My friend John Grant made a mistake.

Many moons ago he was consulting on process improvement for a large law department. He surveyed in-house counsel on their biggest complaints about outside counsel. The response was that outside counsel:

• Don’t understand my business
• Can’t tell me how long anything will take
• Overwork a problem/introduce complexity
• Don’t give me output in a format I can use 

Familiar enough. And so far so good. John’s misstep is that he put the same question to internal clients of the law department. The response was that in-house counsel:

• Don’t understand my business
• Can’t tell me how long anything will take
• Overwork a problem/introduce complexity
• Don’t give me output in a format I can use 

This result was not well received by the law department.

The Lawyer Theory of Value

Law departments face a principal-agent problem that I covered in a piece with the subtle title What’s The Matter With Inside Counsel.

There are few discernible differences between the modal in-house lawyer and the modal law-firm lawyer. They are the same people. Ultimately, they value the same thing: lawyering

The lawyer theory of value states that the key to value is having smart lawyers. Lawyer time is the primary resource and the primary unit of measure even in law departments that have no compensable time sheets.

The lawyer theory of value tends towards the transactional and discrete. Resources (lawyer time) allocated to sequential, individual legal tasks: this question, this contract, this motion. Systems thinking and relative reductions in demand for legal labor (prevention, Lean, #DoLessLaw) are ancillary concerns to be addressed when convenient or absolutely necessary (that is to say rarely).

Given their lawyer-on-task orientation, ask most lawyers what they need to be more effective, and the first answer is more time in their own day. The second answer is more time from other skilled lawyers they already work with. The third answer is more budget to hire additional skilled lawyers. Maybe somewhere in there is a paralegal who is “just as smart, if not smarter, than most lawyers” (because lawyer is the measuring stick). That’s how it all gets done. Smart people working hard.

Dedication to their craft does not make lawyers bad at their jobs:

Most lawyers don’t pay a penalty for their acute focus. When they do, it is usually not obvious, especially to them. They can still make valuable contributions to client success and be well regarded in their profession. Lack of broader interest in the process, technology, and business of law (T-shaped) rarely makes them bad lawyers. It just limits their effectiveness when more lawyering is not the optimal solution to a particular problem.

Sometimes, they may actually volunteer “technology” as a catch-all and panacea. But peel that onion just a layer or two, and you soon realize they want magic. They expect a black box that produces superior outputs from the same inputs. And the urgency driver for finding magic is to free up time to do more lawyering. Once you start impinging on that time and their comfort zone—process redesign, training, change management—you trigger the defense mechanisms of professional issue spotters.

The threat of an implementation dip does not eradicate the faith in tech-centric improvement. But the “we” in we should be using technology more no longer includes “me” but rather transforms into more a generalized “we” encompassing other people in the department and outside counsel. Innovation continues. But without buy-in and participation from key stakeholders, much of it ends up being only skin deep. Meanwhile, the perception that innovation is happening elsewhere feeds the accountability-reducing innovation illusion.

There is, however, an important distinction between being (a) an enemy of progress and (b) a barrier to innovation. I encounter very few lawyers who actively oppose innovation. I find lawyers who support it in theory and simply don’t have time for it in their personal practice. They don’t have time for it because they are extremely busy with mission-critical work.

This has become a go-to cartoon in my echo chamber because it is funny in a way that resonates with outsiders and prospective change agents interested in more systemic innovation:

But from the perspective of the modal member of an in-house team, reality feels much more like:

This time pressure buttresses inherent status quo bias. When you view yourself as operating in a delicate equilibrium, you have a much lower risk tolerance. Different is risky. Different demands time and attention, both of which are in short supply.

Importantly, the lawyer theory of value is not without merit. It is incorporated into my personal worldview. I am convinced that legal guidance is only growing in importance to business outcomes. But assumptions, especially when implicit, can have a constraining effect when they go unexamined.

The constraints of the lawyer theory of value have trapped us into a local optimum for an extended period. The only conceivable solution to the interlocking challenges of scale and complexity was to throw bodies at them.

Faced with the legal cost disease and the more-for-less conundrum, in-house departments have been on a two-decade hiring binge. In the United States, there are now more lawyers working in-house than in the AmLaw 200. How much of the supposed disruption in corporate legal services is attributable to the simple redistribution of labor?

My take: there is a continuum. In-house growth was necessary and good for a variety of reasons, including specialization and the attendant sophistication. But too much is too much. We’re pursuing a path of diminishing returns. The continued overhiring is justified by an oversimplified ‘savings’ calculation. When you move lawyers in-house, you get them at a discount and on a fixed fee. But the math ignores the overhead costs (management, infrastructure, flexibility) of operating an in-house function at scale.

Finding a different avenue to hire the same lawyers to do the same work the same way is implicitly premised on the lawyer theory of value—we are replacing extremely expensive external labor with moderately less expensive internal labor while embedding a chorus of high-status, autonomy-seeking stakeholders who stand ready to proclaim “but we’ve always done it this way.” When it avoids the fundamental demand driver—the relationship between legal labor and business outcomes—insourcing is not a sustainable approach to bending the legal cost curve.

The result is that we have law departments that suffer from the same pathologies as the law firms to which they were supposed to be the cost-effective alternative. When it comes to true alternatives to lawyer time, most law departments still need to overcome the stifling persistence of not here, not yet.

Outliers and Outsized Expectations 

Most. Not all. Before you @ me with #NotAllLawyers and #NotAllDepts campaigns listing prominent counterexamples that confound my narrative, ask yourself, “Is my counterexample prominent because they are an outlier?” If the answer is in the negative, then I welcome the spirited debate about how the landscape has evolved quicker than I realized (which would be great). If the answer is in the affirmative, we are in agreement. There are prominent, praiseworthy counterexamples.

But there is also a genre of writing predicated on these outliers that tends to imply that law departments have it all figured out, unlike scleoritic law firms. Admittedly, I’ve fallen into this trap myself. You pair opinion data (clients are not happy) with empirical trends (stagnation) and cite to prominent outliers (example, example, example). Then extrapolate.

Extrapolation is fine for futurism. But where I and others have steered wrong is when the predictive gets muddled with the descriptive. We create the impression that, instead of harbingers of the future, the outliers are representative of broader trends that are already ‘disrupting’ the status quo. Which they are. But not nearly to the degree or at the rate we may seem to suggest.

There is nothing new except what has been forgotten

There have been prominent outliers for a very long time (here, here, here). Yet like the decades of deaths of the billable hour, systemic change has not quite followed individual experimentation (and the attendant industry expressions of support/interest/intent) at the anticipated pace. I say this from a place of optimism. Not only do I think we can do better, I believe we are doing better. I have bet my career that this time is different—that the combination of trailblazers and structural forces are coalescing to put change on an accelerated trajectory.

I may be wrong (I don’t think I am). I have certainly put too much stock in outliers before.

First, I’ve taken in-house counsel at their word. I’ve relied on stated rather than revealed preference. The delta between public pronouncements and actual practice is not all virtue signaling. Rather, absent context, we have no way to gauge relative importance and intensity of preference. The desire to change may be genuine. But that in and of itself does not make change a priority.

As a result, I’ve assumed change efforts are more appealing and durable than they have proven so far. I expected more law departments to be fast followers. Instead, we’ve repeatedly witnessed innovations by prominent law departments remain outliers. Meanwhile, among the outliers, there is churn rather than accretion. Once the awards are won and the principal champion of change moves on, the jungle swiftly retakes civilization. The progressive GC/CLO gets replaced by a more traditionally minded lieutenant or outsider. Years of change efforts get reverted to the status quo ante at an astonishing clip.

Time to Pay Up

Everything I just wrote about law departments could have also been written about most law firms. The symmetry that comes from the shared lawyer theory of value is foundational to the relationship dynamic.

While they share assumptions, the modal in-house lawyer and the modal law-firm lawyer do have one crucial difference: positional authority. Like the Supreme Court, inside counsel are not final because they are infallible, they are treated as infallible because they are final.

What do you get when in-house counsel who make retention decisions think they want different, but, at the end of the day, really want a vaguely ‘better’ version of the same? You get law firm marketing bullshit.

Three months ago, I laid down a marker:

Bullshit begets bullshit.

There was an overwhelming response to my last post on law firm marketing bullshit. So here I am writing an entire series. That’s how it works.

If you reward bullshit, you get more bullshit

Which also happens to be my rejoinder to my sole (known) critic. While most commentary was positive, a friend chided me for ultimately making clients responsible for the surfeit of bullshit.

Bullshit is bad and, ipso facto, law firms should not traffic in bullshit whether or not bullshit is effective was my friend’s line of reasoning. Fair enough. But that’s hope, not a plan. I will respond to my friend at length (argument by attrition) in another [a series of] bullshit post [posts] about how the legal market is not a morality play.

This post is my down payment.

While I have touched on clients’ contribution to the perpetuating the bullshit cycle in every single post in this arc, I have not given clients my undivided attention at extraordinary length. I wouldn’t want them to feel neglected. More to come.

The full bullshit arc:

• On Law Firm Marketing Bullshit
• More Law Firm Marketing Bullshit (Door Law Edition)
• Law Firm Marketing Bullshit—Tier 3
• Law Firm Marketing Bullshit—Tier 2
• Law Firm Marketing Bullshit—Tier 1
• Law Departments and the Foundations of Law Firm Marketing Bullshit
• Me Being Wrong (More BS)

______________________________________
D. Casey Flaherty is a legal operations consultant and the founder of Procertas. He serves on the advisory board of Nextlaw Labs. He is the author of Unless You Ask: A Guide for Law Departments to Get More from External Relationships, written and published in partnership with the ACC Legal Operations Section, and the Service Delivery Review Primer, written for the Buying Legal Council. Find more of his writing here. Connect with Casey on Twitter and LinkedIn. Or email casey@procertas.com.

(via Bill Henderson)

A law firm recently did something I like.

This occurs more frequently than might be expected from the guy who calls bullshit (see Parts 1, 2, 3, 4 of my bullshit series). I’m the first to admit, however, it isn’t bullshit all the way down. Efforts to reduce bullshit are only useful if the bullshit is obscuring or obstructing real progress.

Per an article in LegalWeek (h/t Ron Friedmann), Clifford Chance saved £15m as part of a continuous improvement initiative that combines “black belt coaches” and legal project managers. The coaches assist in the design phase of deals to keep costs down while maintaining quality. The LPMs are the interface between the lawyers and low-cost providers.

I support every part of this. From recognizing the valuable contribution of expert allied professionals to integrating alternative providers into the delivery of multi-sourced legal services, I have nothing negative to say.

Instead, I will take this unalloyed good and distort it for my own purposes. Witness how easily I transform beauty to bullshit.

RFI Question: Tell us about your approach to process improvement 

RFI Answer: The firm has continuous improvement initiative that combines “black belt coaches” and legal project managers. The coaches assist in the design phase of deals to keep costs down while maintaining quality. The project managers are the interface between the lawyers and the low-cost providers with which the firm partners.

I use this example because I have never reviewed an RFI response from Clifford Chance. Ever. The only takeaway from this blog post vis-a-vis Clifford Chance is that the firm achieved something praiseworthy and is building on their success. They earned their headline. And I would not expect the firm to respond to an RFI as above.

But what if a similar firm did? How can the truth be bullshit? There is no reason to doubt the veracity of the statement, which is responsive to the question.

Again, truth is incidental to bullshit. The bullshit imperative is persuasion. Bullshit is unconcerned with accuracy except insofar as selective accuracy enhances persuasiveness. The problem with the above is not untruth but the failure to situate the truth in context.

The context of mega firms like Clifford Chance is £1.54 billion in annual revenue from 2,500 lawyers. £15m in savings is less than 1% of revenue. With only 14 coaches/LPMs involved in the program, the ratio of lawyers to support is 179-to-1 (for comparison, the ratio of lawyers to marketing personnel is likely closer to 11-to-1). Given the relative size, it is unsurprising that the program is voluntary. Lawyers have to request assistance.

A genuine exchange—the kind of candor I would expect from a brand-differentiated firm like Clifford Chance—would be closer to:

RFI Question: Tell us about your approach to process improvement 

RFI Answer: The firm has been building a continuous improvement program that combines “black belt coaches” and legal project managers. The coaches assist in the design phase of deals to keep costs down while maintaining quality. The project managers are the interface between the lawyers and the low-cost providers with which the firm partners.

We’ve attached a slide deck that delves into specifics of how the program functions and provides real-world examples of measurable savings for clients. 

The initiative is effective (our # projects saved clients £15M last year) but limited (14 allied professionals). At present, the lawyer working your matter must request support. The level of support provided will then be contingent on geography, availability, and appropriateness to matter type.

We are in the process of expanding the program (we plan to add # new allied professionals this year). To the extent justified by the revenue from the relationship, we’d be happy to discuss ways to grow the program in a direction that meets your specific needs.

As advertising copy, that’s not great. But, for me, we are supposed to be well beyond advertising at the RFI stage.

The “for me” is doing some heavy lifting in that last sentence. Most firms operate in perpetual marketing mode and are committed to submitting pure sunshine. And, if we are being honest, many clients would rather receive saccharine statements that suggest their law firms require minimal supervision.

Next post will be all about client bullshit. But take a moment to reflect on the implications of “happy to discuss.” Talking with firms is work. It demands time and attention from people who are already busy. And, in all likelihood, talking would be insufficient. Talking would need to be followed by some sort of doing to bear fruit—structured dialogue, sustained attention, measurement, feedback, accountability….maybe even regular site visits.

Here, however, I want to bring it back to me. What do I do when I receive something like the first answer above and strongly suspect that bullshit is a primary ingredient? The answer may surprise.

I, of course, aim to inoculate answers from bullshit. A composite of some general RFI instructions:

The questions that follow are deliberately broad and open ended. Your answers should not be.

We prefer metrics. Be concrete and specific. Vague reference to your commitment, vision, or efforts in a specific area is not helpful unless accompanied by identifiable changes in behavior and measurable improvements in service delivery.

For example, you may deploy document automation. Citing document automation may be appropriate in one or more response. But such a discussion should be informed by statistics on usage and update frequency with concrete examples of where document automation has been (or will be) utilized on work product for [organization].

Or you may have a project management program. Describe it in the particular and support the description with numbers. How many project managers do you have relative to your overall headcount? Under what circumstances are project managers assigned to client matters or portfolios? What role do project managers play in legal service delivery? What quantifiable dividends does the program provide for clients like  [organization]?

While a program may be worthwhile for the firm in general, that in and of itself does not make the program useful to [organization] in the particular. If you mention an program, supply the evidence necessary to establish the benefits to [organization].

I probably don’t need to tell you that these instructions are mostly ignored. I receive general descriptions almost always devoid of informative numerical content.

Answer quality is so consistently poor I’ve had to temper my grading. Scores are based on relative, rather than absolute, merit. Even without grading on a formal curve, the average grade is already a C. If I were to judge firm responses against my Platonic ideals, that average would likely drop to a D. My instincts are unreasonable. My practices are pragmatic—giving quarter because these types of in-depth service delivery discussions remain relatively rare.

I award high marks for excellent answers even where I strongly suspect the grade is not justified by the underlying reality. I, for example, have given several A’s on the topic of knowledge management even though I know first hand KM is an area where theory and practice often diverge:

Knowledge Management. How do you systematically reuse work product to lower costs and improve quality (e.g., brief banks, clause banks, wiki-like research repositories)? How do you identify and tap discrete internal expertise (e.g., locate and incorporate personnel experienced with a particular statute, judge, regulation, or regulator)?

Explain your processes and protocols for creating, tracking, and leveraging institutional knowledge. How do you identify knowledge capital, organize it for use, and minimize its loss from personnel turnover? How do your efforts in this regard measurably benefit clients like [organization]?

One response, in particular, stands out. The response itself was solid but not spectacular. The firm highlighted a process for tracking variations in a particular type of document and, where appropriate, updating an automated playbook to guide future document generation. Pretty standard. But the document type was directly relevant to the work for which the firm was being considered. And the firm’s answer was superior to their competitors.

What makes the answer memorable is a meeting on the day I graded the response. I had lunch with an in-house attorney who, coincidentally, was a firm alumna. Without mention of the pending RFP, the conversation flowed to a place where she described a knowledge management program she’d initiated at the firm—i.e., the program from the response. Unprompted, she lamented how underutilized the program was while she was at the firm. She was further saddened by reports that the program had fallen into complete disrepair since her departure.

I had strong testimonial evidence that the firm’s RFI response was bullshit. I left the firm’s grade the same.

I noted the conversation in my evaluation. But I did not change the grade because, ultimately, I was grading the answer, not the reality. This hurts my soul.

It was a dilemma. I still doubt my decision. I proceeded with what I considered the least bad option under the circumstances. I kept the playing field level.

I presumed every firm was pedaling varying degrees of bullshit. That my priors had been inadvertently confirmed about one firm strengthened my conviction with respect to the others. Was it equitable to punish the one firm because I knew rather than suspected? I decided it wasn’t.

I am wide open to criticism on this point. I rewarded bullshit that I knew was bullshit because it happened to be good bullshit.

While I am a bullshit connoisseur, I am not the Sherlock Holmes of bullshit. I’m not always able to penetrate its mysteries even when I have strong, empirically grounded suspicion I am being played—i.e., unless I am empowered to go beyond the four corners of the document [cough, site visits, cough].

Yet the quality of the bullshit itself remains valuable. Which brings this series full circle. In the first post, I mounted a partial defense of law firm marketing bullshit:

I often find bullshit useful. When I am reviewing RFI responses, I know I am consuming a fair amount of bullshit. But it is informative bullshit and, ultimately, bullshit I can work with.

There is substantial variation in the quality of the bullshit. Many firms clearly have no idea what they are bullshitting about. They unintentionally present as parodies on par with O’Magawd Mikoreer Izova. Other firms say all the right things. Their bullshit is on point.

Saying all the right things is never enough. But it’s a start. It’s an indicator that someone at the firm gets it. It’s a signal that if a client is committed to weaving continuous improvement into the fabric of a deep supplier relationship, they would, at the very least, be able to enter into a constructive dialogue with the firm.

And, while weak, the words are also a form of commitment. Even if it is mostly bullshit, a firm that tells a client they ❤ AFAs or project managers has more pressure to deliver if that client asks for AFAs or project managers. Although RFI responses are written in the present tense, I often read them as markers as to what the firm might do with sustained client engagement.

The quality of bullshit is one filter among many. It doesn’t help identify the right firms so much as assist with eliminating the wrong firms. It is a step in strategic selection. Though not decisive. Bullshit should never be the final word.

Tier 3 bullshit is transparent nonsense. Tier 2 bullshit is superficially attractive but does not withstand scrutiny or reflection. Tier 1 bullshit suggests genuine understanding. But the gap between knowledge and action remains. Tier 1 bullshit should be read as an indication of latent capacity rather than a representation of current practice.

The anonymous firm from above had created the program they included in their RFI response. And, if utilized, the program would benefit the client. The pieces were in place. Yet it remained incumbent on the client to activate the change in behavior and then pay sustained attention. This is not a message most clients want to hear.

I adore but frustrate my in-house friends. I refuse to let them off the hook. They are channel captains, not retail purchasers. The distinction demands an uncomfortable level of engagement—moving sophisticated clients from the simple binary of loyalty or exit to the real challenges of constructively using voice.

More on that next post.

The full bullshit arc:

• On Law Firm Marketing Bullshit
• More Law Firm Marketing Bullshit (Door Law Edition)
• Law Firm Marketing Bullshit—Tier 3
• Law Firm Marketing Bullshit—Tier 2
• Law Firm Marketing Bullshit—Tier 1
• Law Departments and the Foundations of Law Firm Marketing Bullshit
• Me Being Wrong (More BS)

______________________________________
D. Casey Flaherty is a legal operations consultant and the founder of Procertas. He serves on the advisory board of Nextlaw Labs. He is the author of Unless You Ask: A Guide for Law Departments to Get More from External Relationships, written and published in partnership with the ACC Legal Operations Section, and the Service Delivery Review Primer, written for the Buying Legal Council. Find more of his writing here. Connect with Casey on Twitter and LinkedIn. Or email casey@procertas.com.