Strategic Legal Technology

I am taking a holiday weekend liberty to diverge a bit from my usual topics. As a non-practicing lawyer, reading Is the Versatility of a Law Degree Just a Myth? (The National Law Journal, 1 Dec 2008), I answer yes." 

The money quote:

“Law schools and placement professionals frequently tout the versatility of a law degree as a path to alternative careers. But even in good economic times, the advantage of a juris doctor degree in landing a job in another field may well be overblown.”

I think a JD is not a useful credential for non-law jobs. When I graduated NYU Law in 1986, I worked as a strategy consultant for Bain & Co. My pre-law school job experience got me the job, the JD got me the “consultant” title, the same as MBAs (in contrast to “associate consultant” for BAs and, in my class, one MD).

I started law school uncertain if I would practice. I heard many lawyers and law placement professionals say how flexible a JD and law practice experience is. I found that with my prior business experience, a few employers (e.g., investment banks) would consider my JD as the equivalent of an MBA. I’ve seen little evidence that the market has changed since then.

Back then, I found many former practicing lawyers with fantastic, interesting jobs. I asked how they ended up not practicing. All had practiced - many for years - and for most, moving to a different career was largely a matter of chance.

That many lawyers end up with interesting non-law jobs does not mean a JD is a path to those jobs or a “flexible” degree. It only means that some lawyers, after they practice some years, can change careers.

“You can’t save your way to growth” is a common refrain. In the current economic turmoil, however, growing revenue is hard so the focus must be on cost control. A recent report, article, and conference session drive home this point. 

Hildebrandt is a leading legal market consultancy. The Hildebrandt Special Client Advisory: Fall 2008 notes that

“the current downturn has not yet been significantly offset by increases in other traditionally “counter-cyclical” practices…. the current year will represent a significant downturn for the legal industry… we are unlikely to see any significant turnaround until late 2009, at the earliest… firms [will be] forced to lay off legal and non-legal staff, slow down the hiring of new attorneys, restructure operations, and weed out unprofitable practices.”

The Advisory suggests steps to deal with the downturn, including focus on collections, negotiate credit agreements, examine expenses closely, consider layoffs, deal with performance issues, and adjust practice areas. Longer term, Hildebrandt says we may see more fundamental changes such as new lawyer compensation systems, alternative billing, and more legal process outsourcing.

Driving home many of these points is the new article Partners at UK’s ten biggest law firms take home £1.1m in profits (TimesOnline, 19 Nov 2008). It reports on profits at top UK law firms, citing an annual law firm survey published by PriceWaterhouse Coopers:

“[T]he gap between the top ten and the rest of the market is set to widen as lawyers begin to feel the impact of the financial crisis… the biggest firms had tightened their hold on the market through an increased focus on efficient management. ‘Larger firms have been looking long and hard at their cost base and how much can be outsourced,’ Mr Rose said [head of the Professional Partnerships Advisory Group at PWC ]…. managing partners [are] switching focus from revenue growth to reducing staff costs.”

The topic of growing revenue versus controlling cost was central in an October panel discussion at the Law Firm Leaders Forum. In a session called “Running Your Firm as a Business - A Closer Look at the Middle Office", my co-panelists Ed Poll of LawBiz and Ron Yano, CFO, Loeb & Loeb and I debated that question. Mr. Yano and I shared the view that cost control could increase profits by 1.5 to 2.0 profit points, which is significant in tough times.

Ed focused more on growing revenue but in his follow-up blog post, Law firm overhead - Can we cut?, he writes ”focusing your energy on producing revenue will produce greater benefits than focusing your energy on reducing overhead”. He points out, however, that that increases in the right costs can increase revenues, citing the example of Mallesons creating a system to answer more incoming client phone calls. In my view, another example is smart investment in business research for selling more matters.

[This is based on my post at Integreon.com blog.]

Could BigLaw follow Wall Street in unraveling? 

Few saw that Wall Street Masters of the Universe were really Naked Emperors? Michael Lewis, of Liar’s Poker, writes in The End (Portfolio.com, 11 Nov 2008) about a few who did see the emperor had no clothing.

Could large law firms meet the same fate? Nonsense! That’s what most said about the now defunct or bailed out financial titans.

Here’s a scenario: Fortune 500 general counsels decide suddenly that AmLaw 100 brand names are not worth the premium so shift huge chunks of work to “lesser” firms. Impossible? Before dismissing this, read Rees Morrison’s Why Law Departments Should Beware Super-Sized Firms or Ben Heineman’s Big Isn’t Always Better (Corporate Counsel, Nov 2008) .

If you are friends with any associates laid off from large law firms, point them to Legal OnRamp for networking and resources. 

Legal OnRamp (LOR) is a social networking site exclusively for legal professionals. LOR is primarily for inhouse lawyers but is currently inviting laid-off associates to join. Once online, they will find a career center with a resources, job listings, and networking. Applicants should indicate the firm from which they were laid off.

Getting the word out about this offer is a good occasion to comment on social networks. I’ve been on Linkedin from very early (among the first 50k to join) and joined Facebook and Twitter this year. So far, I see a lot more value in LOR - which is vertically focused - than these other networks. That said, I continue to spend some time on all the networks to see how they evolve.

I feel a post about Twitter coming on in the near future. By the way, you can see my Tweets, which are mainly professional rather than personal, at http://twitter.com/ronfriedmann. Coming up with a 140-character personal profile is both fun and a challenge.

Will Uppington of Clearwell has a good post called Concept Search Versus Keyword Search in Electronic Discovery . 

It offers a helpful explanation and comparison of concept search versus categorization. He concludes that for concept searching “use to become widespread, it will need to become more transparent. But that’s a topic for another day.” I am eager to see him develop this theme.

Concept search software that I evaluated in the early 1990s relied on approaches such as statistical co-occurrence of words (e.g., the SIRE algorithm), vector analysis, state space analysis, tuples, n-grams, and thesaurus-based. I have more math training than most but generally did not understand the computational linguistics behind these.

Given the sophistication and the complexity of concept search software, I am not sure how transparent it can be. I think we need to rely on empirically testing and comparing various tools and approaches.

One measure of market size is the advertising for it. In a possible first, the Wall Street Journal today has a full-page ad for an e-discovery product. 

Turn to B5 to see (at least in the editions delivered to DC and NYC areas) a full-page ad by Autonomy for its eDiscovery product. Now we know EDD has really arrived!

The ad states “10 of 10 top law firms rely on Autonomy for eDiscovery” and that Autonomy is the “Fastest Growing EDD Provider”. I was surprised by both but suspect that as a FTSE 100 company, Autonomy carefully vets its claims. On the lighter side, I wonder how Crowell & Moring feels about the rubber ducks pictured, which feature prominently in some C&M ads.

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?

A survey of Law Department Operations (LDO) Directors sheds light on how general counsels are - or are not - controlling costs. 

“Law Department Operations Director” is a recent position. The First Law Department Operations Survey is published by Inside Counsel magazine and the Blickstein Group in cooperation with Huron Consulting Group. It appears in the November Inside Counsel print edition.

Fifty Fortune 500 respondents answered “which of the following cost-savings initiatives do you use?” Here are the answers. I have grouped them into categories of my making but the text following each dash is quoted:

Pricing and Purchasing
- Flat fee arrangements (77%)
- Preferred provider network (69%)
- Rate freezes (69%)
- Limits on disbursement through billing guidelines (69%)
- Use less expensive attorneys [i.e., regional firms] (65%)
- Aggressive rate negotiation (62%)
- Limit when rates can increase (62%)
- Volume discounts (62%)
- Other alternative fee arrangements (50%)
- Direct relationships with vendors used by firms on your behalf (46%)
- Cap rate increases (39%)
- Discount rate with bonus for success (23%)

Payment
- Electronic billing (77%)
- Quick pay discounts (27%)

Process
- Early case assessment (54%)
- Staffing controls (50%)

If you buy my categories, you will agree that law departments focus on pricing, purchasing and payment. (I assume that the question meant to focus only on outside counsel cost savings; it would be interesting to have the answers for within the law department).

Any serious cost control today by inhouse counsel certainly improves on past inaction. I think most GC are failing, however, to focus enough effort on process, on how lawyers practice law. Only ECA and staffing controls go to the “how”. Where, for example, are efforts to require matter budgets, application of best practices, automation, risk analysis with decision trees, document assembly, and proper use of KM systems.

Judging from the large jump in revenue and profit at large law firms (through 2007), it’s not obvious that the focus on pricing, purchasing and payment has yielded real savings. Is it possible GC are pushing on proverbial balloons, meaning most of their efforts move costs around rather than reduce them? I hope I’m wrong and some outraged GC or LDO Director will publicly provide statistically sound data to show real costs savings.

Real costs savings mean changing the process, focusing on how lawyers practice. The profession needs to overcome its “I am an artiste” attitude and develop better ways of working. The only other alternative I see is for GC to figure out how much matters should cost and then offer that fixed price and no more.

[For those with access to Legal Onramp, see the conceptually related Top Ten Ways For Clients to Save discussion.]

Update (21 Nov 2008): Brad Blickstein, of the Blickstein Group, contacted me about this post. He points out that the question above was multiple choice only, so the conclusion I draw from the question is therefore suspect. Specifically, there was no place for respondents to include the process techniques I mention. Brad notes that “This question was designed to provide insight on what law department operations managers have implemented to lower outside counsel bills, not what corporate law departments (or GC’s) are doing to lower overall costs.” My reasoning is thus faulty but based on anecdote, I still think the conclusion is correct. The survey is now available for free download at http://www.blicksteingroup.com/

You can now chose from at least two specialized legal market search engines. 

Quest from law.com has been around a while. I’ve been disappointed in my occasional use of it so, inspired by Bob Ambrogi’s article Tour the Legal Web’s New Sites, decided to look quickly at the more recently released Lexis Web.

One of my favorite topics is “e-discovery concept search”. Using that string in Lexis Web, one of my blog posts is the first hit (ego surfing was not my goal!). Other hits on the first page are from a range of sources. In contrast, the Quest search yields hits only from law.com publications on the first page, even though I selected the “Legal Web” rather than “Law.com Network” option. I also find the Lexis Web interface much cleaner. Using “knowledge management” as the string yielded similar results.

A substantive legal topic in the news this year was “medical device preemption”. Using that string, I was surprised neither search engine yielded an obvious first page hit about the February Supreme Court decision on the topic, Riegel.

My quick tests are not systematic much less scientific. But my conclusion after 30 minutes is that anyone who wants to rely on either needs to invest some time to figure out exactly how each works. I supposed this post has now become self-referential because it is about concept searching.

File names and document titles turn out to be a big deal. Without proper file names, it’s hard to find the right document.  

Where document management systems prevail, lawyers and staff often fail to provide meaningful titles. So much so that you have to wonder how authors will identify their own documents in the future.

Those of us not on a DMS have to name files. I am constantly surprised - and irritated - that so few people name files descriptively. I regularly receive documents from colleagues, vendors, job seekers and others where the file name bears little relation to contents or where someone has saved over a document in spite of very substantial edits. Perhaps others don’t mind living in chaos but when sending documents, it makes sense to use file names that clearly identify the content, author, and date. That certainly helps the recipient - it might even help you.

In this Roundup: KM and Linkedin, working effectively with law firm professionals, is blogging dead, and links to reports on Ark KM conference. 

Knowledge Management and Linkedin
Toby Brown, who heads Fulbright’s knowledge management and blogs at 3 Geeks and a Law Blog, reports on an interesting finding about a Linkedin feature for KM. A couple of problems though: (1) feature was available, then gone and (2) automatic license of content to Linkedin. See LinkedIn Does KM … Not? and LinkedIn Does KM?. Perhaps connected to LinkedIn Has Added Applications, per Doug Cornelius?

Non-Legal Staff in Law Firms
I liked the 7 Oct 2008 New York Law Journal article Lessons for Working With Support Staff. It’s a primer for new lawyers on how best to work with the many professionals who make law firms tick. My only complaint is use of the word non-lawyer, which I think encourages caste-system thinking and disrupts good team work.

Is Blogging Dead?
LawyerKM asks in Is Blogging Dead?. He’s using Tweeter but still writing a blog. Same here. I’ve just started tweeting at http://twitter.com/ronfriedmann.

KM and the Modern Law Firm (Ark): Blog Reports
Now that I’m more focused on legal outsourcing, I have less time to attend KM conferences. So I was glad to read three blog posts by David Hobbie at Caselines on conference sessions from the Ark KM conference this past week (w/o 27 Oct 2008).
See also Comments from Ark Group Conference: Knowledge Management in the Modern Law Firm by Ted Tjaden as Slaw.