The recently released LexisNexis® RFP Activity Summary Report summarizes the results of a July 2012 survey on law firm responses to Requests for Proposal (RFP). The results are eye-opening for law firm managers who want to improve results or reduce costs.
Many law firms “simply do not know the level of RFP activity underway at their firms.” Of those that do, under 60% track the win and loss rate. If writing proposals were easy, then not knowing or tracking might not matter. Given the time per proposal, however, at 20 to 25 hours, I find the lack metrics shocking. Firms with 500+ lawyers field an average of almost 200 proposals a year - that’s a lot effort to not track. [The time estimate is likely low because it may not include partner or market research time to support proposal writing.]
Effective marketing requires tracking results. Without knowing the win and loss rates, firms have no rationale basis to adjust how much time they put into responses or to which types of RFPs they should respond. Marketing does not stand alone: many firms have little or no data about other support services. With economic pressures continuing to loom, law firms must run their support operations based on evidence, not guesses.
Metrics is only part of the answer. Automation is also essential. For example, in the RFP realm, LexisNexis now distributes and supports, with assistance from Kraft Kennedy, ANSOR software, which streamlines proposal generation. (I have seen a demo of ANSOR and think it is good but have not systematically evaluated the choices.)
In general, I believe that most law firm can improve and automate most of their business support processes. Staff cutbacks over the last few years reduced cost. If times stay tough or get worse, smart firms will seek to improve processes, track inputs and outputs, and automate, not simply cut.
Corporate information technology is shifting from chief information officers to chief marketing officers. Should large law firm CIOs pay attention to this trend?
Gartner reports that by 2017, the CMO will control more tech spending than the CIO. In response, IBM “is making a point of targeting” the CMO. So reports the Wall Street Journal in As Economy Cools, IBM Furthers Focus on Marketers (18 July 2012). Driving this trend is a shift from PCs for personal productivity to systems that can boost revenue “by tracking customers across channels and better targeting offers and advertising.”
Consumer mass marketing and social media drives the corporate IT shift to marketing. Large law firms are purely business-to-business (B2B) so operate in a different environment. Yet they too need to drive revenue growth. Doing so today is hard with legal demand flat and competition increasing. So law firm marketing tech spend may need to go up. I have not seen marketing IT spend trend data but the emergence of marketing technology positions at many large firms suggests it is already up.
Assuming BigLaw marketing IT spend continues to increase, what role should the CIO play? Ideally, CIOs should be deeply involved. At the moment, however, their hands are full. I reported recently that platform upgrades, software migrations, mobility, and security consume CIOs today (see my April 2012 post, What’s Keeping BigLaw CIOs Busy?, reporting on the Hildebrandt CIO Forum).
I see four factors that likely will keep BigLaw CIOs focused on infrastructure: First, law firms have a higher percent of IT-intensive knowledge workers than most of corporate America. Second, law firms support a large number of niche software applications. Third, firms have a larger number of small offices relative to most companies. And fourth, lawyers are demanding and firm owners show up to work every day - IT problems are more obvious than if marketing fails to achieve its full potential.
It will be interesting to see, as marketing IT spend increases, what the relative roles of the CIO and CMO will be.
Last week I co-chaired the Hildebrandt West LegalEd Center CIO Forum in NYC. I report here a few observations from the conference.
My highlights synthesize and interpret comments from multiple panelists and participants plus a pre-conference survey of priorities:
- Focus on Infrastructure. CIOs spend most of their time on core infrastructure projects, with particular focus on security, document management / search / information governance, Windows 7 and Office 2010 migration, mobility, and virtualization. Many CIOs want to help firms grow the top line but have little bandwidth to do so.
- Mobility and Security. It’s worth calling out mobility, mobile device security, and security as the most challenging problems to solve. This theme came up repeatedly across sessions. The stakes are high and the solutions vary, so I expect this will remain a concern, if not preoccupation, for some time. Audience comments suggest that Good and Mobile Iron are splitting the market for mobile security.
- Information v. Technology. In a discussion about IT organization and the span of control of CIOs, the focus on infrastructure was also apparent. The “I” in CIO means information and, to be sure, some CIOs have library, conflicts, records, and other information functions reporting to them. But many remain focused on technology, not information. And all acknowledged that the information intensive functions of marketing and finance need to remain separate domains. Approaches to providing IT support to these vary though many firms recognize the need for dedicated IT support housed in these departments. One interesting theme that emerged is that IT is typically the only function that regularly operates 24x7, which means IT often ends up fielding support for non-IT functions
- Benchmark Surveys Can Cause CIO Headaches. Most legal market surveys of staff and spending ratios do not accurately reflect any single firm’s IT operations. There has always been a fair bit of variance across firms but two relatively new factors make it that much harder to draw comparisons. First, IT does much heavy lifting to support the frequent changes in contract lawyer headcount. With firms relying increasingly on contract lawyers, typical staffing ratios lose some of their meaning. And second, CIOs voiced concern that survey questions do not distinguish between nor capture total IT spend, both internal and external. I suppose that has always been true but it sounds like more firms are outsourcing more services. As a result of these two factors, CIOs must spend a lot of time explaining to management why their firm seems out of line with survey benchmarks.
- Cloud Computing. I heard very little about about cloud computing - much less than I had expected.
I am co-chairing, with Neeraj Rajpal. Managing Director & Chief Information Officer, Morrison & Foerster LLP, the Hildebrandt West LegalEd Center CIO Forum on April 24, 2012 in NYC. I hope you will consider joining.
We have several sessions planned:
- Living with Uncertainty: Current State of the Legal Market and Implications for CIOs: The latest Peer Monitor data on legal market demand, productivity, and realization and what it means for CIOs
- Prioritizing in the Attention Economy: Realizing an IT Strategy Within a Complex Firm Environment: An interactive session focused on current IT priorities, based on a participant survey
- Re-Defining the IT Organization to Thrive in the New Legal Landscape: Examines how CIOs should support and interact with other support functions and organizational structures.
- Low Cost Service Centers and Law Firm IT: Understand this latest trend and what it means if your firm takes this path.
- IT Audits: A Client Perspective: When clients come to audit your systems, learn what to do.
- Mobility Strategies and the Future: The latest on strategic thinking and practical considerations for dealing with the proliferation of smart mobile devices.
Click here to download a PDF of the complete agenda.
We have an outstanding faculty lined up for the day: Patrick Archbold - Head of Risk Management Practice, IntApp; Doug Benson - Partner, SB2 Consultants (and former COO, Orrick); Tony Cordeiro - CIO, White & Case; Bob Dolinsky - CIO, Sutherland Asbill & Brennan; Norma Edmiston - CFO, WilmerHale; Sally Gonzalez - Senior Director, HBR Consulting; Gavin Gray - CIO, Perkins Coie; Peter Kaomea - CIO, Sullivan & Cromwell; Peter Lesser - Director of Global Technology, Skadden; Karen Levy - Director of Global Technology, Debevoise & Plimpton; Elizabeth Lilleboe - Consultant, Peer Monitor; James Paterson - Senior Director of Product Line Management, Lexis Nexis; Michelangelo Troisi - Senior Counsel & Director of Litigation and Risk Management, Samsung Electronics America, Inc
If you would like to attend, register here. Use the code 30CIO for 30% discount (good until April 15).
The Wall Street Journal reported on Monday in Cut Those Costs! (But Not Tech.) that while most companies still look to reduce costs, many “are boosting IT spending, hoping to get a competitive edge”. Should lawyers and law firms do the same?
The article reports that corporate CFOs have a reputation “for putting the kibosh on promising projects when times were tough” but that their view has changed. They now “see tech delivering ever-greater competitive advantages.” New investment is flowing to collecting and analyzing Big Data and supporting a range of mobile devices. A 2011 Q3 found that many CFOs plan to boost IT spending by 10% this year “even as their confidence in the economy declined”.
If law firm IT spending is up at many firms, and I’m not sure it is, I suspect the money goes mainly to maintain or upgrade infrastructure. It would interesting to know how many firms invest in technology that could provide competitive differentiation: better business intelligence to support alternative fee arrangements, project management, enterprise search to find useful work product or experienced lawyers, tools to respond RFPs more effectively and quickly, document assembly to speed document drafting, or systems that allowed client self-help.
Of course, it would also be interesting to know how many lawyers actually want tools that change how they practice. In Sympathy For The Attorney today at 3 Geeks, Ryan McClead wonders out loud, using a great personal story, whether lawyers want to change what they do. Partners might support bigger IT investment in back-end systems (e.g., BI or RFP generators) that do not affect how they practice. Be sure to read the Doug Cornelius (Compliance Building blog) comment on this post, pointing out how hard change is.
Without good data all this is ideal speculation. But since I’m speculating, I’ll close with what I think is the key question: do general counsels, who are the clients of BigLaw, think and act more like the partners who serve them or more like the corporate CFOs and CIOs with whom they work daily? How they align likely determines the demands they place on their outside counsel. And that ultimately will drive law firm IT spending decisions.
Office Work Space Is Shrinking, but That’s Not All Bad (New York Time, 19 Jan 2011) is a good read for anyone interested in working virtually and the future of work spaces.
Employees have become more mobile. One study found that 60% of desks are vacant at a time. The average amount of space per US worker has shrunk by more than one-third. One motivation is to reduce cost. Another is to encourage collaboration. “Even tradition-bound firms in accounting and banking are embracing open-plan offices and other changes.”
I like the closing quote by the president of leading office furniture and systems maker Steelcase: “A lot of thinking about the office has changed. The work setting was a reflection of your status. A job focuses more on collaboration than on the individual now.”
Mary Abraham’s post What Makes Lawyers So Challenging? reports today on findings about lawyers’ personalities. I’d say BigLaw office space reflects - and protects - the personality types.
What I still fail to understand is why, if lawyers spend the day holed up in their office, they do not just work at home? I know the idea - as most partners propound - is to collaborate. If that’s true, then why don’t law firms design space that fosters collaboration? Granted some firms have created some cafe spaces. But every BigLaw office I’ve walked in the last two years still looks, by and large, like law firms of 20 years ago.
In recent decades, law firms have added many new functions, for example, marketing, practice support, e-discovery, client service, business research, and knowledge management. Some firms have also created business analyst roles, which are often in information technology.
A business analyst in IT is not the exclusive purview of the largest firms. At ILTA last August, I met George Ansfield, who is “Strategic Analyst” for 175-lawyer, Cleveland-based law firm Benesch (formerly Benesch Friedlander Coplan & Aronoff LLP). I was intrigued by his title and job, so I followed-up after ILTA with a phone discussion.
George started at the firm a few months ago; he reports to the CIO. His job is to liaise / translate between IT and the both staff departments and practice groups. On the practice side, he enables lawyers to work faster and more efficiently by improving business processes, often with technology solutions. George is working on re-engineering business intake, how the firm generates and delivers client bills, legal project management, and the firm’s e-discovery strategy
His position stems from a recently developed firm strategy to give even greater emphasis to client service externally and lawyer support internally. More specifically, market conditions require meeting new client demands such as legal project management and alternative fee arrangements.
Hearing about George’s role got me thinking more generally about the role of law firm business analyst. In many firms, business analysts are in finance or marketing where their focus is narrow and typically not directly related to law practice. When I do meet business analysts focused on law practice, they often are in IT and serve as practice support consultants.
Given recent market changes – alternative fees, the pressure to unbundle services, and the drive for process improvement – do firms need to consider a stand-alone practice support consulting function?
I touched on this question a few years ago in Practice and Process Improvement in Law Firms, which discussed the role of practice support consulting and where the function should sit inside a law firm. I also considered the possibility that KM would morph into practice support consulting.
Today, Toby Brown at 3 Geeks writes in The Need to Radically Change Legal KM about the need for a new, analytic approach to knowledge management, especially to analyze and set budgets. He implicitly raises a similar question.
So, does anyone think the time has come to make ‘business analyst’ or ‘practice support consultant’ a stand-alone function?
If so, how would it fit in the typical law firm organization chart? And given that tech is likely key to many initiatives, if the positions are not in IT, will the function get sufficient IT support? With all the talk about improving processes and adopting legal project management, law firms may need to consider hiring more practice support analysts and where in the support organization they should sit. Suggestions and examples are welcome.
The latest American Lawyer Technology Survey is out. Cloudy Forecast in the Am Law Tech Survey 2010 finds that BigLaw IT budgets are still tight.
My take is that there is not much new or exciting in legal tech in large law firms. Reviewing the detailed findings (based on 86 respondenst from the AmLaw 200), however, a few results did surprise me:
- Almost three quarters of respondents report that less than 25% of their clients require electronic billing. This says much more about general counsels than it does about law firms. With GC failing to insist on e-billing, I do not see how they can conduct analysis that would support sharper negotiation on fees and better selection of outside counsel. I have to assume law firm partners and managers are happy about this finding.
- Almost 90% of firms now run a central data center. Ah, I thought, firms are getting smart about using hardened, off-site facilities. But then I read on…. Only 1/3 of these firms have offsite centers. Perhaps because I am inclined to outsource generally, I am surprised that only 30% of respondents take advantage of the added security and protection of a co-location facility.
- About one-half of law firms now publish blogs, though the survey does not ask if they are firm-branded. Given the BigLaw pack mentality, I am surprised that 5+ years into the blogging phenomenon that there is such an even split. It’s not obvious to me the one-half that are not blogging will do so anytime soon.
Two other surprises for me go to the survey process and interpretation rather than the results per se. First, I continue to be surprised that many published legal market surveys do not disclose respondent demographics. Though we know “86 of the Am Law 200” responded, we do not know if this is a random mix or skewed sample. In my view, that limits the survey value.
Second, some results appear to be inconsistent. The 2010 average tech operating budget is about $15.5 million and the 2010 tech operating budget per lawyer about $18.5 thousand. Simple division tells us the average number of lawyers is 843.
The survey also reports that projected 2011 capital spending is about $4.5mil and 2010 capital spending per lawyer $11.1 thousand. Were we to ignore the different years, that would mean the average responding firm had 411 lawyers. Hmm. Do we think 2011 capex will drop about 50% from the 2010 level. Or will lawyer headcount drop 50%? Tough economics times notwithstanding, neither alternative feels right. Perhaps ALM can explain either my mistake in interpreting these results or how to reconcile them.
I am attending the conference 2010 Futures Conference & Symposium Agenda hosted by the College of Law Practice Management and the American University Washington College of law. This is a live blog post of Social Media: the Ultimate Business Development Tool or a Huge Waste of Time. The panel discussion moderator is Dan Pinnington, PracticePro. Panelists are Steve Matthews, Stem Legal and Timothy Corcoran, Hubbard One.
The session description: “Social media is hot. Staid law firms are throwing open their firewalls and venturing into the fray. Is there a legitimate commercial aspect to this? Our experts say “yes” and promise you will walk away from this session ready to implement a social media strategy that will change everything.”
- Most hands up for Linkedin, many for Twitter, many for Facebook, only a few for blogging, a few for Legal OnRamp.
- Number of contacts on Linkedin varies widely
- Number of Followers on Twitter ranges widely
- Future of Facebook
- What’s the bottom line - does it increase income
- Is social media an alternative to e-mail for work communication
- How do you find the time to participate
- Who at a law firm should use social media
- Can you integrate social media with telephone
- How do you develop new biz with social networking
- Is social media also collaborative media
Steve on Social Media Stats
- Facebook has over 500m users
- Twitter 140m
- Linkedin 80m users, 1m lawyers
- Legal OnRamp has 12,000 members, one-half are in-house counsel
Is Social Media Over-Hyped?
- Lots of press, but that does not equate to value. So yes, it’s over-hyped.
- Tendency in S/M to create an audience without having a clear message
- Quantifying S/M is hard. Followers is not necessarily a good metric. More followers does not equal bigger share of voice.
- But if your existing contacts and sources of biz are online, you should nurture those connections in S/M
- Yes, over-hyped. Equivalent of an echo chamber
- It’s a tactic, not a strategy. You need a strategy first; S/M may be a good tactic to reach audience.
Do Law Firms Need to Participate?
- Yes. There is a long learning curve and it’s important to be there on the ground floor.
- Facebook knows a lot about its users. A firm may, in the future, be able to target top performers at top schools via Facebook ads
- Just as lawyers should have website and Linkedin profile; beyond that, S/M depends on a firm’s objectives
- Comparison to managing domain names. Firms need to manage their brand in multiple venues, including S/M.
Examples of Firms Doing Social Media Right or Wrong
- Hard to identify stand-out examples.
- Better to approach from practice group than from firm as a whole. It’s hard for a firm as a whole to have a conversation.
- To answer, you need to know what the metric is
- Some firms have a good presence online but it’s not clear they are making more money or influencing their buyers
What Could Firms Do Better with Social Media?
- Do better with content management. For example, if a firm publishes a newsletter, article, or other content on its website, it should use tools to push it out automatically to social media outlets.
- It takes time to manage a social presence. There are tools that make this easier. Set aside a consistent amount of time to be active in social media - if you have already decided it’s an important tactic for outreach.
- Don’t necessarily have the same standard for all posts. You can have types A, B, and C. Not every post has to be an opus.
- Break big chunks of text into multiple posts and schedule them.
Biggest Peeve about Social Media
- Folks who don’t have a content strategy. If all you do is comment on others’ content, it’s not very effective. Social media should be driven by original content.
- Firms should have a general social media policy. Generic is better than policy focusing on specific sites because the popular sites may change. Key is to make clear that you represent your employer. Understand that privacy is a myth (you cannot separate your home and office you).
Are Law Firm Attitudes Changing? Ethical Issues?
- Law firms, which have avoided Facebook, are likely to go there soon.
- Gone are the days where lawyers in large firms have stealth blogs.
- Voices can be different for different audiences, e.g., clients versus law students
- Firms want their lawyers to blog. Many lawyers, however, will want to create their own blog to build their personal brand. Personal brands ultimately trump institutional brands in social media.
- Peeve: have a business strategy before you think about a S/M strategy
Audience Comment: The key for lawyers is to be found on the web. Clients will “Google” a person. To rank high enough to be found, social media is important. But hard to quantify.
Steve Matthews points out, however, that all the social media sites use the “nofollow” tag, which means that they do not influence “Google juice.”
Can You Keep Personal and Business Separate?
- This can be hard
- It can be ok to mix… but don’t overwhelm followers with stream of personal details
Should Firms Monitor Content?
- Set up RSS feeds of firm mentions
- Decide if you are monitoring yourself, the firm, or what your employees are saying
- Search firm names and lawyer names
This is a live post from a private large law firm practice management meeting. This session is “LPM Real World Experience: Lawyers Who’ve Led the Charge.” This is a presentation by partners from two large firms that have implemented legal project management.
Large Law Firm 1 Speaker
Drivers for an LPM initiative:
1. It was client driven. The firm found client expectations were changing; clients wanted to see higher value from their providers and wanted reduced costs (or, at minimum, cost predictability). Clients wanted their outside counsel to be accountable, just as the GC is accountable for his or her budget.
2. The firm also believed that a true LPM capability would be a good competitive differentiator.
3. Client demand for non-standard fee arrangements.
The firm started down the LPM road about 2.5 years ago. Had to decide whether to start with an external consultant or invest internally to develop in-house. The firm decided to make (do it in-house) rather than buy (consultant). The firm started with a small internal team which took standard PM tools that team thought would be useful in law practice.
Once team developed a program, it did a small pilot with a few lawyers. They received ‘robust feedback.’ This led to iterating the LPM approach.
The original LPM working group did NOT include a KM lawyer. Thinks in retrospect this was a mistake because of their involvement in process and content management, which are skills most practicing lawyers don’t have. Once KM lawyers were included, LPM got good ideas on how to use template, naming conventions, and good practices for managing information.
Implementation of LPM is smoother if you run pilots first. The pilots at our firms not only refined the approach but created some champions.
We now have LPM used on multiple large matters. Benefits include
- Discipline around planning, delivering on budget, improved work product, and better communication with client (e.g., clear agreement on deliverables and project milestones).
- Fewer write-offs.
- Better rate management on a per matter basis. A single rate across all matters does not reflect reality of differing types of work.
- Create a historical database that enables the firm to do a better job structuring alternative fees
Large Law Firm 2 Speaker
Speaker has a strategic role a firm. The firm has a project management department that started in 2005. The department now has six people. It is integrate in the firm’s lean initiative. Overall goal is predictable fees and more client value. LPM is one tool in a lean Six Sigma initiative.
Attorneys start by saying “there is no process, we can’t create maps, everything is different.” But the process engineers / mappers sit with lawyers and start with basics (e.g., matter starts when client calls and go form there). At end of working session, there is a detailed process map. Attorneys are typically surprisingly pleased with result. The map shows step, expected time requirement, and associated billing code. The process map is interactive - a lawyer can click on a link, which opens a document in the DMS. Often however, lawyers need to create checklists to support steps in the process. The process map and linked resources is an excellent training tool and reduces e-mail traffic asking basic questions.
By indicating expected hours required for each task, the lawyer working on it can raise a flag if work is taking too long. This can identify anything from a variance in the work to a need for training.
There is a home-grown matter management and budgeting system to track progress of each matter.
The firm asks clients to rate the firm after each matter. The rating ties to ACC value challenge:
- Understands objective
- Legal expertise
- Efficiency and process management
- Responsiveness and communication
-Predicable cost / budgeting skills
Firm was able to show
1. Cost saving on a particular type of matter before client used firm and after - savings of about 40%
2. Though the firm’s blended rate was higher than competitors in RFP situation, firm was able to show its total cost was lower because it was more efficient.
This is a live post from a private large law firm practice management meeting. This session is “Legal Project Management (LPM) Overview: Consultants Who Train Lawyers in LPM” presented by Susan Lambreth of Hildebrandt Baker Robins.
Definition: a pro-active, disciplined approach to managing legal matters. It’s important to de-mystify LPM for lawyers. Lambreth regularly meets lawyers who use Excel and other tools to manage teams. So PM is often an extension of what many lawyers have been doing already.
Need to distinguish between process improvement and LPM. Ideally, firms would improve processes before focusing on project management. But in reality, many firms have gotten on the LPM bandwagon first. Hypothesis is that LPM is less culturally challenging than is process improvement. But LPM does not in and of itself lead to efficient execution of matters - to achieve this require legal process improvement.
Trends driving LPM:
- Shift in power from suppliers to buyers. General counsels face huge cost pressures.
- Clients expect lower costs each year, not higher as in the past.
- Procurement officers now involved in buying outside counsel services.
- These same trends also drive demand for alternative fee arrangements (AFA).
- On the law firm side, productivity (billable hours) and realization rates have dropped.
- The only factor supporting increased profits was rate increases. Now the market does not support rate increases.
- Further, firms are now competing on price. Example: a large NYC firm underbid a much smaller Alabama firms last week.
- Clients are segmenting types of work, dis-aggregating work (unbundling). Clients have said to firms “you unbundle or we will do it for you” For example, in an M&A deal, clients will want due diligence broken off from the rest of the work.
- There is an evolving view that the amount of truly “strategic” work is shrinking relative to operational and routine work. But profit opportunities in the latter two is high if a firm is properly leveraged and managed.
- Though some lawyers view LPM as a fad (think TQM), the better view is that LPM is natural evolution from firm management to practice group management to matter management. Also, project management has been around many industries for decades so is not faddish.
Some “hidden benefits” of LPM include better professional development and increased importance of knowledge management (KM).
Hildebrandt Baker Robbins LPM Framework ™: Initiating, Planning, Executing, Closing, Lessons Learned.
Key Themes: better communication with client upfront to set expectations, clarify project details and define parameters. Develop detailed budgets and work plans, including detailed work schedules and communication plans. More active management of matter throughout its life.
Tools include basic budgeting tools and historic analysis of billing data.
- Need to de-mystify LPM
- Don’t be too ambitious to start unless there is a lot of internal support (e.g., available help)
- Don’t try to train associates without partner buy-in
- Resolve compensation issue (drive for billable hours)
- Recognize the magnitude of cultural change required
This is a live post form the International Legal Technology Association (ILTA) 2010 Conference. This is the opening session, Five Secrets to Put Strategic Unity on the Fast Track, with Jason Jennings presenting. For additional information, see Twitter hashtag #ILTA10.
Jason Jennings is a popular business speaker and writer. Jennings interviewed 15 ILTA members asking about the person, the firm, and what challenges the person and firm face. The results of the interviews:
- Getting everyone on the same page
- Changing nature of practices
- Relevance - are law firms like newspapers?
- Price pressure (down)
- Faster turn around times
- Embracing change
Jennings wanted to focus on five things that other companies do to gain strategic unity. Jennings has, in past, studied the fastest companies in the world. Speed has to do with fast thinking, fast acting organizations. Also the most productive companies. Then wrote “think big, act small” about companies that organically grew profit and revenue consistently. Then identified CEOs who created most value. From this research, he has distilled elements of strategic unity.
Found that some of the most successful companies are: Ikea, Smucker’s Jam, Staples, Koch Industries (largest privately held company), Nucorp Stell. From studying companies like this, Jennings has found five principles.
SHARE A COMMON NOBLE PURPOSE. It needs to be big and bold. Inclusive. Attitude more important than aptitude. The thrill of competition and winning is more important than making money. Shared noble purpose provides direction, drives momentum, and builds culture. “The right culture is the ultimate competitive advantage.” (RF note: compare to Peter Senge’s, The Learning Organization, who argues that the only competitive advantage is the ability to learn faster.)
LETTING GO. Most organization cannot let go of yesterday’s breadwinners. Gives example of GM failing to let go of Oldsmobile. They also cannot let go of ego. Example is Jack Welch ego getting in way of writing off original $100mil in Montgomery Ward and instead, trying to save with another $2bil over 10 years. Most organizations cannot let go of conventional wisdom. At most, this means you achieve conventional results. When you work hard to let go, you are better able to deal with change, innovation happens.
EVERYONE KNOWS THE STRATEGY. Tells story of companies that share widely, like Smucker, which gives all employees, shareholders, and partners. Contrasts that to companies that want you to sign NDA before they share strategy. Secret strategies don’t work. Workers don’t become emotionally connected to work when strategy is secret. Corners get cut and illegal things happen when strategy is secret.
EVERYONE THINKS AND ACTS LIKE AN OWNER.
STEWARDS. Great leaders see themselves as stewards of the organization. Stewardship means service over short-term self interest, abandoning power over others, preserving natural human resources (meaning do right by your employees). Stewards share information, are accessible, keeps their hands dirty (by spending time with clients), stand for something, get rid of superficial distinctions, make it better, are coaches and mentors, and are called to serve.
Recent articles provide a good snapshot of law firm office design; sadly, working virtually does not appear to be on the agenda.
Changing Space - Law firms (slowly) respond to egalitarian trends in office design (ABA Journal, June 2010) reports on BigLaw office design trends. A few firms are changing traditional design elements: Seyfarth Shaw in Atlanta has lawyer offices all the same size; Orrick in NYC has put associate offices in the interior; and Morgan Lewis in DC used the great top floor views not for partner offices but for a common dining area. These example notwithstanding and
“despite the trend toward more open, collaborative and flexible spaces, law firms have been slow to adopt practices common among their corporate clients and other professional services firms: one-size or universal offices, open floor plans, and ‘hoteling’ arrangements where professionals reserve offices when they need them.
Rethinking the Law Firm Workplace (American Lawyer, May 2010) reports that firms “want a lighter and brighter space that is progressive and sophisticated. They want more collaborative work settings where attorneys and support staff can mingle and share ideas openly and casually… The most important concept in creating a more effective workplace lies in designing space that fosters collaboration. For many firms, the opportunity to share information at unexpected locations in the office has proven invaluable.” I suppose this is some progress.
Contrast these two articles, however, to an Information Week blog post , Radical IBM: 200,000 Home-Office Workers (1 June 2010), which reports on an IBM employee who regularly works virtually (remotely) from the Canary Islands. IBM is moving from a culture of presence to one of performance. Since teams are formed by professionals located in multiple locations, it turns out not to matter that much where any given employee is.
I frequently hear lawyers and law firm managers assert that working virtually would interfere with collaboration. As I suggested in my January 2004 Law Practice Management article, The Future Law Office: Going Virtual, virtual work does not have to mean never coming to the office. Firms can take steps to encourage in-person collaboration when and as needed.
If being in the office is so critical, how do skeptics of working virtually explain that, according to a Gensler architect cited in the ABA Journal article, “as many as 25 percent of their attorneys are working away from the office at a given time"?
Could it be that lawyer and law firm managers are simply ignoring reality? Tradition dies hard but ignoring the truth has consequences. When I look at the average AmLaw lawyer overhead of around $200,000 per lawyer, I can’t but help think that’s buying lots of extra space. And whether lawyers bill by the hour or using alternate fees, wouldn’t many rather save commute times on some days and work from home?
Many law firms profess to be green - but how many take into consideration that a culture that requires physical presence in the office spews unnecessary carbon? Working virtually - either from home or suburban satellite offices - would save many a trip by car. Furthermore, maintaining individual lawyer offices means that much more space to heat, cool, or light.
So, what am I missing? Why aren’t firms moving to reduce occupancy and free-up lawyer time by supporting virtual work?
The Wall Street Journal, in collaboration with MIT Sloan, published on Monday an article that pretty much slams chief information officers.
Why CIOs Are Last Among Equals is by three IT academics and practitioners (see bios below). While CIOs are increasingly important to companies, the authors cite research that executive peers view CIOs as limited. “Based on our research, it’s clear that most CIOs don’t have the broad business understanding, strategic vision and interpersonal skills that it takes to run a company or at least play a bigger role in running one.”
The article then enumerates, in gory detail, “The Skills They Lack”. Citing their own research, the authors explain CIO lack of leadership, strategic thinking, synthesis skills, communications skills, influence skills, and relationship skills. Sound bleak? Don’t worry - the authors say these skills can be learned in class and at work.
So readers, are law firm CIOs in a different class? I personally know many who do not fit this mold the authors describe. Further, my sense is that the strength of law firm CIOs has gone up considerably in the last decade, both through ‘organic growth’ (that is, job experience) and ‘acquisition’ (that is, hiring from outside the legal market).
Having defended the camp, I now feel entitled to share that I do think in some firms the Chief Knowledge Office (CKO) has an explicit or implicit part-time job to make up for the skill gaps the authors enumerate.
Comments welcome, as always. (Speaking of comments, there are three very good ones attached to my prior post on project management.)
End Note - Authors of Article: Mr. DeLisi is the academic dean of the Information Technology Leadership Program at Santa Clara University in Santa Clara, Calif. Dr. Moberg is the Wilkinson professor of management and ethics at Santa Clara University. Dr. Danielson is the vice provost for information services and chief information officer at Santa Clara.
Lawyers who still secretly think technology will go away now need to give up hope.
Some might think that by now, all lawyers lovingly embrace tech. Not if we judge by the number of litigators who still don’t get e-discovery. But I digress.
Today the New York Times reported that H.P. Sees a Revolution in Memory Chip. Moore’s Law posits that computer processing power doubles every 18 months. What the article tells us, in brief, is that “memristors” are a new way to pack yet more processing power on a chip. So Moore’s Law is not being repealed anytime soon.
For any lawyer who thinks this is not relevant, all I can say is “look around”. Much of what we take for granted today about daily life - communication, media, cars, safe flights, ATMs, ubiquitous credit card retailing, and appliances - depends on the advent of cheap and powerful processors and memory.
It’s not clear yet, however, what that march of technology means for lawyers. Maybe I’m jaded, but it seems the major legal tech advances of late have been pretty much in e-discovery. Not that there’s anything wrong with that. But it is limited.
I continue to believe that now is a good time for legal tech managers. As firms get over the 2009 shell-shock, they are actually differentiating. Some will find new and interesting ways to use tech to deliver more value.
I’m not the only believer. At the recent Georgetown Law conference, I met a VC who plans to invest in a few legal tech start-ups. And let’s not forget two recent marriages of strategy and tech consultants. I don’t think it is a coincidence that Hildebrandt and Baker Robbins merged operations recently (both have been owned by Thomson Reuters for some time) and that Altman Weil this month inked an alliance with Project Leadership Associates (which is long on legal tech).
Dan Safran, Project Leadership Associates’ Executive Vice President, Legal Solutions sums up at InsideLegal my views nicely:
“Key trends like alternative fee arrangements, project management, strategy development along with the right blend of process, organization and technology execution and sophisticated performance benchmarking are creating a need for legal organizations to integrate technology into their strategic operations.”
Now we just have to wait to see how the legal market uses the ever increasing amounts of processing power.
Will the legal market crash lead to a legal technology resurgence? I suggested so in my post January post Economist Magazine: Expect Profound Structural Shift in Legal Market. Two recent articles show how law firms add value with technology. Whether this is a new trend, however, remains to be seen.
Intelligent Documents Controlling Legal Costs - Law Firms Capture: Expediting Outsourcing And Saving Legal Costs, an interview Alexander Hamilton, Partner in the London office of Latham & Watkins LLP (Metropolitan Corporate Counsel, ["MCC"] 1 Feb 2010) describes a sophtisticated intelligent document approach to managing complex outsourcing deals.
In big IT, HR, finance, procurement, and other outsourcing deals, it’s a lot of work to define services, performance standards, pricing models, and governance models. Rather than simply rely on a prior similar deal document, Latham’s “Capture” system is an interactive document that the client completes to specify key deal attributes. Based on what I call intelligent intake, Capture delivers “a first set of documents that is much closer to the final document and is much better structured because they are drafted with a good understanding of what the client wants, speeding up the process and saving costs for the client.” This halves the time of this phase of the deal and allows Latham to quote a fixed price for it. Further, it lets the deal team focus on the important elements that really need attention instead of distracting details.
Latham is not using a document assembly program such as Hot Docs or Deal Builder. Instead, the firm built Capture in recently available functionality in Acrobat PDFs, specifically, the ability to incorporate if-then reasoning to support an intelligent information collection process. “As the client answers a question, other relevant questions automatically follow.”
The firm has a suite of documents for outsourcing and is building others for M&A deals and other practice areas. A decade ago I worked for an expert system software company. My experience there made clear that the challenge in building interactive legal advisory systems is not the technology; rather it is capturing the legal know-how ("knowledge engineering"). Only a few large firms have built intelligent systems.
The key market question is whether Capture is another “occasional” example of an intelligent system or whether it reflects that even the largest and bluest chip firms now see the value of investing to create truly interactive know-how systems. The economics of law practice today may be more favorable than a decade ago for investing to build smart systems that reduce client costs.
E-Discovery Smarts. In the same issue of MCC magazine, Controlling Legal Costs - Law Firms King & Spalding’s Discovery Center Under Senior Litigation Oversight Produces E-Discovery Savings interviews three partners behind the firm’s large e-discovery operation. The firm has built a large e-discovery practice and processing capability over the last 15 years. Today, “the Discovery Center houses 150 discovery professionals, including 125 attorneys, focused exclusively on providing high-quality, cost-efficient document services both in litigation and in transactional matters.”
This center “follows protocols.. [uses] advanced screening methods to reduce the number of collected records that ultimately require attorney review for production… and [has] developed the most efficient procedures for drafting responses to written discovery requests for entire dockets of
cases with a computer tool that catalogues and indexes approved responses and objections by subject matter…”
E-discovery professionals have recently debated in articles, conferences, and blogs whether to insource or outsource e-discovery. K&S cleary has decided on the former and the prior quote suggests some document assembly capabilities as well. What I find interesting is that the firm is now using this long-standing capability to differentiate itself and position itself as offering higher value.
Can We Draw Conclusions. I wish that I could say two points form a line and that these examples reflect a new round of legal technology. And indeed they may though we will not know for some time. Clients say they want better value from firms. (Whether they spend their budgets wisely to achieve this is still, in my view, and open question.) Firms do not have that many options to provide higher value. Typically it requires some mix of improved process, sophisticated technology, project management, and smarter staffing. Assuming the new normal is flat, which is my expectation, then firms may find to maintain and gain share, they will need to compete with technology.
I only occasionally hear law firms talk about legal technology and knowledge management investments to keep and attract lawyers. At least to some lawyers though, it makes a difference.
Jones Day Practice Head Joins Winston; Other Lawyers Likely to Follow (ABA Journal, 13 Jan 2010) reports on a lawyer moving firms in part because his new firm has a “commitment to streamlining its legal work with the help of new technology” and “a knowledge management department that collects good pleadings and good research so you don’t have to reinvent the wheel when you take on a client issue.”
Given how much firms invest in recruiting and vetting laterals, I wonder how much they have thought about the “equipment” they offer to practice as a recruiting tool.
This year will likely see stable instead of shrinking legal demand. Firms have to adopt to a new reality of clients who want more value. With the crisis over, it will be interesting to see how legal IT and KM fare. And whether this article represents a blip or a trend.
The International Legal Technology Association recently published its annual legal tech survey. From a practice management perspective, here are some findings that stand out for me. I leave it to others to comment on infrastructure.
The 2009 ILTA Technology Survey is available with login or for purchase. It’s a great resource for law firm IT managers who want to benchmark. The survey write-up is excellent and the 60+ pages is chock full of detailed results, including data sliced into firms by five size categories.
Most large firms automate “processes like new business intake.” Almost 90% of 700+ lawyer firms do automate processes and almost 70% of 150 to 699 lawyer firms do. The percent of smaller firms automating workflows is much lower.
I was surprised that only 38% of firms have matter-centric environments. Perhaps because I’ve traveled in KM circles for some time I had the impression the percent would be much higher. Further, the incidence of matter centricity does not vary much by firm size; firms under 150 lawyers clock in around 35% and those over 150 around 45%.
Litigation support and e-discovery remain a fragmented market. The list of products and services that firms report using is long. Of course, having a product and using it exclusively is not the same, so ‘percent using’ data may not mean much. That said, two-thirds of firms have CT Summation and one-third have Concordance; no other doc review tools has over 20% using. Among firms of 700+ lawyers, 38% report using Clearwell, which seems good for a relatively new entrant.
Records management remains a challenge. This year, the survey more clearly distinguished e-mail archiving from RM. Almost two-thirds of firms report having no digital RM product. About one-third say products are not yet mature enough and one-third say they are unclear on the need (for this answer, respondents could choose multiple answers so percents don’t add to 100).
If nothing else, the survey shows that practice support and IT managers have plenty to keep them busy.
Real time blog post on ILTA 2009 session: Technologies that Will Disrupt Traditional Legal Practice with Richard Susskind, author of The End of Lawyers? and “legal futurist"; Gerard Neidistch, Executive Director Business Integration and Technology of Mallesons; and by John Alber, Technology Partner of Bryan Cave. (Posted at close of session without editing.)
[Note: this session is very well-attended. I estimate over 100. The hotel is bringing in more chairs.]
Will address three topics: (1) what is disruption, (2) who is being disrupted, and (3) ten disruptive legal technologies.
What is a disruptive technology. Cites Clay Christensen Innovator’s Dilemma, who talksa bout sustaining versus disruptive. Latter seem to come from no where and disrupts the market. Incumbent players - and their customers - often dismiss new technologies. They don’t see the potential for disruption. Cites Christensen’s illustration of many industries disrupted by new technology. Susskind distinguishes between technology and business model. The technology is not nearly as interesting as the model.
For whom is the tech disruptive? For innovators, the disruptive tech provides competitive advantage For customers, it can provide new value. So the threat of disruption is only for followers. Notes that law firms are far more interested in avoiding disruption or being left behind than in gaining competitive advantage. Law firms only worry about what their peers do; they want to be in the pack, not ahead. So disruptive tech here means its disruptive for law firms that want to stay in the pack (RF: which is all the leading law firms).
Remembers first reading about death of billable hour in 1981. Susskind’s research suggest that at least 50% of general counsels still want billable hour. But thinks we are now, finally, moving away billable hour. Disruptive technologies challenge the billable hour.
Ten disruptive legal technologies that collectively will transform the market - but it will take several years if not longer:
- 1. Document Assembly. Notes the CEOs of big companies assume this is already widely in use. Cites some examples from UK where doc assembly changed the market (e.g., loan documents). Distinguish between internal D/A and external. For internal, you need a big volume. But if you make available online, then economics change because volume can be much higher. So you can go from production level of 10s or 100s to 1000s or more. Disruptive because of hours required up front and then the charges don’t relate to hours.
- 2. Relentless Connectivity. We are increasingly connected and present online. This can mean procedures to make sure that someone at a law firm is always available. Calls on lawyers’ time are increasing. This is relentless but we have to learn to deal with it.
- 3. The Electronic Legal Marketplace. Cites eBay as example of auction market. Lawyers think auctions and other online markets won’t affect them. This is ungrounded. Clients will be able to go online to select legal services. Sees no reason why law will be exempt from this when most other markets are moving in this direction. Electronic market will also make it easier for clients to find alternative providers (e.g., other professional, outsourcers)
- 4. E-Learning. Worries that law schools in Anglo countries don’t teach the right things. Law schools promote a romantic notion of the law that does not reflect reality of practice and evolving, new models of delivering new legal services. New simulation techniques are far superior to traditional Socratic method.
- 5. Online Legal Guidance. Interactive advisory systems will offer advice. This is progressing slowly. Notes that there are, in UK, many public sector websites that offer legal help. References “latent legal market” (RF: a concept Susskind developed in his prior book, The Future of Lawyers). Online system can provide guidance or documents. Cites a UK solo practitioner who developed extensive landlord tenant system and community.
- 6. Legal Open-Sourcing. Make law freely available a la Wikipedia. Is particularly interested in communities of interests. Suggests that community can come up with better answers than individuals. Notes that consumers are more willing to talk to friend who had similar problem than a lawyer.
- 7. Closed Legal Communities. We will see communities of just lawyers and legal professionals to share knowledge and experience. Cites the 9 London banks that came together a few years ago to “coerce” law firms to deliver their collective know-how. Mentions Legal Onramp. It’s disuprtive for law firms because clients can go somewhere else to start.
- 8. Workflow and Project Management. High volume, low value work can be routinized. There is no reason this work requires bespoke / custom attention. Some lawyers now say they are project managers - yet they have had virtually no training! PM is a discipline that requires significant training. Disruptive b/c this makes lawyers more productive so threatens the billable hour. You need project managers to manage multi-sourcing. Multi-source legal work means finding the best set of resources to solve a problem. This can include other professionals and outsourced services. Pull together multiple sources and put together for just in time delivery. A big question is who will do the project management.
- 9. Embedded Legal Knowledge. Uses playing solitaire on a computer as having game rules embedded in software. In the future, we will see systems with legal knowledge built into systems. You can embed knowledge into compliance systems. This will disrupt law firms because it reduces demand.
- 10. Online Dispute Resolution. Are courts a place or a service? Dispute resolution should be viewed as a service. Mentions CyberSettle service. This too will reduce demand for billable hours.
Focus on automating low end legal advice. A recurring problem for clients is understanding US import and export restrictions. A company came to firm complaining about another firm that charged high rates to keep solving the same types of problems repeatedly. Bryan Cave decide to apply tech to solve the problem. The firm conscisouly decided to cannibalize its own hours by embodying know-how in a system. The process to capture the rules was time-consuming but the technology is not. So the firm developed an online legal service. So GC can turn to a system instead of a lawyer to answer a certain set of questions.
How did the firm package delivery? The firm sold access to system for flat fee of a couple hundred thousand dollars per year ($200,000). The lawyers at firm were relieved from boring work. Client get better legal results at lower cost, with predictable cost. Firm uses the software to train new lawyers. A big benefit was that client shifted its higher end trade work (that system was not designed to handle) to Bryan Cave from another firm.
Another example is Streamlining Due Diligence. Problem is that wireless carriers regularly trade frequencies. Any sale / trade of wireless spectrum requires significant due diligence (similar to any asset transfer). Need to look at leaseholds, asset documentation, easements, etc. Moving a portfolio of spectrums can be very expensive. The deals can take so long to due diligence that the deal cannot be done. So the model has to change to support a company’s ability to move portfolios of spectrums.
Just dropping fees was not enough. Instead, the firm developed an automated workflow system. The firm created a system that allows contract lawyers to conduct the due diligence. Embedded know-how in software so that more junior (read cheaper) lawyers could do the work. The system takes lawyers through the workflow and captures information. This allowed capturing required documentation. Result is a “factory workfloor staffed with contract lawyers supervised by experienced lawyers.”
The firm reduced the cost per spectrum transfer by two-thirds and reduced turnaround time from months to weeks. The client can now do deals that it could not previously do. No other law firm can compete for this business. The hard part is the human process, not the technology.
Discusses Mallesons Connect. This is an extranet but doesn’t look like it. It has a lot of workflow built into it. Removes “black box” approach so that clients could see what work is being done and when. Mallesons wanted to provide predictable service levels, demonstrate value, provide round-the-clock service. For clients, system provides project progress, financial reports, alerts, current awareness, training, resource availability, secure deal and data rooms, automatic data generation, sophisticated security, and (in next release) correspondence and know-how.
References PeopleFinder, which is an internal system the firm developed, to locate lawyers in real-time (for internal use). Goal was to answer more calls in real time. Connect is an extension in some ways of this system but with different emphasis since it’s client facing.
Shows a screen shot of Mallesons Connect. It shows total projects, active projects, and unpaid invoices. Provides detail on Active Projects. “My Feed”. All Web 2.0 technology - everything is interlinked and dynamic. Mouse-over an active project shows key info including WIP and key contact and if that contact is currently available. A more detailed screen shows fee-earner calendars and contact info. Provides faceted search across portfolio of projects. Financial summary page provides graphics and tabular summary. All data are real-time.
So far, five clients use the system. Goal is to have 30 largest clients using.
From Q&A: when there was a change in key personnel at client, Connect helped provide continuity.
Questions and Answers
Q: Clients want to use own systems - how did you break down that resistance.
A: Gerard: clients did not have own system so we did not face that challenge. They were eager for tools.
A: Richard: if client is not willing, don’t push that hard; others will be willing
Q: What is legal spend in Australia versus US and is that a factor in Connect uptake?
A: Gerard: we see procurement and other non-lawyers getting involved in purchasing. But divisional business managers are also involved in purchasing decision.
Q: For John: with trade compliance tools, how did you deal with pricing? How do you make sure you are not actually losing money?
A: We took a flyer on pricing, guessing on both costs and value and what client was willing to pay, with ability to adjust. This is how a lot of business works.
Crafting an Effective Strategy is an ITLA 2009 executive track session with panelists Greg Kaple, Senior Partner of Integrated Management Services, Inc. and Ash Banerjee, CIO of WilmerHale. I am attending the ILTA 2009 annual conference. This is a real-time blog post.
Ash explains where WilmerHale strategic plan is today. 2500 people, 12 offices, 1000 lawyers. Ash at firm about one year, came from music industry. Started with assessing needs: practice heads, admin managers; met 70 people around the firm. Collected benchmark data from throughout the firm. Distilled a lot of information into key needs and issues, along with plan of what to do about each. Summarized to 3 pages - short is key. Distilled this to a bulls-eye target: governance process in center, surrounded by platform stability, then surrounded by (1) knowledge and content managment (KM and CM), (2) litigation support, and (3) admin support. Security surrounds the rest.
Achieving goals required a lot of change. Clarified IS role: leverage cost effective tech-based solutions, specifically, deliver solutions, tech services, and info and research. Note that platform / service delivery is distinct from solution and from info and research. Changed organization to align delivering on these goals. One big change was to move part of IS from an operations to a consulting organization. Created a team of 7 consultants; hired 5 from outside and 2 from inside. A lot of incumbents did not fit into new organization so hired quite a few new people into management team.
An internal IS consultant is assigned to each major practice group. This person is the IS advocate for that practice group. He or she has to understand that practice / business and how tech can meet new and even unarticulated needs.
Processes supporting new strategy include: Implemented a lot of metrics to determine if IS was delivering as it should. More rigorous performance management plan. Projects over certain dollar threshold require charters that formally justify. Governance process for IS includes a tech committee ("Steering Committee” with rep from each practice group and senior admin staff) and a project review board that signs off any new project. Service change ‘board’ reviews systems changes before executing.
Developed vision, principles, and roadmap for each of the major initiatives. This has been very effective in getting partner buy-in.
Project execution needed to be predictable. A project management office put together standard frameworks. IS applied service levels to measure to project. Metrics include lead times, effectiveness of changes, and number of projects (with number green, yellow, and red).
A blog post over at the Drug and Device Law blog sparks me to return to the issue of BigLaw blogging. Two lawyers, one from Jones Day and one from Dechert, write this blog jointly.
By now, blogs are so popular that many observers blame them, in part, for the demise of mainstream print media. So blogging hardly seems controversial or quirky anymore.
In The State Of The Big Firm Blogosphere, Jones Day lawyer Mark Herrmann observed “Of the ten firms with the highest profits per partner (we know, we know! everyone criticizes that metric, but the public is still fascinated by it) in the United States, only one has any connection to a blog.”
In a follow-up post, More On Big Firm Blogging, Dechert lawyer Jim Beck picks up on this observation, offering a synthesis of the many comments they received with theories of why lawyers at the most profitable firms don’t blog. This is a must read for anyone interested in BigLaw blogging.
I put my cards on the table in a 2008 presentation, Blogging: Why the Fuss, arguing that blogs are among the most-cost effective approaches to marketing for lawyers.
It’s hard to square the theories Beck reports hearing with the current legal market depression. Absent a return to growing demand for high-end legal services and BigLaw pricing power - both of which seem unlikely anytime soon - BigLaw will have to grab for market share. If so, let’s see how these theories hold up.
Update (8 July 2009): The AmLaw Daily blog, in No Time for Blogging When There’s Work to be Done?, picks up on the Mark Hermann blog post. AmLaw contacted several of the top 10 firms that don’t blog to ask them why. AmLaw also raise a point I make in my “Why the Fuss” presentation: if a firm is going to publish memos or e-mail alerts, why not also blog.
Update (8 July 2009): See also Bob Ambrogi’s Why the Biggest Firms Don’t Blog at Legal Blog Watch.
I came across an interesting technology use survey sponsored by LexisNexis. It has a lot of data on tech usage and attitudes and compares legal and other professionals and three generation of users. It’s worth a look though it’s a bit overwhelming in scope and I am not sure it is actionable for IT managers and CIOs.
The LexisNexis Technology Survey Gap [PDF]. LN conducted the survey (via a third party) in summer 2008. My take-away from the copious data and analysis:
- Almost all professionals now rely on technology. [What’s up with the few who don’t?]
- Gen Y [born 1980+] legal professionals spend more time on applications than Gen X or Boomers but may be less productive as a result
- I found page 23, hours per day spent using various devices, the most fascinating. All respondents report spending time using a fax machine, typewriter, and pager, for an average total of 2+ hours / day. Excuse me? I don’t see how this can be reliable. Even when fax was important, legal professionals did not spend much time using a fax machine (maybe reading faxes). I can’t think of anyone I know who owns a pager. I don’t think there are enough typewriters available to support the implied usage.
- CIOs who want to control non-work applications may find some good ammo for their arguments
As I read the survey, it does not address a long-standing question I have: are Gen Y legal professionals more tech savvy than older generations? Many lawyers and tech managers assert this is true. And this survey shows they use more applications. But that still leaves open the question of whether, when it comes to practicing law more effectively with technology, newly minted lawyers are better than older ones.
A recent law suit contends that a law firm’s online research client charge-backs are unlawful. This hints at the bigger issue is what should be overhead and what should be a charged to clients.
Carolyn Elefant writes in Law Firm Markup of Research Costs: Annoying or Unlawful? at Legal Blog Watch about a plaintiff who “claims that that Chadbourne [wrongfully] charged him $20,000 for computerized legal research services that actually cost the firm only $5,000.” She cites an NLJ article and links to and discusses several blog posts commenting on the article.
I think this suit and her post raise two questions:
(1) What should law firms bill back to clients and
(2) If a service is billed back, how should the rate be set.
My answer to the first: firms charge for whatever they can easily meter. Legal technology - online research, fax, phone, copiers - all come with built-in metering. Books, the library itself, space to store client documents, and circulating periodicals do not. Paralegal work is easily metered; secretarial work is not. (Firms may have missed charging for secretarial time working on documents, which the DMS can meter.)
The second question is harder to answer because it turns on how one interprets the Canons of Ethics. In the past, clients voiced discontent about fax and copying as profit centers though I don’t know if that ever translated into a lawsuit.
Three interpretations of this situation come to mind. Law firms
(1) work hard to allocate costs fairly to clients
(2) are randomly managed and lack a coherent vision of their core business, or
(3) are opportunistic and mercenary.
Am I missing potential explanations?
Would you see a doctor who does not use current diagnostic and therapeutic treatments? If you answer yes, perhaps you are are a lawyer who has yet to master legal technology.
Technology Changes Law Firm Management by Jeremy T. Elman, McDermott Will partner (Law Firm Partnership & Benefits Report newsletter, 9 Mar 2009) is a good but surprising article. Elman writes how legal tech has changed law practice: “the road to partnership … is increasingly paved with computer clicks.” He suggests ways for lawyers to gain comfort with technology.
The surprise is that the legal profession stills needs such articles. More client focus on how lawyers practice would unveil the inefficiency of the hold-outs. Perhaps the current economic crisis will finally cause this to happen.
I recently received a new legal technology magazine in the mail. I was surprised because I had no prior notice of it. And I was disappointed.
I was going to remain silent about my reaction to NextGen_Law, published by the Daily Journal Corporation because I think the market has room for publications to compete with Law Technology News. But reading Bob Ambrogi’s A New Legal Technology Magazine emboldened me.
It’s fair to characterize Bob’s review as scathing and I share his concerns plus have my own. I too found the content tired. Moreover, it was not clear what size law firm the editors are targeting. Some content seemed geared for solos, some for large firms. I think that is hard to pull off as the requirements differ quite substantially. I personally found the lay-out and graphics off-putting.
I’m a big fan of LTN but also value multiple voices. For anyone looking for another perspective, I would stick with American Edition of Legal Technology Insider, which launched last summer.
The legal market faces tough times but working virtually appears to thrive.
Even Law Firms Feel Strain of Layoffs and Cutbacks (NY Times, 12 Nov 2008) opens “You know things are bad when even lawyers are getting laid off.” The The Layoff List at American Lawyer enumerates the many lay-offs, including the White & Case layoff on Tuesday.
In the face of this bad news, Law Firm Perk of the Moment: Flextime (American Lawyer, 12 Nov 2008) reports
“Even in a bad economy, the concept of work flexibility has staying power. For starters, it doesn’t cost anything. Unlike reduced time or job sharing, lawyers on flexible schedules aren’t typically looking to cut down their workload or billable hours. Many are happy to work like maniacs – provided they do it their way, at home or on schedules that deviate from normal office hours.”
I have long advocated flextime in the guise of working virtually. (Not to put too fine a point on it, but I think the article mis-uses the term flextime, which I thought means being at the office but not on a set schedule. The article is clearly is more about where lawyers work than when.)
If a barrier at your firm is the culture won’t allow it, now may be the time to pursue it. If firms don’t take otherwise difficult steps now, will they ever?
I often write about working virtually. Some lawyers object to it because they think it detracts from collaboration. But does anyone really have good data on what it takes for lawyers to collaborate?
I was intrigued to read Share and share alike (Lawyers Weekly, Australia, 26 Sept 2008). It describes how several large firms, including Mallesons, are beginning to experiment with lawyers sitting in open-plan arrangements. That means no private offices. This is an important read for anyone thinking about law firm design and lawyer collaboration. As usual, Australian law firms are leading the innovation charge.
The article quotes some lawyers as saying the open seating arrangement promotes sharing, training, and mentoring. It also discusses potential issues such as noise.
If in-person collaboration is indeed important (and thus a barrier to working virtually), then should law firms move to open seating? I suspect most lawyers and manager will recoil even more at this than at lawyers working from home or from satellite offices. I, however, remain convinced that the question is as much empirical as it is cultural. What goals do firms and law departments want to foster and what working arrangements best support those goals? Collecting data to answer this may be hard. But simply dismissing the alternatives as unworkable is medieval.
[For the record, I personally worked in an open plan for three years at Bain & Company. And the separation between any two desk was often just enough to accommodate a chair moving back by about 1 foot.]
If I were still a Big Law CIO going into budget season now, I’d have strong views about how to present my 2009 budget proposal to management.
This is a tough year for many law firms. Only desperate law firms will short-change critical IT infrastructure and staffing. Merely cautious firms, however, might postpone non-critical spending. CIOs should go be ready to discuss which line items can be cut or postponed. Proposing the bare minimum may not be politic but know how to answer questions about business value, urgency, and priorities.
If you think you don’t need to worry, think again. The current issue of American Lawyer is full of doom and gloom articles.
- One Side of Midnight is sub-titled “With revenue down, firms pin their hopes to the expense side of the balance sheet”.
- The Going Rate is sub-titled “With the economy down, will fees go up?” Fee increases will likely be smaller than in years past.
- Advisers Advance is sub-titled “Tough sledding for firms, good for consultants”.
Your partners read American Lawyer and even if your firm is not hurting, expect management to be cautious or worse.
[A caution if you read The Going Rate. Don’t go on record, as one BigLaw co-chair did with a statement “Law firm partners and managers need to spend a lot more time talking about fees with their clients and less time talking about fees with each other.” Conversations about fees with competitors might be of interest to the DOJ or FTC as an antitrust violation. In fact, don’t talk about your law firm’s pricing with your peers.]
The 2008 Am Law Tech Survey is out. It’s a good read for law firm CIOs and IT directors but I would not rely on the year to year comparison.
The article Am Law Tech 2008: IT in the Balance (Law Firm Inc., 9 Oct 2008) analyzes the survey results. My reaction was simultaneously: “Wow, there’s a lot new and nothing new.” It suggests that law firm IT and legal technology has come of age and that CIOs have big and high-paying jobs. The analysis does deep dives on VOIP, Web 2.0 (aka Enterprise 2.0) technologies, and the deluge of data. Nothing really that new but good confirmation for those struggling with these issues daily.
The article also links to detailed findings (tables). Lots of good stuff there but use caution in comparing 2008 results to 2007. The AmLaw Tech Survey Budget chart shows that IT operating expense per lawyer dropped from $33k in 2007 to $25k in 2008. That’s big and inconsistent with what I know. Keep reading to see that 90% of firms report an increase in operating budget. Unless I’m missing something, this means the survey respondents in 2007 and 2008 are simply not directly comparable and year to year changes reflect different samples rather than trends.
[For other data hounds out there, this also explains a sentence in the article: “While capital outlays are up a whopping 36 percent over last year – $5,310,494, on average, compared to $3,902,145 in 2007 – spending per lawyer has remained flat ($8,496 compared to $8,500).” Reading that I thought, how can that be unless lawyer headcount changed by as much, which is has not to my knowledge. Again - I don’t think it’s safe to compare the two years.]
The AmLaw Tech Survey software chart lists EDD vendors used by firms. I was a bit surprised at the top vendors in this list: Kroll Ontrack, Lexis Nexis (LexisNexis Applied Discovery), IPRO Tech, FTI Consulting, and Zantaz.
If you are looking for benchmarks on staffing ratios, see the operations chart. More than 80% of firms responding have fewer than 30 users per IT support person.
The world of law firms divides into lawyers and non-lawyers. And that’s a shame.
In An overlooked recruitment opportunity blogger Jordan Furlong concludes that large law firms have an excellent opportunity to gain a competitive edge by properly recognizing the value non-fee-earning staff add. He observes that “Lawyers are notorious for their habit of treating employees without law degrees as separate and lesser entities within the firm structure, less worthy of respect and collegiality.” In reaching this conclusion, he cites Employee survey reveals support staff dissatisfied (The Lawyer.com, 1 Sep 2008), which reports on a survey of law firms in the UK that found “An overwhelming majority of business support staff – 64 per cent – did not feel that non-fee-earning roles are valued at their firm.”
As both evidence and cause of this problem, consider the pervasive and perhaps perverse use of the term “non-lawyer.” If you visit HP, IBM, Dell, or Sun Microsystems, do you hear “non-engineer” or “non-scientist"? If you visit Glaxo, Merck, Novartis, or Amgen, do you hear “non-researcher” or “non-doctor"? We can even quantify this to a degree. Google searches for for “non lawyer” yield 183,000 hits and “non doctor” 23,500 hits (for the plurals, the hits are 219,000 and 14,000 respectively).
The law firm caste system is pernicious. Striking it down is not just about feelings and self-esteem. In my experience, it damages team effort and detracts from the overall quality of legal service.
I don’t have a good answer but I leave you with a thought. Consider if we called lawyers “non managers” or “non business people” or “non quants”. Of course, lawyer is a binary designation and these others are not, but you get the idea. Framing people by what they are not is worse than unhelpful.
Good leaders communicate effectively and frequently. How many large law firm managing partners or general counsels use blogs to communicate internally?
I’ve frequently written about the marketing benefits of large law firms blogging. The Wall Street Journal reports today, in Design for Learning: RISD Gets a New Type of President, that the new president of the Rhode Island School of Design “spends at least an hour a day blogging; Mr. Maeda’s entries are ‘unmediated’ – another way of saying unedited – ’so you get the real me, typos, spelling mistakes, you name it.’ ‘He’s the text-message president,’ says a colleague.”
Managing partners and GCs should consider internal blogging to lead and communicate.
Initially I thought a university story won’t carry weight with lawyers. Then I realized that universities are more like law organizations than are most businesses. Universities are loose organizations with a bunch of independent-minded faculty and students who resist central control. Sound familiar?
I wish I had systematically tracked large law firm staff and lawyer reductions.
Not to single out particular firms, but I just read a couple more reports of BigLaw cutbacks. Duane Morris Lays Off Additional Staff (Legal Week, 22 Aug 08) reports that many of the 15 positions cut were in marketing. An expanded version of this article is in the Legal Intelligencer.
New York’s Fried Frank announces job cuts (Legal Week, 19 Aug 08) reports that Fried Frank cutbacks “affect almost 10% of the firm’s total of 730 global support staff, primarily affect floating secretaries, part-time assistants and paralegals and library personnel in the New York and Washington DC offices of the US firm.” According to the firm, this redundancy is not a result of the economy but rather a result of a two-year efficiency study.
I suppose it’s no wonder with both revenue and profit-per-partner falling in the first half of 2008. Forecast: Law Firms to Continue Bumpy Ride Through 2008 (American Lawyer, 21 Aug 08) by Dan DiPietro, the client head of the Law Firm Group of the Citi Private Bank, reports on slowing revenue growth and falling profits per partner at large US law firms. DiPietro forecasts continuing tough times in 2008, so we may see additional lay offs.
So far, I don’t recall reading about many legal IT lay-offs. Has anyone kept a list of firms that have let go lawyers and staff?
Update (30 Aug 2008)See About Those Law Firm Layoffs? It Isn’t That Bad, National Law Journal, 12 Aug 08 for perspective and a list of firms laying off lawyers or staff. I missed this article when I wrote the above.
The The New York Times reported last week (8 Aug 2008) on a study analyzing the cost of not settling law suits. Defense lawyers make bad calls not to settle in almost 1 out of 4 cases. Can lawyers improve that record?
Study Finds Settling Is Better Than Going to Trial reports that that plaintiffs would have been better off 61% of the time accepting settlement offers; defendants would have been better off 24% of the time. The average cost of defendants’ bad calls was $1.1 million.
Is this just the cost of doing business and practicing law? The Times also reports
As part of the study, which is the biggest of its kind to date, the authors surveyed trial outcomes over 40 years until 2004. They found that over time, poor decisions to go to trial have actually become more frequent.
‘It’s peculiar if any field is not improving its performance over a 40-year period,” Mr. Kiser [a study author] said. ‘That’s a troubling finding.’
Two ways come to mind to improve outcomes. One is consistent use of litigation risk analysis. I have blogged about decision trees, a technique to lay out the legal and factual issues, key decisions, and probabilities to determine an expected case value. It’s hard work and involves judgment but forces lawyers and clients to be clear about a case and its odds. Another way is predictive markets.
Whether either way would help is an empirical question. The typical lawyer’s attitude, however, works against systematically assessing how to improve outcomes. The article reports that :
Several lawyers were dismissive of the study, noting that the statistics mean nothing when contemplating a particular case, with its specific facts and legal issues, before a specific judge. They stressed the importance of a lawyer’s experience.
In other words, “trust me, I’m the expert.” Experience is indeed critical but why not improve upon it if, in fact, analytic techniques actually do improve outcomes? The presumption today is that litigators need not do risk analysis. That 1 of 4 cases mistakenly go to trial and the record has not improved in 40 years, however, shifts the burden of proof onto expert litigators to show why they should not conduct risk analysis.
I fear that for some lawyers, the right adage is less “trust me, I’m the expert” and more “what, me worry?” (with thanks to Alfred E. Neuman).
Though law firms are laying off staff, I have seen no evidence (yet) that legal IT workers are particularly at risk. That said, it’s always good to be prepared
Every professional who wants to remain employed should have a current resume. You just never know when it might come in handy. I see many resumes because I hire, network, and informally advise my friends on their careers and resumes. A few simple resume rules that I see violated surprisingly often:
- Two pages. Period.
- No typos (that’s what friends and families are for!)
- Professional look overall (e.g., no cramming text with font and spacing games)
- Positioning of your experience appropriate to the target job (i.e., you may need multiple versions)
- PDF (not Word)
- File title that’s descriptive (e.g., Ron Friedmann - Resume - July 2008.pdf)
In this day and age, especially if you are a technical expert or technology manager, you should also be findable on the web (see my post, Managing the Brand Called You). At minimum, get a Linkedin profile. It may not help but it’s hard to see how it can hurt.
If you do a job search, make sure you have a short, cogent cover e-mail message or letter. It should explain what you seek and why you are qualified. Even if you’ve just had a great conversation with a contact do this. Your contact may want to forward your e-mail, so it should be self-contained. That way your contact can simply write a short cover note like “Great person, I endorse her if you have anything open that might fit … see below.”
Have reasonable expectations of search professionals. Remember, their client is the employer, not you. If you’ve worked with search professionals previously and have a relationship, it’s fair to expect at least a bit of advice and words of encouragement. But absent prior, decent relationship, expect a response only if your credentials happen to match a search currently underway.
If all this seems obvious, sorry, but as mentioned, I never cease to be surprised at how many of these simple guidelines are violated.
Update, 25 July 2008: A reader asked a good question, prompting a clarification. The 2-page resume limit is for resumes you send by e-mail to a contact and, I would say, even to an HR department. If you have a web-based resume or submit your resume to career web sites, then I have less personal experience. Certainly for web based resumes (if you have your own site, as this reader does), longer may be better because you get more potential hit words. I suspect anyone relying on career sites should read separate advice for how best to optimize resumes in that venue.
I am a long-time fan of the UK-based Legal Technology Insider and its companion Orange Rag blog. So I was pleased to learn that a US edition launches soon.
From a PDF-flyer:
“American Legal Technology Insider – a new publication focusing on the large firms sector of the US and Canadian legal IT industry. From the same publishing company as the UK’s market leading newsletter Legal Technology Insider and The Orange Rag breaking news blog, and edited by the Insider’s award winning lawyer-turned editor Charles Christian, American Legal Technology Insider (or ALTi) will follow the UK newsletter’s formula of treating vendor and industry news as real news. Concentrating on the large firms market, along with news stories on who is buying what, the latest trends and developments in legal technology, staff appointments and moves, and vendor corporate news, regular features of American Legal Technology Insider will include: a guest thought leader/opinion piece by a vendor, consultant or law firm IT director; a round-up of the biggest deals of the month; a front page slot covering the product launch of the month; plus ‘up and running’ – an implementation or upgrade case study; and previews and reviews of all the major North American legal IT events.”
To receive this new publication, send e-mail to altisubs at legaltechnology dot com or visit http://www.americanlegaltechnologyinsider.com/ (this will go live on or around 7 August 2008, when the first issue launches; for now, this URL points to the Orange Rag blog).
Much as I am a friend and fan of Law Tech News, I think it will be good for the US legal technology market to have a competing publication.
Several large law firms have laid off lawyers and staff. Less publicized are other cutbacks.
I hear from friends in multiple BigLaw firms that they face pressure to reduce travel costs. If “necessity is the mother of invention” and there is a “silver lining in every cloud,” then perhaps we will see wider adoption of collaborative technology. Much non-client-billable law firm travel is to attend conferences or visit other firm offices. Many web-based technologies allow teams to collaborate and people to present without anyone leaving their desks.
Relatively old technology includes web conferencing, webinars, and instant messaging (IM). Relatively new includes a host of Web 2.0 systems, from shared applications (e.g., Google Apps or Basecamp), to easy point-to-point video, to social networking (e.g., Facebook, Linkedin, and Legal Onramp).
Law firms looking to reduce travel cost can “kill two birds with one stone” by using the cost cutback as an incentive to cause lawyers and staff to use the web in lieu of travel. Beyond cost savings, this will mean less personal and environmental wear and tear.
PS - I finally broke down this weekend and established a Facebook profile. I can see the promise, but as one of my friends messaged me, “be careful about drinking the Kool Aid.”
How does managing legal technology compare to managing corporate technology?
A panel discussion at the Strategic Technology Forum in Lisbon, hosted by LegalWeek in Lisbon last month addressed the question. The panelists were David Coates, IT Director of Bond Pearce and formerly of UBS; Jason Haines, Director of IT, Allen & Overy LLP and formerly of PricewaterhouseCoopers (PWC); and Malcolm Simms, IT Director, Eversheds LLP and formerly of Disney/ABC Television Group.
The panelists pointed out several differences:
In legal it’s about words; in corporate it’s about numbers. This makes a big difference in how CIOs present business cases to management.
Lawyers resist change, industry embraces it.
Corporate management asks “what’s the business case?” Law firm management asks “what are other firms doing?”
Legal market software suppliers are few; corporate many. A corollary: legal software vendors are less innovative.
Corporations do zero-based budgeting, meaning CIOs have to justify items each year. In law firms, budgeting is a continuous and incremental process without the need to justify each year.
“There is no PowerPoint in law firms.”
All of these resonated with me. One comment on “no PPT in law firms.” I think this difference has a deeper meaning than many may think. Presentations are not just about content; they are about guiding or controlling a conversation. When I started as a manager in a large law firm, I met frequently with the management committee to discuss tech projects. Discussions wandered and were, as a consequence, often unproductive. So I decided to use a presentation as a way to help guide the discussion. The resistance to my doing so was palpable. I wish I had had a chance to pose this hypothesis to the panelists for confirmation or rejection.
Law firm CIOs who think strategically need to understand the where the legal market and large law firms are heading.
Large UK law firm Eversheds recently released its Law Firm of the 21st Century report. I found it provocative and had hoped to comment about it but too much time has elapsed, so let me point you to two good commentaries on it.
Eversheds Brings Us “The Law Firm of the 21st Century” by Adam Smith, Esq., provides both a summary and trenchant comments, including “My take on it is that the changes expected are both more and less radical than we have imagined.”
Ed Poll of Lawbiz.com, a Fellow of the College of Law Practice Management and legal consultant, posted The Future of the Law Firm - A report prepared for Eversheds law firm at the College’s blog. He offers an excellent analysis and historical perspective on the issues in the report. Poll examines the “disconnect between lawyers and their clients in large corporate enterprises.”
For just the most recent evidence of that “disconnect,” see The Rating Game in the July issue of Inside Counsel (follow link to PDF of article). The disparity between inside and outside counsel views are quite evident.
In my own view, many of the problems the Eversheds report raises and the commentary on it stem from my thesis in my recent “Modest Proposal” posts, that the underlying problem of the legal market is that customers do not exercise their market power.
Successful large law firm CIOs have learned many secrets to managing legal technology.
Over the last year, I wrote in this blog about maxims for managing legal technology. I collected and refined these blog posts, which have now been published as Maxims for Managing Legal Technology: Unwritten Rules for the Law Firm CIO or IT Director in the June 2008 issue of Law Technology Today, an e-zine of the ABA.
Here are the seven secrets in summary:
1. Tech Enthusiasts May be Your Worst Enemies
2. Let Chaos Work for You, Not Against You
3. Honestly Held Beliefs May be Wrong
4. Let a Thousand Flowers Bloom – Not!
5. Better to Seek Forgiveness than Ask for Permission
6. Less is More
7. Reverse the Persuasion Equation (also known as Don’t Push on Strings)
I have previously written that Australian and UK legal reforms allowing public ownership of law firms could mean big changes in law firms and legal technology. Lyceum Capital in the UK announced in March that it seeks investments in UK law firms. Today, I heard a fascinating interview of Lyceum’s managing partner.
I am at the Strategic Technology Forum in Lisbon, hosted by Legal Week. One of the sessions today was an interview for this conference with Jeremy Hand, managing partner, Lyceum Capital by David Morley, worldwide senior partner, Allen & Overy, LLP. The interview was recorded in London recently, for this conference. The interview lasted 30 minutes and covered much ground. The dialog is paraphrased; a good faith effort to capture the high points.
[Update 12 June 2008: See Morley and BVCA head debate the future of law in LW video, LegalWeek article on this interview with link to the video.]
Q: What attracts you as an investor to the legal sector?
We are a UK investor and have chosen to invest in service providers. We look at markets with long term favorable drivers for growth and profits. In legal, we saw excellent profits and growth, more fragmentation than comparably sized markets, customers who are often intimidated by providers, and inefficient service providers. So there are big opportunities for both new and established entrants that are well capitalized. This is all driven by the Legal Services Act. Even though it only comes into full force in 2011, it creates opportunities today.
Q: From a lawyer’s perspective, why should they take it seriously. Why can’t they say, “it doesn’t affect me”
Being capitalized and well run is always helpful. Investment in IT, work flow, and high quality people is expensive. But partnerships are often reluctant to invest to position themselves for long term success. Financing working capital is a drain, especially for fast growing firms; keeping pace with financial needs can pinch partners. Plus, many partners are too concentrated in their ownership interest in their firms. Human greed is always a factor; some departing partners would like to capture some of the value they have created. You can also use new capital structure to attract and retain the right mix of talent. And finally, capital provides wherewithal to acquire other firms.
Q: Law firms have self-funded or used bank borrowing. Why do they need more capital now?
If owner-partners are the only funders, there is a natural tendency to act very conservatively because their assets are at risk. You can reduce this constraint and improve the financial structure with external investment. In many other professional service organizations, external capital has been effective in driving improvements and increasing value. It’s not just the money - it’s the outside expertise as well.
Q: What will investors seek? What do they get when an investment is made in a law firm?
Lyceum has experience across broad range of professional service firms and we know how to drive growth and profitability above the market average. We offer more flexibility in control and exit. On control, many law firms have a structure where the managing partner does not have much power relative to other service firms. Making quick, effective, and sometimes bold decisions is typically beyond most partnerships. It does not work in that structure. As a financial partner, Lyceum does not want control. What we do want and need to see is an effective management structure. We can play a catalytic role in improving management structures, in investing in IT, workflow, staffing, strategy, and planning. We offer a lot of business expertise and work on a partnership basis. On the issue of exit, we make clear what the structure is, which could be sale to a bigger privaty equity firm, a public listing (though that could be hard), a trade sale. In any investment, we make sure expectations are aligned.
Q: You see legal market becoming more business-like. Won’t some partners fear moving from owner to highly-paid employee? Will that diminish motivation?
Whether lawyers like it or not, the Legal Services Act will create market pressures. Firms will have to respond one way or another. Partners should want to work in a winning organization. To win, they may need to change.
Q: Do you want to see more non-lawyer managers and executives running firms?
Firms could probably be better run by professionals who have had more experience running businesses. We don’t necessarily want hospitals to be run by doctors. Why do we think that lawyers promoted into senior role will be successful because they are good lawyers?
Q: Let’s turn to technology… how do you see investment in technology playing out? Will some firms make massive investment and leap over their competitors?
On the commoditized end of the legal market, technology will have a huge impact. Tech will likely move up the value chain. But the large firms are already investing in technology. But I do see some dramatic changes possible form IT. The future for good technology people might well be better than it is for some lawyers.
Q: How will the Act affect different segments of the legal market?
We are only now just delving into the different sectors. On the commodity end, you need scale, fantastic technology, and direct access to your clients so that you don’t lose margin to distribution channels. On the complex end, deep expertise and deep understanding of customers and full service will be key. But some elements of work even on the high end need to be commoditized. In the middle, there are elements of both end. You’ll need scale and specialization.
Q: What form will the typical investment take?
By 2011 or 2012, the playing field will be clearer. Prior to that, I foresee some investments within existing regulatory structure. Post 2012, a public listing is a possible exit strategy. Loans with conversion to equity are another possible.
Q: What sort of interest have law firms expressed to date?
A huge amount of firm have “come have a chat.” We are having some serious discussions too with prospects. Timing is key though. Outside of legal services, there are organizations that are thinking of how to enter the legal market. They are getting their act together. I think there will be many new entrants before 2012. It’s not too early for law firms to be formulating their strategy.
Q: What advice do you give to firms now to prepare?
Think hard about your strengths and unique selling propositions. If you don’t have any, then you are at big risk. It’s difficult to do do a good self assessment. Firms need to talk to experts on strategic innovation and finance to develop plans. You may need to develop partnerships to be properly positioned. “Don’t put it off.”
Q: Bar associations outside of the UK do not share the UK view. Does this affect your view of firms with an international presence? A&O for example, has more than 1/2 its lawyers outside the UK?
Yes. But we think the rest of the world will eventually follow the UK.
Q: Is it likely this will lead to outsourcing a lot of jobs?
Yes. I think it is likely. There is nothing special about what a lawyer does. The distinction of lawyer v. non-lawyer is very artificial. We are repeat investors in regulated industries such as health and education. I believe that many current lawyer activities do not need to be done by qualified lawyers. So yes, work will move offshore. Lawyers in India could do a lot of the work.
Q: What sort of lawyer - what skills and characteristics - will win?
High quality service will always be key. They need to understand customer. But they have to avoid raising obstacles. They need to be business advisors more than technicians. They must be less forgiving of inefficiency. Be braver about risky investments. Welcome new working practices.
This interview certainly engaged the audience of law firm CIOs and other senior IT managers. Many lawyers in the US probably think they need not worry about the issues Mr. Hand raises. In this age of globalization, however, that is a risky position to take.
The number of law practice management conferences has exploded in the last 20 years. What does this tell us and where are we heading?
In 1989, I saw few conferences of any kind advertised in the legal trade press or by direct mail. To fill a gap in professional dialog, in 1991 I co-organized the Law Practice Technology Roundtable. The day-long, peer-organized meetings brought together lawyers and forward-thinking IT directors to discuss what we now call practice support. It met 20 times over a dozen years.
Now, reading American Lawyer, Inside Counsel, Corporate Counsel, Law Technology News, and other trade publications, I see many ads for law practice management conferences. For-profit companies such as ALM Events, Ark Group, IQPC, and Marcus Evans and not-for-profits such as ILTA, ALA, ABA, LMA, AALL, and SLA host many events.
So what changed and what does it mean? The growth and “business-ification” of the AmLaw 200 is a big driver. In 1990, many firms loathed the idea of firm as business. Today, law practice is simply a way to make big bucks. Growth in professional law practice managers has probably outpaced that of lawyers. Just consider functions today that did not exist or were embryonic in 1990: IT, marketing, business development, professional development, recruiting, sourcing, facilities management, knowledge management, practice support, and e-discovery / litigation support.
Professional sharing is great but I do wonder about the number of conferences. In KM circles, we have asked if there too many KM conferences – what’s new to justify so many conferences each year? Our answers are inconclusive. This post was triggered by Mark Ross of Lawscribe with his thought-provoking post: Legal Outsourcing Conferences - an Addict’s Critique. I too have noticed many legal process outsourcing conferences. (Re the LPO market: I share Mark’s concerns but I think the positive take-away is that we are at the tipping point of widespread outsourcing adoption; of course, I may be biased now that I work for an LPO!)
So, what’s next? Some of my thoughts about the future of conferences:
- Conference organizers should clearly distinguish between “here’s what you will learn” sessions driven by a speaker plus PowerPoint and real panel discussions. I find being talked to – whether by a single speaker or seriatim by 3 to 5 panelists - less useful than a truly interactive panel , one not overly rehearsed, that operates slide-less, and that engages in a real conversation on the podium and with the audience.
- On the commercial side, let’s hope for a shake-out. I’ve heard too many stories of sessions or whole conferences with just a handful of non-speaker / non-vendor attendees. As a marketing person now, I see way too many opportunities to sponsor conferences or pay-to-meet-buyer events. (Even worse, some of the for-profit conference organizers do not seem to understand CRM, so I receive multiple, uncoordinated calls from them soliciting sponsorships. The guilty shall remain nameless.)
- How about more “un-conferences.” I read a bit about these; I gather participants drive these in real time, meaning no advance agendas or speakers. Out of chaos, order emerges. Said another way, I find that at most conferences, the best action is in the hallways, small group discussions, and networking. Perhaps we should just do away with the fiction of sessions and focus on the “intelligence of crowds”, chance encounters, and networking.
- I imagine law firms and departments now spend a pretty penny on conferences. Is there a way to create a collective rating system so that lawyers and department and firm staff could, in a neutral forum, rate conferences, speakers, venues, etc. Any entrepreneurs out there who can start this rating business?
Law firm CIOs and other managers who want the proverbial “seat at the table” need to follow law firm economics. For large law firms that means the AmLaw rankings.
I could not attend the American Lawyer rankings preview webinar today but found an excellent summary by Adam Smith, Esq. at The AmLaw 100 for 2007: “Flash Report”.
The new American Lawyer web site will soon post more information.
Update (1040pm EDT, 29 April 2008): See The 2008 AM LAW 100: Lessons of The Am Law 100 (American Lawyer, 1 May 2008). As of now, the only chart I can find on the web is RPL [Revenue per Lawyer] Ranks 1998-2007. Have some fun: copy and pasted the entire table into a spreadsheet so you can sort and analyze.
Update - Sponsored Link (1 May 08): Click here to buy the 2008 AmLaw 100 downloadable file. Now you’re really talking fun.
Inside Counsel (April 2008) reports on a LexisNexis survey on information overload by professionals: “77% of legal professionals… cite a clack of sufficient information technology tools to cope with the ever-increasing information burden."
Law firms and legal market vendors undoubtedly can do better in creating, deploying, and training on tools. But it irks me to see surveys point fingers at IT professionals. I’ve run IT at a law firm and hosted widely publicized internal seminars to create awareness of or training on new tools. Often, literally not a single lawyer shows up. And many lawyers who complain have almost no patience to learn new software or new features. So many lawyers have only themselves to blame.
Let’s say a lawyer spends 1000 hours/year in front of a PC. Wouldn’t it make sense to spend 5 to 10 hours per year to learn how to use that tool more effectively? Don’t we think that would more than payback the time invested? (Of course, the invested time is not billable and therein lies the deeper issue).
And this is not just about learning tools. How about learning simple information management “hygiene?” For example, don’t reply all to an e-mail unless clearly warranted. Or if you use the same e-mail thread and change topics, change the subject line to so indicate. Or when someone sends you a file and you modify it, save it with a new name before you send it back so that both you and the recipient have clearly labeled original and marked up versions. Many simple steps make info management easier all around but few take these steps.
Then years ago, I would have said the onus was on IT professionals to improve. Today, users have the bigger burden. Those too busy to sharpen their ax should not blame the ax-maker for having a bad tool.
[Click here for a summary of the LexisNexis LexisNexis Workplace Productivity Survey, completed in December 2007. (PDF).]
Blogging continues to grow in big law firms.
Kevin O’Keefe of LexBlog posted his State of the AmLaw 200 blogosphere, March 2008 last week. He found that from August 2007 to March 2008, the number of big law firm blogs grew from 74 to 110. Of the 110, 80 are firm branded.
Joy London and I also track firm-branded blogs. We reported our findings in Updated Directory of Large Law Firm Branded Blogs (20 Nov 2007) and at our list of Large US Law Firm Branded Blogs. The differences in our blog counts probably results from Joy and me missing some blogs, new ones since our update, and different definitions of what constitutes firm-branded.
However you slice the data, the trend clearly continues up. With many firms spending 2% of gross revenue on marketing and already producing a stream of legal content, I am surprised the number of blogs is not much higher. My analysis of blogging in Blogging – Why the Fuss, suggests that a rational assessment of the costs and benefits of competing marketing channels favors blogging over many alternative marketing activities (aka lead generation).
I frequently discuss the pros and cons of working virtually. I agree that lawyers need office time for in-person interaction but was surprised by what one Hunton & Williams partner has to say about the topic.
In Face Time in the WiFi Age (NY Lawyer, 27 Feb 2008), Hunton partner Dionne Carney Rainey extols the virtues of requiring associates to be in the office Monday through Friday, if not more. I leave it to others to comment on the impact this article could have on associate moral.
What I find most surprising is her statement
“It is imperative that new associates be present in the office during normal business hours so they can meet other lawyers, obtain work and start forming relationships. If an associate is not sitting in her office when a partner comes by to give an assignment, the partner will move on to the next associate.”
Clients should be dismayed that work assignments depend on who happens to be in the office. In an age of specialization and high billing rates, clients should hope firms allocate work based on
(1) understanding the client’s matter and matching skills appropriately and
(2) balancing lawyer work loads so that assigned lawyers have sufficient “share of mind” for the matter.
I thought the age of the completely fungible associate had passed. If not, let’s hope billing rates reflect the commoditized skill set.
Jordan Furlong law21.ca picks up and expands on themes I raised in Benefits of Blogging Redux.
In Lawyer blogs vs. law firm brands, Furlong suggests that firm-branded blogs cannot succeed because the voice of each lawyer-blogger will differ. Before I saw this post, I read Wal-Mart Tastemakers Write Unfiltered Blog in the New York Times (3 March 2008). This article describes how buttoned-down Wal-Mart, after some false starts with blogging, now allows some buyers to blog without censorship or review on a Wal-Mart branded blog. If the tightly-controlled Wal-Mart can deal with the multiplicity of voices, I think that large law firms can as well. In my view, uniformity of voice is not a requirement for Big Law branded blogs to succeed.
Separately, the Wall Street Journal Law Blog, in Law-Firm Blogs: Marketing Device or Mere Diversion?, picked up on the BigLaw blogging theme.
A couple of my recent posts generated some controversy about the status of legal blogging. Now, two legal bloggers share some data and comments.
In Why Are Blogs Undervalued? at Drug and Device Law blog, lawyer-bloggers Jim Beck of Dechert and Mark Herrmann of Jones Day assess BigLaw views of blogs. Note that their very substantive blog is not firm-branded.
The entire post is worth reading (plus the comments) for anyone interested in blawging. They write:
“The two of us, toiling alone, with no financial help or other assistance from our firms, have (to our complete surprise) almost accidentally created the most widely read product liability blog on the internet, now receiving more than 25,000 page views per month. In that situation, wouldn’t you expect at least a few of your colleagues to wander down the hall and ask two questions: (1) How did you do it? and (2) How can we replicate it?”
The elephant in the room of BigLaw that no one likes to discuss explicitly is that much non-billable activity is about “lead generation.” Call me crass, call me a destroyer of lawyer professionalism, but even decades ago, one reason lawyers wrote monographs and articles was to establish their reputation and, in so doing, generate new clients (aka leads). The array of law firm marketing activity today - seminars, webinars, e-mail updates, branding, parties, etc. - are all fundamentally designed to generate leads even if they are discussed in terms of creating awareness and establishing credibility.
So for a blog to generate 25k page views/month seems pretty good to me, maybe even stellar. As a marketing guy myself, I would want to know the number of clients generated and the cost of doing so by this medium (blogging) versus the alternative methods. And then there is the intangible value of Hermann being quoted in the New York Times in Medical Device Ruling Redraws Lines on Lawsuits (22 Feb 08):
“Mr. Herrmann, who writes a blog about these issues (druganddevicelaw.blogspot.com), said Thursday that the decision put the onus on medical device companies and the F.D.A. to prove they can protect patients without the threat of product-injury lawsuits.”
Beck and Herrmann and the comments discuss several reasons Big Law may not support blogging. Left undiscussed is the potential tension between individual and institutional interests. Given the ease of lateral movement among law firms, lawyer-bloggers may well prefer an individually branded blog over an institutionally branded one. That way, in the event of lateraling, there is no question of who owns the content. If I were in Big Law firm manager, I would want to find a way to institutionalize and brand the effort of my lawyers.
Are there limits on telecommuting and working virtually?
Of course there are. Almost four years ago in The Future Law Office: Going Virtual, I advocated that large law firms take steps to allow lawyers to work some days at home or in satellite offices.
Some Companies Rethink The Telecommuting Trend in the Wall Street Journal today reports that some organizations - AT&T, Intel, Hewlett-Packard and the federal government - that pioneered telecommuting are scaling back on remote workers, citing factors such as office consolidations, security concerns, and fostering team work. Yet the IDC reports “corporate employees working full time from home are still rising, gaining 30% since 2005 to 2.44 million in 2007.”
It’s a mistake to use this article as an excuse to avoid considering working virtually. Law firms should, especially in light of both the war for talent and concern about costs, do what I suggest in my article: consciously and empirically think about optimizing work arrangements. One idea I had was scheduling meetings on specific days to foster collaboration but allow lawyers to work remotely other days. I never suggested “total telecommuting” for lawyers.
Yesterday I asked if blogging is dead. That post generated 3 comments and some private e-mail; here then is a follow-up.
My post yesterday pointed out that Law Practice Management magazine’s issue on marketing technology did not discuss blogging. Dave Bilinsky, Editor-in-Chief, Law Practice Magazine left a comment which I reproduce here:
Bob Seger put it well in his song “Against the Wind” where he said:
“Deadlines and commitments
What to leave in, what to leave out..”
As the Editor-in-Chief of Law Practice Magazine, we run into the problem of what to include - and what not to - in each issue - and a decision to cover one topic necessarily limits the time and space that we can devote to another. It isn’t an easy choice. In the January/February 2008 issue, we decided to cover marketing technology trends, with a particular emphasis on the technologies that are not yet in common use such as CRM systems, Webcasts and online social networking. Blogging, however, is in our opinion, relatively well-adopted by lawyers - just look at the list of Other Blogs of Interest that you have listed on this blog! Social networking as a marketing tool is still in its infancy. CRM systems are not yet well adopted and have some significant hurdles to overcome before they are widespread in law offices. In our opinion, Webcasts are today what blogging was a few years ago.
We are trying to identify trends that are still young. I started my own blog (www.thoughtfullaw.com) within the last year and felt I was a relatively late adopter at that time!
So we do appreciate the feedback…and the blogging interest .. in the magazine. In this issue, blogging was something that hit the cutting room floor. That was an editorial decision and I stand by it. I hope we didn’t alienate anyone as a result. We do ask that you support us in keeping us *(and our readers)* in the loop by continuing to provide us with new trends, ideas and commentary.
Bloggers Jared Goralnick and Doug Cornelius also commented yesterday, sharing my view that law firms do need reminding about the benefits of blogging.
JK at Fluent Simplicity picked up on my post. He agrees blogging is not dead and rightfully credits Mr. Bilinsky for joining the debate, writing:
The ability to provide an intelligent response while maintaining transparency is to be commended. Agencies take note (one development shop in particular): if someone calls you on something, respond and join in on the conversation!
While Law Practice Management magazine may hold a differing opinion on blogs, the Editor certainly understands social computing.
For those who would like to learn more about blogging for lawyers, see also Cornelius’ Blogging Lessons Learned from a Curmudgeon Turned Blawger Feb 20th post and an Feb 19th interview by LexBlog of Cornelius on why blogg.
The current issue (Jan/Feb 2008) of Law Practice Management magazine focuses on Marketing Technology Trends. Blogging is barely mentioned.
The half-dozen or so articles on marketing technology cover a range of internal tools (e.g, CRM or proposal generators) and external ones (e.g., webinars and social networking). Granted, blogging is not for every lawyer or law firm, but I find its virtual absence from this issue a surprise. Several large law firms see the benefit in firm-branded blogs and many lawyers at firms large and small have their own blogs covering a vast array of substantive law.
I presented at the 2007 ALA annual meeting a on the benefits (and potential pitfalls) of blogging for law firms. I am giving an updated version of Blogging: Why All the Fuss?” to the NYC chapter of ALA on March 12th.
Sometimes little details make a big difference in how law firms use technology for marketing.
I needed a lawyer with specific expertise in a particular office of a multi-national law firm. The expertise is easily described by a unique search term, so I used the search feature to look for lawyers. I searched two AmLaw 100 web sites. One returned a neatly organized table of lawyers indicating their position, office, and practice. The other returned a list where each lawyer entry was four lines: two slightly different URLs, both with the lawyer’s name embedded in the URL; a line with the lawyer’s name; and a time stamp of unknown meaning.
Intrigued by the stark difference in search result displays, I searched on the issue in question and again, one set of results was neat and useful, the other not. With the ever-growing reliance on search to find information, I am surprised a large firm has not worked harder to present search results cleanly.
When you run a $50 billion (US) business with 170,000 employees scattered across multiple countries working in global teams, it pays to make finding the right people easy. Global law firms are much smaller but face similar challenges.
In Moving from Expertise Location to Expertise Deployment (28 March 2005), I described how IBM was developing an experience location system. International Isn’t Just IBM’s First Name (Business Week, 28 Jan 2008) provides an in-depth update on IBM’s success with experience location. The money quote:
“Professional Marketplace… lists more than 170,000 employees along with their skills, pay rate, and availability… managers monitor the database and serve as matchmakers between jobs and people. The databases have shaved 20% from the average time it takes to assemble a team and have saved IBM $500 million overall…. By sifting through several personnel databases with sophisticated software, IBM’s top managers can quantify the skills they have on hand worldwide and compare them with projections of what people they’ll need in six to nine months. When they spot a coming shortfall, managers coordinate with colleagues in other countries to recruit or train people. ”
$500 million is real money and a 1% increase in revenue would is a big deal in most businesses, especially such big ones. Partners who can continue raising billing rates 5% per year, however, might look at this and do a shoulder-shrug. So they may not rush to buy IBM Atlas, the commercialized version of IBM’s experience location product.
IBM’s achievement though goes beyond cost saving and revenue enhancement. It’s really about client service and how best to operate globally. CEO Samuel J. Palmisano on the challenge of managing a global workforce: “The big issues for us are: Where do you put them? How do you retain them? How do you develop them? How do you move work to them or them to work?” The software developed is a big part of how IBM answers these questions.
If the theory about large law law firm mergers is to offer clients a global delivery platform, then law firms need to be taking steps similar to IBM.
This is the seventh in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!
Tech Enthusiasts May be Your Worst Enemies. Value the lawyer tech enthusiast but beware. They often have great ideas – your challenge is to figure out which ones are practical now. They can be counter-productive by oversimplifying complex and expensive changes or by regaling other lawyers about adopting new systems. For BigLaw CIOs, managing the enthusiasts, who can verge on the fanatical, is often more of a challenge than managing the naysayers, who typically only go so far in their opposition.
This is the sixth in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!
Let Chaos Work for You, Not Against You. Law firms governance is very different than corporate governance: organization and management lines are relatively loose. When it comes to practice support and knowledge management (as opposed to infrastructure), go with the flow. Work at the practice group level and meet the needs of individual groups of lawyers. Trying to achieve or impose a standard firm-wide often fails.
Appeal to lawyers’ sense of competition. If you achieve a victory with one practice group, advertise widely. Hope that envy / competition causes other practices to ask for the same.
What is the life span of a CxO at a law firm?
Carolyn Elefant’s blog post title - Life for Law Firm Marketers: Brutish, and Ultimately Short - summarizes the lot of law firm marketers. She asks “Is the short life span of law firm marketers unique? Do marketers in other industries also have short tenures as well?”
One can easily ask the same of law firm CIOs and CKOs. Here’s a possibly half-baked hypothesis… The job implied by “Chief” is the real problem. I’m not talking titles. An IT director runs the infrastructure; a CIO sets strategy and aligns IT with the business. A marketing manager run seminars and does direct e-mail; a CMO sets strategy and aligns marketing with the business. Perhaps the short tenure of Chiefs flows from lawyer resistance to (1) strategy and (2) non-lawyer involvement in real management, not just execution.
Joy London (of excited utterances) and I track branded blogs of large law firms. We have updated the list we first published in March 2007.
Our directory of large US firm blogs has grown:
- 15 AmLaw 200 firms, up from 9, have firm-branded blogs
- 7 AmLaw 200 firms have RSS feeds, up from 5; the number of feed topics has more than doubled
- We now include a few large British firms
Finding RSS feeds and firm-branded blogs for AmLaw 200 is not that easy. Kevin O’Keefe’s LexBlog has designed many large law firm blogs and Kevin lists them on the Lexblog portfolio page. We also search the web sites of large law firms using the Google custom search engine for AmLaw 100 firms that I created.
With ever-increasing law firm marketing budgets (2% according to one survey), I am surprised more firms do not invest in branded blogs to generate leads. In my presentation, Blogging: Why the Fuss (presented at the ALA Annual Conference, May 2007), I suggested a framework to compare marketing “channels.” In my estimation, blogging is one of the more effective ones, though readers can use the framework to reach a different conclusion depending on the weight assigned to each channel consideration (e.g., cost, frequency, and ease of measurement).
If we have missed any large firm branded blogs, please send e-mail to ron @ prismlegal dot com.
This is the fifth in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!
Honestly Held Beliefs May be Wrong. Lawyers vociferously support their ideas, convinced they are correct. But they may well be wrong. An honestly held idea does not make it right. Always reality-test strongly held individual views by checking against other lawyers and the marketplace.
Some examples from days gone by:
- “E-mail will never amount to much.” That was the honestly held view of many lawyers until around 1997.
- “We can’t use optical character recognition (OCR) - it’s not 100% accurate.” That view belied two distinct misunderstandings: (1) appropriate search tools and techniques could not correct for errors and (2) the alternative was better. In this case, the alternative of objective coding was often said to be 97% accurate but in my experience, it was often worse.
- “We don’t need to worry about e-mail in discovery.” Need I say more?
- “We have no real competitors.” If that’s true, lay off your marketing department.
The question for today is which strongly held views will look as silly in retrospect.
This is the fourth in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!
Let a Thousand Flowers Bloom – Not! Two decades ago, legal technology proponents advocated, after Chairman Mao, letting a thousand flowers bloom. That is, they wanted lawyers to be able to do whatever they wanted with their PCs. At one time, I too was a Maoist (in that regard only).
Today, the complexity of IT operations, networks, and running help desks is much greater than in the early PC days. Letting users do whatever they want supports innovation and productivity but can mean chaos, extraordinary support costs, and real IT risks. Yet locking down desk tops and complete standardization has its down sides. So, how to keep both the IT gurus and the adventurous lawyers happy?
I’m not sure there is a perfect answer. One is that IT gives power users rights to install local software and some personal support. If the desktop “blows up,” however, the answer is to restore it back to the firm standard (you are backing up data, aren’t you?)
Any other answers that keeps both power users and CIOs happy? What will happen as/if more firms adopt thin client computing (meaning your desktop really is running centrally)?
This is the third in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!
Better to Seek Forgiveness than Ask for Permission. Getting lawyers to agree is hard. Management is often prone to hand-wringing. Just do something new and if management doesn’t like it, ask forgiveness. Of course, you need to know where to draw the line if you value your job. But remember, never doing anything new or useful may also be a recipe for job loss.
This is the second in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!
Less is More. When trying to persuade law firm management or technology committees about doing something new, don’t write a long report or provide too much detail to start. Remember, lawyers love to find fault with proposals. The more detail, the easier it is for them to find fault. Also, more is a bore. Stick to concepts and business value initially; drop the detail. With this approach, the discussion is more likely to focus on the big picture and business benefit. Tell your audience that if they like the idea, you can develop supporting detail later. They can always nix the idea then. But if they buy into a concept to start, they will be less likely to find fault with the details later. (And if someone asks for answers to details at the outset, ask them how the answer would change their decision. This can get testy but it helps point out that without knowing the big picture, the details may not much matter.)
This is the first in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!
Reverse the Persuasion Equation (also known as Don’t Push on Strings). Many CIOs, KM Directors, and others try persuading lawyers to adopt new technology, to do something different. Change directions. Supply standard productivity tools and make sure they work well. Then provide information on options for doing better to those willing to listen. In fact, make any lawyer who wants to go beyond the standard persuade you that it’s a good idea. That persuasion can be an e-mail with a couple of bullet points. Anyone who cannot take the time to do this in support of what is often an expensive change is unlikely actually to use or benefit from the new thing.
The 2007 AmLaw Tech Survey is out. What does it tell us?
Digital Dialogue (Law Firm Inc., 9/07) includes an article about the Am Law Tech 2007 Survey and related tables and articles.
Last year in a a post about the AmLaw Tech 2006 Survey I mused that the results could suggest undue emphasis on infrastructure. The results have a very different feel this year.
As the article title suggests, BigLaw has growing interest in collaboration technology. I share that view but I’m not sure how deep that interest is quite yet. Three specifics on collaboration struck me:
- A question on collaboration was answered by only 90 of 126 respondents. When 30% of respondents don’t answer a question, that speaks volumes about the non-responders.
- Of the 90 respondents, 3/4 use web conference software. That 1/3 do not shocks me. Granted I have a tech bent, but I’m so used to Webex, GoToMeeting, Live Meeting, and other brands of web conference that I can’t imagine how 20 large firms manage without it.
- Turning to newer ways to collaborate, blogs and wikis seem to be making good inroads: 30 firms have blogs and and 15 internal wikis. Of course, SharePoint, which seems to be more and more popular in large firms, makes blogs and wikis free.
The survey seems bigger this year than last so I won’t even try summarizing it. A few items I found of particular interest:
- Hummingbird’s (now OpenText) share dropped 7 percentage points, Interwoven’s climbed 6 points, and Starlaw clocked in at 2 points. For document management, these are sea changes given the pain in migrating brands. I was impressed with Starlaw at ILTA and am glad to see that they placed in the survey with what is either 2 or 3 customers.
- Market share of e-discovery (EDD) vendors also bounced around but I assign less significance to these movements given the transactional (i.e, case specific) rather than institutional (i.e., firm-wide) decisions typically involved. What strikes me is that 16 vendors are used by at least 15% of respondents. I’d say the market is still fragmented!
- Can we talk about e-billing? I’d think that with all the huffing and puffing by general counsels, e-billing software would be required widely. So I was surprised to see that 105 firms report that less than 25% of their clients require firms to bill electronically.
- Perhaps I’ve drunk my own Kool-Aid, but I expected to see more firms adopting what I have dubbed Enterprise Relationship Discovery software (see my May blog post Something for Nothing? Enterprise Relationship Discovery ). The article discusses some of the challenges with traditional CRM. I view “ERD” products as virtual magic marketing bullets. I was therefore surprised to see ContactNet with only 2% of 124 respondents and no mention of BranchIT.
I’ll have to re-read this rich survey to see if I can mine more tidbits. Please feel free to share your own take on surprises by leaving a comment or sending me email (info at prismlegal dot com).
In the last decade, many US and UK law firms have adopted an “operate globally” strategy, buying or building practices around the world. The rationale is to be where their global clients are. I think that in the future, successful global firms will need to do more than merely be where their clients are.
They will also have to operate and manage more like their clients do. Law firm management has improved but still lags corporate management and operations significantly. Take for example how big companies work. How Teams Can Work Well Together From Far Apart (Wall Street Journal, 9/17/07, $) explains how “IBM uses high-tech tools to grapple with an increasingly common problem: making far-flung teams work well together.” I’ve read many similar articles recently about global teams and working virtually.
In the long term, successful global law firms will emulate not just the locations of their multinational clients, but also how they manage and operate.
The College of Law Practice Management annual meeting took place on Saturday, September 8th. We spent the morning examining the future of law practice management.
Our wide ranging discussion is hard to summarize in a few words. For each of the several broad topics we covered, I offer below a few of the observations and comments that struck me as most interesting.
Law Firm Marketing
- A leading marketing expert believes that law firms have, by and large, blown branding.
- The huge success of leading law firms inhibits marketing. Hungry firms will innovate. Except for lock step Magic Circle
- Marketing is about content and blogs are best way to get content out on the web. [ok, said and reported by a blogger.]
- Alternative billing is the future - it has been for a long time and will be in the future
- A leading legal supplier has conducted a major survey of associates in US law firms. It covers thousands of lawyers across firms of all sizes. Bottom line: lawyers are much more satisfied with their work and life than much of the press we have read would have us believe.
- New lawyers are willing to work hard but want to work smart. They find big firms don’t work smart
- A large firm is using contract lawyers extensively, not so much for low level work but more to allow flexibility for lawyers. One partner moved to contract lawyer status for more flexibility.
- Promise steady compensation for partners who are retiring. Make the condition not maintaining billable hours; rather focus on a clean transition of both know-how and clients to the firm.
- Firms don’t pay for the right kind of management, especially at the practice group level.
- Lawyers need to learn how to be followers to help leaders succeed
- Technology allows workers to do the wrong thing faster and cheaper and can reinforce elaborate bad ideas
- Everyone can be a producer as well as consumer (aka Web 2.0)
- The problem today is not making a computer do what lawyers do but that lawyers now do what computers can easily do
- Technology has a dark side; it can create social isolation
Many firms have strategic-thinking CIOs. Some also have directors of knowledge management and some of practice services. But how many have all three?
Now, Orrick does. Patrick Tisdale is Orrick’s CIO and Peter Krakaur the CKO (Chief Knowledge Officer). Clark Cordner recently joined as Director of Practice and Client Services; he will focus on delivering differentiated legal services enabled by IT. All three are highly-regarded large law firms managers.
I suspect that few AmLaw 100 or 200 firms have such experienced people in all three roles. This threesome should impress both clients and recruits. Clients should see value in both efficiency and effectiveness. Orrick lawyers (and recruits) should find attractive a deep support organization that makes their lives easier.
Lawyer recruiting is in the news. Given the cost and the stakes, BigLaw should be doing more with technology to recruit.
Annual Survey Shows the New Reality of Associate Life (American Lawyer, 9/07) reports on the challenge large law firms face recruiting new talent:
“First, in the short run, the war for talent will become more ferocious. Second, the cost of talent will only increase. And third, the need for firms to differentiate themselves will become apparent even to the hidebound.”
And how well does BigLaw do differentiating itself? Not so well. A related article, Is This Any Way to Recruit Associates? reports that
“Students also have problems vetting firms. They aren’t helped much by firm marketing materials, which often say the same thing and make firms indistinguishable from each other. ‘They all tell you they have great clients, and they work hard but [have] a very collegial atmosphere,’ says the Stanford student. ‘It’s the same discourse over and over again.’ Because so many firms look alike to students, they are now making several visits to firms after they get offers – simply to find a reason to pick one firm over another.”
This article also reports that firms “spend as much as $250,000 to recruit a single summer associate.” Given that huge cost, one might think that firms would take special pains to differentiate themselves or to manage the recruitment process. But there’s scant evidence of that.
Well-known legal journalist Bob Ambrogi reviews law firm recruiting web sites in Web Watch: Online Recruiting (Law Tech News, Aug 2007). He concludes that “[w]hile a handful of firms use the medium to full advantage, most take a remarkably humdrum approach, and some make surprisingly clumsy missteps.”
In my March blog post, A New Weapon in the Talent Arms Race (3/6/07), I noted that BigLaw is not using blogs to recruit new lawyers. It still strikes me that a blog is an easy and inexpensive way to communicate to recruits the texture of life and work at a firm. I’m not aware of any firms doing this.
Meanwhile some firms are at least trying to differentiate. The Web is, like, so cool for law firm hiring in the Boston Business Journal (8/3/07) reports on Choate Hall’s use of video in recruiting. I personally found the video underwhelming (I’m not sure why a summer associate talking about her interest in horror films helps differentiate the firm). Click here for Choate Hall video
Somewhat lost in the American Lawyer articles is that a big factor contributing to recruiting expense is the complexity of managing so many interviews and the workflow of communicating with 10s or 100s of recruits. On that front, one firm, Mallesons in Australia, has innovated in the recruitment process, winning an InnovAction award for its work, as I reported in Innovative Uses of Legal Technology (7/9/07):
Mallesons Stephen Jacques’ TalentNet “a web based solution for recruitment management… has vastly improved the firm’s recruitment outcome while reducing costs… [it] manages all internal and external processes in the recruitment lifecycle, from the requisition through to the final appointment. TalentNet has removed most of the administrative overhead in the recruitment process.”
Mallesons reports that TalentNet “has cut recruitment lead times by more than fifty per cent” and given the firm a competitive edge in recruiting top talent.
Bottom line: Strategic-thinking CIOs should be talking to recruiting partners and directors and firm management about reducing costs and improving results. With a talent war underway, how can BigLaw afford not to be properly armed?
To intermediate or dis-intermediate, that is the question. The web has upended the traditional publishing model where editors select and filter content. BlawgWorld 2007, released today, is an example of “re-intermediation."
Pre-web, we had little choice but to rely on reporters, editors, and publishers to deliver news and information. My presentation Legal Publishers in 2007 and Beyond points out the web can make anyone a news source, an editor, or publisher. No longer must we rely on intermediaries for news.
Dis-intermediation has pros and cons. Information is plentiful but finding and evaluating sources is hard. I still read newspapers and magazines because I value the intermediation; I want trustworthy reporters and editors to exercise their judgment in selecting and covering stories.
Blogs are a great source of information. The number of legal blogs - blawgs - is astounding. But how do you select which to read? Directories such as Blawg, Justia BlawgSearch, Blawg Republic, or law.com’s Quest directory provide extensive listings but limited editorial guidance.
BlawgWorld 2007 (10 meg PDF) is an example of re-intermediation. It “features a remarkable collection of essays from the legal blogosphere.” The editors (at TechnoLawyer) have published highlights from from 77 useful blawgs, offering one easy way to find and evaluate them. (Note: See the PDF press release for more info. Disclaimer: I am not dis-interested since this blog is one of the 77.)
The 1st edition of BlawgWorld in 2005 was downloaded 45,000 times. This volume suggests demand for re-intermediation, for editorial guidance in navigating the blawgosphere. It will be interesting to see how BlawgWorld evolves and whether we will see more re-intermediation in legal publishing.
BlawgWorld also contains a vendor-sponsored problem and solution guide for common legal technology questions. [Will that dis-intermediate legal technology consultants?] The PDF format is well-done, with all content no more than 3 clicks away.
In the billable hour world, lawyers have little incentive to be efficient. This could change. Consider Howrey’s change in associate compensation.
One the one hand, I’ve never believed that many lawyers are intentionally inefficient to rack up hours. On the other hand, billable hour targets or quotas do not create incentives to look for ways to practice more efficiently.
So I was fascinated to read Howrey to Ditch Lockstep Compensation for Merit-Based Model (The Recorder, 6/29/07), which reports that the firm “will introduce a merit-based system of advancement and compensation for associates… writing, deposition, trial practice and client presentation skills will be considered.”
Firms so often focus on their inner workings and don’t consider fully client perceptions. The firm could send a powerful message to clients if it also assesses associate efficiency, particularly use of technology to practice more effectively. For a litigation-focused firm like Howrey, this might include use of such tools as Lexis or West research, work product databases, knowledge management systems, CaseMap, decision trees for risk analysis, spreadsheets for estimating damages, and appropriate selection and use of document review tools for discovery.
If I were a client facing a lawsuit, I would want a great litigator. But also an efficient one.
I recently blogged about assessing the ROI of marketing investment in law firms. That posted generated a response distinguishing marketing and lead generation.
I posted Law Firm Marketing and Technology - Return on Investment (ROI) to the College of Law Practice Management Blog. College Fellow and law firm business development expert Ann Lee Gibson posted a reply response with interesting observations.
I expressed surprise that marketing departments don’t track ROI. Gibson’s reply, More on Law Firm Marketing and ROI - It’s Really about Biz Dev raises good points. She discusses the difference between marketing and business development / lead generation; the money quote:
I’m just saying that the less interesting question to me is, “Why aren’t firms determining their marketing ROI?” and the more interesting question is, “Why aren’t firms actually developing cogent BD [business development] plans with specific and measurable objectives and devoting specific marketing resources (PR campaigns, bespoke seminars, conference appearances, private publications, publications in the legal and other trade presses, etc.) and specific BD resources (for getting-to-know-you visits and needs interviews and pitches and RFP responses) toward those plans, and commit to managing the plan throughout the entire year?”
The distinction between marketing and biz dev / lead generation is big. Law firm CIOs and IT directors need to understand the difference. Ideally, when marketers come knocking on your door, you would steer them toward BD, but that may be more than is possible from the IT side.
I’ve been writing about working virtually for 3+ years so was excited to see a long article in the Wall Street Journal.
Working Together…When Apart (WSJ, 6/16/07, $) is a report by Dr. Lynda Gratton, a professor of management at London Business School. She presents her research findings on seven success factors for virtual teams:
1. Invest in an online resource where members can learn quickly about one another.
2. Choose a few team members who already know each other.
3. Identify “boundary spanners” and ensure that they make up at least 15% of the team.
4. Cultivate boundary spanners as a regular part of companywide practices and processes.
5. Break the team’s work up into modules so that progress in one location is not overly dependent on progress in another.
6. Create an online site where a team can collaborate, exchange ideas and inspire one another.
7. Encourage frequent communication. But don’t try to force social gatherings.
I was disappointed. The article implicitly assumes that companies form teams specifically to meet some new and out of the ordinary goal. Few of the suggestions seem to apply to the more ad-hoc teams that a law firm or other professional service organization might assemble where the duration is weeks or months and the team size under 20. Also, the idea of “boundary spanners” is a concept from social network analysis and, absent doing SNA, it’s not clear how a company would identify these people. That said, I am glad that there are academics studying working virtually - I hope they turn their attention to professional services.
Last week I blogged about an LMA law firm marketing technology seminar. I was impressed to learn the technology but surprised that BigLaw does not track marketing return on investment (ROI).
In the Q&A, I asked if and how the panelists measure the ROI of their marketing. By and large, they agreed that you cannot do so.
This surprised me. Big firms spend 2% of revenue on marketing without knowing the ROI. Yet many firms avoid knowledge management spending, supposedly because they cannot assess ROI. Consistency is the hobgoblin of small minds - or is it just sour grapes?
Tracking ROI, however, is not that hard. At least not for lead generating activities (in contrast to branding). In consulting to vendors, I have seen sophisticated analysis of the cost per qualified lead. Much law firm marketing - sending e-mail updates, hosting seminars or webinars, publishing articles, speaking at conferences, or writing a blog - is ultimately about lead generation.
Managing partners and CMOs should care about the cost per qualified lead. In my presentation Blogging: Why the Fuss?, I set up an analytic framework for comparing lead generating activities. My goal was to encourage firms to compare alternatives, even if measuring precise ROI is not possible. I suspect that if firms systematically assessed their lead generating activities and the results, they would change what they do.
Law firm marketing has come a long way in a decade. An LMA seminar today made that clear. And it holds some lessons for knowledge management and IT professionals.
The DC chapter of Legal Marketing Association (LMA) today hosted a seminar, ”Technology Matrix - Building effective knowledge sharing and using it to plan strategy and track ROI.” Panelists were Mark Greene, Chief Marketing Officer, Nixon Peabody LLP; Catherine Bishop, Chief Marketing Officer, Blank Rome LLP; and Steve Bell, Director of Sales, Womble Carlyle, Sandridge & Rice, PLLC.
All three firms have sophisticated IT architectures that integrate multiple systems to support marketing and sales. Some interesting points:
- If firm management does not have a business perspective, marketing will fail
- Use a taxonomy to categorize matters; that’s the basis of all business analysis
- “All data should have its own home” (aka a single authoritative source for all data)
- SharePoint is an excellent platform to deliver disparate data and reports to lawyers and staff
- Business intelligence tools (e.g., Redwood) can provide key data for marketing
- Software, complex as it may be, is the easy part; changing culture and behavior is much harder
- Very few lawyers use CRM
- Contests and competition are an excellent way to motivate lawyers to contribute data to marketing efforts
Lessons for KM: Marketing faces similar issues, from collecting and integrating data to presenting results to changing behavior. If you are not already closely allied with marketing, now is the time to get moving. (Oh, also take note that this event - local to DC - had more attendees than most national KM meetings I have attended.)
Lessons for IT: Marketing is an important IT customer. If you manage technology, part of your job is supporting marketing. If your marketing department is not using modern tools and an integrated approach, offer to help them.
In my next post, more on the return on investment (ROI) of marketing.
Who needs an office? Law firms believe every lawyer does. But BigLaw is increasingly out of synch with corporate America in this view.
Rolling Out The Instant Office in Business Week (5/7/07) reports that about “60% of the office space that companies pay so dearly for is now a dead zone of darkened doorways and wasting cubes. The age of on-demand projects is creating a need for on-demand offices.”
The article suggests that office space management today will follow worker management in the 80s and 90s: outsourcing and temps. Technology enables huge flexibility in where people work and managing occupancy. “The idea of the office as a static thing is crumbling.”
Law firms have yet to hear this message. A move to working virtually, however, would save occupancy costs while also making lawyers’ lives easier. This can translate to higher profits via lower turnover. Working virtually does not necessarily mean at home. It can mean suburban satellite offices, which also offer significant business continuity benefits.
A Harvard Law legal tech study about which I posted last November has been published. Gene Koo of the Berkman Center for Internet at Harvard Law School wrote New Skills, New Learning: legal education and the promise of technology (PDF), a study with interesting findings about technology and law practice.
Highlights I find interesting:
- Law School = La-La Land: The opening sentence: “A large majority of lawyers perceive critical gaps between what they are taught in law schools and the skills they need in the workplace, and appropriate technologies are not being used to help close this gap.”
- Skills Taxonomy: Koo identifies three skills attorneys must master: “knowledge-generating, techno-social, and metapractice.” Nice taxonomy. Personally though, I would distinguish social and tech skills.
- Knowledge Management on the Decline?: “the advantage of KM may be shrinking due to increasing information available freely online. Several analysts question whether some firms have over-invested in KM, given the lack of evidence supporting its benefits. Additionally, several of the legal technologists interviewed predict that the advantages provided by internal KM systems will erode over time because lawyers’ work product is increasingly available on the Web. For example, attorneys can search the EDGAR database to find other firms’ merger and acquisition filings.”
- Working Virtually: Of the surveyed lawyers, 3/4 work on one or more teams. Of these, 2/3 work on teams that “involve at least one member located elsewhere than the respondent’s office [and] 21% of the teams had at least 1/4 of the team located outside of the office.” This supports my prior arguments that actual data likely shows that lawyers don’t need to be in the office as much as you might think, in part because their team members are elsewhere.
- Lawyer Tech Skills: “Today’s lawyers possess skills adequate to practice, according to the vast majority of people contacted for this study, including law school deans and managing partners.” The study notes that some dissent on this point. I dissent: show me the data. Direct measurement is more reliable than observations of those who may well be techno-phobic themselves.
This is an excellent step in bringing some academic clarity to the role of technology in law practice and legal education.
Microsoft SharePoint has captured significant legal mind- and market-share. It may be moving one step closer to replacing document management software ("DMS").
The consensus among large US firms is that someday it may replace traditional DMS. That day has arrived for one 250-user, UK law firm. Legal Technology Insider (Issue 196, Mar 07) reports that UK firm Lewis Silken (ranked #129) “has decided the days of the dedicated DMS are over. The IT team… has been given the green light to replace its old Hummingbird software with a new” DMS built around SharePoint. “Insider sources suggest several other top 250 firms are planning similar moves.”
Separately, Tom Baldwin, CKO of Sheppard Mullin, an early SharePoint 2007 adopter, has a blog post about faceted search in SharePoint 2007.
I regularly write about the advantages – and challenges – of working virtually. Several recent items are good reading for anyone interested in this concept.
1. Reasons to Hold Out Hope For Balancing Work and Home in the Wall Street Journal (1/11/07) reports that “What’s hot is informal flexibility that allows employees to alter their hours or to work at home on a more casual basis” and “More employers are bowing to workers’ desire to live and work where they want.”
2. Michael Dillon, the general counsel of Sun and a blogger, has a great post on why he gave up his office (1/15/06). Mr. Dillon works only virtually; he has no permanent office. His reasons: becoming a better manager, keeping less stuff, and work-life balance.
3. Blogger Adam Smith, Esq. offers an excellent analysis of the face-to-face versus virtual working together in 200,000 SqFt; Hi Flr; Park Vu (1/30/07, commenting on why law firms pay $100/sq ft for space). He reviews and analyzes some of the literature on the economics of cities, particularly why businesses pay so much to be in cities. The bottom line is that cities facilitate face-to-face meetings. I relate to that idea: when in NYC, I often visit with 4 to 8 people in a day (know the subways - don’t even think of taxis!) I agree with this analysis but still believe, for reasons I articulate in The Future Law Office: Going Virtual, that law firms over-invest in downtown space. My guess is that an analysis of interactions among lawyers in downtown offices would show that face-to-face time is not optimized relative to the space occupied.
4. Business Week has a series of articles in its online edition (as featured in the 3/5/07 print edition) examining the pros, cons, and mechanics of working virtually. The Virtual Workplace includes several articles, including Working from Home: It’s in the Details.
5. And one idea. If you had to decide where to locate a satellite office for a downtown firm, it would be cool to create a Google map mash-up with all lawyers’ homes as points on the map. Then you could visualize clusters and select a location(s) that maximizes convenience. (One could make partner and associate map dots different colors, but that’s another story.)
Update (3/10/07): According to White & Case assistants to choose their hours in Legal Week (3/8/07), two London firms are moving towards working virtually.
Update (3/22/07): SJ Berwin becomes latest City firm to tackle flexible working conundrum in Legal Week (3/22/07).
The large law firm talent arms race just got hotter; NYC first year salaries escalated to $160k. Money, however, is barely a weapon when you think about it. All firms pay the same, so cash is not a differentiator. There’s an easy and cheap way to differentiate. BigLaw has yet to use this weapon staring it in the face.
In researching our just published large law firm blog directory, Joy London and I did not find any BigLaw blogs directed at law students.
Are Your Recruiting Efforts Geared for the Online Generation? in Law Practice Today (ABA, online, Oct 2006) describes how firms can use blogs in recruiting. It is simple and easy but unheeded advice.
Consider the cost of finding new talent: travel, admin overhead, and lawyer time. Firms sell students a product - their firms - but miss an easy way to explain and differentiate their product. OK, most firms have recruiting web pages - static and boringly similar.
A blog could bring to life a firm, its culture, and its personality . How much does this cost? Almost nothing. How do you motivate lawyers? Competition plus a reward. Host a weekly contest for the best short blurb about life and work at the firm. The winner gets a Starbucks card and her name on the blog. Other content being produced anyway - news on deals, press releases on laterals, substantive legal updates - can be re-purposed for a recruiting blog.
Money is fungible. Cultures are not. Blogs are not. Let a new arms race begin.
Update (3/22/07): I recently came across a very nice large law firm recruiting web site. ”Real Deal” is Cadwalader’s recruiting web site. It has excellent production values but no blog.
Non-practicing lawyers as managers is a fairly recent trend in large law firms.
Last week, Clark Cordner, Director of Client & Practice Services at WilmerHale, and I explored the role of non-practicing lawyers and “start-up” teams at the IQPC Law Firm Management Series conference, Law Firm Recruitment & Retention Strategies in NYC. Our presentation is here.
Law firms now hire non-practicing lawyers for jobs old and new, for example, marketing, e-discovery, knowledge management, professional development, and practice support. Among other tasks, they help translate from “lawyer speak” to business or technical terms.
Firms considering a new function often seek a non-practicing attorney to lead either an “incremental” or “start-up” approach. The former entails relatively few resources or commitments. This low risk approach, however, also makes success less likely. The latter is harder because it requires a financial and institutional commitment but is more likely to succeed.
Either way, firms must exercise some caution. First, they must “be careful of what they ask for, lest they get it.” For example, some churn in CMO and CIO positions in recent years likely stems from initial excitement followed by balking when the firm learns what’s really involved. Second, they need to consider how to integrate the non-practicing lawyer and any team reporting to him/her. Thinking this through requires a realistic assessment of a firm’s culture and the strength of its caste system. And third, they need to allocate risk fairly between the firm and the new role: negotiate a graceful exit strategy for both the firm and individual if things don’t work out.
The non-practicing lawyer as manager role is still evolving. That it’s a conference topic speaks volumes about the increasingly business-like approach in BigLaw. But is it worth the investment? Instead of dwelling on ROI, perhaps it’s enough to ask does the person and function “make life a little easier for practicing lawyers?”
It’s always good to know what your boss is thinking. Now, BigLaw CIOs can.
Law Firm Leaders Have Mergers on the Mind in LawFirmInc. (2/12/07) reports on the magazine’s first-ever survey of large law firm COOs. The survey has a very respectable 42% response from the AmLaw 200.
The Year Ahead chart confirms that mergers are hot. It also holds two findings that surprise me: (1) doing more business intelligence ranks closely behind mergers and (2) only 1 firm reports “identifying opportunities to outsource administrative functions” as top-3 priority for 2007. I’ve been following both carefully and would have thought BI a bit less hot and outsourcing much hotter.
The Management Table holds its own surprises: 14 firms added a litigation support department in 2006. Hello, what were they doing previously??? Also surprising is that knowledge management is not on the list. I suspect LawFirmInc did not ask about this, which is a shame.
With law firm mergers booming, national and global law firms are becoming the norm. What defines success for the new behemoths?
For White & Case, Global Expansion Was the Easy Part (New York Law Journal, 1/12/07) describes the challenges one firm faces in creating a truly global firm as opposed to a collection of offices. Some say that even a single office is no more than a collection of solo practitioners.
Measured by profits-per-partner, many large national and international firms are successful. Profits, however, don’t indicate how effective the firms are at cross-selling and cross-staffing among offices. One measure of integration is the percent of hours worked in an office on matters not originated in that office.
The biggest integration challenge is establishing the right culture and incentives. With the “soft side” in place, firms need the right tools to communicate, share, and manage across offices. The supporting technology includes business intelligence reporting, experience location systems, knowledge management resources, and lawyer allocation tools.
You can have all the right tools and still be a series of offices. But you can’t be truly integrated without the right supporting technology.
My prior post asked Do Lawyers Collaborate as Much as Others? Two data points suggest opposite answers.
Lawyers may view skeptically the eWeek article I cited, Wikis Are Alive and Kicking in the Enterprise. If so, they need to ask if Allen & Overy is the exception that proves the rule? Case study: Wiki’s law in Managing Partner magazine (August 2006, UK, $) shows that Wikis have traction in at least one global law firm. The article discusses how Allen & Overy is using wikis; highlights of the A&O wiki roll out include:
- Studied a successful wiki roll out at another organization
- Used outside consultants to tune the deployment to A&O needs
- Focused initially on groups likely to use the tool
- Identified 3 types of uses: internal work communities, project teams, and general office
- Combined blog and wiki functionality in the same interface
- Used e-mail alerts from posts to generate initial interest
- Included tagging features (with social bookmarkgin) to make it easier to find content
- Achieved 500 members using wikis in several months
With support of senior partners, the firm moved quickly from 3 test groups to pilots in a few practices. One immediate impact was a drop in e-mail traffic.
Now for another data point. One frequent expert witness wrote in response to my collaboration post:
“Although, my view is limited to that of an expert witness, I can state without reservation that:
1. Basic collaboration tools are seldom used (IM, journaling, etc.).
2. Tendency to believe that consultation with others is redundant.
3. Evidence of “I am right and don’t tell me what you think.”
4. Tendency for division of labor rather than sharing.”
In management consulting (and in 10th grade geometry), I learned that any two points make a line. But here, I’m not sure I can connect the dots!
Do lawyers collaborate the same way and as much as other professionals?
In thinking about this question, first consider 3 recent articles
- Smashing The Clock, the Business Week Dec 11th cover story, explains how Best Buy is moving away from a culture of office “face time” to work anywhere, anytime, as long as the job gets done.
- Designed For Success in the same BW issue presents awards to several buildings for design excellence; many awards cite new design elements that foster collaboration.
- Wikis Are Alive and Kicking in the Enterprise in eWeek (11/20/06) reports on the increasing traction of wikis in corporate America, especially at Motorola.
Now consider my January 2003 article, The Future Law Office: Going Virtual (Law Practice Management) which argued that firms should support lawyers working outside traditional downtown offices. Anecdotally, it seems law firms still expect lawyers to show up in the office if they are not on business travel. If that’s because collaboration is so important, why don’t we see more evidence of work place flexibility, radical office re-design, or adoption of new collaborative tools as suggested by the articles above?
Instead we have limited law office design change, as described in Office Spots to Meet and Mingle, Legal Times (12/4/06). My take on this article is that the law office design changes described are more about amenities, socializing, and looking cool than about fostering collaboration.
So, a question emerges: do lawyers collaborate less than other professionals? I’m not sure how to measure “amount of collaboration.” And maybe it is not so much about “amount” as “type.” Perhaps lawyers collaborate in ways that differ from other professionals. Legal work may more readily sub-divide into discrete tasks with fewer interactions required than in other businesses. Or perhaps the tasks are linearly sequential, meaning more “pass the baton” than real-time collaboration.
Am I wrong or is this just simply explained by the usual - law firms are slow to change? Let me know what you think - please comment or e-mail me: ron at prismlegal dot com or here.
What can law schools do to help newly minted lawyers be technologically prepared?
A LexisNexis-funded study underway at the Berkman Center of Harvard Law School seeks to recommend “how next-generation law school curricula can preserve the fundamentals of critical thinking and legal history, while at the same time equipping graduates with technology training and skills.” Gene Koo, the fellow leading the study, has a blog post at Law School Innovation seeking comments.
The LexisNexis press release states that “Young lawyers are highly motivated to embrace emerging technologies such as e-discovery and early case assessment.” Perhaps, but one older law student with a tech background told me that his classmates are not particularly comfortable or facile with technology.
Law students today are undoubtedly more tech savvy now than 20 years ago. But just how receptive to and interested in learning new technology are they? They probably rank low in that regard, at least relative to their peers studying other professions. Ultimately this is an empirical question but my experience in large law firms is that “if you build it, they will come” does not work, even with freshly minted, supposedly tech-savvy lawyers.
I’ve left a comment to this effect at Gene’s post. I encourage you to think about the question he raises and provide input. This is one small opportunity to help bridge the gulf between the academy and actual law practice.
The title is not a typo. An Australian company is raising money in a public offering to buy law firms. Outside capital could drive innovative legal technology.
In the UK, the Clementi reforms allow non-lawyers to own law firms. I’ve followed this because with outside capital, legal technology could become strategically more important. In Australia, legal reforms have led to a public offering by Integrated Legal Holdings Limited, which intends to buy several smaller law firms. My quick read of the prospectus is that this offering is about rolling up smaller law firms, not changing the legal business model with technology. Legally listed (LawyersWeekly, 20 Oct 06, Australia) offers the useful observation that for large law firms, raising capital is not typically a constraint, so selling shares is not attractive relative to the partnership model. But it will be interesting to see if ILH succeeds and, if so, invests more in technology than partnerships typically do.
Thanks to Simon Lewis of Sinch for alerting me to this news; his blog is here.
Legal Note from the Prospectus cover: “A copy of this Prospectus can be downloaded from the website of the Company at www.ilh.com.au. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.”
Law Firm, Inc. has published the 2006 AmLaw Tech Survey (11th Annual). What do we make of the findings?
“The technology chiefs of the Am Law 200 firms who responded report that they are tackling a bevy of new projects that update old concerns and applications – integration and security, to name two – rather than attempting more radical changes.” My anecdotal experience as a legal technology consultant supports the idea that infrastructure upgrades are front and center. But I also see quite a few firms going well beyond the basics.
One example is Foley & Lardner, which the article reports has a custom-built extranet with 400 client sites. From my own prior blog entries come many other examples:
Morrison & Foerster’s AnswerBase for KM on steroids,
Bryan Cave’s building and using business intelligence tools,
Jenner & Block’s expansive view of knowledge management (e.g., work force allocation for summer associates),
Skadden Arp’s integrating real work product retrieval directly into document management,
Sheppard Mullin’s early adoption and creation of numerous blogs,
several large firms adopting enterprise RSS,
Eversheds and Clifford Chance re-aligning IT costs via outsourcing, and
Wragge & Co’s fee prediction and transaction management system.
The list could go on. My concern is that the results of the survey, while accurate, can be used by law firm management to thwart innovative ideas offered by lawyers, CIOs, marketers, knowledge managers, and others. I think the list above is enough to show that while infrastructure may take the lion’s share of resources, plenty of firms find ways to do more to serve their lawyers and clients.
At many law firms, it’s budget time of year. IT and KM managers need to make their best cases for proposed spending.
If your boss asks about ROI, consider showing this: “Superstar Economics” & Laterals: Take II by Adam Smith, Esq. It explains why hiring lateral partners may not pay off. How many COOs or managing partners ask about the ROI of laterals? I’ve seen many firms invest huge sums in laterals (and new offices for that matter) with little assurance of return. In comparison, they shun a modicum of risk on tech or KM. Good analysis and apt analogies, however, may not be good politics!
On a more positive note, proponents of new spending can focus on projects that add to the bottom line and present their ideas as an “investment portfolio” rather than a bunch of costs. In my recent KM - The Right Question post, I proposed a framework for evaluating investment alternatives and suggested focusing on technologies, processes, and staff that add to the firm’s revenue and profits. Examples include social network analysis, business intelligence software, proposal generators, and workforce allocation systems. I’ve reproduced here the sample analysis.
Not really. The title refers to the growth of BigLaw marketing relative to IT.
I was surprised to read Larry Bodine’s blog post More Marketers for Lawyers at Big Firms reporting that among the top 100 law firms, one marketing person serves 26 lawyers (a ratio of 26:1). One recent survey (unpublished) of 33 large law firms found that the average support ratio for IT staff is 11:1. The IT ratio has been steady for some time while the marketing ratio has grown.
Managers widely perceive that marketing can boost revenue, which probably explains its growth. IT can also grow revenues - see my post KM - The Right Question? proposing that CIOs analyze projects through the prism of which contribute to top line growth. For example, IT-driven projects such as relationship discovery or work force allocation systems can grow revenues.
Law firms should consistently assess how spending contributes - or not - to profits. Assuming that marketing does and IT does not is irrational. Of course, CIOs can help by presenting their budget and plans in a way that makes clear that infrastructure costs are not optional and other budget items can enhance revenue.
Leading large organizations is hard. Being a new leader in a partnership is especially hard. Law firm strategist and management consultant Patrick McKenna offers an excellent short guide for new managing partners at law firms.
McKenna’s First 100 Days is a step-by-step guide for new managing partners. This is a good read for BigLaw CIOs and technology managers who want to understand more about how law firms operate, especially when leadership changes. (The link is to an e-book of sorts; I found it hard to read on-screen, even on my 19″ monitor, so I had to print it.)
Though the guide is excellent, I was disappointed that McKenna did not suggest that a new managing partner spend time talking to staff. Fortunately, in the additional 10 pages of comments from current and former managing partners, many emphasize the importance of including staff in transition planning.
Law firms are less hierarchical than corporations but are caste systems - you’re either a lawyer or you’re not. This topic warrants a longer piece someday, but the bottom line is that the caste system is detrimental to lawyers, staff, and clients. BigLaw will be better off when it overcomes this pernicious mindset.
A recent Business Week article explores how the “rise of mobile workers has companies unloading space and rethinking what’s left."
Square Feet. Oh, How Square! (7/3/06) opens with the fact that on any given day, 40% of employees are not in the office. They are on the road, working at clients, cafes, or home. “Left behind are dead zones of empty cubicles and dark offices.” In response, corporate America is re-thinking real estate. Companies are “dumping square footage” and re-designing what’s left to accommodate a mobile work force and support more effective collaboration.
I wrote The Future Law Office: Going Virtual over 2 years ago to suggest law firms consider enabling lawyers to work more easily from any location. Are law firms any different than corporate America? Yes. They typically rent the most expensive offices in town. So law firms probably have even more potential to save on occupancy than corporations. As I explained in my article, however, firms still need downtown offices. But do they need as much? BigLaw CIOs have an opportunity to help their firms save on their second biggest cost (rent) by enabling lawyer mobility.
In May, Hummingbird, one of two main document management vendors to large law firms, announced it was being acquired by Symphony Technology Group. That announcement may not, however, be the last word.
On July 5th, Opentext, an enterprise content management (ECM) systems company, announced “its intention to make an offer… for all of the common shares of Hummingbird.” Today (July 11th), Hummingbird announced “the formal commencement of an unsolicited offer” and that its board “will thoroughly evaluate the Open Text offer.”
I am a legal technology consultant, not a financial analyst, so make no comment about how this will unfold. I do note though that years back, Novell acquired SoftSolutions and “upgraded” that document management product to make it much less useful for law firms. With this history, BigLaw customers of Hummingbird should watch the outcome here carefully. Symphony’s bid appears a financial play and therefore unlikely to affect products. Opentext, however, as a player in the same space, seems more likely to influence Hummingbird product direction. Of course, any changes could be positive or negative for law firms - only time will tell.
Finding the right information and the right people can be hard. I recently came across a new web service that addresses one angle of “finding people."
Lawrex is a lawyer referral service started in April. It “provides lawyers with an efficient and effective forum to exchange referrals with other lawyers. LawRex is based on the principal that lawyers should not continually send out referrals, and receive no incoming referrals in return.”
I am intrigued by Lawrex’s point system and automated approach to create a referral market. It seems well conceived – the economist in me likes the incentives and process.
I’m struck by the increasing number of innovative approaches to help find people or information. Others include systems to find who knows whom (e.g., Visible Path), to find work product (e.g., my client’s product, RealPractice), and tagging systems to identify useful web sites (e.g., del.ico.us). Lawrex adds its own twist, applying the reach of the web and market discipline to help with lawyer referrals.
Though I think Lawrex targets smaller law practices, BigLaw may nonetheless learn from LawRex. Similar approaches might fix the distorted cross-selling incentives in some firms. Or provide a model for staffing matters. Ok, perhaps a stretch. But just minding the infrastructure won’t be enough. BigLaw CIOs need to think broadly about how developments like LawRex might filter back to their firms.
Note: I was pleasantly surprised to find a link to this blog on LawRex. That in no way influenced me to write about this site. A friend alerted me to LawRex.
BigLaw manages risks of all kinds. Records retention and discovery are the new biggies, but let’s not forget conflicts and insider trading, among others. Now, firms can consider a new risk.
Common Spreadsheet Errors Can Be Found With More Testing, Some Double-Checking (6/13/05) in the Wall Street Journal reports that an academic researcher has found that there are “undetected errors in about 1% of all spreadsheet formulas… some of those errors are big – big enough to impact a decision.” For example, the researcher says that companies have had to restate earnings because of spreadsheet errors.
Law firms check written work carefully - a 1% error rate would not be acceptable. I’m not sure the same is true for spreadsheets. My sense is that, partially because spreadsheet skill is relatively rare in BigLaw, the QC is not as rigorous as for written work. Even where BigLaw relies on outside experts’ spreadsheets, the potential for error exists. Spreadsheet error can even affect law firm business decisions such as proposed client budgets or practice group profitability analysis.
This risk may not be particularly worrisome, but those lawyers and technology support staff who work on spreadsheets should at least be aware of the issue.
Legal Technology Journal is a very good new publication from the UK.
Editor-in-Chief Charles Christian is a well-known and highly regarded writer, commentator and industry analyst who has been reporting on developments in law office technology and online legal services for over 25 years. His Legal Technology Insider publication has provided news, developments, and notes on legal technology, especially in the UK.
With publisher Legalease, Christian has created a new journal to cover legal tech in more depth, focusing more on the value ("why") of legal technology than on products.. It is targeted at not just IT managers, but also managing partners, COOs, marketers, and financial managers. See the foreward of Issue 1 from more details.
Issue 1, recently released, has many useful articles, including “From bespoke to commodity” by Richard Susskind, an overview of Allen & Overy’s Omnia (a custom matter-centric system), and a report on Freshfield’s Athena KM initiative. This is good reading for any strategically-focused CIO. Subscription info here.
On Friday, May 26th, Hummingbird, one of two main suppliers of document and practice management systems for large law firms, announced it was being acquired by Symphony Technology Group.
Symphony Technology Group “is a strategic holding company that helps companies maximize operational efficiencies in the enterprise software and services market.” BigLaw CIOs should keep their eye out for future announcements to see whether the ownership change means new directions for the company or its products.
BigLaw’s salary escalation for new associates shows the competition for talent. Law firms should consider how technology can help them gain recruits’ mind-share.
The Wall Street Journal, in Podcasts Extend Recruiters’ Reach (4/24/06, $), explains how management consulting firm Bain & Co. used a 20-minute podcast featuring Bain executives to attract students at the Indian Institute of Management. “Pleased with the results, Bain plans to expand its use of podcasts to more universities and other countries next year. That will put the firm on the leading edge of what may be an emerging trend in recruiting, as employers tap a popular new technology to reach young job seekers.”
I am not aware of any large law firms that produce recruiting podcasts. Podcasts might not make a huge difference, but creating and distributing them is inexpensive. Of course, once a firm develops the production capacity, it can also create client updates.
A bold firm could go a step further: along with offer letters, send a firm-branded iPod loaded with podcasts about the firm.
Last November I reported on a Richard Susskind article explaining the lack of innovation in US law firms. The situation may be even worse according to a new article by professional services guru David Maister.
In Are Law Firms Manageable?, Maister paints a grim picture of large law firms and their management. As he explains in his blogged summary, “Among the ways that legal training and practice keep lawyers from effectively functioning in groups are (i) problems with trust; (ii) difficulties with ideology, values, and principles; (iii) professional detachment; and (iv) unusual approaches to decision making.”
The article also contributes further to understanding the challenge of innovation in law firms; a short quote:
“In a room full of lawyers, any idea, no matter how brilliant, will be instantly attacked… most ideas, no matter who initiates them, will be destroyed, dismissed, or postponed for future examination… law firms have a remarkable propensity for half measure, launching poorly specified programs with minimal chance of success….
Lawyers also have a strange view of the concept of risk. In any other business, an idea that was likely to work much of the time would be eagerly explored. [But lawyers will look for a hypothetical where the idea will fail.] There is no greater condemnation in legal discourse than to describe something as risky.”
The entire article is worth reading and quite sobering for CIOs, consultants, and other proponents of innovative use of legal technology.
Two years ago I suggested in a Marketplace Trial that “a financial market to value and hedge law suits” could emerge. Hedge funds are on edge of making that happen.
Hedge Funds Find Returns in Making Small Loans in the New York Times (2/21/06, $) explains that hedge funds seek returns in new and seemingly unusual markets. Several funds are financing businesses that lend cash to injured people. The collateral - pending personal injury suits. One lawyer is helping a client who is “preparing to start hedge funds that will invest in class-action lawsuits and precious coins.” Lawsuits and coins?? Exactly. From Wall Street’s perspective, lawsuits may be like any other financial asset.
An active market in lawsuits could drive legal technology. If Wall Street invests, you can bet that they have consultants, analysts, and financiers analyzing the cases. That can propel data collection, early case assessment, business intelligence and supporting technologies. Hedge funds may even care how much it costs to litigate, so they could be a disruptive event that forces firms to become more efficient.
Lawyers dislike change. They resist the new, whether it’s an application upgrade or submitting time by deadline. Firms must be creative about change management.
Another good example is customer relationship management software (CRM). Many law firm managers say “CRM is the most widely licensed but least used software in large firms.”
Firms hope CRM will provide central contact tracking; some aspire to actual relationship management. But most fail with both. The barriers include not wanting to share contacts, no time to enter data, and “nothing in it for me.”
Some firms, however, do succeed where others fail. For example, Sutherland Asbill is serious about CRM. One key element is a champion. Gail Hageman is a full-time marketing technology specialist and, more importantly, she’s been at the firm a while and has long-standing relationships with many lawyers.
Sutherland also provides incentives. They required lawyers to enter contacts in the CRM to obtain client holiday cards. Lawyers wanted cards, so they began sharing contacts. The firm wanted to track business development. They required describing prospect meetings in the CRM before reimbursing expenses. Lawyers wanted their money, so they started putting information in the system.
Hageman reports that the combination of institutional will and specific actions has achieved high lawyer compliance with the CRM - and provided the firm with a very valuable resource for its marketing efforts.
Judge Richard Posner has an interesting take on what will drive (so to speak) law firms to allow lawyers to work virtually.
I have suggested that law firms experiment with virtual work (e.g., Working Virtually Revisited) and written about related topics (e.g., Where Should In-House Counsel Sit? and Collaboration Re-Considered).
In the Becker-Posner blog, Judge Posner considers the seemingly intractable question of traffic congestion and getting drivers off the road. He concludes that
“until traffic congestion gets significantly worse, little will be done, and perhaps little should be done, to try to reduce it. But I am not pessimistic. In the long run what will reduce traffic congestion will be the continued digital revolution, which will not only increase the amount of telecommuting but also lead to a substantial substitution of virtual for face-to-face interactions in business, shopping, and even socializing. The business district of the future and the mall of the future may be located in cyberspace.”
The judge notes that high-speed Internet access allows him to work at home much more now than when he became a judge 24 years ago.
My 2006 technology prediction for BigLaw: Forget about technology per se. Instead, lawyers must adopt new ways of working.
Changing how lawyers work is tough. On the tech side, even a roll out of easy-to-use new software requires cajoling and hand-holding. Vendors know this. They now deliver truly automated solutions that ask little of lawyers.
On the business side, firm consolidation and client demands create new market forces. Firms must change how they practice, manage, and serve clients. These changes are fundamental and much harder than learning new software. Bullets instead of long explanations:
Technology: Automation Dreams Come True
- Work product retrieval (e.g., RealPractice and West km)
- Relationship/lead discovery (e.g., Visible Path)
- Enterprise search (e.g., Recommind)
- Unified interfaces (e.g., document management in Outlook)
- Business intelligence (e.g., in-house system developed at Bryan Cave)
- E-discovery concept searching (winning products to be determined)
Business: The Looming Nightmare of New Requirements
- Better client relationship management (it’s not just sharing contacts)
- Strategic and marketing plans to achieve competitive differentiation
- Serious matter management - lawyers as project managers, not just domain experts
- Rationalizing work allocation and improving capacity utilization
- Process improvement (e.g., best practices for reviewing discovery documents and managing due diligence)
- Professional development gets real (e.g., affiliating with a major business school)
- Enabling real-time collaboration across offices and with clients and co-counsel
- Consolidating purchasing
- Re-thinking leverage models and partnership structures
- Records management policy
- Developing an outsourcing | offshoring strategy
- Acting on what business intelligence reports say
All this could be good news for BigLaw CIOs. They can enable many necessary changes and are instrumental to some. But lawyer resistance runs deep. Without strong leadership by partners, change management will fail and then a victim must be found. At that point, CIOs – take cover!
The Wall Street Journal article Bringing Surgeons Down to Earth (11/16/05, $) reports on making surgeons pay more attention to non-doctors in the operating room, which turns out to save lives. Lawyers are at the top of their own caste system – can they learn from doctors?
“There is mounting evidence that poor communication between hospital support staff and surgeons is the leading cause of avoidable surgical errors… a big part of the problem is the intense atmosphere of the OR, where surgeons are the captains of the ship, treated with deference because of their unique skills”
Sound familiar? When big cases get intense, the senior lawyer may ignore team members, especially non-lawyers. The stakes are not life and death, but more communication might improve results.
The WSJ article reports that hospitals are following in the footsteps of the aviation industry, which spent 20 years on cockpit management and creating an environment in which the flight crew can talk to pilots, especially in emergencies. Hospitals are adopting the equivalent of pre-flight checklists and team-building strategies that encourage open communication in the OR.
But “nurses and staff can still find it difficult to speak up… OR staff will feel comfortable challenging authority in the long run only if hospital executives and administrators champion change.” Lawyers who do not see a communication problem in law firms should note that one “survey found that surgeons often don’t perceive a problem with communication, while nurses do.”
Law firms are not nearly as hierarchical as corporations; the most junior staff has access to managing partners. But the law firm caste system is rigid – you’re either a lawyer or not, a partner or not. Just as in the OR, breaking down the caste system for better team communication will likely yield better results.
What’s that got to do with technology? Just ask an experienced legal assistant or litigation support manager about watching cases crash and burn because the lawyer ignored advice about how and when to manage discovery documents. Or ask a lawyer who’s been embarrassed by sending a document from which the meta-data was not removed.
Complex legal matters require a wide range of expertise. Like pilots and surgeons, lawyers should listen to their teams.
When a large law firm rolls out new software, how can it measure success? Do firms even ask this question? Reader feedback is welcome.
As CIO at a large law firm, I deployed a portal. We bought separate tracking software to measure and analyze portal usage. I was surprised that tracking was not built in – I assumed all firms would want to measure usage. Hits to the firm directory and some other administrative information were very high (there was no other way to get it); but otherwise, after one year, use was pretty low. Recent conversations as both a consultant and participant at professional events suggest that tracking is still not common.
This topic arises because I wrote a case study (to be published soon) of RealPractice at Littler Mendelson as part of my affiliation with Practice Technologies. My analysis of growth in and frequency of lawyer usage of RealPractice at Littler looks good to me but a friend asks how it compares to other roll-outs.
Great question! I’m not sure if anyone has good comparative data; consider some examples:
- Mandatory systems (e.g., document management) say little because lawyers have no choice.
- Highly specialized practice applications say little because usage is inherently limited.
- Anecdotes suggest that CRM uptake is low, though the intent was for widespread usage.
- I suspect Lexis and Westlaw took over a decade or two to achieve current usage rates.
Can anyone share data on lawyer usage after rolling out software available to all lawyers? OK, maybe you don’t have data. So then let me ask: what percentage use do you think reflects a good result after two years? Would 25% shock you – and if so, in which direction! How about 50%?
Though motivated by this case study, the question is of broader interest. Click here to comment publicly or click here to reply privately by e-mail. I will not use e-mail answers for any purpose without explicit permission.
Lawyers are increasingly mobile - technology lets them work from almost anywhere. I suggested in The Future Law Office: Going Virtual that lawyers could sometimes work at home or in satellite offices. Law firms would save on rent and lawyers would save commute time. Two recent articles offer another look at this topic - and reinforce my conclusion that law firms should continue experimenting with working virtually.
The Business Week Take
From The Easiest Commute Of All (sub-titled “the ranks of remote workers are swelling as companies see the sense in freeing them) in Business Week (Dec 12, 2005, $):
“More and more, the creative class is becoming post-geographic. Location-independent. Office-agnostic. Demographers and futurists call this trend the rise of ‘the distributed workforce.’ Distributed workers are those who have no permanent office at their companies, preferring to work in home offices, cafes, airport lounges, high school stadium bleachers, client conference rooms… At Sun Microsystems Inc., nearly 50% of employees can work from home, cafes, drop-in centers, a company office, or some combination thereof - saving the company $300 million in real estate costs… Today, every knowledge worker has the tools to work from pretty much anywhere: a laptop, a mobile phone, and global, high-speed Internet access that is becoming as ubiquitous as pay phones used to be. Teams are increasingly transnational, warming undersea cables with Net meetings, conference calls, and collaborative projects involving large, far-flung groups. Increasingly, no one is sure of where anyone else is anymore; what’s amazing is how little it appears to matter… Sun says its virtual workers are 15% more productive than their office-tethered brethren”
The Davenport Take in Optimize Magazine
Business Week raves about working virtually, supporting my arguments and then some. A more sober analysis appears in the August issue of Optimze Magazine in Thomas Davenport’s excellent article on Rethinking The Mobile Workforce.
Davenport writes that “many pioneering companies have retreated from the virtual-office concept” for several reasons: it is hard to monitor and control workers; virtual workers feel career-stymied; lack of access to on-site resources; and cultural issues. My article recognizes such limits and suggests being virtual only a day or two per week. Davenport reports, however, that “[e]ven if mobile work is done only occasionally, there’s reason to be concerned about its implications for social systems within organizations.” Essentially, there is no substitute for personal contact with workmates. That said, he proposes steps to manage occasional virtual work and recognizes the need for experimenting (something I stressed in my article) and measuring results.
If Davenport is right about social networking, then firms must think more carefully about who sits where and how lawyers work across offices and time zones. I can’t figure out how to apply his reasoning to multi-office law firms where professionals regularly form teams across offices and with clients and co-counsel.
So I come out closer to the Business Week view and think that law firm managers should actively consider virtual work. Of course, I may be somewhat biased. As a legal technology consultant, I often work virtually, as I did for two software companies. But when I look at my friends, many of whom do work virtually, and at the ever increasing cost of and time for commuting, it seems inevitable that more lawyers will work virtually, at least on some days.
Are you an innovation proponent in a large law firm? Ever wonder why life is hard?
Richard Susskind, a leading legal technology thinker and consultant, writes an excellent article in the Financial Times Online: Backroom boys lead ‘positive disruption’ (free registration required; spotted on DennisKennedy.blog).
Susskind writes that innovation is hard because it “is not easy to convince a group of millionaires within clear sight of retirement that their business model is wrong and that they should change direction and embrace new technologies.” This is a must read for anyone who’s proposed innovative ideas in a law firm, technology or otherwise.
I sometimes despair that lawyers will ever “get it about technology.” But now I think we may be turning a corner.
Lawyers don’t need to be techies, but they should make conscious decisions about how they practice and the tools they use. For too long, too many lawyers have ignored tools that would make them better lawyers. While still a problem, I see signs of improvements.
Early this month, I attended and presented at the Marcus Evans LawTech Forum. I was encouraged by the number of practicing lawyers, both from law firms and law departments, who are actively thinking about how to use technology to practice more effectively.
E-discovery, with its risks and huge data volumes, drives much smarter use of technology. I was impressed by several presentations, which described more systematic processes to manage discovery and more conscious choices and applications of what tools to use to review documents.
But forward-thinking lawyers apply technology throughout their practice, not just in discovery. DLA Piper partner Browning Marean’s presentation was music to my ears. He described several approaches he uses in his practice to deliver more efficient and effective service: matter budgets in Excel; decision analysis using TreeAge; case planning and analysis using CaseMap; work product retrieval using RealPractice; and extranets using eRooms.
Law departments, which often struggle with fewer IT resources than law firms, are moving forward. I joined a discussion of several experienced in-house lawyers. There is significant interest in doing more to manage contracts, from drafting to managing rights and obligations. And almost all reported using e-billing, where the focus, for the moment, is streamlining administration and reviewing bills for variances from agreed upon engagement terms. But there is active interest in going further to analyze data across matters to determine effectiveness and efficiency.
Is blogging here to stay? Lawyers seem to ask that more than most. I think the answer is clearly yes.
Last week I presented at the Fall Educational Forum of the ALA Capital Chapter on whether blogging is here to stay. I explained blogging basics and lobbied the law firms present - large and small - to consider firm-branded blogs. I emphasized law firms are now repeating with blogs the debate of 10 years ago about web sites. Then as now, the answer seems obviously yes - blogging is here to stay and law firms should write blogs. My presentation is here.
ALM (formerly American Lawyer Media) has released its latest, 10th anniversary edition, of the AmLaw Tech Survey.
We sometimes forget how much has changed in 10 years. Highlights include the revolution in mobility (laptops, PDAs, and Blackberries), the adoption of wireless networks, and increasing budgets this year. The complete survey results are also worth reviewing for data on what’s in use, market shares of leading products, and law firm tech spending and staffing. The data confirm the growing interest in Microsoft SharePoint, the increasing importance of electronic discovery services, and client use of extranets.
My friend and colleague, Shy Alter, CEO of ii3, Inc., has created the latest in his great productions of ii3 TV. This one, What’s on a CIO’s Mind, interviews 15 CIOs.
Shy traveled to the ITLA 2005 conference last August in Phoenix where he interviewed the CIOs. Now, with Shy’s editing magic, the program is complete and well s worth watching.
CIOs of law firms large and small will find this of interest. And be sure to show it to your chief marketing officer: more firms should consider this form of streaming video to reach out to clients. Imagine a selection of 2 to 5 minutes pieces offering clients practical legal advice in a format like ii3 TV instead of yet another long list of links leading to dry memos!
I’m no mystery shopper, but I can still report on the bad attitude of some law firm IT support staff.
I visit many law firms as a consultant, conference attendee, or friend. Two incidents are small but telling. At one firm, three visitors, all using different brand PCs, could not use the wifi signal. An IT support person said (nicely) that our machines must be at fault (in so many words). And the likelihood of that is? He later sheepishly informed us a router re-boot had fixed the previously denied problem.
At another firm, I could not send e-mail messages. I suggested to a tech that perhaps the firm’s firewall was the issue. Oh, no, that cannot be I was told (nicely), it must be your machine (in so many words). Later that day, a network engineer told me that indeed the firewall blocks outgoing SMTP mail.
I am dismayed that first-line IT staff blames users. Even if the user makes a mistake, blame is not appropriate. Lawyers are decision makers and if they get bad or condescending tech help, they are less likely to support strategic technology investments. Large firms CIOs who want to achieve bigger goals should make sure they have the basics covered.
Mark your calendars for a very promising legal technology conference. Marcus Evans is organizing its first LawTech Forum in NYC November 3-4. The program looks excellent.
- Benchmarking & Quantifying the Value of IT & Technology
- Effectively using Technology to Increase Productivity
- Using Technology in E-Discovery: Developing an Efficient but Comprehensive Approach
- Navigating the Challenges of Information & Record Management in a Digital Age
- Achieving Competitive Success by Leveraging Your KM
Speakers include Thomas Barnett, Special Counsel, Sullivan & Cromwell; Pamela Martin, Manager IT (Legal), Du Pont; James Michalowicz, Litigation Program Manager, Tyco International; Stephen Roberts, CIO , Covington & Burling; and Michael Stevens, Manager IT (Legal), Cisco Systems.
I will moderate a session called Leveraging Technology to Enhance Your KM Capabilities. The panelists are two of the leading in-house practitioners of knowledge management: Phil Crowley, Assistant General Counsel, Johnson & Johnson and Amy Comeau, Assistant VP, MetLife Legal Affairs.
For more information on the conference and to obtain the detailed program, click here.
By way of background, Marcus Evans focuses on creating events that provide business leaders with critical know-how. Its 31 international offices produce hundreds of events per year on strategic issues that include corporate finance, technology, capital markets, human resources, and business improvement. Some readers may have attended or be familiar with the company’s Legal Technology Summit, which provides both educational tracks and opportunities for law firms and vendors to connect.
BigLaw is not famous for innovation. Some forward thinking BigLaw CIOs advocate change but meet resistance. One explanation is lack of diversity in law firm management.
My friend Eric Mankin is a business innovation expert and writes a regular column on his web site about innovation. His July 25th piece, Optimizing Diversity, provides important insight about decision-making and diversity: “Innovation thrives on diversity. Not diversity based on gender or ethnicity, but rather diversity of experience.”
Though the power of diversity is well-documented, most teams remain insular because “given a choice, most people would prefer similarity over diversity.” Similarity supports smooth communication but squelches the disagreements that spawn innovation. Too much diversity, however, can lead to so much friction that failure ensues. Eric captures the tension with a nice graphic:
He concludes that “For those charged with improving the quality of innovative efforts, one of the challenges is to encourage the tendencies for diversity in environments that tend towards homogeneity.”
It strikes me that even law firms that promote diversity suffer from the lack of multiple perspectives that Eric describes. Skin color, gender, religion, sexual orientation, national origin, and other characteristics may vary, but the funnel to partnership often drives a certain uniformity of thinking.
Advocates of change inside BigLaw will likely gain insight from Eric’s analysis. Acting on this insight, however, is a challenge!
The current issue of Law Office Computing (Aug/Sep) asks “what is the big challenge when implementing new technology in a large firm?” My answer, appearing in the Asked and Answered column> is below.
Until recently, making new technology work properly and efficiently was difficult. Today, the bigger challenge revolves around two aspects of change management: new features or new work habits.
Learning new features, typically from software upgrades, is fairly easy. The changes are usually incremental, so a memo, e-mail notice, or laminated “tips and tricks” sheet, along with optional training, suffice to make the transition. Users might grumble and some might stumble, but they no longer resist the inevitable and necessary upgrades.
No single formula insures success in changing work habits. Elements of effective programs include strong leadership from firm or practice-group management, measuring conformance, and providing feedback. Positive feedback includes formal evaluations or simple incentives such as a Starbucks cash card for good performance. Other feedback can include mild public opprobrium (e.g., e-mail from the senior partner saying “I can’t believe you sent a message asking this before checking the firm’s knowledge management system") and negative performance evaluations.
Orrick Herrington will soon form a separate business to sell support services, including tech, via its West Virginia center.
Via an Edge International blog post, I found an article, Orrick in plan to offer law firms outsourcing service, in TheLawyer. “The West Coast firm has made huge savings by basing a global operations centre in West Virginia, which provides all accounting, finance, technology, payroll and benefit administration services to Orrick’s offices around the globe.” The article reports Orrick will turn this operation into a business within a year, possibly in partnership with another company. (I previously reported this possibility here.)
Notice to legal market innovators: replace the arrows in your back with an award that recognizes your hard work and risk taking. I posted about this in March - the deadline is June 14th.
College of Law Practice Management in concert with Edge International announces The Second Annual InnovAction Awards recognizing innovation in law practices around the world:
“The InnovAction Award is a worldwide search for lawyers, law firms, and other deliverers of legal services who are currently engaged in some extraordinarily innovative effort. The goal is to demonstrate to the legal community what can be created when passionate professionals, with big ideas and strong convictions, are determined to make a difference. Each year, we will present the coveted Nova to those unsung heroes and rising stars from within the legal profession who dare to think differently and succeed by doing so. ”
Click here for the 2004 award winners, here for more detail on the awards, here for how to enter, and here for a list of the sponsors, publication partners, media partners, and friends.
As a Trustee of the College, I am pleased to be a friend. I encourage you to learn more about the awards; apply if you are an innovator and, if you are not, tell your innovative friends about this.
A half-dozen years ago I participated in the partner retreat of an Australian law firm. I was impressed by the business focus of the firm. Now, there are signs that some of this discipline is coming to US shores. And with it will perhaps arrive a more systematic assessment of the opportunities to deploy technology for client advantage.
The Australian firm had a Chief Strategy Officer who presented to the partners. A spirited discussion ensued concerning various strategic, marketing, and competitive issues. In contrast, a few months later I participated in a large US firm’s partner retreat. There, the managing partner extolled how the firm was “high quality” without mentioning strategy or competition.
I was therefore intrigued to see that Dickstein Shapiro has appointed a chief strategy officer (reported in the June 9th issue of Washington Business Journal). The new CSO is “responsible for ensuring that all firm initiatives - both internal and external - are in line with the company’s strategic plan.” I am not aware of many other large US law firms that have chief strategy officers. So it will be interesting to observe how this role evolves, in general and at Dickstein.
An empowered CSO should have some say in how a firm deploys technology to serve clients. And if there is someone with strategic vision, able to focus on the market, client needs, and competition, that bodes well in my opinion for a firm using technology to serve clients more effectively.
The over-hyping of technology leads to a natural reaction to discount its impact. That is a mistake. Broken promises notwithstanding, new technology continues to change law practice and business.
In the past, the challenge was just getting new technology to work. Today, the challenge is adopting new systems to improve business, practice management and client service. Adoption depends on culture, attitude, competition and management, not on the technology itself. Managers guiding their law firms’ futures should consider technology-enabled opportunities along three dimensions – communications, practice management and business management.
That is the thesis of an article I wrote for the College of Law Practice Mangaement Spring 2005 newsletter (PDF) and posted here.
In response to my post about business intelligence software, one of my large law firm readers provided interesting comments about large law firm business development. This helps illustrate that some CIOs have an opportunity to be change agents in their firm.
First, here is the comment from a lawyer in a large firm:
“I spent a number of years in-house with a large financial institution. The focus on market analysis there was huge, analyzing customer segments, determining customer profitability, setting profitability targets, defining strategies for dealing with customers who didn’t meet those targets, etc.
One thing that continues to amaze me about my large law firm (and I suspect that it is not a lot different elsewhere) is the seeming disregard for all sorts of basic business development approaches. It’s as if the lawyers say, “Well, BD means either (1) take the client to a sports event, (2) host an internal CLE event, or (3) speak at some conference, and there is nothing else that I could possibly do to develop business.”
They don’t start with the basic cross-selling of their own capabilities to their colleagues, they don’t focus on providing real value to their clients (because a lot of it would involve the investment of non-billable time that the firm doesn’t recognize, even if it pays off exponentially later), and they don’t analyze what they do right (and what the they do wrong!) to determine what things to emphasize (or ditch). And yet these are all intelligent people.
It continues to mystify me (although I believe that the emphasis on the billable hour works to discourage any such activities).”
I believe the situation is not quite so bleak in many large firms, but certainly there are many where this is still true. I also know many CIOs who see the need for their firms to adapt better business approaches, whether in law practice, marketing, or back-office processes. Often, technology is just a small part of the change, really just a “supporting role” in a bigger drama.
I think that because CIOs inherently must deal with change (think of just all the operating system upgrades in the last decade), they are more comfortable with new ways of working than are many of their lawyer colleagues. Of course, being a change agent is hard work and can be job-damaging or -ending. But forward thinking CIOs who have basic infrastructure under control do not lack for opportunities to help their firms adopt better ways of working. Evaluating and introducing BI tools is just one example.
I recently asked a lawyer whether his firm was pursuing a relatively new idea and his response was, “how many other large law firms are doing that?” My reply was “why is that a relevant question?” He was taken aback and offered no answer.
The setting was a social event, the lawyer involved in his firm’s communication efforts, and the question was “has your firm considered a blog?” I have previously posted about firm-branded blogs, so will not cover that territory again. The interesting issue here is how firms think about change and new ideas.
Large law firm technology managers who suggest new initiatives frequently face the question “how many other firms are doing that.” Most businesses evaluate a proposal based on benefits, costs, feasibility, and risk. The analysis includes what competitors are doing but that’s not the starting point. In three years of strategy consulting at Bain & Company, I do not recall a client or consultant ever starting with that question.
In well-functioning markets, that is the wrong question. When customers have ample choice and switch suppliers to achieve lower cost or higher benefits, producers constantly look for ways to gain share by doing a better job pleasing customers. So producers eagerly assess new ideas that might provide a competitive advantage. When suppliers fail to embrace the new, they suffer (consider, for example, Digital Equipment or Detroit car-makers).
In the legal market, however, it’s hard to identify instances where the market has penalized firms for being late adopters. Firms may lose a client or two if they lag, but this does not lead to folding. The only explanation I can offer for why firms can repeatedly start with the wrong question is that their customers are simply not demanding enough.
Maybe I’m completely wrong… I’d love to hear from anyone who has a better explanation, either why this question is the right place to begin thinking about change or why law firms can keep asking if it’s wrong.
Last week blogger Adam Smith, Esq. wrote that per partner profits at large UK firms are much lower than at large US law firms. It’s interesting to consider why and if technology plays a role.
In a follow-up post, he offers explanations from several readers. The one I offered (and quoted in full at his post) is
“A possible explanation for the lower profits per partner in the UK is that clients in the UK are more sophisticated, demanding, less willing to pay high rates, and more insistent on budgets… If UK companies spend less proportionally on legal fees, there’s less money to go round. ”
The other explanations are worth reading.
My sense, based more on anecdote than hard evidence, is that the large UK firms are ahead of their American counterparts in the application of technology to law practice and that the difference does not stem from spending a lot more on technology. I believe the explanation for the difference in profits also explains why the UK firms do more with technology: competition. It seems to me that the UK market for legal services is more competitive, which not only drives down price, but drives the need to differentiate service offerings and hence leads to more interesting uses of technology.
Last week I spoke at the ABA Tech Show on “Where Are We Going,” in which Toby Brown, Marc Lauritsen, and I talked about the future of legal technology.
My key point was that while new technology often seems hard, the real difficulty typically revolves around change, not the technology itself. To illustrate this, I outlined a spectrum of new technologies ranked from easiest to hardest with respect to change (1 being easiest, 5 hardest):
(1) New software that requires learning only a simple, new interface, for example, the new generation of full-text search tools designed to simplify knowledge management and e-discovery.
(2) New communication tools such as blogs and webinars. These are easy and cheap but using them means some changes in thinking and behavior. Individual lawyers can act on their own, however, so the barrier is relatively low.
(3) New analytic approaches enabled by technology such as profitability analysis, business metrics, and workforce automation. Adoption is hard because it requires managerial action and change by many lawyers.
(4) New work patterns that technology supports such as working virtually, offshoring work, and adopting project management discipline. These are very hard because they require institutional action.
(5) New business models such as delivering interactive advice, managing contracts for clients, and developing preventive law systems. These are hardest because they require not just institutional change, but also market change.
The point is that in considering new technology, firms need to identify where the real challenge lies, from quick and easy training to difficult institutional and market changes. Firms should start with an analysis of their business need and opportunity, then realistically assess the individual and institutional appetite for change. Only then can they make an informed decision about a new technology and its potential payback.
Fellow blogger Adam Smith, Esq. has assembled his second panel of “savvy bloggers” to address the question of the future of the billable hour.
The assembled responses are an interesting read about the basic economic model of the legal profession. My response to his question was:
For the high-end, non-commodity work that large law firms do, the billable hour will prevail, at least for next decade or two and likely beyond. When I started in the legal market in 1989, I was sure alternative billing was just around the corner. It appears very little high-end work has moved away from the billable hour so I am now reluctant to predict radical change. I’ve spoken with lawyers eager to offer alternatives but clients decline. The billable hour will stay for the same reasons it has not yet gone away: risk aversion, lack of disciplined and business thinking by attorneys in firms and law departments, and a failure of imagination.
As a proponent of best practices and the application of technology to law practice, I wish it were otherwise. A move to fixed fees would create strong pressure for efficiency, which would favor adoption of demonstrated best practices and more technology to automate wherever possible. If e-billing spreads and if general counsels actually analyze the data rigorously (the latter being a BIG IF), then there might be a move toward tighter project management and budgets. This would at least vitiate some of the pernicious impact of the billable hour.
New legal technology frequently raises ethics concerns. A new Legal Ethics blog covers ethics and, this week, in connection with the ABA TechShow has a focus on legal technology and legal ethics.
Ben Cowgill is the lawyer-author of Legal Ethics; for this week’s focus on tech and ethics, Ben has assembled a panel of guest bloggers, including me. Reproduced here are my first comments on his blog:
As a proponent of using technology to serve clients and practice law more effectively, I have frequently confronted ethics questions. Examples include e-mail (confidentiality and privilege), interactive advisory web sites based on expert systems (malpractice and unauthorized practice of law), use of application service providers (confidentiality), and performing legal work offshore (confidentiality and privilege).
What is surprising are not the questions but what must bluntly be called two-part knee jerk reactions. First is the immediate claim, typically absent any factual inquiry or ethics research, that the new thing would violate ethics. And second is the failure to assess the ethical risks of the status quo relative to the new thing. For all the early concerns about e-mail, how many lawyers send faxes to hotel front desks for hand delivery to a guest? How many read the disclosure on overnight delivery labels and consider the possibility that the package contents might be viewed by someone else?
Perhaps both the profession and clients would be better served by shifting the burden of proof. The proponent of the new would need only make a plausible argument that the new thing is ethically sound. That would shift the burden of proof back to the nay-sayers, who would win only based on clear and convincing factual and legal arguments. Lawyers may be creatures of the past but robotically following old ways causes its own set of problems (see, for example, The T.J. Hooper).
I hope that others will chime in on Ben’s blog to answer these and other questions.
Last Monday, the Wall Street Journal reported that companies “have struggled for years to reduce their legal costs, with little success” and that “[n]ow technology is coming to the rescue.” I’ve struggled since then with how to think about this article.
On the Case (paid subscription req’d) explains that businesses “are finding they can use software to automate routine legal matters, such as drafting standard employment contracts, as well as streamline complex chores like patent applications.”
One the one hand, I was disappointed that the Journal neither unearthed new examples of the application legal technology nor cited large companies beyond those usually mentioned in articles about legal technology. On the other hand, I take comfort in blogger Adam Smith, Esq. comments that the fact that the WSJ reports on something, certifies it is a trend.
This article reminds me that real change is likely to come from external forces. Only a few general counsels are pushing the envelope. My hope is that CEOs and CFOs read this article and send it to their GCs with a hand-written note asking “are we doing this yet?” Now that might have an impact on how law departments and firms operate.
I’ll close with an observation about considering change in the legal profession. The article says “some legal experts say it may be risky to automate or outsource legal tasks” because “[i]mportant information might fall through the cracks of automated systems.” Sure this is true, but in comparison to what? The idea that humans - with all their frailties and distractions - always catch all important information seems, how shall I say it, a tenuous position. Lawyers must learn that it’s not enough to object to the potential flaws of a new way; they have to be viewed in comparison to the flaws and risks of the existing approach.
Notice to legal market innovators: replace the arrows in your back with an award that recognizes your hard work and risk taking.
The College of Law Practice Management in concert with Edge International announces The Second Annual InnovAction Awards recognizing innovation in law practices around the world:
“The InnovAction Award is a worldwide search for lawyers, law firms, and other deliverers of legal services who are currently engaged in some extraordinarily innovative effort. The goal is to demonstrate to the legal community what can be created when passionate professionals, with big ideas and strong convictions, are determined to make a difference. Each year, we will present the coveted Nova to those unsung heroes and rising stars from within the legal profession who dare to think differently and succeed by doing so. ”
Click here for the 2004 award winners, here for more detail on the awards, here for how to enter, and here for a list of the sponsors, publication partners, media partners, and friends.
As a Trustee of the College, I am pleased to be a friend. I encourage you to learn more about the awards; apply if you are an innovator and, if you are not, tell your innovative friends about this.
Legal Tech NYC is a good time of year to take stock of the legal technology market. Some years nothing is new (e.g., around 1992, the only new thing at Legal Tech was a coffee maker!). This year, fortunately, there is much to report…
This year, I was pleased to work with my friend and affiliate, Joshua Fireman of ii3, to write a report on what we saw at Legal Tech. It covers KM, E-Discovery, and Infrastructure. Separately, Joshua and Shy Alter, CEO of ii3, wrote about their time at Hummingbird Summit (the week after Legal Tech). Click here for the report, which is on the ii3 web site.
Consulting firm Hildebrandt and The Law Firm Group of the Citigroup Private Bank, which works with many of the leading law firms, have just released their 2005 Client Advisory. The combination of Hildebrandt’s strategic insight with Citigroup’s financial insight yields a very useful look at the state of the legal market.
Anyone operating in the large law firm environment, including CIOs and senior technology managers, should stay current with the overall market environment, so this report is a must read. Some highlights I found interesting include:
- Among 143 firms analyzed, revenue grew about 9%, with 3% coming from hours and 6% from rate increases.
- US law firms continue to consolidate and to grow internationally.
- Clients may finally be resisting law firm rate increases.
- “From a technology standpoint, 2004 was a year in which many firms focused internally on their infrastructures and advanced use of systems, as well as externally on enhanced client communication and collaboration tools. We expect these to remain primary areas of focus in 2005 as well.”
- Many firms are fostering teamwork and taking CRM (actual client relationship, not just systems) more seriously.
- “Outsourcing of various “back office” functions that began developing as a serious trend in 2004 will expand during 2005 as law firms continue to look for ways to optimize their delivery of legal services.”
There is much much more in this report worth reading.
Large law firms CIOs and IT managers frequently benchmark their operations against the competition for their own purposes or in response to firm management. The International Legal Technology Association (formerly LawNet) has recently released an excellent IT staffing survey to help in this regard. And it has some provocative findings.
ILTA’s IT Staffing Survey (January 2005) offers one of the best legal IT staffing surveys that I have seen. As both a “consumer” of and “responder” to such surveys, I have frequently been troubled by questions or analysis that do not allow “apples to apples” comparisons. The authors of this survey have taken significant strides toward providing more uniform data. As well, they have provided interesting analysis. (One of the three authors is fellow blogger Tom Baldwin.)
For anyone interested in the details of law firm IT operations, the survey is a must read. One key finding is that large law firms have a higher ratio of IT staff to lawyers than do smaller firms. The ILTA study analyzes staffing ratios by firms in 9 size categories. I re-worked the numbers to three categories:
Ratio of Users to IT Staff by IT Category
|USERS||Network||Help Desk||Training ||App Dev||Tele/AV||Lit Supp||IT Mgmt ||Total IT|
The key finding: larger firms have fewer users per IT staff person than do smaller firms. That is, relatively speaking, large firms have more IT support per user than do smaller firms. So, for example, the largest firms have 30 users per IT person whereas the smallest firms have 40. The differences are especially noticeable for help desk and training.
The study authors report that factors they had considered - geographic spread, practice scope, or specialization - do not explain the difference in staffing. My hypothesis is that the relatively rich staffing of the largest firms stems from the size and complexity of matters on which they work. My guess is that the larger law firms have higher leverage (more associates and staff per partner) than do the smaller firms. This higher leverage allows the large firms to work on complex, fast-moving matters. Just as these firms typically have higher associate to partner leverage, so to they have higher leverage of IT staff. The richer staffing ratios help large law firms keep highly profitable large deals and litigation, which genuinely do require armies of smart and dedicated people.
I have previously posted about General Electric’s experiments to use auctions to buy legal services. The experiment seems to be a success.
In ”General Electric names 37 firms for UK panel launch,” LegalIT reported on January 19th that in the UK, GE selected 37 firms for Â£30m of work based on an online auction. “The review saw firms bid against each other in real time for mandates, primarily on price. A GE spokesman said: ‘[Using the new system] means we have appointed the best possible counsel at the best prices.’ ”
Apparently at least one lawyer is upset that some firms started their bids high and then matched subsequent lower bids. Oh horrors! Price competition in legal services! It could get worse; LegalIT reports that “the auction system is now being introduced to other parts of GE’s European business, with a national review currently underway in Spain.”
As I have argued previously, as competition and pricing pressure increases, forward-thinking law firms will look more to technology to lower costs and improve their ability to deliver service.
Ringing in the new year is a great article by a Cisco law department member on how technology can change and dramatically improve the ways lawyers practice and the business relationship between lawyer and client.
Laura Owen, a lawyer who is director, worldwide legal services, at Cisco Systems Inc, suggests in The Tech Evolution: Change or Die ((Law Technology News, 1/4/05) multiple ways that lawyers can work more effectively. Her advice is directed at both law departments and firms. Many of her suggestions relate to appropriate use of technology.
She enumerates nine specific measures, including commoditizing routine work by deploying document assembly, e-signatures, and contract management systems. (On contract management, see my recent prediction on this topic and how Cisco uses contract management.)
Evans also suggests consortia to share needed work and using technology to perform routine work. As an example of the latter, she cites McGuireWoods ContractBuilder. (I maintain a list of online legal services and will add this one soon.)
She concludes that “Just like the industrial revolution, technology has revolutionized the way businesses work. But it’s not enough to have BlackBerrys and knowledge management systems. We all need to embrace these advances to change the way legal services are delivered.” I could not agree more; in fact, much of this blog is directed at that very idea.
I started my career in legal technology in 1989. For most practical purposes, this means I was in the legal market at the beginning of the PC revolution. And I had many colleagues who shared with me their technology experiences from the prior decades. For readers who may be frustrated at times with technology today, it’s helpful to think how far we’ve come.
The current issue of the American Lawyer magazine has published my article, Back to the Future in the AmLaw Tech supplement. I had fun writing this - you may have fun reading it.
The online version did not include three “sidebars,” which are available here.
Also of note, this is the last quarterly issue of AmLaw Tech as a stand-alone magazine. Quoting editor Mark Voorhees in his Editor’s Letter: “It is time now to bid adieu to AmLaw Tech, the publication but not the concept.” The supplement will appear annually in June, with the annual tech survey. A new AmLaw Tech column will appear in the main magazine. Why? Voorhees explains: “After compensation and rent, [technology] is the largest expense at most firms. We want to recognize the central role that technology palys at firms by covering it in our flagship rather than relegating it to a supplement.”
Last year GE Capital began an experiment to purchase legal services via auction (see my posting). Two years into the experiment, GE reports savings of up to 20%.
GE Capital Wins Big with Legal-Services Auctions in the Corporate Legal Times September issue quotes Barbara Daniele, general counsel of the GE Capital commercial equipment finance division: “We’ve realized dramatic cost reductions from the auctions - up to 20 percent for most areas, compared to 2003 rates.” Daniele makes some other interesting points:
- The “very best” firms have participated in auctions.
- Work quality has been high.
- GE has not yet bid out high-end litigation.
- Information technology is important in achieving these successes.
GE is a trend setter in law practice (e.g., creating a law department as good as any large law firm). This development raises at least two very interesting questions: (1) will other clients follow and (2) have the winning bidders simply accepted a lower margin or have they found ways to be more efficient, for example, by using technology? Comments welcome from anyone who can answer these.
I have previously suggested (blog post and article) that law firms might be able to reduce occupancy cost and free-up time (billable or personal - to be negotiated) by allowing or encouraging lawyers to work at home or in satellite offices some number of days per week. The idea is that less office space is needed if lawyers work at home more.
A range of obstacles could make this difficult (and my article discusses these). One is that lawyers are needed in the office. Part-Time Culture Grows at Firms in the National Law Journal (10/26/04) reports that an increasing number of firms are open to part-time lawyers, including those on the partnership track. It strikes me that if firms can arrange work for part-time lawyers, they can also arrange work and schedules for full-time lawyers who spend time working outside the office.
Most law firms are at work on their 2005 budgets. In considering technology budgets, it’s interesting to ponder when something “new” is no longer new. This is no mere philosophic question; I believe the answer affects how firms make decisions.
I started thinking about “newness” last week when I saw articles about blogs in both the Wall Street Journal and the October issue of the Corporate Legal Times. Every periodical I read - general, business, legal, and technology - has covered blogs. So let’s stipulate that blogs are no longer “new.”
Then I started thinking about just what does “new” mean and does it matter. I can’t define “new” but it seems to me that faced with something “new,” decision-makers must (1) have knowledge about the subject and (2) “frame” the subject appropriately, that is, figure how it fits with what is already in place.
Proponents of the new in law firms should be aware that decision-makers may lack both knowledge and an appropriate framework. Moreover, they face skepticism and a high burden of proof. That seems ineffective and inefficient to me.
When every periodical has reported on a new thing, then the presumption and burden of proof should shift. Take blogs as an example: a lawyer proposing that his or firm create substantive blogs should not have to explain what a blog is. The discussion needs to be framed around communications, marketing, and client service, not around technology. (I happen to think firms should have blogs, but the point here is that it is not a tech decision.)
Similarly, e-discovery is not new. So lawyers should no longer need an explanation of what metadata is and why it is important. A litigator who has not seen and read article about this topic is verging, in my opinion, on committing malpractice. And the framework of discussion about it needs to shift away from pure technology to case strategy given the tech issues.
If I am correct here, and I admit my ideas are embryonic, then I can crystallize the problem: lawyers as decision-makers often have trouble coping with the new. I have had many experiences where I’ve read repeatedly about a topic and, when I mention it, a lawyer looks at me blankly. Lawyers who lack awareness of the world around them should not be firm managers.
And for those who do know about the new, especially if it is technology, tend to frame the new as a technology issue. That tendency is ill-advised as it allows the decision maker to avoid business, competitive, and strategic considerations. In effect, the subconscious script is “well, this is technology, I’ll let the CIO worry about it - I don’t have know anything or do anything.”
CIOs are not acquitted from their duty to educate partners and other decision makers. But that duty only goes so far. Lawyers as decision-makers must grapple with the new. First, they need to read and know what is happening. And second, they need to frame the issue correctly. A Cisco router upgrade or new Intel chip can safely be relegated to the realm of pure technology. But much of the new is only disguised as technology. Lawyers need to take more responsibility for understanding the implications and framing the right questions.
Fellow blogster Jerry Lawson and I recently exchanged e-mail messages about bloggers asking for links. That led to an interesting discussion about relationship management generally. Our shared observation is that, among other challenges of law firm CRM (customer relationship management) is that lawyers have limited views of relationships.
I observed that lawyers seem to have a very different approach to relationship management than do business people. Lawyers seem to think relationship capital is very hard to earn and easy to lose. On several occasions I have tried to get partners to engage clients on topics relating to a firm’s use of technology. They almost always react along the lines “I am not going to risk my relationship asking favors of my clients.” In my experience, when a professional asks for a small favor, say a client’s view and a bit of help, assuming you’re not asking for too much time, it actually adds to the political capital. It seems to me most people like being asked their opinion and, in the context of an inherently one-sided lawyer-client relationship, such “asks” can help even-up the psychological balance.
Jerry seconded this idea, adding that psychological studies show that if you try to get a new acquaintance to like you, it’s better to get them to do you a favor than it is for you to do them a favor. This is exactly the opposite of what you likely expect. Most would assume that if you do something nice for someone, he or she would be more likely to think well of you. But the opposite is often true. Psychologists explain the phenomenon as a byproduct of “reduction of cognitive dissonance.” That is, the other person has a psychological need to justify having done you a favor. If you were unworthy, the other would feel stupid for having done you a favor. Therefore, they tend to convince themselves that you are a nice and worthy person.
What does this have to do with legal technology? If we are right, it means that tech managers who are developing client-facing technology should ask partners to ask clients to comment on the firm’s plans. Rather than viewing this as a bother, we think most clients would think more highly of a firm for asking. And the feedback you get is likely to help you deliver a better service. Both of us would welcome comments from marketing folks or others who can comment or expand on this theme.
This posting is also available at eLawyer Blog
“Firms are making roof repairs rather than remodeling the kitchen.” So concludes the 9th AmLaw Tech survey of large law firm technology, published in the September 2004 issue of American Lawyer magazine.
This survey is one of the best and most reliable for large law firm technology spending and trends. A few findings stand out:
- Slightly more than one-half of firms report increases in both capital and operating budgets, up almost 10 percentage points from last year. And more than 60% of firms have more IT employees this year than last.
- The focus on new spending is primarily on infrastructure upgrades, including remote access, telecommunications (specifically moving to VOIP, that is, internet telephony), and major software upgrades (e.g., to new versions of document management systems).
- A significant percentage jump year-over-year in number of firms using electronic evidence discovery vendors confirms the EED is rapidly growing.
The survey also finds that knowledge management is in choppy waters. KM “was a postmillennial buzzword that developed a nasty reputation.” Interestingly, this year’s survey has only one KM questions (what software does the firm use other than document management) whereas last year’s survey had five questions. The KM focus now is primarily on search (for example, West KM, or Lexis Nexis Total Search).
This KM finding is consistent with my sense of the market. Quite a few firms remain committed to KM; many are testing the waters, albeit in limited ways; and, some are steering clear. Based on the frequency of KM topics at conferences and number of attendees at these sessions, however, I do not think KM is in any fundamental danger. But we may be in a period of consolidation and more realistic expectations.
I would have liked to see a bit more about portals in the survey. While a couple of questions do address portals, it’s hard to draw any conclusions. The advent of multiple options - the leading document management vendors have released new versions of their portal add-ons, specialized products and upgrades continue to come from companies such as Plumtree or LawPort, and Microsoft’s SharePoint (which seems to be gaining mindshare rapidly) - have led many firms to consider (or re-consider) the role of portals.
The portal question is hard: the technology options are numerous and the planning issues tough. It will be interesting to see what directions law firms go in 2005 with portals. I suspect that the next survey will have some interesting findings about portals.
My prior post suggested stepping back from the day-to-day change to examine fundamentals. Among other points, I suggested lawyers might not need notebooks. Fellow blogger Dennis Kennedy raises a good point about my comments.
Responding to my statement that “some clear-thinking firms now understand that with the advent of Blackberries and inexpensive home PCs, it is probably no longer necessary to equip every lawyer with a notebook PC,” Dennis sent me an e-mail saying
“While there may be more nuance in your position on this than shows, I am concerned about the implications. Specifically, many IT directors can seize on your conclusion to justify equipping lawyers with inadequate tools. In fact, I’d suggest that increasingly common free WiFi Internet access makes the future of Blackberries open to question. I can see the benefits to IT directors but that approach takes lawyers backwards. I can easily make the case for more notebooks and the combination of Tablet PC or notebook, WiFi, OneNote and CaseMap and other litigation tools is extremely powerful for litigators.”
I think the resolution is the “hidden nuance.” My point, not stated clearly enough, is that IT managers must constantly monitor needs and adjust accordingly. Today, in some firms, lawyers with notebooks hardly ever use them. Some firms regularly send at IT person to walk the halls and see how many notebooks are sitting on desks. The data suggest that many rarely leave the office. To the extent that a lawyer has a wireless handheld device (and likely a home PC) and therefore rarely, if ever, carries a notebook out of the office, then a desktop computer should suffice. If, however, a lawyer has legitimate need for a notebook - to work at home or while traveling, then IT should provide one. A wireless handheld unit is by no means a substitute for a notebook for every lawyer.
The general point is to meet the reasonable needs of lawyers but that the definition of “reasonable needs” can change over time. WiFi may indeed soon completely change the tools we use (including cell phones and handheld wirelesses). Just another reason periodically to assess needs, tools, and strategies to make sure they are all in alignment.
Technology is all about change. The job of the CIO is often as much about change management as it is about technology. Sometimes change occurs so continuously and gradually that we do not realize that whole systems and environments have been altered. The role of secretaries in law firms illustrates what I mean.
Legal Secretaries: Numbers Wane, but Demand Does Not on law.com reports on a study by a staffing agency on the changing ratio of secretaries to lawyers. It confirms that more firms are moving to a higher ratio of lawyers to secretaries. The study also finds, however, that despite the relative decline in demand for secretaries, it is still hard to find good ones. Moreover, the demands on secretaries have increased given their expanded coverage.
Clearly, the advent of PCs and lawyers typing their own documents combined with voice mail and fax delivery to PCs has changed what secretaries do. In my view, there has been enough gradual change in the role of secretaries that firms should re-think the role and organization of secretaries. I have previously argued in The Future of Legal Secretaries (published in the Legal Times, May 2003) that law firms should consider adopting a team approach to secretaries.
My idea about secretarial teams may or may not be right. The point here is to observe a phenomenon - the gradual evolution of the changing secretarial job - and not just assume that incremental organizational adjustments suffice. Forward-thinking CIOs and other senior law firm managers need to consider whether a systemic change may be required.
There are other examples of where “gradualism” can give rise to “wholesale structural change.” Some clear-thinking firms now understand that with the advent of Blackberries and inexpensive home PCs, it is probably no longer necessary to equip every lawyer with a notebook PC. Economics, security, and convenience may mean reverting to less expensive and easier to manage desktop models.
The general lesson is that firms need to “step back” occasionally to look at the big picture, to see the accumulation of gradual changes, and to consider potentially new and different real change rather than mere incrementalism.
Last week I wrote about the possibility that Orrick might provide back-office services to other law firms. That post generated two interesting comments that question and expand on my conclusion that this could be a distraction.
On 8/19 fellow blogger Rick Klau commented:
Ron - thanks for the pointer to this article. I recall Orrick’s announcement several years ago to move to this model, it’s interesting to see reports of its success.
Question - when you say that firms should avoid the distraction factor, what about Womble & their spin-off FirmLogic? Seems to me the gating factor for most law firms isn’t their inability to manage different service lines (and margins on some tech offerings can be just as high, and far more scalable), it’s their inability to be business-oriented in their management.
Do you agree?
I had been thinking about Rick’s question, knowing that I did not agree, but was having trouble articulating the reasons. The next comment sums up my views better than I could have said myself….
On 8/24 John Alber, the Technology Partner at Bryan Cave replied to my post and Rick’s comment:
I disagree with Rick. The business imperatives and core competencies of a technology company are very different from those of a law firm. Very, very few businesses–even the best managed businesses–are able to mix and sustain radically different business models under the same roof.
The law firms who dream of offering their “cost centers” to the world in order to reduce their overhead burden or even achieve profitability from those centers have not learned from the business histories of their clients. Turning cost centers into profit centers was all the rage in the 70s and 80s. Some companies are still licking their wounds.
Technology is best used to create an extraordinary service model within the existing business structures of law firms. Any other use undermines the core business of the firm.
“Growth – real growth – depends on innovation. Oh sure, a big acquisition can inflate a company’s top line, but it’s hardly fair to call this growth; agglomeration would be a better word.” So writes Gary Hamel and Gary Gets in the current issue (July-August 2004) of the Harvard Business Review to open their article, “Funding Growth in an Age of Austerity.” What does this say about large law firm consolidation and future growth prospects?
This article and much of the issue argue that real growth comes from innovation. Even if a law firm merger works – and it’s unclear how many really do – and revenues grow faster than they otherwise would, that growth presumably comes from a better ability to cross-sell. Such growth probably reflects another firm’s market share loss rather than an increase in market size.
I suspect that recent large law firm growth stems from three factors: (1) increased demand for legal services, for example, new transactions, corporate investigations, or new regulatory requirements; (2) price increases; and (3) a gain in share relative to smaller firms. Lawyers may get lucky and experience continued demand growth stemming from business and legal developments. But growth by acquisition, pricing, and share gains may not continue unabated.
As the HBR points out, real growth ultimately stems from new demand (e.g., low cost flights, MP3 players, Starbucks, or online stock trading), which means innovating and building new businesses, tasks that are very difficult. Innovating in the legal market seems even harder than in other markets, which is why I suspect firms typically focus on combining or adding new practice areas.
Adventurous firms could try starting new businesses. Reasonable targets might be preventive law audits or fixed-price counseling services. I think the goal has to be to tap what Richard Susskind identified as the latent market for legal services, that is, the managers at companies large and small who need legal help but don’t get it. Exploring these opportunities may mean special dispensations, particularly, waiving billable hour targets for a few lawyers.
I am biased of course, but it seems likely to me that any new business opportunity for a law firm will have a big technology component. Whether it’s an Extranet, Web Service, or expert system, I can’t say. But given that law is so information-intensive, it seems likely that technology would be required to support any truly new business.
The challenge here is significant and discussed succinctly in a companion article, What Every CEO Should Know About Creating New Businesses. It’s a “top ten” list of the challenges in innovating. My favorite is “Starting a new business is essentially an experiment.” The author points out that “perfectionist cultures…are in for a rude awakening, since it’s seldom possible to figure product designs or business models fully in advance.” The drive for perfection and fear of failure runs deep in large law firms. Future growth may require confronting and overcoming these.
New technologies and processes abound in the legal market: e-discovery, portals, customer relationship management (CRM), knowledge management, practice group profitability analysis, matter-centricity, online training, to name a few. What can we learn from the past, both to predict the future and to guide how we manage the new?
I wish I could answer this question. For the moment, I have just begun to consider it by looking at other technologies. I have not done any research on how long it took lawyers to adopt online research, but my sense is that it took well over two decades, from about 1975 to about 1995. I think that the adoption of PC-based word processing happened much faster - about one decade. And internet browsing and e-mail seemed to happen faster still, probably about 5 years. One could of course quibble with the data (after all, I don’t have any solid numbers), but I suspect most would agree that adoption rates accelerated, at least with respect to these technologies.
We cannot, however, conclude that adoption rates are increasing for all new technology. My “counter example” is litigation support. I believe that many litigators - including those at some of the largest firms - have still not adopted clearly superior document management practices that were identified as early as the late 1980s. It seems obvious to me that in most large matters, lawyers should cause a document database to be built early on to manage and analyze documents yet this is still a struggle in many matters. The explosion of e-discovery and the ramifications of doing it wrong may finally cause lawyers to pay attention in this arena.
How can we explain the history? “Necessity” does not seem to be a factor. There are malpractice considerations, if nothing else, that arguably should have driven adoption of online research and appropriate discovery document management faster and deeper. The only consistent theme I see is the impact of client demand. The fact that clients started using e-mail forced lawyers to do so. The fact that clients adopted Word caused most law firms also to adopt Word over the course of about 5 years (in spite of reasonable arguments that Word Perfect is the better word processor for lawyers). Clients may now be driving the adoption of e-billing, though the outcome there is still uncertain.
For those who strive for change in law firms, it may be that the only “sure thing” is that if you can connect client demand to a proposed change, you will have a better shot at succeeding than if you can’t. I would love to hear from anyone who can take our historical experience and draw different or better lessons.
Applying technology to improve law practice is a continuing challenge, as those of us who have been doing it for years can attest. What, one might ask, are the law schools doing to help?
A New York Law Journal Article, Law Schools Steal a Page From Business Schools (May 5, 2004), discusses whether law schools should offer more business training than they currently do or consider work experience in admitting students. I have always been of the view that law school should provide more practical skills training, so was happy to see that there appears to be serious discussion of the curriculum in the academy.
In particular, it seems to me that law schools, aside from any business skills they could teach, should also teach law students about practice and information management, including the use of technology. Medical students are trained to use a range of equipment that they need to be effective doctors. Why is the same not true in law? The answer surely cannot be that neither equipment nor tools are needed.
I am not suggesting turning high-end law schools into trade schools. But it is a fact that lawyers in all types and sizes of practice need to manage a lot of information. One or two classes on matter management, databases, spreadsheets, document management in large cases, risk analysis, and so forth would surely not destroy all that is sacred. And, as an economist, I would argue that the marginal value of one or two practical classes greatly exceeds the marginal value of yet one more substantive law class in a topic the student will never once encounter in practice.
Speaking of marginal value, the value of my entire third year of law school was very low. I think there’s a strong case that law training could be very effective with just two years. I’ll stake a strong - but I think entirely reasonable and defensible - position and say that requiring the third year benefits mainly law schools, by supplying an extra year of tuition, and the profession, by creating an artificial barrier to entry to the profession. Now that my cards are on the table… it seems to me that at least the academy should provide some practical business and technology skills if they insist on keeping the degree a 3-year affair.
I have proposed that law firms consider the possibility that lawyers be encouraged to work at home some days or at satellite offices. Today, the Wall Street Journal reports yet another reason to support this idea: workers get more done at home because there are fewer interruptions.
In my article Going Virtual and subsequent blog postings (e.g., Working Virtually - Some Statistics, I set forth the case for doing work at home.
The somewhat light-hearted Journal article Cookies, Gossip, Cubes: It’s a Wonder Any Work Gets Done at the Office (4/28/04, p. B1) reports that interruptions at work are legion, especially for those working in cubicles. “In a sign of just how loopy the line between work and home has become, it sometimes seems as though the home is better suited to work, while work is better suited to, say wedding planning.” A researcher found that at “one large law firm,” people working in cubicles (granted this probably means staff and not lawyers) were interrupted more than 15 times per day. This leads to losing one hour to re-focus one’s effort.
The article acknowledges that homes create distractions as well but that it can actually be easier to close the door on family and pets than it is to prevent cubicle interruptions. I suspect that lawyers are somewhat insulated from this volume of distraction, both because they typically have private offices and because there is a culture of quiet in law firms (at least in my experience and relative to the corporate world).
Large law firms that face build-out and lease renewals should think carefully about the work culture of the future and how creative planning now can lower occupancy cost, convert wasted commute time to leisure or billable hours, and make their lawyers and staff happier and more productive. It goes without saying that appropriate technology is necessary to support such changes.
The widely reported merger of Wilmer, Cutler & Pickering and Hale & Dorr raises interesting questions about the role technology can play in helping to integrate two firms.
To be sure, merging the tech infrastructure of two firms can be a major challenge. I will leave that topic to others. Even if the infrastructure consolidation proceeds flawlessly, there is still a big question: should a merger prompt adopting knowledge management practices and technology.
The answer is clearly yes, as was well-articulated by Cindy Thurston, Director of Knowledge Development at Shaw Pittman, in a February 2004 article, Knowledge Management and Mergers (PDF) in Capital Connection (a publication of the Capital Chapter of the ALA). Thurston points out that “a key to successful mergers is being able to find the right information or expert quickly.” For this, she suggests good KM and expertise systems are required, as is a serious customer relationship management system.
Of course, I am biased in the direction of firms “doing KM.” I have also for several years now asked (of partners, consultants, and others) why there is so much consolidation among large firms. I do not find the proffered answers convincing, so I was pleased to read a skeptical commentary in the Washington Post today. In Scaling the Myth Of Mergers’ Efficiencies , columnist Steven Pearlstein questions the rationale of mergers.
Synergy does not happen by itself. Cost savings must be carefully engineered. And revenue enhancements through cross-selling take a lot of work. If ever there were a time to demonstrate the return on investment in capturing and sharing documents, identifying and locating experts, and sharing relationship information, it seems that it would be in the two or so years following a major merger.
Added 4/22/04 at 945am: See Law Firm Merger Mania for the transcript of a follow-up discussion to the Pearstein column.
I noticed today on Legal Technology Insider that Interface Software, makers of Interaction customer relationship management (CRM) software, has acquired the assets of Scout Solutions, makers of Aptus.
According the April 19th Interaface press release,
“Interface Software announced today that it has signed a definitive agreement by which it has acquired the assets of Scout Solutions. This acquisition cements Interface Software’s leadership in the CRM space and underscores the company’s long term strength and viability as the premier provider of CRM solutions to the professional services industry.”
It will be interesting to see if this acquisition has an impact on the role of CRM in large law firms. While many firms have purchased CRM, my sense is that few are really using it effectively.
As far as I know Scout and Interface are the two products most large law firms considered because both “grew up” in the legal marketplace. I hope that the combination does not diminish innovation in CRM for law firms. To be sure, there are many “generic” CRM systems, but at least anecdotally, I’m not aware of many firms that have looked beyond these two choices for CRM.
In my prior post, Working Virtually, I referenced an article I recently wrote for Law Practice suggesting law firms consider facilitating lawyers working from home. A recent Wall Street Journal article, “It’s 10 A.M. - Do You know Where Your Workers Are?” (1/12/04), has some interesting statistics about alternate working arrangements, including a 15% productivity gain.
The WSJ article reports that about 25% of the “US work force works from home at least some of the time, while another quarter is mobile or works from customer locations.” The move to at-home work is being driven by employers seeking to reduce costs and employees seeking more flexibility. The article goes on to report that at least some companies find at-home workers more productive: one study of 2000 workers at 15 companies found a 15% productivity boost from working at home. The gain is attributed to fewer distractions such as “water cooler gatherings and unnecessary meetings.”
These data support my contention that law firms should consider testing ways that lawyers could work away from expensive downtown offices, either in their home or at low over-head, suburban satellite offices.
The January/February issue of Law Practice magazine includes an article that I wrote called The Future Law Office: Going Virtual. It explores how law firms should consider letting lawyers spend more time working at home or in satellite offices and, in return, rent less space in expensive downtown centers. A good example of this idea in action appeared recently in the The New York Times.
In the December 31, 2003 edition, the Times ran an article called Reverse Commute: Bringing the Office to the Employee that explains how Skidmore, Owings & Merrill, a large architecture firm, opened a satellite office on Long Island. An 8-person technical team works out of low overhead space in Hauppauge. The article cites several advantages of opening this office:
Retention of a key person who no longer was willing to commute 2 hours each way to Manhattan
Operating costs that are one-third less than Manhattan.
Close proximity to relatively easy-to-use MacArthur Airport so that the tech staff can easily reach clients around the country.
Various technologies allow the 8 remote employees to interact easily with their colleagues in Manhattan, though they do occasionally travel to the city for in-person meetings. The functional requirements of an architectural firm are, if anything, probably more demanding than that of a law firm. I was pleased to see a real-life of example of the ideas I explore working for a professional services organization.
On a related note, I also came across a good article by systems integrator Kraft, Kennedy & Lesser that describes Voice Over Internet Telphony, one of the enabling technologies I discuss in my article.
My article, and others on legal technology, is available on this web site.
In Get the Picture yesterday, the Wall Street Journal explored the application of visualization software to gaining a better and deeper understanding of business problems. I wonder if law firms could use the type of visualization software the article describes to manage both their business and their knowledge.
The article explains that a range of businesses - examples include a mobile phone vendor, pharmaceuticals maker, and corporate bond trader - use visualization software from vendors such as Fractal Edge, Antartica Systems, Panopticon Systems, and Inxight Software to visualize business data. By taking large quantities of data and displaying them visually, business managers are better able to spot trends, analyze workloads, and identify exceptions.
While it would take some experimentation, it strikes me that law firms could use visualization software. On the management side, firms face large quantities of data, both about their clients and their timekeepers. Perhaps visualization software would help quickly identify clients with payment problems or associates with too much or too little work. It might also help identify trends in the business by practice area. On the substantive side, many firms have created taxonomies to help manage knowledge. Applying visualization software to the number of documents by taxonomy node (perhaps including data about authors) would help identify areas “to mine and manage” for knowledge management purposes.
Visualization techniques are already in use to analyze the large volumes of data generated in electronic discovery. For example, vendors Attenex and Cataphora both provide interesting visualization tools to help understand, manage, and sift through e-data.
I would be curious to hear from readers if they know of any examples of visualization software used to manage firm business or knowledge.
Here are my views of trends to watch in 2004. I choose the word “trend” intentionally because, as Yogi Berra said, making predictions is hard, especially about the future. Regular readers of my blog know that I focus on the strategic use of technology and not technology per se.
I therefore start with what strikes me as important legal market trends, phrased as questions:
Law firm mergers - seems likely to continue but the question still is, are they working and are there synergies (marketing or operational)?
Alternative billing - is it dead or alive? When I started in the legal market in 1989, it seemed inevitable. It’s seemed inevitable now for so long that I wonder if it really is.
Convergence programs - do they really work and, if so, is there more to come? Several large law departments have widely publicized programs to reduce the number of outside counsel and manage them more effectively. Why haven’t we seen more of this?
Management Structures and Approaches - will there be a move toward a more corporate form of managing law firms? It seems to me that law firms have moved toward more more systematic management and an increasing professionalization of staff functions. Is this perception true and, if so, will it continue?
On the technology front, I start with the premise that most firms now have decent infrastructures and keep them reasonably current. Though there are a host of infrastructure questions such as storage strategies and disaster recovery, I’ll focus on what I consider the more interesting strategic questions:
E-Discovery - why isn’t most discovery focused on digital data, rather than paper? What are the best approaches to e-discovery? I think that in 2004 more litigators will embrace e-discovery and the profession will make progress in establishing norms for how best to conduct it.
ROI - How should firms evaluate returns on tech investments. Now that infrastructure expenses are considered operational, how should firms think about measuring the return both on infrastructure and expenditures beyond the basics? Firms are more conscious than ever of costs, but it does not seem that many have adopted a more strategic approach to thinking about tech investments.
Outsourcing - Will firms outsource more? There were several interesting developments in 2004. It seems likely the trend to outsourcing will continue.
Work Flow, aka Business Process Modeling - Will more law firms adopt work flow technology? Some firms have installed work flow systems, primarily for “back office” functions such as opening new matters. The key question for me is what the opportunities
are to use work flow on the practice side - I suspect they are limited to high-volume, niche practices.
Knowledge Management: Hire PSLs, buy fancy full-text or taxonomic software, buy portals, do nothing? Firms are still wrestling with the best approach to KM. I expect that in 2004 we will see some consolidation of thinking on best approaches. (See my blog entries on KM.)
E-billing- how much is happening? What is the impact beyond reviewing charges and paying bills? I think that if inhouse departments moved to e-billing and knew how to analyze the data, the implications could be significant all around.
Online Legal Services? What is the future of online services? As my recent update on this topic indicates, online services have not taken hold as much as some of us expected, but the future is still an open question.
Note that the trends I focus on are about how law firms and departments use existing technology. We should also keep an eye on new technologies that will continue to be important. The top three I’m watching are Wi-Fi, Voice Over Internet, and Web Services.
Josh Fish of Hubbard One has a good article, Using Strategic Technology to Win and Keep Business, in the November 2003 issue of LawNet’s Peer to Peeer newsletter.
In it, he argues that firms should view their technology budget in two bins: operational and strategic. The operational should be viewed with an eye toward cost saving whereas the strategic with an eye to revenue enhancement and profits. Furthermore, the strategic element should be considered from a portfolio perspective, meaning some projects will succeed and others will not; the goal is to earn a postive return on the portfolio.
This articulates very clearly a view I have always held. I hinted at this distinction - though not so eloquently - in my article The Business Case for Delivering Legal Advice Over the Web. I went a bit further in one respect though, which was to argue that firms need to consider the risk and return on technology investment in comparison to other investments they make.
The article, in part, promotes the idea of an online legal service, in particular a HIPAA service provided by ReedSmith (see my blog posting on this service). I am a long-standing advocate of online services (see my articles on and list of online legal services).
In my prior post I noted that in celebration of Law Technology News’ 10th anniversary edition (October 2003), former managing editor Robert J. Ambrogi posed two questions to a dozen plus people, including me, who are deeply involved with legal technology. In The Future, The Past, Ambrogi asks one question about the future and one about the past. Excerpted here is the second question about the past and my answer. [Note that answers were intended be very short.]
What is legal technology’s greatest shortcoming so far?
Ten years ago, technology was a limitation: hardware was expensive and software was underpowered. A look at corporate America is instructive. Many economists argue that the recent productivity surge is a direct result of corporations learning, over the course of a decade, how to deploy technology systems to full effect. During the many years it took to achieve gains, massive changes in how work is performed were required.
As for the legal market, technology has room to improve but is no longer the limit. There is no “magic technology bullet” that will make lawyers more productive and effective. Today, the shortcoming is in the ability of lawyers individually and firms/departments collectively to adopt new ways of working that take full advantage of technology.
Putative shortcomings in technology can no longer be an excuse for avoiding difficult process, culture and business changes that will be required to achieve lower cost and higher value legal service.
Law.com reports in Now for Law Firms, Too: Competing for Business Online (New York Law Journal, November 10, 2003) that General Electric Commercial Finance is using the online procurement service Procuri to seek competitive bids for legal services.
The article quotes a couple of un-named partners of large law firms who complain about this approach. One says that cost and value are not equivalent and that auctions don’t value unique skills. Another suggests that the auction will drive away qualified lawyers who can get better pricing elsewhere; this same partner also suggests that the involvement of non-lawyers in the selection process is a bad idea. If I were GE, I would find such remarks insulting for they suggest that a sophisticated purchaser is unable to assess qualifications and pricing. It is also insulting to non-lawyers (let the record show that I am a lawyer) for it suggests that they cannot make intelligent purchasing decisions.
Any time a market becomes more competitive, it is disruptive for existing players. And it is no fun to have whole business systems changed. But that does not mean new ways are less effective. Perhaps the lawyers quoted in the article had visited the Procuri web site and were unhappy to see the services Procuri lists, which includes mail and delivery, waste disposal, lawn care, and security guards. Clearly the process for retaining lawyers is more involved than for these other services, but that does not mean it cannot be routinized and scrutinized systematically and qualifications weighed against price and other factors.
And speaking of other factors, from the strategic legal technology perspective, I would be very curious to learn whether GE considers the use of technology by a law firm when selecting counsel via Procuri. To some degree, the use of technology should be built into the price. But realistically, in complex matters, seeing the direct link between appropriate use of technology and pricing is hard. If I were making the purchasing decision, I would want to know not only what technology a prospective firm uses, but how the lawyers on the team serving me actually use the technology to provide effective and efficient service.
This week I was at the Legal Tech conference in Chicago to present on knowledge management. One the first day, I attended the keynote address by Christine A. Edwards, a partner at Winston & Strawn. Until recently, she was the General Counsel of Bank One Corporation and, prior to that, of Morgan Stanley. She gave a very good talk about “Accountability at the Speed of Thought,” which dealt with the role of technology in compliance, what GCs need from technology, and the role of tech decision makers.
She made what I thought was a very interesting distinction between how lawyers view decisions and how business people do. While the comment was in the context of technology decisions, it applied more generally. Ms. Edwards said that when business people face something new, for example, a new product or expansion opportunity, they ask “What are the benefits and the costs and how will this help our strategy and bottom line?” In contrast, she has observed that when lawyers are faced with something new, they inevitably ask “Who else is doing this?”
And therein lies a big problem with how law firms decide. Rather than assess decisions on their own merits as businesses do, they look left and then look right, then decide. Given how they make decisions, one has to wonder why they think there is safety in following their peers - do they simply assume peers have done the analysis better?
I have confirmation of this phenomenon from a friend who works for a tech company that sells some infrastructure-type products. He said a couple of years ago they were going after legal. I said it was a tough sell. His response was yes, but if we manage to get two of the top firms, the rest will follow. And he was right. In this instance, it was probably a good decision all around.
But firms that want to gain competitive advantage from the application of technology to their practice and serving clients need to behave like businesses, not lawyers.
Yesterday I heard Swati Agrawal of firmseek and Anne Balduzzi, a legal and technology marketing consultant, present on “Using Technology to Make the Most of Your Marketing Dollars” at a an event hosted by the Mid-Atlantic Chapter of the Legal Marketing Association (LMA).
Swati and Anne emphasized the importance of using a single database to drive the marketing function. Maintaining marketing materials such as lawyer biographies, practice area descriptions, and standard cover letters in a central database offers two key advantages. First, it allows firms quickly and easily to produce, modify, and update both print and digital media. And second (this one was music to my ears), it allows firms to create Web-based versions of proposals. This means that clients can navigate proposals for content of particular interest and firms can track hits to learn what clients find most useful.
I was surprised by a show of hands at the beginning of the session. When the speakers asked how many of the attendees had recently spoken to their technology colleagues, only a few hands went up. CIOs who manage databases and CKOs who manage knowledge repositories should take steps to be aware of the needs and resources of their firm’s marketing department. On the one hand, there is a potential challenge in having to manage yet another repository. On the other hand, there are opportunities to integrate and combine data sources to provide better quality information and knowledge at lower cost. For example, firms that want to create an expertise database (skills locater) might consider whether they could at least get a first cut at lawyer expertise by doing full-text searches of the bios.
Law firms would be better off if they rose to the challenge of supporting marketing department technology needs and worked to integrate marketing data both at a technical level and as a knowledge resource.
How much IT support should firms provide to users? Many firms answer this question via benchmarking (that is, comparing spending and staffing to comparable firms).
Lawyers are demanding “customers.” They want a lot of support and, when they want it, they want it now. By and large, that is probably a good thing since the opportunity cost (potential lost billings) of slowing down a lawyer is high. And few managing partners or COOs want to hear or deal with partner complaints about lack of support.
But firms may overinvest in support. It may be possible to achieve a high level of IT support at lower cost by applying some market principles. (I am a believer in the power of markets - see my posting The Power of Markets - Is It Applicable within a Law Firm? of 12 Aug 03.) The September 8th issue of Information Week has an article about how Dell runs its business. Imagining What’s Possible reports on how Dell runs highly efficient manufacturing. Because Dell manufactures in virtually real time, the company can change the order in which PCs are made to accommodate important or rush orders. Until recently, sales people could expedite certain orders through informal relationships. Now, to expedite, “they can assign a priority ranking from one to seven, but they have only a limited number of those rankings.” Rationalizing how sales people influence the manufacturing queue helps Dell be more efficient.
Law firms could do something similar. Lawyers and staff could get a “bank” of points to use for priority IT service. The bank might, of course, depend in part on how much business a lawyer generates. Such an approach might serve to reduce the number of instances of unnecessary “fire drills.” It might also more closely align support with real business needs.
In most firms, client work always takes priority. That may not be the best rule. Suppose there are two IT emergencies - one for a small client in billing arrears and one for a partner about to do a non-billable marketing activity. The marketing may well be the higher value activity and be more deserving of support. Right now, IT departments have to allocate sometimes scarce support resources based on incomplete information and on who is most likely to raise a stink.
Rationalizing the allocation of support when resources are tight via a point-like market mechanism could lower costs while also ultimately improving performance. A lawyer trying to get support for a low profit client would probably not “waste” points while a lawyer preparing for a meeting with a hot prospect would likely happily spend points for expedited service.
Of course, the mechanics of such a system are probably rather complicated and the effort to adopt a new approach large. But it is at least interesting to think about ways to more carefully and systematically match resources to true needs.
This past weekend, I attended the annual meeting of the College of Law Practice Management. The attendees are a mix of lawyers and law firm managers (including chief administrators, marketers, HR, and technology). We spent an entire morning working in small teams. Each team had the task of envisioning two types of law firms in the future (e.g., a firm handling commoditized work or a 25-lawyer firm focusing exclusively on IP work) and what the critical resources would be. Teams had about one hour to think through the scenario for each firm type. While I did not keep precise count of the 16 “reports” we generated concerning what the firm would be like and the resources it would need, many of the scenarios required very heavy use of technology. In quite a few, technology was the lynch pin that would allow the firm to exist and thrive (given the constraints imposed by the facts of the exercise). It was interesting to see that a diverse group of lawyers and managers, many with several decades of experience, focusing on the importance of technology. Perhaps this bodes well for the future of legal technology.
I recently had a personal experience that perhaps illustrates the power and limits of technology. I was grocery shopping when I noticed an employee using a hand-held wand to scan the shelf bar code for out-of-stock items. It surprised me that a person had to walk the aisles, look for empty facings (the supermarket term for each column of goods), determine if the empty facing meant the item was out of stock, and if yes, then scan the bar code. I asked the employee why this was necessary given that the store knows or should know how many units of each item it receives and the check out system keeps track of every item sold. I would have thought that by subtraction, a supermarket could determine when an item goes out of stock.
Of course, asking the person doing this job how the whole system works is not the most promising way to obtain a conclusive answer, meaning he had no idea. I suspect that several factors prevent this approach from working: the number of items delivered to a store’s loading dock may not be the number ordered, check out clerks do not always properly scan items (so that my mix of yogurt flavors may be scanned as all one flavor), and shop lifting is obviously not tracked by scanners.
Bar codes and scanners have had a tremendous impact. Arguably, the data supermarkets have collected has shifted the balance of power from manufacturers to retailers. And clearly, scanning has sped the check-out process (and is now enabling self-service in some stores). In spite of tremendous investment and tremendous benefits, bar codes and scanners simply do not solve all the problems a supermarket faces.
The lesson here for the legal market is that one should have reasonable expectations about what technology can do. I don’t know if the supermarket industry even expected bar codes and scanners to track out of stock items automatically. But my expectation about the power of that system was clearly overly ambitious. Lawyers and law firm managers need to be realistic about what problems technology will solve and what problems will remain, even after significant investment.
More and more, technology allows workers at all skill levels to work at home. Should law firms think about this option in their long term planning? This posting is prompted by an article the The New York Times ran, More Companies are Routing Calls via Internet (01 Sep 03). It reports that “[i]nternet telephony… is no longer restricted to adventurous techies.”
Technology Background.The Times reports that the technology “has matured to the point that voice quality is virtually indistinguishable from that of a conventional phone call.” Some background: Internet telephony, also known as Voice Over Internet Protocol or VOIP, uses the same cables and protocols that transmit computer data to transmit voice. Whereas traditional phone calls reserve a dedicated circuit for each call, VOIP sends each call as a series of data packets over a shared line. Some law firms have already switched or are switching to VOIP.
VOIP Allows Working at Home. But this post is not about the technology. I was struck by another fact in the article. JetBlue uses VOIP “to create a ‘virtual call center’ for is 700-plus reservation agents, who work from home… The commute to work is as quick as a mouse click.”
Do Lawyers Need to be in the Same Location? In a prior posting, my answer to this was “Clearly, being able to meet in person has tremendous value. And clearly, downtown meeting space is required to serve client needs. But modern technology allows working effectively from remote locations. And as more and more large firms attempt to become truly national, it means lawyers from multiple offices should be working together. If lawyers across cities, states, and countries can work together effectively, then surely lawyers located in the same metro area can.” (See More on Offices: Downtown v. Suburban, 01 Jun 03.)
Most law firms already have remote computer access. Increasingly, firms will have VOIP, which will allow routing phone calls anywhere there is high-speed web access. Firms could save significant occupancy costs if lawyers worked more hours at home and therefore required smaller offices. Furthermore, if lawyers are spared daily commutes at least some days, they could either bill more hours or have a better life.
For national and international firms, breaking some of the local bonding that occurs purely as a result of geography - while risky - might actually result in more effective team work across the firm. Moreover, if firms are not constrained by thinking about offices, they might form teams that are based exclusively on meeting client needs rather than on the coincidence that several lawyers happen to be in the same office.
In the past, I would have said that reservationists need supervision and therefore must be in a central location. Clearly, JetBlue is disproving this. I assume that lawyers do not need supervision. The question then is what percent of the time do they really need to have in-person meetings or access to central resources. The instinct is to say they need a lot of both. That may be true, but at minimum, I would treat the question empirically. If it turns out that in-person meetings and access to central resources are needed a relatively small percent of the time, a dispersed work force may be feasible.
As technology allows new flexibility and eliminates what we previously thought of as immutable constraints, law firms will have to confront what the true constraints of their business requirements are. It may be that central offices are indispensable. But just assuming that’s so is no longer justifiable.
Law firm technology managers regularly face the question of when to upgrade software or hardware. The answer is neither easy nor obvious. Beware the Underlying Costs of Using Dated Technology from the New York Law Journal on law.com provides a good analysis of some of the hidden costs of not upgrading.
The important point - and one on which corporate IT managers have increasingly focused - is the “total cost of ownership” or TCO. TCO reflects all of the costs of acquiring and operating systems. Hardware makers are fond of pointing out that the hardware acquisition cost is a relatively small percent of TCO (I recall seeing numbers of about 15%) and therefore purchasers should be willing to spend a bit more on hardware if it is less costly to operate. While self-serving, the general point is true.
For example, some law firms that have postponed upgrades of PCs because of budget considerations find that “playing catch up” a year or two later ends up costing more than if they had stayed on a regular upgrade cycle. This may make sense in partnership accounting and in managing profits per partner year over year, but the underlying economics are not favorable.
I am not suggesting that law firms or departments rush out and always buy the latest upgrade. Rather, the goal should be consciously and carefully to analyze TCO and make rational economic decisions. If the economics must be over-ruled because of political or budget considerations, that should factor explicitly into the decision. And if that does happen, firm management should not blame IT staff for higher costs in the future.
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.
How should lawyers and law firm/department managers charged with making decisions about legal technology go about gathering information? This post deals with collecting information about and analyzing legal technology options, not using legal technology intelligently.
I am prompted to ponder this subject because in a recent issue of a legal publication, I read a software directory. The directory was presented as editorial content, not paid listings. I was struck how the directory appeared to omit some prominent vendors. Whether this was merely an oversight or driven by advertising or other considerations, I don’t know. Moreover, although presented as editorial content, it appears that the information about each product or service was provided by the vendor.
The point is that law firms and departments looking for technology should not rely exclusively on one or two published directories. Many directories I have seen are either based on “pay for placement” or on some unspecified editorial judgment. Of course, such directories still have value, but they must be supplemented with other sources.
I would say the same about most surveys of legal technology. Perhaps I apply too high a standard to surveys. Prior to going to law school, I was an econometrician and regularly used data collected by rigorous standards. After law school, I was a management consultant and did a lot of work in the consumer packaged goods industry, where many highly refined market research reports are available.
Given my experience with surveys in other fields, I find that many legal tech surveys have three problems. First, it is hard to write questions that are unambiguous. The ambiguity arises from the variation in labeling and categorizing of both software and staff. Second, it is hard to collect statistically valid samples. And third, organizations may own software products and list them in surveys but may not really use them or use them in only a very limited manner. As with directories, surveys have value, but decision-makers should rely on multiple sources.
So what is a decision-maker to do? Fortunately, the legal profession has a tradition of sharing information about legal technology. Whether at conferences or through informal networking, most law firms and law departments will share quite a bit of valuable information about their experience with products and services and about how they are organized and staffed. For anyone contemplating a significant legal tech decision, the moral is to consult directories and surveys but not stop there - go beyond them and network with professional peers to learn the true story.
Yesterday I wrote about the difference between making good decisions and achieving good outcomes. I am reminded of another example of this distinction by a Jim Rapoza eWeek column (July 14th issue), Choose Excellence. He discusses the interplay between innovation and vendor size, complaining that many IT buyers do not consider quality or innovation sufficiently in their purchase decision. Instead, they tend to select products from established vendors, “even if the product is mediocre.” He sights the old saw that “nobody ever got fired for buying IBM.” Yet often smaller, less well-known, and perhaps smaller vendors may offer superior products at lower prices. He does not say it, but these buyers are worried about bad outcomes flowing from their good decisions.
Law firm and department technology managers can face the same issue. When they consider vendor options, they should remember that Ã¢â‚¬Å“big and establishedÃ¢â‚¬Â is no guarantee of continuity. For example, one of the first document management products designed for law firms, SoftSolutions, started as an independent company. It was purchased by WordPerfect, which in turn was purchased by Novell. Novell then “upgraded” SoftSolutions in a way that made the product no longer useable by law firms. More recently, Hummingbird, an established technology company, discontinued the development of its Corporate Law Pack product, stranding some 150 or more corporate law departments. (See Ado Over LawPack).
And companies that start small do not always stay that way. When iManage first came to market, some firms were reluctant to consider the product because it came from a software start-up. Yet iManage now is an established player in document management (and is publicly traded).
For me, the lesson is to focus first on the software features and the services the vendor provides. If a particular vendor appears to have the most attractive offering but may be small, most law firms and departments are well-equipped to analyze the business stability and protect their interests (for example, through source code escrow agreements). In short, make a good decision and hope for a good outcome.
My approach to legal technology has always been informed, in this order, by what lawyers need to practice, by business considerations, and lastly by the technology itself. Recently, I was thinking of some maxims and catch phrases when I realized that many apply to strategic legal technology. So, I am starting an occasional post called “Maxim of the Day.”
When I first studied litigation risk analysis (for more info, see Marc Victor’s Web site) I learned “to distinguish good decisions from good outcomes.” This seems surprisingly simple. Yet many seem not to understand the difference.
You have to evaluate the quality of a decision based on the information available at the time you made it. Not all good decisions result in good outcomes. If a good decision leads to a bad outcome, that does not mean the decision was bad. Similarly, achieving a good outcome does not necessarily mean you made a good decision. The decision may have been bad and you merely got lucky.
One legal technology example concerns whether and when to invest in building a database to manage and analyze documents. Many litigators postpone too long the decision to build a document database, thinking the case may settle or there may not be that many relevant documents. Both may be true but in my experience, not building the database is usually a bad decision. That’s because usually there are a lot of documents and usually cases don’t settle before a significant amount of discovery. On average therefore, I have found that it pays to build databases relatively early in a case.
Of course, there will be times that a litigator decides not to and the case settles soon thereafter. While it may seem that money has been saved, that does not make the decision good, it just means luck saved time and money. Against these “lucky” outcomes one must balance the cases where lawyers or paralegals wastefully spend hundred or thousands of hours manually reviewing documents - with few controls over the process - because there is no database to cull the documents and record lawyer comments and designations of privilege, responsiveness, or issues.
I have a personal example as well. In the early 1990s when I was at Wilmer, Cutler & Pickering, I ordered 10 copies of Lotus Improv, taking advantage of a new product introductory offer. Improv was a “revolutionary” spreadsheet that allowed entering formulas in an easier way and allowed easy data slicing and dicing. I was convinced that if I had the copies in hand, I would find lawyers who would want to use the product. Before I could proselytize and demo its advantages, Excel started gaining market share rapidly over Lotus. And then Microsoft put “Pivot Table” features in Excel, which replicated many of Improv’s innovative features. We soon switched the whole firm to Excel from Lotus 1-2-3 and the copies of Improv I had ordered were “wasted.” I like to think that decision was good, but just had a bad outcome. At the time I ordered them, there was no way to know what would happen with Excel.
The more general moral here is that legal technology managers and strategists as well as their bosses - executive directors, COOs, and managing partners - need to understand that not all decisions work out well. And not all good outcomes are the result of good decisions.
Legal Technology and Organizational Change (Interesting McKinsey Quarterly Article)
Many law firms and law departments are interested in applying technology to improve law practice. Sometimes, new technology is merely a matter of a bit of back-end technical work and user training. Such changes do not require organizational or behavioral changes. An example of this is switching word processors or document comparison software.
Sometimes, however, gaining the benefit of new technology requires significant change. Firms and department can run into problems when they expect to reap rewards but do not understand this. For example, some firms and departments start a knowledge management initiative expecting that they will be able to capture and re-use valuable expertise and documents without changing lawyersÃ¢â‚¬â„¢ behavior. Often, that does not work.
A McKinsey Quarterly article, The Psychology of Change Management (2003, Number 2), provides useful insights into the steps required to change organizational behaviors. Firms that deploy technology that requires behavioral change should consider the lessons presented here. The article points out that is not enough to ask for change. Rather, organizations must take four steps:
(1) persuade people that the change is desirable,
(2) align the reward and recognition systems,
(3) create compelling role models, and
(4) train people in new skills.
For anyone trying to engineer change, this article is worth reading (free registration required).
Separately, an article in Optimize magazine (July 2003) covers some similar ground. The IT Productivity Gap argues that IT pay-offs are only “realized when the IT investment is coupled with new strategies and business and organizational processes.”
In my prior post, I reported that Linklaters is building its own knowledge management software. Reading this article prompted me to think about the decision to make versus buy software, a decision most organizations face. Law firms and law departments are no different.
For many categories of software, the decision is obvious. It’s hard to imagine “making” e-mail, word processing, spreadsheet, or presentation software. But for many software categories, the decision is less obvious. For example, some law firms have created their own document management software and some law departments have created their own matter management systems even though commercial products are available for both.
As a general rule, there are seveal reasons why I believe it is better to buy than to make:
Vendors typically develop deeper expertise than any one customer can.
Vendors have incentives to keep products current, both by introducing new features and updating them so that they work with new operating systems or new versions of companion software.
Vendors are better positioned to provide support and maintenance.
Developing software is not an easy process and most law firms and law departments are not structured to facilitate the process. Keeping internal developers focused on a project in the face of competing demands (development or maintenance) can be hard. Furthermore, documenting home grown systems sometimes never happens.
Nonetheless, there are times when developing software makes sense. For example, it may be less expensive because an organization will only create a fraction of the features that the vendor choices provide. Or the needs of the customer may be unique and tailoring the vendor product not worth the effort.
It would be interesting to know what drove Linklaters to make rather than buy.
Today I had lunch with a friend who is in-house counsel at a large company; he was formerly an associate at a large law firm. He is tech savvy and we spoke about how lawyers use technology. My friend made an interesting observation, which I attempt to summarize here.
People who are interested in how computers work tend to be more interested in “how things work” than they are in “how relationships work.” While the two are not mutually exclusive, his observation is that personalities and skills tend toward one of these two opposite poles. And he notes that the most successful lawyers - both in law firms and departments - tend to be those who are most interested in relationships.
Perhaps this helps explain why the legal market has been slow, in many respects, to adopt technology to become more effective and efficient. To get to a leadership position requires skills that tend to diminish the importance of understanding “how things work.” Comments anyone?
On Friday I posted a note regarding Orrick’s move to a central back office in W. Va. and the possibility of offshore outsourcing of back office functions. This caused me consider a related question: does it make sense for large law firms to rent a single, high cost office in each city?
I am shaped by my experiences in NYC, Washington (DC), and Boston, where downtown rents are very high and where many lawyers live in suburbs from which the commute time to downtown is quite long. Would it make sense in these and other cities for firms to rent less downtown space and, instead, open a couple of suburban locations? I have talked to partners at some firms about this and the idea has been poorly received. But it might be worth considering.
Here are some factors to consider in thinking about this:
1. The rental cost per square foot in suburbs is significantly less than downtown.
2. Many lawyers have reasonably long and only partially productive commutes. Shorter commutes might result in more billable hours and/or more personal time.
3. Running a separate office entails extra overhead. Is that extra overhead more or less than the rental cost savings?
4. How important is it that all lawyers in a single city actually work in the same building?
The first three items go to quantifiable economics. It would be interesting to learn if any firm has done the analysis.
The fourth item is perhaps the most difficult one to address. Clearly, being able to meet in person has tremendous value. And clearly, downtown meeting space is required to serve client needs. But modern technology allows working effectively from remote locations. And as more and more large firms attempt to become truly national, it means lawyers from multiple offices should be working together. If lawyers across cities, states, and countries can work together effectively, then surely lawyers located in the same metro area can.
Lawyers in suburban offices would undoubtedly have to go downtown (or vice versa) for meetings. And this would add to overhead in the form of offices for visiting lawyers.
As technology improves - especially tools for online collaboration and video conferencing - it will be interesting to see if the economics and culture of law firms support multiple offices in a single metro area.
If anyone has thought this question through more rigorously, I would be interested to hear about the analysis.