Contagion

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Posted in: Access, Governance

Back in July 2018, I noticed that the State Bar of California had created a task force to consider whether regulatory reforms could improve access to justice in that state. I wrote about this development with what you might call jaded optimism:

The smart money, the obvious prediction, says this task force will come to nothing, that the forces of intransigence will chalk up another win by making the right arrangements with the right power brokers, or simply by stonewalling until the reformers tire themselves out. … 

But here’s the thing: Eventually, change does arrive, often when you least expect it. At some point down the road, power in the legal market will shift away from lawyers just enough to enable new expectations, assumptions, and rules for how legal services are created and delivered….

There will be a moment when that shift begins. This might even be it.

A little over a year later, an extraordinary series of events, unprecedented in the modern legal profession, began to unfold. You might be aware of some or even most of them, but it’s not until you see them arranged chronologically that you fully appreciate just what has happened in the American (and Canadian) legal profession in a shockingly brief period of time. With quotes from the linked reports, here’s the chronology:

●  August 28, 2019: “The Utah Supreme Court … has unanimously approved a work group report that lays out recommendations for narrowing the access to justice gap by reimagining lawyer regulation. … The work group outlined a new structure for regulating legal services by: 1) loosening the ethical restrictions on lawyers in the Rules of Professional Conduct and 2) creating new regulations for companies and others providing some legal services. The report recommends amendments to Rules restricting lawyer advertising, as well as Rules prohibiting lawyers from fee sharing with non-lawyers or allowing non-lawyers to have ownership or investment interest in law firms.”

● October 8, 2019: “The Chicago Bar Association and the Chicago Bar Foundation launched a joint task force to respond to the market failure in consumer legal services. … [The task force will have] five working committees, which include areas such as ‘Modernizing Lawyer Referral & Law Firm Models,’ ‘Optimizing the Use of Other Legal Professionals’ and ‘Partnering with Online Legal Service Providers and Other Businesses and Technology Entities.’ … A public comment period is expected during the summer of 2020, with a goal for submitting recommendations to the Illinois Supreme Court in September 2020.”

● November 6, 2019: “The Florida Supreme Court has asked The Florida Bar to undertake a study of the rules governing the practice of law in order to determine whether revisions are needed to improve the delivery of legal services within that state. The Supreme Court directed the committee to look into the topics of lawyer advertising, referral fees, fee splitting, entity regulation, regulation of online service providers, and regulation of non-lawyer providers of limited legal services. … The letter asked that the study group complete its work and submit a final report by July 1, 2021.” (More details here.)

● January 1: 2020: Pursuant to recommendations of the Legal Services Task Team created by the Law Society of Saskatchewan and the provincial Ministry of Justice,  “amendments to The Legal Profession Act, 1990 include a clearer definition of the practice of law. The Task Team also recommended expanding the list of exemptions to the unauthorized practice provisions and creating limited licences that may be granted by the Law Society to non-lawyer legal service providers on a case-by-case basis.” (Also on January 1, the Law Society of Saskatchewan launched a proactive entity regulation regime.)

● January 9, 2020: “The creation of [Connecticut‘s] State of the Legal Profession Task Force was driven by the access-to-justice gap, as well as the challenges lawyers face in the current system. … Various task force subcommittees will examine alternative business models, how technology can be leveraged to advance the legal profession, and ethics rules. …The task force is aiming to produce a report by 2021.”

● January 20, 2020: “The Law Society of British Columbia‘s … futures task force has released a consultation paper and … is seeking input from lawyers, notaries, paralegals, the judiciary, organizations and the public to assist in its consideration of what legal practice will look like over the next decade, in particular the factors and forces that are likely to influence the delivery of legal services and the regulation of the legal profession.” The deadline for public comments was Feb. 29, 2020.

● January 23, 2020: “[The Global Legal Practice Committee of the ] D.C. Bar announced it will study evolving legal service delivery models in the U.S. and abroad, including non-lawyer ownership of law firms. … The possibility of loosened law firm ownership rules in the nation’s capital could be of special interest to the Big Four accountancies.” The deadline for public comments was March 9, 2020.

● January 30, 2020: “The New Mexico Supreme Court endorsed proposals to expand civil legal services in the state, particularly to lower- and middle-income residents and those living in rural areas.” The report recommends the creation of a Court Navigators program and further study of the licensing of non-lawyers to perform limited legal work.

● January 31, 2020: “A petition to the Arizona Supreme Court from Dave Byers, a member of the Arizona Task Force on the Delivery of Legal Services, proposes ‘substantial’ rule changes led by the proposed elimination of a rule forbidding non-lawyer ownership stakes in law firms and legal services operations. … The proposed rule changes will be considered at a rules conference in August. That will be preceded by a public comment process.”

● February 5, 2020: “…  and whereas experimentation with different approaches to regulatory innovation provides a measured approach to identify and analyze the best solutions to meeting the public’s growing legal needs, the [United States] Conference of Chief Justices urges its members to consider regulatory innovations that have the potential to improve the accessibility, affordability and quality of civil legal services, while ensuring necessary and appropriate protections for the public.”

● February 7, 2020: “The Illinois Attorney Registration and Disciplinary Commission (ARDC) has published for public comment an Intermediary Connecting Services Proposal [that] would regulate lawyers’ participation in for-profit matching services and regulate the services themselves. … The proposal would regulate lawyers’ participation in for-profit matching services and regulate the services themselves.” Comments are open until April 3, 2020.

That’s one way to put it.

● February 16, 2020: “The Association of Professional Responsibility Lawyers … in an access-to-justice report [that] could be released as soon as August … likely will make concrete suggestions, including rule changes, to spur states to increase access to legal services. This could include suggested changes to Rule 5.4 to open law firm ownership to non-lawyers, alterations that could redefine who can practice law, and reforms to make cross-state border representations easier. APRL is relatively small when compared with the ABA, but its recommendations in issues like lawyer advertising have carried weight.”

● February 17, 2020: “An overwhelming majority of the ABA House of Delegates agreed to approve Resolution 115, which encourages state regulators and state bar associations to explore regulatory innovations that could improve access to legal services, and to collect data on those programs. But the resolution also notes that it should not be construed as recommending any changes to the ABA Model Rules of Professional Conduct, including Rule 5.4, as they relate to non-lawyer ownership of law firms, the unauthorized practice of law, or any other subjects.”

● February 25, 2020: “The [California State Bar] Task Force on Access Through Innovation of Legal Services approved eight recommendations that will go to the bar’s board of trustees next month. The task force stopped short of calling for immediate changes that would allow non-lawyers to take an ownership stake in law firms. The group also opted for only a modest expansion of fee-sharing. Instead, the 22 members pinned many of their hopes for reform on the creation of a trial program for entrepreneurs known as the ‘regulatory sandbox.’ … The recommendations are scheduled to go to the bar’s board of trustees March 12.”

● March 9, 2020: “The Manitoba government is taking the first step to making legal services more affordable and accessible. … [New] legislation would let the Law Society of Manitoba designate and regulate another category of legal service providers, which would be called a limited practitioner. … The changes were suggested by the Law Society of Manitoba after a review found there were legal needs that weren’t being met and there was a need for more affordable alternatives for legal advice, information, and representation.”

● March 31, 2020: The State Bar of North Carolina has created an Issues Subcommittee to Study Regulatory Change. The Subcommittee will “examine the impacts that lawyer regulations have on access to justice and national reform trends.” The Subcommittee will hold its first meeting on March 31, 2020.

It will be almost exactly eight months between the approval of Utah’s Task Force Report and the first meeting of the North Carolina Subcommittee. By end of day on March 31, ten American jurisdictions, three Canadian provinces, the American Bar Association, and the US Conference of Chief Justices will have either launched task forces to examine legal regulation reform or have taken significant steps towards encouraging such reforms or actually implementing them.

Three brief observations.

1. It would be not just clichéd to call this series of events “a domino effect,” but also misleading. Many of these reform initiatives were conceived and carried out contemporaneously, with some awareness but only limited knowledge of what was happening in other jurisdictions. There is an element of synchronicity here: This wasn’t so much a series of cause-and-effect occurrences as a tectonic shift in the subterranean landscape of the law, manifested in several locations in less than a year.

The reality of a full-scale access to justice crisis seems to finally be registering with those who lead and regulate the legal profession, and these 15 separate reform efforts are the first results. All across the North American legal profession, many people appear to have had the same thought at about the same time: “This can’t go on.”

2. These efforts are not uncontested. State Bar presidents from New York, New Jersey, Ohio, Pennsylvania, Delaware, and Illinois fought the original ABA Resolution 115 and required the insertion of clauses protecting Rule 5.4 in order to win their support. Resistance by lawyers to regulatory reform efforts in California seems to have led that state’s Task Force to slightly downsize the scope of its recommendations. Hardly surprising, though no less disheartening.

But it’s important to recognize that this opposition has not yet thwarted or halted the reform efforts. As I told Law360, the amendment to the ABA resolution did not detract from the resolution’s scope or impact, but only clarified the limits of how the resolution should be interpreted. Reform opponents are playing a “prevent defence” rather than mounting any offence of their own, trying to slow the train as it leaves the station or preserve old exclusivities for a little while longer. Re-regulation has the momentum, and those on both sides of the issue seem to understand that.

3. The title of this post is obviously provocative, standing as we are in the rising shadow of a true crisis of contagion. But I chose the title deliberately, and not just because the spread of legal regulation reform across multiple jurisdictions feels infectious.

It seems likely that our society is about to enter a period of social and economic upheaval. If everything breaks right, it will be a brief, containable wave of sickness, followed by a short-term recession — a lot of extra hand-washing, cancelled trips and other inconveniences, but nonetheless an experience that passes like a summer storm. Or it could be something much more serious.

The further down that spectrum we’re taken by the COVID-19 crisis, the more transformational will be its effects on our economy, our governance, and maybe most importantly, our social contract with each other. Part of that social contract is that the elites who run things in our society are given license to do so on the condition they run things for everyone’s benefit. There is a lot — and I mean, a lot — of doubt in many people’s minds about the validity of that deal. When 39% of Americans would have trouble covering an unexpected $400 expense (and 12% couldn’t do it at all), how could they possibly manage a health emergency? Or a legal one?

So it might not be surprising to find, when we emerge from this coming crisis, that the terms of the relationship between the legal profession and wider society have begun to change. Even if the crisis is contained and short-lived, existing frustrations with the broken legal system will be exacerbated and amplified, and regulatory reform is likely to come swifter and more thoroughly.

But if the crisis is neither contained nor short-lived, then there might even be a Great Re-Ordering ahead of us, a turning point at which anger over a broken system turns into action, and deference to elites gives way to hostility, protest, and a readiness to rewrite that social contract.

So these legal regulation reforms might not be outliers at all; they might simply be preparing the legal profession for our new normal. Because as we’ve witnessed over the past eight months, radical new ideas can be contagious.

Law firm culture and the “war for talent”

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Posted in: Strategy, Talent

This is a moment of opportunity for law firms. As systems and technology transform the engines of legal services and a new legal economy emerges, firms have a rare chance to strengthen their competitive positions and grow their market share through innovation and investment for the future.

A few firms are doing exactly that; but most are not. And what’s weighing down many of those firms is a cultural millstone that we don’t talk about enough. It’s not the tired excuse of “our lawyers are too risk-averse.” It’s something more formidable: a toxic mix of owner complacency and employee intimidation. It’s a culture of timidity.

At these firms, serious investment in meaningful innovation doesn’t happen, partly because the partners won’t sacrifice individual profits and comfort for the firm’s long-term strategic advantage — but also because nobody else in the firm is willing or able to confront this unpleasant truth and challenge the firm’s owners to do better. At exactly the moment when bold leadership would pay huge dividends, nervous silence predominates. The partners are afraid of risk and sacrifice, and everyone else is afraid of the partners.

A useful illustration of the culture of timidity in many law firms is the so-called “war for talent,” which apparently is still going on about 20 years after it first broke out. Law firms love to talk about how they’re “winning the talent war” by acquiring this lateral or appointing that director or paying first-year associates a little more than the firm down the street.

The thing about wars is that they’re expensive and destructive, even in the business world, and you don’t get involved in one if you can avoid it. But if you are going to get involved in one, you better have a plan for how to win it and an ironclad resolve to pay the costs you will incur.

As far as I can tell, no law firm has tried to actually start, or win, a war for talent. No law firm has been willing to make the sacrifices necessary. For the benefit of any law firm that might like to try someday — and more importantly, to illustrate how a culture of timidity hobbles the effort — here’s a suggested blueprint. A few caveats:

  • I’m focusing here on new legal talent, the kind law firms (often) hire straight out of law school and (occasionally) develop into partners, but the principles here can apply to acquiring more experienced talent too.
  • I’m discussing this in the context of large law firms, but the principles absolutely apply to midsize or regional firms, with appropriate changes to elements like quantum of compensation and range of law schools.
  • I’m restricting my definition of “legal talent” to just lawyers, which is unfair, but designing a full-spectrum legal talent strategy is beyond this blog post. Most of the reasoning below applies to acquiring all legal value providers, however.

1. Hire for your firm, not anyone else’s. The purpose of a talent strategy is to help implement a pre-existing firm strategy. Consult your firm strategy (if you have one) and ask yourself: What business are we in? Who are we serving, what do they need from us, and what is our differentiated value proposition to them? You are hiring people for that firm, and no other. Law firms that hire “the best and the brightest” (however they define that nonsensical term) end up with a generic pool of talented lawyers who could work anywhere. You want lawyers who will do better at your firm than they would anywhere else. But getting ruthless clarity about your firm’s nature and purpose can be a long, brutal slog through your partners’ selfish priorities and comfort zones. Effective strategic planning starts with honest self-assessment, and that is not most partners’ strong suit.

2. Hire for tomorrow, not yesterday. Law firms routinely make the mistake of looking for new lawyers who’ll “fit their culture.” That’s a problem — not only because “culture” invariably justifies and perpetuates the exclusion of women and visible minorities from the firm’s ranks and power structures, but also because your firm’s culture is old and your incoming talent is young. You’re not just hiring for 2020 — you’re also hiring for 2025, 2035, and 2050. You need lawyers who won’t “fit” your culture so much as make your culture new and better. You’re hiring leaders for a diverse future, not worker bees for a monochromatic past. But your partners, especially the older white guys, want to hire the candidates they’re “comfortable” with, and you know what that means. They need to be persuaded otherwise, or you’ll wind up building a law firm ready for all the challenges of 1998.

3. Cast the widest net for new talent. Most firms hire from a small group of favourite or “safe” law schools every year. It’s easy, convenient, and uncontroversial, which means all the other firms are doing it too. Look everywhere for talent. Your very specific needs will be hard to fill, so broadcast them to every school in the country through social media and targeted ad placements. Visit more “lower-ranked” schools in person and meet their brilliant, hard-working, creative, empathetic students. Your rivals are ignoring these rich veins of talent, but you’re smarter than they are and you’re willing to spend more than they do. But first you’ll need to persuade the partnership to increase your recruiting budget, and to consider schools other than their alma maters or those most highly ranked by some penny-ante online magazine.

4(a). Pay twice the going rate for new talent. A New York firm raises its starting associate salary to $190,000, and the rest of the industry either meekly follows along or clutches its pearls in dismay. That’s not a “war for talent,” that’s a PR exercise. You want to win the war for talent in New York? Pay new associates $350,000 a year. Or pay $240K in Chicago, $190K in San Diego, $140K in Halifax, whatever. Publicize it far and wide, make sure the whole industry (and every law student) knows that your firm crushes everyone else in this category. Or, if you simply can’t persuade the partners to ramp up associate salaries that much, try this cheaper alternative:

4(b). Take over your associates’ student loan payments. Pay the top-ranked salary as well as all your new associates’ loan instalments, and keep paying them until the associate becomes an equity partner or leaves the firm. Nothing preoccupies new lawyers more than their debt loads, so take this burden off their minds; you’ll be inundated with applications. Either of these tactics would vastly increase the size of the talent pool from which you can draw. It would also blow partners’ gaskets, not just for the hit to their profits but also for the exposure they’d feel from adopting such a bold tactic. Most firms that have made it this far into the list would falter at this step. For those that soldier on, we’ll add another outrage:

5. Don’t bill your new associates’ work. I campaigned for the revenue-neutral associate a couple of years ago, and you can read all my arguments for it there. But the upshot is that even your hand-picked high-paid new associates don’t have the skills to produce work of value that clients want to pay for, and forcing them to do so creates enormous negative pressure. “But, but,” the partners sputter, “Who will pay for the associates if we don’t bill their time?” Here’s a radical answer: The owners of the business can pay employees out of their own profits, like in the rest of the world. Another hard truth for the partners, another differentiating factor for candidates. And here’s one more.

6. Immerse new lawyers in a world-class training program. Take a group of brilliant, diverse, highly motivated, well-paid new lawyers, and instead of pushing them to bill thousands of low-quality hours, spend their first two years on the job equipping them with a suite of 21st-century legal business knowledge and skills. Which ones? Customer service, process improvement, project management, human-centred design, cultural competency, financial literacy, artificial intelligence, knowledge management, industry intel, time management, I could go on and on. Embed them on cases, in transactions, and especially on-site with clients, as observers and apprentices. Can you imagine what you’ll have on your hands at the end? What a contrast they’ll present to the exhausted, disheartened second-year cohort at every other firm?

All of the foregoing can be yours — probably yours alone, because how many firms will copy you? And to get it, all you have to do is pay the price for it. But this strategy would cost something even more valuable than money: It would cost political capital.

A senior staff member who seriously brought this proposal to the partnership at most law firms might not have a job this time next year. A senior partner who tried to sell their colleagues on it would suddenly stop getting invitations for dinner or golf. Breaking the culture of timidity in law firms, speaking truth to power, can come at a high price.

The path to winning the legal talent war is simple. But it’s not easy, and it’s not supposed to be. If it was easy, everyone would do it.

Will a law firm’s owners yield a fraction of their profits to help make their firm the undisputed winner of the legal talent wars, year after year? Will a firm’s leaders gamble their status, risk their relationships, or spend their political capital to make it happen? In the great majority of firms, maybe 99 out of 100, the culture of timidity ensures that these questions won’t even be asked, let alone answered.

So how about your firm? Are you one of the 99? Or are you the 100th out of 100, where someone was brave enough to raise this and the partnership was bold enough to try it? I’m not saying every law firm should mount this talent strategy — frankly, many firms shouldn’t. But every law firm should be a place where it could be openly considered, where employees feel empowered to raise difficult issues and owners are mature enough and secure enough to be told things they’d prefer not to hear.

Because of course, this isn’t just about the “talent war.” This is about everything coming our way in the legal economy over the next decade or more. Every law firm is going to experience the same storms, go through the same crises, and glimpse the same opportunities. The firms that come out of this gauntlet leading the pack will be those that found their courage, empowered the right leadership, galvanized the partners, accepted the sacrifices, and committed to act. They calculated the steep price of starting and winning a war, as well as the risks of breaking the code of silence around that price — and they chose to pay it nonetheless.

There’s no other requirement. There are no other tests. Is this your firm? Are you ready?

Reflections from a parallel universe

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Posted in: Innovation

With the publication of Jack Newton‘s terrific new book The Client-Centered Law Firm: How to Succeed in an Experience-Driven World (glowingly reviewed by Bob Ambrogi at Above The Law), I thought I’d share with you an excerpt from the book’s foreword, which Jack graciously invited me to write. Then go order and read a copy of The Client-Centered Law Firm for some great insights into where the legal marketplace is going and what lawyers can do to keep pace with it.

= = = = = = =

I’ve recently returned from a trip to a parallel universe, where an alternative timeline of history has unfolded. It was a fascinating place, and I want to share with you some of what I saw there.

  • I saw the enormously profitable entertainment giant Blockbuster, which watched the internet develop and understood its potential as a movie distribution engine. Blockbuster used its vast collection of films and its data about customers’ buying habits to become the world’s leading source of movies online, and now even produces its own films. “We’re not in the business of renting videocassettes,” Blockbuster’s leaders told themselves. “We’re in the business of helping people enjoy the movie they want to see tonight.”
  • I saw the great photography multinational Kodak, whose researchers were among the first to develop the technology behind digital cameras — but rather than dismissing their researchers’ work, Kodak’s leaders saw an opportunity to develop an entirely new line of products. The company eventually invented digital photo technology that it now licenses to Microsoft’s popular “mPhone” at an enormous profit. “We’re not in the business of selling film,” Kodak’s leaders realized. “We’re in the business of helping people take pictures.”
  • And I saw the most powerful and valuable company in the world: Sears, the global online shopping colossus. Leveraging its long history as a source of convenient purchasing — from its catalogues to its distribution centres — Sears understood that the internet was the most convenient possible way for people to shop, and it invested heavily and successfully in the technology to make it happen. “We’re not in the business of running department stores,” Sears’s leaders said. “We’re in the business of helping people easily get the products and services they need.”

In our own universe, of course, things didn’t turn out quite this way. These longstanding market incumbents missed the opportunity presented by new technology to rethink just what business they were really in, and to re-design their companies in ways that could enable them to use this technology for greater growth and higher profits.

But this alternative timeline reminds us that established market leaders need not inevitably lose out to upstarts and challengers from the outside. Not only is it possible for incumbents to reap the rewards of technological changes, it is incumbents who are best positioned to do so. They already have the market dominance, the financial reserves, the brand power, and the proven track record of success. All they need is to be willing to think a little differently about themselves and about their customers’ actual needs.

This is exactly where the legal profession finds itself as we open the third decade of the 21st century. It is now beyond all doubt that technology has changed and will continue to change the conditions under which legal services are bought and sold. There is no going back to the way things used to be. And we shouldn’t want to go back, because we can now serve our clients better and faster and less expensively and with a higher degree of quality than we could before. We’re at the dawn of a golden age of legal services.

Lawyers can lead the way into that new age — if we are willing, if we have the courage and the foresight, to understand that technology and change and upheaval are not threats, they’re opportunities. Opportunities for us to give more help and better advice to more people and more businesses, faster and more effectively and more profitably than in the past. Opportunities to work fewer hours, connect more deeply with clients, run better legal businesses, and lead happier personal lives.

Are you in the business of billing hours? Are you in the business of filling out forms and signing documents and attending meetings? Are you in the business of measuring out your life in six-minute increments?

If you are the lawyer I think you are, then the answer is no. You are in the business of helping people solve problems, of putting lives back on track, of helping businesses grow and prosper. But it’s possible that your own law business has started to chase and measure and reward the wrong things — that it has forgotten its intended purpose, what and who it’s actually for. Because the purpose of your law business is your clients.

It’s time for the legal profession to develop client-centred law practices. It’s time for us to rethink and redesign our law businesses. It’s time for you to write your own alternative history.

What will lawyers do now?

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Posted in: Purpose

Modern Law Magazine in the UK asked me to submit an article for their January 2020 issue, which featured a host of luminaries discussing the near and mid-term future of the legal marketplace. You can find the current issue here, with my article (“What will lawyers do now?”) starting on page 7.  Below you’ll find an excerpt from the piece, but I’d encourage you to read the full issue online and in particular, the terrific contributions from Mark Cohen, Jane Malcolm, Stephen Mayson, Helen Phillips, Richard Susskind, and Joanna Swash, among others.

The rise of a new legal economy over the next several years will require a thorough review of all our assumptions about what legal work consists of and, ultimately, what purpose it serves. Everyone in legal services, buyers and sellers alike, will need to rethink their possibilities, interests, and opportunities.

For the legal profession, one question above all others demands our attention: In the new legal economy, given the rise of “I don’t need a lawyer for this,” what will lawyers do?

Answering that question will, or should, preoccupy the leaders of the legal profession over the course of this coming decade. My small contribution to that effort would be to suggest the following four categories of responses, which can be arranged in the consultant’s favourite diagram, the four-quadrant chart.

What will lawyers do in the new legal economy? One of at least four things:

1. Retreat to higher ground. The rising waters of commoditization and systematization will submerge many of the low-lying sectors of activity that have traditionally supported legal careers. But some lawyers will be able to escape the surging tide by virtue of their specialities.

There will be fewer trial lawyers in future, as I’ve argued; but there will still be some, and they will be the most exceptional advocates practising at the highest levels. Clients will also still need empathetic advisors and well-informed counselors, even more than they do today, and some lawyers will develop these skills to their utmost. A few genuine experts, possessing unparalleled knowledge and insight that cannot be adequately reflected in a database entry, will also thrive.

The coming changes to our legal ecosystem will not render all species of lawyer extinct — even in the distant future, there will be lawyers performing services and helping clients in ways that will be familiar to those of us with roots in the 20th century.

2. Support the new systems. Many lawyers who find that systems and software are performing tasks for which they once billed hours will decide not to rage against the machine, but instead to support the machine, maintaining and further developing its effectiveness.

After all, someone will still have to understand how the law works, in order to translate statutory guidance and common-law reasoning into lines of code and algorithms. And someone will have to create the risk-monitoring mechanisms, design the workplace standards, and carry out the data analysis in the examples cited at the start of this article. These are lawyer tasks, and lawyers will be needed to perform them.

The development of artificial general intelligence is a very long distance away, and most AI developed in the meantime will augment human reasoning and ingenuity, not replace it. The machines still need us more than we need the machines.

3. Address unserved markets. It is a truth universally acknowledged, although seldom addressed to any practical degree, that only a small fraction of the legal problems and opportunities that people and businesses face ever make their way to a lawyer. That will change.

All the new legal systems and software coming our way sound wonderful — but not everyone will be able to afford them and access them. While rich people and large in-house law departments will experience a Golden Age of Law, the vast majority of individuals and businesses will be left to struggle through increasingly underfunded government programs and antiquated courts. These people will be in truly dire need of help — and some lawyers will respond, sacrificing higher incomes and more prestigious postings in order to serve the greater public good.

Providing community-based legal aid, building street-level systems to help people get the benefits they’re entitled to receive, crowdfunding the resources to fight for just causes — those are just some of the tasks lawyers will render in the early days of the new economy. As time goes on, more will emerge. And that bring us to:

4. Create new opportunities. If the only answers to the question, “What will lawyers do?” are “Retrench,” “Assimilate,” and “Help the poor,” then the future of the legal profession will be significantly less interesting than its past. But I’m willing to bet on lawyers, and on our creativity and passion, to do better than that.

In a legal economy premised on fewer problems, higher standards, faster performance, and integrated solutions, lawyers will be challenged to come up with new value propositions, new ways of helping people live better lives with fewer complications. What will they come up with? Maybe a “law school” that educates individuals on their legal rights and risks? An affordable online “legal utility” that replaces arcane legal information with clickable solutions? An AI-guided digital resource to replace linear and analog advice paths? A travelling dispute resolution roadshow with pop-up locations in marginalized communities?

The unexpected gift to lawyers of the new legal economy is this: Losing our old tasks will liberate us to find new purpose. Lawyers’ future will be limited only by our imagination, ambition, and compassion. We can forge the legal profession we truly want, not the crumbling legacy institution that was bequeathed to us.

What will lawyers do in the new legal economy? It’s really up to us — which means, of course, that it’s really up to you.

Starting your legal career

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Posted in: Careers, Law School

I received an email last week from a third-year student at a Canadian law school asking for advice. He’s set to graduate next spring, but like a growing number of other soon-to-be or recent law grads, he hasn’t been able to line up an articling position. (For those unfamiliar, articling is a one-year apprenticeship period that a law graduate must complete before he or she can be called to the Bar.) He struggled in his first year of law school, and his grades reflect that; but even though he’s adjusted since then, he can’t get potential employers to look past his first set of marks, and isn’t sure what to do now.

This is not a post about all the things wrong with the articling system in Canada. There are enough news items out there with terms such as “articling crisis,” “crisis of values,” “what’s wrong with articling,” “the abolition of articling,” and “the end of articling,” that you can safely conclude the system is not in great shape. For a definitive data-driven look at these problems, especially regarding the degree to which many people’s articling experiences are scarred by sexual harassment and racial discrimination, this report from the Law Society of Alberta is a must-read.

But whatever law societies do or don’t do about articling someday, my correspondent’s concerns were far more immediate. And there are countless law school graduates in his position in many countries — unable to get a job as a first-year associate or even in a “law-related” role, terrified about imminent loan repayments they have no way to meet.

Unfortunately, I didn’t have any short-term solutions to offer my correspondent, nor did I know enough people in his jurisdiction to connect him with a network of potential employers or mentors. All I could come up with were some longer-range, bigger-picture suggestions — not what he needed today, which I regretted, but maybe something he could use shortly down the road. Having written them down, I thought they might have some value to other people in his position, and so with his permission, I’ve adapted (and anonymized) my response and provided it below:

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You mentioned that you have “a story to tell” potential employers, and suggested that if employers were aware of that story, it might enable them to look past the first-year marks and consider you as a candidate “whole and entire,” someone whose first-year grades don’t tell the whole story. I think that’s a great approach, and if you can fully develop that narrative, you could potentially turn this into an opportunity to stand out from the mass of other job-seekers. Here’s what I mean.

Most law students take a conventional and conservative approach to the job-search process. They participate in on-campus interviews, lead with their grades and CV, and try to convey a sense of being the best candidate for this particular interviewer. In turn, employers (or at least, the people they choose to represent them in the recruiting and hiring process) fall into the habit of expecting these kinds of pitches. So it becomes a kind of dance, a formulaic process by which A tries to interest B and B expects A to try to interest it through a limited number of established criteria.

It’s understandable that the process has evolved this way, because both law students and law firms are conservative, risk-averse entities. What student wants to take a chance at missing out on a job because they were too unconventional? Equally, what recruitment person wants to risk the wrath of the partners by recommending someone unconventional who might not work out? Better for all concerned to go with the “tried and true” signals and markers. And that’s how we end up with the mess of a system we have.

Your first-year grades are making it difficult for you to succeed in this conventional process, because they make it easy for the recruiter to glance at them and strike your application off their list. (Speaking as someone who’s hired many people, one of my goals was to find quick and easy ways to reduce the large pile of applications.) So if, in fact, the conventional process is not going to serve you, it might make sense to abandon it in favour of something less conventional, more tailored to you as an individual.

So I think the first thing you might want to do is to change your focus from “How do I get a job?” to “How do I want to begin my legal career?” I readily admit: That’s a tough shift to make, with graduation and debt looming, and it might well be that your financial circumstances won’t allow you to deviate from the norm in this respect.

But if this shift is possible, I’d encourage it, because I think that change alone is going to set you apart, in terms of your capacity to establish yourself as a successful lawyer, among the members of your graduating class. Most of your classmates have zeroed in on that “first job,” both because it’s the entry gate into the profession and because a successful first year in a law firm holds out the promise of ongoing employment. (Not to mention the whole debt payment thing.) But they’re probably not thinking much beyond that. Lawyers and law students are box-tickers, and “getting a job after graduation” is just the next box to tick.

But here’s the thing: Articling, or first-year associateship, is just one year. Your legal career, should you choose to spend most of your working life in this sector, will stretch to 30 or 40 years. I’d encourage you to think about that career: What do you think you might like to do with it, at least in the beginning? What areas of law, or what types of practice, seem best fitted to you at the moment? You don’t need to (and couldn’t, anyway) make decisions today about what you’ll be doing in 2028 or 2043 — just about the first two to four years of your working life in the law.

This line of inquiry, in turn, patches in to your own history, experiences, and personality, and this is where we get back to “your story.” Everyone’s story is unique, intertwined with what we’re passionate about, what we have an aptitude for, and what our upbringing and life experiences have shaped us to be and prepared us to do. Everyone I’ve ever met is passionate about their own story, and they can create a compelling narrative about who they are, how they got here, and what they’re good at doing.

So a question you might think about, and use to ground and guide your next moves, is: What’s your story? What’s different about you, what stands out about you, in terms of the talents you own and the skills you’ve honed and the good things you want to do with them? And once you’ve got that narrative in your mind — or ideally, written it out and run it past friends and family members for their feedback — ask yourself: “To whom would this story be of particular interest?”

These questions can’t be answered in isolation, of course — they hinge on other factors. Where do you plan to live after graduation, and for the next few years? If your narrative and your ambitions involve a particular type of practice area or industry or community or other setting, then you’ll of course factor those in as well. There might also be relationship obligations or family duties to consider. But these are part of your narrative, too — try not to regard them as restrictions or limitations, because they’re part of who and where you are right now and they have full legitimacy to be in your story formation.

The more you think along these lines, the more you can narrow and sharpen and focus in on precisely how you want your legal career to begin. And with that focus becomes a certainty and confidence that will help carry through in your applications and interviews, because you’re not just another law graduate looking for a place to draw a paycheque and start paying down debts. You know who you are and where you want to be and what you want to do — which again, I strongly suspect is a place that many graduating law students haven’t gotten to yet.

Part of the narrative you’ll form, of course, is the struggles you experienced in first year. The marks are obviously there, and you’ll be asked about them. Your best bet, I think, is to weave them into your story, as part of the journey you’ve undertaken to get to this point. And as with all good stories, it’s important to fashion this difficult period as a trial or test that you passed and came out of better and stronger: You overcame the challenges that caused your marks to be low, and emerged clearer-eyed and more focused on your goal.

What matters most here, I think, is that you select the right audiences to whom to tell this story. Your average boring office of a national law firm is probably looking for your average boring law student, and that’s fine for them. But you want to identify those places where you feel confident that you (and your narrative) are a great fit — where you’re the person they didn’t even realize they needed until they met you.

When you’ve narrowed down these places, then I’d encourage you to contact them directly — but not necessarily to ask for a post-graduation job. Instead, I’d consider positioning yourself as a bright, hard-working, self-made law graduate with a strong and well-thought-out plan for the start of your legal career, who has identified this employer as a place where you can contribute value while learning about being a lawyer.

Such employers might not have articling or first-year positions available. They might not even offer such jobs! They might not be legal workplaces at all! But if they’re persuaded of the value you can offer them — if they’ve heard from you on the phone and met you in person and have had a chance to think about how you, specifically, can help them, specifically — then maybe they could be motivated to help you get into the profession. And maybe they know someone at a small firm or in-house department nearby who’s willing to take on an articling student or first-year lawyer, just so that you can get that first step out of the way. Or they might have other options that I don’t know about.

These are all just possible points of departure for the start of your legal career. But as a resource to help you think about the career you’re going to create and the paths you’re going to carve out along the way, there’s a brand-new and highly compelling book by Mike Whelan called Lawyer Forward. It also emphasizes the importance of stories, and I highly recommend it for your review and consideration.

I wish I had more immediate solutions or more practical “right now” advice to offer. But I hope the foregoing observations might have some longer-term value for you. I’d try to lean away from “getting articles” or “getting a job after graduation” — as critically important as these goals are — and more towards “starting my legal career,”  which includes both the short-term one-year needs as well as bigger-picture, more thought-provoking goals and considerations.

It will help you figure out the kind of people and the kind of organizations where you’ll feel like you belong and where you know they’ll benefit from your contributions. And it will help you really figure out what kind of lawyer you want to be.

The new legal economy

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Posted in: Change

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.

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.

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

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Posted in: Big Firms, Careers, Ethics, New Lawyers, Purpose, Technology

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.

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.

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.

How to save the lawyer development system

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Posted in: Governance, New Lawyers

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.

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.

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

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Posted in: 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.

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.

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

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Posted in: Law Firms, Purpose

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.

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.