Couldn’t help myself. I encountered a tweet about a “robot lawyer” and took the bait. I’m a moron.

An unwise decision. Silliness promptly followed. To preview, Robot Lawyer LISA is just another document assembly tool with a single mediocre form (an NDA). For what it is—consumer-facing doc assembly—the concept and content are fine relative to what else is available. The claims to be something more—an  AI robot lawyer—are absurd. The hyperbole, however, is effective (here I am writing about it like a sucker) and unsurprising given that we (hopefully) just passed the peak of another hype cycle.

As document assembly tools go, the Robot Lawyer LISA’s UI and UX are reasonably slick if slightly buggy.* It’s built on Neota Logic, a platform I like. With respect to the content, I outsource the analysis to the incomparable Mr. Contract, Ken Adams (see my previous post on Ken and online legal forms):

I had a look at the fruits of your dalliance with LISA the AI Lawyer. The best I can say is that someone who fraternizes with LISA might well end up with something more suitable than if they had grabbed an NDA at random from the great online junkyard.

The questionnaire offered is basic. The annotations offered are rudimentary. The guidance mostly comes in the form of an AI-free PDF. But that’s probably OK—LISA is aiming for the unsophisticated end of the market.

The language in the output document is Clunky Traditional, English Division. I could write a book about its shortcomings. In fact, I already have. That said, it would be delusional of me to fault the language because it doesn’t comply with my guidelines, given that my guidelines are still, uh, pioneering, particularly in England.

In the two minutes—really—I devoted to substance, I spotted two issues. A recital refers to information that might be “confidential or proprietary in nature.” The word proprietary doesn’t make sense in this context, as I discussed in this 2010 blog post. It’s an unnecessary mistake for LISA to make, given that the word doesn’t occur in the body of the contract. But it doesn’t bode particularly well.

And I noticed this sentence in the PDF: “The main reason and benefit of using a deed rather than a simple agreement is that confidential documents or information provided BEFORE the NDA is signed will be covered by the deed.” That strikes me as debatable: if as part of getting more confidential information I agree to keep confidential any information disclosed previously, my promise is supported by consideration without my having to resort to the magic-words contrivance of describing the contract as a deed.

Further rooting around would likely raise further issues. That said, the substance is likely treated no worse than it is in the mass of stuff out there.

I realize I’m setting the bar low, but we’re dealing with business contracts, where dysfunction is the norm, so you can set the bar low and conceivably still be useful. But don’t expect me to applaud. Given the brave-new-tech-world trappings, I would have expected something a bit more ambitious, in terms of technology and content, from LISA the AI Lawyer.

I didn’t share Ken’s expectations. Vain hope, sure. But no room for genuine disappointment. Grandiose claims about “robot lawyers” put my BS detector on high alert. “Artificially intelligent”, “robot”, and “lawyer” are vague terms that continue to be stripped of meaning by overuse. Robot Lawyer LISA takes this vacuousness to new heights.

AI is a broad field. I’m comfortable with expert system platforms like Neota Logic being considered a form of AI. I don’t have the chops to argue otherwise. Still, I doubt it conforms to what most people today think of when they hear the term “artificial intelligence.” We constantly move that goal post: “It’s only AI when you don’t know how it works; once it works, it’s just software.“

At a recent conference, I presented with co-Geek Ryan McClead, a VP at Neota, who recounted many debates about whether his product qualifies as AI. His killer rejoinder (paraphrasing) is that it doesn’t matter if the technology conforms to someone’s subjective definition of AI, what matters is whether it solves a real problem better than what is currently available. Hear, hear!

The reason I had to try Robot Lawyer LISA for myself is because I could not elicit a coherent answer on what made it superior to the available alternatives. Like Ken, I found it, at best, comparable to what has been around for years. If Robot Lawyer LISA is AI, so are all the other consumer-facing dynamic document assembly platforms. Which is to say the AI label is not a useful distinguishing factor.

I made a good decision in staying out of the argument about what constitutes AI. Instead, I stupidly plunged into the “robot lawyer” abyss:

As the person behind the account surely knows, the definitions of “robot” are broad. Most people probably think of these:

 

But there are software robots. So I guess, technically, we can take the broadest definition and call any form of software automation a “robot”, just as we can call it all “AI.” This, however, makes AI robot both redundant and virtually meaningless as a descriptor.

There seems to be no statutory definition of “lawyer” in the UK (happy to be corrected on that). Yet Robot Lawyer LISA does not satisfy any of the plausible candidates I located:

From The Law Society:

Lawyer – a member of one of the following professions, entitled to practise as such:
the profession of solicitor, barrister or advocate of the UK

  • a profession whose members are authorised to carry on legal activities by an approved regulator other than the Solicitors Regulation Authority (SRA)
  • an Establishment Directive profession other than a UK profession
  • a legal profession which has been approved by the SRA for the purpose of recognised bodies in England and Wales, and
  • any other regulated legal profession specified by the SRA for the purpose of this definition.

From Slater and Gordon:

The term Lawyer is a generic term used to describe anyone who is a Licensed Legal Practitioner qualified to give legal advice in one or more areas of law.

From Oxford Dictionaries:

A person who practises or studies law, especially (in the UK) a solicitor or a barrister or (in the US) an attorney.

Best I can tell, Robot Lawyer LISA is not a member of any profession, not entitled to practise, not licensed, not qualified to give legal advice, and not a person, let alone a person who practises law. Indeed, the site delivers the disclaimers you would expect from an ordinary online document assembly service:

this App is made available to you strictly on an ‘as-is’ basis and we give you no warranty, guarantee or assurance of any kind about this App.

In particular, the information provided may be incorrect or out of date, and may not constitute a definitive or complete statement of the law or practice in any area and the output of the App may not be suited to your particular purpose.

The information provided is not intended as, and does not constitute, legal advice in respect of any specific situation or for any particular purpose. You should take your own legal advice in respect of specific situations and conduct your own research into the suitability of lawyers before appointing them.

So Robot Lawyer LISA does not give legal advice. Instead, it counsels lay consumers to take their own legal advice (huh?) and do their own research before appointing a lawyer (and here I thought I already had a robot lawyer in LISA). Weak sauce.

I am sure someone from the Robot Lawyer LISA team can point me to a nebulous definition of “lawyer” that encompasses their app. But that will only prove that words have no meaning, and we are all living in the fever dream of a stoned college sophomore who is encountering Wittgenstein for the first time.

Whether there is some tortured, technical sense in which LISA can be called an AI Robot Lawyer is irrelevant (to me). What matters (to me) is that labeling LISA an AI Robot Lawyer does not convey any useful information to the consuming public.

This prompts two questions that share an answer:

1. Why do damage to the English language in order to call LISA an AI Robot Lawyer?

2. Why do I care?

Because it works. At least in the short term. These days, it would be hard to garner press coverage for launching yet another doc assembly app for basic contracts. You won’t be invited to keynote any conferences for providing lay consumers a single mediocre form to fill out online. But put “AI” or “robot” in the press release, and the near-term coverage will be considerable. So you should probably use both. And it isn’t just chumps like me who read everything. It is the headline skimmers in positions of power.

I run into too many legal operations folks in corporations and firms suffering from hype fatigue. They never bought into the hype themselves. But their superiors see so many article about AI and robot lawyers that orders come down from on high to investigate this promising new frontier. The superiors are expecting robot magic. The operations folks come back with a smattering of point solutions, most of which are useful, but none of which live up to the hype. This exercise in chasing shiny objects wastes everyone’s time, including the providers, who actually have worthwhile, if narrow, products to offer.

Likewise, I’ve endured too many god awful keynotes where people run through some back issues of Wired and then conclude with “and it’s coming to law”, as in:

Watson won Jeopardy! And now he’s not only curing cancer but also making gourmet meals. yada yada yada. Moore’s law. yada yada yada. Alexa. Siri. yada yada yada. Augmented reality. People are controlling drones with their brains. yada yada yada. Blockchain. IoT. 3D printing. Quantified Self. Chatbots. Self-driving cars. Machine learning. Quantum computing. Cold fusion. Red mercury. yada yada yada. And it’s coming to law.

I am so tired of sitting through these insufferable, interminable fluff parades. It’s novelty porn. It’s distraction. Yet it has a real cost. Attention is finite. The operations folks dispatched to uncover the dark mysteries of robot magic are not devoting their limited research time to solving actual problems. The vendors who have to entertain these fishing expeditions get derailed from speaking to legitimate prospects or from coming to terms with immediate market needs.

Despite my deep annoyance at Robot Lawyer LISA and my even deeper disappointment in myself for taking the bait, this is where I have to give the usual caveat that it is not all fluff. Document assembly and automation are still, decades later, underutilized in the legal space. Consumer-facing forms fill a genuine void. Neota Logic is a great platform that underpins all sorts of interesting offerings (e.g., the Akerman Data Center). There are other solid companies out there using various forms of AI to introduce needed tools to the legal market. And some of the best keynotes I’ve ever had the pleasure of attending have AI as a core theme (e.g., I witnessed Dan Katz’s phenomenal ILTA keynote live and then watched it again online).

There is real innovation happening in legal that is well worth paying attention to. But this ain’t it. This just adds to the deafening cacophony of hype-driven noise. Yet I can’t blame the folks running Robot Lawyer LISA. Start-ups are hard. The legal market is an especially tough nut to crack. They found a way to get noticed. That their marketing annoys a curmudgeon like me is, for them, probably just an added bonus. Ultimately, I have to score this round for Robot Lawyer LISA because I just wrote a long post about a vanilla doc assembly offering with only one form.

_______________________________________
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.

*Robot Lawyer LISA’s UI and UX are solid. But, despite selecting the United States as my jurisdiction, I could not move forward without a “Company Number.” I’m assuming this refers to a CRN. The U.S. has no meaningful analogue (I’m not going to put my EIN in an NDA). My text response—”don’t have one”—made it into the assembled document.

In addition, I was required to provide a backup email for me and my counterparty. It is rare that I have a second email address for someone I am just starting to do business with.

I also did not see any esignature functionality, which, to me, is a key feature in the contract space.

Finally, I should probably mention that Robot Lawyer LISA’s other differentiator is supposed to be impartiality. Instead of guiding only the author through the document assembly process, the counterparty can opt to walk through the same guided process. I’m unmoved. I don’t know if its novel in this space. I’ve definitely encountered bilateral contract collaboration platforms on the corporate side. But maybe it really is some sort of gamechanger that I am too jaded to appreciate. If it ever gets to the place where it can help creatively resolve disagreements about contractual content (e.g., combining Ken’s insights on contract language with, say, the choiceboxing techniques of Marc Lauritsen, who happens to also be the godfather of legal document assembly), then I will revise my opinion and apologize for my rank cynicism.

[Ed. Note: Please welcome guest blogger, Steve Nelson, Managing Principal, Law & Government Affairs, The McCormick Group. – GL]

One of the big topics discussed recently in the legal press is how the very large firms continue to separate themselves from the rest of the AmLaw 200. In an article accompanying the American Lawyer’s financial disclosure reports for the AmLaw 100, the magazine revealed some pretty shocking statistics; while the top 50 firms reporting significant increases in revenue per lawyer, profit per partner and profit per lawyer, the next 50 firms reporting decreases in all of these statistical categories.

This is not a new phenomenon. Over the past few years, many observers have been writing about how the mega-firms are pulling away from the pack. You would think that a large number of midsize firms would be responding by illustrating how they are more efficient and provide very value to clients.  But a recent study performed by The McCormick Group seems to show otherwise.

Since around 2000, and particularly since the advent of the Great Recession of 2008, firms have responded to calls for efficiency by hiring three types of professionals, those handling practice group management so that each practice area can be run more efficiently and more profitability, pricing professionals to respond to corporate calls for alternative fee arrangements, and legal project managers to work directly on engagements to provide value to the clients and efficiency to the firm.

Of those three, one—pricing professionals, have become virtually de rigueur in the AmLaw 200.

Largely because the firm needs to have someone with a financial background respond to requests for proposals and other demands for alternative pricing, more than 80 percent of the AmLaw 200 have at least one professional focused on pricing.  And that has run the gamut from the very large firms down to the bottom of the AmLaw 200.

But the acceptance of practice group management and legal project management is much more uneven.  On the one hand, 60 percent of the AmLaw 50 firms have professionals handling each role, and 76 percent have one or the other.  And when one considers that nearly half of those who have not instituted such programs are either big New York-based firms or large one-practice specialty firms, the adoption rate among large multifaceted law firms is higher.

But as the accompanying chart shows, the percentage of firms having those professionals in place drops dramatically throughout the rest of the AmLaw 200; only 19 percent of the Second Hundred have practice group management professionals, and even less (13 percent) have LPM specialists.

Firms PG Mgt. LP Mgt. Both Either
Top 50 30 30 22 38
51-100 18 26 13 31
101-150 12 10 4 18
151-200 7 3 1 9

A few notes about methodology:

  • Firms were included as having these functions if they have professional personnel (not practicing lawyers) with identifiable responsibility over these functions, whether or not they included the words “practice group” or “legal project management.”
  • Professionals with a pricing or similar title were not included as having LPM responsibilities unless their title or profile included discussion of LPM. (At many firms, pricing personnel are supported by other professionals in the finance department who play a broader role within the firm.) 
  • On the practice management side, firms in some instances have designated just one practice (often IP) as having a practice group manager or business manager.  Those were included nonetheless, so the statistics may overstate a bit the number of firms having full-scale practice management programs. 
  • Of the firms in the top 100 that had no practice group management or LPM function, about half were either New York-based firms or were one-practice specialty firms.

The conventional wisdom among law firm experts is that the firms at the top are doing well because they often do bet-the-company work which commands whatever rates they wish to charge, and that alternative fee billing often works to those law firms’ advantage in terms of success fees on major transactions.  But according to Susan Raridon Lambreth, Principal with the Law Vision Group, while the largest firms do bet-the-company work, many of them also do a lot of other work that is increasingly fee pressured by major clients.  Many of the largest firms in the US are actually facing more pressure from clients on rates and efficiency than the mid-sized firms — by the size of the matters they handle and the nature of their client base.

“It’s the clients with sophisticated law departments that are putting the heavier pressure on firms when it comes to providing client value and the vast majority of their outside counsel are in fact at large firms.  As a result, large firms have significant pressure to provide volume discounts, detailed budgets or caps even on multi-year, complex matters and more. This has resulted in write-offs or downs in the tens of millions to over $100 million in many of the AmLaw 100 firms.”  

On the other hand, many mid-sized firms have a larger percentage of their client base with smaller or more middle market companies, she says, where there is less pressure to provide fee alternatives or budgeting, so the smaller firms aren’t really feeling as much pressure to change their approaches.  Another law firm consultant Timothy Corcoran of the Corcoran Consulting Group, puts it more bluntly.  “There are still a fair number of law departments doing a poor job of managing outside counsel.”

According to some industry surveys, resistance to industry change has been greater among the smaller and mid-sized firms.  Lambreth says that law firm leaders in those firms often want to institute changes, but they don’t have the partner buy-in.  There are a large number of partners that simply don’t see any need to change and it can be harder to make the business case for change short-term, even when there are long-term warning signs.

Indeed, instituting a PGM or an LPM program will often add up to between 5-10 new professional positions, which will often have a material impact to those firms which are already under pressure just to keep up with the previous year’s financial results.  That, Corcoran believes, is exacerbated to the fact that a number of smaller firms are laboring under a false impression about their standing in the market. “They have spent the last few years convincing themselves that clients have determined they’re just as good as the big firms and so now their philosophy is something along the lines of  ‘just as good as the big firms, but cheaper.’ ”  As a result, he says “they’re not doing anything particularly creative, such as embracing LPM to prove they’re just as good (or better).” Inevitably, they run the risk that another firm will come along that looks just as good and is another level cheaper and the client buys from them instead. Or the big firms that are embracing LPM and finding ways to generate higher profits at lower prices can now claim that they are in fact less expensive.”  So, says Corcoran, midsize firms are facing pressure “from above and below.”

So we seem to be at a crossroads:  the large firms that are doing the best economically have invested heavily in creating more value to their clients, while the midsize firms that are facing a more uncertain future are unwilling or unable to make changes so that they become more efficient.  That’s certainly not the narrative we tend to hear.

The talent at Columbia Law School apparently doesn’t limit itself to legal scholarship. The Law Revue put together a musical rendition of which online legal resource is the best “to cite… to cite.”

Whether it is the bribery of using Lexis, the snobbery of using Westlaw, or the lone man that uses Bloomberg, the Law Revue walks you through the law students’ night of deciding which resource is best.

So pick up your Lexis/Westlaw/Bloomberg coffee cup and sit back and enjoy the show.

Recently, I had the pleasure of speaking with Nancy
Jessen, SVP at Legal Business Solutions at UnitedLex about a survey recently
completed with ALM on legal department insourcing, entitled “Build or Buy? The Evolution of Law Department
Sourcing”. Our chat was really interesting, different
than what I expected. Here’s what I learned.

We are all too familiar with the challenges facing law
firms – the rise of competitive pressure, rate 
squeezing, the need for better project management so as to be able to
not only price and staff matters effectively but also turn a profit.  We also know of the impact of legal
technology in the e-discovery space, in contract drafting etc. and all of the
many AI applications that are threatening to take jobs away from lawyers. We
think of these issues and many others as law firm issues rather than legal industry
issues and look to the alternative model law firms, and outsourcing as the
answer or at least on the path to legal market euphoria.  Nancy, and some of the ALM survey findings,
point out, however, that legal departments face many of the same issues. 
For many years, law departments were immune from
pressures and expectations that almost every other corporate function faced — cost
management, return on investment, justification for new resources, and
technology-driven efficiency to name a few.  Then, 2008 hit and everything changed. Not
just for firms, but for in-house departments, too. In-house teams were also
being forced to demonstrate value, provide legal recommendations that supported
business objectives, create internally efficiencies AND strategically direct external
counsel.  A difficult task for
in-house counsel, just as it is for law firms trying to make sense of the new
world order in legal.
Today, in 2017, managing e-discovery and other
litigation software, supervising external counsel and overall legal spend is
table stakes for in-house departments. Like their firm counterparts, today,
almost 10 years later, General Counsels are focused (or trying to focus) on
demonstrating value by increasing operational efficiency of the in-house team,
from balancing high-cost/low-value staff against low-cost, inexperienced staff;
dealing with the constant fear of the next budget cut  – something Nancy referred to as “death
by a thousand cuts;” or the hardest part of it all, insourcing/staffing
strategic lawyers who can sit with the C-Suite, make business decisions, help
the company grow, avoid risk and support initiatives with the highest and best
business impact.
The survey results, which include data from the ALM
Intelligence 2016 Corporate Counsel Insourcing and Outsourcing Survey, highlight
some of these moving parts:
·      
In 2017, only
26% of law departments expect their annual operating budgets to decrease, while
32% expect an increase, and 42% expect it will stay the same.
·      
In 2016, 34%
of respondents said the number of full-time, in-house lawyers stayed the same,
and 52% plan on maintaining that level in the next 12 months, indicating that
increased insourcing within law departments may be slowing down.
·      
In 2016, 39%
of legal departments surveyed decreased their overall use of outside counsel,
and 43% estimate they will do the same in 2017. Similarly, those who said their
utilization of outside counsel would not change increased from 43% in 2016 to a
projected 47% in 2017. Only 4% said they would increase the use of outside
counsel in 2017.
·      
Regarding
Alternative Service Providers, 57% of respondents send work to ASPs. Of those,
25% said they plan on increasing the number of ASPs they use in the next 12
months, and 28% said the amount paid to ASPs will increase in the next 12
months.
In-house counsel, too, are subjected to shrinking
budgets, doing more with less, engaging technology, and resourcing efficiently.
Just as many are calling on firms to radically change
their paradigms, it seems the in-house departments are also looking to shift
the paradigm. We see this in some small ways, with bold statements from in-house
departments wanting firms to increase diversity. In-house departments can do
more to change the archetype, but whereas firms have to deal with the
complexity of the partnership models, in-house teams face obstacles around
C-Suite buy-in, and personal reputation. 
GCs and firms both know they need to change. The
question is, how can you best be strategic, deliver value, increase
efficiencies AND operationalize all of it? 
Would you buy it, or build it?

 

 

 

 

One of the best things I get to do as the incoming President of the American Association of Law Libraries (AALL), is reach out to new members that have joined the association and talk with them on the phone. I find that the new members genuinely appreciate that someone has reach out to them, and took the time to welcome them to AALL. I have found that I, too, get a benefit from talking to the newer members because they give me some insights that I might otherwise never encounter. One such event happened to me recently and it helped me understand what we should be pushing as the real narrative of law librarianship and legal information professionals.

The person I was talking to was a Research Attorney (JD w/license, but no MLIS, so not a librarian.) We were discussing the overall structure of the departments, and how her role fit in with the librarians and other professionals on the team. We talked about the reaction from the attorneys and others within the firm, and she said something that caught my attention.

She mentioned that the lawyers would make comments about how “nice” and “helpful” the librarians and other researchers are. She said she commented back that that’s completely missing the point of the true value. These law librarians and other professionals are smart, curious, creative, intuitive, and brilliant in the work they do. They do not waste your time. They are efficient and effective in finding the correct answers, finding it quickly, and making sure that it doesn’t cost you more than is reasonable for the issue at hand. Yes, we can do that with a smile, but that’s the icing on the cake. The real value is that we do what we do better than anyone else. That’s what we need to push as the real narrative. Of course, we can still do that with a smile.

This discussion left me with a smile on my face as well. Even better, it left me with a clear narrative to make sure that smart, curious, creative, intuitive, and brilliant are included in that discussion.

Years ago I got into the legal speaking circuit after presenting on the future of the legal profession to a group of bar leaders. I called the presentation “Staying Relevant.” I credit this moment with pushing me into the spotlight of change in the legal profession since it lead to a slew of speaking invites and for me becoming known for driving change in the legal market.

This was 1999.
A lot has happened since then – but somethings from my presentation have yet to materialize. On one level, I should have published a book based on that presentation. That, along with a British accent, would have lead to much greater fame and fortune. But such was not to be.
The presentation covered a broad range of trends, from the incursions of technology to the emergence of alternative providers. At the end of the presentation I commented on the need for the profession to “stay relevant.” My catch phrase which I still use today is the “Paradigm of Precedence.” This label is meant to highlight how the profession is indoctrinated from an early age to look backwards – not forwards. At the center of that paradigm is that the courts look to the past for direction on today’s needs. This approach is bedrock to the judicial branch of government.
However, this thinking has spilled into every corner of the profession. Thus my recommendation to stop driving the boat by watching the wake.
Last week I presented at a courts and technology conference. I actually used my paradigm of precedence phrase as it was very applicable. What caught my eye at the conference was another session on the vanishing trial. The session noted how only a few cases ever go to trial anymore. 1 in 100 was the stat quoted. This is not new news. However, the session went on to talk about how the rule of law is threatened since without trials, the courts are no longer setting precedence. Instead, settlements, arbitrations and the like are where disputes are resolve: in private where they do not impact the law … or set precedence.
The punch line of my 1999 presentation was that lawyers can sit back and watch change, or they can engage and shape it. I noted that the three letters that should scare lawyers the most were H.M.O. – referring to the fact that when doctors sat back, there were real consequences for their profession. At the core of that concern for lawyers, I suggested, sits the Rule of Law. Back then I noted that if disputes were no longer resolved in public, by the courts, then the rule of law would be up for sale. So it should be of paramount concern to lawyers that the courts retain a viable place at the center of legal ecosystem.
A mere 18 years later the courts noticed – sort of.
This makes me take stock of all of my current thinking about change in the legal market and how it will be relevant in 18 years. And it gives me an idea for the title of my new book: Timing is Everything.

There are two standard answers to questions asked in a law firm setting.

  1. Well… it depends.
  2. You have to understand, we’re unique.

Both of them drive us nuts, but we get used to them and adjust or responses over time to limit the eye-roll and shaking of the head to a minimum.

When it comes to where a law firm library falls in the structure of law firm administration, both answers tend to get applied. If you were to look at the AmLaw200 firms, you will find that the law library function falls under many different types of leaders.

  1. Library Directors who report to:
    – COO
    – CMO
    – CIO
    – CKO (non-librarian)
    – (I’ll group these as CxO from this point)
    – Managing Partner
  2. Library Managers who report to:
    – KM Directors
    – CxO
  3. CKO (librarian C-Level) who report to:
    – COO
    – Managing Partner
By my count, there are approximately 7 CKO where they are Librarians in the AmLaw 200. (Or some variation, like me, where I am a Chief Knowledge Services Officer) As you might think, I have a bias toward this style of management. I’ve stressed the ability for law librarians to direct their own fates for nearly the entire decade I’ve written this blog, and will continue to do so as I take on a President role in the American Association of Law Libraries in July, and well beyond that. 

I mentioned in a post last year that if Law Librarians don’t find themselves a seat at the table, they will find themselves on the menu. When I tell other law librarians this, they agree, but then they look at me and say, “Greg, you have to understand, we’re unique at my firm.” What this typically means is that their firm doesn’t want to challenge the status quo, and likes things to stay as they are. There are firms with Library Directors that are much more progressive and forward thinking than me, yet there is no path to a C-Level for them at their firm. That’s a shame. The Law Library and its functions of compiling, analyzing, filtering, and producing legal and other information is one of the most important administrative functions that a law firm has. It keeps attorneys practice ready and up to speed on the very functions that drive the legal industry. We do the due diligence necessary to keep our attorneys informed and prepared. In the Information Age, we are the Information Professionals.

BloombergBNA President, Scott Mozarsky, penned a recent Above the Law article where he stressed the importance of what law firm libraries and librarians do to drive business in the door at law firms. He mentions that law librarians and legal marketers are teaming up and becoming a powerhouse within the firm to help drive business development and client awareness of the firm’s abilities. He mentions that this is a great collaboration, and that he is seeing more firms adopt the Researcher/Marketer team approach. I’ve seen this exact scenario going on in law firms for nearly two decades, and I’m sure it preceded my entry into the market. Mozarsky is correct in that this makes perfect sense to team up the analytical skills of the law library researcher, and the business and marketing skills of the law firm marketer. It’s a perfect match of strategy put into action.

The one area that I have to alternate from the path with Mozarsky suggests, is that this means that it makes perfect sense to place the library under the CMO. To that, I would have to answer, well… it depends.

In my personal experience, and from the anecdotes I’ve heard from my peers over the past twenty years, it was the librarians that have been pushing for the teaming up of marketing and research, and the CMOs have been very reluctant to adopt this strategy. I know… I know… ever firm is unique, so this may not apply to you. However, I would go out on a limb here and say that most firms that have this type of collaboration, the idea was pitched by the library staff and the marketing department had to be won over to try it out. That’s not to say that CMOs are anti-library, but it does say that librarians tend to be very good and leveraging the existing tools, resources, and people to augment the overall strategy of the firm. We understand that driving new business, or expanding existing business is a strategy that all firms have, and we know that we can contribute to that goal. Because we sometimes lack the seat at the table, the idea of leveraging this wealth of resources already at the disposal of the firm may have been overlooked.

The law library at most firms contain the most credentialed staff in that firm. The fact that the most credentialed staff in the firm doesn’t have a Chief voice speaking directly for them is a lost opportunity for those firms who ignore them. I am quite proud to talk with others and tell them that they need to understand, my firm’s unique. We have a voice at the table, and we are heard.

All too often in law firms when we talk about marketing failures or look for new marketing successes, we look to see how “other industries” are doing it. We look at the marketing spend of consumer goods companies which make our budgets look like a small child’s allowance.  We bemoan not having enough money to really make a difference or we lament the time and energy spent on directory submissions for minimal tangible ROI, yet we still participate in these things marketing activities since we are bound by the street rules of the legal marketing game.  When we think about legal marketing, I think we would all agree, that despite the smaller budgets that our B2C counter parts, we have evolved beyond pricey tickets to sporting events, and are focused on content or account marketing. Yet, despite the laser  focus on true client development we still struggle.

We struggle to make the impact on our firms that we believe marketing is having in other industries.  Lately, I can’t help but think the answer (or part of it anyway, but this is a blog, so let me think big and unrealistic), lies not on the marketing communications side of the equation, not even in the traditional business development side either, but in the CRM or sales cycle part. The part with the dirty word (sales) and the acronym most people still struggle to really understand outside of “invite list” or “mailing list”.  I have written before about how I think CI is really or should really be about CRM+. More and more, I am starting to see how these two functions, that are often behind the scenes – the introverts next to their extrovert MarCom buddies, the strong silent types that comb through data, deserve more attention in the client conversion or retention conversation.  

Regardless of what CRM system a firm is using or even more to the point where there is no formal CRM system in place, there is often resistance to having contacts and related activities shared within a firm. Whether owing  to the law firm as hotel-for-lawyers mentality, privacy issues, fear that others will ruin the relationship, lack of trust among partners or some other reason lawyers generally don’t want to share their contacts and firm’s have yet to find a good way to change that behaviour en masse.  There are always exceptions to the rules, but if you talk to your friends at sales organizations, the CRM system if the life blood of the organization and those that don’t share are the exception.  Not only are contacts shared but client touches are also shared – who has had dinner with whom, who sent pricing information and when, responses to pitches are recorded and client lessons are shared on the go through the CRM system. Occasionally, I am a the target of these sales pitches and for a moment I am always surprised that a new, or new-to-me sales person knows so much about me and my relationship to the organization.  Then I remember I am but a record in the company’s CRM system and a smart sales person will look me up before making contact and will therefore intimately know my history of engagement, how I feel about a product or service, who my account reps is and so forth before even picking up a phone. They may even know some personal details about me to help break the ice. Combine this knowledge with sales training or soft skills around appropriate communication so as not to come off creepy or stalker-like and imagine what you can do.  What if you had the ability to call a client on any given day, and say something like “Hi, I see you are subscribed to our X Practice newsletter and received our most recent update on issue  Y, I know you had lunch with Partner W last week, but I still wanted to follow up to see if you had any questions and to invite you to an event we are hosting on related topic Z. I believe partner W and some of his clients you might want to meet will also be there ”  There is real value in that for clients, instead of waiting for the phone to ring with a retainer, lawyers can be proactive in providing client service that is tailored, builds the firm’s and the lawyer’s relationship, engenders trust and requires very little effort other than consistent recording and reporting on the part of the lawyers and the CRM professionals.  All you need to know who is subscribed to what, who is reading what and who is taking whom for lunch or to a golf tournament. Being able to connect those internal dots, along with knowing is what happening in the client’s organization or industry so you can help your clients avoid surprises or capitalize on market activity – including your firm’s own bespoke networking events, is client service euphoria. 
Data is driving insights across all kinds of disciplines from healthcare to retail, data is also driving revenue for all kinds of B2C companies, culture is the only thing standing in the way of making data driven client service a reality for law firms as well. Its a simple methodology that does take some data clean up and data strategy, along with a workflow assessment, but with the right people in place and a culture that supports client service above all else it can happen.  CRM and CI might not have all of the glitz and glamour you associate with legal marketing, branding and social media buzz, but I do believe that partnered together and used effectively as in the example above, these two strong silent types can effect real and tangible change for firms. 

Last post, I offered some skepticism about one conclusion–the billable hour is already dead–in the annual Report on the State of the Legal Market from The Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute. I tried to be emphatic that this minor point of incredulity did not take away from the overall brilliance or usefulness of the Report. Yet I spent an entire post on the subject.

I have fallen into the same trap. I once opened a piece with the premise that the billable hour is not the sole topic worthy of discussion:

The billable hour is not the immediate cause of all that ails the legal industry. Freedom from the tyranny of the billable hour would be a fine start. But there is much more to do and discuss. For proof, look no further than law departments. Many corporate law departments suffer from the same pathologies as law firms despite having cast off the perverse incentives of compensable time sheets.

We have a culture challenge that is more than a matter of modifying a single incentive. My piece focused on the rise of legal operations and procurement. It cited massive increases in in-house staffing and technology spend, as well as tipping points in the use of metrics and RFPs. I touched on the BigLaw caste system, along with the rigidity and fragility of the traditional law-firm partner and compensation models. I used cybersecurity as an example of why law departments and law firms need to engage in data-driven dialogue on topics not taught in law school—e.g., the integration of process and technology into the delivery of legal services.

Naturally, since the thesis was that there are many topics to discuss beyond the billable hour, the comments section quickly devolved into a forum solely to debate the merits of the billable hour. It is my own fault. The billable hour is catnip to the kind of legal professional inclined to take part in an online discussion (including me). Like Antwan Rockamora, I had to expect a reaction.

Whenever I try to not talk about the billable hour, I am reminded of this take from the phenomenal Kevin Colangelo. As one of the primary forces behind Panagea3, Kevin experienced first hand the staying power of the billable hour:

Despite our best efforts to be “innovative” in terms of how we priced our services, clients and prospective clients always found shelter in the billable hour. Offers of unitized rates for drafting and negotiating contracts were always met with something like “And how many hours of work does that represent?” It quickly became clear that although we were doing what the market had asked us to do (i.e., offer fixed, unitized and other alternative fee arrangements), the only way that the market could understand the value of our pricing was to stack it against the only measure of value on which we’ve all been conditioned to rely: time.

Vince Cordo of Shell and I discussed this dynamic at length in the ACC Docket. We tired to explain why a law department that had moved exclusively to AFAs would bother with a reverse rate auction (we also tackled ‘shadow billing’ here). And that is at a company that successfully transitioned to AFAs. You get story after story from Toby and his compatriots in pricing who regularly respond to client demands for innovative fee arrangements only to find that, in the end, many clients opt for a slightly deeper discount on the traditional billable hour.

Again, the billable hour is not the only piece of the puzzle. The value proposition Colangelo was selling was not predicated solely on the fee arrangement. Whether they are for or against alternative legal service providers, I suspect there are very few participants in the legal marketplace who would take the position that moving business from a traditional law firm to TR Legal Managed Services (what Pangea3 became) or Elevate (a subsequent Colangelo company) or [pick favored provider] has no impact unless accompanied by abandonment of the billable hour.

And that’s the topic I want to discuss: Alternative Legal Service Providers

“Oh, that’s just labor arbitrage” is sometimes deployed by people like me to sound dismissive of a particular cost-saving measure. We’re not saying the savings aren’t real. We’re just saying that it is not all that interesting. Using an alternative provider, however, can be just labor arbitrage and also the first step on the path to interesting.

To take extreme examples that some people believe have been eradicated (nope, not yet, not even close), there are too many clients out there who could quickly save millions by finding alternative means to accomplish tasks that keep (much diminished) armies of junior associates in hours. Due diligence, document review, routine contracts, low-level fact investigation and organization, etc. They could cut costs dramatically through simple substitution of hours charged at between a third and a tenth the billed law firm rate.

The substitution need not even be 1:1. With rates being a fraction of what they were, the transition costs and subsequent friction introduced by collaboration across multiple organizations can increase inefficiency, add hours, and still produce significant savings. The bottom line is that if you can get the same quality at lower cost, you should do it. Labor arbitrage is a perfectly valid path to cost savings. It is just not that intellectually interesting.

But what can become interesting is that moving work to an alternative provider is an admission that the work is not the exclusive domain of high-cost, high-status experts. Once you’ve done that, a world of possibilities opens up.

This is the thing that scares so many lawyers. Much of what we do could be handled by an ambitious high school sophomore. Much. Not all. The abstract legal insights and the articulating thereof can generate immense business value. It is also hard to replicate. But executing on those insights—i.e., converting them into concrete deliverables like contracts and motions—while absolutely necessary is often more labor intensive than skill intensive. It is the advocacy/counsel/production/content matrix that I long ago appropriated from Jeff Carr. The genuine value of the advocacy and counsel has served to excuse our awfulness at production and content.

Yet the disaggregation movement has been slow. The multi-sourcing of legal work has taken time. That it did not happen overnight was often cited as evidence that it would/could never happen, that outsourcing would remain a “gnat in an elephant’s ear.” Well, that gnat is starting to buzz awful loud.

Because alternative providers can be the harbinger of alternative methods for delivering legal services, the pace at which alternative providers are growing is an indicator (leading? lagging?) of how the market is changing. In addition to the Report, The Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute also released The 2017 Alternative Legal Service Study, which pegs the alternative provider market at $8.4 billion. I remember a few years ago when it was controversial to suggest it was a $1 billion market. That’s considerable growth, especially compared to law firms that have seen flat demand this entire decade. The $8.4B looms even larger if you account for the displacement effect, i.e., law firms losing $4 for every $1 paid to alternative providers.

But the Study isn’t all about law firms losing. Law firms are setting up alternative providers. Law firms are integrating alternative providers into their own delivery of legal services. Where 60% of corporate clients are using some form of alternative provider, law firms aren’t far behind at 51%. The Study also suggests that “many firms are exploring the idea of serving as a ‘general contractor’ for matters where ALSPs are leveraged to maintain or increase margins while maintaining or expanding service offerings and staying competitive.”

The Report further explores this concept:

Opportunity for a New Focus on Supply Chain Management. In response to the growing influx of nontraditional competitors in service areas historically dominated by lawyers, many law firms – in addition to focusing on their core practices – have chosen to expand their service offerings into other related areas that complement the firms’ existing legal expertise but are beyond the scope of traditional law firm services. While these ventures currently constitute a very small part of the legal market, there has been a noticeable increase in the number of firms willing to experiment with such approaches.

One particularly intriguing opportunity for such expanded services responds to the growing client willingness to disaggregate work among many providers by reimagining a new role of the law firm as the overall coordinator for all of the services being provided to the client. In this supply chain management role, the law firm would offer not only the core services that only lawyers can provide but also the overall supervisory function that would ensure that all of the work of various vendors providing services to the client is consistent with the needs of the project, delivered in an efficient and cost-effective way, and acceptable against agreed upon standards of quality.

And here is where it gets truly interesting for me. Now we are talking about integrated systems for delivering legal services. While it can start out as just labor arbitrage, there should be returns to scale as dedicated alternative providers gain institutional experience and insights at delivering types of services that were previously doled out to a rotating cast of law firms and matriculating junior associates. Since we’ve already conceded that the work does not demand a high-skill, high-status expert, there should be opportunities to introduce automation and other forms of technology into the service delivery process. While transitioning to an alternative providers may have upfront costs and introduce some frictions, in the long run their capital structure and culture should be better suited to innovation.

It is also a replicable type of success that can build on itself and move up the value chain. The Study observes that, “the most common use of ALSPs is low-risk or standardized, high-volume tasks” but “corporate law departments were more likely than law firms to say that they would look to alternative providers in situations where specialized expertise was required, indicating some willingness to allow ALSPs to play at least some role in more bespoke tasks.”

We’re transitioning to a multi-polar world. Customers, law departments, law firms, alternative legal service providers, legal technology companies, etc. But the logic of the multi-polar world has been evident for a long time. Why do we just now seem to finally be moving in that direction? Why do clients need a general contractor or supply-chain manager? Good questions. I’ll try to tackle at least one of them in my next post.

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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.

I always get so much mileage from the great data and charts in the annual Report on the State of the Legal Market from The Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute. This year is no different. All praise to them. But, first, a minor quibble (it is my nature).

The headlines upon the Report’s release were clear on the main takeaway:

Billable hour pricing is effectively dead because of budget caps, report says

Death of billable hour kills of traditional law firm franchise

The billable hour is effectively dead

The Billable Hour Isn’t Dying – It’s Already Dead

The headlines were consistent with the text of the Report:

Death of Traditional Billable Hour Pricing. One of the most potentially significant, though rarely acknowledged, changes of the past decade has been the effective death of the traditional billable hour pricing model in most law firms. This isn’t to suggest that most firms have done away with billing based on hours worked; indeed the majority of matters at most firms are still billed on an “hourly basis.” But focus on that fact alone misses a fundamental shift that has occurred in the market.

This change has been overlooked principally because of a definitional problem. In much of the writing on this subject, the focus has been on so-called alternative fee arrangements or “AFAs,” pricing strategies that are based on fixed-price or cost-plus models that make no reference to billable hours in the calculation of fees. Since other pricing models typically incorporate some reference to billable hours, it has often been assumed that only AFAs are genuine non billable hour alternatives and every other approach is simply business as usual. That conclusion, however, overlooks a major shift that has occurred over the past decade: the widespread client insistence on budgets (with caps) for both transactional and litigation matters….

Although today AFAs probably account for only 15 to 20 percent of all law firm revenues, budget-based pricing is much more prevalent. Indeed, in many firms, these two methods combined may well account for 80 or 90 percent of all revenues.

Quick, someone go find Jeff Carr and tell him that Don Quixote has vanquished the windmill! I would love to interrogate this data and find it to be righteous. But it is so contrary to my personal experience that, absent more compelling evidence, I just can’t accept it despite the credibility of the source. That skepticism probably comes, in part, because of how many times I’ve read about the death of the billable hour (for fun, I rounded up 20+ instances at the bottom of the post).

I encounter a number of clients with written requirements that all matters must have a budget. I see fewer who actually enforce such requirements in any meaningful way. And it is passing few that seem to impose discipline around the budget number to the point where it functions as a cap. This is not to say that such clients do not exist—some absolutely do—it is to say that I haven’t found enough of them for that 80 to 90 percent number to be automatically assimilated into my mental models of how the world works.

That said, I’ve had reason (NBA, MLB, POTUS, NFL) to call into question my mental models. So I come at this from a place of epistemic humility.

Everything else in the Report is as fantastic as ever. I’ve already updated my slide decks with the charts on demand and realizations. The former remains flat, the latter continues to fall. But I’m sure we can square both trends with increased profits and then paint a picture of long-term sustainability, right?

It’s not that I am skeptical that we are in for some sort of reckoning. I just don’t think it will be an abrupt end, let alone that it has arrived in a final, categorical form like the death of the billable hour. For an actually balanced and nuanced parsing of the report, I recommend Mark Cohen. And for his eternally amusing (and always brilliant) foretelling of the apocalypse, I must share Ken Grady. Myself, I actually have a different TR report I want to dig into next post.

 

As promised, the many deaths of the billable hour (it’s like a terrible version of John Wick but with a few awesome cameos):

 

AI and the Legal Business Model: Why Time is Up for the Billable Hour (2020)

Law firms’ love affair with the billable hour is fading (2019)

Should There Be A Requiem For The Billable Hour? (2018)

As AI Portends the Death of the Billable Hour, Law Firms Face New Reality (2017)

Companies want lawyers to kill the billable hour (2017)
Alternative Fee Arrangements’ Challenge to the Billable Hour (2017)
Legal industry moves away from billable hour to alternative fee arrangements (2017)

Curbing those long, lucrative hours (2010)
Alternative Arrangement (2010)
Forever in Flat Fees (2010)
Law firms react to tight budgets, offer alternatives to billable hours (2010)
Billable Hours Giving Ground at Law Firms (2009)
In Corporate Counsel’s ‘Who Represents Whom’ Survey, GCs Say They’re Serious About Alternate Billing (2009)
Has the Billable Hour Met Its Tipping Point? (2008)
Kill the Billable Hour (2008)
Lawyers Ditch Billable Hour Structure (2008)
The Scourge of the Billable Hour (2008)
Killable Hour (2008)
How to kill the law firm billable hour (2008)
The Billable Hour Must Die (2007)
The Tyranny of the Billable Hour (2005)
ABA Commission on Billable Hours Report (2002)
Hourly Billing is Outdated (1994)

….Beyond the Billable Hour (1989)

And some counter programming:

The Billable Hour Just Won’t Die, Report Finds (2016)
The unkillable billable hour (2015)
Billable Hour’s Death Greatly Exaggerated (2015)
In Defense of the Billable Hour (2014)
In Defense of the Billable Hour (2014)
In Defense of the Billable Hour (2013)
Despite Stagnant Economy, Movement Toward Alternative Fees Still at a Crawl (2012)
The Billable Hour Endures (2010)
Surprise! The Billable Hour is Not Dead (2009)

_______________________________________
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 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.