Yesterday I heard a presentation from a well-known legal consulting group about the state of the legal market for 2011. This is part of an annual road-show they take to different cities to talk about the legal market in general and any distinctions in the local market. Although there were no big surprises in the presentation, they confirmed and exposed some nuances in the market. A point clearly made is that although the market is no longer going down, it’s not really going up much. In English this means the market has flattened out.
A follow-on point is that the only way to grow, and in many cases maintain your position in a flat market is to steal work from your competitors.
Later on a third point was made by showing a wheel of differentiators law firms possess. There were seven ways shown that a firm can differentiate itself in order to get, keep or steal business. These are pretty much what you would expect: expertise, geography, relationships, technology …. Number seven on the wheel is Price. A quick assessment of the firms in attendance at the presentation (and in the market) lead me to believe the only real existing differentiator is #7 – Price.
Spinning the wheel and connecting these three dots leads us to the following conclusion: Expect heavy price competition in the legal market for the coming year(s).
Oh yeah – they also suggested a different business structure if firms want to survive in this type of market.

As the market moves away from hourly rates to fee-based billing, law firms are facing a significant market challenge. One of the foundations of a functioning market is “free information.” Economists mean “free” in the sense that information about pricing is freely available to everyone in a market. That way the market can continually set prices at that magic point where supply meets demand.
In the hourly rate arena, this free information exists. The market has been setting billing rates by level of experience and type of practice for some time now.
However, when it comes to fee-based pricing this open market does not yet exist. There is not enough market activity to generate this type of information, especially in a “free’ way.
This is especially a challenge for the law firm / suppliers in the market. Although a firm will pitch a type of work to a number of clients at some fee-based pricing level, the knowledge gained is minimal due to the variations in the clients’ situations and needs. Clients, on the other hand, get to see apples-to-apples price comparisons for every piece of work they bid out.
Law firms are blind to this critical market information.
What to do? Like most challenges, this one presents an opportunity; a very valuable opportunity for lawyers to talk to clients about fees. In this situation, you will not be asking a client what the winning bid was, but instead getting a sense from them about what the market is telling them about pricing. Not only will this effort tell you what that client’s expectations are about pricing, but over time, this activity will inform you about what fee-based prices the market will bear.
So … it’s either talk to clients about fees and prices or remain blind to key market price information. You get to pick.

Are you starting to think that your e-newsletter is looking a little tired? Interested in adding some social media features?
Here’s a quick guide on what to consider when undertaking a redesign:
  1. Look at your current newsletter and identify what’s lacking. If you are working with a committee, ask each person to come to the brainstorming session with a current newsletter marked up with their suggestions. At this stage, all ideas are welcome and all will be considered.
  2. At the first meeting, review all suggestions then talk about big-picture goals:
  1. over-all look and feel
  2. new functionality
  3. high-level goals (broader content, broader reach)
  • At the end of the first meeting, task each member to bring back at least 1 example of a newsletter that they admire. It doesn’t necessarily need to be a legal e-newsletter. Want some inspiration? Go to the PRSA Silver Anvil Awards site or LMA Awards site.
  • At the second meeting, finalize design, content.

    • It may take a few more meetings, depending upon how detailed you want to get. But remember, when breaking up your goals, make sure that they are SMART goals: specific, measurable, achievable, realistic and time-framed.And make sure to measure the success of your redesign. Take a benchmark of your current newsletter so you can see how well your new design works and whether you may need to tweek it. Track results too, to demonstrate a real ROI. The great thing about e-mailed newsletters is that they are web-based and fluid so they can be easily updated from issue to issue.

    Good morning from Chicago! As many of you may know, there is a meeting going on up here at the McDonald’s resort (The Lodge) where 40 or so vendors, law librarians, and stakeholders are meeting to discuss some of the issues that are currently affecting the relationship of the overall industry. You probably know it better as the AALL Vendor Colloquium. The meeting should be interesting, and I assume there will be some hard questions asked both from the customers’ point of view, and probably some coming back at us from the vendors’ point of view as well. I, of course, will be coming from the large law firm point of view.

    I don’t think you’ll be seeing a lot of #AALLVC tweets today, as many of us were asked to wait and sit through the entire discussion before we start pushing information out. I looked at this the same way that I looked at when I got to look at WestlawNext last year when I went up to Eagan, MN. Many of you may not agree with me on this, but that’s what I agreed to, and I will make sure that I keep lots of notes on what is said and will blog about it on Wednesday, along with my own personal commentary.

    Mark Estes will be pushing out recaps (live blogging) at the AALL Spectrum Blog later today and on through tomorrow. I’ll be talking with as many vendors, librarians and stakeholders as I can to get a feel for where I think we are heading as an industry of legal information professionals and legal information providers over the next few years. Like I said earlier… it should be interesting. Stay tuned for more…

    We three Geeks, with the help of Librarian Extraordinaire Jan Rivers, conducted a brain analysis on ourselves.
    How, you may wonder, do three seemingly normal, non-medically trained legalists do self-brain analysis?
    With a little help from technology, of course!
    Jan pointed us to a little online test at the Art Institute of Vancouver that runs a Right Brain versus Left Brain Creativity Test.
    You would think that we three Geeks would be logical, linear and, well, geeky? Ah, contraire, my dear readers!
    And the results are:
    @gnawledge: 45% Left-Brained and 55% Right-Brained
    @glambert: 41% Left-Brained and 59% Right-Brained
    @lihsa: 46% Left-Brained and 54% Right-Brained
    Perhaps that explains Toby’s stellar stage presence, Greg’s rocker ambitions and my penchant for poetry? Perhaps the better name for us would be the 3 Gleeks?
    Or to put it another way, what do you get when you hook up three square geeks?
    Why Geeks Cubed, of course–Geeks to the Third Power rule this house!

    I’ve commented before that part of what makes each ILTA Annual Conference so valuable is the event’s emphasis on providing actionable takeaways – lessons that can make a real difference in how you and your organization operate. So after returning from the conference last year, I put together a list of my own personal takeaways. I then copied the items into an Outlook appointment that repeats quarterly. My six-month ‘appointment’ just popped up, and I thought I’d share my takeaways here. It’s not only useful to remind myself of these lessons, but it’s also interesting to evaluate which I’ve implemented (and which proved more challenging). If you have a list of your own takeaways from #ilta10, please share them in the comments.
    User Feedback
    1. Jo Haraf – Use post-its labelled with ‘love it’ / ‘hate it’ / ‘fix it’ to get feedback from users.
    2. Jo Haraf – Book recommendation, “Innovation Games” by Luke Hohmann, for understanding your customers’ needs.
    Change Leadership by JAG
    3. Ask, “what impact is this action going to have on the people around me?”
    4. When implementing change, communicate early and often the HOW and the WHY.
    5. Vest personnel in change: transparency, communication, candor.
    6. “The role of leadership is to turn challenges into opportunities.” General Dennis Reimer
    7. Keep people informed as you’re about to change their lives.
    Client Satisfaction
    8. Are you measuring your clients’ satisfaction with your extranets? Only 5% of respondents to ILTA survey said ‘yes.’
    Failure
    9. Plan to fail: mitigate the consequences; learn; use the failure as a guidepost.
    After Action Reviews
    10. Be open & honest; review the system not the person.
    11. Conduct either by timeline or by theme/topic.
    12. Document everything you did right! Not just the areas for improvement.
    Friendly Project Management Tools
    13. Basecamp = Simple, very usable tool for helping to manage projects, plus integrates with email.
    14. LiquidPlanner = Very useful gantt tool; the only software that allows you to input duration ranges (e.g. 2-3 days, 1-2 weeks).
    Working with Vendors
    15. Make sure you understand how the vendor will meet your success criteria.
    16. Working with vendor – Don’t just reward for success, but also penalize for not meeting criteria.
    That’s my list – please share yours in the comments. And remember, registration for #ILTA11 opens on March 1.

    Since Ayelette called me out on delivering depressing news earlier in the week, I thought I would end the week on a consistent, low-note by highlighting a emerging trend in downward pressure on legal fees.
    The existence of fee/pricing pressure in the legal market is common knowledge. However, based on my experience I see some trends appearing in different layers of the market. My basic thesis is that the higher up in the market you go (by size of company), the more pressure you will have on fees and rates. On the surface, this thesis may seem a bit mundane since conventional wisdom holds that the clients with larger budgets have gotten more sophisticated and are leveraging that to lower their legal fees.
    However, I suggest this sophistication is more about willingness and ability.
    And by “willingness” I mean the CEO told the GC to cut outside legal fees – no excuses. By “ability,” I mean the CEO said to the GC, “Purchasing will help you do this.” Too often I have heard in-house counsel apologize for their cost cutting behaviors. This suggests their willingness is mandated. In-house lawyers also appear to struggle with Purchasing’s involvement in how law firms are hired. So this ability is external to the legal department as well.
    Why is this happening? As previously noted on 3 Geeks, the legal department is no longer exempt from cost-cutting. Having been exempt for so long, legal is now a prime target. As one GC put it, “Legal is the last bastion of untapped cost savings for the CEO.” Evidence of this trend is the evolving role of Purchasing. Originally very general RFPs for legal work were going out from Purchasing. These initial efforts may have resulted in fewer firms being on a client’s list. But now things have evolved to the point that clients are releasing RFPs on specific work. With a definable scope in place, price competition is becoming commonplace. The result for law firms is a more consistent, higher level of fee pressure with this class of client.
    Moving down market to mid-tier companies, there seems to be less willingness and ability to push down on fees and rates. I believe these clients are just as “sophisticated” as the Fortune 500 types. However, they are not yet feeling the same pressures from leadership on cutting fees and their Purchasing departments are not as large, powerful and involved.
    That being said, the same behavior will find its way down-market over time. The Perfect Economic Storm I have previously mentioned, will eventually find its way to all corners of the market.
    As this evolution continues, I predict getting work from large companies will present a real challenge for law firms. Their old-school instincts will tell them that staying with this type of client is good, given the size of their legal spend and for being marquee clients. But the ability to sustain reasonable margins on this work will continue to erode.
    Here comes my depressing comment: How long will it take firms to understand this trend and adjust to it? My answer: Too long.

    I have the wonderful job of researching dozens (maybe hundreds?) of different legal rags everyday. There are definitely some good legal news resources out there, and we thought we’d let you share a few of your favorites with us. For example, I enjoy the Osmosys Legal Industry Monitor for generic legal news (plus it is FREE!!)

    We have a number of contributions this week. If you didn’t contribute, but don’t see your favorite resource, go ahead and add it to the comments.

    Since I’m having to post this from a conference, next week’s Elephant Post asks about “non-traditional” conference that you like. So, after you’ve bookmarked all these resources, go ahead and scroll to the bottom and contribute to the next post!
    WSJ Professional alerts
    Marilyn Bromley
    Law librarian

    I use it for CI by tracking our competitors, industries, markets and trends. The search interface is very unsophisticated, so I have to deal with lots of false hits, but when it finds something useful, in real-time, it makes me look good with my stakeholders!
    Roadsync
    Harold Goldner
    Lawyer

    Roadsync is one of only two Android applications that will enable users to sync Outlook tasks with their handsets.  Since we are a TimeMatters shop, and my to-do list is integrated into contacts, cases, and other case-specific records, I sync from TM to Outlook twice daily (beginning and end of day).  Roadsync enables me to keep most of that information with me on my Android phone.
    Lexology
    Karen Sawatzky
    Law librarian

    It’s organized, authoritative, well-written, and even includes a search box! What more do you need in a legal resource?! I’ve filtered it so I only receive info on areas of law my firm practises.
    Google Reader
    Catherine Deane
    Law Librarian

    With Google Reader, I can create RSS feeds of multiple news sources, and easily use either the Google Reader interface, or Google Reader Play to scan the headlines and abstracts for news articles from blogs, and other news sources. Then I can read in detail, or email to others relevant legal news.
    My reader feed currently contains over 30 different sources that cover the topics of: Academic librarianship, law librarianship, law and the legal profession, legal news, news for law professors, news for law students, and general current awareness.
    Some of the most useful sources are: Law Librarian Blog; beSpacific and Legal Theory Blog
    But my new favourite is Library Stuff
    Google Reader / Google Alerts
    John Hafen
    Lawyer

    I subscribe to updates posted on numerous online news sources and blogs (including this one) through Google Reader.  I also follow online news related to specific keywords through Google Reader via Google Alert feeds. 
    Contrary to popular belief, RSS is not dead!
    Twitter
    Megan Wiseman
    Law Librarian

    Twitter gets a bad rap some days.  At the risk of beating a dead horse, however, I’d like to defend Twitter’s immense usefulness:  Glancing up and down my Twitter feed is the first thing I do once I turn on my computer for the day; it’s the last thing I do before hitting the kill switch at night.  …and no, I do not use it to advertise what I ate for lunch, or how crowded the bus was that morning. 
    It’s my up-to-the-minute news feed for out-of-the-way tidbits of information.  I’ve not gotten into “”trending”” very much, but understand its usefulness … quite often, I don’t have anything particular I’m looking to know, I just want to know it all!! And Twitter does that for me.  I recommend following these folks if you want to get a good river of information in the legal and library sectors flowing past your eyes: AmLawDaily, lawyerist, HotLawTopics, LexisNexis, lawdotcom, bobambrogi, ALA_TechSource, govloop, ALALibrary, aallnet, natlawreview.  (At the time of this posting, all the listed sources had posted sometime in the past half hour.)  I use it to spark conversation, get ideas, find resources, and general news.  So lets all Tweet like the birdies Tweet!
    Law 360
    Nicole Snyder
    Law Librarian

    I use Law 360 because it allows me to quickly focus in on my firm, other firms and companies that are of interest to me.

    Next Week’s Elephant Post:

    What “Non-Traditional” Conference Do You Go To (Or Would Love To Go To) And Why?

    I’m sitting here at the Ark Group Conference in New York (#ARKLIB) – because apparently, I’m the only Geek that knows how to compile all the Elephant Post contributions – and got to thinking about how much I enjoyed the high-level discussion we were having. So, I thought I’d make it into the next Elephant Post and see what other conferences are out there that may sit outside the mainstream.

    Go ahead and fill out the form below, or email me, or DM me on Twitter if you have something you’d like to share with the rest of us.

    See you back here next week!!

    In one of those about-to-fall-asleep, mind-is-wandering moments, it occurred to me that law firms are financially structured a lot like the US Social Security system. I wish I could give the genesis for this thought, but I was lucky to retain the overall analogy. However, it may have come from Ayelette’s post about my recent dark and forbidding predictions.
    Social Security (SS) is structured such that workers (a.k.a. contributors) pay into a system that passes this money along to retired folk (a.k.a recipients). When you pay in to SS, you get the impression you are building an account that will pay you back, but the reality is you are merely building eligibility to receive benefits from future generations of contributors.
    In law firms associates and other non-partners are the contributors who generate profits that are then passed on to the partner/recipients. Becoming a partner puts you in-line to reap the benefits from future associate/contributors. The differences between the systems are two-fold. First – unlike most retirees, partners are still contributing to the system via their own billable hours. Second – whereas workers contribute for decades into SS, associates only contribute for 7 to 10 years in to the profit pool before they become recipients.
    The two systems share one weakness: The pool of contributors must be of sufficient size in order to maintain the payments to the recipients. Currently both systems appear to be facing a “contributor deficiency” situation.
    I’m not sure which one will be the hardest to fix.

    I’m going to play “Devil’s Advocate” for a few minutes, so bear with me. I hear a lot of talk about how law firm administration has to:

    • “do more with less” 
    • “everyone has to wear multiple hats” 
    • “times are tough” 
    • “budgets have to be cut in hard times” 
    • “clients just aren’t paying for that any longer” 

    I’m sure that I’m not the only one that’s hearing this lately. In return, it gives me some good ammunition to take to my vendors and say:

    • we can’t afford to continue 10% or greater increases in subscriptions any more
    • we just don’t recover as much as we used to from clients
    • my budget is slashed because of the bad economy

    Now, I know that the vendors would never come out and say this to our faces, but if anyone is following the numbers coming out of the Am Law 100 firms so far this year, vendors could counter with something like “Your budget was cut again this year? But, didn’t your firm just report that it had its best year ever? Sounds like your firm is doing just fine to me. That’ll be an extra 10% increase in your subscription, thank  you very much.”

    Here are a few of the headlines that the Am Law 100 press releases have been bragging about lately:

    • Profits and Revenues Hit Record Highs
    • Very Big Year
    • Bump Up in Profits
    • It’s Back to 2008
    • Profits Surge
    • Rise in Revenue, Profits
    • Profits, Revenue Rises

    We all know that administrative cuts were deep over the past two to three years. Quite frankly, it’ll be a long time before we ever see 2008 type budgets or staffing again. In fact, many of us believe that the downturn in the economy helped weed out some serious inefficiencies and helped us streamline the overall administrative side of the house. That being said, many of us also believe that we cannot continue to cut services without it eventually catching up with us, and potentially biting us in the butt. It is also pretty obvious that the excuses we’ve been using for the past two years are hard for others to accept when we’re also slapping ourselves on the back for record profits.

    We’re at a cross-roads right now on developing ways to improve services provided by the administrative side of a law firm, without slipping back into the pre-2008 sloppiness that caused so many cuts in services and staffing. Vendors will probably think that it is “business as usual” in the legal industry; Partners will think that “we still need to run a lean operation”; however, it is those of us in the “non-lawyer” side of things that have to start developing ways to keep costs down while at the same time bringing services back up to an acceptable level that provides the firm with the resources it needs.

    Time to put away the excuses of “we don’t have the money” and time to start developing the new business model of “we can’t afford to waste our time, effort and money on _____, any longer.”