Insights from the College of Law Practice Management

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Posted in: Innovation

As usual, my trip to the annual meeting of the College of Law Practice Management was more than worth it (even considering that Chicago broke an all-time record for single-day rainfall while we were there). Listening to and exchanging ideas with so many thought leaders in law practice management was exhilarating —  a full-morning session of presentations and workshops was particularly thought-provoking. Other highlights included the induction of new fellows and the Innovaction Award ceremonies.

Rather than try to summarize everything we talked about, I thought I’d reproduce for you my page of “I hadn’t thought of that before” notes. These are ideas or insights that occurred to me or were delivered by speakers during the conference, and that might be of equal interest to you.

– “If you’re happy with your choices, you’re balanced.” This observation came from Carol Phillips, director of administration with Sidley Austin LLP, who was speaking about one of my least favourite terms, work-life balance. Carol expressed much of the frustration that many partners feel about the demands of the newest generation of lawyers, and while I don’t share it or agree that it’s all the Millennials’ fault, I do appreciate that the frustration is genuine. But in looking for a new way to define balance for lawyers, she offered the observation above, which I think contains a lot of truth and should be employed by more lawyers of all generations who are assessing their careers and lives.

– “Imagine Google buying Clifford Chance.” This truly startling scenario was one of those painted by Ward Bower of Altman Weil, in a presentation on the Legal Transformation Study: Your 2020 Vision of the Future, a major strategic research project released earlier this year by a wide range of law firms, legal organizations and consultancies. Ward talked about future possibilities such as 10,000-lawyer global firms, widespread automation of legal services, a Big Six worldwide hegemony of firms, and massive deregulation of the profession. It’s an important and thought-provoking project whose free executive summary deserves a read. Continue Reading

Repainting or renovating?

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Posted in: Clients, Innovation

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

Preaching to the choir about innovation

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Posted in: Diversity, Innovation

Legal Times reports the release (2nd ed.) of Fair Measure: Toward Effective Attorney Evaluations, by the ABA’s Commission on Women in the Profession. Fair Measure offers law firms instructions and materials to help them conduct performance evaluations free from gender bias. And it offers us a useful prism through which to view the most important role innovation plays in the practice of law.

I haven’t read the book, but its central premise — that evaluations are (a) key to lawyers’ career progress in law firms and (b) extremely susceptible to both overt and unconscious gender bias in favour of men — seems unassailable. But the book also seems vulnerable to two underlying assumptions: that (a) most law firms systematically rely on evaluations or indeed any other rational method when assessing and promoting lawyers, and (b) most law firms are sufficiently troubled by their clear inability to retain women lawyers that they’ll actually do something about it.

In a typical law firm, when partners evaluate associates, they often do so in a peremptory manner that reflects the low priority management has accorded the task — it’s not billable, it’s not tied to the partner’s own status or compensation, and it’s not part of a holistic approach to associate development that includes mentoring and training. Similarly, decisions to extend partnership offers are often made with subjective criteria that reflect partners’ own personal likes and dislikes, which invariably includes stereotyped beliefs about gender and ethnicity.

The real problem is the absence in many firms of rational, consistent mechanisms for evaluating and nurturing talent, and the untroubled attitude towards the negative impact that absence has on fairness and diversity within the firm. In other words, Fair Measure is a book designed for the small minority of firms that actually believe they have a weakness and actually want to fix it. The bulk of the profession likely will pass it by.

But you know what? That’s fine. Continue Reading

Capped fees, limited innovation

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Posted in: Billing, Innovation

To the well-known list of companies that have consolidated their roster of outside counsel to one firm (DuPont, Tyco, and Linde, most prominently), you can now add Pfizer, which Corporate Counsel magazine reports has given all its employment litigation work to Jackson Lewis and its 500 lawyers across the US. But this one comes with a twist: in exchange for its sole counsel designation, Jackson Lewis is capping all its fees to Pfizer, issuing one invoice a month containing one-twelfth of its annual fee and an accounting of its its time spent on Pfizer matters in the last 30 days.

There are three interesting points to take away from this story. The first is to note that when Pfizer’s GC was asked to list the reasons why Jackson Lewis won this ten-firm competition, the first thing she cited was trust: “We were putting all of our eggs in one basket. Before, we had a choice among ten firms. Making this decision meant that choice was gone.” Never mind the economics: you don’t win a contest like this unless the client has the utmost faith in your reliability and wisdom.

The second is to observe what happens in the absence of trust: tucked away in a sidebar at the bottom is an account of Pfizer’s frustration with fat, vague law firm invoices that didn’t comply with the department’s well-established billing guidelines. So the company hired a legal bill assessor called Legal Cost Control, which found that Pfizer’s outside counsel were billing for things like making copies, sleeping on airplanes and assembling budgets. Now Pfizer sends all outside counsel invoices to a billing review team — and it’s fair to assume that firms submitting questionable bills won’t be in that trusted inner circle, if they remain counsel at all.

But the third, and most significant, aspect of this story is that while Pfizer is combining two innovations here, convergence and capped fees (well, UK law departments wouldn’t call law firm panels exactly innovative), it missed an opportunity to add a third when it retained the right to recoup Jackson Lewis’s unspent fees at the end of the year. Continue Reading

Results, not résumés

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Posted in: Innovation, Law School, New Lawyers

Professor William Henderson, who teaches at the University of Indiana Faculty of Law and blogs at Empirical Legal Studies, has written a watershed treatise on how large law firms recruit and use associates. The ELS blog summarizes it, the ABA Journal reports on it, and Bruce MacEwen and Gerry Riskin have already flagged it as an extremely significant contribution to the ongoing evolution of the traditional law firm business model. With apologies for a brevity that glosses over some important points, here’s a summary of Are We Selling Results or Résumés?: The Underexplored Linkage between Human Resource Strategies and Firm-Specific Capital, and some ideas that flow from it.

Large US law firms are deeply tied to the “Cravath system” of hiring new lawyers, generally defined as recruiting the most outstanding law students from the top law schools and giving them the best training. This was a great idea when Cravath Swaine & Moore first developed it early last century, because it was a branding strategy: Cravath deserves your business because we hire only the best of the best. But because the firm became so successful — for a variety of reasons — other firms copied its hiring strategy, and the Cravath method, once an innovation, became narrow-minded standard operating procedure.

Today, demand for corporate legal work has skyrocketed, exhausting the talent pool to which firms — because of their adherence to the Cravath method — have restricted themselves when recruiting the associates who do this work. Accordingly, with rising demand overwhelming a fixed talent supply, the cost of new lawyers has risen as high as $160,000 a year, well above the value of the services they provide.

This has numerous negative effects. Firms either pass on these cost increases to increasingly incensed clients, or absorb them in lower partnership profits, leading elite partners to decamp for more lucrative firms. Worse, top clients order firms not to place these overpaid associates on their files, meaning young lawyers are trapped in the most dead-end work from the least interesting clients, hurting morale, exacerbating attrition and damaging the firm’s future leadership development.

The most obvious solution for the firms — increase supply by hiring outside the “elite” group — is verboten, because these firms fear a loss of prestige associated with hiring “second-rate” graduates from “second-rate” schools. (Firms have already conceded ground by digging deeper into the graduating classes of elite schools for new recruits). A recruit’s “pedigree” now holds entirely disproportionate importance in law firms’ hiring decisions, and no major firm seems prepared to risk breaking ranks to try something different.

Henderson proposes something different, a new approach premised on a groundbreaking productivity study at Bell Laboratories in the early 1990s. In a nutshell, the study found that knowledge workers’ productivity was not tied to traditional measures of excellence such as IQ and self-confidence, but to a series of work strategies such as taking initiative, sharing knowledge, and managing work commitments, most of which are trainable. Continue Reading

The innovation arms race

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Posted in: Innovation

Head over to the College of Law Practice Management’s blog at your earliest opportunity and check out the rolling list of entrants for this year’s Innovaction Awards now being posted. As is the case every year, law firms around the world (and for the first time, an in-house law department) have submitted accounts of their innovations in client service, knowledge management, value billing, legal technology, pro bono, talent management and a host of other critical aspects of legal services crying out for improvement. The decision of the judging panel, of which I’m a member, will be announced soon.

There’s a longstanding belief that lawyers can’t or won’t innovate when it comes to how they manage their businesses, deliver their services, and relate to their clients. And it’s true that law firm culture has historically been inimical to innovation in legal services delivery. Law has been almost the only industry where a challenge to the standard operating procedure was considered bad for business, not just by rival firms, but also within your own organization. The status quo might leave your client dissatisfied and you unhappy, but the way we’ve always done things has kept us in business (and a lot of us in Mercedes), so don’t mess with it.

But what I’ve seen and heard in this profession the last few years has convinced me that this belief is wrong, on two points. First, lawyers themselves, given encouragement and room to experiment, can be really innovative in process, delivery and relationship. Innovation is, after all, the outcome of creativity and competitiveness — two of lawyers’ natural strengths — harnessed towards engineering a better process, accomplishing a more valuable result, and achieving the sheer thrill of being better at something than anyone else. As Bruce MacEwen reminds us, innovation is about never being satisfied with how we did it last time.

Secondly, the defensive circle around the status quo is weakening in law firms — badly, in some. The complacency that helps form the foundation of typical law firm culture, and works to block lawyers’ inclination to innovate, is being eroded by massive shifts in the legal marketplace. “Staying the course” just isn’t posting the kinds of gains it used to — it’s a thin portfolio with little to support it beyond successful results from a far less demanding era than this one. Today, it’s a foolish investment, and lawyers are finally starting to openly acknowledge that.

That’s really why I think we’re at a watershed time for innovation in the practice of law — it’s finally becoming a serious item on law firms’ agendas. If you doubt it, go read the Innovaction entries. They demonstrate that there’s a whole new arms race taking shape in the law — an innovation race — and that if you’re not at one of these innovative law firms, they’re already ahead of you.

Update 7/22: The winners have been announced! Congratulations to our three 2008 Innovaction Award recipients:

Mallesons Stephen Jaques
Sydney, Australia,
Innovation:  PeopleFinder

PeopleFinder is an internally developed web 2.0 application that introduces reliable, accurate and rich presence to the firm’s intranet directory and BlackBerries.  It has resulted each month in over 10,000 more calls into the firm being answered by a person rather than voice mail.

Novus Law LLC
Chicago, IL
Innovation:  Documenting the E-discovery process from collection to production

Novus Law created a system that documents the 864 step e-discovery process from collection to distribution.  Utilizing a globally recognized quality management method, the system captures and documents in order to measure and improve quality; manage and predict schedules and significantly reduce costs.

Pillsbury Winthrop Shaw Pittman LLP
Washington, DC
Innovation:  ValueChain

ValueChain is a novel method of visually displaying clients’ objectives, capabilities, opportunities and risks, so that clients can better understand what impact outsourcing various critical business functions may have on the company as a whole and how best the outsourcing operations and agreements should be designed and structured.

Hacking the legal marketplace

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Posted in: Innovation, Talent

I missed this story when it first came out in May, so I’m now belatedly noting a new talent recruitment company called Bohire. Its business model is simple: every time you successfully suggest a person who lands a job with a company, the company will pay you a reward in the hundreds or the thousands of dollars. The more important and high-paying the job, the greater the reward you earn. Companies already look to their own people for recommendations of lateral hires; Bohire has basically turned that personal reference system into a Web 2.0 application.

Read this report and that one for more details, including the fact that some of Bohire’s clients are law firms: one of the big national outfits here in Canada, along with some smaller Toronto boutiques. At the moment, these firms are using Bohire to recruit legal assistants and law clerks. But if these hires work out — and so far, they seem to be — how much longer do you figure it’ll be before the firm starts hiring lawyers this way? And how do you think that will go over with legal recruiters, many of whom currently charge 20% or 30% or more of the position’s annual salary for a successful placement?

I wrote earlier this week about a “process revolution” underway in the delivery of legal services, but it’s more widespread than that: it’s affecting the whole law industry. Legal publishers are under siege by bloggers; legal research providers are being challenged by cheap or free case law sites; legal recruiters are having to cope with Bohire and its soon-to-come competitors. One of these days, the open-source movement is going to get around to the legal software industry, and that’s going to do to established software makers approximately what Google is doing to Microsoft.

And really, I used the wrong word. It’s not a revolution; it’s a hackfest. The legal industry is being hacked, just like the recording industry before it and the movie industry right about now. If you’ve ever visited Lifehacker, you know what I mean by hacks: shortcuts, productivity tricks, efficiency and convenience improvements that straighten and smooth out unnecessary obstacles. Third parties are hacking their way into the law’s traditional seller-buyer relationships to set up new efficiency shortcuts, perspective windows and alternative resources. Crowdsourced legal recruitment is just the latest example.

The traditional constructs of the legal industry — many of the products and services offered by and to lawyers —  are being deconstructed and rebuilt along 21st-century lines. Pay close attention to any tremors in the ground on which you’re standing.

You can’t charge for that anymore

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Posted in: Billing, Clients, Innovation, Technology

There’s a process revolution underway in the legal marketplace, and yesterday brought two more reports of cannon fire. The ABA Journal published a primer (HT to Legal Blog Watch) by Boston lawyer Jay Shepherd on how to establish a flat-fee billing system. It’s not an airy, wouldn’t-it-be-nice piece; it’s a practical guide borne of his firm’s successful experience with abandoning hourly rates. The key step: reviewing eight years’ worth of bills to figure out exactly how much it costs the firm to complete various client tasks.

Meanwhile, Larry Bodine linked to a Forbes magazine story about FastCase, a Washington, D.C.-based company that provides access to an online, digital, searchable collection of U.S. case law at much lower costs than those charged by traditional publishing powerhouses West and Lexis. The article describes similar ventures launched by other organizations, without even getting into the Legal Information Institute collection and its offspring around the world.

So for those of you keeping score at home, here are two more things you won’t be able to build into your legal bill the way you used to:

–> the standard lawyer fuzziness around just how much it’s going to cost to do something the firm has done before; and

–> most commercial online legal research services, because the cheap or free alternatives are proliferating.

These two entries join a growing list of items law firms can no longer charge out at pricey associate rates, if they can charge them out at all: Continue Reading

Be your own platform

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Posted in: Innovation, Marketing, Publishing

This morning, the Supreme Court of Canada released its long-anticipated decision in Keays v. Honda, a wrongful dismissal case that concerned the extent to which punitive damages should be awarded under Canadian employment law. The plaintiff, who had scored an unprecedented $500,000 in extra damages at trial, saw his notice period cut from 24 to 15 months and his aggravated and punitive damages wiped out altogether. It’s a powerful signal from the country’s highest court that punitive damages are to be reserved for the most outrageous instances of conduct, which the 7-2 majority felt were not present. But that’s not why we’re here.

In the last 24 hours, I’ve received three e-mails and one phone call from lawyers advising me that the SCC decision was imminent and offering to write an article or be interviewed for a piece in National on the judgment. Among other things, these requests are a compliment to our magazine: they demonstrate that lawyers consider National a leading publication with which they would like to be associated — that our brand carries sufficient weight within the profession such that it would be beneficial to their reputations to appear therein. I’m certainly happy about that.

Now, here’s the thing: we’re the wrong publishing vehicle for them to pursue. In practical terms, National publishes just eight times a year, and the issue currently in the editorial process won’t be circulated until mid-August — and even then, this edition’s lineup is already set; the next issue with any degree of lineup flexibility arrives on lawyers’ desks in late September. By the time we publish anything on Keays, months will have passed since the decision was released and it will be the oldest of old news.

Moreover, National covers a wide range of issues, as befits the periodical of a nationwide lawyers’ association, and employment law is not our focus. Employment lawyers seeking to raise their profile should be looking at periodicals specific to this field, especially those to which corporate clients subscribe — that’s the audience these lawyers ought to be trying to reach.

But there’s something more fundamental at work here. Continue Reading