8/12/14

Let CI Be Your Guide

Someone asked me recently why I think more and more law firms are creating CI roles or increasing their CI capacity, encouraging their BD and Library staff to work more closely so forth. I didn't really have a good answer on the spot, "cause it makes good business sense, or because market competition and consolidation is increasing" seemed all to obvious and do not address this specific moment in the evolution of the modern law firm.  Last month, I participated in a webinar presented by Ann Lee Gibson, long time law firm CI consultant as a part of the IntelCollab webinar series and unknowingly, Ann Lee answered the question in part.  Her presentation was titled How Competitive Intelligence Helps Professional Services Firms Succeed, and you can view the entire presentation here.  The focus wasn't specifically on law firms, but by not focusing, certain things became clear.  To begin the various US based professional services firms are compared  by revenue, number of employees and number of professionals.  According to the data, law firms had the highest revenue in 2013, but also the greatest number of employees (costs) but NOT the highest growth rate, nor does the profession represent the largest number of businesses in the professional services.  Furthermore, when compared to Accounting firms, the 2013 data  points out that 75% of revenue in law firms comes from 53 firms, whereas in the Accounting sector that same percentage of revenue is drawn from four firms.  So putting on the CI analyst hat here, what do the numbers tell you? Not surprisingly, especially if you follow any of Toby's posts, law firms are running inefficient organizations, with leverage issues as a result of the many many owners. I am not the economist so won't get into the numbers except to say that law firms are increasing CI as way to minimize the impact of the figures.  But even forgetting the economics for a second, you can see from the literature, the blog posts and the new titles that are popping up all across law firms that something is happening.   

Twenty, even 15 years ago firms only had to worry about appeasing clients, doing good work and getting more work from the same or other clients. Few firms were concerned in any systemic way about their competitors and even fewer were thinking about clients in terms of their needs and wants. Today, that landscape has entirely changed.  Clients are driving change at firms by demanding attention be it through: AFAs, LMP, LPO, and/or e-billing. Add to that the growing impact of technology on both the business and practice of law, industry consolidation nationally and internationally, growing in house legal teams, changes to the ownership rules for law firms and firms are forced to be more competitive.  How a firm chooses to be more competitive can (and does) come in varied forms.  Some are shrinking administrative costs and reducing overhead by creating pools of assistants rather than the traditional 1:1 of firms, shrinking headcount or budget for things like KM, Marketing and Library services. Others are taking a different approach choosing to focus on understanding their clients, their markets, their competitors and their own business savvy better.  That's where CI enters the mix and helps to set the course.  CI is a strategic endeavour in understanding the market condition, the forces of pressure and their impact while also being tactical in informing RFP responses, filling the pipeline and providing colour in addition to background information.  CI, when done well can be the centre point for collaboration and competitive advantage within in a firm. 
There is no denying that the legal industry is changing. The speed of the change depends on where you sit, what you see, and where you want to go, but no one can deny that as the legal industry ship is steering in a different direction, and firms are realizing the power of CI as the compass to help navigate the waters. 

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7/29/14

The CIO Brain And Music… Not As Strange As It Sounds

For those of you that attend the ILTA conferences, you may be aware of the (in)famous band called Legal Bytes. Legal Bytes is the world's only band made up entirely of current and former Chief Information Officers from law firms. At this year's ILTA conference, Legal Bytes will actually be releasing a 12-song CD of original material called "Bright Lights… Big Data." The August 17th release at ILTA, presented by Recommind, will talk about the joys and pains (mostly pains) of managing technology in the BigLaw world. Our very own 3 Geeks' contributor, Scott Preston, is the drummer of Legal Bytes (way to go Scott!!)

Now, it may sound funny that there were enough musically talented CIOs to actually come up with a band, but it is really not as strange as it may seem. In fact, I would say that my (anecdotal) experience with techies in the law firm world has been skewed heavily toward those techies having musical and fine art skills. Last night, I watched a Ted Ed video from Anita Collins that put the CIO and Music puzzle together for me. Turns out that playing a musical instrument is like a "full-body brain workout." It also helps build connections between the right (creative) and left (mathematical) halves of the brain. Exactly what the creative/mathematical CIO needs to be successful. Watching the video below might help you understand how your own CIO's brain works, and why he or she acts the way they do.



Also take a look at Legal Bytes' first song off their new album. Make sure to pick up a copy of the new album. The first release, iPad Girl, is already on YouTube.


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7/21/14

Whither Change?

Image [cc] Moyan Brenn
Three posts recently caught my eye. One was on the imminent demise of BigLaw. The other was on how small firms are about to have their day. In the third one Thomas Sager, the GC for Dupont takes GCs to task for not pushing hard for change from outside counsel. In his words, "Until that happens, I don't know how you are going to beat this."

Right ... on all accounts?

The impending doom and demise of BigLaw is getting to be a very old story. Old enough, we should all be asking; So when is this actually going to happen?

The rise of small law post brought back memories. In my bar association days I used to bring up this topic. Although I didn't predict any rise. Instead I would suggest to small firm  lawyers they have an advantage over large firms when it comes to adopting change. They don't have to form a 20 member task force to study an issue for 18 months, then make a recommendation that is too late and going to be ignored. However, the reality of small firms is that they are also owned by lawyers. And hence, they have no interest in change. They "just want to practice law."

The article on Sager actually hit a note with me. I fully agree that clients are not really pushing firms to change. They are pushing instead for discounts. Discounts aren't really a change driver.What sort of change do discounts motivate with outside counsel? I actually asked this question to an audience of in-house counsel in a presentation recently. After thinking about it, most people there shrugged their shoulders and said "not much." One finally raised her hand and said "It motivates firms to raise their rates." She may be right. But the bottom line is discounts do not drive changes in the way legal services are delivered.

So adding these three thoughts together, lead to one of my infamous epiphanies. My mind drifted to patent litigation, as it often does. What will drive change in this type of service? Other than some incremental, marginal changes, to really change this practice the courts would have to change the way patent cases are litigated. Chance of this happening: Approaching Zero. What about deal work? Somehow we would have to restructure due diligence, negotiation and documentation for all deals. Right.

This all brings Jeff Carr's comment to my recent post to mind about "complexifying" legal services. Most legal services are built on known models - which are complex. A number of years back an attempt was made to simplify litigation using arbitration. This just created a new subset of complexity. Even at the low end of the litigation market - try getting a divorce. Unless it's uncontested, you will enjoy the complexified experience of the US court system.

So what's my point? BigLaw may suffer on the edges (ala Patton Boggs), but clients still need their services. Small Law can't or won't step into the breach (except in certain circumstances). And LPO's will continue to nibble at the edges, but are not apparently taking away large portions of legal work from large firms. So the Big Disruption seems unlikely any time soon.

I think Sager is right. But I am also bearish on the idea of clients embracing change at that level. That side of the market is just now fully embracing e-billing. This might give them better data, but it doesn't really change their operations. Maybe if we see in-house legal teams dramatically change in structure that will be the sign that Armageddon is upon us. But I will point out (again) these teams are made up of lawyers. I suppose they have more immediate pressures to save money, but I'm not seeing the kind of direct pressure Sager notes bearing down on them to actually change.

Of course I could be wrong. Or maybe I am just impatient.

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7/17/14

Texas Scold 'Em

They say that everything is bigger in Texas.  Apparently that even includes self-deluding opinions. Yesterday, a friend pointed me toward an article in Texas Law Book entitled Get Wall Street Out of the Practice of Law. (Subscription Required) In this opinion piece, the author, a former Big Law partner and current Legal Communications Advisor, offers her own opinion on the Texas Bar Opinion No. 642.  Opinion 642 is the one that says that "Texas Law Firms" (Is that any firm with an office in Texas? Firms with offices only in Texas? Or, firms with headquarters in Texas?) cannot have non-attorney staff with the title of Officer or Principal. So, in other words, no CMO, CTO, CIO, CDO, COO, or CXO unless, they also happen to have a JD. WTF?

If you are a regular reader of this blog, you may recall my own opinion of Opinion 642.  As is my habit, I responded to the short-sighted and misguided ramblings of the Texas Bar with ridicule - in verse no less - which frankly took way more time than I should have ever devoted to such nonsense. And yet, here I am again writing about it. But I could not leave this one alone.

I'm just going to pull a few of my favorite quotes.
"...non-lawyers actually do control Big Law and the Big Titles are the proof."
Yes, we're starting off slow, but I've never even heard of a BigLaw firm where the C-level officers have anything close to the power, standing, or pay of their corporate counterparts. Still, hang in there with me, it gets worse. I promise.
"...ever since the non-legal managers gained power starting in the mid-to late-1990s, the hourly rates for lawyers have skyrocketed to the point that even the biggest corporate clients feel the pain."
Setting aside the issue of how much power "non-legal" managers actually have in law firms; correlation does not equal causation. That's science and statistics 101. Maybe they should teach that in law school along side the business classes that don't exist. Also, I hate to be petty, but doesn't the term "non-legal" imply illegal?  My guess: an editor complained about using the non-word "non-lawyer" 8 times in a thousand word post so they changed 3 of them to the non-synonym "non-legal". It was probably the same editor who used the term "Wall Street" in a title for an article that doesn't mention Wall Street in any way and that has nothing at all to do with investment banking, stock markets, or a street in lower Manhattan. But that is pure speculation on my part, I could be non-right.
"...the hourly rates have to pay for the Big Titles of the ever-increasing non-lawyer management ranks. As a result, every lawyer needs to bill more hours at a higher rate each year for the firm to look profitable in the year-over-year metrics that the non-legal managers live by. They have trained the lawyers to live by them too."
Here's where we start to pick up steam. Those poor lawyers SLAVING away to pay for the gigantic titles of all of the non-lawyers they are forced to hire. How much do titles cost anyway? Truth is those "big titles" are often given in lieu of big salaries or bonuses.
"...I know most [Lawyers] are decent, hardworking, ethical people. But I also know that too many of them have become slaves to a system where managers focused on accounting and profits-per-partner metrics control the livelihood of the lawyers whom they are supposed to support. "
Admit it! You thought I was being overly dramatic using the term "slaving" above, didn't you? No. She actually says it.  Lawyers are "slaves to a system where [presumably non-attorney] managers [who are] focused on [those crazy nonsensical things like] accounting and profits-per-partner metrics control the [much much larger] livelihood of the lawyers whom they are supposed to support."

So, is she saying that focusing on accounting and increasing profits-per-partner are not supportive of the poor little attorneys who are just trying to make a living?

I can almost - almost - believe that the Texas Bar is legitimately concerned about intelligent and well-qualified people running law firms in a way that makes their membership look bad.  That would at least explain, if not justify, their ridiculous Opinion 642. But I am truly baffled as to how anyone could honestly believe that this opinion is intended to hold the line on skyrocketing legal costs. Thankfully, I have an easy way to test that hypothesis.

If Opinion 642 stands, and firms change the titles of their "non-legal" Officers in Texas, we'll check back in a year and see just how much the average billing rates of Texas attorneys have come down.

See, science baby!  Stuff I learned outside of law school. Sometimes it really does come in handy.


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7/15/14

Jeff Carr, Project Management and Procurement

Jeff Carr in his Race Car
Jeff Carr announced his retirement from his GC role at FMC Technologies recently. For those who follow the legal change landscape, Jeff has been a consistent beacon, advocating for change for quite some time. His model at FMC is one of (if not THE) most successful client implementations of legal cost savings in the world. His recent Forbes article noted how the company has grown significantly since he took on the role, while his legal spend has decreased. Fortunately Jeff has stated that even though he is leaving FMC, he will not be leaving the fight for change. We would all do well to follow his future efforts.

His retirement, combined with other recent challenges got me thinking. A recent trend has been the involvement of the procurement department in helping legal departments control costs. The use of procurement is obvious, since their role is controlling costs and saving money for clients. Silvia Hodges has done a lot of work on this subject, and the role of procurement continues to evolve in this aspect.

However ...

If you look at what Jeff has done to drive his success, procurement is not the driving factor. Instead, if you dig into his "budget with consequences" thinking, what you will find is not procurement, but instead project management.

Jeff began developing his approach based on a few core ideas. One of them was the lack of feedback built into the purchase of legal services. For years he had noticed that when law firms performed poorly, instead of giving them constructive feedback, clients would just stop sending those firms work. This meant opportunity for new firms to come in, but eventually the new firms would make some mistakes (since everyone does eventually) and then they would be marginalized too. The result was not good for Jeff as a client. There was never much improvement, only a stream of new faces.

So Jeff's approach was designed to change this aspect. If you have ever heard one of his presentation (and I have been privileged to actually present with him), he will note that if you do one thing as in-house counsel to change things, it is to implement after action reviews of matters. This one thing will drive a lot of positive changes.

After action reviews are all about project management. These efforts drive better planning and budgeting for the next engagement, creating a project management life-cycle.

So in thinking about Jeff's approach and contrasting it to the rising trend of procurement in the legal space, a thought occurred to me. If I were a client looking to better control my legal spend, I would not be knocking on Procurement's door. Instead I would be calling up the Project Management Office and getting them involved pronto. Effective project management will drive sustained cost savings, as clearly demonstrated by Jeff. Procurement will work to understand the cost per unit of service, and then drive down that per unit cost as best it can. And we all know what "per unit cost" is in the legal space: Billable Hours.

I rest my case. And I wish Jeff the best in his future endeavors.


P.S.: I shared a preview copy of this post with Jeff to make sure I wasn't full of it. He responded with this wonderful comment:

Like most things law-related, we tend to complexify things.  Perhaps it’s because we make money from complexity – either because it take more time to navigate the complexity and ambiguity, or because we’re needed to play the role a Sherpa through the mist (or more likely both).  As I’ve gotten older, I’ve tended to become more of a Zen GC – there is beauty in de-complexification (what the non-law world might call simplification).   Project Management is one of those things – it’s really a quite simple three step process – Who, does What, When.  This is then the first step of the grander P3 process of Plan, Perform, Perfect.  The after action part you focus on occurs in the Perfect stage.  The interesting thing to me is that the Perform step is relatively unimportant – just follow the plan with zero defects or deviations.  It’s the Plan and Perfect stages that actually matter.  

But then again, as Confucius might have said:  The solution to the problem is simple.  But those with the Power to solve the problem find it quite difficult.



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