The Power of Markets – Is It Applicable within a Law Firm?
On Monday, I read two articles that made me think about whether law firms could apply market principles to improve their efficiency and effectiveness.
Futures Trading and the Internet in the New York Times business section (8/11/03) discusses the power of the Internet to create markets: “The Internet’s ability to move information instantaneously and cheaply makes it possible to push decisions down to the level of the individual… This capability has made it possible to imagine making a market out of almost anything.” The article discusses how the free flow of information on the net makes it possible to create all types of markets. But there may be ethical ramifications in doing so, as the recent Pentagon proposal to create a futures market in terrorism illustrated.
Navy Turns Auctioneer, Lets Sailors Bid for Unpopular Posts in the Wall Street Journal (8/11/03) describes how the Navy is using an eBay-like system to fill certain positions in online auctions. “The online auctions are one piece of a new Navy plan to unleash the power of the free market on its personnel system… In the new system, sailors will be able to bid on jobs that no one wants.” The Navy views this approach as an important way to help retain highly skilled personnel. Sailors indicate how much extra compensation they would require to fill certain slots. The system is new, so the Navy is still wrestling with how to balance various factors. The lowest bid is not dispositive; prior performance counts, as do the views of commanding officers.
Reading these articles, I wondered whether law firms could use an internal market place to staff matters more effectively than they now do. The allocation of lawyers to matters is an art, not a science. It depends on availability, skills, interests, personal chemistry, among other factors. But as firms grow (both in number of lawyers and offices), it seems increasingly difficult to allocate bodies and time. If lawyers were always allocated within relatively small practice groups, perhaps there would be no issue. But some practice groups are large and it seems uneconomic to restrict staffing within a group – load balancing considerations suggest going across groups, at least where the skill sets are compatible.
Some products are emerging that help law firms address the work force allocation issue (see for example, information about a product called Maven that assists with goal setting, assessing performance, tracking availability, and allocating resources). It may be that such products are the best way to maximize utilization and performance. But it is worth considering whether an internal market place like the one Navy is creating could help law firms staff matters when resources are tight or a matter is unpopular.
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