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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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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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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Innovation Tournaments: A New Incubator for Law Firm Creativity?

Image [cc] Vyperx1
We very often hear from bloggers on this site regarding the struggles associated with change and innovation.  Fear of failure, lack of inertia, protecting territories—all seem to be stumbling blocks that many firms face when initiating change.  It seems, however, some organizations have found a way to successfully encourage and nurture new ideas internally. 

I had the pleasure of speaking to Karl Florida, Managing Director of Small Law Firm Business Segments and Innovation Champion, at Thomson Reuters, about a new innovation program the company has instituted.

For many years (as many of us are well aware), the Thomson Reuters model has been to acquire business units and manage their growing portfolio.  More recently, the model has shifted, with a focus on knitting the units together to drive more organic growth between them. 

One way Thomson Reuters is accomplishing this is by establishing a cross-unit Innovation Task Force (ITF) and a Catalyst Fund to support new ideas.  Thomson is looking for great ideas from within and establishing a system that rewards creative thinking to further serve their business goals.  How it works is this:  On a monthly basis, ideas can be informally submitted across the company via a home-grown tracking system (no business plan is required, but there is a template to gather certain information).  There are a small number of administrators who collect the proposals and submit them to the ITF.  The ITF prioritizes the ideas, develops Proof of Concept (POCs) and sends the top 5 to a C-level suite of decision-makers. They, in turn, determine if any will move forward into the funding stage.   The appropriate business units and a business sponsor are chosen, and a prototype is created and tested in-house and in the market.  If successful, the product goes to market based on a timeline.  The entire process is tracked through each stage of the pipeline process. 

While the program is only a few months old, it is already gaining in popularity.  Some of the areas where ideas are being generated are Big Data analytics in relation to law, scientific, tax and financial sectors, data visualization tools, regulatory compliance and (wait for it), wearable tech! 

Karl tells me Thomson Reuters is finding the most opportunity in the space between units.  He compared this to the genius of a Reese’s Peanut Butter Cup.  You have chocolate, which is awesome on its own, and you also have peanut butter, equally wonderful.  But put them together, and well, then that is where the magic happens. 

While Thomson Reuter’s program appears mostly devoted to product development, law firms could certainly take advantage of this sort of model to solicit and promote ideas from within regarding client service and delivery, along with development of administrative efficiencies.  The model, along with variations, allows and in fact, encourages a small, but safe space (with funding!) to experiment with new ideas without the associated pressure and demands to be “the right” solution out of the gate.

FYI, if you want to learn more about innovation tournaments, I highly recommend the book, Innovation Tournaments:  Creating and Selecting Exceptional Opportunities, by Christian Terwiesch and Karl Ulrich (hat tip to CCH, for giving me the opportunity to see Karl Ulrich in action).  Because don’t we all need some more peanut butter cups?

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An Open Letter to Sales People

In the last several weeks, I have been called, emailed or otherwise pitched to by a variety of solutions providers. I have to tell you despite having a great memory, I can't remember a single company name nor what any of the companies who wanted my firm's money do.    The reason I can't recall any of those fine details is because I was too put off by the approach, lack of planning and general disrespect for my time that within two minutes of each call, I zoned out.  I have also had a series of great sales pitches in the past while, where halfway through the call I wanted to purchase the service or product regardless of the price, because the person pitching to me understood my need, met a challenge or was generally on the ball. I get that sales can be a tough a grind and I generally applaud the tenacity and bravery of sales people.  But to the sales people who fall in the first group, I offer this:
Do your research
There is no excuse today to not research targets. Ten minutes on LinkedIn, Facebook, even the good ol'Google should provide insight into me as an individual, my role with the firm and how your product or service might be work for me.  Failing that, ask me what I do in the realm of whatever you are trying to tell me and then listen to my answer.  Use my answer to probe further or offer up a synergy of some kind.  I recently had a sales person fail at this exercise when, after hearing my answer to her question, responded with (and I am loosely paraphrasing) "oh, well this product is not for you then, we have better success with firms who want to be innovative". I hope she wasn't suggesting that I am the poster child for stagnant approaches to laws firms. A quick read of my LinkedIn profile suggests otherwise, I think. I shouldn't have to say it, but don't insult your prospective clients either. 

Study the Site
As it happens, laws firms, like any businesses today, have websites.  The websites, like the firms, vary in their sophistication but at the very least the sites will tell you something about a firm. Visit that site before you pick up the phone. Don't, for example, try to sell a litigation boutique access to your corporate database or a Canadian firm exclusively US content without making the case for why I should listen beyond the initial pitch.  If a firm very obviously can't benefit from your product or service don't pick up the phone or draft the email. 

Avoid Jargon
I work in Marketing we invented catch phrases and slogans. Please use your own language when you call me to tell me about your product or service. I don't deal well with jargon or salesy chatter that describes specifically nothing. Don't tell me what "law firms" all over are doing or are interested in, as it assumes that I don't know my business and that I am relying on people like you to tell me what I need. I don't.  I do my own research, but if you were to call me and tell me how another firm in a similar geographic area or with similar practices is benefitting from your product or service, I am all ears. 

I love learning about new products and services in the market, I thrive on hearing how other firms are using products to their competitive advantage, or to increase efficiency. Don't stop contacting me -  ever.  All I ask, is that before you do call or email me, please spend a bit of time doing your homework if you want me to listen. 

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