The corporate client disconnect

by with 4 Comments

Posted in: Clients, Innovation

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

Book Review: The End of Lawyers?

by with 19 Comments

Posted in: Books, Innovation

The End of Lawyers? by Richard Susskind (London: Oxford University Press, 2008)

This is an enormously important book, and if you have any interest or stake in how the legal marketplace will operate in future, you have to read it. The End of Lawyers? provides a sweeping assessment (and in places, an indictment) of today’s legal services landscape and describes the architecture of the systems that will replace it. It identifies the pressure points where the legal services marketplace is poised to fracture and describes the forces that will cause the breaks. But what really stands out about The End of Lawyers? is its comprehensive depiction of a profession undergoing massive transformation – it provides a unique panoramic view of a legal marketplace in unprecedented flux. We talk a lot about “visionaries” these days, but in the legal profession, nobody seriously competes with Richard Susskind for that title, and this book shows why.

Now, I’m a little late to this party — many other people have written excellent reviews already, most recently this incisive commentary by Mitch Kowalski at the Legal Post. Others have also covered this terrain very well, including Bruce MacEwen, Jim Hasset, Nick Holmes and Ted Tjaden, as well as numerous consumer reviews at the Amazons of the world. Accordingly, while I’ll provide an overview of the book’s contents, strengths and weaknesses, I’m going to try focusing more on what the book represents in the history of legal innovation (answer: a watershed) and its implications for the legal profession’s evolution (answer: potentially shattering).

The End of Lawyers? relates how technology (especially the Internet), collaboration, globalization, and other forces are changing the fundamental rules by which legal services are bought and sold. The book is characterized by several key observations about how the legal marketplace is being transformed, with three especially significant ones:

  • The identification of an evolving and fluid spectrum of legal services categories: bespoke (one-off, customized or tailored), standardized (drawing upon precedents, process or previous work), systematized (reduced and applied to automated systems), packaged (systematized services exported to clients) and commoditized (packaged services so commonplace as to have little or no market value). Most lawyers insist that their services cluster around the left-hand end of this spectrum; Richard convincingly argues that movement to the right is inevitable for many types of legal services, with profound implications for lawyers’ business models.
  • The decomposition of legal tasks into component parts that can be delegated to various sources, few of them actual law firm lawyers. Twelve types of destinations for this multi-sourcing (reminiscent of unbundling) are identified: in-sourcing, de-lawyering, relocating, offshoring, outsourcing, subcontracting, co-sourcing, leasing, home-sourcing, open-sourcing, computerizing and no-sourcing, each of which is explained in more illuminating detail. Despite this multiplicity of legal work performers, an overarching entity responsible for managing the work must exist, and all the systems and processes involved must work together seamlessly.
  • In the context of astonishingly deep and rapid technological advances, the emergence of no fewer than ten disruptive (in the Clayton Christensen sense) legal technologies: automated document assembly, relentless connectivity, the electronic legal marketplace, e-learning, online legal guidance, legal open-sourcing, closed legal communities, workflow and project management, embedded legal knowledge, and online dispute resolution. These developments offer tremendous opportunity for more efficient and effective legal services delivery; but they also represent major threats to various aspects of the traditional law firm business model.

And this really is just a sampling – only an actual précis of the contents could convey everything that the book suggests. The details and depth in which these and other observations are explained and illustrated, with ample use of current examples, should be enough to persuade most readers that these trends are real and they are irreversible. But over the course of the book, Richard makes other observations that can fairly be called eye-popping ­– they open the mind to possibilities that none of us have been pondering: Continue Reading

Renovating or tearing down?

by with 4 Comments

Posted in: Big Firms, Billing, Innovation

I grew up in a small city of about 80,000 and went to law school in a similarly sized town, so my first experience of a major metropolitan center was when I began working in downtown Toronto. I remember being a little overwhelmed by the massive bank towers in the financial district — not a patch on New York, obviously, but still impressive to someone who’d not seen many buildings above eight floors high. But I also remember thinking — and this might give you some insight into the sometimes skewed and contrary way my mind works — “How are they ever going to get those buildings down?”

It seemed to me at the time (and still does now) that putting up a very tall building, while an arduous and lengthy task, is also a pretty straightforward and orderly one. While traffic might be rerouted and the noise pollution might be substantial, still it’s a planned, supervised, rational process with a fixed start and reasonably fixed end date. But if you ever need to take that building down, what do you do? I’ve never seen anyone erect a scaffolding superstructure around a skyscraper and deconstruct it floor by floor. Generally speaking, buildings aren’t dismantled gradually, their component parts carefully carried off to be reused and rearranged for new or better buildings; they come down all at once in a destructive collapse. Sometimes they videotape the implosion, to be replayed at the end of a half-hour news cycle.

This brings me, in a roundabout sort of way, to the billable hour — specifically, a recent wave of articles that suggests a serious challenge to its lengthy rule is underway. Famously, Cravath Swaine & Moore managing partner Evan Chesler published an article in the Jan. 12, 2009 issue of Forbes titled “Kill the billable hour,” in which he sets out clients’ (and lawyers’) unhappiness with and alternatives to the billable hour. As you might imagine, that got a lot of people’s immediate attention. The AmLaw Daily noted a number of resonant examples in the U.S. profession, while lawyers in London piped up that they’re already ahead of that particular curve, thanks.

Around the same time, The American Lawyer named as its Litigation Boutique of the Year the Chicago firm of Bartlit Beck Herman Palenchar & Scott LLP, a crack litigation team remarkable in no small part for not billing by the hour and keeping few associates on hand. Based on all this and more, Legal OnRamp‘s Paul Lippe suggests we’re witnessing an actual, real-time change in the legal profession’s billing mindset. And Michael Grodhaus wonders if those who switch away from the billable hour during the recession will ever go back.

Me, I keep thinking back to those towers. Just as they took a long time to go up and won’t come down without a lot of noise and debris, so too the law firms inside them took many years to build, and if they ever need to be, um, re-purposed, it won’t be easy or painless. Buildings are demolished when their structural underpinnings become unstable or their basic design is rendered obsolete by new advances; occasionally you’ll see a retrofit, but most often you’ll see the wrecking ball, because something that big and rigid just can’t be reduced, reused or recycled. Continue Reading

Regeneration

by with 7 Comments

Posted in: Innovation

Thacher Proffitt & Wood, a 160-year-old US law firm established the same year The Communist Manifesto was published, the Second French Republic was founded and Wyatt Earp was born, will close its doors tomorrow. Following failed merger talks with Spalding & King, Thacher Proffitt arranged for 100 of its lawyers, including its managing partner, to be acquired by Sonnenschein Nath & Rosenthal, which itself laid off scores of lawyers earlier this year.  Thacher Proffitt becomes the third major US firm, following Heller Ehrman (which has now officially gone bankrupt) and Thelen Reid, to collapse with little warning this year; countless other firms cut hundreds of staffers, associates and even partners. Most of the forecasts out there say 2009 figures to be substantially worse.

So this is a post about hope.

No, it’s not just the spirit of the season talking. Let’s look briefly at the state of some other industries at the close of 2008 before circling back to the legal profession to see from whence springs hope. Continue Reading

Information, innovation and a top 10 list

by with 5 Comments

Posted in: Innovation, Publishing, Technology

This is kind of a roundup post — a few things I thought might interest you on the theme of innovative information for lawyers.

First, if you haven’t checked out JD Supra lately, you might have missed this handy new feature: a Facebook application for streaming your legal documents. JD Supra Docs allows legal professionals who publish their work on JD Supra to make their documents and professional qualifications automatically available to their friends and contacts on Facebook. Every time you post a new document on JD Supra, it will automatically stream to your Facebook profile. Steve Matthews nicely sums up what JD Supra is doing here with the term “social legal documents.” That’s a concept worth leaning back and thinking about for a while — it represents an important part of the law’s future in a wired world.

And speaking of wired lawyers, Richard Granat of the eLawyering blog dropped me a line to let me know about the ABA Law Practice Management Section’s James I. Keane Memorial Award for Excellence in eLawyering. James Keane founded the ABA’s eLawyering Task Force, which looks at ways lawyers can use the Internet and other electronic resources to deliver legal services to the “latent market” of people of moderate means. One of my core beliefs is that latent legal services represents the future of the profession — lawyers will lose much of their traditional work to technology, commoditization and new competitors, but they’ll gain much more through the innovative provision of proactive or constructive services to currently unidentified and untapped client markets. So I’d like to help encourage the kind of service recognized by this award, about which you can learn more right here.

Finally, Susan Cartier Liebel of Build a Solo Practice LLC, a very deserving ABA Journal Blawg 100 finalist, decided to provide her own “Best of the Blawgosphere” list, on which Law21 is humbled to appear. Then she challenged all of us to do the same: create a list of recommendations of those blogs you believe others should learn about and publicize on your own blog.  Let’s take the idea behind the ABA 100 and expand it.  Let’s make December of every year the month we introduce our readers to new blogs of note. Let’s give everyone who blogs for education or love of writing and who does so with consistency and quality a pat on the back for a job well done.

Victoria Pynchon of the Settle it Now Negotiation Blog was first out of the blocks with this great list, so I thought I’d give it a shot as well. To paraphrase Susan, this is by no means an exhaustive list, just a sampling of blogs that are doing great work and that deserve and will repay your time and attention. All these blogs, to my mind, merited the ABA’s notice, but not all made the final list; I’ve provided a link where you can cast your “people’s choice” vote for those that did. In no particular order, here they are:

the [non] billable hour — Matt Homann has a gift of seeing the legal profession from exactly the right perspective to make us think differently about how and why we practise law.

3 Geeks and a Law Blog — For my money, the best new law blog out there. Greg Lambert, Toby Brown and Lisa Salazar are thinking years ahead about lawyers and technology.

Adam Smith, Esq. — Extraordinary insights about global law firm management by Bruce MacEwen, who might be the best pure writer in the blawgosphere. Vote here.

What About Clients? — You don’t throw around a word like “fearless,” but that’s exactly how to describe Dan Hull and Holden Oliver’s blog, which demands unapologetically that lawyers put clients first. Vote here.

Build a Solo Practice LLC — Already mentioned above, but Susan’s blog has joined Carolyn Elefant’s touchstone blog My Shingle as absolute must-reads for solo and small-firm lawyers. Vote here for both.

Empirical Legal Studies — The legal profession has an aversion to metrics. Prof. William Henderson is rectifying that by showing that we can, in fact, measure what we do. Vote here.

Strategic Legal Technology — Legal process outsourcing isn’t about lowering costs so much as it’s about rethinking how legal services are produced. Ron Friedmann is quite simply the LPO thought leader.

KM Space — What I just said about LPO applies equally to knowledge management, the key to the profession’s future. Read Doug Cornelius and you’ll get why KM matters.

Law Is Cool — To my mind, a glaring omission from the Blawg 100’s Student list. I’m politically distant from this student-run blog, but its voice and perspective, especially on social justice issues, is irreplaceable.

In Search of Perfect Client Service — Patrick J. Lamb’s Valorem Law Firm walks the talk on client-oriented legal services, and his blog is an invaluable resource for lawyers who want to follow.

Finally, I’ve been remiss in not yet drawing your attention to three Canadian blogs that made the Blawg 100 cut. You should go vote for them, and you should definitely read them. (Update: please also consider this to be their 2008 Clawbies nominations.)

FP Legal Post — Jim Middlemiss’s team at the Financial Post‘s blog tracks corporate law developments in Canada and worldwide, often irreverently. Maybe the only example anywhere of mainstream media getting the blawgosphere. Vote here.

Precedent: The New Rules of Law and Style — Welcome to the future of legal publishing. Precedent is also a young lawyers’ magazine, the rare one that authentically possesses that demographic’s voice and perspective. The online columns are terrific. Vote here.

Slaw — The talent on this roster, led by Simon Fodden, is unbelievable. The contributors’ list is a who’s who of Canadian (and increasingly, global) law bloggers. It’s not just the best law blog in Canada — it’s one of the best law blogs, period. Vote here.

The market doesn’t care

by with 10 Comments

Posted in: Clients, Innovation

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.

The power of positive blogging

by with 1 Comment

Posted in: Innovation, Law21

It’s not often I can derive a blog post from a tweet, but Debbie Weil‘s recent Twitter entry sent me to this thought-provoking post at CopyBlogger, and got me thinking about the purpose of the legal blogosphere. Brian Clark’s entry talks about the phenomenon of “social proof” — people’s tendency to judge the quality of a thing, in the absence of other reliable indicators, by its popularity — in the context of social media. Among other things, social proof is the fatal flaw behind Digg’s claim to be a useful news filter, and to my mind at least, connects up with Jeff Jarvis’s recent admission that editors are necessary after all. (HT to Nick Holmes on that one.)

But as Clark points out, social proof is also dangerous because “[s]ometimes, your message inadvertently convinces people to do or accept the opposite of what you want…. [S]ocial proof tells us it’s okay to do what we already want to do. This isn’t all bad, especially when it involves the acceptance of your message. But it can also result in negative social proof, in that it motivates people to do the opposite of what you want because you’re trying to change behavior already supported by social proof.” He cites examples like littering statistics leading to more litter and suicide coverage leading to more suicides.

This got me thinking about law blogs, particularly those that, like this one, want to encourage positive change in how the legal profession views its role, manages its business and serves its clients. You might have noticed, if you read (or write) these blogs or are familiar with the whole LPM genre, that a common tone in these conversations is frustration, if not exasperation, with the irrationality and immovability of the status quo. More hair has been pulled out over the billable hour, the alienated client and the overworked associate than any of us care to think. I now wonder if we haven’t been part of the problem.

If social proof operates in the legal blogopshere, then we run the risk that by constantly returning to the foibles and failings of traditional lawyer business practices, we actually reinforce them. Your average lawyer who happens upon a blog post railing against the billable hour, and promoting all the competitive benefits that would flow from changing your approach, probably doesn’t think, “Ah! You’re right! There’s a better way to go, and I can profit from following it.” That lawyer probably thinks, “See? Most lawyers, like me, still bill by the hour and keep their clients waiting. I’m not the odd one out, and I’m in no danger of being left behind.”

What can we, who write about these subjects, do to avoid reinforcing what we’d prefer to erase? Our options are admittedly limited: when most lawyers are doing it one way, and human nature is to do what most people do, we’re kind of up against it.

But I think we can refocus our efforts to find examples of lawyers thinking differently and acting innovatively, and to broadcast those examples with sufficient frequency and volume so as to disrupt the notion that “everyone’s doing it the old way.” The Financial Times’ innovative lawyers list is a good example, but I’m especially proud of the College of Law Practice Management’s Innovaction Awards (which I’m chairing this year), which specifically seek out the pioneering innovators in the law and promote their achievements. We need to accentuate the positive, to shake the perception that it’s okay for lawyers to walk the old ways because they have lots of company. We should do all we can to make the traditional road feel a very lonely one.

And this gives me a segue into responding to a meme I received a few days ago (on my birthday, no less) from Mary Abraham at Above and Beyond KM, asking a simple question: “How do you decide how/what/when to blog?” The “How” is: at a keyboard, with coffee, whenever I’ve got a story I need to tell. The “When” is: whenever an opportunity presents itself, which I can tell you is not nearly as often as I’d like.

But the “What” is the most important:  I want to write articles that help advance the day when the power of social proof works to benefit lawyers and their clients, not hinder them, because the old ways of doing business have fallen into disuse. I want to write about the legal profession as it should be, as it could be, and as, increasingly, it is.

These are the days of miracle and wonder

by with 10 Comments

Posted in: Innovation

I’m not American, I didn’t cast a vote in the Nov. 4 election, and I’m not especially partisan (nor is this blog remotely political). I just wanted to make a very brief entry here about the courage to innovate.

All of us have said, at one time or another, that there’s no point in trying to break the pattern — we can’t change our career, our law firm, our faculty, our company, our whatever. We tell ourselves to be realistic: we can’t get past the entrenched interests, irrational biases or suffocating inertia that stand in our way.

That excuse just lost a lot of its power. It’s now recorded fact and history that all these things can be overcome. The unconventional can prove wise, the remotest odds can be surmounted, the unprecedented can become precedent — and president. The world now has an astonishing template and argument for innovation; no matter your politics or nationality, you’re the beneficiary.

Twenty years ago, our parents would never have believed it. Twenty years from now, our children will take it for granted. But right now, it’s our tremendous fortune to stand right on the equilibrium between “It can never happen” and “It can happen,” and to marvel at it. Take a moment to revel in a game-changing victory for the courage to innovate — the courage to try.

Then go make some precedents of your own. It can happen. It just did.

Dispelling the myths of lawyer education

by with 3 Comments

Posted in: Innovation, Law School, New Lawyers

There’s an old story about a supposed experiment in which five apes are placed in a cage containing a stepladder. A banana is hanging from the roof of the cage, and a sprinkler with ice-cold water is positioned above it. Whenever an ape tries to climb the ladder to get the banana, the sprinkler comes on and drenches all the apes until the ambitious ape abandons the effort. Eventually, after numerous attempts and soakings, the apes learn to avoid the ladder altogether. Then the sprinkler is turned off completely.

Now one of the apes is replaced with a new ape, who, not surprisingly, heads straight for the stepladder to get the banana. The other apes set upon him immediately, beating and shoving him until he gives up — even though the water never comes on. Then another replacement ape arrives, and when he tries to get the banana, the other apes attack him — including the previous new ape who has never been soaked! Eventually, five new apes who’ve never been showered with ice water will nonetheless avoid the stepladder and the banana. And that, the story goes, is where policy comes from — that’s the way we’ve always done it around here.

The legal profession resembles that cage in a lot of ways, but how we educate and recruit new lawyers might be the best example. Our beliefs and practices about the legal training process owe far more to our professional myths and oral traditions than they do to the cold light of evidence. Here are two recent examples. Continue Reading

The law firm as middleman

by with 0 Comments

Posted in: Innovation

This past week brought word that Axiom Legal is working on opening its fourth office, this one in Chicago. The company is now at 230 lawyers and growing, not bad for an operation that hasn’t yet celebrated its tenth anniversary. Axiom is a firm that provides highly credentialed lawyers on a contract or project basis to in-house law departments for substantially less than what major law firms — many of which have incubated current Axiom lawyers — would charge.

Axiom has been a hit with clients, but an even bigger hit with individual lawyers, who have responded to the promise of interesting work on location with major clients at good (but not stratospheric) salaries and reasonably flexible hours.  Bruce MacEwen featured Axiom in a couple of recent posts, and the firm’s website offers plenty of articles in the business and legal press detailing its rise.

Axiom’s foray into Chicago is occurring around the same time that The Practical Law Company is establishing its first North American beachhead in New York.  PLC needs no introduction for readers in the British Isles, who will already be familiar with the legal know-how company that provides knowledge, transactional analysis and market intelligence for business lawyers and clients. Doug Cornelius at KM Space published an account of PLC in a post earlier this month, identifying the company as embodying the future of knowledge management.

I had the good fortune earlier this summer to speak with Ian Nelson, PLC’s vice-president of business development and marketing, who provided me with an online tour of the company’s offerings. PLC’s value proposition is that its own crack staff of lawyers collects and stays on top of critical information in business law, so that its customers don’t have to continuously duplicate that effort. It’s not far off the idea of private KM teams that I suggested in a post earlier this year.

These companies are among the most innovative entrants in a legal marketplace undergoing a great deal of upheaval, and they’re both worth your attention and consideration on their merits. But while they provide two different types of service, it seems to me they have one particular thing in common: they pose a disintermediation threat to law firms. Continue Reading