I am writing a round-up post to highlight recent news, a recent article I wrote about LPO, and four video interviews I conducted.
The State of Legal Process Outsourcing (LPO). I wrote an article on the state of LPO, Client market power means continuing cost-cutting, arguing that while LPO is growing, so too are many other alternatives to large law firms. It appeared in a legal efficiency supplement to the The Times of London on 11 June 2013.
Another Low Cost Service Center. Ashurst, the now global UK law firm, announced that it will open a low-cost service center in Glasgow, Scotland with 150 positions to start, 30 of which are fee earners. (Ashurst press release.) It will be the second UK firm to have a Glasgow center. By my count, over two dozen large US and UK firms now have low cost service centers.
Taxonomy of Law Firm Strategies. Bruce MacEwen, aka Adam Smith, Esq., is publishing a great series of posts on “a law firm taxonomy", in which he categorizes large firms based on their business model. In each post, he discusses the model and its merits. See http://www.adamsmithesq.com/
Can We Do Less Law? Clients seek more value from law departments and law firms. To date, they have focused on shifting the balance between outsourcing and insourcing and, for outsourcing (aka law firms), changing compensation arrangements. I keep waiting for general counsels to talk more about ways “to do less law”. A couple of weeks ago, the Wall Street Journal published How America Lost Its Way, a commentary that argues too much law stifles the US economy. More recently, the WSJ published Your New Secretary: An Algorithm, which, contrary to its title, is really about using advanced data collection and algorithms to help workers do a better job. Consider how such data, properly analyzed, might help companies detect illegal activities before it goes very far.
Video Interviews. At Legal Tech NY last January, I conducted several video interviews. Two I did on behalf of Project Counsel Media on e-discovery and two I did on my own about the current and future state of the legal market….
Lifting the Lid on New-Model Law Firm with Andy Daws of Riverview Law. Riverview Law is a new model law firm in the UK; Andy is the representative in N. America,
The Dealmaker’s Perspective on the Legal Market with Nick Baughan of Marks Baughan, an investment bank with deep legal technology expertise.
Putting the e-discovery ecosystem in perspective: an interview with David Horrigan of 451 Research. David is a lawyer-turned-analyst with the 451 Research.
Johannes Scholtes and ZyLAB talk about key e-discovery market and technology trends in Part 1 and Part 2.
Regular readers may realize I have written little about e-discovery recently: I lost interest in the predictive coding debates. Long ago I concluded that “smart” software, guided by discovery professionals, beats armies of lawyers conducting linear review. Now, however, an article by three Skadden Arps lawyers prompts me to turn back to e-discovery.
Partners John Beisner and Jessica Miller and associate Jordan Schwartz wrote a two-part article in Legal Technology News, Can E-Discovery Violate Due Process? (Part 1 (7 June 2013); Part 2 (10 June 2013)). The authors note the high cost of e-discovery and potential changes to the Federal Rules of Civil Procedure intended to reduce that cost. They argue that
“current discovery rules impose substantial burdens that pose a significant threat to defendants’ due process rights.” (Emphasis added.)
Specifically, they say that even if the proposed amendments to Federal Rules of Civil Procedure governing discovery (Note 1) become law, defendants will face costs that are too high:
“The reality for most civil litigation is that the defendants’ obligation to bear these exorbitant discovery costs incentivizes plaintiffs to serve burdensome discovery requests on defendants with zero downside risk to themselves…. because defendants seek to avoid these exorbitant costs, discovery is all too often used as a weapon to coerce settlement of claims, regardless of their merit”
Here’s where it get interesting:
“forcing a defendant to pay significant discovery expenses (without any contribution from the plaintiff) absent any finding of liability arguably infringes the defendant’s right to due process.”
They acknowledge that courts have yet to weigh in on the due process issue as applied to the producer-pays rule and note the novelty of their position.
After setting forth the case law and reasoning to support their view, they suggest additional rule changes:
“One solution is to establish a general rule that each party pays the costs of the discovery it requests, subject to adjustments by the court… A more modest step would be to expand cost shifting for electronic discovery…. While some courts have sanctioned cost-shifting for electronic discovery in their courtrooms, the rules currently do not require that courts consider cost-shifting when overseeing discovery.”
For better or worse, the US is not a cost-shifting system (Note 2). So, with the qualifier that I do not practice law, I will venture to say that their position seems to require line drawing. I see no clear and bright rule for applying “subject to adjustments by the court” or creating a framework for when courts should shift costs.
To the extent the due process argument has legs today, it probably would have been equally valid 20+ years ago when defendants fretted about producing 100+ bankers’ boxes of paper (as oppose to, say, 5 to 15). Even in 1990, I think some defendants said (or at least thought) “discovery is all too often used as a weapon to coerce settlement of claims, regardless of their merit. ” The essential issues today seem the same as they did then; only the quantities have changed. That makes me wonder whether leaving the legal market in another line drawing exercise helps.
Once we draw lines, I think we come right back to the predictive coding debate. If costs are “low enough", then cost shifting seems less likely; if costs are “high enough", more likely. The big discovery cost drivers are the technology services and professionals’ time to collect, process, and review data and documents. If we stipulate that automated discovery and review techniques
(1) cost much less than the alternative and
(2) are “good enough” (whatever that means - another line drawing issue!),
would courts order “automate” more readily than they would “shift costs"? So is due process just a back-door way to pressure the judiciary (or perhaps the legislature) to come to grips with how we do discovery?
I am all for driving down legal costs (Note 3) and appreciate the authors’ new and provocative thesis. My view that “due process is predictive coding in hiding” may be off-base. So I look forward to hearing other commentators’ reaction to the Skadden-authored article and my view.
* * *
Note 1: The article offers a good recap of the proposed rule changes; see also Proposed Discovery Amendments Move to Public Comment (LTN, 6 June 2013).
Note 2: It is interesting, and I suspect entirely coincidental, that this article appears days after the Obama administration proposed steps to curtail so-called patent trolls (aka non-practicing entities), in part, by cost shifting.
Note 3: Over at Twitter, I recently started a series of Tweets hashtagged #DoLessLaw. So far, unlike with many of my other Tweets, I have not managed to engage anyone on the topic. I find it deeply concerning that, all the chatter about better value notwithsanding, few seem to look for ways to create value by reducing legal complexity and legal acts. For more on that idea, see the Saturday Wall Street Journal, How America Lost Its Way, in which Niall Ferguson argues too much law is stifling the US economy.
In a forthcoming article on legal process outsourcing, I conclude that LPO “is just one of many alternatives to large law firms… just a small part of a new legal landscape.” Since I submitted it for publication, Altman Weil released its 2013 Law Firms in Transition, which provides insight into legal outsourcing in the US market.
Altman Weil sent surveys to 791 US managing partners and chairs in March and April 2013, receiving responses from 238 firms (30%), including 37% of the 250 largest US law firms.
Just under 50% of firm leaders believe that outsourcing legal work is now a “permanent trend", up from just over 10% in 2009. That seems a huge shift until we see what firms are actually doing. When asked “Is your firm currently pursuing any of the following alternative staffing strategies?", only 7.7% of leaders listed legal outsourcing.
The 7.7% answer, however, conceals a big difference between large and small firms. In firms of 250+ lawyers, almost 20% are are “currently pursuing” legal outsourcing (up from about 6% in 2010). The increase for legal process outsourcing (LPO) does not seem that big when we consider other alternatives to associates and partners. Specifically, in large firms, the jump in pursuing the use of contract lawyers is even higher. In 2010, 57% of firms were “currently pursuing” the use of contract lawyers; now, 87% are, a jump of 30 points. The survey does not ask about staff attorneys but anecdotal evidence suggests significant growth in that category among large law firms.
In thinking about the role of LPO, we also must consider the client side, which this survey does not cover. Many law and compliance departments use a broad range of alternatives to BigLaw such as staffing companies, managed review services, and substitutes for law firms such as the Big 4.
From the LPO provider perspective, the good news is that the market increasingly accepts LPO as a permanent trend. The bad news is that LPO faces competition from numerous other alternatives.
From the macro to the micro, from strategic direction to execution details, law firms face challenges. Several news items and blog posts last week take us through these pressing legal market questions.
The Strategic Overview. Bruce McEwen in A law firm taxonomy: Introduction (21 May 2013) offers an intriguing framework to think about how to classify law firms by strategic and market position:
- Truly global players spanning three or more continents
- Capital-markets-centric specialty firms headquartered in a global financial center—often historically tethered to a major I-bank
- Corporate-centric firms headquartered in non-global cities catering to sophisticated upper/-middle market, mostly non-financial services
- “Category killer” specialists targeting one broad but not necessarily high-intrinsic-value practice
- Traditional boutiques
- “The Hollow Middle:” One-size-fits-all, not a special destination, generic law firms
- Emerging “synergistic super-boutiques”
You can quibble with the taxonomy but the key point is that law firms compete in different segments. Firms need leaders who can identify the right segment, develop a strategy for it, and then lead execution of that strategy. Whether firms and their leaders can do so remains doubtful…
The Gap between Market Changes and Responses. A May 21st AmLawDaily blog post Survey: Firm Leaders Admit Downturn’s Permanent Impact reports on Altman Weil’s survey, Law Firms in Transition 2013: An Altman Weil Flash Survey. The survey finds a big gap between law firm’s belief about the future of the market and actions they are taking to respond to those changes. For example, 80% see a shift to fixed fee pricing but only 29% have made significant changes in their pricing; 96% see the new importance of practice efficiency but only 45% have taken steps to improve efficiency.
If firms are not grappling with known problems, I don’t see how they can address the bigger strategic questions that MacEwen’s post implicitly raise. Perhaps the fundamental challenge of leading law firms explains the gap between recognizing problems and taking actions to solve them.
The Gap between Leading and Following. Two blog posts over the long weekend suggest that law firm partners often reject attempts at leading and managing. Patrick McKenna writes today at Slaw Do You Know What It Takes to Be a Firm Leader?, lists 30 challenges new law firm leaders face. Pam Woldow writes in her blog today Loneliness at the Top: Managing Partners’ Scary Balancing Act that managing partners face a tough challenge giving up law practice to manage because returning to practice is hard. I believe these challenges have existed for decades; today, however, the failure to resolve them has more dire consequences.
The Gap between Expected and Actual Skills. Turning from the macro to micro…. gaps exist even in the day-to-day of how lawyers work. D. Casey Flaherty, in-house counsel at Kia Motors, pointed that out last week at his Legal Tech West Coast keynote speech, covered in Big Law Whipped for Poor Tech Training: At LegalTech, Kia Motors’ Casey Flaherty chastises firms for poor tech competency. (Legal Tech News, 22 May 2013). Flaherty
“recently launched his technology audit program, where firms bidding for Kia’s business must bring a top associate for a live test of their skills using basic, generic business tech tools such as Microsoft Word and Excel, for simple, rudimentary tasks. So far, the track record is zero. Nine firms have taken the test, and all failed. One firm flunked twice.”
As best as I can tell, he tests for fairly basic proficiency in the most widely used software.
In a Twitter conversation about Flaherty’s article, I asked “do we need a reference model for core lawyer competency skills beyond research + writing?” Picking up on both the Altman Weill survey and my question, Larry Bridgesmith writes in Coloring Between the Lines: No Way to Resolve Crisis (May 25th in the ERM Legal Solutions blog) that “[m]any more skills and needed competencies can be articulated and developed for lawyers and law firm leaders.”
Closing the Gaps. The articles and blog posts over the last week point out major gaps in large law firm performance. Bridgesmith concludes that “if we don’t stop worshiping the status quo, there will be no growth, only decline.” I agree.
I see two ways to close the gap of responses and the gap of leadership. One is that a few firms will figure it out; they will do very well indeed. The other is to allow outside ownership.
To close the technology skills gap, firm leadership must first recognize the gap exists. More clients like Flaherty would certainly accelerate recognition. The superficial answer to closing the tech skill gap is easy: more training. The real - and much harder - question, is how will firms motivate lawyers to obtain that training. The floor is open for suggestions.
Two New York Times articles on Monday make me think that lawyers have more in common with media moguls than I thought.
Solving Equation of a Hit Film Script, With Data explains that
“The same kind of numbers analysis that has reshaped areas like politics and online marketing is increasingly being used by the entertainment industry…. Now, the slicing and dicing is seeping into one of the last corners of Hollywood where creativity and old-fashioned instinct still hold sway: the screenplay.”
A consultant performs a statistical analysis on a draft screenplay that compares its content and characters to successful screenplays. Based on the differences identified, the consultant suggests substantive changes to improve the odds of success. Of course, “many top screenwriters… [reject] statistical intrusion into their craft.”
Sound familiar? Much like screenwriters, many lawyers view themselves as creative geniuses: “How dare someone try to tell me how to do or improve my work - I am an artist.” In my view, however, most legal matters are more similar than lawyers think and therefore even easier to analyze statistically than are screenplays. A range of tools exist today that can help analyze and standardize documents and, more generally, improve the delivery of legal services, ; examples include KM Standards, Exemplify, DiligenceEngine, Docracy, HighQ Solutions, and Neota Logic.
Lawyers, unlike screenwriters, however, do not have studio chiefs breathing down their necks. Studios have a big incentive to maximize the likelihood of success and, since they bankroll production, can often get their way. Law firm management is NOT to partners as studio chiefs are to screenwriters. If clients were to BigLaw partners as studio chiefs are to screenwriters, then we would see faster uptake of products that both improve the efficiency of producing and quality of legal outputs.
Perhaps the bling blinds clients… Coincidentally, another article the same day turns on the “artiste mentality”. For Media Moguls, Paydays That Stand Out reports that CEO pay per $100k of market cap in media far exceeds that of other industries. Part of the explanation:
“Compensation experts say executives who negotiate in the rarefied air of glittering celebrities may begin to see themselves as magical themselves… ‘It infiltrates your thinking,’ said James Reda, a consultant at Gallagher Benefit Services specializing in executive compensation. ‘They begin to think of themselves as deserving as much as the talent.’ Of course, we all think we are worth more than we are paid, but that’s where boards and corporate governance come in. Or not.
‘These companies have historically weak boards and super aggressive chief executives,’ said Alan Johnson, a compensation consultant. ‘And I think the boards get dazzled by interacting with celebrities and going to parties.’ ”
Sound familiar? Perhaps BigLaw partners indulge in some magical thinking as well. And perhaps they dazzle their clients. Granted, we live in a super star, winner-take-all economy. In the New Normal, partner super star status may be at risk for all but the top dozen firms. Beyond those firms … we may see the equivalent of studio chiefs and effective boards work their wonders. If it is not the GC doing so, increasingly, it will be the corporate procurement office.
One reason that clients of large law firms want alternative fee arrangements (AFA) is to drive efficiency. The right AFA structure motivates firms to maximize productivity. In AFA World, what does productivity mean and can firms improve it?
In Billable Hour World, “productivity” means annual hours billed per attorney. Elsewhere, it means “output per hour.” In a firm, think of output as briefs per hour, documents reviewed per hour, transaction documents written per hour, and so forth. In AFA World, firms that keep lawyer headcount steady but finish more matters per week or month make more money.
One driver of lawyer output per hour is support staff. The more “non core legal work” lawyers delegate to staff, the higher their output. Many firms, however, have cut support, at least in the form of secretaries. Until about 20 years ago, the typical lawyer to secretary ratio was 2:1. Today, 3:1 is the new 2:1. Many firms now drive it as high 5:1 or 6:1. In AFA World, that trend may have to reverse.
Consider an April 4th Business Week article that asks Where Have All the Secretaries Gone? It reports that companies have cut too many assistants. Now, highly compensated professionals spend too much time on low value tasks such as copying and booking travel. More assistants would improve overall productivity and pay for the extra cost.
The profit-maximizing amount of lawyer support in AFA World will be an empirical question. The answer lies in field work, data collection, and analysis. It lies in determining when lawyers should type and edit and when they should delegate that to assistants. It lies in figuring out who should do quantitative analysis, create presentation, conduct research, and format documents.
My guess is that higher secretarial ratios will still prevail in AFA World but firms will add other types of assistants, for example, business analysts and presentation specialists. Even for core legal work, firms might find that shifting some work, for example, “heavy” legal research” to specialists makes sense.
Smart firms will also ensure that their attorneys get really good at using core technology properly. That means training them to type and/or dictate and to use Microsoft Word, Excel, Adobe, and PowerPoint effectively. If you think lawyers are already good at this, look around and then read a series of articles in Law Technology News by D. Casey Flaherty, corporate counsel for Kia Motors America: Tech Drive - As part of beauty contests, Kia Motors’ corporate counsel tests associates to assess technology skills (Dec 1, 2012); Kia Motors Tests Outside Counsel Tech Skills (Jan 24, 2013), Kia Motors Tests Outside Counsel Tech Skills, Part II (Jan 25, 2013); Monica Bay Interviews D. Casey Flaherty at Legal Tech NY (video, Jan 30, 2013).
BigLaw today still seems to manage support for Billable Hour World. Firms have cut and re-jiggered staff but from what I see, they have not fundamentally analyzed or re-thought support. If AFA World arrives, law firms will have to re-visit their staff arrangements yet again.
A New York Times article last Monday, More Cracks Undermine the Citadel of TV Profits, offers the legal market lessons on how unbundling can shake-up established players.
With the growth of media delivery options, consumers no longer must buy bundles of channels from cable companies. They can watch what they want, when they want, on the screen they want, without buying more than they want. Incumbents fight this trend but the bundle likely will not survive:
“[T]he concept of the bundle has been foundational. Ads go with editorial content in print, commercials go with programming on television and the channels you desire are paired with ones you did not in your cable package. People were free to shop for what they wanted, as long as they were willing to buy a bunch of other stuff they did not [sic]…. though bundles may be a handy way of protecting things, they also tend to obscure the weaknesses within. Those flaws are becoming more apparent as the practice of bundling comes under attack…. once the consumer decides, it doesn’t matter what stakeholders want. They can’t stop what’s coming…. The advent of the Internet presented an existential challenge to bundles. Once consumers got their hands on the mouse and a programmable remote, they began to attack the inefficiencies of the system…. Change often comes very slowly, but then happens all at once.”
Substitute a few words and this could describe the market for corporate legal services. BigLaw still dominates but the unbundlers have arrived:
- Alternatives to law firm such as legal process outsourcing (LPO) providers, document review companies, and Axiom Law and its competitors. (For an excellent discussion on Axiom, see Richard Granat’s April 8th post, Is Axiom Law a Law Firm?)
- New types types of law firms such as boutiques (BigLaw expertise without its overhead) and new model law firms such as Clearspire (US) and Riverview Law (UK), which offer fixed fees and lower overhead.
- Law firms that offer unbundled services: Several US firms offer document review service from low-cost service centers. Multiple UK firms run their own alternates, with document review and paralegal support from low cost centers in Belfast, Scotland, or the north of England.
- The Big 4. At The Georgetown Law “Shrinking Pyramid” conference on April 12th, I tweeted ”@PaulLippe reports each Big 4 does $2-4B of ‘legal systems’ work adjacent to what law firms do. BigLaw lost out. #LawShrink”. (Note: that revenue likely dwarfs all the the alternatives combined.)
In the media market, consumers eagerly lap up unbundling. In the legal market, general counsels say they want lower cost so one might guess they too lap up the alternatives. But their appetite seems not nearly as voracious as media consumers. An April 19th Legal Week article (subs. req’d), Feeling the squeeze – GCs under pressure to cut costs are pushing for more value from their external lawyers, explains that, in spite of the drive for value, GC are surprisingly conservative about exercising the unbundling choice. It notes
“bringing more work in-house is the most preferable option to help cut legal spend… most GCs feel the easiest way of reducing legal spend is for law firms to cut their charge-out rates and offer alternative billing…. When it comes to outsourcing, in-house lawyers are still sceptical… [and] equally reticent about a new legal services venture set up by Carillion [an innovative ABS]”
So, will unbundling undo BigLaw? Partner profits in BigLaw remain healthy but under pressure. Firms have imposed cost controls and staff hiring freezes. Moreover, BigLaw continues to face an overcapacity problem, which drives a long-term issue of smaller new associate classes and the more immediate issue of “Suicide Pricing” (see Above the Law, Buying In: Suicide Pricing (16 Apr 2013 ) and Bruce MacEwen (Adam Smith, Esq.) in a Bloomberg Law interview, “Suicide Pricing” on Bloomberg Law (12 October 2012).)
As the Times notes, “change often comes very slowly, but then happens all at once.” Only time will tell if BigLaw will face the same challenges as Big Media. Even if it does, it’s worth noting that much of Big Media remains profitable. But the media players and industry structure keeps changing in unexpected and sometimes - for the players - terrifying ways.
Eric Chin of Beaton Capital recently wrote a nice analytic piece about the Charmed Circle law firms - the top NYC law firms. The Charmed Circle of BigLaw firms in the USA (April 9, 2013) presents an excellent financial analysis of these top firms. He invited commentary on his post.
Today Bruce MacEwen, aka Adam Smith, Esq., published his views as a guest writer. Adam Smith Esq on BigLaw’s Charmed Circle (April 18, 2013) sets forth Bruce’s views that circle members shift over time and, separately, the challenge of Magic Circle firms entering the NY market.
My comments, Charmed Circle and the luxury goods market (April 12, 2013) ask just how ensconced their position really is, though I cannot reach a firm conclusion. Here is are my comments in full:
What’s happened in the luxury goods market…
Luxury stores and brands such as Tiffany and Hermes are subject to economic ups and downs but I have seen no evidence of fundamental changes in the buying behavior of their customers. Contrast the luxury goods market with retailers of consumer electronics in the USA, where the rise of Amazon and other online stores led to Circuit City (a major Big Box store) and other chains to go out of business and to Best Buy (the one surviving Big Box electronics store) having to re-tool its selling approach.
So the question I have is whether the Charmed Circle is more like the luxury sector, subject only to economic ups and downs, but facing no fundamental change in buying behavior, or more like electronics, where buyer behavior has permanently changed.
The way to gauge that would be understanding how much pricing pressure they face. And the way to answer that would be to know what their realization rate is, which we do not.
What this means for law firms…
We do know that that the many firms tracked by Citi Private Banking have seen realization rates drop by about 10 percentage points, from the 1990s average of about 93 or 94% to an average today of about 84%. If members of the Charmed Circle have experienced that drop as well, I think that would speak volumes about the sustainability of their growth and margins.
Even if they do face such pressure, however, I suspect their competitive position is safe for the foreseeable future. Two or three dozen law firms likely think they are in the top 10 firms that do not have to worry about their future, that the market for their “unique and branded expertise” is safe.
The fact is, however, that here is just not that much high-stakes, price insensitive work, where clients will pay premiums and buy the brand to sustain a large number of firms. But I think that sliver is large enough to sustain the Charmed Circle firms.
For me, the more interesting question in the US market is what happens to the firms that cannot lay claim as clearly to being the go-to experts for certain high-stakes work.
- - - -
My coda here is that I fear, as price and value pressure continue, that many firms face a squeeze. The brand of Charmed Circle firms will carry them quite a ways. But what of the AmLaw 20 to 100. Some have good differentiation but many do not. Time may be running out for some.
This is live post from the Georgetown Law conference, The Shrinking Pyramid: Implications for Law Practice and the Legal Profession. This session is Collaboration and Innovation in the New Normal. (As this is a live post, please forgive any typos or failures accurately to report speaker points.)
The academics presenting at this session and their works:
Collaboration: A Challenging but Strategic Imperative for Today’s Law Firm, Heidi Gardner, Harvard Business School
Changing Career Models and Capacity for Innovation in Professional Services, Michael Smets, Aston Business School and Timothy Morris, Said Business School, University of Oxford; Namrata Malhotra, Imperial College Business School
The Moderator: Reena Sengupta, RSG Consulting
The Panelists: Kim Koopersmith, Chair, Akin Gump Strauss Hauer & Feld LLP;
Stephen Denyer, Global Markets Partner, Allen & Overy LLP
Heidi Gardner, Harvard Business School, Collaboration: A Challenging but Strategic Imperative for Today’s Law Firm
Studies teamwork in professional services firms. Worked 5 years at McKinsey. Over last year, has looked more at law firms and has collected data over this time.
A core tension exists. On the one hand, in PSF there is increasing specialization. People are rewarded for developing narrower and deeper expertise On the other hand, the market grows more complex and requires multiple types of expertise to solve problems. This is “differentiation v integration”. Collaboration Practitioners often suffer from the fallacy of uniqueness.
There are multiple challenges to collaboration in professional service firms. People in different areas of expertise have different world views and different vocabularies. Working across boundaries requires re-negotiating status (who’s in charge). That may sound simple, but it’s not. The “star culture” reinforces individualism and makes collaboration harder.
The “Performance Pressure Paradox”. On high stakes projects, collaboration is essential. But key leaders become risk adverse. This leads to bad group dynamics and weak team performance. This leads to using the most important knowledge less than they should. Because the senior people can’t let go of control, they collaborate less.
Yet the data show that average revenue per client increases significantly with growing collaboration across practices. Heidi looked at collaboration at the matter and client level. She found that on a project basis, cross-discipline and cross-practice collaboration drives up revenue. She has hypothesis that this also improves client stickiness.
Some research suggests that people who collaborate identifies more with their firm. This improves satisfaction and retention. It also institutionalizes relationships and the market knows this. So this lowers the portability of and value of individual practitioners.
So there are many reasons to promote collaboration… but it is not easy to do. Need to figure out what’s in it for the individuals.
Heidi is studying law firms - likes the fact that time is recorded because this provides very granular data on who is doing what. She has data for 8 years, spanning economic cycles, so research can generalize across economic situation. Over 500 professionals, over 150,000 person-project combinations.
Here are some findings from her research.. Collaboration leads to higher productivity. The more individuals a fee earner work with year one, the more they will bill in subsequent years. Cross-practice collaboration is a better predictor of revenue growth than within-practice collaboration. Adjusted r-squared of regression is 0.58 (RF: pretty good, not great).
So, how does collaboration help? Reciprocity is one mechanism: give work to a colleague now, more likely to get work in the future. Reputation is another mechanism: the more people with whom a lawyer works with, the more her reputation spreads through the firm. This can support higher hourly rates.
Collaboration benefits rainmakers. Heidi compared two nearly identical lawyers based on practice, graduation date, and hours billed. One with bigger network has 4x the revenue. But cause and effect is unclear.
Michael Smets, Aston Business School: Changing Career Models and Capacity for Innovation in Professional Services
Says that legal is a perfect storm now. While clients demand novel solutions, the knowledge behind the novel solution becomes a commodity quickly. This requires constant innovation in law practice substance. Who does the innovation? It’s the lawyer talent. On the talent side, there is war of people, a challenge of work-life balance, and question if new generation is willing to work as hard.
Innovation in law firms has three dimension: legal solutions, operational changes (service delivery), and business model innovation. Lawyers, if they do any innovation, is in legal solutions (substantive law). Research focuses on legal solution innovation and the professional talent that drives it.
Discusses how to turn talent into service delivery…. One option is knowledge leverage (knowledge management systems). Another is via leverage: senior lawyers guide junior lawyers. Leverage drives the shape of the pyramid. To convert talent and leverage to service delivery requires billing hours. Talent faces pressure to bill many hours. The incentives for this: direct compensation, deferred comp, life-long career, and human development capital.
Most of the legal solution innovations comes from top of pyramid. But the pressure to bill hours at all levels dampens incentives to invent new solutions. The up or out pressure also hampers innovation. Political pressure to assimilate, social pressure against maniac hours.
The tensions in the model have led to creation of new permanent positions: counsel (Legal Director (UK?)) who are salaried, experienced lawyers with no rainmaking responsibility but firm-related bonus; permanent associate but smaller bonus; professional support lawyers who are experienced and support billing lawyers who get salary only.
Suggests that more junior lawyers are motivated to innovate legal solutions to develop their own business. With experienced lawyers in non-partner positions, the juniors can tap their know-how to do so. This frees up partners to sell more work since they no longer need to spend so much time on creating new legal solutions. [RF: not sure I got this right and if I did, not sure I agree it’s right. Missing link for me is how often does legal innovation win business versus providing good solutions with better service delivery.]
In summary: innovation capacity is linked to career model; consistent operating model enhances innovation capacity; innovation hinges on requirement, motivation, and ability; use new capacities strategically, not ad hoc; new career models can create a win-win situation for firm and staff.
Koopersmith agrees in part and disagrees with presentations. Akin Gump values cross-selling - that’s the best news for promotion to partner and higher compensation. Does not look for exponential benefit of cross-selling. With respect to shape of organization: we have associates, staff attorneys, off-track associates, senior counsel, and partners. Does not see the non-partners as the ones driving legal solution innovation. Also, junior lawyers often have innovative ideas.
Denyer agrees but says almost all of the legal solution innovations has come from non-partners. Often, doing that is key to associate becoming a partner. Also, UK firms have always had to operate on a cross-border basis, which has meant a lot of collaboration. We have been forced to look for ways to innovate because there are so few others way to differentiate. Contrasts UK to US; in former, he says fewer opportunities to become highly specialized (RF: not sure I followed this entirely).
Denyer is surprised not to hear more about comp structures, specifically lock-step v eat-what-you-kill as issue in innovation. Heidi says she sees a wide range of collaboration behaviors within the same firm and so it’s not clear comp structure drives this. Koopersmith thinks that lock-step would drive more collaboration and innovation because less worry about who “owns” the innovation.
Heidi often hears lawyers say “my clients won’t pay for collaboration”. Denyer thinks this must be lawyers at clients who are very focused and non-collaborators, not the GC. Koopersmith: says this is like hearing “it’s all about me", which is not what managing partner wants to hear - or what client wants to hear.
Audience member points out some GCs say cross selling is their biggest bane. Koopersmith responds that the attitude is right reaction to _bad_ cross selling. Good cross selling means really understanding the client, working closely with them, identifying potential opportunities, and offering new service in context of deep and trusted relationships.
Discussion of role other professional can play in cross-selling, collaboration, and innovation. One Dutch firm was able to increases its China business through effort a non-lawyer professional. Akin Gump has Pricing and Analytics Director who helps identify client needs and focuses on putting together teams.
I periodically report on personal productivity issues based on my experience. I’ll start with the good news - a neat expense tracking app - and the move to the bad news, cloud disappointment and Verizon FIOS.
Expense Tracking Made Easy. I started using BizXpenseTracker on my iPhone and really like how easy it makes capturing expense information, including receipt photos. It saves a lot of time by making almost-real-time expense tracking easy, which I find much better than waiting until a trip ends. To submit expenses, the app offers several options. I e-mail myself an Excel spreadsheet and PDF of receipt images. You can buy an add-on app to sync to a computer desktop but I am loathe to install yet more software so skipped that option. The iOS version of the app back-ups to Apple’s iCloud or to Dropbox. It also synchronizes between i-Devices. It’s a big time-saver and I have only one minor complaint: I find syncing between my iPhone and iPad unreliable.
Cloud Disappointment. It turns out that the cloud giveth but it also taketh. Google announced that it will soon discontinue Reader, its cloud RSS aggregation software (which collects “feeds” from multiple blogs and new sources to read in one place.) I moved to Reader some time ago when Bloglines shut down its cloud reader. Now, I am again in search of alternatives. I have tried Feedly and Netvibes. Netvibes is out because, for me, it does not seem to collect all my feeds (or it does, but too delayed, just not sure). Feedly is pretty good, especially on i-Devices, but I miss some browser keyboard shortcuts that Google offers. When cloud services come and go, it’s takes time to evaluate and learn the alternatives.
I also see other cloudiness. To Tweet, I use HootSuite, a web-based service to monitor and post to multiple social media services. Recently, a key feature - search - stopped working in the Chrome browser. HootSuites’s help acknowledges and promises a fix. So my romance with clouds is over. No longer can I assume that the only change will be more cool new features. That said, it’s not so bad if I compare it to my experience with desktop software. For example, I regularly find deficits in Microsoft products, and they have had 2+ decades to get it right in some instances.
Verizon FIOS Outages a Time Waster. In the fall I switched to Verizon FIOS for home Internet. Starting in late January, over several weeks I had three service outages (voice and internet), none of which Verizon could explain. After the second outage, I had a long-ish call with a tech on an escalation support team. As I understand the situation, Verizon does not have reliable diagnostics down to the neighborhood or household level. After the third outage, I had Verizon replace all my on-premise equipment. So far, so good, but that seemingly drastic step was necessary to eliminate one potential cause, should I experience another outage. Of course, all this is a huge waste of time: reporting the problem, waiting for callbacks, waiting for service techs to arrive, and relying on a slower mobile data connection until service is restored. The situation is also surprising given that FIOS is a relatively recently designed and deployed - and seemingly high tech - system.
I’ve been disappointed not to see more client-facing systems in the legal market. I recently wrote an article suggesting potential explanations.
That article was published in the premier issue (March 2013) of Legal It Today, available for download and subscription here. You can also read it on this website, here.
It elicited little feedback so I am posting a short summary here. Any confirmation or rejection of the theories I propose is welcome.
Two recent surveys found that few firms use technology to achieve substantial client impact. In May 2012, I surveyed large firms to update a list of client-facing systems that I compiled six years ago. I was surprised by how few new online services I found. In November 2012, the FT issued its US Innovative Lawyers 2012 report, based on survey research and interviews. Legal tech barely features in it.
THE POTENTIAL EXPLANATIONS
- Firms lack interest
- The CIO has no time
- Individual partner and institutional firm interests diverge
- Lawyers are too risk averse
- Firms lack investment capital
- Firm management has no time
- Law and legal advice are too complex
- Clients lack interest
WHAT THE FUTURE MAY HOLD
- Alternatives to BigLaw gain share, in part with client-facing technology
- Some large law Firms Innovate to build systems, they gain share
- Clients act on their own to build systems
- No change
Is your factual assessment different? Or do you have other theories, or predictions? You can e-mail here: info at prismlegal dot com.
This post is a follow-up to my January 7, 2013 post, The Role of Data Driven Models in Law Practice. I offer here ideas about data that lawyers should consider collecting and analyzing to predict and reduce legal problems.
In the earlier post, I discussed an article, In What Computer Models Can - and Can’t - Do, by Ryan McConnell (Baker & McKenzie partner), Dianne Ralston (Schlumberger Ltd. deputy GC), and Charlotte Simon (Baker & McKenzie associate). Their ideas intrigued me but I was disappointed that they seemed to conclude that, because of “noise", data models would not be helpful in their compliance practices.
To spur thinking about where data collection and modeling might help avoid legal problems and support compliance, I offer below a few ideas to consider. These may be hard to execute or may fail. My deeper concern is epistemological: how do we know what might work?
Am I the only one who thinks it odd - and wrong - that large corporate law and compliance departments seemingly conduct little or no research and development? Companies that employ hundreds of lawyers and compliance professional already spend a lot on law. Why not do some R&D to find ways to reduce cost? Granted, that R&D might yield poor results. Without trying, however, how do we know? Perhaps the research would lead to much lower ongoing legal or compliance costs.
So, here goes with some possibilities:
- The authors discuss the possibility of using job descriptions to aid in compliance bu conclude there is too much noise in that data. More data often solves noise problems, so why not aggregate job descriptions across companies - that could yield more insight into problematic positions or locations than any one company’s data. Thinking about ‘compliance as a utility’, there may be multiple opportunities for companies to share non-competitive data to improve compliance. Large data sets, as the authors observe, usually yield more reliable results.
- Companies have a very rich, extant store of data that may well yield compliance clues: e-mail messages, files, and databases. Subject to privacy and other potential legal limits, companies could analyze the e-mail headers to look for suspicious patterns of communication. Suspicious might include too much, too little, or unusual combinations of people in touch. Start by finding a known compliance problem and do this analysis retroactively to learn what analysis might be predictive.
- Going one step further with e-mail, companies could perform semantic analysis on e-mail content (not just headers) to look for suspicious substantive discussions. Already in the 1990s the US financial sector did this (using, for example, Assentor), to identify broker e-mail messages that violated securities rules. Today, with the predictive coding techniques developed for e-discovery, much more is possible - and affordable.
- Corporate data does not stop with e-mail. Databases to support operations, sales, and expense management may also yield pointers for where to look for compliance issues. With social media, the possibilities seem endless.
- If the data the authors cite, and if e-mail and corporate records do not suffice, then collect data. Compliance officers could consider web-based surveys. If that loses too much nuance, then they could deploy a team of low cost lawyers to make outbound calls to interview selected employees and systematically enter the interview results into a database for analysis. Who said we have to stop with off-the-shelf data?
- Models may never be 100% reliable. The question is whether they are reliable enough for triage. If a model can bucket outcomes into ‘almost certainly not a problem’, ‘almost certainly a problem, and ‘may be a problem’, then lawyers at least have some indication of where to look. A team of offshore lawyers could apply human judgment to refine model results and surface the most suspicious findings to inhouse counsel.”
These ideas are not even in the Big Data realm. All these ideas can be tested with tools that have been available for years. The floor is open for other ideas, Big Data or otherwise.
This post captures my live Tweets from the Ark Law Firm Pricing and Profitability Conference occuring now in NYC. This Tweet stream is from the keynote address, The State of Pricing in the Legal Profession Today, by Toby Brown, Director of Strategic Pricing & Analytics, Akin Gump Strauss Hauer & Feld LLP.
Below are my Tweets in chron order minus the hashtag for this conference, #ArkPnP2013. @gnawledge is Toby’s Twitter handle (name).
@gnawledge has formed a legal group of over 200 people focused on pricing. LMA is home (in a SIG)
Fulbright survey found AFA declined. @gnawledge questions this. But partly depends what we mean by ‘alternate’
Pricing in legal is defensive - about holding on to what law firms have.
To do pricing in BigLaw, skills needed: 1. ability to interact w partners 2. willingness to embrace unknown.
RT @nicholasnv: Function of strategic pricing is to maximize profitabily firmwide, not just at the matter or practice levels.
“Pricing is utter chaos”. Some firms have very experienced pricing profs; others barely have anyone focused on it
Firms struggle where pricing function belongs in staff structure. @gnawledge not currently in a department at Akin Gump
Knowing what clients want is biggest success factor in good pricing. Ask clients “where does it hurt”.
At one client, the pain point was first year associates. The real answer was not to put them on matter.
The pricing person has to model profitability. Existing tools look backwards; tools for prospective profit analysis emerging.
The pricing person has to monitor matters - but lawyers don’t want to be held accountable. Must give them actuals v budget.
RT @joshuafireman: Profit drivers: Rates, realization, productivity, leverage @gnawledge
Each point drop in realization translates to a one to three point drop in margin.
Firms must rely more on leverage to maintain profits. Partners must push work down - but they worry about their hours.
Firms will have to adjust partner compensation to encourage appropriate pricing and profitability.
Pricing is chaotic on client side. A few companies, e.g., GSK, focus on paying market price.
Clients not yet very good at specifying scope. Some RFPs do not make clear what client really wants.
Client trust is broken. Angry at 1st yr associate comp + PPP level. Price pressure will continue until those change.
Very easy for clients to seek discounts. When clients freeze rates, class bumps stayed.
Legal procurement has had mixed results. GC + proc profs still struggle. Still focus too much on hours.
In rational markets, info widely available. Legal market lacks transparent pricing.
Firms + clients ‘are begging for some rationality in market’
Existing + new players beginning to provide legal market price data.
@gnawledge backing away from emphasis on phase + task coding.
Law firms don’t know what they sell. Matters not sufficiently characterized to compare + analyze.
Law has been ‘no stone unturned business”. Clients want fewer or cheaper hours. But they need to more explicit about it.
Pricing and legal project management will continue to grow as firms struggle with price and margin pressures.
Lawyers and legal market professionals need to learn to love statistics more.
More In-House Lawyers Question the Billable Hour by ACC President & CEO Veta T. Richardson in Corporate Counsel magazine (13 March 2013) criticizes a finding concerning alternative fee arrangements in the recently published Fulbright Litigation survey. Her conclusion may well be correct but the evidence she cites does not, statistically speaking, directly rebut the finding she questions. In my reading, the time periods and questions ACC asked are not close enough to compare results directly.
My goal is not to weigh-in on the disputed finding, whether GC are increasing or decreasing their use of alternative fee arrangements. Rather, it is to discuss statistical validity.
Too many legal professionals are uncomfortable with numbers and more still with statistics. I believe that explains persevaration over predictive coding, failure of many legal market surveys to publish the number or demographics of respondents, and incorrect comparisons (see, e.g., my post, 2008 AmLaw Tech Survey.)
Ms. Richardson points out that ACC has a larger sample than the other survey. In general, larger sample sizes are better than smaller sample sizes. But a big sample that fails accurately to represent the population is not necessarily more reliable than a small one. Beyond sample size, the questions asked matter a great deal. Do any AFA studies directly ask about the dollar spend for which the respondent is answering the AFA question?
The point is, statistics is a nuanced science. It’s scary when legal professionals start arguing stats. Fortunately, the next generation of lawyers may do better. Today, Dan Katz, a professor of law at Michigan State University, posted his syllabus for his Quantitative Methods for Lawyers class.
This is a live post from the Reinvent Law Silicon Valley conference in Mountain View, CA. Please forgive any typos or errors in conveying what speakers say. Now up, in a six minute Ignite-style talk, is Kingsley Martin, CEO of KM Standards (formerly Kiiac) on Reverse Engineering Legal Logic.
Until today, we have followed inductive approach to law. But deductively, we can read documents to find out what they mean and what’s common. Kingsley says he is close to breaking the “subjectivity barrier”. Just as we will have driverless cars, we can have machines that draft contracts.
Some argue that we need intuition to think. Kingsley: when you measure by outcomes, does it matter what the mechanism is?
Find, analyze, and optimize are the three steps to make a decision or draft a document. Consider as example of buying a car. First, find info on all cars. In past, this would have required trip to library or consulting friends. Today, we solve by Internet search. Second, analyze the cars. With Amazon and other tools, we can use “faceted search” to narrow results and compare results ("Structural Classification"). To optimize, you need to be able to pull data from documents (from search results) and interpret.
Technology can find contracts - that’s easy. Most of Kingsley’s effort is to analyze similar sets of documents to identify relevant elements and come up with a checklist or template of common elements. Analysis also assesses how similar or dis-similar each clause is. “Standard” clauses have little variation in clauses across documents. Where there is heavy variance in language, it either reflects heavily negotiated clauses OR by lawyer personal preference. Some clauses are relatively rare but these have little variation. A fourth set of clauses are both rare and vary - these are deal specific.
A computer cannot draft a document from scratch - but it can pull clauses and combine. Computer can also reverse-engineer the logic to derive the questions that need to be asked. Beginning the journey to be able to data mine out of documents all of the necessary clauses. Will be able to benchmark, provision by provision, whether clauses meet market standards or raise issues in courts.
Let’s assume that today, humans are more capable than computers. But with computers doubling in capacity every 18 months… they will overtake humans. [RF: this is the Ray Kurzweil Singularity argument.]
This is a live post from the Reinvent Law Silicon Valley conference in Mountain View, CA. Please forgive any typos or errors in conveying what speakers say. Now up, in a
six minute Ignite-style talk, is Kevin Colangelo, managing partner of Youson & Irvine on Building the Law Factory.
Prior to current law firm, was an executive at legal process outsourcing provider Pangea3. Will give insight into what it took to build a law factory.
Getting work done and efficiently can be accomplished in any location; does not have to be done in India, where Pangea3 (PS) started. In 2013, the template for efficient legal services is better known. In 2005, when P3 started, there was no model, no template for practicing law more efficiently, for leveraging process and technology.
It’s imperative to change the operating model. Law + Tech + Design + Delivery is Reinvent Law approach. P3 focused on People, Process, and Technology. The technology was the easiest part. We were able to log all calls, e-mail, attachments. So all workers could track all client matters.
Process discipline is not that hard. It requires defining, measuring, analyzing, training, testing, and continuous improvement. We shared with our clients the processes we used. Transparency is good. Helped show defensibility of work.
People is always the biggest challenge. Lawyer are similar everywhere, resistant to change. Uses analogy of Henry Ford building the first-ever assembly line. Ford needed to add culture to make the assembly line work. P3 made sure that everyone was engaged, irrespective of role in organization. Says that this culture is very much lacking in BigLaw today.
The Law Factory is a great place to be - if you maintain the culture.
This is a live post from the Reinvent Law Silicon Valley conference in Mountain View, CA. Please forgive any typos or errors in conveying what speakers say. Now up is Raj Abhyaker, CEO of LegalForce, on “Making Fat Law Firms Flat through Operational Redesign for the age of the Internet”.
[RF note: LegalForce hosted a reception last night at their retail store in the heart of downtown Palo Alto. It’s a very cool space.]
Background: Raj was a an IP lawyer. When he raised ideas to be more efficient, lawyers with whom he worked were not interested. So he started as a solo in 2005 and, at same time, created a start-up company. In 2008, started a company to collect government trademark data and make it accessible on the web, which Google was not indexing. Trademark site gets a lot of web hits; one of biggest on web. His firm has become the world’s largest trademark filing law firm. Now has 24k clients, adding 500 clients per month. To make law even more accessible, started a retail outlet. Most interesting to Raj is that AmLaw 10o firms are asking him about his technology and methods.
Nine ways to redesgin large law firms into a modern force:
1. Globalize Operations, without sacrificing quality. Move repetitive, detail oriented, recurring tasks to global workforce in lower cost locations. “Redesign the supply chain.”
2. Rethink Associate Compensation. Move from tenure to contribution-based compensation. Reward responsiveness within minutes or hours (implicitly: not at end of year at review time!). ID and reward fiscal and business talent, even in new associates. Firms should develop clien. Legal ‘t service metrics and then evaluate associates based on how well they service clients.
3. Hire JD/MBAs for Management Functions: Partners should elect a president with real power to act; he or she should be JD/MBA, no billing responsibility, and ability to bind direction of firm on own w/o partnership vote.
4. Broadcast Goodwill via the Web: Spread any public event over the web. Use more video. Broadcast educational video widely. Hire a full-time video producer. Let the community use conference space for beneficial events.
5. Invest in Retail Access to Law, Not Lobbies: Create destination retail experiences that enable firm to operate on Main Street Be accesbile retail hours, including nights and weekends. Change the paradigm of what the firm is and how clients access it. Open kiosks at your clients. Large firms have big opportunity here.
6. Make Lawyer Calendar Visible to Clients: Web based access to lawyers; web-based appointment making
7. Legal Dream Teams May Span Firms: Let corporate clients build their own ‘dream team’ across firms
8. Preventive Care at Subscription Rates:
9. Predictive Intelligence. Get smarter about the future and decision making
This is a live post from the Reinvent Law Silicon Valley conference in Mountain View, CA. Please forgive any typos or errors in conveying what speakers say.
Dan Katz of MSU Law: The Future is Already Here - It’s Just Not Evenly Distributed
Storm brewing in legal. Complicated. though. Simple version:
1. Under-investment: senior partners of law firms have different views of decisions than more junior ones. Juniors may want to invest for long term but seniors want money in pocket now. Incentives are very strong to maximize current income over increasing the future value. (RF: I’ve long thought about the inter-temporal tensions of law firm partnership model.)
2. Dimensions of Competition: What are the differences between closely ranked AmLaw firms? (RF: or even those not so closely bunched in rankings>) If we can’t tell difference in substance, then focus on tech, design, and process. But firms that say they are different… it’s just a bumper sticker slogan. Compare to modern manufacturing, Fortune 500 logistics, or modern Operating Room..
3. Client Sophistication: GC face pressure still from financial crisis to limit legal spend. Legal exceptionalism is over. GC demands no junior lawyers; instead, work with unbundlers such as LPO, insourced services, or managed review companies.
4. Lawyer Regulation: Restrictions on non-lawyer ownership is big limitation on competition and innovation. That’s why UK has changed rules with Alternative Business structures. This rule protects lawyers, not clients. If law firms can’t raise capital and others can, then firms are at a disadvantage.
5. Legal Tech Industry: Bill Henderson asked at Legal Tech NY who are the long list of exhibiting? They are the companies who are raising capital and who are taking work away from BigLaw. How can law firms compete? They have to become the competition
6. Why Can’t a Law Firm become Something Different? Why don’l law firms have R&D departments? Individual partner incentive is to maximize short-term gain versus investing for future. Very hard to overcome. But it’s possible to start over. How can we see new players emerge in face of current regs. We see rise of new entities that combine law firms with related service entities (RF: see my prior blog posts on Clearspire Law). But legacy platform just doesn’t refer to software - it also refers to people. BigLaw lawyers are the installed base! No need to wait for Model Rule 5.4 to change… there are business models now that allow investment in legal market.
This is a live post from the Reinvent Law Silicon Valley conference in Mountain View, CA. Please forgive any typos or errors in conveying what speakers say.
Who Owns the Law? Ed Walters of FastCase
Government works are public so on its face, public owns the law. But Ed says it’s not so simple. If you think about ownership of the law in terms of traditional property rights, then for many years, Lexis and West have owned the law.
Says Westlaw walked into DOJ and stole the in-house KM system being built, Juris. West said in 1983 that it wanted to help DoJ maintain its system. As added bonus, West would add cites to Juris. When contract came up for renewal in 1993, West wanted 3x as much for renewal. West said original contract gave Westlaw ownership rights to any co-mingled content, which addition of cites did.
Fastcase, a legal research company, wanted to put Georgia code online. When Fastcase went to upload, saw a LexisNexis copyright notice. Ed checked with L-N, which said it did indeed own the GA code. b/c LN writes headlines, claimed ownership of GA code. Ed said, ok, so I want to license. Four months later, LN said never will we license the GA code to you. (A slide shows flipping the bird.)
No one, however, thinks that state statutes can be copyrighted. Turns out to be cheaper to re-write catch-lines in code so Fastcase did that rather than litigate.
Only Thomson Reuters and Reed Elsevier have claimed ownership of the law. Should we stand for this? Should we care?
Ed says best versions of state codes are now maintained in academia. They are visual and better than commercial versions. We should not force innovators to have to buy code to build innovative new products. We should care that citizens do not have unfettered access to the law.
Allowing the big companies, with the big bucks, to push around everyone on ownership of law stifles competition and innovation. But the law is ripe for revolution and re-invention. Since law is not under copyright, reinvention can happen even faster than in music or movies. Also, law has a deep inherent architecture that makes it a fascinating data set with which to work. Ed, as example, shows a data visualization of FastCase presents to help users find and understand the law. If the data are available, much innovation is possible.
Says he does not fully blame TRI or Reed b/c they put out good products. But states have more obligation to make the law both free and open. Free is not enough; open is key: it needs to be in open formats, authenticated, and available for bulk download.
Who owns the law? We do. Law is not jut dusty books. It’s an important achievement of human species. Law is moral document. We cannot cede ownership to private companies. Take our law back.
Earlier today I posted five Tweets that tell a short but compelling narrative of the sea change in the large law firm market in the US and other Anglo nations.
1. Bruce McEwen, aka Adam Smith, Esq., wrote a great series of blog posts called Growth is Dead, now a book. Last week, Bloomberg Law interviewed Bruce for an excellent 12-minute recap.
2. Separately, ERM Legal Solutions posted an item last week that picks up on one Bruce’s key themes: the loss of law firm pricing power. Crossing the Chasm: Thinking Clearly in the Legal Pricing Crisis reports on a legal pricing conference and how firms and clients can bridge the pricing gap.
3. I was intrigued to read over the weekend a Legal Futures post (UK), UK LawNet raises bar with new client service standard. LawNet helps its smaller-law-firm members standardize their practices and client service, including “mystery shoppers” and ISO standards. Service principles vary little by customer size, so BigLaw canlearn service delivery lessons from LawNet.
4. I expect that these cross currents will the subject of much discussion this Friday (8 March 2013) at Reinvent Law Silicon Valley, which , I will attend. It is a “conference devoted to law, technology, innovation, and entrepreneurship in the legal services industry.” It focuses on new ways of operating in the legal market. It’s hard to imagine a conference like this attracting some 400 legal market participants a few years ago.
5. Capping off my Tweet stream, I noted that the Washington Post published on Sunday Value Added: Home is where Potomac Law Group wants its workers, about a DC-based “new model law firm”. It is growing rapidly by tapping the market of experienced lawyers who don’t want to work full-time. I have spoken to founder Ben Lieber, featured in the article and he was a panelist on a session I moderated on new model law firms last fall. Ben is one of many lawyer-entrepreneurs now creating new and more cost-effective ways to deliver high-quality legal services. I expect PLG and other large-firm alternates will prosper given all the changes we see.
The short story told by these items: BigLaw faces growth and pricing challenges, smaller firms are innovating in process and staffing, and whole conferences and classes of individuals and organizations now focus on better ways of working that improve the client value proposition.
I could end on a doom-and-gloom note, citing two large firms that last week laid off staff or lawyers. That is, indeed, part of the narrative. The more important message for large law firms, however, is that they have an opportunity to flourish in a time of change. The answer is simple in concept but hard to execute.
Large firms must differentiate, revamp pricing, improve process, adopt project management, and improve service delivery. Success in those undertakings gives firms a shot at gaining share and at least maintaining profits at current levels.
Management must remember though that, unlike the old days, they cannot put into place a strategy and let it run on auto-pilot. With demand flat and completion growing, firms will need to adjust strategy and operations regularly. The growing market we experienced until recently was dynamic in a way that covered a multitude of missteps. Mature markets are dynamic in different ways – the players must constantly angle for advantage. And mature markets may not forgive execution sins. It will be interesting to see how many firms succeed in this new narrative.