What leadership really means

I recently had the opportunity to speak with John Kain, managing partner of Kain C + C Lawyers in Adelaide, Australia. John’s company (it’s an incorporated legal practice, not a firm), which specializes in high-end corporate, commercial and M&A work, is one of the more progressive and innovative legal service providers that I’ve come across in a while.

Among the interesting features of Kain C + C Lawyers is a short-form advisory memo that lawyers are sometimes asked to give clients. This memo, which can run no longer than two pages, must contain one of four recommendations concerning the client’s proposed course of action: “Very Good,” “Good,” “Poor,” and “Very Poor.” When John relayed these measures to me, I immediately identified what was obviously missing among the choices, and I’m sure you have as well. And then I realized why it was missing.

John does not offer a middle choice, a “Fair” or an “It Depends” between “Poor” and “Good.” He does not permit his lawyers to be ambivalent in their advice to clients. Either recommend something or recommend against it, strongly if you so choose; but you must take a stand with your advice and you must sign your name to it. Invariably, every new lawyer in the company, when first confronted with this memo, comes to John asking for the middle-way option, and he always refuses. The client, he tells them, is paying us to advise them. So: advise — and be ready to live with the results.

I found this a really interesting practice, because it forces the lawyer to shift from the easier role of “analyst” into the more perilous role of “advisor.” We’re quite comfortable, as lawyers, with analysis: it’s an intellectual exercise that allows us to occupy a safe, low-stakes position. The “reasonable person” that we fetishize in the law is an analytical construct, an imaginary neutral against whom we measure actual human behaviour for fun and profit.

Advice is a different beast. Clients act on advice, making decisions that carry consequences for which we bear at least partial responsibility. It’s the difference between “What does the law say?” and “What should I do now?” There’s a good argument that advanced technology (e.g., expert applications, IBM’s Watson) could provide sound legal analysis; but nobody seriously argues that technology can render trusted counsel, or that any client would act on such counsel even were it offered. To my mind, a lawyer “grows up” the first time she gives actionable advice to a paying client. You’re not just writing a memo anymore; this time, it counts.

Every practicing lawyer can probably recall the thrill of her first real “advisory” moment — and the deep anxiety that accompanied it. Because the flip side of advice is responsibility: the possibility of error, the risk of failure, and the finger of blame pointed at our heart if it all goes wrong.

Everyone suffers from a fear of consequences for a wrong decision, but I sometimes think lawyers are unusually prone to it. We talk about our “risk aversion,” our overabundance of caution and hesitancy. I’ve written before that lawyers are more properly described as “embarrassment-averse” — we hate looking bad in front of clients and colleagues, and nothing looks and feels worse to us than failure.  The nadir of this phenomenon is what you might call “responsibility aversion”: the desire to avoid any action with more than a nominal amount of uncertainty and a corresponding probability of failure.

The antidote to all these aversions is the same: it’s courage. Courage is not simply one of the virtues, as C.S. Lewis has written: it’s “the form of every virtue at the testing point.” I would argue that no characteristic is more important to a good lawyer than courage: it’s what allows us to stand up for our opinions and to stand by our clients as they implement those opinions and change the course of their lives. The best lawyers aren’t just the smartest or hardest-working or the most caring: they’re also the bravest. The worst lawyers, by contrast, are the most timid and the most easily led away from their instincts and standards.

That’s all well and good. As I see it, though, our profession has something of an issue with courage these days. Specifically, I think we need to start showing more of it. Here are four examples of what I mean.

Our advisory role. I’ve only been part of this profession for 20 years, so I can’t give first-hand accounts of the “old days.” But I have the distinct impression that lawyers used to be firmer and more direct when giving advice than we are now. Conditions and reservations seem to be a more common feature of legal advice these days. Clients complain that we frequently default to “No” (if there’s a chance something will go wrong, don’t try it) or hedge our bets (do this, unless any of these seven things are present, in which case don’t). Clients seeking our counsel about what to do often receive advice about what not to do instead.

Our procedural habits. The apocryphal story of the in-house counsel, who asked his law firm for a chair and got a dining room set instead, illustrates our tendency to employ diligence far beyond what’s often necessary. Lawyers are infamous for turning over every stone and tracking down every possibility, which prolongs legal matters and increases costs. We like to say this is because we’re thorough and perfectionist, and we are. But it’s also because we fear the remotest possibility of a bad outcome and seek to eliminate all uncertainty, which is just not practical. There’s a cost-benefit line at which reducing uncertainty any further ceases to pay dividends, but we often lack the courage to stop at that line and say, “Enough. We’ve got what we need.”

Our business practices. We price our services by the hour because we want clients to bear 100% of the risk that something unexpected will happen (as if often does) during the course of a retainer, rather than having the gumption to calculate that risk as best we can and explicitly share it with our clients. We resist changes in our firms’ practices and procedures because we fear the consequences of failed innovations, and so we timidly wait for a dozen other firms to go first and thereby miss our chance. We dwell more on the personal and professional risks of adopting new methodologies and technologies than on the rewards they could provide to our firms and our clients.

Our regulatory approach. Lawyers do not permit competition in legal services from anyone outside our profession, even in the face of the clear failure of our present system to provide affordable legal services to more than a handful of potential clients. You can call that many things — protectionist, paternalistic, callous — but it also comes across as a lack of conviction that we could hold our own against “non-lawyer” providers. If lawyers are so convinced of their superiority, these entities argue, why are they afraid to compete against us in an open market? Where is the courage to take on new comers, or to take a measured risk of liberalization that could improve access to the law?  [do_widget id=”text-7″ title=false]

Please understand: this is not an attack on the moral backbone or personal courage of individual lawyers. This is an expression of growing concern that our professional habits have driven us into a culture of doubt and apprehension, a general meekness and conservatism in how we view our world and act within it. That world is undoubtedly riskier and more perilous than it’s ever been: the mind-boggling complexity of the law, the challenges of sustaining a viable practice, the savagery of competition between lawyers, and the spectre of client retaliation in court for mistaken advice all play a part. How much easier to reduce our exposure, stay the familiar course, adopt defensive postures, and reinforce our strongholds.

But when we bend to these challenges, rather than rising to meet them — when we spend too much time thinking about the worst-case scenario and how to avoid it — we miss out on so many opportunities and we accomplish so much less than we could.

Our ultimate value, to both clients and society generally, lies in our willingness to speak the truth and recommend the right course, regardless of the discomfort or pain that will entail, especially to ourselves. Our professional calling is to assess, manage, and recommend courses of action (and their attendant risks) that serve both our clients’ interests and the greater good, and to gladly accept responsibility for doing so. That’s courage, as manifested in the legal profession — and in all its manifestations, it takes one familiar form: leadership.

This is the time for leadership in the law, and I’m here to tell you that no one is exempt. Every lawyer has both the opportunity and the responsibility to visibly exercise leadership, in our firms and with our clients and in our profession, by acting courageously. Assess risks, accept them, and act accordingly; stand tall for what you believe is correct; look failure in the eye until it blinks; put yourself on the line for what’s right and necessary. We’ve become too passive, reactive, and defensive for anyone’s good, too reliant on what we’ve always done before. We can’t afford any more “it depends” or “wait and see.” It’s time to stiffen our collective professional resolve and show the world what a powerful, confident legal profession can do.

So: advise, and live with the results. Innovate, and stand by your efforts. Speak out, and welcome everyone’s eyes turning to you. Lead, and watch everyone else get out of your way.

Jordan Furlong is a lawyer, consultant, and legal industry analyst who forecasts the impact of the changing legal market on lawyers, clients, and legal organizations. He has delivered dozens of addresses to law firms, state bars, law societies, law schools, judges, and many others throughout the United States and Canada on the evolution of the legal services marketplace.

Don’t think like a lawyer

This article was just published in the “I Wish I’d Known” column in the October 2014 issue of Student Lawyer, a terrific publication of the ABA’s Law Student Division. My thanks to Marilyn Cavicchia and Darhiana Mateo Téllez of the ABA for the invitation and opportunity.

“You’re going to learn to think like a lawyer,” said one of my professors in the first week of law school. She didn’t mean it as the threat it turned out to be.

Law degrees might be three years long, but let’s be honest, you’ve begun thinking like a lawyer within one. I still remember, in that first year, walking past a tall ladder propped precariously against a city building and thinking not about the worker’s safety, but about his liability.

It’s a small, insidious change. You start to view others not as people, but as tortfeasors, claimants, or consignees — parts to be played, with fault to be assigned and damages to be assessed. Cases become puzzles, games: Spot the issue! Identify the error! Feel justified as you deny coverage to the quadriplegic accident victim who didn’t see the light turn red. Distance yourself from him with the insulating, all-excusing logic of the law.  [do_widget id=”text-7″ title=false]

Thinking like a lawyer is easy and fun. But I wish that “thinking like a lawyer” had been provided as a complement to my already-installed “thinking like a person” system, not as a replacement for it. I wish I’d been shown the off switch.

Equally, I wish that law school had gone on to instruct me in “feeling like a client.” Few lawyers, and hardly any law students, know what it’s like to be a client — the anxiety, the vulnerability, the isolation that accompanies a problem we don’t know how to solve and whose consequences could ruin us. Many lawyers forget this, if we ever knew it or felt it in the first place.

I wish there’d been a mandatory second-year course called, simply, “The Client.” And as part of that course, each student had to visit a local lawyer incognito for a 20-minute consultation about a hypothetical problem. And to come back afterwards to report: how were you made to feel? Like the subject of a human event, or the object of a legal process? Were you engaged, or just acknowledged? Looked at, or looked through?

And, oh man, the price. What it feels like to ask a lawyer the seemingly simple question, “How much will this cost?” And either the lawyer hedges and quotes an hourly rate that doesn’t help, or she actually drops a real number on you. And in 10 or 15 years’ time, if you’re financially successful, maybe that number won’t faze you. But today, as a law student, with debts and middling job prospects — that number will chill your blood. As it should.

Legal education is a powerful drug; but if you’re not careful, it can drown out your instincts, stifle your emotions, and numb your heart. Law school molds and enhances your intellect, but frequently neglects to enlighten and illuminate your soul. The damage is predictable.

Great lawyers are more than just brilliant tacticians: they’re instinctive, heartfelt, caring, and real. No matter what else you do in law school, start learning how to be a lawyer like that.

Jordan Furlong is a lawyer, consultant, and legal industry analyst who forecasts the impact of the changing legal market on lawyers, clients, and legal organizations. He has delivered dozens of addresses to law firms, state bars, law societies, law schools, judges, and many others throughout the United States and Canada on the evolution of the legal services marketplace.

You say you want a revolution?

If you’ve been reading my blog for a while, you’ll know that I’m convinced of a couple of things: (1) Fundamental shifts in the legal services environment will spawn a  diverse population of new providers that will expand access to those services while destroying lawyers’ market exclusivity; and, (2) This is, on balance, a good thing. I’ve never been more certain than I am today, at the close of 2013, about the first — but I’ve never been less certain about the second.

I’ve contributed a few thoughts recently about the state of the legal market to Lexis-Nexis, JD Supra, and the CBA’s National magazine, among others. My basic message is the same throughout: we’re no longer predicting a new legal future, we’re living in a new legal present.

And yet I still see people in this industry asking, “Where’s the revolution? When is the change going to come?” Folks, the change is here. We’re living it. Cast your mind back five years, when Richard Susskind had just published The End Of Lawyers?, and ask if you thought this much upheaval and advancement and innovation was possible in such a short period. Cast it back 10 years, when the blawgosphere barely existed, and ask the same. The legal market is becoming more diverse and more accessible every year; legal services are more affordable and more predictably priced every year.

Most importantly, the pace of that change is accelerating. More new things happened in this market in 2013 than in 2012. More happened in 2012 than in 2011, in 2011 than in 2010, and so on. Alternatives to the traditional — in terms of service providers, business models, workflow systems, delivery vehicles, pricing strategies, and so on — are becoming normalized; that is, they’re spoken of less frequently as “alternative” and more frequently as simply another option. We don’t even talk about the “new normal” as much — it’s all becoming normal. These are not the signs of change in retreat; these are the signs of change becoming mainstream — ceasing to be “change” and starting to become “the way things are.”

The normalization of alternatives comes at a steep price to the incumbents, and I’m aware of that. Lawyers have it tough right now, tougher than most of us have ever experienced, and I’m sorry to say it’s going to get worse before it gets better. I don’t take that lightly. But clients have it better already — better than they’ve had it before, in terms of knowledge and access and choice and affordability, with the prospect of much better yet to come. And at the end of the day, as much as I care about lawyers, I care about clients more, because they’re the reason we’re here: to help them use the law to reach their goals, enhance their dignity, and better their lives.

So what’s the problem? Why am I suddenly also concerned about whether all this change will, in fact, be a good thing? Because while I hope and trust that the traditional legal market will fall away and that a better one will replace it,  I’m increasingly alive to another possibility — that the traditional legal market may fall away, and nothing will replace it.

One of my very few hobbies is geopolitics (yes, I know I need to get out more often). I’m a dabbler in this field at best, but I’ve had an interest for many years, and I still remember what I was thinking on the day the Berlin Wall came down. Certainly those were extraordinary images and wonderful times, a lifetime marker for the generations that helped bring it about or watched it happen. But what was going through my mind, watching the Wall come down and totalitarian governments all over eastern Europe collapse with it, was: This is happening too fast. Corrupt, decrepit regimes were falling over like dead trees in a windstorm, but in many cases, there was nothing — no replacement regime, no legitimate constitution, no rule of law — to step into the breach. Some of these countries, to their great credit, grew reasonably healthy liberal democracies out of the rubble. Many did not.[do_widget id=”text-7″ title=false]

George Friedman has observed, accurately, that the people who start revolutions are often not the people who finish them, and that revolutions do not always end up where their instigators hoped they would. I think it’s fair to say that we’re at the start of a revolution in the legal services market. That should be, and is, exhilarating. But it should also summon us to the barricades to make sure that, if the incumbent regime falls, looting and chaos are not the immediate outcome and the lasting legacy.

If you want an example, take a look at law schools. You’re probably aware that applications to US law schools have been dropping like a stone and that enrolment is now down to its lowest level since 1977. As Bruce MacEwen notes (and as I’ve been saying for some time now), this story has only one ending: many American law schools will close or will become so small as to turn into veritable cottage businesses. There’s no question that there are too many law schools providing too little value to their students and to the clients they’ll someday struggle to serve, and that a major correction is overdue here. There’s also a lot of schadenfreude throughout the profession right now as these schools wriggle on the hook.

We can hope for and work towards a renaissance and reinvention of law school. But what if that fails? What if 80% of US law schools close and are not replaced? Will the profession and the public be well served by a legal education system that features Harvard, Yale, Stanford and a few other clones, and nobody else? Or what if the failed law schools are followed by profiteering private law degree factories that replace the passive academic lecture with cookie-cutter “practical training” packages bereft of jurisprudence and professionalism? I think this is an unlikely outcome. But it is a possible outcome — a possibility that didn’t exist 10 years ago, but does today.

Or take a much bigger and broader example: the legal profession itself. This blog contains six years’ worth of mounting criticism of lawyers and warnings of dire consequences should opportunities for reform be ignored too long. But it also contains staunch defences of the inherent value of lawyers as expert counsellors to troubled clients and defenders of the rule of law. Lawyers are both desirable and necessary. But we’ve exploited our protected and prestigious position in this market for so long that an over-correction is now possible — not lawyer reform, but outright lawyer rejection. Alternatives to lawyers, as I’ve detailed above, are here and are flourishing, and we’ve encouraged them to develop by our failure to fully serve the market. These alternatives should complement us, not replace us. But it might not work out that way.

Let me be clear: I’m not backtracking, not one inch, on my belief that this market needs serious, structural reform, that access to legal services must be expanded and improved, and that lawyers should be playing different (but still important) roles in this market than we do today. Don’t mistake the foregoing for the kind of fear-mongering employed by protectionists and lawyer exceptionalists to beat back change in their own interest. Instead, this is a call for the legal profession to recognize that change is really happening — and that we now need to throw our efforts into trying to manage, to the extent possible, the enormously strong forces coming into play.

How can we avoid the worse- and even worst-case scenarios? How do we manage the effects of revolutionary forces? This has to be a collective effort — everyone in the legal profession and its associated institutions has to play a part. Here are my recommendations.

1. Regulators must lead the way by recognizing these trends and staying well ahead of them. Every regulatory activity and initiative must clearly enhance either access to legal services or lawyers’ professional standards. Every barrier to “non-lawyer” entry to the marketplace must be immediately examined and, unless objectively justifiable in the public interest, set aside. The self-governance of lawyers in the public interest must be protected and prioritized. Regulators that spend their time on trivia, such as declaring lawyer blogs to be improper advertising, are running enormous risks in a market environment this volatile.

2. Bar Associations must promote the value and professionalism of lawyers in a crowded market. Forget about any efforts to keep “non-lawyers” off our turf; that battle is over, and we lost. Now is the time to create “image campaigns” that tell clients, not why we want to law school, but why a lawyer’s ethics, professionalism, expertise, reliability and integrity are worth the premium that we inevitably will cost. These are marketing campaigns that communicate the extraordinary value that a lawyer brings — while recognizing and readily conceding that not every situation requires a lawyer’s services.

3. Law Schools must preserve and promote the importance of professional values in legal education. Those schools that survive the coming purge will be under enormous pressure to provide “practical,” “real world” training and clinical opportunities, and so they should. But they must also recognize and embrace their role as the incubator of ethics and professionalism, because the competitors that will emerge in the education and training space likely will not care about these facets of the future market as much as law schools do or ought. Law schools will provide lawyer training simply to survive in this market; they must also provide the primary foundations of ethical lawyer behaviour.

4. Courts must recognize that their traditional role as the arbiter of private legal disputes is in mortal danger. Ninety-eight percent of disputes never see the inside of a courtroom, and 90% of all disputes never even enter the process. Courts are utterly agonizing to many of the people who use them and utterly irrelevant to all those who cannot; this is a short road to disaster. Train staff to help self-represented litigants, because they will shortly and permanently outnumber lawyers; deputize senior lawyers to resolve conflicts locally; institute ODR services affiliated with courts’ enforcement powers. Above all, rip off the blinders and recognize how close you are to the edge of the chasm.

5. Lawyers must accept and act upon a single new reality: we cannot continue to make a living in the law the way we used to. Full stop. We must create sustainable cost advantages through adoption of technologies and processes. We must cede to new competitors work that we cannot do as efficiently, effectively and profitably as they can, forming partnerships where appropriate to integrate services in a complementary fashion. We must learn to price rationally, fairly, and predictably. We must remember and pursue the true purpose of law. Above all, we must resist every temptation, no matter how small or how great, to compromise our ethics and professional stature for any business reason. These will soon be our sole competitive advantages.

Revolutions are powerful, frightening, and unpredictable things. Once they’re really underway, they can’t be controlled or directed. Market revolutions are less violent and bloody than political ones, but they can be just as destructive. In times of revolution, you figure out very quickly just what it is you need to really safeguard. I believe we need to safeguard the rule of law, the independence of the profession, and the fundamental values to which lawyers have always sworn oaths. Everything else is replaceable or negotiable; these are not.

In 2014, the revolution in the legal market will continue to foment, to bubble away, to push in from the edges and from underneath. One of these days, it will break out in full, and it will be a wonder and a terror to behold. I truly don’t know when that’s going to happen. But I do know that if we want there to be a viable legal profession afterwards, we need to act now — to lock down and preserve the critical few things that we really, truly can’t afford to lose.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.   

Ready for the future? Your survival kit survey results

Previously on Law21 … last month, to be exact, I designed another survey for your consideration. This one was a good deal more complex than my first Law21 questionnaire, which simply asked you to prioritize 10 characteristics of a modern law firm.

This time around, we postulated a “future legal survival kit,” giving you 15 features with which to equip a future firm and asking you to assign them points according to how important you thought these elements would be. The survey was posted in the dead of summer, so I was pretty pleased to get the 73 responses that we did. I also suggested (and still recommend) that you check out Evolutionary Road, my new book published by Attorney At Work, as both a guide to help you complete the survey and as a fairly transparent, yet hopefully still effective, promotional effort.

So let’s get to the results, which I’ll follow with an analysis of each entry and my own rating of each one.

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So, the top choices of our 73 respondents (those options that received 10 points on average or more) were strong client relationships, integrity, and legal know-how. I can’t help but observe that if I had asked for the top five features of a traditional law practice in the halcyon bygone days of the profession, I would have wound up with a very similar list. This isn’t to say that Law21 readers are reactionary conservatives, which I’m pretty sure you’re not. More likely, it represents a yearning for the future profession to return to the fundamental bedrock values that we perceive underlay the successful law practices of our parents’ and even grandparents’ generations.

I can understand that desire, and I approve of it to a certain degree: there’s an emerging consensus that whatever lawyers and law firms have morphed into from the 1980s to the present day, more has been lost than gained in the transformation. But however much we may wish for a return to the old days (and they weren’t wholly fabulous, let’s keep in mind), they’re not coming back. We can’t simply revisit the past to build the future: the architecture of legal practice has to adapt.

Here’s my brief analysis of, and my own opinions on, the 15 features listed in the survey:

1. EQ.  Survey: 11.89. Me: 10

I was pleasantly surprised by how well emotional intelligence was rated, and it gives me hope that lawyers are coming to appreciate not just the importance of communication and client service, but also how these methodologies need to be infused with the virtues of attentiveness, sincerity, and personal connection. It matters that we care, and it matters that we get that fact across.  [do_widget id=”text-7″ title=false]

2. Connections.  Survey: 11.49. Me: 0

Here’s the first major diversion between me and all y’all. I can see the desirability of having strong relationships in place to help jump-start a future law practice. But to my way of thinking, this is a secondary characteristic, one that I can develop if I have many of the other listed skills and assets. My zero doesn’t suggest that I think this trait is worthless; it’s simply that I value other things more.

3. Moral Fibre.  Survey: 10.73. Me: 20

I’m reassured that you rated integrity so highly — this is an asset we don’t always think about when assembling our advantages. But for me, this is a cardinal virtue in a lawyer: not just having moral character, but having a reputation for it. In a future legal market riddled with noise and confusion, trustworthiness and personal reliability will be a tremendous competitive benefit, not to mention an inherently good thing to possess.

4. Legal Knowledge.  Survey: 10.16. Me: 0

Again, it’s not that I believe legal know-how has no value in a law practice; obviously it does. But I don’t need to personally possess this feature or have it in place, in-house, in my practice. Legal knowledge is now widespread and easily accessible, and its price keeps dropping. I can outsource this asset, retrieve it when and from whom I need it, and build up other resources instead.

5.  Innovation.  Survey: 8.63. Me: 0

We’ve now moved out of the top four and into the single-digit answers, although 8.63 is still above average (assigning equal points to all 15 choices would mean 15 awards of 6.66.) This one was a tough call for me, as it came down to a choice between Innovation and Risk-Taking, which are related but different ideas. But for reasons I’ll set out below, I went with Risk.

6. Solutions R Us.  Survey: 8.53. Me: 20

This was my first really big surprise: I felt sure that problem-solving would rank more highly. To me, this is a primary lawyer characteristic, one from which many other assets flow. People seek out lawyers when they have challenges they can’t solve: we’ve always been able to meet that need ourselves and we’d always better be ready to do so. Problem-solving lets us anticipate risks and opportunities, too.

7. Pricing Strategies.  Survey: 7.54. Me: 20

Given the array of other features on offer, I can understand how people might assign pricing a roughly average score. But to me, it’s a paramount ability, one on par with integrity and problem-solving. We cannot survive in a future legal market unless we are experts at pricing our services, which in turn implies we are experts at managing our business costs. This is the last of my three “20” scores.

8. Process Mastery.  Survey: 7.45. Me: 10

I almost gave this one a 20 as well, but the fact is that I can probably acquire skills and techniques in process management from third parties. But as a lawyer of the future, I require at least a familiarity with and appreciation for the importance of systems and procedures in running a profitable business in a legal market where many services are heading towards commoditization.

9. Techno-Wizardry.  Survey: 5.78. Me: 0

We’re now entering the final tranche, where all entries received below-average support. Technology, like process, is something with which every lawyer will require at least a nodding acquaintance and comfort. But tech expertise can be outsourced more readily, and the rapid evolution of technology tools argues against making it a core lawyer feature of a modern law practice.

10. Financial Facility. Survey: 5.46. Me: 10

I thought this one might rank more highly than it did. Thanks to self-selection bias and legal education failures, few current lawyers entered the profession with any degree of financial literacy, and many still lack much business knowledge or instinct. These lawyers already struggle to compete in a closed market against other equally challenged lawyers; how will they survive in a real market against real businesses?

11. Risk Acceptance.  Survey: 5.18. Me: 10

Why did I choose risk appetite over a flair for innovation? Because the former is, I believe, critical to both business and lawyer success: you can’t run a risk-averse business in a competitive market, and you can’t properly advise clients without recognizing and integrating the reality of risk in everyday life. Innovation is very useful, and I’d take it if I could. But it’s not as essential as risk acceptance.

12. Nice Niche.  Survey: 5.12. Me: 0

I actually do think niches will prove to be important characteristics of future law practices, especially for solo and small-firm lawyers: much of what we now call “general practice” law will be lost to private companies and computers. But I came to believe that a niche is a result of career success, not a cause, and you appear to agree with that assessment.

13. War Chest.  Survey: 5.1. Me: 0

Interestingly enough, this was the first entry I thought of when conceiving this survey, and I thought I would rank it highly. But eventually, I came to see it as a secondary, not primary feature, not least because it’s a non-renewable resource: once the money’s spent, it’s gone. There’s never been a better time to find venture funding for startups, and that applies to the law as well.

14. Recruiting Prowess.  Survey: 4.6. Me: 0

I should admit that I planted this one partly as a red herring. While I think it will be important to attract the right people with ease, this entry was added more as a test of whether people think the current frenzy for lateral hiring of partners with big books of business will continue to be a staple of law firm strategy in future. I sure don’t think it will, and happily, neither do you.

15. Famous Brand.  Survey: 4.33. Me: 0

Someone’s gotta be last. I actually thought this one would and should rank higher: reputation and prestige are like catnip for lawyers, and not without reason, because a well-known name is central to our ability to get our phones ringing. But fame and prominence are things you reap, not things you sow. If you’ve chosen among the other 14 features wisely and executed them well, this one will follow.

So there you have it: my prescription for a future legal survival kit:

20: Moral Fibre

20: Pricing Strategies

20: Solutions R Us

10: Emotional Intelligence

10: Financial Facility

10: Process Mastery

10: Risk Acceptance

Whether or not you took the survey, tell us now: do you think this is the best future survival kit? What would you have packed more of, or done without, and why?

And of course, keep in mind: this isn’t really a hypothetical scenario at all. This is the situation facing your firm, today, right now. So what will you do?

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

Death to “Profit Per Partner”

It’s time for law firms to junk “average Profit Per Partner” (PPP) as a measure of profitability and success. Past time, actually: our continued adherence to this shallow and self-centred metric is a prime contributor to the BigLaw existential crisis we’ve been reading so much about lately. By using PPP as the primary (if not the only) criterion by which to assess our law firms’ health, we perpetuate a host of self-destructive habits and impair our ability to operate our law firms in a truly profitable and professional manner.

There are two broad categories of reasons why PPP is a disastrous success metric for law firms. The first category has to do with the narrow and simplistic nature of this measure and its inherent definitions of value. The second is related to PPP’s increasingly outdated devotion to individual shareholder profits.

Let’s start by understanding exactly how primitive average profit per partner really is. First of all, it’s “average” —  adding up total firm profits, dividing by number of partners, and ending up with an amount that might well reflect no single partner’s profit at all. (Recall Bill Henderson’s dismantling of the concept of a $90,000 “average starting salary” for new law graduates, when he demonstrated the bimodal distribution of such salaries and that virtually no new lawyers actually earned $90,000 in their first year.) With the ratio between highest-earning and lowest-earning partners now more than 9 to 1 throughout the AmLaw 100, an “average” profit is almost meaningless, too easily skewed by outliers at either end.

We might improve slightly on PPP if we adjusted it to measure “median profit per partner” — at least then we’d have some confidence that a few partners are actually making that amount, and outliers wouldn’t distort the data. But even here, we run into another fundamental problem: the definition of “partner.” Law firms have tended in recent years to extend this title to lawyers, and retract it from them, based largely on their present accounting needs: we’re currently in the depths of a “de-equitization” trend, evidently based on a desire to reduce the number of seats at the table and the number of denominators in the PPP equation. This is worse than the tail simply wagging the dog — this is the tail deciding whether there’s even a dog back there or not. If a metric is going to determine your growth strategy, it had better be a damn good metric. [do_widget id=”text-7″ title=false]

But PPP is not a good metric: it drives selfish, irrational, destructive behaviour. If a firm’s PPP dips precipitously or its position in the AmLaw rankings falls more than a few slots, a veritable death watch is created for the firm, both inside its walls and in the wider market. Influential partners and rainmakers, most of whom know very little about actual firm profitability, feel compelled to jump to firms higher in the rankings — with no regard given to whether the “higher” firm will be better for them or for their clients. Morale falls within the firm, recruiting become harder, CVs start circulating — all because one simplistic metric says the firm is in trouble. Entrepreneurs would be shocked by the credulity and financial ignorance of lawyers revealed by PPP contests.

PPP is further susceptible to the widely recognized (but rarely acknowledged) fact that every set of PPP figures published for large law firms is entirely self-reported: law firms tell the market what their revenues, profits and partner counts are, and invite us to do the math. But hardly anyone steps up and questions whether the base figures themselves are accurate. Consider the brouhaha created in 2011, when some of the law firm profit numbers listed high in the AmLaw rankings varied from those in a report by the firms’ lender of choice, Citi Private Bank — and not surprisingly, the self-reported firm numbers were noticeably more robust than the bank’s figures.

Now, you might still be willing to overlook all these legitimate objections to PPP if you were convinced of one thing: that the annual profit earned by partners is a proper measure of the success of a firm, and that we should simply improve our analytics until we can measure that profit accurately. That belief rests on another basic assumption: that the ultimate and best purpose of a law firm is to generate and maximize profits for its partners. That brings me to the second, and I think even more incisive set of objections: this belief is false.

Law firm partners are the equity shareholders in their firm (and outside of England, Wales and Australia, only lawyers may be such shareholders). “Shareholder value,” in turn, has been the fundamental strategic goal of the corporate world for the last few decades: merge, diversify, fire, close, acquire, rebrand, lay off — do whatever it takes to maximize shareholder profits. This is a corporate philosophy whose time has passed. Justin Fox writes in the most recent issue of The Atlantic, in an article titled “How Shareholders Are Ruining American Business”:

This notion that shareholder interests should reign supreme did not always so deeply infuse American business. It became widely accepted only in the 1990s, and since 2000 it has come under increasing fire from business and legal scholars, and from a few others who ought to know (former General Electric CEO Jack Welch declared in 2009, “Shareholder value is the dumbest idea in the world”). But in practice … we seem utterly stuck on the idea that serving shareholders better will make companies work better. It’s so simple and intuitive. Simple, intuitive, and most probably wrong—not just for banks but for all corporations. …

[The] heyday [of shareholder value] ended with the stock-market collapse that began in 2000. The popping of the tech-stock bubble demolished the notion that stock prices are reliable gauges of corporate value. And as the economy languished, the shareholder-driven U.S. corporate model ceased to look so obviously superior to its Asian and continental-European rivals. The intellectual assault on shareholder value began, and has been gaining strength ever since. …

Multiple studies of corporations that stay successful over time—most famously the meticulously researched books of the Stanford-professor-turned-freelance-business-guru Jim Collins, such as Good to Great—have found that they tend to be driven by goals and principles other than shareholder returns. … In a complex world, you can’t know which actions will maximize returns to shareholders 15 or 20 years hence. What’s more, most shareholders don’t hold on to any stock for long, so focusing on their concerns fosters a counterproductive preoccupation with short-term stock-price swings. And it can be awfully hard to motivate employees or entice customers with the motto “We maximize shareholder value.”

You can see the many parallels between American corporations and law firms in this regard:

  • PPP as an overriding goal also rose to prominence in the late 1980s and 1990s (a period often associated with the start of a decline in professionalism);
  • Shareholder profit does not predict the health of an enterprise (Dewey & LeBoeuf was profitable until the day it crashed);
  • Rampant partner mobility and lateral hiring frenzies parallel shareholders’ increasingly short-term possession of company stock;
  • “Annual partner draws” parallel “annual shareholder earnings” and drive short-range, revenue-now behaviours;
  • Staff members and associates don’t share in the profits, so how they can be expected to support a strategy in which they have no personal claim?
  • Truly great firms are driven by goals and principles (how often have we said to ourselves, “Law used to be a respected calling, firms used to be places with a higher sense of purpose,” etc.?).

I don’t think it’s a huge stretch to say that when PPP became law firms’ fundamental measure of success, lawyers at these firms began to lose their compass, and the firms themselves began to lose their way. [do_widget id=”text-8″ title=false]

So it’s not just that PPP measures only one simplistic thing — it measures the wrong thing. There is no correlation, let alone causation, to be found between profits earned by equity partners on average and a host of other positive features that could equally reflect firm success:

  • Firm-wide profitability
  • Lawyer and staff retention rates
  • Lawyer and staff morale
  • Client loyalty
  • Client satisfaction
  • Community impact
  • Pro bono commitment
  • Prestige

That last one really goes to the heart of the issue: more lawyers now reflexively accord more prestige to a firm depending on its AmLaw ranking. But do you really think clients believe that a firm’s profitability — its ability to maximize revenue from these same clients — helps determine its prestige and desirability? And do you think clients applaud lawyers’ desire to make the maintenance and growth of that profitability their primary measure of success?

Law firms are, or should be, far more than profit machines for their equity partners, just as companies should be more than just profit machines for their shareholders. But even if you don’t believe the latter — if you think that capitalism is so base that corporations really should be nothing more than money engines — aren’t lawyers and law firms supposed to be different, and better? Isn’t this the argument we always hear against non-lawyer ownership of law firms: that “law is a profession,” that the greedy desires of businesspeople and shareholders would drive us to ruin if they were admitted to the ownership circle? If we’re so superior to mere corporate types, let’s prove it — by adopting a measure of law firm success that has more in common with today’s globalized economy than with Dickensian England.

I admire The American Lawyer and I have friends who work there (hopefully after today, too). But it’s time we called on AmLaw to abandon PPP as a measure of law firm success. The AmLaw rankings are incredibly influential within the US legal profession and have spawned imitators worldwide, and it makes sense that an independent assessment of law firms exists to guide both clients and lawyers in identifying “the best” firms. But we are in desperate need of improved criteria for determining “the best.” PPP is shallow, simplistic, and misleading; it encourages antisocial and unprofessional behaviour; and it’s out of step with modern enterprise philosophy. We can do better; we need to do better.

I have no doubt that constructing a more complex, sophisticated measurement of success among large law firms would be a difficult task — but that’s no reason not to try. If The American Lawyer again takes the lead, as it did years ago when it first developed the AmLaw 100, it could have a wide and (I believe) massively positive impact on how lawyers view themselves and how they run their law firms. If it chooses not to do so, it will only be a matter of time before someone else comes up with a rival ranking with different and better criteria that will capture the profession’s imagination.

Whether we like it or not, PPP is in its dying days. The sooner we put it out of its misery, the sooner we can start to bring new life to our law firms.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.   

The secretarial canary in the law firm coal mine

“A really far-sighted law firm would give its secretaries the chance to ‘skill up’ and take on more responsibility, accomplishing more advanced tasks. … Change ‘secretary’ to ‘workflow manager’ or ‘logistics director,’ and you’ve accomplished three great things at once: increased the role of software in handling clerical and financial duties, reassigned your valuable secretarial help up the productivity chain, and attended to an area in which you can find real efficiencies and carve out a true competitive advantage over other firms.”

– Yours truly, “Legal secretaries 2.0,” January 24, 2008

In recent months, a number of major law firms have offered buyouts to legal secretaries, accelerating a trend that began before the downturn. This week New York law firm Weil, Gotshal & Manges LLP cut about 110 staff positions, including about 60 legal secretaries. “I would imagine that the remaining secretaries are going to take on a heavier workload,” said Lee Glick, a legal secretary with Weil who has worked there more than 25 years and still has a job.

The Wall Street Journal, “Legal Secretary, a Dying Job,” June 27, 2013

Contrasts like this one guarantee that I’m at no risk of overestimating my impact on the business of law.

I had fond hopes, 5 1/2 years ago, that law firms might take advantage of a dynamic environment and re-engineer their organizational workflow. Recognizing that secretaries’ purely clerical tasks could be done more efficiently elsewhere, for example, they would outsource or automate those tasks and liberate secretaries to take on more challenging, valuable and productive work.

As it turned out, however, firms only got as far as the first step: they sent the work to lower-cost providers. Then, instead of upgrading the qualifications of their loyal and experienced secretaries, they simply canned them. Surviving secretaries at a growing number of law firms are now expected to serve four lawyers at once — at some firms, that number is going as high as six or seven. Hands up if you think either the secretary or the lawyers are going to be better off as a result.

Five years ago, in an atmosphere of financial and social crisis, law firms threw numerous staff and associates overboard, in an effort to keep profitability levels from plummeting and sparking a rainmaker exodus. Not the best tactic in the world, but understandable at the time. Today, though, it’s as if those sacrifices were never made — the purges have intensified (staff, associates, and now other partners) as firms target for elimination any perceived drain on profits.

Based on all these cuts, I’m left to conclude that law firms apparently wish to be populated exclusively by extremely high-earning equity partners. In a magical land where complex legal businesses were run by invisible fairies, that would be a pretty nice outcome. In our world, however, where those partners need actual people to make their profits possible, the latest round of bloodletting bears a closer resemblance to profit-preserving cannibalization — a tactic that has its short-term merits, I suppose, but few long-term strategic advantages.

I want to take a look at what’s happening with law firm secretaries, and then I want to use that to illustrate what I feel is a growing, and serious, issue at the heart of law firm management.

First, why has it come to this: the evisceration of the legal secretary role? I can see three factors intersecting at the same time:

1. Many lawyers seem determined to view “secretaries” in their stereotypical role of clerical helpers, and as clerical tasks inevitably migrate to machines, secretaries themselves are perceived as serving no further purpose. I see secretaries differently: as lawyers’ “managers,” the people who quietly organize lawyers’ lives and enable them to practise law productively and effectively. The emergence of new technologies does not remove the need for lawyer management; if anything, it intensifies it. But if you really believe that a legal secretary performs low-value and easily replaceable functions, you will treat that position accordingly.

2. Many law firms seem equally incapable, even with countless high-tech tools and processes now at their disposal, of reconfiguring their workflow to be more sophisticated and cost-effective. The smart way to improve profitability is to outsource truly fungible tasks and upskill your existing resources (including, but not limited to, secretaries)  to take on more complex tasks that can deliver more value and/or reduce internal inefficiency. The stupid way to improve profitability is to fire people and give their work to their frightened surviving colleagues, thereby reducing personnel costs. Many law firms, near as I can tell, are choosing stupid.

3. Profitability pressures in law firms (more about that in a moment) have short-circuited any creative impulses that might have led firms to different outcomes for their secretaries. For instance: many lawyers still struggle with practice basics like client communication, marketing, and professional development. They would benefit tremendously from a dedicated resource whose job is to manage and organize all these aspects of their career — someone who has worked with them for years and knows them very well. If firms are going to reassign traditional secretarial duties elsewhere (and there’s good reason for them to do so), why not divert secretaries into these high-value and highly necessary roles, rather than just cutting them loose altogether? It’s not just a lost job, but also a lost opportunity.

It’s on that last point, I think, that we approach the heart of the problem. Law firms could help secretaries reimagine their roles, add more value to the firm, improve morale, and save jobs — they could do all these things, if they wanted to. But they don’t.  They don’t care about these things nearly as much as they care about maintaining or growing profitability. And the intensity with which law firms have come to care about profitability is starting to look a little sociopathic.

Something has gone seriously wrong at the core of a number of law firms. I don’t how else to describe it except as a mean streak — a level of selfishness and ruthlessness among decision-makers that we’ve not seen before. The triggering event was probably the massive change in client behaviour and the deeply unnerving drop in business that followed, combined with lawyers’ utter inability to adjust their own practices in response. But it seems to me that many lawyers aren’t just troubled or worried by what’s happening — they’re angry. Their income has fallen, and they’ve taken it personally, because that was income to which they were entitled. They’re feeling victimized, hard done by — and they’re lashing out, seeking instant remedies for themselves regardless of the long-term costs to others.

I’m not sure what it is about this latest round of cuts that feels wrong to me. Maybe it’s that it just seems so petty. You need to fire a secretary who earns a fraction of your annual billings in order to save your firm? That’s unlikely. You need to fire her in order to maintain the profitability to which you’ve become accustomed? That’s unseemly. They say you can judge a society based on how it treats its most vulnerable members, and I think the same applies to law firms. And I wouldn’t feel very proud to be a member of some of these law firms right now.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

Available now! My first two published books: Evolutionary Road (e-book published by Attorney At Work) and Content Marketing and Publishing Strategies for Law Firms (co-authored with Steve Matthews, published by The Ark Group). Click the links to learn more and order your copies today.


What do lawyers sell?

The first time I heard Richard Susskind speak was at a Canadian Bar Association conference in Montreal in 2007. That was also the first time I heard one of the best parables about professional services ever told. I’ll try to paraphrase Richard’s delivery from memory:

“Black & Decker, the power tool company, had just hired a new CEO. He walked into his first meeting with his board of directors, held up a power drill, and asked, ‘Is this what we sell?’ The directors looked at each other and looked at the drill and said, ‘Yes, that’s one of ours; that’s what we sell.’ ‘No, it isn’t,’ replied the CEO, and he put down the drill and picked up a board with a hole in it. ‘This is what we sell,’ he said. ‘This is why the customer comes to us. This is what he wants.'”

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That’s a magnificent illustration of the best way, the only correct way, to look at the process of buying and selling anything — that is to say, from the buyer’s perspective. Given the legal profession’s struggles to cope with a newly evolving market — as exemplified by the shocking cuts and wholesale retrenchment of many large law firms recently — it seems like a good time to apply that question to lawyers.

What do lawyers sell? Ask 100 lawyers that question and you’ll get, not 100 different answers, but a very narrow range of familiar answers, repeatedly proffered. “I sell my time,” some lawyers will respond. “I sell my expertise,” others will reply. The MBA types: “I sell solutions.” The ones who’ve been paying attention: “I sell value.” The ones who haven’t been paying attention: “I sell excellence.”

None of these, however, is a good answer, because none of these are things that clients specifically need and that can be identifiably described.

  • Time: No one in history has ever bought or sold one second of time. It’s not a commodity in any sense of the word.
  • Expertise: No client needs legal expertise for its own sake. Specialized knowledge has only applied, not intrinsic, value.
  • Solutions: Getting closer, but this is a buzzword that’s meaningless without context. And not every legal matter is a “problem.”
  • Value: Closer again, but really, “value” isn’t much better than “solution” — it’s another way of saying, “I sell you what you want.” It’s circular.
  • Excellence: Must try harder.

There’s a better answer to that question, I think — one that unites the many incredibly disparate strands of legal services. There’s one response that can legitimately cover all the myriad needs of diverse legal clients — from getting a will made out to clearing up a tax issue, from overseeing a bankruptcy to managing a high-stakes acquisition, from defending an assault charge to gaining a permanent work visa, from enforcing a child support order to appealing the loss of a business licence.

That one answer is this: Lawyers sell peace of mind. This is what clients seek when they turn to a lawyer. This is their “hole in the board.”

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“Peace of mind” is what you get when you find someone with expertise, someone who’s excellent at what they do, someone who comes up with solutions to problems and avenues for opportunities — you find them, and you speak with them, and over the course of time, you come to trust them. You trust that they will help you, that they will use their skills to remove a worry, manage a process, or come up with an answer that has eluded you. That trust delivers peace of mind.

Almost every client, when he first contacts a lawyer, is legitimately anxious about something important. He’s worried, he’s not sleeping well, his emotional well-being is compromised. “Peace of mind” is what that client gets in that blessed moment when he can say to himself, “It’s alright. I’ve talked to a lawyer, and she’s given me options, and she’s working on the matter, and she’ll take care of it. Someone is looking after it, or will help me through it. I can start to relax now.” And he does.

Look at your own client relationships. Think about the most rewarding engagements, the most satisfied clients. Maybe they won their case, maybe not. Maybe the deal closed, maybe not. But in most cases, the clients who speak most highly of their lawyers are the ones to whom the lawyers gave the gift of peace of mind — the trustworthy assurance that someone is sharing their burden and helping get them to a place where the burden will be lifted.

Clients buy peace of mind — that’s what they want when they hire a lawyer. Gear everything about your practice — your first consultation, your personal manner, your client communications, your dependable prices, your transparent activities — towards increasing your trustworthiness and reliability and relieving your client’s worries and burdens. You will be a happy, successful lawyer with happy, satisfied clients.

Available now! My first two published books: Evolutionary Road (e-book published by Attorney At Work) and Content Marketing and Publishing Strategies for Law Firms (co-authored with Steve Matthews, published by The Ark Group). Click the links to learn more and order your copies today.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

So you designed a law firm: Your survey results

Previously on Law21 … after discussing the apparent disconnect between what lawyers seem to believe they can accomplish within law firms and what they’re actually empowered to do, I set up a brief survey inviting lawyers to distribute 100 points among 10 features of a hypothetical law firm to create an ideal working environment. First, the results (click on each image to get a larger version):

Question 1: Below are listed 10 features of a law firm. You have been given 100 points to assign to these features. Please assign these 100 points among these features according to how strongly you would prioritize their presence in your law firm. 

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Question 2:

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And Question 3:

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Now, my comments:

1. Law21 readers, and those in their immediate professional circles, are not big questionnaire fans. The post containing the link to the survey received in the range of 1,500 unique page views over the past several days, yet only 82 people completed the survey. In future: free coffee with every survey filled out! Limit one per customer. Not actually redeemable.

2. Not surprising to me, anyway, but Law21 readers aren’t a typical cross-section of the legal profession. “Client Service” finished comfortably in the lead among all 10 options, to be followed by “Good Workplace,” with the pre-race favourite “Partner Profit” barely finishing ahead of “New Lawyer Development” for third place. I think it’s fair to say that few law firms in the physical world actually match that profile. But I’d happily work for the law firm you’ve collectively designed here.

3. Nor am I really surprised to see “Community” and “Diversity” in the lower third of results. But I do think you should all be more concerned about your pension situation than you evidently are.

4. Does it say something that the survey attracted more responses from support staff than from non-equity partners and senior associates combined? At this level of statistical significance, probably not. But it at least suggests that the “non-lawyers” (sic) who work in law firms have a vibrant interest in what their firms could and should be.

Now, given the small response size, I’m reluctant to break down and compare categories against each other. But you may find this interesting: when I isolate the “Equity Partner” responders from the overall group (40 in total), the results are virtually even: that is, out of the 10 responses, no option received more than 11% of the total and no option received less than 9%. The variations in the final overall results are almost entirely the work of non-equity partners, associates, and staffers:

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I want to draw two statistically indefensible but nonetheless interesting conclusions from this.

First: equity partners want their firms to be everything, all the time. They want to be profitable yet collegial, prestigious yet affordable, elite yet community-minded. This, of course, is not possible: when you try to be all things to everyone, you end up being nothing to anyone. My own extrapolation is that this is at the root of many law firms’ problems: the people running these firms can’t prioritize among competing visions and demands, making them vulnerable to those demands that have the shortest time frame and the most severe short-term impact (hello, Partner Profits).

The second statistically indefensible conclusion from this exercise is that when you move outside the equity circle, a law firm’s other stakeholders have a very clear vision of what they want in a firm: one that serves clients above all else, one that provides a positive working environment, and one that yes, makes lots of money for its equity owners  — so long as those first two conditions have been met. You might or might not think that’s a good vision for a law firm. But at least it’s a vision: it’s the result of choices among options that result in a firm with an identifiable personality and profile. The firm designed by equity partners, as described in the results above, might as well have been formed at random.

So my last word on this exercise is to reiterate my message to law firm partners: you can make your law firms into whatever you want them to be. You are not helpless victims, floating like flotsam of the surging tides of commerce — that would more accurately describe your associates and staff, who, as previously noted, have a much clearer idea of what your firms could be. You and no one else are the captains of your ships, and their direction and mission is up to you. Accept your power and embrace the opportunity to make hard choices about the purpose and personality of your law firms — you’ll be rewarded for your courage and determination with praise and recognition of your leadership. We’re all waiting on you — make it happen.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

Design your own law firm: A Law21 lawyer survey

Not for the first time, and probably not the last, I find myself reading reports from the legal marketplace and wondering why lawyers are asleep at the switch.

The latest head-scratcher comes courtesy of Altman Weil and its fifth annual Law Firms in Transition Survey of 238 US law firms. Importantly, only one-third of the respondents were within the AmLaw 200 — we’re not talking about the giants here, but about firms whose lawyer complements range from 50 into the hundreds, and whose clients likely include some national companies, a lot of regional businesses, SMEs, and individuals. Here are a few highlights from the Am Law Daily report:

  • 80% of respondents think the move towards non-hourly billing will continue — but only 29% had made significant changes to their own pricing practices.
  • 96% believe the focus on improved practice efficiency has become entrenched — but only 45% had made significant changes to improve efficiency.
  • 67% think smaller annual rate increases are also a permanent change — but between 21% and 40% of all fees at all firms are still simply being discounted.
  • And despite all the foregoing, when asked to cite the greatest challenge they expect to face over the next two years, the #1 response (15.2%) was “increasing revenue.” Coming in at #8 (5.6%) was “delivering value to clients,” while the afore-mentioned “improving efficiency” — which, remember, 96% think is here to stay — finished at #11, with  2.8%.

Near as I can tell, many of these respondents must believe that permanent, radical change in the market is something that’s happening to other people. The disconnect between “This is really happening” and “We’re doing something about it” remains perplexingly wide.

Now here are the results of another survey, one that didn’t get quite so much attention, but whose implications are far more chilling. The UK’s Legal Services Board released the results of an incredibly comprehensive survey of small businesses — an astonishing 9,703 of them, ranging from solo entrepreneurs to companies with up to 50 employees. (Although the countries are different, the two survey populations suggest a high degree of overlap between the law firms and the clients in each.) Here are some of the findings:

  • 38% had experienced a “significant” legal problem in the past year, almost half of which had a tangible financial impact — a total market value of £100 billion when scaled up across all small businesses.
  • 91% of respondents took action to respond to their problems — but most either handled it themselves or got help from family and friends.
  • Of the minority who sought formal advice, only about 40% went to members of the legal profession — the rest sought out accountant, trade associations and the like, especially for tax issues.
  • Bottom line: Legal service providers were involved in just 16% of these matters. That means that roughly £84 billion worth of potential small business legal services are being resolved without the legal profession.

Oh, and here’s the kicker: When asked to assess the statement that “lawyers provide a cost-effective means to resolve legal issues,” only 13% agreed.

So I find myself wondering: faced with reliable, overwhelming, and readily available data that shows a near-complete misalignment between them and their markets, why are law firms doing so little in response? Why are firms, even while openly admitting that many essential marketplace fundamentals have permanently shifted, moving so slowly, it at all, to address these changes? I’ve previously suggested the confidence of the dinosaurs as a culprit, but I think there’s something more at work here.

When I talk with lawyers in law firms about these issues, I’m sometimes struck by the impression of powerlessness that I get. Lawyers, including partners, seem to almost shrug, as if to say, “Yes, but what can I do?” The structure and culture of the firm are presented as an unalterable reality, a mix of good and bad that’s just the way it is. The firm delivers profits, prestige, and security — albeit ever-decreasing amounts of each — but it’s also hidebound, reactionary, and highly vulnerable to change. But what are you gonna do? Priorities have been set and choices have been made, and we have to live with the results.

There are times, when confronting this malaise, that I feel like responding, with some force: “Yes, but you own the firm! It’s yours; you’re the equity owners. Nobody else is in a position to make the firm something different and better than what it is. The associates, the staff, the clients — they might not much like the state of affairs either, but it’s not their show; they consider both the firm’s successes and its shortcomings to be entirely your responsibility. If you’re not in charge, who is?”

What I would really, truly like is for more partners to accept full responsibility for their firms — to recognize the need for decisive action to adjust the firm’s bearings, to take that action, and to fully own the changes that follow. I’d like to see them act as the owners they are, not as the passive sideline observers many of them seem to have become.

To that end, I’ve decided to try introducing a third questionnaire into this mix — my own. I’ve created a very short survey — only three questions — at SurveyMonkey, and I’m making it available to anyone who wants to take it. It’s directed towards lawyers in law firms, and I hope they constitute the majority of respondents, but anyone in the legal industry is invited to take part as well.

The title of the survey is: Design Your Own Law Firm. And that’s exactly what you’re invited to do. The survey provides you with 10 features of a law firm, gives you 100 points to distribute among those 10 features any way you like, and asks you to use those limited resources to design the kind of law firm you want to be part of. Here’s a preview of the 10 features, listed in alphabetical order (they’re randomized in the actual survey):

  • Affordability: The firm’s services are priced for maximum client accessibility.
  • Client Service: Clients reward the firm’s efforts to provide extraordinary service.
  • Community Leadership: The firm is widely praised for its active community efforts.
  • Diverse Workforce: The firm is more race- and gender-diverse than its peers.
  • Elite Reputation: The firm is considered among the very top tier in its market(s).
  • Funded Pensions: The firm ensures post-retirement income for both lawyers and staff.
  • Good Workplace: A positive, collegial atmosphere produces collaboration and referrals.
  • New Lawyer Development: Junior lawyers receive superb training, mentoring and work.
  • Partner Profit: Equity owners derive highest levels of annual revenue from the firm.
  • Prestigious Clientele: High-profile or respected clients frequently retain the firm.

Here’s the link to the survey — it’s open today, May 23, and will stay open for either one week or until I have enough responses to draw some conclusions. Please take the survey — Note: print out your choices before pressing “Done,” so that you retain a copy — and forward it to your friends and colleagues. Be honest with your answers: give the responses you really feel, not the ones you think you “ought to” give.

I’m very interested in finding out how — when given several good options, but only a limited amount of resources — lawyers prioritize the structure and culture of a law firm. And I’m hopeful, maybe even optimistic, that by going through this process, lawyers will realize that they really do have the power to make their firms the way they want them to be.

Here’s your chance to be the architect of your law firm. You’re responsible for its priorities. What will you create?

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  


Reinventing the right things

Warning: Lengthy Moral Philosophy Discussion Ahead. Worse luck for you, it’s from an English major who took exactly two Philosophy courses in undergrad and was entirely unsuccessful in trying to penetrate Kant’s Critique of Pure Reason, so govern yourselves accordingly. But it’ll take us a few paragraphs before we get there. First, we talk technology.

In Silicon Valley earlier this month, there transpired a conference that crystallized many of the current trends and topics regarding the rapid re-engineering of the legal marketplace. Reinvent Law is a laboratory based at the Michigan State School of Law and sponsored by the Kaufmann Foundation that seeks to combine innovations in law, technology, design and delivery to create a new and better legal system. The primary Reinventors are MSU law professors Daniel Martin Katz and Renee Knake, and if you’re not following them on Twitter, you should be.

ReInvent conferences had already been held in Dubai and London (the latter under the Law Tech Camp banner), but the Silicon Valley meeting was a breakout event that deeply connected with many people in the legal market and is still generating conversations. Here’s a roundup of commentary on the event: I especially recommend Ron Friedmann’s live-blog posts for your review, while the report by The American Lawyer’s Aric Press demonstrates that the issues #reinventlaw is exploring are of interest to some of the largest legal enterprises in the world.

I was seriously sorry to miss ReInvent Silicon Valley, and I hope to make it to a future iteration of the event closer to home. I’m a fan of what ReInvent Law is aiming to do and the methods by which it’s doing it (Dan Katz’s work with data and the law is particularly noteworthy). Technology offers us tremendous potential to improve the quality, delivery and accessibility of legal services, partly because technological disruptions are being applied from the bottom up and from the outside in (rather than top-down from within the legal profession, as previous reform efforts have been), and because the application of internet-based technology can provide benefits well beyond its costs.

This is not a unanimous view, of course, and Reinvent Silicon Valley had its share of critics, including Scott Greenfield of Simple Justice. Scott’s post on the subject expresses a deep skepticism about the conference’s focus on technology, especially as it relates to the criminal justice system. Scott’s take on these issues will be familiar to readers of his blog, but I’d like to single out one part of his post for further consideration:

The fear is that much of what is being promoted as the future of law will actually come to pass. We will have those paperless offices where we sell virtual legal services unbundled like the widgets they can be. And the prisons will still be filled with people whose computer programs told them they should be free.

It’s not that the people involved in all of this aren’t smart. Indeed, these are some very smart, very dedicated people, but they don’t see the law. Dreams of technological change may be very exciting, but to what end?

That last question is an interesting one, and it will do all of us in the legal marketplace reform movement some good to think it over for a while. What are we aiming to achieve with the growing integration of technology into the legal system? I think Scott may underestimate both the purpose and the impact of these new legal technologies: to reduce costly inefficiencies and improve effectiveness throughout the legal service process; to provide more avenues for people to access legal services; to break the monopolistic tendencies of the legal profession that have served the market so poorly.

But when Scott talks about “making the law actually work better for the sake of human beings, rather than make it point and click,” he reminds us that the end, rather than the means, is what we need to focus on here. And although I don’t think this is a mistake that the ReInvent people are making, nonetheless we are vulnerable to the risk that our newest tools — and some of them promise to be very powerful indeed — may cause us to value the tool more than the task. Automation is meant to serve a purpose, not to be a purpose in and of itself.

This brings me to the central issue I want to examine, and to the philosophical part of our program. Peter Thiel recently delivered a guest lecture at Stanford Law School’s Legal Technology course. You might know Thiel as the co-founder of PayPal, the first outside investor in Facebook, and a generally brilliant fellow worth roughly $1.5 billion. Blake Masters took notes on Thiel’s lecture and the Q-and-A that followed, resulting in an extremely thought-provoking and (for me) unsettling read, because Thiel essentially advocates a greater role for automation and technology in the justice system.

You should read the whole article, but it’s quite long, so here are some key excerpts for present purposes.

Computerizing the legal system could make it much less arbitrary while still avoiding totalitarianism. There is no reason to think that automization is inherently draconian. 

Of course, automating systems has consequences. Perhaps the biggest impact that computer tech and the information revolution have had over last few decades has been increased transparency. More things today are brought to the surface than ever before in history. A fully transparent world is one where everyone gets arrested for the same crimes. As a purely descriptive matter, our trajectory certainly points in that direction. Normatively, there’s always the question of whether this trajectory is good or bad. …

In some sense, computers are inherently transparent. Almost invariably, codifying and automating things makes them more transparent. … Things become more transparent in a deeper, structural sense if and when code determines how they must happen. One considerable benefit of this kind of transparency is that it can bring to light the injustices of existing legal or quasi-legal systems. …. If you’re skeptical, ask yourself which is safer: being a prisoner at Guantanamo or being a suspected cop killer in New York City. Authorities in the latter case are pretty careful not to formalize rules of procedure. …

The overarching, more philosophical question is how well a more transparent legal system would work. Transparency makes some systems work better, but it can also make some systems worse. So which kind of system is the legal system? … [Is it] pretty just already, and perfectible like a market? Or is it more arbitrary and unjust, like a psychosocial phenomenon that breaks down when illuminated? 

The standard view is the former, but the better view is the latter. Our legal system is probably more parts crazed psychosocial phenomenon. The naïve rationalistic view of transparency is the market view; small changes move things toward perfectibility. But transparency can be stronger and more destructive than that. …  Truly understanding our legal system probably has this same effect; once you throw more light on it, you’re able to fully appreciate just how bad things are underneath the surface.

Once you start to suspect that the status quo is quite bad, you can ask all sorts of interesting questions. Are judges and juries rational deliberating bodies? Are they weighing things in a careful, nuanced way? Or are they behaving irrationally, issuing judgments and verdicts that are more or less random? Are judges supernaturally smart people? The voice of the people? The voice of God? Exemplars of perfect justice? Or is the legal system really just a set of crazy processes?

Looking forward, we can speculate about how things will turn out. The trend is toward automization, and things will probably look very different 20, 50, and 1000 years from now. We could end up with a much better or much worse system. But realizing that our baseline may not be as good as we tend to assume it is opens up new avenues for progress.

On the surface, there’s much to like here. It’s difficult to argue that the legal system is not, at least in part, a crazed psychosocial phenomenon, inconsistent and frequently irrational in its operation. There is no shortage of error and bias in the law: Scott Greenfield might point to prosecutorial malfeasance and systemic discrimination, whereas I might point to the rampant inefficiency of law practice, the turf-guarding monopolism of lawyer market regulation, and the fundamental conflicts between the traditional law firm business model and the best interests of clients. Why not introduce into this highly imperfect system the discipline, objectivity and predictability of the algorithm?

And yet … something about Thiel’s narrative bothered me. Just the fact that the word “totalitarianism” came up in this discussion is enough to raise red flags about the possible risks we run here. Humans have a long-held apprehension about developing technologies that will eventually destroy them: I wrote about this in Blawg Review #252 back in 2010, when I tracked science-fiction tropes about technophobia from Frankenstein to The Matrix. Literature abounds with nightmarish future states in which our machines, given the power to execute the law, eventually become the law unto themselves. If we have a generalized dislike of bureaucracy, it’s because we fear the spectre of a faceless, mindless, autonomous system that knows who, what, where, when, and how, without ever knowing or caring why. And history supplies us with good reason to feel that way.

But I was also disturbed by what I felt was a deeper problem: that while this approach was clearly intended as a moral good that would improve fairness and correct injustices, nonetheless there was something vaguely wrong about the whole thing. So I did what anyone would do in these circumstances: I consulted a moral philosopher; in my case, Dr. Richard Matthews of King’s University College at the University of Western Ontario (who also happens to be an old and great high school friend) for his assistance. With his permission, here are excerpts from his illuminating response:

The article is deeply uneasy with human subjectivity. … The discussion of AI and improvements in legal computation suggests the possibility of improving on this, of making the legal system more rational. To be fair, he acknowledges that things could get better or worse with the introduction of AI. But what he does not notice is that the drive is to eliminate human fallibility as such from the process of legal reasoning — to render human judgment irrelevant.

Suppose that the trend towards legal computation is “successful,” whatever that would mean…. The consequence will be reduced human involvement in the most important aspects of the legal system, and thus increasing irrelevance of human beings as subjects in the process. This is, no matter what the ultimate results of the process are, the further objectification of human beings. Humans become the objects of judgments, not subjects.

What are some of the practical implications of this? Well, you have been mapping many of them in your blog already — the elimination of highly skilled and highly trained lawyers and judges from participation in a meaningful human activity; the organization and maintenance of law through mechanization of the kind that this article identifies; and by taking the labour that you cannot be bothered to mechanize and finding the least-well paid and most desperate people to do it. Obviously there are many others, but I find none of them attractive.

This is a mapping and reshaping of human life and its possibilities which has, at its root, the controlling and reshaping of human populations. The controlling will not produce better human beings or increased obedience to law. Instead, it always generates resistance. …

Such technologies also concentrate power in the hands of an increasingly small group of people, since they own and thus control access to the AIs. The issue of transparency is dodgy, in any event. We have to ask: To whom are computers transparent, since 99.9% of the world doesn’t have a clue what a computer is, even as we use them. Also, the computer does not function in a politically neutral environment.  I would be highly surprised to find transparency applied to powerful individuals in the same way that it will be applied to the vulnerable. 

I think Richard has struck several nails on the head here, which is why I’ve gone to such lengths to address this subject: because although the size of the risk that an increasingly automated justice system presents is very small, the potential impact of that risk is not. I’m fond of saying that lawyers were invented to serve the law, not the other way around. Well, the law was developed to serve people, not the other way around, and one of the services it’s meant to deliver is to support and extend the realm of human dignity. Humans aren’t always great at sustaining our own and others’ dignity; but we do try, here in the law, to accomplish that, and sometimes we succeed. Machines aren’t good at it at all.

Rest assured, I remain a strong proponent of improving and expanding the role of systems, processes and technology in the business of law and, to a more limited degree, in the justice system itself. The problem arises when we give in to the temptation to let these systems run loosely supervised, or not supervised at all — and that temptation is real, because every mechanized process is always telling us, “Go on, take a break, leave it to me, I’ve got this handled” — and, hard-pressed for time or money, we often acquiesce. Not everything requires watchful human guidance, but some things do, and the law is one.

The word “autonomy” comes from the Greek autonomos, which means “independent, living by one’s own laws.” (Emphasis added.) The implications of that definition for this discussion are too strong for me to pass up: these are our laws, meant for our good, and Peter Thiel notwithstanding, I recommend that we remain highly vigilant about and directly involved with their application.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.