The New Normal of the legal market is all about value for the client. Value is in the eye of the beholder say the panelists in the Exploring the Nuance of Value session. Toby Brown, Director of Pricing, Akin Gump explained that he regularly talks to clients to learn what they mean by value. Sometimes it is lower cost, sometimes it is predictability, and sometimes it is regular, even payments.
Mark Chandler, General Counsel, Cisco Systems called value subjective. He explained this with a core microeconomics 101 concept: “consumer surplus”. Price is the intersection of the supply and demand curves (lines). The consumers constituting that part of the demand curve above and to the left of price intersection point would willingly pay more. So even in rigid classical economics, where there is a single market price, buyers assign different values to goods. I like that view. At core, Mark and Toby agree that law firms need to align how they think and work with law department needs.
Views differ on how best to deliver “value”. Some suppliers, er, I mean law firms, believe that delivering value means working and managing in new and less expensive ways. Four firms participated in a session on “New Model” law firms (which I moderated). All firms started in the last few years; all share the view that they must practice and or conduct business in new and different ways. A few panelist comments stood out for me:
- Just as business people cannot and should not meddle with law practice, “lawyers cannot meddle in how the business is run.” I also like what I consider two corollaries, “I have never met a lawyer in the business section of a bookstore” and “Why did we ever think that owners should manage?”
- Our value proposition: “Fine legal minds at one-half the rate”
- We built our firm with the view “Customer out, not partner down”.
- “We put our fees at risk”
Whatever their differences, these firms focus on delivering lower cost legal service. They have reduced the expensive downtown trappings of BigLaw and the huge staff support structures as well. They tap very experienced lawyers but manage them in new ways. Two firms explicitly separate business management from practicing lawyers. Two have invested heavily in technology to deliver lower cost, higher value service.
New Model law firms, however, have no monopoly on value. At least not according to the two InnovAction Award winners (see my separate real-time conference blog post on InnovAction for more details). The winners, Seyfarth (for Seyfarth Lean) and Littler (for Littler CaseSmart), both AmLaw 100 firms, say that big and established firms can innovate and deliver more value, that client’s don’t have to turn to New Model firms. Based on the innovations, I have to agree (though it’s not clear how many other firms are following in their footsteps).
With all the discussion of cost and value, it’s always helpful to remember that not everything that counts can be counted, at least not in dollars. Diversity consultant Vernā Myers gave a fabulous, dynamic presentation. She observed that diversity initiatives have taken a hit with economic tightening. As firms hire fewer new associates, they have become ever more credential conscious and risk-averse, which works against diversity. As firms hire lateral partners, they focus on nabbing big books of business, which favors older white men. A sobering reminder that lawyers need to remember that the drive for value cannot be focused only on pure dollars and cents.
You may wonder how technology plays into the value equation. As a conference co-chair, I saw no compelling topic on technology for the corporate legal market. In contrast, however, The Consumer Law Revolution session very much was about technology. The audience heard about a multitude of start-ups serving the consumer market. While these have much promise, the jury is, as they say, still out. We also heard about document assembly and interactive expert systems. Both have been available for years so it is not clear if they will have break-out moments. One panelist noted that given how many consumers cannot afford legal representation, it is morally reprehensible that lawyers deploy so few automated systems. I agree and would add that if general counsels were not cut of the same cloth as BigLaw, they might well call the limited used of tech by the AmLaw 200 scandalous.
As much as we hear about value and alternative fees and value, the change appears more evolutionary than revolutionary. In the session The New Normal from the GC Perspective, well-known ‘value advocate’ Susan Hackett of Legal Executive Leadership (and ex-ACC) made a forceful case for value and for change. Her GC co-panelists, however, on balance, seemed more concerned with expertise and cultural fit than explicitly reducing cost or redefining value.
Perhaps the biggest surprise for me was the session The Future of Managing Partners, which featured four managing partners. They focused mainly on culture and consensus. I heard much less about how these firms are adapting to the New Normal than I expected. I may, however, have been swayed by the Tweet stream. The Twitter conversation was quite at odds with the panelist comments. (Notes: 1. Archived conference Tweet stream here. 2. On day one, our hashtag, #COLPM, was the top trending term on Twitter!) The Tweets noting that the panel would not have been so different 30 years ago summed it up well. My favorite live moment was an audience question suggesting that “culture” is an excuse never to change. I’ve been there!
If I draw one, overarching conclusion from the conference, it is that the legal market is changing. It never changes as fast as I would like but the economic pressures are real. Enough clients now demand change and enough new model and traditional firms offer new approaches that I am confident we will continue to see real change. I am also confidant that large law firms that innovate to improve service delivery and client experience can maintain and gain share and profitability.