The three types of collaboration

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The corporate client disconnect

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

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

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

What the recession will bring

My newest Law21 column is up at Slaw. Click the link to go read it, and then take some time to peruse all of Slaw’s other great posts and conversations at what Dennis Kennedy calls the best law blog in the business. As always, I’ll also post the article here.

“Are we looking at a second Depression? I don’t think so,” said Paul Krugman, NewYork Times columnist and Nobel-Prize-winning economist, during his luncheon address to the Canadian Corporate Counsel Association’s World Summit last week in Vancouver. Then he added: “A month ago, I would’ve said, ‘Absolutely not.’ But today, I’m going to say, ‘I don’t think so.'”

That was the standout quote for me from an economic assessment so pessimistic that at its end, Krugman admitted: “I wish I had some positive things to tell you.” But aside from, as he said, having “people in Washington I can now talk to,” he didn’t have much good news to share. The powerful tremors emanating from Citigroup add to worries that even an astonishing American stimulus package of $800,000,000,000 — a financial adrenalin shot roughly equal to Australia’s entire GDP — won’t cover even half of the expected $2,000,000,000,000 in losses this recession is pounding out. Every country’s economy is in trouble, and even those with the political will and financial tools to address the problems seem stymied. Europe is facing particular challenges, while China — whose financial statistics are “science fiction,” Krugman said — is facing a sharp downturn. He thinks the eventual solution to banks in crisis is going to be nationalization — though he observed that not even the Obama administration is psychologically ready to take that step yet.

Now, another Great Depression is still a considerable distance away (we’re nowhere near 25% unemployment, GDP cut in half, or a stock market reduced by 90%, for example). And since whatever the mainstream media brings you is pre-inflated at least 20% by hype, you could be forgiven for thinking that things are bad, certainly, but not borderline catastrophic. But while Krugman’s grim outlook took me aback, what really struck me was the lack of surprise among audience members, including a lot of general counsel and in-house lawyers from national and global entities. Some of them nodded in agreement and all of them seemed to have had their beliefs confirmed, not undermined, by his remarks. They had the air of people who know exactly how bad things might be.

Law firm lawyers should be concerned by that. They should also be concerned by this: for the most part, surprisingly little was said about the problem of outside counsel costs. This wasn’t because the problem had gone away; from my reading of comments on stage and in conversations, it was because legal costs had ceased to be something to talk about and had become something to be dealt with. The simplicity and finality of that sentiment were unnerving. I asked an in-house lawyer to name one thing her outside law firms could do to make her happier. “Reduce their costs,” she replied. Fair enough, I said; should they do it by outsourcing, or by automating, or by — she cut me off. “I don’t care,” she said flatly. (Patrick J. Lamb reports a similar experience.) Continue Reading

The new leverage

Bad news on the economic front continues to pile up — you don’t need the links from me — and the legal profession is finding its ride increasingly bumpy as a result. Wachovia’s legal specialty group reports that partners in large law firms are bringing in less revenue for the first time since approximately the Industrial Revolution. But it also points out an overlooked fact: despite all the talk about associate layoffs, it’s staff that’re really taking the hit at firms, down 18% in September alone. That suggests a couple of things: that some firms really are taking steps to retrain or otherwise hold onto their associates (and there’s good reason to do so, says Bruce MacEwen), but also that these firms aren’t looking as far down the road as maybe they should.

Looking down that road are the good people at The American Lawyer and Legal OnRamp who, with the assistance of consultant Rees Morrison, recently conducted a survey of in-house counsel members of Legal OnRamp. The survey (disclosure: I made small contributions during the design process) asked in-house lawyers about their relationships with outside counsel and their predictions about how those relationships and in-house practices will evolve over the next five years. Topics of inquiry included client satisfaction surveys, value billing, outsourcing, commoditization, automation, consolidation, and social networking.

The thrust of the results is that in-house lawyers aren’t especially happy with outside counsel in terms of service, partnering and communication — nothing new there — but are surprisingly tentative about predicting major change in how they go about acquiring services from these law firms. Very surprising, actually, as Michael Grodhaus says in reference to another study “in which 32% of 600 corporate executives predicted significant changes in law firm billing practices over the next two years. … So in the face of what is likely to be the worst financial crisis in this country since the 1981-82 recession — two-thirds of these corporate executives expect to continue to be billed by the hour for legal services just as they have always been? Where are their shareholders?”

The AmLaw/OnRamp survey results are here, the analysis by Rees and AmLaw’s Aric Press  is here, and Paul Lippe’s analysis at Legal OnRamp is here (members-only on that last one). All insightful stuff, and worth your time. For me, though, the takeaway is found in Aric’s introductory AmLaw editorial, summing up the big-picture view of the changes underway in the legal services marketplace. He identifies, correctly I think, four trends driving change — client pushback, talent upheaval, technological disruption and the Legal Services Act — and forecasts both fundamental change (farther down the line) and disaggregation of legal services (probably a lot sooner) to come. He closes with this concise but powerful state-of-the-nation on change in the legal marketplace (emphasis added): Continue Reading

The market doesn’t care

Two of the smartest people writing on the web these days are Seth Godin and Scott Karp. They have an important message that everybody in the legal services marketplace, especially lawyers, needs to hear.

First, this is what Seth had to say in the course of a short but eye-opening interview about the book publishing industry, which is staring at hard times because of technology-driven upheaval:

First, the market and the internet don’t care if you make money. That’s important to say. You have no right to make money from every development in media, and the humility that comes from approaching the market that way matters. It’s not “how can the market make me money” it’s “how can I do things for this market.” …

The market doesn’t care a whit about maintaining your industry. The lesson from Napster and iTunes is that there’s even MORE music than there was before. What got hurt was Tower and the guys in the suits and the unlimited budgets for groupies and drugs. The music will keep coming. Same thing is true with books. So you can decide to hassle your readers (oh, I mean your customers) and you can decide that a book on a Kindle SHOULD cost $15 because it replaces a $15 book, and if you do, we (the readers) will just walk away.

Scott picks up this theme in a post about the newspaper industry, which is already deeply mired in Internet-induced hard times and has no clear way out:

[T]he web and the market don’t care. The web is the most disruptive force in the history of media, by many orders of magnitude, destroying every assumption on which traditional media businesses are based.

But the market should care, you say. What would happen if we didn’t have the newspapers playing their Fourth Estate watchdog role? Here’s the bitter truth — the feared loss of civic value is not the basis for a BUSINESS.

The problem with the newspaper industry, as with the music industry before it, is the sense of ENTITLEMENT. What we do is valuable. Therefore we have the right to make money. Nobody has the right to a business model. Ask not what the market can do for you, but what you can do for the market. …

I’ll repeat Seth: The lesson from Napster and iTunes is that there’s even MORE music than there was before. We’ve got highly entrepreneurial, creative, and driven people … working hard outside of newspaper company walls to invent new models for journalism. Journalism will find a way. Even if the industries that once supported it do not.

You can probably guess where I’m going with this: the legal services marketplace doesn’t care if lawyers make money. The irreversible changes that our industry is going through, the steady advancement of globalization and technology, the growing legions of competing products and producers — the earning expectations of lawyers and the atrophied business models of law firms mean nothing to them. What lawyers want is about as relevant to these forces as the farmer’s crop is to the tornado bearing down on him.

Let me rephrase some of what Seth and Scott have said specifically in the context of lawyers:

First, clients don’t care if you make money. That’s important to say. You have no right to make money from every problem or opportunity clients face, and the humility that comes from approaching clients that way matters. It’s not “how can the client make me money,” it’s “how can I do things for this client.”

The lesson from offshored lawyers and document management companies is that there are even MORE legal service providers than there were before. What will get hurt is law firms and the guys in the suits and the unlimited budgets for entertaining. The legal services will keep coming.

The web is the most disruptive force in the history of law, by many orders of magnitude, destroying every assumption on which traditional legal businesses are based. We’ve got highly entrepreneurial, creative, and driven people … working hard outside of the profession’s walls to invent new models for legal service delivery.

But the client should care, you say. What would happen if we didn’t have lawyers playing their role to uphold standards and protect the rule of law? Here’s the bitter truth — the feared loss of civic value is not the basis for a BUSINESS.

The problem with the legal industry, as with the music and newspaper industries before it, is the sense of ENTITLEMENT.

Follow your clients through the recession

And now, your legal services marketplace update:

Got fear? Not everyone is ready to head for the fallout shelter just yet, and rightly so. But I think it’s fair to say that we’re not looking at just another slump here. We have an historic financial crisis (hopefully nearing its completion) likely portending a deep and prolonged recession, coming at a time when law firms’ business and service delivery models are already under unprecedented pressure. You don’t need to believe the apocalypse beckons to recognize that this is, at least, an extraordinary period of transition for lawyers and law firms.

If you want to get the best sense of where the legal industry is going, though, there’s really only one place to look: at clients. Never mind what they’re saying — they always say the same things — look at their circumstances and watch what they do. The extent to which clients’ needs are driving actual changes in their behaviour is the extent to which lawyers’ worlds will also change. Continue Reading

The new legal publishing niche: clients

Hey there, legal professional — looking for a career change in these uncertain times? I have a legal publishing niche to recommend to you. But first, some background.

This economic crisis has inspired some of the best legal blog writing I’ve seen in a while — urgent, direct, and relentlessly focused on communicating to readers exactly how serious a situation we’re in, and just how unique are the opportunities and threats lawyers face. If you haven’t been reading Patrick J. Lamb, Gerry Riskin, Dan Hull & Holden Oliver, Rob Millard, Susan Cartier Liebel, and the ACC blog the last few weeks, rectify that oversight. Click on these links and review what these commentators have been saying about the fundamental restructuring of the marketplace now underway, and why law firms of every shape and size need to respond in fundamental, game-changing ways.

What you’ll notice about many of these blogs and most of these entries is that they’re client-focused: that is, they either analyze the marketplace that buys legal services, or they explain the pressing and rapidly evolving needs of clients, or both. This is still a rarity in the blawgosphere: most legal blogs talk about developments in the law itself or address the business concerns of lawyers and law firms. Like most everything else connected with lawyers, most legal blogs are all about us. The image of the “client” that emerges from most law blogs is shaped by the perspective of lawyers — the client as a mysterious yet disadvantaged entity that needs lawyers’ help, makes demands on lawyers’ time, and pays lawyers’ bills.

But the most valuable and interesting legal blogs in the near future, like the few I’ve referenced above, will write from the perspective of, and serve the direct interests of, the client.  Whereas most lawyer blogs are created to explain the law (and promote the lawyer) to clients, these blogs will explain clients to lawyers — and that’s going to be a far more important service. They’ll paint in broad strokes, necessarily, since every client is different —  but they’ll still give lawyers powerful information about the drivers and priorities that lie behind every client interaction.

But there’s yet a further, still undiscovered publishing niche. Continue Reading

Repainting or renovating?

There’s repainting, and then there’s renovating. Innovation in the practice of law can take either of these forms, and while there’s nothing wrong with a fresh coat of paint or moving the furniture around, installing new support beams and ripping out the plumbing is a whole other order of commitment to change.

As a useful example of repainting, word from the UK is that 18 major law firms are getting together to establish a new “carbon footprint” protocol for their industry. The Lawyer reports that the “Legal Sector Alliance, a movement of law firms and organisations committed to working collaboratively against the climate threat, [will] provide law firms with a practical guide to adopting environmentally sustainable practices.”

Not meaning to discourage any sensible steps towards a better environment, and the firms deserve credit for promising to reveal footprints that could be embarrassingly larger than expected; the free market in saving face is a powerful force in a tightly knit profession like ours. But best intentions aside, this initiative will have a lot more of an impact on, say, marketing and community relations than it will on the fundamental business of these firms: serving their clients.

Clients are looking for something a little more substantive. Mike Dillon, GC of Sun Microsystems and occasional but engaging blogger, expressed as much in a post last month called simply “Finding Value.” Mike ticks off areas of needed reform in law schools and legal media, and acknowledges that clients need to step up, too. But law firms, he says,

need to understand every component of their operating expense and business model. What is the cost of attorney turnover in the firm? What are its core v. non-core technical strengths? Can the firm manage sub-contractors (i.e. other legal service providers) to provide more cost effective services to clients in non-core areas? Does the firm fully understand its customers and does it tailor its services to the customer’s specific needs?

These are the kinds of questions that start the kinds of conversations among lawyers and clients that we need. To that end, let me direct you to a very promising conversation just getting started: Continue Reading

The rise of good enough

Developments last week in the world of electronic discovery have gotten me thinking about matters of a weightier nature. The Wall Street Journal published an article about the rise of automated e-discovery services and the degree to which they’re eliminating the need for lawyers in this area (it’s subscriber-only, so I’m relying on the good graces of Carolyn Elefant at Legal Blog Watch, who provides some highlights).

New e-discovery tools, says the article, promise cost savings of more than 85% — something bound to elicit sweet hosannahs from clients, but perhaps rather different responses from lawyers. One such lawyer, a partner at Fenwick West, cites a cautionary tale of a client that decided to go the cheap route and handed over an e-mail archive search to its internal IT personnel. You can guess the result: disastrous disposal of necessary files and big money paid to the law firm to clean up the mess.

Now, there are two things worth noting about this example. The first is the dichotomy it suggests: either have the professional lawyers do the work or give it to the complete non-specialists, and no in-between. But in fact, there’s a lot in between, and some law firms are figuring this out. Ron Friedmann at Strategic Legal Technology brings us word that Dorsey & Whitney has launched its own e-document review service, at fixed prices to boot. As Ron says, this is less a challenge to e-discovery providers than it is to other law firms, who might have to start rethinking how their business models incorporate e-discovery.

But there’s another angle here, one that goes to a more foundational matter in the law. The example above presents a familiar, even archetypal warning to clients: engage a lawyer now to do the job right, or engage the lawyer later, for more money, to fix the mess you made by trying to do it on the cheap. You might even call this the Cardinal Principle of Lawyer Marketing: the short-term cost of hiring a lawyer is less than the long-term cost of going without one. We’ve all heard it, and many of us have used it, but few of us have examined its foundation or implications. Continue Reading

Podcast on conflicts of interest

Law21 was quiet for a week while I worked the Canadian Bar Association’s Canadian Legal Conference in Quebec City. Among the highlights for me was moderating a podcast on the CBA’s just-released Final Report of its Task Force on Conflicts of Interest. You can access the podcast by clicking the third link in the right-hand column on the CBA’s Conflicts Home Page.

The podcast, which runs less than 25 minutes, featured three members of the task force: Chair Scott Jolliffe, managing partner of Gowling Lafleur Henderson LLP, and members Gord Currie, EVP and General Counsel of George Weston Ltd., and Simon Chester, a partner with Heenan Blaikie LLP and fellow Slawyer. We talked about the report’s principal recommendations, the valuable Toolkit that accompanied it, and why conflicts matters so much to both lawyers and clients. Hope you find the program interesting and the report useful, no matter where you practise.