As the Vice-President/President-Elect of the American Association of Law Libraries (AALL), I wanted to tell our 3 Geeks’ readers about the new visual identity and tagline that AALL officially rolled out last night. Leaders within the organization worked on this rebranding effort for nearly two years, and displayed the new logo back at the annual meeting in Chicago last July. I, for one, like the new logo, and the tagline that goes along with it. I applaud those that worked on the rebranding effort and I hope that members of AALL, as well as those that benefit from the work that law librarians, legal information professionals, take a moment to look at the new branding and take a moment to think about all the good work that the Association, its members, and staff provide to the legal industry.

I wanted to focus on the tagline, and the two meanings that it represents.


Your Legal Knowledge Network


Internal Meaning: To members of AALL the tagline represents the community of knowledgeable law librarians and other legal information professionals who identify with the ideals of access to justice, the dissemination of legal information, and the ability to reach out to that community in a way that adds value to the service we provide for our individual organizations. To me, the best thing about AALL is its members. It is your legal knowledge network because we learn from each other, and we form bonds that unite us and allow us to leverage the knowledge of the entire association, regardless of the type of work we perform, or the organization which we work. This is your legal knolwedge network of highly-educated and forward-thinking professionals are willing to give their time and experiences to help others within AALL and beyond is a valuable professional development tool which all law librarians and legal information professionals should feel proud to belong.

External Meaning: For the legal industry, AALL members represent some of the most educated, connected, and resourceful employees of your organization. AALL becomes your legal knowledge network and exposes your organization to advanced educational opportunities to keep your law librarians ahead of the curve for changes in the legal environment. AALL is your legal knowledge network to discover new legal information resources and provide access and understanding of how these resources may bring value to your practices within your organization. AALL is your legal knowledge network to fight and lobby for legal information to be open and available and not locked behind a government or corporate wall. AALL is your legal knowledge network that multiplies the talents and skills of your legal information professional by the diverse talent and skills of thousands of other law librarians and legal information professionals.

I may be biased in my appreciation for AALL and what it does for me, my organization, my profession, and the legal profession as a whole… but I am not wrong. I have written and talked about the value of law librarianship ever since former AALL President and Georgetown University Law Library Director, Bob Oakley, reached out to a very green law librarians some sixteen years ago and asked me to write about where he thought I believed the profession was going. AALL gave me a voice and an opportunity to leverage its members and resources to expand my own career. I hope that in the course of my journey I return the favor to another member of my network.

I think our current President, Ron Wheeler says it best. “AALL’s new brand honors our past, embraces our present, and emboldens our future as legal information professionals. The knowledge and talent of our members, combined with their unrivaled dedication to service, make our whole legal system stronger. I have never been more proud to be a law librarian.”

For those current members of AALL, thanks for being a part of this network. For those that have lapsed in the past few years, I encourage you to come back. If you’re a law librarian or someone who works in the legal information profession, I invite you to come join and make this network your own. For those who employ law librarians and legal information professionals, encourage them to join and leverage this network. After all, AALL is your legal knowledge network.


Technology is cool. There is no disputing that fact. Last month, while travelling for work, I had a video conversation with my kid, while I was 3500 kms away in a relatively remote mountain resort, and he was in a moving vehicle. Last week, while doing some research I came across a data visualization of all of the spells used in all seven books of Harry Potter on a scatter chart, and when you hovered over the data points you learned when the spell was used, by whom and why. That’s cool, that’s technology. Whether we are looking at the vast amounts of data in the world and how we can use that data, make it visible, pretty and useful, or whether we are talking about “smart” technology, machine learning or artificial intelligence as it applies to daily work tasks that can be automated, made better and or make our work lives and products more efficient.

And yet, as I sit here at ARK KM 2016, in NYC, the themes I keep hearing coming out of every session, are around audience engagement, adoption, clarity of purpose, how do we encourage people to share, and clear or shared communication. Fundamentally “soft skills” that technology can’t really impact have been a part of every presentation. Like it or not, while some of us may prefer to engage with robots, as people working in law firms for legal clients, we are dealing with people, clients are people. Implementation of strategically sound KM programs, social for enterprise, efficiency in data visualization, noise reduction, cross firm collaboration, data integrity, whatever it is – people are at the centre and people are necessarily complex. When we talk about getting people to collaborate, share data, engage on client matters together and so forth, we are discussing changing cultures with in individual firms and within the legal industry as a whole. Changing legal and law firm culture, (and related initiatives such as KM – however you define it) start, in my opinion with putting clients first.

I have written here and else where about how clients are or should be at the centre of any significant initiative by firms. Putting clients first to my mind means using a design thinking approach to new initiatives. Design thinking as explained in a recent Lexpert article is “also known as “human-centred design” — an approach that, at its core, is about structured problem-solving with a design flair.” The first step in design thinking that runs through every stage of the process is empathy. Empathy is knowing how someone else feels, whether as a lawyer knowing how a client feels or as an allied professional in a firm knowing how your lawyers feel. Feelings are not always used in the same discussion as law firms or lawyers, but therein, lies the change that needs to happen. In order to successfully innovate and move culturally sensitive initiatives forward we need to think like our clients, we need to feel like our clients. We need to understand our clients pain – their difficulty in solving problems and then very quickly try various solutions in solving those problems or assuage any ill feelings.

Technology can be a tool in helping to achieve resolution, but the tech itself could never replace empathy. The ability to think like others, to feel what they feel and to really understand their challenges and how to address those challenges is really about people connecting with people regardless of roles or capabilities. This is the heart of design thinking – the human element. The EI or emotional intelligence that is required to make AI, KM, BD/Marketing and other projects a success. On the surface it seems simple, and maybe it is, but all too often we are distracted by the technology and the crazy capabilities they afford us. Blinded by the possibilities of the technology, we present solutions to problems people don’t have or we aggregate data sets and taxonomies that make sense to only a few and confuse everyone else. We then push these technology solutions on a varied group of people and expect them to be as excited and ready for the impact of the technology as we are. Who wouldn’t want to know every spell Harry and his friends ever used to defeat He-Who-Should-Not-Be-Named. But if those capabilities add nothing productive to my day, or solve no real world issues, then any real value the technology tools provide gets lost. Tie solutions back people. Start prototying solutions only after actually talking to people, all the people, with all the same problems. Use technology to aid in solving real world issues or frustrations and eliminate the pain that real people are feeling. To do that, we need to be sensitive to the human element every step of the way. Once you can do that, the prototyping and ideation gets far easier, but empathy especially in law firm processes can be a fickle friend.

Who wants to take on that session at ARK KM next year???

If I am in a room with an academic law librarian for more than five minutes, I almost always get some form of this question:

What are the tech skills I should be teaching law students to better prepare them for working in the ‘real world?’

My answer is a pretty standard one. “Make sure they know the basics… then we can teach them the unique skills needed for our particular firm.” The same question came up last Friday when I was on the Law Librarians Conversation podcast with Rich Leiter, Roger Skalbeck, Elizabeth Farrell, Ken Hirsh, Darin Fox, and Michael Robak. Knowing the cool stuff is secondary to knowing the basics.

What are the basics? My guess is that you already know (especially if you’ve read any of my co-geek, Casey Flaherty, posts.)

  • MS Word – especially style sheets and any basic tasks that are automated rather than manual.
  • MS Excel – with some basic understandings of formulas, especially simple math formulas, sorting and filtering.
  • Adobe PDF – Focus on how to effectively use PDF and exporting from other programs like Word.
  • MS PowerPoint – pretty much Google “Death by PowerPoint” and learn the what not to do lessons.
  • MS Outlook – learn rules and foldering. Once you’re at your firm, learn how Outlook interacts with your document management system (DMS) and be an avid filer and rule follower for the DMS standards of your firm. 
It is amazing how many Associates show up at their firms, having attended seven  years of higher education, and do not have these basic skills mastered. According to Casey Flaherty and Darth Vaughn’s ABA Journal article, “Tech comes naturally to ‘digital native’ millennials? That’s a myth” only about a third law law students get these tasks right on the first try:

  • Accept/Turn-off track changes.
  • Cut & Paste.
  • Replace text.
  • Format font and paragraph.
  • Fix footers.
  • Insert hyperlink.
  • Apply/Modify style.
  • Insert/Update cross-references.
  • Insert page break.
  • Insert non-breaking space.
  • Clean document properties.
  • Create comparison document (i.e., a redline). 
That’s not to say that Millennials don’t have tech skills, it just shows that there is a difference in being a consumer of technology and mastering technology needed for the practice of law.  
I commonly say that learning these basic tasks isn’t sexy, but it is necessary to understand before you can really get to the “sexy” technology later. Darin Fox, Law Library Director from the University of Oklahoma, corrected me on the Podcast and said that when his law students see what happens when they apply style sheets to documents, they light up, and think it is very sexy. I have forgotten how exciting it was when I first learned how to create a non-breaking space, and what affect that had on my documents, or the time I read Typography for Lawyers and finally understood why the old standard of double-spacing after a period was no longer the way to draft a document. There is a certain sexiness in creating a document that looks good, and does some “magical” formatting, or a spreadsheet with a built-in formula that displays information compiled from multiple locations. 
Even if you don’t find the basic skills as sexy as some of us do, it is still necessary. When I talk to law students, I usually tell them that if they want to get into the really advanced technology and be seen as a tech guru at their firm (small or large), then learn the basic stuff first, show everyone that you’ve got that down, and then you’ll be the first person on the list when it comes time to try out the newest innovations. There’s so much going on in the legal tech world right now, that I think it is rivaling the dot com era. Artificial Intelligence is such a buzz right now, that I think we may be on the cusp of an AI boom/bust in legal. High tech courtrooms are more and more common, and I even got a peak at the Virtual Reality station in Darin Fox’s library. 
With so many new and exciting tools coming on the market, law firms need help understanding which tools actually work best with the way the law firm works and practices law. We need attorneys to step up and test these exciting tools, and if you want to be that cutting edge attorney, then position yourself early by mastering those basic skills.

Craig Ball wrote a great article yesterday on “Six Powerful Points for Better Presentations” where he give some great tips on presenting information in PowerPoint. At the very end, under his “But, Wait! There’s More” section, he mentioned that he also uses PowerPoint as a “powerful screen capture and video editing” tool. I thought I’d have a little Friday fun post to show you one of my favorite image editing features of PowerPoint of removing the background from an image.

I have to admit that 99% of the time that I do this is to pull a prank on a friend, usually by editing something they posted on Facebook. It’s fast and easy to do once you know where and how to use the tool. Much to the chagrin of my Facebook friend (and Austin rocker), Adrian Conner, I’m going to use her as an example of how to edit a picture in PowerPoint (MS Word also has similar tools.)

Step One: Grab the Picture and paste it into a blank PowerPoint slide. (I think we all know how to copy and paste)

Step Two: Resize the photo (if it is too big or small) so that it fits on the slide, and then double-click the image to bring up the “Picture tools – Format” tab on PowerPoint’s menu bar.

Step Three: Click the “Remove Background” icon on the Picture Tools menu tab. This will create a ‘box’ around a portion of the image and PowerPoint will attempt to automatically remove the background of the image. The part that is to be removed will be displayed in a purplish color.

Step Four:  Move the outline box around until it is a close to the part you want to keep as possible. In this case we’re removing the boxing bear and just keeping serious looking Adrian. PowerPoint does a pretty good job here of getting most of Adrian’s serious stare, while removing the boxing bear. However, despite the glare, some of Adrian’s hair is not there. Also the knit-toboggan is missing from her wild-haired noggin. Not to sweat it… we can edit… it.  (And this is the reason I’m a blogger and not a famous lyricist.)

Step Five: To edit the parts you want to keep or delete, there is now a “Background Removal” tab that appears on the menu bar. In this case, we have areas we want to mark to keep. When you click on the “Mark Areas to Keep” tab, your mouse will turn into a pencil and you can click parts of the picture you want to keep. My suggestion is that you click around the very edges to do this. If you click outside the area, you can hit CTRL-Z to undo your click and try again, or you can press the “Delete Mark button and remove them that way. If there are areas you want to remove, you can do the same with the “Mark Areas to Remove.” Again, stay around the edges until you get where you have removed (or added) everything you want to keep.

Step Six: Once you’ve got all the areas you want, click the “Keep Changes” button on the menu. This will remove all of the picture that is currently in that purplish hue. If it doesn’t quite look right, you can click CTRL-Z again and add/remove more areas until you get it where you want it.

Step Seven: Crop the image around what is left. I usually do this because PowerPoint will keep the image the same size as the original, and if there is a much smaller area remaining, I want to crop that out. Use the “Crop” tab on the menu and pull the outline around the part you want to keep. Then press “Crop” again to remove the rest of the image.

If this is all you want to do, you can stop here, and right click on the image and “Save as Picture.” However, if you want to have some fun, then follow the next steps.

Step Eight: I like to overlay these images over something outrageous. To do that, I have to make the background of the remaining picture as transparent. This will allow me to place this image on top of another image and make it look like it is a part of the picture. To do this, click on the “Color” button on the menu, and select “Set Transparent Color.”
Click anywhere on the white portion of the background of the remaining picture, and it will become transparent.

Step Nine: I usually find a Google Image or a Flickr Image (make sure it is creative commons or not copyright protected if you’re going to use it outside of your own personal enjoyment, e.g., post it on a Facebook.)

Paste the picture in the same slide as the one you  edited, and right click on the image and click on “Send to Back.” This will put your edited photo in front of the image you now want in the background. Align your picture the way you want it by making it smaller/larger so that it begins to look like it is part of the new background. If you’re like me, it make take a few tries and different backgrounds to get the effect you want.

Step Ten: You can edit the color of each of the individual images, and play around with the corrections, color, and artistic effects buttons on the Format menu. Once you have it where you like it, you’ll want to merge the two images together so you’ll have a single final image. You can do this by selecting both images (CTRL-A works, or you can click on each and use the CTRL button as you click), and then press the “Group” button on the menu, and select “Group” from the drop down. You can then right-click and “Save as Picture” to save your final result.

It takes me about five minutes to do all the editing. It takes longer to find a good background to use than it does to actually do the editing. I find it to be very easy, and a lot of fun. Since many of us don’t have editing tools like Photoshop, this is an inexpensive way to have some fun editing pictures.

Hypocrisy is the tribute vice pays to virtue. As such, it is a venal sin. But I’m thin skinned and easily goaded. I couldn’t take it when my best friend called me out for being a hypocrite. And so I have found my way back to a law firm, Haight Brown & Bonesteel, on a part-time basis despite thinking that my law firm days were over.

NOTE: still running Procertas, consulting, writing, speaking, Nextlaw Labs, etc. the rest of the time.

Me = Hypocrite

My original image was as a scourge of law firms. But I didn’t write the headlines. As regular readers have come to learn, my actual message, best captured in my ACC guidebook, is focused on deepening relationships between law departments and law firms. My thesis is that there are win-win improvement initiatives that can come from data-driven law department/firm collaboration. As such, I have staked out the position that law firms are redeemable. I’ve stated repeatedly that law firms are capable of real, positive change.

But I could not be more cognizant of the fact that real change is hard. It is easy to write about change. It is relatively easy to advise large law departments to talk to their law firms about change. It is a genuine challenge to drive change in a law firm, especially absent explicit client mandates. So while I have accepted speaking gigs from law firms and discussed consulting engagements with defined objectives, I have shied away from nebulous commitments to assist firms with general improvement. Until now.

I feared failure. More specifically, I feared that I would be regarded with the same Easy-button mentality as a technology purchase. That is, they would see their commitment to pay the sticker price as their primary obligation. Then I, like technology, would be expected to work some magic in background. Make everything better but don’t make us do anything different. People are all for progress, but they sure hate change.

I don’t have easy answers. Some behavioral changes may be simple (stopping doing X; get better at Y). Few are easy (we’ve always done X; it will take time/effort to get better at Y). So I had an expectation of being completely ignored.

What I had to get over is that this did not make me special. Someone has to do the hard work eventually. I had no excuse for refusing to get my hands dirty.


The Best Friend

Darth Vaughn was born before the movie. Mom wanted to name him Darryl. Dad wanted to name him Garth. Darth struck them as a better compromise than Garryl (no offense to the Garryl’s out there). A few years later this happened.


Rather than slaughter Jedi younglings, Darth Vaughn got a B.S. and a Masters in Regional Planning (with a specialty in geographic information systems) from Cornell, where he also played basketball for the Big Red and was the Ivy League high jump champion. He then worked as business technology consultant at Accenture before decamping to USC for a J.D. and second Masters in Real Estate Development. He’s now a successful trial attorney handling all manner of business litigation. Classic underachiever

Three important points on Darth:

  • Until his daughter Alanna blessed this world, the best thing Darth had going for him was being Lael’s husband. Lael, my law school classmate, is too good for him in every way. Though I still strongly disagree with her veto of “Leah” when baby names were being debated (somehow, I had no vote).
  • For those conferences that encounter difficulties finding diverse speakers, Darth is a master presenter with absurd PowerPoint skills. He presents on presenting (e.g., trial graphics), process, technology, and elimination of bias among many other topics. He’ll be on stage at Clio Cloud Conference tomorrow.
  • Darth is, and will remain, a principal in Procertas

Given my affinity for process and technology, you’d think Darth and I connected at USC Law (he was a year ahead of Lael and me) and bonded over what he’d done while at Accenture. To be honest, it was mostly the bourbon. We met through a mutual friend after graduation and found in one another a reliable drinking companion. Conversations about the lackluster state of affairs in law only came later. And then we never shut up about it.

Despite doing quite well at a large, prestigious firm, Darth considered it too big to change. He had been hunting for a place where he could both practice law and have a firm-wide impact on the way legal services are delivered. He found it in Haight.

Haight offered to bring him in as a partner and the Director of Legal Process Services. It was an almost ideal situation. Almost. The problem was time. He is an attorney with cases to run. Giving him the title does not magically provide the necessary resources, especially time, to affect change. So he put on a charm offensive, convincing them to talk to me about spending two weeks per month dedicated to process improvement.

Me, he called names. In some creative but grossly offensive ways, he suggested that I lacked the intestinal fortitude to execute on my ideas. He seemed to think that my ego was so fragile that I would respond to childish taunts. He was right.

The Managing Partner Who Abolished Committees

But I was still dubious. Then Darth told me the story of Haight’s managing partner, Chris Stouder. Chris is a Haight lifer who loves the firm and therefore made it a condition of his ascension that all power be vested in him so he could actually execute. The first thing he did with that authority was abolish committees. Since then, he has been on a mission to remake the firm.

“Because we’ve always done it that way” is the phrase most likely to set Chris off. He is extremely proud that the firm is about to celebrate its 80th year. History is important to him. But legacy more so. Chris’s mission is to ensure that the firm is around and thriving for another 80 years. He is intimately familiar with changes in the legal landscape and knows that simply being a loose collection of supremely skilled lawyers will not be enough to sustain the firm over the long haul. For Chris, improvement is not an indictment of the past, it is a way to honor the past by building upon it.

Chris has already introduced massive overhauls of governance and compensation even though it resulted in some well-established partners leaving the firm. He has the interest, the authority, and the resolve to pursue real change.

The External COO

While Chris assuaged doubts about the willingness of the firm to actually change, I still had hesitations about the arrangement. I wasn’t going full time. I wasn’t abandoning my other endeavors. I wasn’t moving back to California. Anthony Forde took care of those concerns.

The breadth and depth of Tony’s knowledge is breathtaking. He is as comfortable talking about server upgrades as about utilization rates. He can masterfully move from matter-level profitability to dashboards to record taxonomies in the space of a single thought without any drop off in insight from one topic to the next. He is Haight’s COO and superb at his job. But Haight is not his only gig.

Tony is also the founder and president of Vendor Direct Solutions, one of California’s largest business process outsourcers. While there is definite overlap between the roles, the fact that he can do them both at the same time speaks volumes to how well firm handles part-time employees in prominent positions. It evinces a flexibility that I simply did not expect to find in a law firm.

The Plan

As a proud proponent of legal technology, I came in with a lengthy list of tech solutions the firm would need to purchase before I could get started. The complete list is below:

1. Sticky Notes

The initial plan is simply to listen and learn. I have many general ideas. Trying to implement them all at once would be an unmitigated disaster. Trying to implement any single one of them without stakeholder buy-in and taking into account actual conditions on the ground would be a waste of effort. I don’t know where the chokepoints are. I don’t know what firm clients are requesting. Basically, I’m a far less attractive/brooding version of this guy:

After getting a general overview of the firm, the first thing we (Darth and I) would like to do is sit with one practice group and begin to map their process for a particular case type. Then go from there with a bias towards finding ways to do less (waste elimination) rather than more (additional processes). The hope—because it is not concrete enough to be a plan—would be to identify some refinements that can be scaled across the firm. Alternatively, we would work with them on local refinements and move onto addressing another practice group, case type, or constraint. Repeat.

Ultimately, there is little mystery of what we would like to do. We want to work directly with firm clients on sustainable improvement initiatives that better integrate the firm into the clients’ legal value chain. First, however, I should probably figure out where the bathroom is.

The Takeaway

Haight is both an aberration and a harbinger. Darth, Chris, and Tony are a unique collection of co-conspirators who would be hard to replicate. But we’ve reached a point in the evolution of the legal market where a 65-lawyer firm is making a serious, public investment in process improvement without a splashy marketing angle (robot lawyers!). That would have been unthinkable just a few years ago. Now, it is notable but not shocking. In a few years, it might be mundane. Change is hard. And that is precisely why we need to work at it.

_______________________________________
D. Casey Flaherty is a legal operations consultant and the founder of Procertas. He is Of Counsel and Director of Client Value at Haight Brown & Bonesteel. He serves on the advisory board of Nextlaw Labs. He is the primary 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. Find more of his writing here. Connect with Casey on Twitter and LinkedIn. Or email casey@procertas.com.

Innovation is hard.  Despite how easily the word gets tossed around, like a “bong at a frat party” as a friend likes to say, but to truly innovate, to truly change a process, a culture, a product is one of the most difficult things to do. 

Many legal industry pundits call for law firm innovation, and us non-lawyers have been called out as the gatekeepers of innovation because we are not moving mountains, challenging the status quo faster or with enough chutzpah.  There may be some truth to those claims, we do get frustrated, our ideas can be difficult to implement in the highly matrixed world of law firms and we can get stymied by politics.  Often we give up and retreat into the comfortable,  “we’ve tried that before” type excuses.  But we have to keep trying, use different approaches, find new language and keep repeating the cost benefit of not changing.  If we don’t innovate or transform what and how we do things, we may see more of our roles outsourced or vanish entirely as has been the trend. Today, I pulled out a report I created back in 2008 as an example of what firms could and should be doing for CI and practice strategy.  At the time, the report was shot down for a variety of reasons but as I resurrected it from my “precedents” folder today, and blew off the dust, I still saw its brilliance.  It would have been easy to walk away and not keep trying to innovate in the space given that set back. I was crushed to be honest and wondered why I was working in the industry when what I was hired to do was not welcomed with open arms.    The report was and still is a perfect example of CI innovation in firms. At the time, no one was talking about insights or big data.  But the report pulled together internal insights with external data, it combined form with function. It’s a beautiful report and it lives in my file cabinet to this day.  A pretty picture of what could be. 

I didn’t walk away from the legal industry or my craft, I kept at it and eight years later I have a well respected and culturally ingrained version of that would-be quarterly report going out daily in my firm.  The insights may not be as bold but the delivery is faster and tailored to the individual user.  It’s a baby Pheonix rising from the ashes.  There is still work to be done to truly innovate in the legal space, much of that innovation and change is culturally and client dependant.  But that doesn’t mean that we should give up, walk away or ignore the hard.  Embrace the hard, chip away at it day in and day out.  Instead of focusing on what we can’t do in our firms, finding that report today inspired me to think about what I have accomplished and to change the narrative.  We have to focus on what we can and do change, and keep pushing through the hard to make things happen.  Celebrate the small wins and open the proverbial gates that’s we are accused of keeping closed by finding ways to get through to challenging professionals and business owners, whether on a CI project, a profitability and pricing analysis or a library resource that can increase a firm’s efficacy.  Innovation is about changing a culture, about upending what is into what can be and sticking with it.  Innovation is hard. 

As I drove home tonight thinking about this post, Fleetwood Mac’s Landslide came on the radio and I had to smile.  Time does make you bolder. And time sometimes it is exactly what you need to innovate too.  Its time to be bold. 

 
I was recently asked my opinion on associate salary increases (no, really. It’s not like I have any compunction about foisting my unsolicited opinions on the world). I told the person I would get back to them. That was a couple of weeks ago. And I still don’t have anything resembling a coherent position. I am of many minds:

Tribal affinity. I was a BigLaw associate. I am still drowning in law-school debt. It is hard for me to begrudge associates their first raise in a decade. Inflation-adjusted salaries for associates at top firms have increased about 25% since 1986 (while the cost of living in New York, where the elite firms who started the avalanche are located, increased substantially more). Profits per partner, meanwhile, are up 225% in inflation-adjusted terms over the same period. Making associate salaries the symbol of law-firm profligacy is like foreign aid serving as the rallying cry for fiscal conservatism.

Tribal affinity II. Except it really is a potent symbol. I was also an in-house counsel who occasionally encountered a junior associate of limited value (not their fault) and thought to myself, “This person makes more money than me.” I admit it, I’m petty. Going in-house was a conscious choice. But I’m not alone in my resentment:

The newspaper also spoke with an unnamed chief litigation officer for a Fortune 100 company who also questioned the need for the pay raise. The chief litigation officer said a lawyer in the company’s litigation department with 20 years of experience doesn’t make $180,000. “Why would we ever think a first-year associate is worth that?” the lawyer said.

Quite a way to remind clients of all they fund beyond the mature domain expertise they actually value. It was a move guaranteed to engender client backlash and further fuel some threatening trends in client/firm relations. But firms still fell all over themselves to keep up with Cravath.

Keeping up with Cravath. Cravath, Wachtell, et al. I have cognitive dissonance because I don’t really think of them as part of the general BigLaw market despite the fact that I recognize their role in driving that market (Cravath salary scale, Cravath bonus scale…). I’ve never found fault with the idea that there are elite lawyers and elite firms who are sought after to handle price-insensitive work. Such work exists. Clients pay a premium for it. Cravath, Wachtell, and a few others are undeniably in that class and are in many ways immune from most of the forces I drone on about.

But work is finite, especially price-insensitive work. And clients are getting more discerning about what they put in the price-insensitive bucket. It’s easy to understand why the AmLaw 5 firm thinks they need to keep up with Cravath. But it is hard to understand why the AmLaw 95 firm thinks the same

Or is it. The game is follow the leader. AmLaw 5 is competing with Cravath. AmLaw 10 is competing with AmLaw 5. AmLaw 20 is competing with AmLaw 10. And so it goes down the line. AmLaw 95 is not trying to keep pace with Cravath, they are keeping pace with AmLaw 85.


Keeping up with Cravath II. And while a few law firm partners may be almost as venal and petty as me, it probably isn’t pure ego.

There is client chatter about the New Normal. But many successful partners have not encountered it yet. They still operate in a world where law is a credence good. How much associates are paid is among the many status signifiers (impressive zip codes, lobby art, watermarked business cards) that communicate, “Don’t worry. We got you. No one ever got fired for hiring [prestigious firm].” Not paying associates the going rate might be seen as evidence of diminished stature.

It is easy to imagine associate salary increases coming up as a negative the next time a firm seeks rate increases. “Rule No. 1 of associate raises is that partners do not pay for the raise.” Clients may push back on the basis that they are not going to foot the bill for delusions of grandeur.

But it is just as easy to imagine the mirror-image discussion if the firm declines to increase salaries. A firm that doesn’t raise compensation has less of a claim to ‘market’ rates since they clearly do not consider themselves in the same class as their peers.

Moreover, large, diverse firms are not monoliths. There is plenty of intrafirm variation. You can be AmLaw 150 in profits per partner but still have a viable claim to the best tax or real estate practice around. Which herd is the firm trying to run with?

Clients notice. So do the laterals who might hesitate about moving to a firm perceived as falling behind the pack.

More of the Same. Maybe this is the straw that breaks the camel’s back. More likely, it is just another straw because, well, inertia. Regardless, it is absolutely a sign that law firms expect the status quo to reign for the foreseeable future.

Yet even those of us partially inclined to yawn cannot ignore it. Above the Law’s traffic went through the roof [every associate who got a raise should be sending lavish holiday gifts to Cravath’s Executive Committee and the ATL editorial team]. And the story continues to occupy considerable mindshare.

The big story in law (measured by attention) is therefore something along the lines of: Rich lawyers give slightly more money to not-as-rich lawyers based on belief that other not-as-rich lawyers (inside counsel) will send them high-margin work regardless. 

That the story consumed so much oxygen manifests a lawyers-only view of the world. Obviously, the legal world is, by definition, lawyer centric (though some misguided souls argue it should be client centric). But delivering legal services is increasingly a team sport. The question of how domain expertise is leveraged through process and technology, not just additional expensive bodies, keeps growing in importance. Yet, unsurprisingly, I didn’t hear anyone at ILTAcon discussing commensurate raises for allied professionals. The caste system remains intact.

I have no idea what Perkins Coie pays their associates. But I’d wager that hiring Toby will have a more significant impact on the firm’s cost and performance (and revenue and profitability) in the near, medium, and long term than whatever decision they made on salaries. That the firm has now also lured Keith Maziarek away from DLA Piper is an absolute coup. Add a new, change-agent CIO in Rick Howell, and you can start to tell a story that should be far more important to clients than what associates make. But I doubt an item about a firm assembling a process/pricing/tech nerd dream team among its leadership would get one percent of the client attention or peer-firm mimicry of an elite New York firm marginally increasing salaries of people who already work there.

Likewise, I must have missed the media circus when Christopher Ende left Goodwin Procter to become the Law Firm Pricing, Solutions, and Panel Management Leader at GE. But knowing Chris (from conferences; no intimate knowledge of his role/plans implied) I suspect that his hiring will be more meaningful to the industry than whatever Goodwin pays its associates. If Chris does a quarter of what Vince Cordo has done since he left Reed Smith to join Shell, we’re in for a wild ride.

Which, of course, means I’ve come back to my evergreen themes: (i) clients demanding change and (ii) allied professionals playing a critical role in both making and satisfying those demands. Neither really has much to do with associate salaries.

If clients truly care, then the salary increase is a big deal. If clients don’t really care, then it isn’t. Truly caring would mean changing purchasing behavior.

Referencing associate salary raises to score rhetorical points in the midst of a rate discussion—where negotiating down the size of the annual rate increase has somehow been reframed as getting a ‘discount‘—is not altering behavior. You are still just having a discussion about rates. You might consider a different conversation.

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D. Casey Flaherty is a consultant who worked as both outside and inside counsel and serves on the advisory board of Nextlaw Labs. He is the primary 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. Find more of his writing here. Connect with Casey on Twitter and LinkedIn. Or email casey@procertas.com.

Some bonus material for those not offended by the length of my posts.

More of the Same II. You get what you reward. We’re rewarding the same things in the same way as before. So behavior is unlikely to change much.

There is a genuine question of whether most firms are even increasing total compensation to their associates. Only after we get through bonus season will we know which firms are actually paying their associates more overall and which firms just moved bonus money into salaries.

Whether or not total pay is actually up, clients should absolutely take an interest in comp structure (and fee structures, governance, succession, process, training, tech, etc). The incentive that clients are rightly worried about is that the perceived increase in fixed costs will drive firms to (a) raise rates and (b) demand more hours from their associates. But these have been the dominant trends since forever. Annual rate increases have come to be regarded as natural law. And most law firm bonuses have been premised on hitting/exceeding hours for decades.

It’s not that incentives don’t matter. I’m just not sure they have shifted in any meaningful way.

Keeping Up With Cravath III: The herd is strangely selective when it comes to mimicking the elite firms. Keeping pace on salaries is relatively easy. But what about lockstep partner compensation? Ruthless brand discipline? Etc. When you bring those up, you get all kinds of “we’re different”, “they’re different”, “that won’t work here”, “you don’t understand”….which is often true enough. Still, the idea that a firm is keeping up with Cravath or Wachtell because they pay their associates the same salary seems to get the causation backwards (you are not elite because of what you pay your associates; you are able to pay associates because you are elite).

I appropriated this from the estimable Bruce MacEwan:

So what does this putative firm of the future look like?

For as long as I’ve been in and around this industry, I have heard ad nauseum infinitum that firm ABC or XYZ, whether or not they had any remotely plausible aspiration to these leagues, only wants to act on the “highest value,” “price-insensitive,” “bet the company,” “make or break,” “premium work.”

Your day has arrived. You may wish it hadn’t.

Because what is the model I’ve sketched above? It’s a model, as a partner at an AmLaw 10 told me last week, with “clients who are happy to pay $1,100/hour for me but not $400/hour for even a qualified midlevel associate.” What is that model?

Wachtell.

We’re all Wachtell now, if we can pull it off.

But I put this squarely in the category of “be careful what you wish for,” since “being Wachtell” is far more challenging than being a typical AmLaw 50-ish firm—no offense to those of you in that category.

Let’s back up: I have a confession. I used “We’re all Wachtell now” calculatedly. The phrase—the very mention of the firm’s name—can inspire envy in the ranks of those who subscribe to the notion that their firm needs to be in that top right quadrant of the 2 x 2 matrix, the “highest value,” “premium work,” etc., engagements. And of course, who can object to Wachtell staking out its own party-of-one place in the PEP stratosphere?

But that’s not all the Wachtell model is about. There are two other critical elements more challenging to embrace: (1) that 1:1 partner:associate leverage, and (2) their intense focus on highly specialized and narrow lines of business, without deviation.

Achieving (1) is going to require wrenching changes in almost every firm that chooses to go down that path, and it can risk introducing centrifugal forces that can tear the place apart before you can achieve the goal.

And as for (2), it requires saying No relentlessly, and many more times than you’ll ever get to say Yes.

Are you game?

And if not, what’s your plan?

A couple months back, I was giving a talk in a far off land (Canada) and the moderator introduced me as “the most internet famous person [he’d] ever met.” This was genteel nonsense, all the more endearing because it was absurd on its face.

He was doing obvious violence to the concept of fame. Googling “D-List Celebrity” returns an image of the prop comic Carrot Top, who has 63.4K followers on Twitter. As you can see from the panel to the right, my follower count establishes me 4% as Twitter famous as Carrot Top who himself is only 5% as Twitter famous as Emergency Kittens.

Further, the moderator’s puffery doesn’t hold up even if “fame” is being used in the local sense–i.e., widely known among the tiny subset of people who read about changes in the legal market. As the panel to the right also indicates, I am one of the least followed Geeks. There were several people in that room who are Lambert-like in their audience reach. I was not even the most famous person the moderator encountered that morning.

Rather I think what he was commenting on my ubiquity. It may be dreck, but there is no denying that my production is prolific. If you are one of those people (he is) who actively engages on the topics I cover then I am downright Kardashian in terms of saturation. Repetition has a substantial impact on perception.

In a similar vein, after a few drinks, one of my fellow presenters complimented me on my ability to “stay on message.” That was his polite way of noting that every time he sees me, which is often, I am spouting a slight variation on the same themes. But that’s the thing, I am generally not directing my talks to the people with whom I share the stage, fellow bubble dwellers who see me too often. I’m talking to an audience where 99% of the people have never heard of me and are almost completely unfamiliar with my message.

These fine gentlemen read a huge percentage of what gets written on changes in the legal landscape so they encounter me all the time. They are not alone. There is a cadre of people who are similarly engaged. But how many? My anecdotal answer: not many. 

True Story 1. I used to write the legal tech column for the ACC Docket. For two years, a magazine sent to more than 35,000 inside counsel had my ugly mug opposite the coveted back inside cover. But when I would attend the ACC Annual Meeting–filled exclusively with people who get the Docket–my name/face recognition was de minimus among the people I did not already know (from the internet and other conferences). Mind you, I only got that writing gig after a fair amount of publicity elsewhere. Still, the people I met for the first time had no idea who I was, let alone anything about the ideas I espoused on the back page of the magazine they received every month.

That they did not know me was not all that surprising. Even today, I’m a niche player. But in trying to explain my interests to them, I would invariably make reference to important ACC initiatives like the Value Challenge or prominent ACC figures like Susan Hackett, Jeff Carr, and Ken Grady. Blank stares all the way around. So I would move onto ‘common’ concepts–AFAs, LPM, KM–and still elicit no spark of recognition or interest. Eventually, the conversation would turn to anodyne topics like the weather or the venue before we politely parted ways.

It was evident that attending the ACC Annual was the sum total of their engagement. If a topic was not covered in a panel they attended, they were not going to hear about it. And, of course, these were the self-selected individuals willing to make the extra effort to attend the ACC Annual (a great conference). The majority of their peers got their CLE’s online or for free from local law firms. I was interacting with the most active subset of in-house counsel. And most of them had no frame of reference for topics I consider fundamental to legal service delivery.

True Story 2. Last week, I was talking to a friend who was preparing an internal presentation on his firm’s successful use of alternative fees [slow clap]. He mentioned the presentation to a partner whose response was, “What’s an AFA?” That a partner at any law firm is not familiar with the term is surprising. The AFA conversation is older than I am. Such ignorance from a partner at a firm that was already broadly and successfully using AFAs is even more astounding. Except it isn’t. It is pretty easy to imagine a successful partner navigating a lucrative career without being confronted with the alternative fee concept frequently enough to internalize the abbreviation.

Most Lawyers Don’t Read, Most Clients Don’t (Seem To) Care

Imagine a conversation between an in-house counsel from Story 1 and the law firm partner in Story 2. The exchange might very well contain substantive brilliance that furthers a vital business interest. Neither story suggest that their subjects are anything other than true domain experts who render valuable client service.

But once the topic moves beyond discrete legal issues to the business aspects of the relationship, they probably struggle. Discounts would be about the long and the short of it. Regular writedowns of invoices. Annual rate-increase theater. Discounts serving as the fallback whenever the conversation veered into nebulous topics like efficiency, staffing, responsiveness, etc.

It’s not that they would fail to recognize that there were problems. It’s that they would not really know where to start with remedial action. So they would apply the discount bandaid and try to get back to their comfort zone, substantive legal issues. That is until the in-house counsel became frustrated enough to shop elsewhere, leaving the outside counsel to wonder why the phone stopped ringing.

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.

I don’t blame anyone for not reading me. Indeed, I don’t blame anyone for not reading the people I read (who are much better than me). Lawyers spend all day reading. It is natural that the little time they have off the clock is spent parenting, socializing, exercising, drinking, sleeping, or consuming popular culture. Despite some evidence to the contrary, lawyers are human.

Nor do I expect the reading habits of lawyers to change much. I expect an incremental increase in general awareness of the New Normal and an attendant increase in comfort with process and technology as necessary appurtenances to expertise in the delivery of legal services. Beyond some baseline improvements, I don’t really expect most lawyers to add much process/tech acumen on top of their domain expertise. Rather I see the continued increase and integration of legal operations, legal engineers, allied professionals, process/tech nerds, etc. The integration point is key. It’s not like these people don’t already exist. But the caste system is resilient.

I’m not exactly the first person to point to the superior returns from the division of labor supported by proper management (i.e., making people capable of joint performance). If only we had a group of people whose job required them to keep abreast of changes in the legal market and who were then empowered to modify behavior at law firms.

You’d think that “managing partner” fits that job description. On recognizing shifts in the market, you’d be right. These fine people are acutely aware of what is going on. But managing partners rarely have the unilateral authority to do that much about it because their partners are so focused on autonomy that many of them would choose it over money:

So who do the partners listen to? Clients.

A return to that topic in the next post.

_______________________________________
D. Casey Flaherty is a consultant who worked as both outside and inside counsel and serves on the advisory board of Nextlaw Labs. He is the primary 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. Find more of his writing here. Connect with Casey on Twitter and LinkedIn. Or email casey@procertas.com.

ADDENDUM: At ILTAcon (amazing conference), my friends mocked me for writing so frequently and so long. Deservedly so. I can’t let go of ideas until I get them on paper. This is my scratchpad, which some of you seem to enjoy.

This was supposed to be the final installment in my series on why law firms are not doing more to change the way they deliver legal services.

In Part 1, I made the case that managing partners were well aware of the shifts in the legal landscape but were becoming more pessimistic about their firms’ ability to adapt. In Part 2, I suggested it was rational for powerful partners to resist change efforts because their success validates their approach. In Part 3, I explained the clients tend not to ask for change (voice) because they seek alternatives instead (exit). In Part 4, I cautioned that client’s signalling (exit) was too incremental to materially affect near-term behavior and therefore expressing their dissatisfaction (voice) was imperative if they want more/faster change than they are getting. Here I tried to dig a little deeper into why partners might be unaware of what they might do differently.

Because it is so important (and repetition matters), I want to conclude with some more thoughts on the role clients play. Hence one more post than originally planned.

Six posts out of a single survey question serve as Exhibit A that I write way too much.

 

image [cc] Angelskiss31

Let me start out this post by saying that I like David Perla, President of Bloomberg Law and Bloomberg BNA’s Legal division, and consider him to be an ally for the law librarian and legal information/knowledge profession. However, I have to say that I am a little disappointed at his Above the Law article yesterday called “A Challenge for the Gatekeepers.” His article starts out with a warning to the legal industry saying that “change is coming – with or without you,” but then he spends the rest of the article singling out Law Librarians and Knowledge professionals as the gatekeepers. Although David says this isn’t about Bloomberg Law’s new roll out of a Tax Product, quite frankly, it reads like it is. I’m really disappointed that he took to Above the Law to vent.

Transitions in how a legal products perform for practice areas is something law librarians deal with practically on a daily basis. One of our primary responsibilities for our firms are to evaluate these products and present an initial evaluation report to the Practice Group Leaders or power players within the practice area. Law Librarians have a diverse legal expertise, and some are legal area experts. I know law librarians that are more savvy when it comes to understanding practice areas like Tax or IP than most Associates or Junior Partners in their firms. We understand our firms, we understand our Practice Groups, and we are tasked with the responsibility to know when it is right to push for new products, and when it isn’t time.

I can’t speak for everyone, but I push for change every day! EVERY SINGLE DAY!!

I constantly evaluate new products, establish training sessions to teach attorneys and others the value of the very expensive resources we purchase with our law firm partners’ money. I work to de-duplicate resources so we are not wasting money. I also make recommendations on keeping similar products because I understand the way the attorneys work and know that sometimes it pays to have those resources, even if on the surface it seems irrational. I make sure that we have team members that go to PG meetings to observe, listen, and engage. It’s not gatekeeping. It’s called being a leader and making sure that we are implementing the overall strategies of our individual attorneys, our Practice Groups, our Offices, and our Firm as a whole.

I’m a little confused when David wrote:

I attended a session at AALL [American Association of Law Libraries] where librarians were brainstorming how to be more relevant or get lawyers to pay more attention to them. But when the moment comes to actually introduce change at law firms, they flinch out of fear. Afraid that the attorneys they work for will find change uncomfortable, they balk—just as Monster’s executives balked at upsetting the site’s customers.

Not buying a new legal information product is not the same as “flinch[ing] out of fear.” I find that statement to be a bit misleading, and way overly broad in the assumption that law librarians can’t pull the trigger on change.

I appreciate Bloomberg BNA being a disrupter in the legal information field. But, I will say that when the disruption initially affects the Tax and the Labor & Employment groups, it makes for a very difficult sale to those groups. Not that they are change adverse, but that they are either well served by their current products and have a comfort level with them, or that they are a group with very narrow profit margins that have to have concrete evidence that new, much more expensive, products will truly make their work more efficient and not decrease that narrow margin.

It’s not about throwing up barriers for change. It’s about understanding our environments and applying our expertise, experience, knowledge, and wisdom to every single change we see, every single day. I’m not a gatekeeper that flinches at change, I’m an experienced leader for change that make sense for my organization.

When buyers are dissatisfied, they shop elsewhere. Decline in demand signals the seller to change behavior. It’s textbook. And yet it does not seem to be working in the legal market. Despite a decade of buyer dissatisfaction, behavior has remained mostly the same. Managing partners recognize the many signals of client discontent but still claim that clients aren’t asking for change.

Last post, I explained why clients rely on exit rather than voice to express frustration. Here, I will try to illustrate why voice remains critical. In short, there is too much friction in the market. The current pace of exit is insufficient to drive major change. Nor does exit necessarily ensure structural reform, as opposed to reallocation of the same damn problems.

Clients are mad but not that mad

 Clients’ bark is much worse than their bite. The overall trend isn’t so much a decline in demand for law firm services as a flattening. Rather than a net reduction in law-firm business, the insourcing and managed-services pushes are still experienced as a slowing of the explosive growth that marked the law firm market for decades.

This not-quite-decline is why managing partners point to insufficient economic pain as a barrier to change.

While the slowdown is enough to sustain a cottage industry in conferences and thinkpieces (see e.g., me) about the imminent implosion of the traditional law firm model, it is not enough to fundamentally threaten the model. What is true generally is especially true for the partners with the most power within law firms–i.e., those with the biggest books, best relationships, and shortest time horizons. They are doing just fine and that seems likely to continue.

Why clients don’t use exit more

Exit is risky and expensive. Incumbents mostly do quality work, and switching costs are high. We tend to form long-term supplier relationships. We should act accordingly.

Even if prices are a problem and service delivery is frustrating, good lawyers remain extremely valuable. If a client already has good lawyers, they are loath to move their business elsewhere. We have few reliable proxies for, let alone measures of, lawyer quality–which currently resides somewhere between a credence good and “I know it when I see it.” There is risk inherent in transitioning from known to unknown commodities. As Firoz Dattu of AdvanceLaw has observed, we have an information problem.

Moreover, the transition itself is resource intensive because of search and ramp-up costs. An incumbent that already knows the company, personalities, procedures, etc. offers genuine advantages. Indeed, the more rigor a client adds to protocols, processes, billing guidelines, etc., the more painful it is to find a new firm and bring them up to speed.

The transition to insourced or managed-service alternatives can be even more daunting, including the part where inside counsel attempt to repurpose budget that the organization is acclimated to directing towards law firms (law firms aren’t the only ones biased toward the status quo).

That, on net, the most common preference is to remain with incumbent firms does not mean those firms couldn’t stand to improve (hence the dissatisfaction). Repeating some of my standard schtick: with people and price in place, it is process that offers the most levers to drive continuous improvement. The only way to address process is to actually address process. That requires having a data-driven conversation. In short, voice.

If most incumbents are going to remain incumbents for a material length of time (i.e., no exit) then voice is the only real option to affect behavior.

Repeating the same thing, expecting different results

 I’ll never understand shopping primarily on the size of a discount (where the client chooses the firm with the higher effective rate because the firm came down by larger percentage from their rack rate). Then again, I also don’t understand moving from one firm to another solely because the latter has lower rates.

All else being equal, lower rates mean lower spend. But all else is rarely equal. Even assuming the same quality, the basic math problem is that the variable you aren’t controlling (hours) tends to have a much wider range than the variable you are controlling (rate). Where the difference in rates is usually linear (5% to 30%), the hours required can differ by orders of magnitude (20 hours of superfluous research to support the same 2 hour drafting exercise). The extra hours can swallow up the lower rate subtly and quickly.

This realization is usually accompanied by the resolution to do something about hours followed quickly by the awareness that proper scoping militates towards alternative fees. You’ll get no objection here on the shift to alternative, especially value, fees. But recognize that it is the move to value fees that is doing the heavy lifting on changing behavior, not the switching of firms. That said, I can get behind selecting a new firm because they excel at value fees (e.g., they employ Toby). Still, we’re now a long way from exit for the sole purpose of reducing hourly rates.

You are not going to change behavior by moving from one traditional firm to another simply because the latter has lower rates. You may not even save money.

Insourcing

Of course, you can move to the ultimate flat rate–a salary–and still not solve your problems. You are not just bringing a lawyer in-house. You are also insourcing the attendant challenges of scale. Resource allocation, document management, knowledge management, project management, data/analytics, technology, training, professional development….The demands and difficulties of scale will always grow faster than the in-house team.

Returning to the discount analysis, the problem remains much less about (i) the unit cost of lawyer hours than (ii) the number of units legal tasks demand. While insourcing in the present environment makes it easy to demonstrate a reduction in unit cost (rate), it is not automatic that the transition will do anything about unit volume (hours).

It is certainly possible for in-house teams to get a handle on scale (legal ops!). But they do so by addressing service-delivery issues–i.e., the same issues on which they were silent with their law firms when opting for exit over voice–and prevention (a separate but vital topic).

There is an argument to be made that coherence is easier to achieve when everyone answers to the same boss. They’ve handed out Nobels in economics (Coase, Williamson) for explaining why we have islands of dictatorship (organizations) dotting the sea of the market. That is, there is logic beyond unit-cost reduction that supports insourcing trend.

I agree with this logic to a point. I think it was absolutely essential for in-house departments to get bigger and more sophisticated relative to their external spend. Exit, let alone voice, requires extraordinary effort for a law department that is already completely underwater trying to triage too many matters. Any system predicated on extraordinary effort is doomed to underperformance.

But, as I said, only to a point. The unit-cost ROI is proving a little too compelling for many law departments. They are mostly just throwing less expensive bodies at the same problems. They are growing in ways that make perfect sense and save real money, for now. But they are trading short-term tractability for long-term flexibility.

Today’s cost-saving hires are tomorrow’s roadblocks. “We’ve been doing it this way for 10 years…we know what we’re doing…we just need more headcount” is something all new hires will be able to say eventually. Entrenched employees, especially autonomy-obsessed lawyers, are challenging to retrain, repurpose, or retire. (Recommended: here and here from the peerless Ken Grady).

Sustainable cost savings may prove illusory. No matter the extent of the short-term savings, the in-house department will eventually have to address the systemic service-delivery issues (i.e., voice). Insourcing just changes the audience. I would not be the first one to observe that, often times, in-house departments have an easier time affecting external behavior.

Managed-Service Providers

 The inevitability of addressing systemic issues remains true even if the bodies being thrown at the problem are really inexpensive on a relative basis. Managed-service providers, too, can suffer from the legal cost disease.

I’ve said many times, there is nothing wrong with labor arbitrage. If a law department can get the same product at a lower price, they should. In a world of tradeoffs, it is even worth considering slightly lower quality at radically reduced costs on non-critical work. But labor arbitrage only slows, rather than levels, the uptick in legal spend–i.e., it does not fundamentally bend the legal cost curve identified by the essential Bill Henderson:

It is justifiable for a law department to enter into a relationship with a managed-service provider expecting that the initial savings will come from labor arbitrage. But the long-term strategy has to involve systematization through process and technology. Systems do not arise spontaneously with managed-service providers, just as they are not naturally occurring at law firms or in-house. Law departments will still have to pay attention to and address (voice) the systems by which their managed-service providers are delivering legal services.

Just as there is logic to insourcing beyond labor costs, there is a compelling argument to be made that managed-service providers are in pole position to thrive in a more system-oriented legal market. First is the simple but genuine advantage of being relatively new and nimble. Building from scratch is often easier than retooling. Second is that the value proposition of managed-services providers is already expertly designed systems, rather than the individual expertise of particular partners. Not only is this more in line with the drive to systemization but it also suggests more stable long-term arrangements (no lateral mania with client work treated as chattel), especially since it complements law department insourcing of expertise. Underpinning both of these advantages are a capital structure and culture more amenable to infrastructure investment, process re-engineering, and technology deployment.

Back to Law Firms

I truly believe that in-house teams and managed-service providers will continue to grow as central pillars of legal service delivery while the frantic growth that law firms experienced for decades seems very much dead.

But let me conclude with some love for law firms. Inertia is unavoidable but not indomitable. Because they have been ascendant for so long, law firms have more intellectual capital than anyone. They have relationships, track records, experience, perspective, etc. They are filled with brilliant, experienced, talented, hard-working domain experts who are genuinely dedicated to quality and client satisfaction. Some of these domain experts are lawyers. Some of them are allied professionals who have spent more than a decade preparing for the transition to a more system-oriented legal market (see y’all at ILTACON next week). In theory, law firms even have more financial capital than anyone.

Law firms have the time, the talent, the funds, and the opportunity to make us doomsayers look silly. They just need a little push. But, clients, you do need to ask. A tad more on why in a subsequent post.

Exit isn’t enough. Whether work is being done in-house, by a law firm, or by a managed-service provider, the systems for delivering legal services will need to be addressed. Clients will have to use voice at some point. There is no time quite like the present.

Full Arc: Law Firm Resistance to Change and Law Department Responsibility

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D. Casey Flaherty is a consultant who worked as both outside and inside counsel and serves on the advisory board of Nextlaw Labs. He is the primary 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. Find more of his writing here. Connect with Casey on Twitter and LinkedIn. Or email casey@procertas.com.