The new legal economy

For several years now, I’ve been talking about the concept of a “legal market.” When I first began using the term, it wasn’t in wide circulation — when discussing big-picture issues that affected everyone in the law, lawyers tended to talk about the “legal profession,” which neatly excluded everyone who wasn’t a lawyer. Sometimes I’d see a reference to the “legal industry,” which I didn’t much care for either — “industry” summons images of factories and smokestacks and a degree of sophistication in production methods that did not describe legal services at all.

I preferred “legal market,” so much so that I named my book after it. I liked “market” because it communicated something that many lawyers didn’t seem to fully appreciate: There are both buyers and sellers in legal services. There are, in fact, hundreds of times as many buyers as there are sellers — lawyers are vastly outnumbered by clients — and they’re the reason the profession exists. But as I wrote in my book, law is effectively “a seller’s market whose sellers don’t even know they’re in a market. They’re like fish that don’t know they’re in water.”

I do think that’s changed for the better over the last several years — “legal market” is increasingly ubiquitous in legal media articles and in conversations among law firm leaders. And without any doubt, this market has experienced a great deal of change over the last decade:

  • the rise of legal process improvement and outsourcing,
  • the emergence of competing or substitute service providers,
  • the technology-driven commoditization of legal work,
  • the growing sophistication of large law firms and law departments, and
  • the slow but steady liberalization of legal regulation.

Today’s legal market features increasingly knowledgeable and assertive clients choosing among a growing array of diverse service providers. In the result, sellers have more incentives to compete on price or quality (or both) and more tools with which to do it, thereby delivering greater value to buyers. By no means has the power imbalance in favour of lawyers been entirely rectified, and I doubt that it ever will; but we’re in a better place than we were, and we can be reasonably confident that the market can improve further still.

But now I think we’re coming up on a new issue. Throughout all of this amazing market change, one thing has remained largely constant: What lawyers do. Market evolution is changing the “how” of lawyer work, and to some degree the “who” as well — but thus far, it has had relatively little impact on the “what.”

Here’s what I mean. A client who retains a lawyer in 2019 to defend against a litigation claim might require that, say, the work be done on a fixed-fee basis, or that an e-discovery company be employed, or that the entire retainer be subject to project management. But the lawyer is still being hired to handle the litigation: To assess the claim and its likely outcomes, negotiate a settlement if appropriate, and proceed to trial if not. The essence of the relationship remains the lawyer’s agreement to defend the litigation on behalf of the client.

What if they held a trial and nobody came?

But suppose, in the example above, that there was no litigation. Suppose that, for a variety of reasons, the client never approached the lawyer in the first place to inquire about her litigation services. All the project management and fixed pricing in the world are irrelevant in the absence of the retainer. That’s not a matter of how lawyers do their work. That’s a matter of what lawyers are actually doing — or not being asked to do — inside the market.

Why might there have been no litigation in the foregoing example? Some possibilities:

  • The client improved its internal risk-monitoring mechanisms and caught a problem in its early stages before it metastasized into a statement of claim.
  • The client implemented new workplace standards that changed the behaviour of an employee who otherwise would have done something to cause litigation.
  • The client hired a Big 4 accounting firm to build compliance requirements directly into its contracts and business processes, reducing the risk of violations.
  • The client consulted data showing that claims of this type succeed 89% of the time, and ordered the in-house department to settle it quickly at the outset.
  • The client is based in a jurisdiction that offers a robust online dispute resolution process that disposed of the litigation twice as fast for one-tenth the cost.

Some of these examples are still speculative, while others are already commonplace. But what they share in common is that the traditional application by lawyers of their knowledge, skills, and time is not a factor in any of them. These examples, and more like them to come, are going to change the “what” in “what lawyers do.”

There is a substantial portion of the practicing bar that makes its living primarily by managing, fighting, and winning (or losing) litigation. But from the client’s perspective, litigation is an entirely negative experience, one that the client is strongly incentivized to minimize, avoid, or eliminate. Fifteen years ago, it didn’t matter whether the client liked litigation or not; it was an unavoidable fact of life that required a lawyer to resolve. Today, however, clients have access to tools, procedures, and third-party options that enable them to fulfill their desire that litigation either never occurs, or disappears quickly and easily.

What happens to litigators when clients find ways not to litigate?

This effect is likelier to be more dramatic on the commercial and transactional side. “Today I watched a demo of two AI products electronically mediate and draft a Purchase Agreement, in plain language,” said Twitter user willnme2014 in a recent discussion of this topic. “It took about 35 seconds. That is the future of commercial lawyering.” I think he’s right, and I’m not alone in thinking that. “Everything that can be taken out of the hands of subject-matter experts and handed over to the process experts and technologists will be,” said Orrick, Herrington & Sutcliffe Chairman and CEO Mitch Zuklie in an interview with The American Lawyer.

This is not about “computers are coming to take our jobs.” That’s the wrong angle. This is about something deeper and more significant: The nature of what is being bought and sold within the legal market is changing. That’s not a market phenomenon. It’s an economic one.

Clients used to ask lawyers for certain types of services like document preparation, contract review, transactional due diligence, and dispute litigation, to name just a few. These services still constitute the bulk of many lawyers’ annual sales inventory. Today, clients are asking lawyers for these services less frequently, and in the future, they will ask for them less often still. Clients sometimes ask other providers to supply these services, but in the big picture, systems, software, and structures are emerging that will either perform these services automatically, or eliminate the need for them in the first place.

And if technology delivers on some of its more outlandish promises, soon enough we’ll see clients asking lawyers less frequently to answer complex legal questions, or more frequently to provide “machine learning-enabled judgment.” Sure, much of this talk could turn out to be AI puffery; but think about where we were 15 years ago, when few people seriously thought machines could carry out millions of hours of billable lawyer work. Technology invariably arrives at the party later than expected, but it always shows up eventually.

The truly disruptive impact of advanced technology in the law will be to reduce the incidence and volume of traditional legal work given by clients to lawyers. This isn’t just a market change; this is the emergence of a new legal economy. That’s a term we need to start thinking about, developing more fully, and changing our strategies to reflect.

Not exactly as illustrated.

The old legal economy consisted of paying lawyers by the hour to do every legal task that needed to be done. In the new legal economy, systems, software, and structures are going to integrate, automate, delegate, and eliminate countless legal tasks by which lawyers once made a living. It is possible that new tasks could arise to replace them — if such tasks can be envisioned, if clients are amenable to giving them to lawyers, and if — as Susan Hackett and Karl Chapman urge — lawyers stop practising to the bottom of their licences. But by no means is it certain that any of these conditions will be met, let alone all of them.

We’re not just entering a new legal market; we’re experiencing the rise of a new legal economy. This will require a thorough review of our assumptions about what legal work consists of and, ultimately, what purpose it serves. In the result, everyone in legal services, buyers and sellers alike, will need to rethink their possibilities, interests, and opportunities. We need to consider, and come up with answers to, three really important questions:

  1. What now constitutes “legal work”?
  2. How will legal work be done?
  3. What will lawyers do?

The rise of the lawyer

Earlier this year, I received an invitation to write the epilogue for a book called New Suits: Appetite for Disruption in the Legal World, by Michele DeStefano (founder of the groundbreaking Law Without Walls program based at the University of Miami Law School) and Guenther Dobrauz-Saldapenna (partner and leader of PwC Legal Switzerland and leader of PwC’s global legal tech efforts). New Suits is an enormously ambitious and illuminating exploration of the frontiers of technology-powered legal practice, especially for large enterprise clients and their outside counsel, and I highly recommend that you read it.

Soon to be a major motion picture. Well, no.

Of course, I’m no technology expert, and I felt supremely unqualified to say anything useful about the impact of blockchain, AI, RegTech, and so on. But I thought that lawyers who read New Suits, especially newly called lawyers or law students, might reach the end of the book feeling a little overwhelmed by the scale of change facing them, and wondering whether the legal world of the future would in any way resemble the one they had already entered — and if that world would need, want, or even welcome lawyers.

So I wrote what was essentially a message to those lawyers, to explain what all the forthcoming changes would mean for them, what the new legal world was going to demand of them, and what they should feel both empowered and required to demand in return. With the kind permission of the authors, and with a few small edits, here is that lengthy but heartfelt message. 

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As I was preparing to write this epilogue, an email alert flashed across my screen with a message from a legal technology company. It announced itself in breathless terms: “AI has once again triumphed over a human lawyer.” (The task in question was the screening of a non-disclosure agreement.)

What an appropriate starting gun for this undertaking. The book you’ve just completed has catalogued in amazing detail the changes rippling along the foundations of the legal market worldwide, the technology that’s rewriting the rulebook for practising law, and the market forces that are fundamentally changing the nature of legal demand. Enterprise legal services — that sector of the market devoted to the legal needs of large companies, corporations, institutions, and governments — will never be the same again.

Yet it’s worth pausing to think about the deeper implications of that message. Why does it say “triumphed”? Who’s rooting for the machine here, and why are they rooting against the human? What benefit is being created by the application of this new technology — and who will ultimately reap that benefit? Are we celebrating because a human lawyer will be liberated from drudge work and assigned to deliver wise counsel to sophisticated clients? Or is it perhaps more likely that that lawyer will instead be liberated from a steady paycheque, and that fewer rather than more opportunities for human judgement will result?

We live in an age when the ultimate goal of many corporate activities is to “enhance shareholder value,” a phrase that has become a mantra not just for corporate boards, but also for the equity shareholders of large law firms. But you know, not everyone out there is a shareholder, and not everyone is seeing their value enhanced.

There are some who instead characterize our era as “late capitalism,” and who suggest that we’re entering the decline phase of one system and the gradual emergence of something else, something new. Is either of these opinions correct? What mantras should we be adopting for an enterprise legal market populated by blockchain, digitization, smart contracts, and Reg/Sup/PropTech? What is the real purpose of lawyers in the intelligent machine age?

For lawyers, these are not academic questions, and we should not act as if they are. If you’re a lawyer whose career trajectory is likely to carry you up to or past the midpoint of this century, I believe these questions are vital for you to contemplate. The answers you come up with will determine not just the sort of work you find yourself doing, but also the ultimate ends towards which your efforts will lead you, your clients, and everyone else. This epilogue is intended to help you through that contemplation.

To my way of thinking, there are three critical considerations for you, the 21st-century lawyer, to ponder during this process of discernment — three factors that merit at least as much time and bandwidth as any other. These concepts are “System,” “Service,” and “Self.” Here are my thoughts on each.

1. System

Now and for the foreseeable future, enterprise legal services will be created and delivered primarily through systems. For our purposes, we can define a “system” as an organized structure of interrelated and interdependent methods, procedures and routines, created to carry out an activity or solve a problem. If that concept interests or even thrills you, you’re going to love this line of work. If it puzzles or bores you, you might have a problem.

The reason we’re talking about systems is that we are long past the point where enterprise legal needs can be fulfilled by individual lawyers, sequentially and in single file, working in longhand and billing by the hour. As this book has made clear, both the sheer scale and the growing complexity of companies’ legal and compliance challenges require equally scaled and complex solutions. Enterprise clients compete in high-pressure environments and operate within unforgiving timeframes. They cannot be served in the same way you would serve a family business or a private client.

That’s going to have a profound impact on the types of people who will be drawn to this sector of the legal market. Systems analysts, software coders, design thinkers, and engineers of all kinds will be a natural fit for enterprise legal. People who can grasp the big picture of what the client needs, who can envision processes and flowcharts and logic statements that generate solutions to those needs, and who can build and maintain robust frameworks to contain and run those solutions rapidly, repeatedly, and reliably — those will be the architects and superstars of the enterprise legal market.

If you feel that the foregoing characteristics don’t describe you, then it’s possible that your legal destiny lies in a different direction. But don’t walk away yet! Because it’s also possible, and maybe even likely, that there is a place for you in the enterprise legal market — an important place, in fact.

Analysts and coders and engineers can capture the big-picture needs of a major enterprise client, and they can design and build astonishingly complex systems to meet those needs. But there’s still a role for human judgment here, because no matter how inspired and intricate a system might be, there are two questions that must constantly be asked about it:

  1. Is the system doing what it’s supposed to do?
  2. Is what the system is supposed to do actually the right thing to do?

To be clear, many engineers and software architects have not only the skills required to envision and build effective systems, but also the talent required to monitor, scrutinize, and judge those systems. But not all of them do. The “how” of a system is not the same as the “why” of a system, and both of these inquiries need to be made of, and met by, a legal system on a regular basis. We’ll want to have different people with different skill sets making those inquiries.

Legal systems also age and atrophy and degrade over time. Minuscule errors crawl inside and inaudibly misdirect the intended flow of data or invisibly unravel the logics underlying the processes. Since we can’t see or hear the initial errors, we need to watch the results, over and over again, and ask ourselves whether our incredible machines are delivering their intended solutions and client outcomes. That will require the attention of people who:

  • can detect patterns within a system and find emerging variations therein,
  • have built strong relationships with clients that allow them to understand their goals and priorities, and
  • can integrate these two bodies of knowledge into an effective system assessment regime.

Those are lawyer skills, and they will be needed in the enterprise legal market. But there’s more; there’s also the need to ask whether a system that’s doing what it was built to do is achieving what it ought to be doing.

It’s a delightfully complex system. What’s it for again?

A powerful and widespread misconception is that if a machine or a system is generating results, those results are necessarily good and trustworthy, because the machine or system is unbiased and objective. You’ve probably heard someone cite the results of some automated process or other as proof in an argument or to defend a political position: “It’s all math, and the numbers don’t lie.”

But it’s not all math, of course, and it never has been. There are already countless examples of how sexism and racism is baked into algorithms and processes by programmers who don’t believe they themselves are sexist or racist, but whose experiences and biases inevitably guide their “objective” decisions.

This problem will become worse as machine learning and data-driven decision-making spreads to judicial, regulatory, and administrative systems (especially for poorer individuals who can’t afford customized assistance). A system that performs exactly as it’s designed, but that keeps rejecting valid compensation claims from people with non-Anglicized surnames, is a bad system. But will anyone notice?

The future of law, especially enterprise legal services, is without any doubt systemic. But systems need people to run them, to remedy them, and to remind everyone else that we build systems to serve people’s interests. And that brings us to our next point.

2. Service

The law is a service profession. Both historically and etymologically, the very notion of “profession” is grounded in service towards others for the greater good. If you’re a lawyer, your central purpose is to serve other people and make things better for them — principally your clients, but not exclusively, and not to the intentional detriment of others.

Now, if you’re engaged (or you plan to engage) in the enterprise legal market, where you’re working for corporations and institutions and governments, you might think the foregoing homily doesn’t apply to you. That kind of thing is for lawyers in family law, or wills and estates, or criminal defence — “People Law,” as it’s been described. Your job, by contrast, is to help grow shareholder value, or improve brand penetration, or eliminate unwanted efficiencies. You don’t serve people so much as you serve productivity. Right?

Well, you can answer that question for yourself. But if I might suggest something for your consideration: No matter how massive and global your clients, no matter how complex and high-value the transactions, no matter how sophisticated and AI-driven the systems you’re using, it’s all People Law. Shareholders are people. Employees are people. Individuals whose lives are irrevocably altered by enterprise legal decisions are people. And you’re not allowed to conveniently overlook them in pursuit of your legal duties.

I don’t think it’s deeply controversial to note that in many parts of the world, perhaps including the place where you’re reading this book, the quality of both private lives and public infrastructure has deteriorated throughout the last few decades. In a world where capital outperforms labour by a widening margin, the rewards of ever-greater productivity are shared by an ever-smaller number of people. Many influential individuals seem to believe that economic productivity should be society’s highest goal. They’ve forgotten that both private corporations and public institutions were created in order to make people’s lives better. They were built to serve us, not the other way around.

I have some news for you, and you can decide if it’s good or bad news: One of your functions, as a lawyer for the people who’ve forgotten this truth, is to remind them of it.

When a corporation or an institution repeatedly crosses the line of acceptable conduct and ends up ruining itself and others, a question that invariably arises in the aftermath is: “Where were the lawyers?” The answer, in most cases, is that the lawyers were either helping to facilitate the client’s actions on its road to ruin, or were studiously looking the other way, having persuaded themselves that it wasn’t their job to challenge the sustainability or wisdom or even morality of their client’s decisions. That the role of a lawyer is to make happen what the client decides should happen. That their job is to serve power, not speak truth to it.

That is the wrong conclusion to reach. It’s wrong because it flies in the face of a lawyer’s ultimate duty, which is not to his or her client but to the rule of law and the courts. It’s wrong because it surgically removes ethical and societal factors from the lawyer’s consideration, transforming the lawyer into a rote enforcer or a random subroutine in the larger system of productivity. And it’s wrong because many people, both inside and outside the corridors of power, can sense when something the client is doing isn’t quite right, and they will look to see what the lawyers are doing — and if the lawyers are simply sitting quietly with their heads down, then that’s what they’ll do as well. People follow our lead in murky ethical situations, whether we want them to or not.

You think maybe a good lawyer could have made a difference at some point?

I’m not talking merely about the obvious kinds of scandal and self-dealing, which make even the most battle-hardened lawyer pause and think things over. I’m talking about the unexamined assumption that if the client wants to do something in order to enhance shareholder value, that is the highest and ultimately the only goal worth considering, regardless of the human or social or environmental consequences.

This challenge is made even greater by the rise of systems in the enterprise legal space. It’s easier to call out bad behaviour by an individual than it is to call out bad programming in a system that “objectively” issues eviction notices to the most vulnerable members of the community. There is a role for the lawyer of a commercial client to flag the negative social consequences of the enterprise’s activities, to bring them to the attention of the client’s leaders and insist that they look closely at the human costs of those activities. Maybe the lawyer’s duties extend no farther than that. But they certainly do not extend any less.

Believe me when I tell you that enabling or tolerating socially corrosive activities is the most pernicious trap into which an enterprise lawyer can fall. And it is especially dangerous because it disguises itself as “service to the client,” a salve to your conscience and a False North to your moral compass.

So you need to remember, throughout your life as a 21st-century enterprise lawyer, that if you silently endorse or willingly enable a client to advance its own interests through harm to others or to the obviously greater good, you are losing your way. And as we’ll discuss in the next section, you are also in danger of losing yourself.

3. Self

Early in my career as a legal magazine editor, I wrote in an editorial that the most important person in your law practice was your client. Shortly afterwards, I received a letter from a health and wellness expert who took exception to that idea. The most important person in your law practice, he said, is you. Upon reflection, I’ve come to believe he was right.

It’s easy to overlook this fact — and at times, it can even seem noble to do so. Haven’t I just finished saying that the ultimate role of a lawyer is to serve others? Doesn’t this suggest that a lawyer should strive to diminish herself or himself, to substitute the good of others for the good of ourselves? That seems like it should be an attractive notion to a serving profession.

But self-diminishment and self-negation have proven to be destructive in all walks of life, and especially so in service-oriented professions like medicine and the law. What we need instead is a more fully developed sense of how we should regard our selves, and where we should place our selves, within the dynamic array of needs and priorities of the 21st-century lawyer.

Technology makes this goal more important, not less. The very first promise of the machines we build has been that they will make our lives better — that they will save us time and energy, allowing us to devote these precious resources to enhancing our freedom, leisure, and personal advancement. Raise your hand if you feel like technology has gifted you abundantly with these assets. Raise your other hand if you look forward to the rollout of a new technology in your office and how much you’ll enjoy the extra time it will provide you.

The truth, of course, is that even those technologies that really do save us time and effort rarely do so to our benefit, but rather to the benefit of our employers. Think of all the amazing technologies that have arrived in the law over the last couple of decades, from document automation to contract drafting to e-discovery: Have lawyers enjoyed a windfall of unallocated hours and clear horizons with which to better ourselves and those around us, or to engage in more fulfilling and higher-value endeavours? Or have those “freed-up” hours been immediately captured by others and filled with ever more work, all in service of “greater productivity”? Especially if you work for an employer who measures your productivity in hours billed, and for whom “freed-up time for you” is the last thing they want?

Machine learning and artificial intelligence are going to amplify and accelerate these trends and concerns. Remember that email from the legal tech company I quoted at the start: “AI has once again triumphed over a human lawyer.” Guess who the human lawyer in this story is.

So long as the prevailing philosophy of the corporate world is to prioritize profits over people, it’s going to be your responsibility to look out for yourself — and to look out for your self. There are two areas in particular where you need to focus your efforts.

One is the broad category of your health and wellness. You have to safeguard and strengthen them both. Previous generations of lawyers failed to do that, and they left countless unhappy lives, broken marriages, emotional breakdowns, and substance addictions in their wake. Quite possibly you were raised in a home afflicted by these ills; if not, you almost certainly know someone who was.

Now it’s your turn to run this gauntlet — but you can do better. You can reject the proposition that your highest or only function is to be a cog in someone else’s machine, to forever be on call for those who pay your wages, or to substitute your client’s judgment for your own on a daily basis. You can instead assert that your physical health, mental wellness, and emotional stability have value, apart from and above your work. You can invest in your health the way previous generations invested in CLEs and association memberships. This will pay off throughout the course of your legal career and your life.

But there’s another way in which tending to your self will be important: In understanding and applying your own unique value proposition as a lawyer.

The ironic effect of the rise of automation and systems in the law is that lawyers’ human qualities will actually become more important to employers and clients. Job interviews in the near future are likely to feature the question, “What can you do that our machines can’t?” Previous generations of lawyers shared a common set of basic skills that are now being automated and systematized, which means that from now on, a lawyer’s personal distinctiveness will be more valuable than ever. Your unique humanity will be your best selling point.

In a sense, this challenge will also be the great opportunity for your generation of lawyers. You’ll be able to re-engineer the blueprint, or reformat the DNA, of what it means to be a lawyer. But be warned: As systems and software proliferate, you will constantly be tempted to serve the machines that were created to serve us, to prioritize productivity over people.

You’ll have to resist and reject that temptation. You’ll have to lead the evolution of the lawyer’s role back towards the enforcement of positive social norms, the enshrinement and protection of personal dignity, and the pursuit of service to the improvement of lives. That leadership might be the greatest legacy of the 21st-century legal careers that you will build.

Conclusion

One final thought as we close this book. The greatest responsibility of being a lawyer is that what you do and say matters to many people, far beyond those who pay you for your services. It also happens to be a lawyer’s greatest privilege. That’s always been true of the legal profession, but the clarity of that truth will be especially evident in the 2020s, 2030s, 2040s and 2050s — throughout your legal career.

So here’s what I’d very much like you to remember: What you do matters. Who you are matters. When you speak out, it has an impact. When you fall silent, that has an impact too. Do not let yourself get lost in the noise and complexity of the machine; do not lose sight of the primacy and power of true service; do not lose who you are, and who you could be, amid the upheaval and disruption to come. Out of this chaos, you can forge new meaning and greater purpose. Out of the end of one era in the legal profession’s history, you can launch the start of another.

Your time is nearly here. The rise of the machines is almost over. Now it’s time for the rise of the lawyer.

You’re up.

How to save the lawyer development system

I bring news from the places where lawyers gather. In addition to presenting at several law firm retreats in 2019, I’ve also spoken to meetings of law firm administrators, law firm knowledge officers, legal industry analysts, and law students and professors. As you might imagine, these are disparate groups that tend not to agree on a whole lot.

Yet consistently, in audience questions and hallway conversations, one common concern kept arising at all these events — that the lawyer development system is in serious trouble and could be headed towards collapse. This post is intended to describe the problem and propose potential ways for us to avoid what might otherwise be a professional disaster.

Let’s start by defining our terms. By “lawyer development system,” I mean the structured yet largely informal process by which a law student on her first day of classes eventually becomes a confident, competent lawyer providing legal services of value to clients. Obviously, this process stretches well beyond one’s call to the bar: Way back in 2010, I suggested that it takes seven years for a first-day law student to reach that point, although in a brief survey I conducted in 2017, some lawyers said it took an additional five to ten years after graduation before they felt like a “reasonably confident and competent lawyer.”

So by these lights, the lawyer development process requires anywhere from seven to thirteen years of a person’s life, starting from their first day of law school. I need hardly point out that in most countries, we credential lawyers three or four years into that process and expect them to bill well over a thousand hours annually by the end of their fifth. Much of the lawyer development process, therefore, involves experiential learning on real client matters, long before the point of confident competence has been reached.

Most importantly, responsibility for the lawyer development process is diffused throughout the legal ecosystem, with no single entity holding full authority over and answerability for the process and the results. This is what I mean by “structured yet informal” — if it takes a village to raise a child, then it takes an entire legal market (including law schools, bar examiners, law firms, and clients) to raise a lawyer, without anyone technically in charge of the whole process.

Current state of discussions about the lawyer development system.

I personally think that’s a pretty ragtag way for one of the world’s great professions to sustain itself. But to all the criticisms we can level against this system, one defence is hard to refute: It works. Lawyers are here, and we provide people with legal services, and the world hasn’t ended. It might not be a thing of beauty, but the system works.

Until it doesn’t. What people in law firms and law schools have been telling me over the course of this year is that they’re deeply worried about the lawyer development system. Specifically, they’re saying: “We don’t know where the next generation of lawyers is going to come from.”

Let’s start with one of the legal profession’s oldest truisms: Law schools don’t teach people how to be lawyers. Not only is this inarguably true, I don’t see how it could be otherwise. If it takes an average of 7 to 13 years to really “become” a lawyer, law school can do no more in its three years than get the ball rolling. Law schools are not set up to teach people how to deliver legal services to clients, and they can’t be reconfigured to play that role without gutting them and converting them into completely new entities. If we want to have lawyer development academies that mix classroom instruction with supervised work opportunities for ten years before granting a license to practise law, that’s fine; but that’s not the world we currently live in.

And anyway, law schools haven’t had to “teach people how to be lawyers,” because the profession has effectively outsourced this job to the private sector. Most lawyers’ early development time — say, between three and eight years after their first day of law school — is spent working for more experienced lawyers (usually in law firms) rather than directly for clients. The well-worn path looks like this:

  • Step 1: Get hired as a new associate at a law firm.
  • Step 2: Work really hard.
  • Step 3(a): After a period of six to twelve years, accept an invitation to join the equity partnership, after which you can continue to work really hard while getting a cut of other lawyers’ revenue.
  • Step 3(b): Alternatively, anytime between the first and twelfth year on the job, leave the firm to join (i) another law firm, (ii) a corporate or public-sector law department, (iii) sole practice, or (iv) some other type of employment inside or outside the legal market.

I expect that would describe the path into the legal profession for at least 90% of the lawyers reading this post, as well as for their colleagues and supervisors. It’s so ingrained into the profession that we scarcely notice it anymore. We take it for granted that once we leave law school, a wide range of private businesses will welcome us into the working profession and pay us an annual salary to bill thousands of hours to clients while learning the intricacies and nuances of law practice.

Not every law firm does a good job of developing lawyers, of course. At many law firms, the quality of these early years of lawyer development is pretty abysmal: On-the-job experience substituting for actual training, trial-and-error learning taking the place of mentored instruction, and crushing billing pressures outweighing almost all other considerations. But this system more or less does the job of getting new law graduates from knowing nothing about law practice to knowing something about it, inside a (relatively) quality-controlled environment.

To be clear, law firms don’t play this critical role in the lawyer development system just to help the legal profession. It’s not an act of charity. They do it because they can bill their associates’ time spent working on basic, low- to medium-level tasks, pay them less than the revenue they generate, and pocket the resulting profits. And even though attrition will cost them most of these lawyers over the years, one or two will make it through this gauntlet ready to buy equity in the firm and keep the place solvent for another year. The rest of those new hires will eventually fan out across the legal market and keep the lawyer landscape populated.

This entire system, however, with all its benefits and faults, rests on a single and increasingly fragile foundation:

  • Step 1: Get hired as a new associate at a law firm.

Law schools, bar admission personnel, and (without realizing it) clients all assume that law firms will keep doing what they’ve been doing for years: Hire new lawyers and show them the ropes. The entire lawyer development system hinges on law firms acting as that bridge out of law school. If law firms were to stop doing that, or even to severely curtail their new-lawyer hiring, it’s not an exaggeration to say that this system would simply break down.

I submit that we’ve already entered this process, right now. It looks like this:

1. The “low- to medium-level tasks” that used to occupy associates’ time have been migrating from law firms to more cost-effective performers such as software, ALSPs (including a growing number of law firm spinoffs and subsidiaries), and clients themselves. These tasks are routine and highly procedural, yet law firms still want to perform and bill them the same way they perform and bill highly specialized partner tasks. That value mismatch means firms have difficulty competing for this work. The US economy has been surging for almost a decade, yet “the overall growth trend for demand for law firm services [in that time] has been essentially flat to negative in every year.” That lost demand for law firm hours is very probably “associate work” that is no longer being given to associates.

Courtesy Prof. William Henderson. Click to enlarge.

2. As the volume of (formerly) “associate work” coming to law firms declines, firms respond by employing fewer new lawyers. It’s not as if firms actually need more than a handful of new associates in any given year to become future partners — the rest are hired only to bill hours, and if there are no hours to bill, why hire them? The essential Prof. Bill Henderson crunched the data last year and found that the number of entry-level jobs in private practice in the US declined from 20,611 in 2007 to 16,390 in 2017, a 20% drop. Large law firms, which shoulder about a quarter of first-year lawyer hiring, brought in 139 fewer first-year lawyers in 2017 than in 2007, even though these firms’ non-first-year lawyer population grew by nearly 40% during that time (from 65,212 to 90,867).

3. Now consider that the migration of low- to medium-level tasks from associates to more efficient providers has only begun. The development of technology for automating basic legal work is accelerating, along with growing acceptance (by both buyers and sellers) that legal work should be carried out by the most appropriate performer or platform. The Law Society of England & Wales studied this phenomenon and concluded that “the number of jobs in the legal services sector will be increasingly affected by automation of legal services functions” — in fact, it estimated that over the next 20 years, the equivalent of 67,000 full-time legal jobs will be consumed by technology. Note that the US has about 10 times as many lawyers as does England & Wales.

In “Legal Professionals of the Future: Their Ethos, Role and Skills,” Prof. John Flood writes that “the effect of automation here could be dramatic, in that if junior associates were to be gradually culled from firms, the entire reproduction of the legal profession could be jeopardized, since law firms are structured around associates being promoted to partnership.” Joe Patrice at Above The Law calls this the path towards “the death of the junior attorney,” writing: “Sooner rather than later, firms are going to slow their junior hiring and focus on a narrower range of candidates. … If the training regime for young lawyers isn’t addressed, the population of competent attorneys … will simply dry up.”

Are law firms aware of this issue? Of course. But they are neither structured nor incentivized to do anything about it. They are far more interested in acquiring established partners with mobile clients to boost immediate revenue (even though those efforts frequently disappoint), in shrinking the size of the equity circle (thereby growing profits for those inside), and delaying partnership admission for their remaining associates as long as possible. They are fixated on maximizing short-term partner profitability, and first-year associates could not be further removed from that goal. Rightly or wrongly, law firms do not consider the future of lawyer development to be their problem. They are increasingly less willing and less able to take on this job.

As it turns out, this is your circus and these are your monkeys.

So whose job is it? I come back to my initial observation that the lawyer development system has been outsourced to and diffused among many different stakeholders. Each of those stakeholders will be happy to tell you that it’s someone else’s job to train and develop lawyers; none of them wants to step up and take on this immensely important (and expensive) responsibility. But the outsourced-and-diffused solution has just about run its course, and something has to replace it — something unified, principled, systematic, and clear about its purpose and goals.

For my money, there’s only one correct answer to the question of whose problem this is, and who is responsible for finding a solution. In a self-regulating profession, responsibility lands squarely on the professional regulator. Whether that’s a state bar, a state court, a law society, or a special regulatory board, this entity is statutorily charged with ensuring that the lawyers who deliver legal services to people and businesses are competent, trustworthy, and reliable. That is job #1. If the entity cannot do that, then it might as well close its doors and forfeit professional self-regulation to the government. (Governments might be only too happy to take on the job if they feel lawyers aren’t up to it.)

Too many regulators are currently obsessed with pursuing “unauthorized” legal services providers, or with defending their own territory, or even with laudable goals like increasing access to justice. I submit that none of these activities is as central to the self-regulatory mission as saving and enhancing the lawyer development system, and I believe that regulators should make this their primary focus immediately. Governments can punish malevolent or rogue legal providers through criminal prosecution, and they can increase access to legal services by legislating open markets and restoring public funding for legal aid. But only lawyers can fix the lawyer development system.

How could we go about this? Here’s one suggested route forward for a professional legal regulator to consider.

  1. Drop all the extraneous activities and functions described above and concentrate your limited resources and political will on this subject.
  2. Identify the core professional competencies lawyers must possess at various stages of their development. Canada and Great Britain have already done this for you, although neither jurisdiction has yet implemented these competencies as part of their lawyer admission regime.
  3. Accredit any educational or training institution that will develop these competencies in lawyers over a minimum period of five to seven years at the start of lawyers’ careers. Inform law schools that they can keep their accreditation if they agree to deliver these competencies and prove they can do so.
  4. Invite law firms interested in participating in the development of competent lawyers to submit detailed plans for the hiring and close supervision of lawyers, in conjunction with an accredited competence delivery institution.
  5. Credential lawyers in stages, much as novice drivers are allowed to drive only at certain times and with adult passengers, or as medical interns are licensed only to carry out certain basic procedures. Abandon the absurd fiction that a newly called lawyer is entitled to do anything a veteran lawyer can do.
  6. Be fully transparent about this process to government and especially to the public. Let people access detailed assurances about the nature, quality, and reliability of what they’re getting when they hire a lawyer.

The foregoing is only an outline, and professional development experts can surely improve on it. But I don’t see that the task in front of us can be accomplished by anything much less radical than this. Law schools would fall and rise, creating a brand new educational landscape for lawyers. Professional self-regulation would be transformed into what it should always have been: keeping our own house in order so that society is demonstrably and thoroughly well-served by lawyers. Lawyers themselves would become confident and competent much earlier in their careers, accelerating their timelines for delivering real client value and improving their mental and emotional well-being in the process. By resolving one impending crisis, we can tackle and solve many other lingering problems.

It’s time to stop blaming law schools for not doing regulators’ job. It’s time to recognize that law firms won’t do this job anymore and shouldn’t anyway. It’s certainly past time to stop making clients do this job through lawyers’ trial-and-error learning process. It’s time the legal profession took the privilege of self-regulation seriously by unifying, clarifying, redesigning, and transforming the lawyer development system.

Re-personalizing law firm culture

I was contacted the other day by someone who had run into a challenge while drafting a partnership agreement for their new firm. Specifically, they were struggling with the conditions under which partners could be removed from the enterprise. The firm’s initial approach to the issue — which was giving this person pause — was that a partner’s failure to maintain the standards of partnership (defined almost entirely in financial terms, which is a whole other story) would be a violation that triggered removal from the partnership, like an “Eject” button on a cartoon car seat.

I thought I would share with you a modified version of my response to this person, partly because so much of what’s gone wrong with law firm culture is neatly encapsulated here — but also because it’s worth a reminder that you have the power to envision and develop a different and better type of culture in your own legal workplace.

What this proto-firm is experiencing is a subconscious desire to automate the process of partner expulsion — to move it a safe distance from the lawyers, so that they don’t have to handle the distasteful task personally. “If you don’t meet these targets, you’re out” is the message most law firms send to their partners these days — but the targets themselves aren’t as important as the unforgiving, cause-and-effect ultimatum, which delegates the decision to remove the partner to an impersonal, “objective” standard. A physical and emotional distance is maintained between the expelled lawyer and the remaining partners. It’s not personal — it’s strictly business.

I’d like a word about your billables, Sonny.

Sometime over the last few decades, the de-personalization of partner relations became a cultural feature of most law firms. Maybe it grew from the expansion of partnerships from tens of lawyers to hundreds or even thousands, rendering any kind of “personal touch” very difficult in practical terms. Or maybe it arose from lawyers’ own personality quirks — our off-the-charts lack of sociability, or the deep aversion most of us feel to open conflict (which we dress up as a desire for “collegiality”). It certainly hasn’t helped that many firms now treat their own lawyers primarily as sources of revenue, rather than as human beings with lives of their own — why wouldn’t those lawyers replicate that attitude in their treatment of their own colleagues?

So what I suggested to my correspondent was this: Whatever standards and thresholds the firm decides to set for continued participation in the enterprise, make sure that if a partner falls below those thresholds, that triggers not an ejection, but a conversation — a grown-up talk between the partner and the firm’s leader to discuss what happened and how to fix it.

I guarantee you that every partner who fails to meet a firm’s productivity standards has a story to tell. It’s a leader’s job to listen to that story with empathy and equanimity and to figure out how best to proceed. That the failure happened is not in dispute; why it happened is what the leader needs to address. Were there extenuating circumstances that caused the lawyer to miss a quota or target? Were there personal issues at play? Did a key client suffer a serious setback? Did the lawyer experience a productivity-draining conflict with a colleague?

Once you’ve identified the cause, you need to discuss potential remedies. If the partner has a skills gap when it comes to some aspect of her performance, she could be offered extra training. If the partner is experiencing domestic difficulties that she’s been reluctant to raise at the office, she could be offered counselling or other assistance. If the partner has simply grown tired of the work she’s doing, she could be offered a sabbatical or a shift in her career trajectory. There are as many remedial options as there are types of challenges.

But what the firm cannot do, not if it wants to retain any kind of professional integrity, is to automatically throw that person overboard because they’re “under-performing” or whatever other euphemism the firm comes up with. That’s not leadership; that’s the complete abdication of it.

None of that is to say, of course, that a leader should simply accept a partner’s story and just tell her to do better next time. There needs to be a response to a partner’s failure to meet standards, or other partners will rightly complain. The leader must decide if the problems causing the partner’s failure can be addressed, and if so, how — and if they can’t be addressed through reasonable means, then yes, there must be a system in place by which the partner can be formally excused from the partnership. But you can’t proceed to this step without having first engaged in an honest conversation and a good-faith effort to address the root of the problem.  You can’t skip the personal and go directly to the impersonal, no matter how uncomfortable you might find the personal to be.

But there are larger issues at work here than a single firm’s partnership agreement. In broader terms, the de-personalization of law firm culture has completely undermined the nature and purpose of law firm partnership itself.

It’s increasingly obvious that the partnership structure confers few business advantages on firms, so its defenders instead tend to argue that partnerships are more professional and collegial than “mere” companies. That simply doesn’t square with our lived experience anymore — firms now de-equitize partners as routinely and easily as the meanest corporation lays off employees. It sometimes feels to me, in fact, like many law firms have developed a superstition that the low-trust, high-tension, hyper-critical nature of firm culture actually correlates with (or even causes) the firm’s success — and that a kinder, gentler law firm is therefore also a weaker, less competitive one. Toxic masculinity as law firm culture, essentially.

You can adopt a partnership construct for your law firm, or not, as you wish. There are different ways to structure ownership and profit-sharing in law firms, depending on your local ethics rules. But none of them require the de-personalization of the culture. None of them necessitate the alienation of professional colleagues from one another, turning lawyers into ruthless judges of one another’s fitness and delegating the execution of their judgments to automated processes. Mad Men has been off the air for four years now. No one’s calling for a reboot.

Don Draper. Don Corleone. Coincidence? I think not.

So if you’re launching a new law firm today, or thinking about renewing the one you’ve got, start with an effort to personalize your culture. Open yourself up to the personal connections and individual relationships that naturally result from professional helpers working long hours in close quarters. Embrace the concept — it didn’t used to be a radical one — that you should trust your colleagues and should give them reason to trust you. Feel genuinely good about your colleague’s success and try to enhance that success, even if it has absolutely no financial or brand-building benefit for you. Engage with your colleagues as people first, lawyers second, revenue-earners last — not in the reverse order that many law firm cultures currently follow.

A law firm culture that has been re-personalized would never tolerate the suggestion that a partner be automatically ejected for failing to hit an earnings target. It would not permit one of its own people, lawyer or staff, to struggle and drown unaided in a rising sea of fixable problems or hidden troubles. It would put people first, always.

Think about being part of a culture like that — and then compare that to how you feel about your own organizational culture. Which seems better to you? Which makes you feel like a human being who happens to be a lawyer, rather than the other way around? Which culture would you race to join, and fight to defend?

How to make less money

I can’t tell you how many times a law firm leader has said to me recently, “Jordan, we’re simply making too much money. We’ve got a profit epidemic on our hands, and frankly, it’s causing some serious damage to the fabric of our firm. Something has to be done about it.”

Just the other day, in fact, there I was in my local fair-trade coffee shop, sipping organically roasted java with the powerful leaders of three immensely profitable BigLaw firms. They clutched their artisanal ceramic mugs tensely, lines of worry creasing their brows.

“I’m really concerned about how much money my firm is making,” confessed the managing partner. “We broke into the AmLaw 50 a couple of years ago, and I just learned to my dismay that we moved a few spots higher this year. Half the partners in my firm — including me! — made more than $1.6 million last year. Can you believe it? I’ve got a B.Comm. and a J.D. from a top-14 law school, yet despite that flimsy track record of intellect and success, I’m going to make insane amounts of money again this year. I can’t offer any excuse — it just happened. But I need to find a way to staunch the fountain of dollars.”

“I know exactly what you mean,” said the chief administrative officer. “Even lower in the AmLaw 200, we’re in the same boat, and it’s having some serious negative effects. The partners have become obsessed with nonsensical metrics like PPP and look jealously at lawyers in higher-ranked firms. I’m reluctant to admit it, but some of them are even putting their own financial interests ahead of their clients’, pushing their juniors to stay late on evenings and weekends, billing every client-related thought. It really saddens me to see it, and there’s no denying that it all flows from these geysers of revenue.”

“It’s worse than you think,” said the AmLaw 100 senior rainmaker. “You should see the caliber of people who are applying to join our firm these days. Rapacious partners from other firms who want to be guaranteed higher profits than they’re making now. Mercenary law school graduates prepared to sacrifice their health and well-being for six-figure starting salaries. And every day, it seems, another lawyer comes skulking around my office wanting me to share my secrets. I have no secrets! My law school roommate became the GC of a pharmaceutical company; that’s why I own three Porsches. I’m an ordinary schmuck who was in the right place at the right time. But can I convince them of that? Not a chance.”

I held up my hands. “Ladies and gentleman, I understand completely,” I said. “And honestly, I have to shoulder some blame. I’ve spent the last ten years advising law firms how to be more innovative, productive, and client-focused. Of course I meant well. But how could I have failed to see that many firms would focus solely on how much more profitable my advice could make them? I’m as guilty as anyone of recklessly encouraging this mania. And it’s high time I made amends.”

But if you ask for a rise, it’s no surprise they’re giving none away.

So that’s why I’m writing this post, offering law firms my best advice on how to make less money and be less profitable. I recognize that it might be too little, too late for the current generation of senior lawyers, clutched inescapably in the claws of six- and seven-figure annual incomes. But maybe this advice will do some good for future lawyers who, against all expectations, somehow form the notion that law firms exist for some purpose other than generating truckloads of cash for their owners. In hopes that such a future might materialize, here are my suggestions.

1. Stop billing your junior associates’ time. For some of you, this will seem redundant: Your biggest corporate clients have already told you not to bother billing anything performed by first-or second-year associates, because they won’t pay for on-the-job training of unskilled workers. But many other clients haven’t written that memo yet, allowing their outside counsel to generate millions of dollars in low-quality revenue from youngsters who don’t know what they’re doing half the time. Those firms could easily reduce their revenue just by turning off those taps.

Some partners will object, of course. But you can point out that giving these lawyers real skills training, supervised non-billable client access, and one-on-one mentoring opportunities (all of which could helpfully reduce revenue from other lawyers) will not only remove brutal billing pressures on these associates, but will also accelerate their development, improve their morale and well-being, and increase their retainability. “Revenue-neutral associates” could pay for themselves, assuming you stopped overpaying for academic high-achievers from famous law schools and instead started recruiting future star lawyers from law schools all over the map.

First- and second-year lawyer billings are the empty calories of law firms: They give you a temporary high, but leave you feeling bloated and regretful afterwards while compromising your long-term health. Start cutting revenue right here.

2. Place limits on your lawyers’ annual billing totals. This goes for all your fee-earners, not just the rookies. Most firms institute minimum expectations for how many hours they expect lawyers to bill, and that’s fair. But they don’t institute maximums: there’s no limit to the number of hours lawyers can churn out, leaving a dangerous outlet through which lawyers’ workaholism and competitiveness can spiral up into an eruption of revenue. (And, for firms concerned about that kind of thing, widespread lawyer burnout.) Before you know it, industry commentators are mocking your firm for employing a lawyer who bills 4,200 hours a year.

A simple solution to this problem would be to effectively cap lawyers’ billable hours. Most firms can’t actually order partners to stop working past a certain number of hours, of course. But you can tell your lawyers that they will not receive any compensation for hours worked past a given number. “Feel free to bill 3,000 hours if you like, but we stop counting your hours at 1,800 when calculating your annual income.” Deprived of financial rewards for non-stop billing, many lawyers will ease off the gas pedal, planting an elegant disincentive at the root of your runaway revenue problem.

Well, really now, who doesn’t?

Revenue caps are difficult to impose from the outside, but with the right planning and execution, you can incentivize performers to install them from the inside. The end result for your firm: Not just less revenue, but also more predictable levels of revenue. Oh, and I guess healthier lawyers, too.

3. Increase your pro bono commitments. I admit, it’s difficult to keep lawyers from working. Like small children, they need something to occupy them; if you don’t watch them like hawks, they’ll wander off somewhere and start making money for you. So give them a way to do lawyer work without getting paid. Sounds like some crazy magical thinking? Not at all. That’s the beauty of pro bono publico work: Lawyers get to practise law and sharpen their skills while working for the public good, but without any of the attendant risks of unwanted revenue.

I’m sure your law firm already encourages its lawyers to perform pro bono legal work; but let’s be honest, we both know that the billable work always takes priority, financially and culturally. So you need to do more than just double your hourly pro bono expectations: you need to develop a culture in which lawyers genuinely feel that paid and unpaid hours are worth the same. That’s a long-term project, absolutely; but the sooner you start, the sooner you’ll see the benefits, and the likelier that you’ll bring about a permanent shift in how lawyers view the value and purpose of their time and efforts.

You might be thinking, “But we already provide legal support to the local opera house and the junior yacht club! What more can we do?” Here’s one suggestion: Have every litigator in your firm spend one day a month in their local family court, representing pro se parties who’ll lose child access or support if they go into court alone. Do good for people who will never be able to pay you back. You’ll make the world a better place, but far more importantly, you’ll make less money.

4. Give all your staff members a 15% raise. Despite your best efforts, the fact remains that it’s hard for law firms not to make money. Even in a highly competitive market and with increasingly cost-conscious clients, large law firms remain cash-printing machines. So in order to really take a bite out of profitability, you’ll also have to find ways to increase your costs. No, not by reverting to rampant inefficiency and the daily reinvention of wheels: Encouraging procedural sloppiness will kneecap your competitive strategy. You need to spend more money usefully.

An easy place to start is with your “non-lawyer” staff. I don’t know how much you’re paying your secretaries, law clerks, librarians, paralegals, marketers, IT people, etc. to labour inside your cash factories while having to deal with your lawyers day in and day out, but it’s almost certainly not enough. Give them all a 15% raise across the board; but don’t stop there. Cover daycare costs for employees with preschool kids. Extend medical, dental, and vision care benefits to their families. Find creative ways to spend money on your staff.

Brewster’s Millions: Under-appreciated comedy and blog post inspiration.

I grant that this will create unintended consequences, including happier employees, rising retention rates, higher-quality performance, and more qualified job applicants. Also, you’ll inadvertently pressure your competitors to match your raises while enjoying a PR bonus from adoring media coverage. But let’s keep our eye on the ball here. The point is to make less money, and this will help your firm move towards that goal.

5. Fund 100 full law school scholarships for underprivileged students every year. I know what you’re thinking: That’s not really going to make much of a dent in our revenue. And you’re right. Even at the highest-ranked law schools in the United States, the total cost of law school attendance is around $80,000 a year, or $240,000 for three years. Underwriting that cost for 100 students would generate an annual bill of $24 million.

That might sound significant to the casual observer. But let’s look at how much money law firms actually make. The entire AmLaw 100 generated $98,748,110,245 in revenue last year. (Yes, that’s $98 billion). I don’t have access to median revenue figures, but if you divide that total by 100, you’ll get an average revenue of $987,481,102 per firm. Subtracting $24 million from that total would lower revenue to $963,481,102 — a decrease of 2.4%. Firms would still retain 97.6% of their earnings, so no, this isn’t going to move the needle that much by itself.

But it’s a good start. And at least you can take solace that 100 deserving young people who’d never otherwise even dream of becoming lawyers will be able to attend law school every year, lifting up their communities and enhancing the legal profession in ways we can’t begin to imagine.

So there you have it: Five simple steps towards corralling your big law firm’s runaway revenue. But these steps can also be followed in proportion by smaller or regional law firms whose leaders are equally concerned that the single-minded pursuit of ever-more money and ever-more profit has transformed their firms from proud bastions of professional service into brutalizing pyramid schemes that enrich a small few at the expense of too many. Not that they’d necessarily put it in those exact terms.

As for my BigLaw friends, they rinsed out their mugs, tipped the barista, and trundled wearily out the door, already thinking of the burdens awaiting them in Accounts Receivable. I only hope their successors can use this advice to pull their firms back from the brink of death-by-revenue and to plot a course towards a future where law firms aren’t focused on profits above everything. We can but dream.

The future of law, maybe

  • “Peace in our time.”
  • “The Beatles have no future in show business.”
  • “There’s no chance the iPhone will get any significant market share.”

Honestly, I don’t know why anyone makes predictions about anything. A hundred unforeseen factors surface immediately after you finish prognosticating and shatter all your starting assumptions. Only a glutton for punishment would actually make predictions about the future on the record.

And so, naturally, I accepted a request recently from Lawyers On Demand to forecast the future of legal careers. The full result of my labours can be found here, but I’ve summarized it briefly below.

In five or so years from now, the traditional legal market should be approaching both its zenith and its logical conclusion. Record-breaking profits for old Boomer partners as they burn up their law firms on their way out the door; the relentless disaggregation of legal work to lower-cost platforms, with ever-fewer associate roles for young lawyers; a metastasizing crisis in the public legal system, coinciding with geopolitical upheaval in a post-Brexit, post-Trump world. So much to look forward to!

There’s no need to dredd the future of law.

As much as this might seem like a first draft of the Avengers: Endgame script, all this really represents is the culmination of decades-long trends: an explosion of change in a legal market long overdue for it, against the backdrop of massive generational transition and technological chaos. The good news, and there is some, is that new opportunities for legal employment and value creation will start to flourish in this period, especially for lawyers with modern skills and diverse experiences. Radically different law firm business models will start to emerge.

Fast forward 15 years from now, and the picture gets brighter. There’ll be a new international order, and while it might not necessarily be one you like, at least it will be stable. Governments will hire lawyers to redesign and implement a new public infrastructure in which basic legal services are mandated and provided by the state. Courts will handle mostly criminal and constitutional matters, while most civil litigation will go to private arbitrators and online DR platforms. Family dissolution will be fast, cheap, and run by bureaucrats. You can decide if that’s a good thing or a bad thing.

What will lawyers be doing? Some will be unique specialists, tracking down violations of bilateral personal information protection treaties or building online systems for auditing clients’ compliance with carbon-trading laws. Others will serve regional enterprises from suburban mixed-use developments, or run home-based solo practices using deep knowledge of narrow subjects to draw a worldwide clientele. Others will program and upgrade online consumer law solution engines or deal with more complex matters beyond the software’s reach. And a hardy few will still bill by the hour for advocacy, judgment, counsel, and complex legal advice.

The road ahead should be great.

I have very little to say about the legal world 25 years from now, other than that it will probably be helpful to specialize in constitutional, immigration, real estate, or energy law. In a permanently hotter world beset by climate refugees, disappearing coastlines, forced population resettlement, and the rapid development of non-carbon fuels, there should be no shortage of work for you.

Now, look: Am I convinced that all the foregoing, and much more in the full report, will come to pass? Of course not. In case I hadn’t made it clear at the outset, predictions are a mug’s game, useful mostly for future amusement opportunities. But none of the factors behind these forecasts is imaginary or speculative — all you need do is look at the roads we’re driving down today to see that these potential destinations are not outlandish possibilities.

Friendly robot lawyers will take care of everything.

More importantly, the point of my forecasts is to give today’s and tomorrow’s lawyers not just a glimpse of what they might be doing in the 2020s and 2030s, but to remind them that no matter how great or how terrible things turn out to be, the world will still need lawyers. It might not always like us and it probably still won’t fully appreciate us, but it’s going to need us. And we need to be ready to meet those needs, because they’re going to be different and more complex and more challenging than anything we’ve dealt with so far.

So if you entered the law to become rich and influential, I’d suggest you consider another line of work, maybe hedge funds or America’s Got Talent! But if you entered law because you genuinely want to make the world a better place, then I’ve got great news for you: The world wants to be a better place. But it will need help to get there. And it will need you to step up and provide it.

A version of this article was first published by LegalWeek (April 17, 2019) as “Why Tomorrow’s Lawyers Will Be Needed More Than Ever.” My full-length forecast of the mid-range future of legal services, “Through the Legal Looking-Glass,” can be found at Lawyers On Demand’s website.

The next top model: Law firm edition

As you probably know, I wrote a book a couple of years ago strongly suggesting that the traditional law firm, shot through with various defects, is a poor fit for the new legal market and won’t survive competition from newer and better models for legal services. Smarter people than me have since asked: Okay, supposing you’re right about that — and we’ll know soon enough if you are or aren’t —  then what exactly is going to replace your much-maligned traditional law firm?

It’s a good question, and luckily for me, I’m not the only one pondering it. Managing partners, industry consultants, conference organizers, and venture capitalists have been kicking this one around for a few years now. The consensus answer, up to this point, has essentially been “something that’s not a law firm,” and there are plenty of candidates for consideration.

We’ve seen the emergence, over the past several years, of legal process outsourcers, legal technology platforms, flex-time and project lawyer companies, and managed legal services providers, These and other entities have collectively been grouped  under banners like “NewLaw,” “alternative legal services providers,” and the latest term, “law companies.” Together, they already represent about a US$10 billion slice of the legal market.

Most of these businesses share several common features, including:

  • corporate structure and governance,
  • investments of external funding,
  • extensive use of process and technology,
  • reliance on people who aren’t lawyers,
  • focus on efficiency and cost control, and
  • ability to leverage knowledge and data.

Search iStock for “future office model” and this is what you get.

But you could more easily describe all these entities simply by saying that “they’re not law firms.” Because the characteristics of law firms are well-known: Lawyer-owned and -operated, expensive, elite, inefficient, lawyer-centric, risk-averse, kind of pretentious, and a little out of touch. Defining your new legal business by distancing yourself from these attributes is a pretty good way to get clients’ attention in a shifting market.

So it’s fashionable, and maybe even reasonable, to assume that traditional law firms will largely be replaced by their diametric opposites — the alternative legal business, the agile legal company, the AI-powered legal machine. I’m confident these businesses will secure a significant space for themselves in the new legal market, and I suppose it’s even possible that ALSPs and law companies will turn out to be the dominant species of legal services supplier in future.

But here’s another possibility. Maybe traditional law firms will be replaced not by law companies, but by law firms — radically different law firms, to be specific. Law firms that, while still lawyer-owned and -operated, are also:

  • efficient,
  • accessible,
  • progressive,
  • modernized,
  • collaborative, and
  • resolutely, enthusiastically client-first.

These won’t be old law firms with a fresh coat of innovation paint. They will be systematically distinct from old law firms, based on a whole new model, right down to their DNA.

I think there’s a place in the market for law firms like this — a really big place, in fact. And I want to find them. I want to identify, profile, and publicize law firms around the world that are — right now, today — throwing away the outdated attributes of their forebears while keeping the most important parts and adding new and better elements to their core function: allowing lawyers to truly meet clients’ most pressing and important legal needs.

In short, I want to conduct a search for the next law firm model. And I’d like you to help me.

Why should we do this? Three main reasons:

1. Tens of thousands of bright, hard-working lawyers worldwide, associates and partners alike, feel trapped inside traditional law firms, deep in debt and deeper in regret for having chosen what turned out to be a disheartening workplace. They can sense how dysfunctional their firms are, distant from their clients and often damaging to their employees, and they yearn for a better environment in which to exercise their skills and serve their clients. But they don’t know where else to go, or how they could go about building anything different and better.

2. Many more lawyers have walked out of those firms, or have been cut loose by them, or were never even hired in the first place — they’re exiles from the traditional platforms for practising law. But they can’t, or don’t want to, hang out solo shingles or get jobs with law companies — they want to work in law firms, just not at the cost of their personal and professional well-being. And they’re joined every year by thousands of law school graduates who have already heard about, or will soon learn, what’s in store for them. All these lawyers long for better, radically different law firms, too.

Doesn’t look that futuristic, to be honest.

3. Clients still need law firms. No disrespect to law companies, which generate a wide range of high-quality legal solutions for clients in a timely and affordable fashion. But I expect most of them would readily agree that they can’t and don’t want to provide every kind of legal service. In particular, they don’t offer legal advice, personal advocacy, strategic counsel, complex legal opinions, and other mid- or high-level legal services, and most of them have no ambitions in that direction. Clients, both individuals and organizations, need mid- and high-level legal services, and I think they’d welcome with open arms the arrival of radically different and better law firms that can deliver them.

And one other factor, on the personal side: If this effort to identify radically different law firms succeeds, and if these examples can be used to design templates for building more such law firms in future, then I’m thinking of making this the subject of my next book.

So my request of you today is: Help me find the next law firm model. I’d like you to nominate law firms that meet the criteria described below, regardless of size or jurisdiction. You can add your nominees in the comments, or send them to me via the email contact form at the bottom of the page. Feel free to immodestly nominate your own firm if it qualifies. If I can accumulate a critical mass of nominees, I’ll list a selection of them in a subsequent post, and I’ll follow up with some of them to arrange more in-depth interviews for a book.

Here are my criteria.

1. The law firm must be no more than 15 years old. (Founded in 2004 or later.)

2. The law firm must not be a law company or ALSP of the kind described in the third paragraph above.

3. The law firm must feature at least one (and preferably more) of the following attributes:

a) New Structure: The firm is not a lawyer partnership, it divides ownership from management from labour, and/or it has a strict corporate decision-making governance system to which lawyers have surrendered autonomy over the firm’s decisions and direction.

b) Greater Accessibility: The firm is physically located, marketed, and/or priced for maximum client convenience, affordability, and relevance. The firm knows where its clients are, and it goes out to meet them there with offerings they can understand and afford.

c) Fresh Markets: The firm is heavily focused on markets that either are brand-new, or have been traditionally under-served, or have been locked out of the legal services world for all practical purposes. The firm has identified and is unlocking latent legal markets.

d) Serious Technology: The firm offers extensive client-facing technology that provides legal answers or solves legal problems, and/or it has used technology to build super-efficient internal systems for creating legal products and services that improve profit margins.

e) Outsourcing: The firm repeatedly partners with law companies or ALSPs (e.g., LPOs, flex agencies, managed legal services providers) to complement its more advanced offerings. The firm identifies what law companies can do more effectively than it can, and collaborates accordingly.

f) Better Pricing: The firm prices most or all its work on a subscription, fixed-fee, risk-sharing, and/or incentives-driven basis. Hourly billing of lawyer work does not necessarily disqualify a firm, but its overall pricing must be intensely client-focused and outcome- or value-based.

“Simple and stylish manager office.” Futurism meter reads: 0.

g) Smarter Compensation: The firm generously rewards lawyers for a wide range of activities and outcomes (including client satisfaction, contribution to productivity, mentoring of juniors, leadership and management) other than hours billed and clients landed.

h) Leveraged Knowledge: The firm makes extensive use of legal knowledge resources and business/competitive/client intelligence to create new services, serve clients better, improve internal productivity, and/or sharpen external competitiveness.

i) Diversified Sales: The firm applies resources other than lawyers to generate new business opportunities from new and/or existing clients, including sales professionals and industry data. Rainmakers and partners are not the sole or critical engine of the firm’s new business generation efforts.

j) Multiple Disciplines: The firm employs (or if permitted, extends equity to) “non-lawyer” professionals and technicians who play significant client-facing and/or revenue-generating and/or system re-engineering roles. And it doesn’t call them “non-lawyers.”

I want to be clear that this is not a “legal innovation contest.” I’m not interested in receiving a raft of submissions from firms that have added one or two innovative tweaks to a standard law firm partnership. I’m looking for law firms that are truly, radically different from the traditional law firm model, such that the criteria above exemplify that essential difference, rather than constitute mere bolted-on accessories to the old familiar model. And I’m looking for firms that have done this recently enough that they can serve as an inspiration and a template for today’s and tomorrow’s lawyers to follow their lead.

Also note my use of strong modifiers in the criteria: “intensely,” “repeatedly,” “extensive,” “maximum,” and so forth. Again, this is to separate traditional firms that are (admirably) trying some different things from the radically different law firms I’m seeking — those for which these attributes and activities are the everyday rule, rather than the exception.

We need new and better law firms to replace the old and struggling ones now littering the legal landscape. We need to give young lawyers and law students examples and templates to help them build their own sustainable, profitable, fulfilling, client-focused, radically new firms. We need to give the client world better mousetraps to whose doors they can beat a path. In short, we need to find and promote examples of the next great law firm model. Your help would be invaluable.

The moral issue here

“I’m not worried about the moral issue here,” said Gordon Caplan, the co-chair of AmLaw 100 law firm Wilkie Farr, according to transcripts of wiretaps in the college admission scandal that you’re already starting to forget about. Mr. Caplan was concerned that if his daughter “was caught …she’d be finished,” and that her faked ACT score should not be set “too high” and therefore not be credible. Beyond that, all we know from the transcripts about Mr. Caplan’s ethical qualms is that “to be honest, it feels a little weird. But.”

That’s the line that stays with me, right through the “But” at the end. I want to tell you why, and I especially want to tell you if you’re a law student or a new lawyer, because it is extraordinarily important that you understand what’s going on here.

Mr. Caplan, who’s been placed on a leave of absence by his tight-lipped firm, was just one of dozens of rich, high-powered individuals now under indictment for bribery and mail fraud and such. I’m less interested in the two actresses who were arrested, however, than I am in the titans of industry who felt not just pressured to cheat their children’s way into prestigious colleges, but also strangely entitled to do so. Here’s a lengthier excerpt from the conversation between Mr. Caplan and the cooperating witness (the owner of the business running the con) who recorded him: [Emphasis added]

CW-1: What happened is, all the wealthy families that figured out that if I get my kid tested and they get extended time, they can do better on the test. So most of these kids don’t even have issues, but they’re getting time. The playing field is not fair.
CAPLAN: No, it’s not. I mean this is, to be honest, it feels a little weird. But.
CW-1: I know it does. I know it does. But when she gets the score and we have choices, you’re gonna be saying, okay, I’ll take all my kids, we’re gonna do the same thing. (laughing)
CAPLAN: Yeah, I will.

What the witness is telling Mr. Caplan here is that most of the rich-kid college applicants with various learning challenges who require extra testing time and accommodation — they don’t really have such challenges. It’s all a scam, you know. Political correctness run amok, everybody gets to have a disability of some kind these days, yada yada. And see, Gordon, all the rich people are taking advantage of this. They’re getting their kids bogus certifications that allow them to cut in line in front of you. Everyone’s doing it, Gordon. Everyone else is already cheating the colleges. All you’re really doing is evening the score.

Let’s set aside for a moment that the co-chair of a firm where the average partner earned $2,969,000 in 2018 can consider himself not one of “the wealthy families,” or the sheer irony that one of the richer and more powerful people in the profession really believes that the playing field is tilted against him. What’s really important to appreciate, I think, is that two things are happening here:

  1. Person A is telling Person B a series of lies.
  2. Person B wants to believe they’re not lies.

“It takes two to lie, Marge,” Homer Simpson once told his wife. “One to lie, and one to listen.” It’s a hilarious line, yes, but you know what else? It’s true. The effectiveness of a lie is directly proportional to the credulity of the person who hears it, and most people aren’t credulous because they’re stupid. I guarantee you the co-chair of an AmLaw 100 firm isn’t stupid. They’re credulous because they choose to be.

Most people believe the lies they’re told because they want the lies to be true. They want the world they live in to operate according to a series of principles and practices that make sense to them, confirming their suspicions, fulfilling their deepest wishes, and absolving them of blame for how they feel and what they do.

Lay it out, Leonard.

All the rich and powerful people who allegedly consented to participate in these crimes did so because they wanted to believe the justification that was offered to them. “You’re not really cheating. You’re just fighting back, refusing to be a sucker anymore while everyone else cheats to get ahead of you.” How intoxicating that is. How sweet and reassuring and vindicating. How interesting that it’s invariably people already overstuffed with money and power and privilege who’ll pay anything to buy that lie.

So why does any of this matter to lawyers, especially to young lawyers? Because of that one line I quoted.

“I mean this is, to be honest, it feels a little weird. But.”

Do you recognize that sound? That’s the sound of a person’s conscience, a lawyer’s conscience, struggling to make its voice heard.

This one apparently can’t muster much more than a twinge of doubt, a feeling of discomfort, a nagging sense of this isn’t right and I shouldn’t be doing it. It lasts for only a second, though, because the next word fatally undermines it. But. Yeah, I know, at some fundamental level, this is wrong. But.

It doesn’t matter what rationalization or justification follows the But, because at this point, it’s all over. The battle has been abandoned. If the next word out of his mouth had been So or Therefore, Mr. Caplan’s life would have gone in a very different direction.

You need to be able to recognize the sound of your own conscience. You need to listen to what it’s telling you, and not wave it aside with a But or an Anyway or a Nevertheless. You might be sitting there, fresh out of law school, saying, “No problem, I’m ready for whatever the practice of law wants to throw at me, I’ll stand my ground.” And I’m here to tell you, you have no idea what’s coming. You have no idea of the forces you’re up against. You don’t appreciate just how badly compromised the legal profession and law firm culture already are.

Does the name Ralph Kayser ring a bell with you? Probably not. Back in 2014, Mr. Kayser approached 16 lawyers at the most prestigious law firms in Manhattan as a representative of a government official in a mineral-rich African country who wanted to transfer a large amount of “facilitation money” into the United States without anyone from his country noticing it. You couldn’t have said “money laundering” any more clearly if you’d used a megaphone.

None of the lawyers took Mr. Kayser on as a client, but according to the ABA Journal, 15 of the 16 — including the then-president of the ABA itself — “offered advice on how [Kayser] could buy pricey Manhattan real estate without revealing his identity.” Here are some of their responses:

  • “So we have to scrub it at the beginning, if we can, or scrub it at the intermediary location that I mentioned.”
  • “We could provide you with the list of countries where the banking systems require less detail on ownership or source of funds.”
  • “And you don’t have to declare to bank authorities where the money comes from.”
  • “When I get money from my other clients, it always comes in with some strange name on it. I don’t even ask.”
  • “They don’t send lawyers to jail, because we run the country … We’re still members of a privileged class in this country.”

I want to pause here and remind you that the people saying these things are legal aristocracy. They are some of the finest lawyers at the most famous law firms in the richest legal profession in the world. Breathless articles are written when they change the firms they work at.

Mr. Kayser, as it turned out, was a plant — an operative from global NGO Global Witness who wanted to show just how easily such an obviously dubious offer could be entertained by the aristocracy of the US legal profession. Mission, as they say, accomplished. And even the one lawyer who rejected Kayser’s advances out of hand, Jeffrey Herrmann, was revealing in his dismissal. “This ain’t for me,” he said, “my standards are higher” — but left unspoken in his reply was the acknowledgement, “But it’ll be for someone else, whose standards aren’t.”

In his feature article for The Atlantic, “How Kleptocracy Came to America,” Franklin Foer made the following cutting observations about what the Kayser incident demonstrated:

“Global Witness conducted its experiment to point out BigLaw’s complicity in the spread of kleptocracy. But the footage also provides primary anthropology of an American elite. A profession like law has highly developed ethical codes, yet those codes appear to have receded in recent years. Even the most prestigious firms find themselves fretful about the survival of their high-priced business model, which was profoundly rattled by the 2008 financial crisis and the corporate cost-cutting that followed. Greedy impulses have surely always existed within the white-shoe world, but the sense of Darwinian struggle and the norms of a global elite have eroded boundaries. The same partners who shed underachieving colleagues more ruthlessly than they used to also seem primed to adopt a more permissive attitude toward clients whom they might once have rejected.”

Rip the privilege away from a privileged person and you create a very dangerous individual. Do the same thing to a profession steeped in rankings and prestige and money, where aspiration to elitism is held to be a virtue, and you create an extremely hazardous moral environment.

If you’re about to enter that environment, or if you’ve recently entered it, then I’m also here to tell you: Hold on to yourself. The ground is sticky and the slopes are slippery. You will be told various lies, and you need to know that they’re lies and not wish they were true. Here are some of them:

  1. “Everybody’s doing it.” No, they are not. I say to my teenage daughter, “There’s nothing in this world that everyone does. People can’t even agree on what kind of shampoo to use. If somebody tells you that ‘everyone’s doing it,’ that’s because they need the comfort and support of your co-conspiracy in questionable behaviour.” And she rolls her eyes and says, “I know, Dad.” But not everyone does. Not even in the AmLaw 100.
  2. “That’s how it’s done around here.” You can overestimate your daily billables count, you can order the secretary to work after you leave, you can gossip about a client in the coffeeshop, because that’s what the senior lawyers do all the time. While that last part might be true (frequently it is), the inference — local custom or firm culture supersedes ethical rules or moral dictates — is a lie. But you will find it an unbelievably hard one to resist.
  3. “The big clients deserve what they get.” I had lawyer friends at the start of our careers tell me sincerely that it was alright to file a false insurance claim because insurers were massive and rich and would never miss the money and probably cheated their policyholders anyway. The same logic fuels rampant overbilling on big corporate files every day. It’s a lie. Cheating a cheater doesn’t make you Robin Hood. It makes you a crook.
  4. “You work hard and you’ve earned a little something.” You know who works hard? The person who vacuums up the dinner you spilled at your desk, then goes on to work an overnight shift to support her kids while you go home to bed. And if she was ever so much as caught taking office supplies home with her, she’d be fired on the spot. And rightly so. And so should you be, for whatever quiet “perk” you talk yourself into “earning.”
  5. “It’ll look bad if you don’t go along.” If you don’t go along to the strip joint with the client. Don’t go along with the jokes about the new temp. Don’t go along with the senior partner’s temper tantrums. Don’t go along with the pressure to “review” that client memo for a few extra hours. You’re making the rest of them look bad when you don’t go along. But maybe, just maybe, that’s their problem, not yours.

Nobody is going to push you to soft-pedal potential money-laundering on your first day. That’s not how it works. It works by wearing down your defences on the smallest things, the littlest corners cut, the slightest concessions made. “Indeed, the safest road to Hell is the gradual one,” wrote Screwtape, “the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts.”

Wisdom from the other Mr. Keyzer.

You’ll be told to be practical, be realistic, to grow up already. If you listen, if you decide you want the lies to be true, then eventually you won’t need to be pressured to have a polite, informative conversation with a scoundrel about money laundering. You’ll do it yourself, naturally, without a second thought. And one day you’ll find yourself on the phone, saying that a certain proposition makes you, to be honest, feel a little weird, but.

This is not just for people in BigLaw. This is for everyone in every size law firm or law department, anywhere in the world. Your time will come. Your standards will be tested. Your loyalty or pragmatism or intelligence will be questioned. And you will feel such reluctance, such disinclination, to be the glaring exception. You will want to believe all the rationalizations offered to you. You will want the lies to be true because it’s easier that way. You will even find words like I’m not worried about the moral issue here on the tip of your tongue.

When (not if) that day comes, pause and listen for that voice. It’s the one that’s whispering, This isn’t right and I shouldn’t be doing it. Listen to it, consider what it has to say, take it seriously. And if you find, as is usually the case, that the voice has a point, then do not allow the next word out of your mouth to be But. Do not undercut your conscience when it’s come through for you at crunch time. Make the next thing you say be So or Therefore or It’s not for me, my standards are higher.

You’re a lawyer. Even if nobody else around you seems ready to live up to that privilege, make sure you do. Your conscience deserves it. Your profession needs it. And your career might hang on it.

The price of collaboration

(I’m trying something new here: Two posts on closely related topics, released simultaneously, rather than one massive post. For those of you born before 1992, think of it as a double-album release.)

If you can keep the human touch, there’ll be better days ahead.

At the end of the companion post to this one, “The reality of collaboration,” I proposed that the key to collaboration, in a legal relationship as in any other, is that you have to show up to the relationship every day, and you have to work really hard at it. Like a friendship or a marriage, each side has to take seriously not just the commitment to enter a special relationship, but also the hard work required to sustain and grow it.

But maybe most importantly, each side has to recognize that the collaboration, the partnership, is going to change you. If you try to hold back, to have an arm’s-length, surface-level collaboration, I don’t think it’s going to fly. If a corporate law department and a law firm enter into a collaborative relationship, and 18 months later both the department and the firm are basically the same entities they were before, then I think the effort is failing. Real partnership has a real price.

Jae Um puts it very well in her analysis of Microsoft’s Trusted Advisor Forum: “This recognition of what partnership costs is important, from both [the] buyer and seller of legal services. … I continue to see too many law departments and law firms slap the tax that comes with BFF-ship on far too many relationships that don’t offer BFF-level benefits. And just as pretend-BFF-ship demands social and emotional costs, pretend-partnerships lead to unwarranted costs for everyone involved.”

What do the costs of true partnership look like in the legal market? Well, I think that a law department that wants a truly collaborative relationship with an outside law firm has to really believe in that firm, to invest itself in it — not just as a source of expertise and knowledge, but as an organization with complementary values and admirable people. And by investing itself in that firm, the law department must be willing to adapt its own structure and capabilities (to the extent feasible for a corporate division) in response to what the firm offers and provides, to trust in the firm and rely on it, even to incorporate the firm’s patterns and structures to a limited degree.

Even in an overcrowded marketplace, very few law firms (or legal services suppliers) are going to meet those thresholds for any individual client. But that’s the kind of outcome the search for collaboration inevitably leads you towards, and it can be achieved — Microsoft and Perkins Coie are an excellent example.

For law firms, though, the cost could be even higher. Crafting a true partnership with a corporate client means the firm needs to know the client inside and out — to understand its purpose, goals, priorities, strategies, markets, products, customers, rivals, competitive advantages, regulatory environment, compliance pressures, and on and on. It needs to assemble and analyze deep reservoirs of data about the client and its world, and to build and maintain strong relationships with its leaders, all in order to not just solve the client’s problems, but also to anticipate and minimize its troubles and risks and help it to achieve its core business objectives.

This will require the law firm to expend a tremendous amount of effort, energy and bandwidth on the client — but all these resources are finite. What you devote to one client is what you cannot dedicate to another. The cost to law firms of a serious client collaboration would very likely include a reduced capacity to serve other clients, because not every client can be your BFF and you need to choose where to direct your singular devotion. When considering the intensity of what major clients are going to ask of their primary outside counsel in future, the degree of client-specific focus a law firm will have to undertake in response might ultimately render it best suited to serve only that client, or a few others very much like it.

Now it’s true, as Ron Friedmann points out, that if a law firm narrows its focus to one or a very few clients, it might paradoxically end up reducing its value, because clients rely on their firms for intel and insight garnered from a wide range of other clients in the same or affiliated industries. I’ve certainly heard from clients that they value outside counsel precisely because these firms interact with so many market stakeholders that they get the industry “lay of the land” more comprehensively than the client can.

The challenge, though, is that as clients push firms to “know our business deeply” and “be our collaborative partners,” the firms could wind up being dominated by these clients, making it harder to strike that balance of general market knowledge and specific client insight. I’ve heard law firms’ managing partners talk about the need to scale back the ranks of their clients and focus most on the highest-value, top-performing ones — push the “80% of our work from 20% of our clients” ratios up towards 90 and 10. That has undeniable benefits for the firm. But it also has costs. And clients have to appreciate that they can’t ask the same law firm to be both “our trusted collaborative partner” and “our eyes and ears out there in the industry.”

Good collaborations can get everyone’s attention.

Now, look: None of the foregoing commentary, in this or its companion post, is intended to disparage and reduce collaboration efforts between law department and law firms. I think these efforts are great, for the same reason I think friendships are better than acquaintances and marriage is better than hooking up. Better and deeper human relationships are always a worthwhile goal, and the same general logic applies to business entities that can develop strong bonds of mutual reliability and success. The commercial legal market would be a significantly better place if more companies followed Microsoft’s lead to establish and maintain strong, demanding, grown-up relationships with a select number of outside legal providers.

But the market would also be a significantly different place if that came to pass. The notion of massive full-service law firms teeming with myriad disparate clients would start to give way as a new model firm emerges — one that specializes not in a practice area or even an industry sector, but in the strategic enablement and advancement of a single client’s (or a handful of clients’) goals.

In that scenario, the supply side of the market might coalesce into one group of providers that delivers a wide range of services to an extremely small handful of clients, and another group that delivers a very narrow and specific type of legal service to a wide range of clients (and I can assure you that law companies and ALSPs are very interested in that kind of approach).

I guess what I’m saying, to bring this special two-part episode back to its beginnings, is that partnership and its benefits are worthy goals of collaboration, but remember: Partnership will change you. Both law departments and law firms need to be aware of what true collaboration between the buyers and sellers of legal services would look like, what it would require from both participants — and what it might do to the legal market as we’ve always known it. The full-service, multi-client law firm is a fixture in our collective imagination of this industry, and it has a lot of merit. But it is, I believe, inherently resistant to collaborative partnerships with clients. In a market dominated by that kind of supplier, client-firm collaboration will be the exception, not the rule.

But if we strive to make such partnerships the rule rather than the exception — or if we see the emergence and growth of new providers that are only too happy to devote themselves blissfully to deep collaboration with their clients — than we could start to reimagine the legal market in some very interesting, and potentially transformative, ways.

The reality of collaboration

So I was recently asked to write a paper about ways in which law firms and corporate law departments could collaborate more. My thesis is going to be: Are you sure that’s what you want? Are you certain you know what you’re asking for?

Most of what’s been written on collaboration in the legal industry simply deploys the word as if we all agree on its meaning, and in any event, usually addresses internal collaboration within law firms, or supply-side collaboration between firms and other service providers. Examples of true collaboration between a legal buyer and legal seller are rare, and I think there’s a reason for that.

When clients yearn wistfully for greater collaboration with their outside counsel, they usually identify their goal as building a partnership with the law firm. But “partnership” implies a deep, long-term relationship between client and firm, one that reaches beyond merely tactical matters to address and fulfill fundamental client needs. The word “partner” suggests (as it does when used within a law firm) a high degree of trust and commitment, a sense of shared goals and mutual dependence. Implicit in this desire for partnership is an assumption that the standard firm-client relationship is coldly transactional, and that a collaborative relationship could deliver more value.

Note: Dysfunctional partnerships are seldom hilariously wacky.

But value for whom? If collaboration really is about partnership, then that enhanced value must be experienced by both participants. So our first question is whether the parties to the collaboration share the same understanding of “value.” Because if your partner in collaboration is not generating any value for itself, then you’re not really collaborating — you’re just shaking down your supplier (or your customer, as the case may be) for a better deal. 

From the client perspective, enhanced value in legal services might include the following factors and be measured by the following metrics:

  • Lower outside legal spend → saves money
  • More predictable outside legal spend → improves budgeting
  • Preventative risk identification and management → less litigation
  • More productive internal legal operations → increases efficiency
  • Fewer points of contact with a law firm → increases ease and consistency of service
  • Greater diversity within law firm personnel → fulfills corporate values
  • Greater alignment of value of task with value of provider → saves money
  • Free CLE provided by the law firm → enhances in-house skills

There are certainly other examples, up to and including the grand prize: a demonstrable contribution by the legal function to the company’s profitability, market share, or brand strength. These are all ways in which a corporate law department would consider its value to have been enhanced by a deeper relationship with a law firm.

Now, here’s a list of factors with which a potential law firm collaborator would likely define and measure enhanced value:

  • More money from clients → more profits for partners

I’m not trying to be cynical here. But I’ve dealt with a lot of law firms in my time, and the overriding value in the typical law firm really can be expressed in that one line. And the problem is that very few of the ways in which corporate law departments define “value” include giving law firms more money.

So we have a built-in disconnect. When a client comes to a law firm and talks about collaboration and partnership, what the law firm invariably thinks is, “This is a great opportunity for us to grow our business with this client.” Then, when the client starts pulling out some of these examples, there’s a startled silence as the firm thinks, “Oh. That’s what they mean by collaboration.” And the whole endeavour is kneecapped from the start.

The problem is that law firms aren’t normal businesses, and they’re not motivated by the kinds of things that drive normal businesses. Greater client collaboration might very well give the firm steady work in the coming years and first choice of high-end files and a more competitive position within the client’s industry, and so forth. But unless the whole effort increases individual partners’ profits this year, or at worst next, the firm will be cool to the idea. And if the collaborative effort actually reduces partners’ profits this year or next year, then the firm is not going to get on board this train.

To date, there’s really been only one type of collaborative initiative that has seemed to satisfy both client and firm objectives, and that’s convergence: The client narrows its panel of outside law firms, either increasing the amount of work the surviving firms obtain or, at worst, preserving the same amount of work in what otherwise would be a loss of the client and a revenue bloodbath for the firm.

But as research increasingly shows, convergence has not delivered the value that clients had hoped to achieve.

  • AdvanceLaw and its GC Thought Leaders Experiment has found that “clients with panels do not see meaningful differences in outside counsel performance for their matters (on quality, cost-efficiency, responsiveness, solutions focus, and the like) as compared to clients without panels.”
  • Casey Flaherty has written that he’s “long believed most convergence initiatives waste considerable time for limited benefit … convergence remains an excellent opportunity to leverage volume to reduce unit cost. Unfortunately, that is about as far as most corporate law departments take it.”
  • Dennis Kennedy recently argued that “convergence can, perhaps paradoxically, act as an innovation destroyer if not properly tended…. It’s hard work that requires constant attention. It’s easy to see how these programs can actually destroy innovation.”

Now, what AdvanceLaw (in a companion article), Casey, and Dennis all make clear is that convergence can deliver real benefits to the client and firm alike — but it requires careful planning, clear goals, frequent contact, and consistent follow-up, especially on the client’s part. These efforts all exact costs, from the client and the firm alike. So in many cases, it will be only very large law departments, and/or those with especially dedicated leadership, that can assume and manage those costs.

For an example of how to do convergence right — and of the effort required to achieve that goal — check out Microsoft’s Trusted Advisor Forum:

Microsoft asked its top external legal service providers to share two innovation stories at a Trusted Advisor Forum at its Redmond campus. In brief:

  • Tell us one way have you have gotten better in the last year
  • Tell us one way you will get better in the next year

The initiative flows directly from General Counsel Dev Stahlkopf. A few weeks after her elevation in April 2018, Stahlkopf set expectations with outside counsel during a relationship-partner lunch at Microsoft’s Corporate, External, and Legal Affairs Global Summit. One of her concluding slides read, “Our Ask of You: Partner with us to continuously improve and innovate.”

Yes, I’m channeling the ’70s today.

Read this essential analysis of the Forum by Jae Um at the Legal Evolution blog and you’ll appreciate the extensive thought, sophisticated strategy, and significant effort that Microsoft undertook to organize and execute this event. “Microsoft is doing something unusual here: sustained and intentional action underpinned by very rigorous thinking,” Jae concludes. “And the entire team at Microsoft is brave enough to do this with as much transparency and candour as practically possible.” But she also notes that many firms invited to the Forum struggled to meet Microsoft’s two requests (which is okay), while some firms simply declined the invitation to participate altogether (which is not).

And that’s the thing about collaboration: You have to show up to the relationship every day, and you have to work really hard at it, with goodwill and positivity, to get it right. Like a friendship or a marriage, each side has to take seriously not just the commitment to enter a special relationship, but also the hard work required to sustain and grow it.

That’s the reality of collaboration between clients and law firms — but neither clients nor firms might fully appreciate the costs of that reality. More on that issue in the companion post to this one, “The price of collaboration.”