Future View: Do You See What I See? [Live post from COLPM]
This is a live post from the College of Law Practice Management Futures Conference. This session is Future View: Do You See What I See?.
[As with all my live posts I try to capture the highlights of what panelists discuss and report accurately. Any of my own editorial comments appear in square brackets preceded by my initials, RF.]
Moderator: Sally Fiona King, SNR Denton
Panelists: Ross Fishman, Ross Fishman Marketing; Dave Hambourger, Seyfarth Shaw LLP, Janet Taylor Hall, Integreon, Chris Murray, Jones Lang LaSalle Americas, Inc.; Chris Petrini-Poli, HBR Consulting
Sally King Introductory Remarks
The new normal is clear, all prior bets are off, innovation is the order of the day. Law firms are under tremendous client pressure to reduce costs. Total demand for legal services is down. Clients are more sophisticated. Twenty years ago, the only GC lever was spend inside or outside. Today, the GC has many options to adjust and control costs. The GC is aided today by e-billing data stream, which provides insight that allows GC to compare and contrast law firms, determine who has is efficient and who is not. One GC told Sally recently that quality is a given – he cares about cost. Many law firms chase the same assignments. Realization rates are down – they average 84%. Profitability is down.
Some of the questions to consider today:
How should firms improve profitability and ensure their survival?
What should we make of alternatives such as LPO and Lawyers on Demand?
Should law firms embrace? If so, how?
Janet Taylor-Hall re LPO
Q: Where does Integreon expect to grown. What is happening with LPO. Can you tell us more about CMS Cameron McKenna?
Janet Taylor-Hall: Discusses the move from “LPO 1.o” to “LPO 2.0”. The company has grown from 10 legal professionals a few years ago to 750 today. This gives a sense of how LPO has scaled tremendously. These lawyers do work for both GC and law firms.
CMS Cameron McKenna, #13 law firm in UK, has outsourced its entire middle office to Integreon except for some very senior managers, marketing, and secretaries. The lessons learned: it’s not easy to do this outsourcing, either for the firm or the outsourcer. But it’s working because both sides are collaborating. If you talk to Duncan Weston, the managing partner, he explains he decided to outsource because he wants partners focused on clients and client relationships, not on any operational issues.
Ross Fishman re Marketing
Q: How are firms changing the way they market? What are some unsual moves recently? Do you have any insight on CMS Cameron McKenna?
Old advice: Law firms need to avoid brochure cliche. New advice: Law firms need to avoid website cliche. Marketers are fighting the same battles and having the same conversations about marketing for the last 20 years. “Boring cliches still prevalent.”
Notes that in smaller communities law firms have even more opportunity to differentiate themselves because there is less competition so even less emphasis on marketing and positioning. These smaller firms now target BigLaw work. With recession, they now have a shot at success. Large firms now fact skilled spin-offs, litigation boutiques, and competition from other small players. Dave Hambourger notes that yesterday the GC of Jones Lang specifically said he wished more small firms would pitch him.
Small firms still need to build their brand so that if big clients come calling – or if they call on big companies – the buyer has some awareness of the firm. Some of the small firms target specific niches or geographies.
Brochures are dead or very small; big brochures are all on the web now. Brochures moving to mobile device. But they are still boring. Has not seen any useful firm apps.
Social Media: expresses some skepticism about social media. Law firms are not the Chicago Bears or Justin Bieber. Clients don’t form emotional attachments to law firms. So social media has a different function for law firms. Law firms are not inherently interesting; firms must make themselves interesting. But several in audience say that younger generation “swim in the Facebook waters” and that longer term, firms have to find way to play in social media.
Search Engine Optimization (SEO): this will be key for law firms.
Chris Petrini-Poli re Law Firm Strategy
Q: Law firms are changing the way they do business. Given survey you just conducted, what advice do you have for law firms?
Law firms have vast number of acceptable options. They have to choose the right ones. Clients are requesting pro-active interface, asking for new billing and fee ideas. Firms can capitalize on this.
Peer Monitor Index came out yesterday. Demand dropped, expenses are up.
Strategy worked stopped at many law firms in the recession. That is worst time to stop strategic thinking. Firms made many cuts in recession but did not make truly fundamental changes in operations – that is beginning to happen now. Is there a “Tier 2”, a way to fundamentally change how law firms operate? Sally asks about Six Sigma. Chris says firms have not really embraced it in any meaningful or wide-spread way. Janet says in UK, now firm has gone as far as Seyfarth has – but more lawyers today do know what Lean means.
95% of law departments report they are taking active measures to control outside counsel spend. Number one is keeping work inhouse. Inhouse headcount is up. AFA is second biggest. But law departments split 50-50 if alternative fee arrangements really work or save money. Average hourly rate paid to top three firms has gone up. This suggests that GC still willing to pay for premium advice. Sally notes however that even premium firms have realization issues, which suggests that clients may be willing to pay for expensive partners, but not for the overhead (meaning junior associates).
Chris Murray on Space Costs
Q: After people, leases are most expensive cost. Real estate in US is about 8% in US and 12% in UK. Up significantly from past. How are firms dealing with this?
Firms are outsourcing, developing more flexible space.
Client-Facing Space: Conference room utilization has not gone down. Most firms have moved to central conference centers – this allows higher utilization. Many firms used movable walls that go up into ceiling. These are sound-proof. Allow more flexible space utilization. More law firms now provide concierge services for visitors. Some firms focus on consistency of client experience across their global footprint (e.g., be able to plug computer in any office). There is a move toward food service in a common area. This allows more diverse food offering and reduces expenses. Firms not worried about clients mixing because they mix in reception and rest rooms anyway.
Practice Space: Not designed for client visits. Lawyers spend about 50% of their time in “quiet, reflective work”. 35% is in collaboration. This drives design. Many law firms now have coffee areas adjacent to conference center – both a client and practice amenity. In US, outside of lawyer offices, no walls should be fixed. In UK, move to open office landscape even for lawyers. American lawyers demand quiet unlike lawyers elsewhere in world. For one firm, had design sound-proof lawyer offices. In UK, cites examples of 2 firms that started with open lawyer space and a year or two later, built walls. Jury is still out on open lawyer space. In US, interior lawyer offices are becoming a viable option, especially with glass walls, and LEED requirements.
Practice space includes “teaming rooms”. Some are used to store paper, still [RF: !!] but firms are moving away from paper, but it’s still a slow process. More firms are putting in “convenience stairs” so that lawyers can more easily interact across floors. Firm developed lingo: “stair conversations”.
Support Space: As staff ratios go down, less use for interior space. Many firms moving to secretarial teams. The secretaries sit together and serve a group of lawyers. In one firm, a 3-secretary team support 21 lawyers. As secretarial ratio goes up (lawyers to secretaries), hard to find ways to use the space. The more a firm can consolidate support and centralize, the easier it is to plan space. Deciding what support staff can move offsite can be hard.
Dave Hambourger on Technology
Q: Tech is expensive still. How do we harness recent developments? What has the best potential to change the way we work? How should firms protect against firms that force upgrades by refusing to support older versions?
In past, firms would reject outsourcing out of hand. That attitude is gone today. That does not mean cloud solutions are automatically accepted, but they are not automatically rejected. Law firms realize they provide advice and documents; they don’t have to run servers. Lawyers think that inhouse solutions are more secure but Dave points out that cloud providers specialize in what they do and may, in fact, offer better security.
By offloading core services to the cloud (or other outsourcing solutions), IT management can focus on strategic solutions. Slowly emerging is an attitude that good enough is good enough – the tech does not have to be perfect.
Mobile Devices: CIOs historically fought outside services such as social media and mobile devices. Today, the “secret CIO” is the managing partner. He or she brings in a mobile device and wants it to work with firm IT infrastructure. So CIO has to make mobile devices work. Lawyers choose their own mobile devices so if firms enable the devices, the training issue goes away. Lawyers will use services such as Dropbox. CIOs have to figure out how to let lawyers use these services while minimizing risk. Devices are only getting more capable so lawyers will use them even more.
Re managing vendors who strong-arm upgrades: Little to do concerning Microsoft. If legal-specific, you can negotiate with vendors.
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