Revenue – Cost = Profit: The basic equation that governs business. Yet this remains an elusive, not-yet-understood equation for most law firms. This fourth post in a series on law firm profitability will examine what this equation could and should mean to law firms.
As various legal markets shift from rates to fee pricing, the law firm business model will need to shift from a cost-plus model to this new (actually old) margin model. My good friend Kingsley and I presented at TECHSHOW last spring and used a slide that sums this transition up well:

The first bar shows how much firms used to make on a given piece of business. The second bar illustrates the impact of market price pressures. What use to be $25k, is now selling for $20k. The third bar then shows our challenge. How do we move the cost of services line to the left to restore profitability? I would note that this shift is independent of AFAs. The same market pressures are occurring regardless of the type of billing used.
I want to emphasize the magnitude of this challenge. Law firms have lived in a cost-plus world for 50 years and their structure reflects that. This history has ingrained a deep mindset that hours equal profits. Every aspect of a firm’s structure is currently driven to this end. Most importantly, compensation almost exclusively rewards this behavior. That being said, let’s explore what issues firms will need to address.
First off – firms have spent considerable effort in the past two years cutting overhead in an attempt to maintain profitability. By cutting various costs, usually administrative, they lower a firm’s overall “Cost” (see our initial equation), holding the line best they can on profitability. This effort is typical and healthy in a downturn. However, “cutting your way to prosperity” only takes you so far. At a point you have to turn your attention to cutting the cost of service delivery. This approach actually requires investment. Firms need to invest both money and time into changing their delivery models such that the cost of delivering a service goes down. This enables firms to compete in a market where pricing pressures exist as they do now.
As a professional services firm who sells time in some fashion (whether it’s priced by the hour or not), a law firm has two options to lower its cost of delivery:

  1. Cut the amount of time it takes, or 
  2. Reduce the cost of time. 

 The first option is the focus of much discussion right now, especially related to LPM and process improvement. The second approach has had much less attention (if any) and requires: 

  1. paying people less, 
  2. giving people less resources to do their jobs, or 
  3. pushing work to lower cost labor sources (a.k.a. leverage). 

 In the next post of this series, I will peal back the layers on these two approaches and explore the potential of success using them.

Even at this level of discussion, the depth of the challenge becomes obvious. Law firms have deeply embedded attitudes and structures designed to:

  1. increase the number of hours it takes to deliver, and 
  2. increase the price of time. 

 So for law firms to succeed in this emerging market dynamic, they should focus first on changing these attitudes and structures. Compensation is an obvious place to start, but also the most daunting to change. Messing with someone’s income is never taken lightly. Yet if it isn’t address, that income will increasingly become jeopardized because clients are not concerned with how firms pay their people.

This brings us back to our main issue – law firms need to shift their structures and focus to delivering more for less to their clients. And the focus on “less” should be internal. Merely giving bigger discounts and providing fixed fees only addresses the external needs. The internal needs of using fewer and cheaper hours are where the real work lies. As mentioned, the next post in this series will look at the specific options for how firms can meet this challenge.
My prediction/hope: 2009-2010 were the years of reducing overhead. 2011 should be the year of reducing the cost of the delivery of legal services.

We mentioned last week that Thomson West was slapped with a $5.18 judgement from a case brought against them by two Law School Professors where West published shoddy pocket parts and attributed the profs’ names to the publication even though they did not write them. We also mentioned that the general consensus from those interested in the decision was that Thomson West would appeal that judgement. According to a report from Courthouse News Service (CNS) this morning, an appeal is coming.

Although CNS couldn’t get Thomson Reuter’s VP of Communications, John Shaughnessy, to comment, they did get him to admit that TR planned an appeal because the verdict had “no basis in fact, law or equity.”   From some of those I’ve talked to in the legal publishing and library industry, the thought is that TR will attempt to get the entire case thrown out by the appeals court, or at a minimum to get the damages reduced significantly.

As the CNS article points out, although Thomson West’s attorney, James Rittinger, defended his clients by saying that even though the pocket part that got published was “terrible,” there was no malice on behalf of his client and backed that up with mentioning that no one even complained about the pocket part when it was released. Even with that said, Rittinger admitted that “They would have been a lot better off if they paid them the 5,000 bucks.”

We’ll just have to wait a bit longer now to see what the final verdict in this mess ends up costing them.

The year 2010 may be remembered for a lot of reason (or maybe you want to quickly forget it)… but, for me it will always be the year that the 3 Geeks’ started the Elephant Posts. As many of you may know, our best ideas are developed after a few beers and a good meal, and this was no exception. Scott Preston thought that getting the perspectives of a lot of people on a specific question would make for good blog material.

The “Elephant” name came from the story of the blind men explaining what an elephant looked like by describing the part of the elephant they were touching. It also came from the “Elephant in the room” concept of talking about something that was right there… but no one seemed to really want to acknowledge.

Every Thursday for the past twenty-one weeks, we’ve asked a question and a lot of you have offered up your perspectives. After twenty Elephant Posts, we think we’ve hit on something good.

What Elephant Post Question Would You Like To See In 2011??


I thought we’d do a little year-end retrospective of the Elephant Posts, and while you’re watching/reading/re-reading them, think of some questions you’d like to see asked in 2011, and either post them in the comments, email them to me, DM me on Twitter, or add them to the Google Docs form that we’ve set up.

And remember, next week’s Elephant Post is already waiting for you to give your perspective!!


Review of the 2010 Elephant Posts:

  1. Is It Better To Get It Right Or Do It Right? (August 12, 2010)
  2. When Does Your Firm’s Culture Trump Innovation? (August 19, 2010)
  3. When Does Great Get in the Way of Good? (August 26, 2010)
  4. Did the Downturn in the Economy Give You an Opportunity to ‘Rightsize’? (September 2, 2010)
  5. What Do You Do Well, But No One Seems To Ask You To Do It? (September 9, 2010)
  6. What’s the Next Process That Will Get ‘Efficiencied’? (September 16, 2010)
  7. What Do You Spend A Lot of Time, Money and Effort On That Just Isn’t Worth It? (September 23, 2010)
  8. What Would You Tell a Law Student Before They Enter the ‘Real World’? (September 30, 2010)
  9. How Do You Build Upon the Strengths of Your Firm’s Administrative Staff? (October 7, 2010)
  10. Consultant – “Your Job Should Be Outsourced… Prove Me Wrong!” (October 14, 2010)
  11. Name Something Transformational That You Learned From Your Boss (October 21, 2010)
  12. “I Think You Need to Look Up the Meaning of _________. I Don’t Think It Means What You Think It Means.” (October 28, 2010)
  13. What Is Something You Can Do Immediately to be More Productive? (November 4, 2010)
  14. How Do You Market Your Department and Yourself Within The Firm? (November 11, 2010)
  15. What Drives You Crazy When Dealing With Vendors? (November 18, 2010)
  16. Which Fictional Character Would Be Outstanding In Your Profession? (November 24, 2010)
  17. What Free Product Do You Use In Your Job? (December 2, 2010)
  18. What Surprised You Most About Your Profession? (December 9, 2010)
  19. How Is Social Media Changing Your Profession… Or, How Should It Be Changing Your Profession? (December 16, 2010)
  20. What Saturday Night Live Quote Have You Used At Work? (December 23, 2010)

I ran across an interesting post yesterday from a law firm that posted their response to a Cease & Desist (C&D) letter. It seems that the Berkeley, CA firm of Cobalt LLP posted a story on their “News” section of their website/blog about the Utah case of Wilcox v. Career Step. At the beginning of the post, they used an image of Career Step’s logo. A week later, Cobalt LLP received the C&D from Durham, Jones & Pinegar firm out of Salt Lake City, UT on behalf of Career Step, demanding that Cobalt remove the logo from their website.

Cobalt decided to post the letter, and their response to the C&D on their website… which they don’t refer to as a “website” but rather as their “blog”:

 We are a law firm; and we are reporting news in our blog. Clearly is that stated under the category on ‘News’ as you acknowledge in paragraph two of your letter.

The next part of the response is what caught my eye, and made me wonder if a calling something a “blog” as opposed to “website” allows for extra protection… in this case First Amendment protection under “Freedom of Speech?” It is also interesting that on Cobalt’s on website, there is a disclaimer that calls the site a “website” … even at the bottom of the “News” page.

Here is Cobalt’s answer on the trademark issue of the C&D:

We acknowledge that your client has trademark rights. However, protection for trademark rights under the Lanham Act is limited to protection against another’s use of a designation to identify its business, or in marketing its goods or services in a way that causes a likelihood of confusion. Such trademark rights do not override First Amendment rights.

Now, it has been 15 years since I took Intellectual Property classes in law school, but this seems to be a bit of a stretch in claiming that labeling a section of a website/blog as “News” allows for a law firm to use a company’s trademark by claiming First Amendment protection.

Anyone think that Cobalt has a leg to stand on here? Can a law firm use a trademark logo when reporting on a case and claim that it falls into a safe haven against trademark rights because it is listed under their “News” section?

I’d like to see how this plays out… Maybe Durham, Jones & Pinegar will post their response on their website/blog, too!!

Kudos to the Minnesota SLA division’s Terri Horsmann for converting this 1964 information film to a YouTube video for all to see. It was fun to see how the information research of 1964 corporate libraries has changed, but it was more interesting to see how much of it still runs parallel to today’s research techniques.

As you watch the video, pay attention to the number of times you see the “Reading is Key” posters in each of the different corporate libraries. I’m thinking that was the ALA Library Week Theme that year…

Here’s the description of the video, and you can go to the Minnesota SLA YouTube channel to leave comments for Terri and the others responsible for archiving this little piece of corporate librarian history.

Get a rare glimpse into a day in the life of a corporate research librarian in 1964! Created for National Library Week by Grieg Aspnes, Research Librarian for Cargill, the film shows Grieg going about his day as he visits other libraries throughout the Twin Cities, trying to answer a complex question for an internal customer. At the time, the film was sent several places in the U.S., as it was used by several library schools and at professional events. It was also shown on local television station, WCCO TV, channel 4, along with a panel of special librarians, for a career segment.
As you watch, be sure to pay attention to the “little black bag”!The original film is held in the archives of the Minnesota Chapter of the Special Library Association (SLA), and was converted to digital format in 2010.

Back in November, I reviewed a product called Summarity that summarized websites on the fly so that you didn’t have to read an entire page to get the relevant information. However, as a researcher, sometimes you want to point lawyers to a specific article, but really want them to see a specific section of that article so that they can quickly see why it is relevant to their research. To do that, you can use a new product called Sniply.

Sniply (snip.ly) is a web URL shortener, but it also allows you to set focus on a specific section of a webpage, and even add comments to explain why you’re pointing to this section of the page. This is particularly useful if the person you are sending the snip.ly link to is someone that has a short attention span. (I imagine that some one’s face just popped up in your head just now???)

The process is simple, effective and free! You can connect Snip.ly to your Facebook or Twitter account, or you can use it as a guest user. Snip.ly simply adds an overlay to the web page with the portion you’ve highlighted, plus any comments you’ve added. Here’s a quick example:

Let’s say there was something in last week’s Elephant Post that I wanted a friend to read. However, I really wanted her to focus on the part that talked about “competitive intelligence” and breaking bad news. Using snip.ly, I can draw her eye to that paragraph simply by sending her the snip.ly link.

Step One: Paste the link into snip.ly and click next (or, use the bookmark tool that allows you to just do it right from the page you’re on!):

Step Two: Select the portion you want to highlight.

Step Three: Add comments, select the image you want to include, and determine if you want to directly share it to Twitter, Facebook, email it, or if you just want to get the shortened URL.

Once you have the snip.ly URL, send it to the person and when they click on the link, they’ll see an overlay with your snip.ly comments.

How easy is that??

If you’ve connected snip.ly with your Facebook or Twitter account, it will save your links if you ever need to go back and review your work. The only issues I saw with this was that it didn’t let you delete those links if you wanted to clean up your history, and it sometimes would not get the formatting exactly right… especially if you’re highlighting numbered lists. Both of which seem pretty minor considering the usefulness of this resource.

Give snip.ly a try and let me know what you think. Heck… even send me a couple of snip.ly links of stuff you think I should read!!


Welcome to this week’s Elephant Post Question. I’m Greg Lambert, and you’re not.

Since we’re only a couple of days away from Christmas, we thought we’d throw out a fun Elephant Post this week that was 35 years in the making. We love Monty Python, and Star Trek, and Star Wars, and Doctor Who… but we are all big fans of Saturday Night Live, too. There’s hardly a day that goes by that I don’t toss out some quote from SNL… usually as a snarky response to something I just read or in a conversation that needs to be lightened up. In fact, most of the time that I talk with my co-blogger Toby Brown, the conversation usually starts out with “Toby, you ignorant slut.”

So, we’ve got some library, competitive intelligence and marketing folks sharing with us some of the SNL quotes they like to pull out of the bag at work and why they like to use it.

I think we’ll skip the Elephant Post next week, but that will give you an additional week to come up with a contribution for our first Elephant Post of 2011. What Is Your New Year’s Resolution For Your Profession? Instructions for how you can contribute are listed at the bottom of this post (it is super easy!!)

Law Librarian Perspective
Cindy Bassett
Bad Idea

I am the person in meetings coming up with crazy projects for everyone to participate in.  The ones that will take over my colleagues’ work life . Some of my ideas are brilliant (at least to me and the patrons they would serve) and some…not so much. At times, I can almost hear the “Bad Idea” mutter coming from my colleagues.
I never think this myself though. 😉

Law Librarian and Competitive Intelligence Liaison  Perspective
Jan Rivers
The Big Picture

“And that, my friends, is the Big Picture.”
During SNL’s Weekend Update, A. Whitney Brown would comment on current events and put them in perspective by ending with, “And that, my friends, is the Big Picture.”
I make passing reference this at work and live by it on a daily basis.
To bring value to your business, you must be aware of the Big Picture.
What are the goals and objectives of your firm? How does your organization operate? How are profits generated? What are the issues that keep management up at night, etc., etc.?
You must understand how you fit within the Big Picture of not only your firm, but also your profession and industry.
If you don’t have the context of the larger whole, you make decisions in a vacuum and waste time and effort on tasks that are not valued or necessary.
With the advent of the “New Normal,” it is more important than ever to have a robust understanding of the Big Picture surrounding your work and your firm so that you can be nimble and proactive in the face of change.

Competitive Intelligence Perspective
Zena Applebaum
Hit and Run, Dine and Dash….


As CI people, we sometimes have to deliver news that no one wants to hear: a key competitor won a bid that your firm lost, a client has had a class action filed against them and so forth. Often, when faced with delivering this news, I think of Dennis Miller and the Weekend Update.  “That’s the news, folks, and I am outta here!”

Marketing Analyst Perspective
Danny Johnson
A hug from God

“I believe it’s just God hugging us tighter” – Tina Fey as Sarah Palin in response to her thoughts on global warming.
Every Friday the marketing and support teams at NetDocuments have lunch together and politics seems to be the popular discussion point. When a climate change issue came up a year or two ago, someone asked me (the moderate voice in the room) what my stance on global warming was. Being the witty man I am, and being fresh off of seeing SNL, I said, “”I believe it’s just God hugging us tighter.”” Half the room thought I was a mastermid…the other half thought I was an idiot. I don’t think their opinions have changes since.

More recenlty, when Russia was awarded the 2018 World Cup, a co-worker sent me an email saying, “at least Sarah Palin will be able to watch the World Cup from her house.”

Internet Marketing Perspective
Lisa Salazar
That’s so funny, I forgot to laugh!

Here in law firm-ville, humour can be sorely lacking.
Every once in a while, to smooth the way, it’s good to inject some humour into meetings. It’s amazing how things can turn around and lighten up.
So maybe, next time you walk past your colleague, just say, “”there’s that wild and crazy guy.””
Make ’em laugh. I dare ya.

Knowledge Management Perspective
More Cowbell!
How many times do you sit in meetings and watch as the discussion focuses in on some minutia while skipping over the pivotal pieces that are important to getting things done? Whenever that happens, I want to say “you know what this policy needs?? More Cowbell!” 
Alternative Fees Perspective
I’m Not Worthy!

NOTE: Actually, Toby didn’t contribute to this week’s post, so I just thought I’d put that in there to make him feel bad about not contributing! – GL
What Is Your New Year’s Resolution For Your Profession?

What are the things you want to accomplish this year? What trends do you see on the horizon? What trends will get left behind in the year that was? 
Let us know what you plan to do this year. You can go to the Google Docs Form to share your New Year’s Resolution with us! Have a Merry Christmas and Happy New Year!!

Mark Herrmann at ATL, wrote an excellent piece on “Is blogging a useful business development tool?” I thoroughly enjoyed the piece, but take issue with a core aspect of his thesis. He notes that “Blogging can be very rewarding in many different ways, but it will create only a very few (if any) serious rainmakers.”
My push-back on this piece is somewhat semantic – but in a crucial way. I question whether the legal industry understands the term “business development.” At many firms, you still can’t use the word “marketing”, so they call it client relations. We blend together and interchange the terms: marketing, client relations, client development, business development, rainmaking and on some rare occasions, we use the term sales. In a more traditional business environment you have the continuum of marketing – business development – and sales. Marketing is primarily about getting attention in the market. For law firms this is done via websites, brochures, seminars and ads. Business development (BD) is primarily relationship building with existing customers and with the new customer leads generated by marketing efforts. For law firms this is usually the follow-up efforts from marketing events, along with pure BD events, such as attending sporting events and social gatherings with clients. Sales is the closing of business deals. This is where one locks in an engagement with a client, and settles on the fee.
In many professional services firms, BD is sales. In reality, BD (although not always called that) is sales for law firms as well, which brings us back to Mark’s thesis. Blogging is really a marketing tool that extends itself into the BD realm via its relationship enabling aspects. But blogging doesn’t build relationships – people do. Blogging merely provides the platform to build relationships. Therefore, I wouldn’t expect a blog to turn anyone into rainmaker, any more than I would expect a kiss to turn a toad into a prince.
It has been my experience that the law attracts people who are uncomfortable with BD. Lawyers get much more excited about the facts of a case or the terms of deal than they do with relationship building. One of my golden rules of AFAs is that a lawyer will do anything to avoid talking to a client about fees. This demonstrates the non-BD personalities of most lawyers.
And again back to Mark’s article – what really caught my attention was the incredible success he experienced from his blogging efforts. Just to name a few:
  • I became a better lawyer.
  • We became unbelievably plugged in to events in our area of law.
  • We dramatically raised both our personal profiles.
  • People who sponsored conferences about drug and device issues were keen to have us participate.
  • We got our book deal.
Most BD people I know would kill for these opportunities. Becoming the “go to” person in your field is approaching BD nirvana. Clients come to you, instead of you knocking on doors hoping to get some of their time.
My evaluation of the ROI of Mark’s blogging is extremely high. But no – his blog didn’t close any deals for him. And I wouldn’t expect it to.
Meanwhile – my blogging goals remain the same: Getting to know more fascinating people and learning interesting things.

My friend Joe Hodnicki over at Law Librarian Blog lays out a good overview of some of the bad decisions that West Publishing made in the whole Rudovsky vs. West matter. As Joe puts it, “Invoice-paying law librarians” have seen tricks and shams for a while now, but with so much going on, and in an economy where we’ve all taken on extra responsibilities, how does one fight these tricks?

Although West Publishing (Thomson Reuters Legal) got slapped with a $5.18 million verdict in this case, most people I’ve talked to don’t think that the final amount will be anywhere near that amount. Jonathan Turley writes on his blog that the amount will most likely be reduced, but that “Even at a total of $2 million, however, it would be a major new precedent in the field and the company is likely to appeal on contractual grounds. Indeed, this could end up in a Torts Treatise or West pocket part.”

I’ve sent a message to the AALL Executive Board and the SLA Legal Division Board about this matter, but I think there are things that we in the legal industry (whether you are a lawyer, librarian, paralegal, or secretary) that use these products should ask ourselves. In fact, Jason Wilson‘s comments on Jonathan Turley’s post say it better than I could, so I’ll just quote him:

Regardless of what happens to the verdict, the larger issue is the message concerning “sham” updates. I forget the price, but I believe customers paid around $175 or possibly more for the update that included only three cases. But for the Professor’s review of the material and their objections, no retraction and more thorough update would have been forthcoming. For me, the question is:
 
  • Who is policing the content for sale?
  • Do you know if the content you buy, whether online or in print is current?
  • Does this opinion change how you feel about West Publishing products?
  • Will it make you scrutinize a product more carefully before you purchase it?
We all feel like something should be done to prevent things like this from happening, or at least quickly identify questionable practices and call out publishers when they are playing tricks with publications. The $64,000 question (or maybe it is the $5.18 million question) is what do we do from here?
There are really good people in the legal publishing business… but there are also those that pull stunts like this one in order to pad the bottom line in a weak market. The stunts are being pulled as Joe Hodnicki mentions in a previous post where Scott Burgh points out a number of questionable actions that publishers are playing with updates, volume replacements, and pocket parts that have changed very little, yet cost very much. AALL’s CRIV members have been pointing out these practices for years to its members, and the Guide to Fair Business Practices for Legal Publishers is mentioned almost every time somebody identifies a questionable practice by a legal publisher. Yet, the practices seem to continue. 
How can we, as customers, stress to the publishers that attempting to run schemes like these may help the bottom line in the current fiscal quarter, but will have long-term damaging effects for years to come?

I’m sure West Publishing is going to appeal to have the Rudovsky decision tossed out and attempt to go back to business as usual. So, what are you going to do?

[Note: The video was taken down after Will.I.Am’s copyright claim of the song.]
Big tip-o-the-hat to my friend Marlene for sending me this video of a flash mob made up of lawyers, staff and even a partner or two from the Toronto office of Blake, Cassels & Graydon LLP. Just shows that even those in the legal field can put on a red ball cap and dance around the mall to some “Just Dance” Wii choreography!

  
Blakes Lawyers Rock YouTube! from BlakeCasselsGraydon on Vimeo.