matter is conducted: the policyholder or the insurer? But again, it’s hard to argue that this offering leaves potential litigants worse off than they are under the current system.

And finally, shifting gears and hemispheres, comes word from Australia of what is so far a successful family law initiative called Family Relationship Centres. This excerpt from the story summarizes the project better than I could:

Everyone who walks through the door, or calls the toll-free line, is entitled to three free hours of help every two years, whether it be on-site counselling and mediation or off-site specialized services. After that, costs are based on ability to pay. Walk in the door of a Family Relationship Centre and you are greeted by a “parenting counsellor” rather than a wall of pamphlets. Their job is to get a sense of your personal situation and how it’s playing out for your family, and to assess what help you need to start moving ahead.

The centres are meant to act as triage units for ex-partners who may be hobbled by mental health issues and addictions, or children acting out because of prolonged family conflict. “They will not close that file until they are certain that person has got the help they need,” says Parkinson. Mediation is a mandatory first step, a move aimed at making the costly and adversarial court system a “mechanism of last resort.” The last of the centres opened last year, and already Australia has seen an 18 per cent drop in court filings.

These Centres are part of a massive and very expensive state overhaul of the family law system in Australia, and so far they seem to be working very well. But like the other two advances noted previously, this project apparently developed with little if any leadership from the legal profession.

We seem to be ceding the innovation ground in law to private companies, which by definition are primarily interested in turning a profit, and to government, which has a different set of priorities than either lawyers or their clients. Last month, the very first InnovAction Honourable Mention handed out by the College of Law Practice Management went to the Practical Law Company; last year, an InnovAction Award went to Novus Law LLC — both private companies. I doubt they’ll be the last winners from outside the practicing bar.

So why aren’t lawyers, law firms, or lawyer regulating bodies leading the way in developing innovative legal service delivery solutions? Part of the reason lies in the profession’s singular resistance to initiatives that involve risk or an entrepreneurial spirit. But part of the reason, it seems to me, is also the fact that the solutions these entities are providing are to problems the legal profession helped create.

In most cases where plaintiffs shy away from using the legal system, it’s because the cost of the trial is both disproportionate to the potential award and completely out of reach of the great majority of individuals. And the cost of a trial is largely within the control of lawyers, because lawyers’ fees are by far the single biggest component of litigation costs. Who else bears responsibility for how much we charge? Yes, there are other factors inflating trial costs — better funded courts could reduce backlogs and delays, and discovery can be difficult to predict and control. But if there’s a case to be made that someone or something other than the price of lawyers’ services bears the majority of responsibility for litigation costs, I’d like to hear it.

Most innovations in the law these days are devoted to making the legal services delivery process more streamlined, more efficient, and more affordable to more people. A good number of these solutions come from individual lawyers and law firms, which is extremely encouraging. But as a profession, we should be concerned about the extent to which other solutions are emerging from outside our walls — and the extent to which they’re aimed at solving legal cost problems for which I think lawyers bear primary responsibility.

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:


“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.

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.

The three types of collaboration

There was a lot to take away from yet another excellent ABA TECHSHOW in Chicago last week. One thing I didn’t take away, though, was my laptop. I managed to lose it the night before leaving and spent a fruitless morning searching all over the Hilton Chicago hoping to find it. Happily for me (and for the CBA, whose laptop it actually is), a good samaritan at the ABA (yet to be identified and thanked) found it and is shipping it north as I type. But until it arrives, I’m bereft of all the notes I took during the conference (aside from those recorded in my irregular Twitter feed from TECHSHOW), and so the detailed report  I had hoped to file for you is essentially sitting at Customs for an indefinite period of time.

In the absence of said notes, and since many other attendees have already written excellent reports from and summaries of TECHSHOW, I thought I’d instead focus on something that occurred to me while attending the CLE sessions, touring the trade show, and engaging in the various social and cyber events connected with the conference.

We’ve been talking about collaboration in the practice of law for some time, and it now appears to be arriving in force. But what’s interesting is that you can detect three different streams of collaboration starting to manifest themselves, each distinct in nature and impact from the others. I think they can usefully be referred to as lawyer-to-lawyer (L2L), lawyer-to-client (L2C) and client-to-client (C2C) collaboration.

Lawyer-to-lawyer (L2L) is the simplest, if not always the easiest, type of collaboration for lawyers: working with other lawyers (colleagues, opponents, or interested observers) to further a goal or increase their knowledge. There are numerous options within law firms: shared calendars and documents, meeting managers, instant messaging, wikis, and videoconferencing. Lawyers can also collaborate with other lawyers outside the firm, of course: marking up an agreement or prospectus on Google Docs or with the advanced collaboration tools on the newest Adobe Acrobat versions. Online meetings and webinars can put lawyers in the same space without incurring travel time and costs. And social networks represent a whole new frontier of L2L collaboration. (Read Dennis Kennedy and Tom Mighell’s now-definitive text  The Lawyer’s Guide to Collaboration Tools and Technologies for more.)

All these tools have the effect of making lawyers’ interactions with each other more powerful, streamlined and efficient. This is a good thing for lawyers insofar as civility and collegiality are easier to extend to collaborators than to competitors, a bad thing insofar as many lawyers’ business models reward inefficiency — expect to see more of the former and a lot less of the latter as the years go by. There still remains the old cultural obstacle, lawyers’ unwillingness to share knowledge and insight even with colleagues. But I suspect that over time, the evidence that collaborating lawyers are happier and wealthier than hoarding lawyers will become overwhelming, and natural selection will do the rest.

Lawyer-to-client (L2C) collaboration is in some respects a simple variation on the L2L version, only with clients at the other end of the line. In addition to the L2L instances cited above, extranets are the most common examples of L2C collaboration, with online project management and real-time document assembly growing as well. But L2C collaboration is less a matter of technology and more a matter of adopting a fresh attitude and mindset towards a lawyer’s role. L2C collaboration is harder for lawyers because it builds into the foundation of the client relationship elements of trust and transparency with which a lot of practitioners are acutely uncomfortable.

L2C-collaborating lawyers need to be so confident about their own processes and the value they deliver that they will have no compunction about giving clients the run of the factory floor, so to speak. They also need to be willing to cede some control over the relationship — always a challenge for this profession — and to actually listen to what clients are saying and work hard to accommodate their needs within their own procedures. Lawyers who open up their practices and processes to clients and who solicit clients’ active participation in the progression and resolution of their matters are the gutsy exceptions today; not too far down the road, they’ll be the general rule, because the market will require it.

That brings us to the third and and most powerful form of collaboration: client-to-client (C2C). Every lawyer should be paying extremely close attention to C2C collaboration, because it has the power to disintermediate them, in whole or in part, from the legal services delivery process.

It maddens clients that lawyers constantly reinvent wheels that have been invented thousands of times before, at substantial cost in lawyers’ time and clients’ money. They think, justifiably enough, that the amount of time a given lawyer spends to complete a task should be inversely proportional to that lawyer’s experience and expertise in this area. Lawyers’ failure to implement this simple marketplace rule can be traced directly to their habit of selling their hours rather than their expertise. Clients have had just about enough of that. And it’s occurring to them that many, many other clients must be in exactly the same position.

In C2C collaboration, clients pool their own legal knowledge and resources to form a vast living database that has the potential to replace much of what lawyers sell. One of the disruptive legal technologies discussed by Richard Susskind in The End of Lawyers? — and emphasized by him during his TECHSHOW keynote address — is “closed client communities” that draw upon their members’ collective experience and wisdom in legal matters.

Imagine millions of social networks cropping up, each peopled by and devoted to a single specific legal matter — divorcing spouses with children in Ohio, laid-off white-collar workers in British Columbia, high-tech startups in County Durham, industrial CLOs with environmental issues in New South Wales. Members contribute their own stories to wikis, supply both questions and answers to Q-and-A sections, and console or encourage fellow members in forums. The end result can be a civilian version of the kind of KM systems many clients wish their law firms would create and make available to them: a database of known facts, creditable experiences, and reasonable extrapolations of what will happen in a typical matter of this type.

This is a prime example of what a C2C collaborative system would look like — and there’s really nothing to stop clients from forming them right now. The best current example is Legal OnRamp, which gears its focus to high-level corporate counsel worldwide. But OnRamp also counts law firm lawyers and others as members, and makes conversations between lawyers and clients about legal services innovation one of its deliverables. In the Susskindian future, many such communities will emerge, cutting deeply into lawyers’ traditional inventory.

Will C2C collaboration make lawyers irrelevant? Of course not — there are extremely few areas of law where even the best-informed clients can wisely go it alone. But C2C collaboration will be one of the forces that will greatly narrow the range of profitable services lawyers can sell. It will hasten the arrival of the day where most of what lawyers do consists of high-value analysis, judgment and counsel, rather than knowledge and process. And quite frankly, it would also constitute a step towards greater access to justice for a lot of people.

As more instances of collaboration emerge in the practice of law, watch to see into which category each instance falls. L2L collaboration will become increasingly common and should be welcomed for its efficiencies. L2C collaboration will also grow and should markedly improve levels of lawyer effectiveness and client satisfaction. But the C2C collaborations are the game-changers, and we need to watch them carefully, because they will directly affect the fundamental nature of what lawyers can sell.

The problem, of course, is that lawyers may not hear about these C2C instances until it ‘s too late — because we’re not going to be part of those conversations.

The corporate client disconnect

I’m coming to think that many corporate clients get the outside counsel fees and service they deserve. After reading this LegalWeek article about in-house lawyers’ predictions for 2009, I had to note the ongoing disconnect between what corporate law departments say is important to them and what they actually do. The article speaks with some GCs noted for their innovation and asks them what the future will bring. One says: “Some firms are still operating with the view that people will pay their rates for quality alone, but GCs will begin to question their value.” Begin to? Another says: “We will be having discussions with our legal service providers in Europe in an effort to sharpen up the management of costs. One way of doing this is by asking advisers for a quote rather than just waiting for a bill — that will save money.” You think?

I don’t mean to be snarky, but we’re well into the worst-recession-since-they-started-calling-these-things-recessions, and we still seem to be mired in the Platitude phase of the long-vaunted overhaul of corporate legal services purchasing.  Companies have been  talking tough about reining in legal spend for years, but where are the deliverables? The recent mass lawyer firings have nothing to do with how firms sell services to clients; the fundamentals of the inside-outside counsel dynamic haven’t shifted. Since it’s the rare law firm that will open any conversation likely to lead towards either less revenue or a business model restructuring, clients are the only ones with both motive and opportunity to pull the trigger. Yet even with disaster looming, hesitancy appears to rule the day.

So why does corporate legal spend still resist most attempts to apply the kind of rational discipline painfully familiar to other commercial suppliers? Why does the other shoe continue to hover in the air?  Here are three possible explanations, though I can’t say whether or to what extent any are definitive; I’d welcome input from any current or former in-house lawyers. Continue Reading