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

_______________________________________

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.
Actions are supposed to speak louder than words. Directionally, client action seems fairly unambiguous:

Managing partners are well aware of these broad trends. Yet they still claim that clients aren’t asking for change:

I tackled those pesky partners last post. Not only is the net impact less than dire—erosion, not extinction—the danger is also not evenly distributed. The pain isn’t that acute for most rainmakers who can point to decades of empirical evidence that suggests they will be fine. Given their stature, relationships, and time horizons, most are probably right.

In addition to robust data, the rainmakers can probably offer a fair amount of anecdotal evidence, or the absence thereof, about clients’ supposed interest in change. The top partners probably don’t hear much about change from clients. And if they do, it is probably while trying to quickly get past the annual unpleasantness of rack-rate kabuki—where the two sides keep using the word “discount” while actually dickering over how much to raise rates.

This does not mean that clients are content or passive. It means they are bad at articulating their concerns or do not consider complaining worth the effort. Very few firms know they’ve been fired. The phone just stops ringing. Even fewer firms know why they’ve been fired. Or why they didn’t win the RFP. Or why their work from the client was down 2% instead of up 2%. Or….It can be a very slow bleed. There are many ways to lose business that do not involve a formal “you’re fired.” And there are just as many possible explanations for the loss.

In short, clients are using exit, not voice. In the classic treatise Exit, Voice, and Loyalty, the economist Albert O. Hirschman outlined a client’s options when quality declines (or fails to keep pace with what is available elsewhere).

Clients can be loyal–i.e., they keep returning to the firm because of relationships, complacency, lack of alternatives, high switching costs, devil-you-know conservatism, etc. Loyalty is major part of the legal market, in part, because there are genuine advantages to incumbency. Loyalty continues to be the most important aspect of the client/firm relationship. We’re witnessing a steady accumulation of minor paroxysms, not a mass exodus.

Clients, however, can and do exit. They take their business elsewhere. Alternative destinations include other firms, in-house, and managed service providers. As the headlines above demonstrate, exit is becoming a more prominent part of the legal landscape.   

Or clients can exercise voice. They can express their dissatisfaction but still afford the firm an opportunity to course correct. The managing partners’ “clients aren’t asking” response suggests that clients rarely do this. Clients choose exit instead.

Voice is critical. Loyalty signals acceptance of the status quo. Exit signals dissatisfaction and decline. Voice is the informative middle ground that demonstrates loyalty, raises the spectre of exit, and provides the path forward to bolster the former while avoiding the latter.

There is a vital difference between asking for a manager and leaving the store to shop elsewhere. So why don’t sophisticated corporate clients exercise voice? My friend Connie Brenton of NetApp/CLOC provided part of an explanation in a piece we co-authored on the topic:

Client preference for exit over voice has much to do with resource constraints. We need results now, innovation now, efficiencies now. We haven’t the time to wait for our firms to catch up. There are also an increasing multitude of accessible alternative solutions and technologies that were not previously available, making the exit not only easy but the responsible decision for our businesses. Organizations such as the Corporate Legal Operations Consortium (CLOC) provide a forum to share best practices including how to better in-source legal work or move day-to-day work to lower cost alternatives.

Frankly, as Ron Friedmann has observed, it is often easier and quicker to start from scratch than to try to retool. Not only are established processes resource intensive to amend, but interpersonal dynamics also consistently fall back into familiar patterns. If the inside lawyer and outside lawyer are accustomed to resolving every hiccup with a discount, it may feel unnatural to have any other conversation, especially when there is ‘real’ work that needs to get done.

In the short term, it is simple to show ROI on moving to a firm with lower rates, bringing work in-house, or diverting work to a managed-service provider. Each option can be far less daunting than asking a long-time incumbent to cut their rates in half, let alone make an abrupt move to value fees (which Pat Lamb compares to reciting the alphabet backwards). You don’t necessarily let the incumbent go immediately. You taper their work, which subtly moves from increasing to flattening to declining as the new resources come online. Indeed, by keeping the incumbent around, you get to have a control to validate your ROI calculation.

The right question may not be why clients don’t use voice but, instead, why they should even bother. Since I wrote a guidebook entitled Unless You Ask, I feel compelled to try to answer in my next post.

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

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

As many of you that follow 3 Geeks know, I’m a big fan of the products that are coming out of Stanford University’s CODEX program. One of the latest insights comes from a CODEX fellow, Casetext, with their new CARA platform. Casetext’s VP of Legal Research, Pablo Arredondo, has been talking with me about CARA for a number of months now, and I’ve seen a few versions as he prepped CARA for release. If you’ve ever seen Pablo demo this new product, then you know how excited he is about the value that he believes this brings to legal research.

What is CARA? CARA is a ‘brief-as-query’ legal research tool, in which instead of using a keyword query you drop an entire brief in as the input. Users can input a brief in either Word or PDF format. From my use of it, I would explain CARA as a tool to analyse your brief (or the other side’s brief) to find potential missing points of law, or alternative arguments not cited within the brief.

CARA data mines the inputted brief and uses the gathered information to form a sort of ‘mega-query’ that runs against Casetext’s database of case law. CARA takes a look at the brief and analyzes how much cited cases are discussed within the brief as well as the other text within the brief. Arredondo explained to me that “[t]he analysis CARA runs looks not only at direct citation relationships (Case A cites to Case B) but also ‘soft citation’ relationships – Case A doesn’t cite Case B directly, but Case C cites to both A and B.” He also says that, “CARA also discounts heavily cited procedural cases like Celotex” so that these citations do not skew the results. Attorneys and researchers upload their drafts to check for missing cases before filing and uploading their briefs, and they check their opponent’s briefs to see if there are missing cases that they might be able to exploit.

Screenshot of CARA results.

CARA outputs a list of cases, all linked to the full text on Casetext. The results are displayed along side

  1. concise summary of case holding; 
  2. most cited passage from the case; 
  3. link to a law firm client alert discussing the case.  

Because attorneys are uploading drafts/work product, there is always a question of “who can see my draft?” Arredondo told me that “Casetext has applied stringent security to CARA.  Inputted briefs are not stored; once the data is extracted the brief is deleted. The reports CARA generates are accessible under a unique URL with a long hash; only those possessing the link can see the report.”

A geek like me loves to learn about how the back-end of these systems work, so bear with me for a paragraph as I repeat Pablo’s explanation of how CARA processes the brief that you drop in for analysis. CARA uses what is called topic modeling system (latent semantic analysis) to sort results based on how well they match the topics in the brief.In law-librarian terms, this means that CARA uses the full text of the brief and compares it to the full text of existing cases, looking for similarities in both legal terms and regular nouns. It’s not magic, it’s math. But, sometimes math can look like magic. Alright… end of uber-geek discussion.

The second serious question that most of us ask when we see products like this is “does it replace Westlaw or Lexis?” The answer is simply, no, and it is not meant to. CARA is designed to supplement traditional research systems. It can catch cases you missed using regular tools or help you find cases that you would have found anyway, only much faster. In these modern days of “efficiency” in legal practice, getting to the answer, faster, is a competitive advantage, and that is what CARA sets out to do.

Pablo mentioned that CARA will be made freely available to the judiciary, and that trials for firms or individuals are available for anyone who wishes to evaluate CARA. He said that there were no strings attached to the trial, and that you can contact him for details on the trial at pablo@casetext.com.

[NOTE: Please welcome guest blogger, Michael J. Robak, Associate Director/Director of Information Technologies, Leon E. Bloch Law Library, University of Missouri – Kansas City. -GL]

The movement to establish a true Technology instruction track and andragogy (meaning Susskind, Kowalski, et. al.) in the legal academy is gaining real momentum.  As readers may recall, on March 16, 2016 the ABA TECHSHOW provided an opportunity for an Academic specific event tied to TECHSHOW which 3 Geeks generously allowed me to advertise.  This first ever Dean’s Roundtable, held at IIT Chicago Kent College of Law (which was enthusiastically supported and hosted by Professor Ron Staudt,), was incredibly successful and helped set the stage for creating an Academic track at the 2017 ABA TECHSHOW.

The event was so successful that the 2016 ABA TECHSHOW Chair, Steve Best, thought a second edition of the Dean’s Roundtable would provide an even greater opportunity for dialogue if it could be held in conjunction with the ABA Annual Meeting in San Francisco in early August for a West coast version.  Those who attended the Roundtable, including the first Roundtable’s generous sponsor, Thomson Reuters, thought a second event would be well worth creating.


And so we are announcing the Dean’s Roundtable Part 2 to be held at UC Hastings College of Law on August 4, 2016 from 9:00 am to 1:00 pm. And I am pleased to announce Thomson Reuters is again generously sponsoring the event.


If you are at a law school in the San Francisco area or if you are attending the ABA Annual Meeting or if you are interested in helping build technology teaching or the ABA TECHSHOW Academic track please consider attending the Dean’s Roundtable Part 2 on August 4, 2016. 


And we particularly extend the invitation to practitioners, we need comment and recommendations from outside the ivory tower.

This is a free event and registration can be found here.

We hope to have in attendance a number of the members of the ABA Law Practice Division, including members of the Executive Committee, to create an even stronger dialogue about the “how and what” of teaching technology, particularly from those practitioners most engaged with serving as technology evangelists.  The second part of the dialogue will focus on helping design the academic track for the 2017 ABA TECHSHOW.  2017 TECHSHOW chair, Adriana Linares, is an avowed and immensely supportive proponent of the track and is working with her Board to develop the track.  Input from the Roundtable will be very important to getting this organized.

Besides the ABA TECHSHOW Academic track, there have been two other important developments in the month of July.  The first was a discussion that occurred in early July at the SubTech 2016 Unconference, hosted by the University of Richmond Law School (and thanks to Marc Lauritsen for organizing and Roger Skalbeck (and Dean Wendy Perdue) for hosting) the event for connecting law schools that have engaged in the substantive teaching of technology. During this unconference,   John Mayer, law tech dude extraordinaire, (where would we be without John!) sua sponte created a website to serve as a connector for those wanting to teach technology.  Among other services, the website will collect syllabi from anyone who wants to contribute.  If you are on the Teknoids listserv you’ve probably seen the conversation.

The second terrific development occurred during the AALL Annual meeting last week.  Elizabeth Farrell Clifford (who attended SubTech 2016) organized a flash meeting to discuss teaching technology.  This amazing event had about 30 people in attendance with another 15 or so expressing regret to Elizabeth they could not attend.  The meeting had each of the attendees discussing what they taught or planned to teach and clearly demonstrated law schools are recognizing the need to formally move in this direction.  The attendees unanimously supported the idea of creating an AALL Caucus focusing on teaching technology.  Elizabeth and I are moving forward on this proposal.

The half day conference Agenda is as follows:

8:30 a.m. – Registration
9:00 – 10:15 – Moderated Panel Discussion
Moderator – Dean Ellen Suni – University of Missouri – Kansas City School of Law
Panelists:
Professor Oliver Goodenough – Vermont Law School
Professor Alice Armitage – UC Hastings College of the Law
Professor Dan Linna – Michigan State University School of Law
Professor Jeff Ward – Duke Law
Assistant Dean Bobby Ahdieh – Emory University School of Law School
10:15 – 10:30 Break
10:30 – 12 noon – Discussion Forum
The panel will lead a discussion with members of the audience to move toward consensus regarding the next steps for advancing teaching technology in law school and examining how the ABA TECHSHOW can be part of these efforts going forward.

12 noon – boxed lunch and further discussion
(Generously provided by Thomson Reuters)
 

Please feel free to email me (the man behind the curtain) with comments, thoughts, ideas or any suggestions.  There will most likely be a discussion about the Academic Track and this topic generally at the Association of American Law Schools (AALS) at the January, 2017 meeting in San Francisco.

It is rational for someone who has been wildly successful doing something a certain way to keep doing it that way, especially when the odds appear favorable that they will continue to be successful. Most people don’t exit their comfort zone without a compelling reason. This is doubly true of many high-status experts.

Any story about lack of change in the legal market premised solely on lawyers being stupid has limited explanatory power. I’m partial to a more nuanced narrative where the incentives to change are not evenly distributed. More specifically, those with the most power, by definition, encounter the least pressure to embrace innovation.

A continuation, this post will focus on law firm partners resisting change.

A Primer On The Legal Economic Landscape

For context. Legal Business just released the Global 100 under the banner Hitting the Wall. The headline for this year’s Am Law 100 was Signs of a Slowdown. The Altman Weil 2016 Law Firms in Transition survey opens with the observation that “most firms are choosing to proceed with lawyerly caution in the midst of a market that is being reinvented around them.” The key findings from the survey are:

  • Unreliable demand
  • Surplus of lawyers
  • Inefficient delivery of legal services
  • Proactivity is a competitive advantage
  • Resistance to change

Likewise, the Peer Monitor/Georgetown 2016 Report on the State of the Legal Market states, “U.S. law firms continued to experience very sluggish growth in demand, coupled with negative growth in productivity, and continuing downward pressure on rates and realization.” The Report warns of BigLaw’s Kodak moment:

This story of the demise of Kodak is an important cautionary tale for law firms in the current market environment. Since 2008, the market for law firm services has changed in significant and permanent ways….

The reactions of the law firm market to the rapidly changing environment in which firms operate parallels in some respects the story of Kodak. The current challenge in the legal market is not that firms are unaware of the threat posed to their current business model by the dramatic shift in the demands and expectations of their clients. Instead, as in the case of Kodak, the challenge is that firms are choosing not to act in response to the threat, even though they are fully aware of its ramifications.

There are many reasons that may lead firms to make this choice, but one of the primary ones is surely that, like Kodak, many law firm partners believe they have an economic model that has served them very well over the years and that continues to produce good results today. They are consequently reluctant to adopt any changes that could put that traditional business model at risk. While that might appear to be a viable short-term strategy, the danger is – again like Kodak – that this effort to preserve their past and current success could result in law firms failing to respond to trends that over time could well challenge their traditional market positions.

“Over time.” That’s the thing. There was no single ‘moment’ that caused Kodak’s demise. There was a long series of choices that resulted in Kodak becoming less competitive in the market it once dominated. The market for photography did not collapse. Especially accounting for smart phones and social media, photography is far healthier than it has ever been. But the economics of the market changed, and the largest incumbent did not (enough).

Certainly, advances in technology—from film to digital—underpinned the economic recalibration. But technology was not Kodak’s problem. The Report does a nice job laying out the history in which Kodak itself was responsible for much of the innovation that would undermine its market dominance. Rather, as explained in a new post up at the Harvard Business Review entitled “Kodak’s Downfall Wasn’t About Technology”:

The right lessons from Kodak are subtle. Companies often see the disruptive forces affecting their industry. They frequently divert sufficient resources to participate in emerging markets. Their failure is usually an inability to truly embrace the new business models the disruptive change opens up. Kodak created a digital camera, invested in the technology, and even understood that photos would be shared online. Where they failed was in realizing that online photo sharing was the new business, not just a way to expand the printing business.

The reason we still talk about the “Kodak moment” is that it made for really good copy. Headline writers jumped at the opportunity to use the company’s tagline when describing the rare cataclysm of a premier company filing for bankruptcy. But it was a moment of reckoning that was decades in the making. And the bell was tolling for a once prestigious participant, not the industry itself.

As an industry, legal is doing relatively well. Contrary to the headlines, demand is not flat. Rather, demand for law firm services is flat. According to HBR, the ACC, and LEI, the surplus is being captured by clients and, to a lesser extent (for now), their alternative service providers.

For law firms as a group, the story is one of stagnation, not collapse. There is, however, more volatility at the individual law firm level with bankruptcies and mergers. Unsurprisingly, the volatility is greatest at the individual lawyer and staff level. We’ve experienced significant de-equalizations and layoffs. This year, nearing a decade since the start of the Great Recession, the Am Law 100 again reduced the number of equity partners.

Pretty bleak picture, right? Not really. Not for everyone.
Profits Per Me
Anyone who is interested in this topic should read Bruce MacEwan’s Growth is Dead and Bruce in general. Among the many reasons to read Bruce is the compelling way he explains that the top lawyers at the top firms have never really experienced a bad year. In the almost three decades (1987-2016) of the Am Law 100, revenues have increased from $7 billion to $83 billion, a compound annual growth rate of 8.9%. Over that time, profits per partner have quintupled (5x) from $324K to $1.6M (2.3x if we adjust for inflation).

And that’s the average firm and the average partner. Averages are misleading. Many lawyers substantially outperform the average. At most firms, including the average and below average, the compensation spreads among equity partners keep growing. That is, the people with the most power within law firms have been doing quite well for a long time and there are few signs of their good times ending anytime soon. Soon matters. Most rainmakers are closer to the end of their career than the beginning. Time horizons affect perspective.

The top partners at the top firms probably figure that clients hire them for their deep expertise. They probably figure clients will continue to do so. Many of them are probably right. And those that are right will continue to have the most power in traditional firms because they will be the ones bringing in the business. The participants with the most interest in shifting the business model—and it is more about business model than tech, which is just one piece—will either not be enfranchised to begin with (e.g., associates and allied professionals with little to zero chance to make partner) or will find themselves disenfranchised (e.g., de-equitization) once the new normal intrudes on their professional tranquility.

Ken Grady recently had some tweets that did a wonderful job summing up partner resistance to change:



Why take risks when you can be rich without doing so? Why try to disrupt yourself when the market is not? If you’ve been extremely successful for 30 years and that is likely to continue for the next 10—when you’ll retire—why change course?

And the explanation need not be avarice. Attention is a finite resource. The most successful lawyers are stunningly busy. They are busy doing important work for key clients. If they are not feeling pressure from those clients (“client’s aren’t asking for it” is the subject for next post) and if market machinations are not affecting their wallets, how much attention are they really going to devote to what appear to be other people’s problems. How much effort are they going to put into real change, which requires real resources (attention, time, money).

Managing partners are paying rapt attention. Isn’t it their role to force their partners to also come to terms with the shifting market? Call a partners’ meeting. Hand out Bruce’s book and George Beaton’s Remaking Law Firms (both highly recommended). Restructure compensation to tie it more to firm than individual performance. Invest in infrastructure. AFAs. Legal project management. Technology. Alternative staffing models. Experiment….

That’s all well and good until a few key rainmakers decamp for other firms where they are guaranteed to make more money. Those people who don’t usually pay attention because they don’t have to will still notice if the firm pursues change initiatives that affect their time, workflow, or bank account. On the latter point, supported by strong historical evidence, these successful, high-status professionals consider substantial annual growth in their compensation to lie somewhere between a natural law and a birthright.

Even now, their belief in their ever-escalating economic value seems well founded. The lateral market is nuts. 93.7% of firms are pursuing growth via the zero-sum game of acquiring laterals. Unhappy rainmakers are coveted free agents subject to bidding wars. This makes the BigLaw business model—where your most valuable assets can walk out the door—inherently fragile. Even the largest law firms are susceptible to animal spirits and the cascade effect of rainmaker defections.

The prime directive of the managing partner is to keep the firm solvent and intact. That limits their leverage to force through changes that key partners resist. Successful partners need someone to handle the administrative side of the business. But, as autonomy-seeking missiles, they hate to be managed. Martin Bragg captured this well in exchange we had after my first post on the topic (reprinted with permission):

I am of the view that the real power lies (in most firms) with the king makers rather than the kings which in turn means that (most firms) are herded rather than led. The irony of this is that most lawyers in my experience hate anything to do with firm management but are unwilling to let others do it for them!

As a Martin alludes to, the foregoing is a bit of a caricature. My posts are about “most firms” and are already too long without nuance. There are some managing partners who are empowered to take a “let’em leave” attitude to partner defections. There are large firms with interesting, innovative approaches to business models, R&D, and productizing services. It’s not that change isn’t happening. It just doesn’t seem to be happening enough.

I’ll leave the final word to Bruce, who had a great post reacting to the Global 100:

In Law Land the cynical smart money is almost always on stasis; nothing will really change because any talk otherwise will spook the partners. If nothing else, this view has years and years of solid predictive success behind it.

But I wonder.

Rates of growth and decline—I emphasize decline because it is largely a story of decline in the only currency that matters, purchasing power—in overall gross revenue, RPL, PPL, and even PEP are to almost all of the 120,000+ lawyers toiling in these firms pretty abstract and denatured concepts.

One number, however, is as hard core and riveting as can be: One’s own personal compensation. This is where the abstracted figures have an impact people recognize and understand.

We can all have a debate in the parlor about whether too many lawyers with room temperature C+/B- talent were too highly paid by too many firms for too long, but as the reality of these numbers, “the New Normal” as far as the eye can see, and heaven only knows what other exogenous shocks intrude on our world, begin to sink in, real take-home pay is going to fall, and barring “something radical,” continue to fall for the great majority of these 120,000+ souls. (You guys gathered under the Wachtell banner, and few others of similar caliber, are excused—but then I stipulated I’m talking about C+/B- talent, so you knew that already.)

Upton Sinclair (1878—1968) was among many other things , author of the 1906 classic The Jungle, exposing malfeasance in the US meat packing industry and contributing to momentum behind passage of the Pure Food and Drug Act. He also gets credit for this barbed quip:

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

For quite some time now—coming up upon a decade—for partners in highly successful firms to “understand” that the good old days aren’t about to return would have entailed their understanding that the ever-upward trajectory of their compensation could be imperiled. No wonder the notion of change, much less “something radical,” spooked them. Self-interest required no less.

What if that is something that might be about to change?

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

_______________________________________
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. 

 While I was sadly unable to attend the 2016 AALL annual conference that wrapped yesterday in Chicago, I have it on good authority that the most recent ALM Law Library Survey  caused some intense discussion around industry surveys and their value. The issues raised go well beyond law libraries and seem to fit almost any annual survey where industry statistics or trends are presented. Those in legal marketing, would no doubt agree that directory rankings, akin to surveys of the industry are just as flawed in their research and survey methodology. Not to mention the concentrated amount of work they represent for a dubious ROI.  Nevertheless, since it was a hot topic yesterday, let’s go back to the ALM Law Library Survey as the catalyst for exploring the topic of surveys and their value. 

On the surface, the question “Do you plan to eliminate a majority of your print collection within the next five years?” seems innocuous. But if you think about it for more than a second, the question itself is a bit like leading the witness. There is no way to answer the question without distorting the data.   If you answer yes, the analysis will jump to suspicions of shrinking libraries, if you answer no, the analysis will jump to law librarians not embracing the future and e-resources.  Either way, the survey will point to a definitive trend about the value of librarians and libraries as a result of one poorly worded question the value and timeliness of which is in and of itself outdated. Not to mention that the results are often skewed by lumping all respondents together regardless of budget size, head count or prior culling of collections that have already been accounted for in previous surveys.  

The question, simple on the surface, points to a lack of understanding about the industry and most certainly limits the usefulness of the aggregated responses.  Print resources are an indication of – what?  Surveys, much like directories, league tables and the like provide those who create these industry research pieces with dramatic headlines, website traffic and social media click-throughs, generating soft leads and business or consulting opportunities. Surveys also provide data and data should provide insights, at least that is how it is supposed to go down.  But there has to be integrity and mindfulness in both the collection and analysis – the question above and its binary answers with no context, provides for neither. 

I am a data junkie, you all know that. I love metrics, and analytics makes me happy.   I understand the desire to create some benchmark that compares everyone to everyone else to see who’s winning and who’s falling behind. It can be the American Lawyer rankings, or it can be a Cosmo survey. The problem is that if those that are producing the survey don’t ask thoughtful questions and implement solid statistical analysis, they can pretty much make up the results (the old “I can make data say and anything I want”) to serve their end needs.  Now, I may be naïve or a bit of a Polly Anna, but I honestly don’t believe that those who create these surveys do so with malicious intent. I do believe that ALM or Bloomberg, Lexis or Thomson genuinely care about the clients they serve and do want to provide value to their clients by way of empirical data and industry insights.  

As I see it, the current model of survey and reporting as discussed at AALL has two flaws.  The first: survey creators are often on the sidelines, looking in on the action – they support the game but aren’t in it the same way industry leaders would be.  Therefore, to really add value, survey creators need to find a way to include industry leaders or practitioners in the creation of the survey so that the same questions are not asked year after year skewing the results in to a cumulative data mess. If you want to provide real usefulness, start by asking insightful well-crafted questions.  The second: despite working in an industry of word smiths who manipulate language to serve the needs of their clients, many of us (myself included) need to brush up on our written communication and analysis skills. That is, we need to be able to draft better questions, that result in stronger more representative and meaningful findings.  The size of print collections in the earlier example is no more an indication of a library’s strategy than the number of beds in a hospital speaks to the quality of care. Correlation is not causation, and poorly constructed survey questions, limit analysis to trite observations adding little benefit to the working body of industry knowledge.

I’ll stop the rant now, but hope next time the discussion turns to surveys, we can actually discuss the results and what action we want to take, rather than the methodology. 

Word limits are a very good idea. Constraints benefit my regular writing (which needs all the help it can get). Here, however, I get to ramble, which has its own virtues.

As some you may have seen, Legaltech News published the first Legal Tech Assessment case study in November. This was a milestone moment for my fledgling company. But there was much more to say. So, if you are interested, what follows is an annotated version.

The case study opens:

People, some of whom are lawyers, do not like training. Training takes time out of their day. The time taken is not always offset by skills gained.

Justin Hectus knows this. As Director of Information for boutique powerhouse Keesal, Young, & Logan (KYL), he anticipated the audible rolling of eyes when he announced a basic technology training program for all associates and paraprofessionals. What he did not expect was that when the program finished every participant would answer “Yes” to the following two questions: Was it worth it? Did you learn something that you now use every day?

Lawyers will protest free food or anything else that takes them away from their desk. While a sandwich and a cookie remains the most proven method for persuading lawyers to exit their office during normal business hours, griping commences the moment it becomes mandatory. This has much to do with incessant deadlines and the attendant sense of urgency that drives lawyers. I’ve mentioned the studies on lawyer urgency in previous posts, but I think Bill Henderson captured it best in a comment:

In my experience, lawyers (and law students) are very anxious to get to work. If they feel busy, they feel productive — even if that sense of productivity is objectively wrong from a systems engineering perspective. Learning something new is non-billable time (or for students something not on the final exam). It feels wasteful to lawyers/law students because the payoff is uncertain/speculative.

Yet, it is this same sense of urgency combined with a penchant for autonomy and alterations in the office/tech landscape that have reduced the incidence of delegation. Or, at least, that is the theory that seems to underpin many law firms’ announcements of staff reductions:

 

For more examples of firms citing lawyer use of technology as the impetus for support-staff reductions see here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here…
It is easy to construct a narrative based on greed where the firms are intentionally shifting labor-intensive work from nonbillable to billable resources. And there may be something to that. But I take the firms at their word. I believe them when they claim that lawyers are using tech more and relying on staff less. Even if, as Bill observes, it is not optimal from a systems engineering perspective, self-reliance comports with the lawyer compulsions towards autonomy, urgency, and a subjective sense of productivity. 
Lacking a typewriter of their own, a lawyer speaking into a Dictaphone or editing a document in pen was embedded in a workflow that demanded delegation. Lawyers outfitted with computers have the capacity, but not necessarily the training, to do many more tasks themselves. They have to affirmatively choose to delegate. Even if they suspect they are not quite as fast as the person to whom they might delegate, the lawyer may conclude that they will still have the task completed sooner by doing it themselves because it will not wait in a queue.
There is, of course, an interplay between youth, staff reductions, and operating environment. One should expect to see differences in delegation among the generations.

I repeatedly warn about the pernicious myth of the digital native–i.e., because they grew up with technology, younger people are automatically capable of using technology well in all its forms. The analogy I always return to is that expecting familiarity with single-purpose apps (e.g., Twitter, Instagram) to translate into facility with deep desktop software (e.g., Word, Excel) is like expecting someone who can microwave a Hot Pocket to be capable of cooking a gourmet meal. They are capable if you train them.

But disputing the conclusions re digital natives is not to dispute all of the premises. As a matter of chronology, the younger someone is, the more likely it is they grew up surrounded by and using technology. If theorizing about digital natives only went so far as to suggest a broad correlation between age and a general comfort with technology, I could get on board.

Moreover, I repeatedly lament the myth of the digital native because it is so pervasive. Almost everyone, including the digital natives themselves, seems to have bought into it. People of all ages make decisions based on the perception that the young are innately skilled with technology. This conviction could drive two different but reinforcing dynamics.

(A) Partners might see staff as less necessary based on the perception that younger attorneys don’t need them as much. So, over time, the partners alter the attorney/staff ratio. Younger attorneys therefore have no choice but to do work themselves.

(B) Younger attorneys are less inclined to delegate work to staff because of their self-perception of being good–or, at least, just as good–with technology. Staff has less to do. Observing this, the partners alter the attorney/staff ratio over time. 

Those are theories. Theories are debatable. At the end of the day, there is an empirical question: are lawyers doing more labor-intensive work themselves? One of the many things that makes KYL so remarkable is that they actually endeavored to answer that question when designing their training initiative:

KYL’s recent initiative to refresh timekeeper basic technology training commenced with an empirical investigation of where it was needed most. As detailed in a previous LTN article, Hectus and his team pulled usage statistics from KYL’s document management system. Most interesting was their finding as to how the generations differed in balancing delegation and autonomy. While senior attorneys relied heavily on support staff, many younger attorneys maintained direct control over their own documents in a variety of applications.

As explained in that previous article, between 2004 to 2014, the share of Word keystrokes attributable to KYL’s senior shareholders held steady at 0%. If firm management had based their decision on their own lived experience, the training emphasis would have been entirely on staff. Fortunately, these were trial lawyers, and evidence was their primary consideration. The evidence demonstrated that, over the same time period, the share of Word keystrokes attributable to all attorneys rose from 39% to 80%.

The empirical investigation identified a subset of people, including attorneys, who might need training in specific applications. But what training? How much? While individual trainees struggle with the fact that they don’t know what they don’t know—and, therefore, do not know what questions to ask—trainers, likewise, struggle with knowing where to begin:

KYL had identified who should be proficient in which applications. But they still lacked information as to who needed training or how much. Hectus did not want to waste anyone’s time on things they already knew. He considered lecture-style info dumps an ineffective way to deliver technology training, in part, because trainees start from such different baselines. He wanted to ensure that people were learning, not just enduring a demonstration from which they took nothing. Time is a poor proxy for learning. Hectus preferred to measure learning directly.

KYL introduced the Legal Technology Assessment (LTA) to identify gaps and validate gains. The diagnostic assessment allowed users to test out of training they did not need. Some trainees tested out of training modules entirely. For those who needed training, the pre-identification of both skills and gaps reduced total training time to almost a third.

Returning to the sense of urgency, a great advantage of competence-based approaches is that once training has been made mandatory, the assessment becomes a carrot rather than a stick. Telling people you are going to give them a test creates anxiety. By contrast, telling them that you are going to permit them to test out of mandatory training is a relief.

The assessment also gives trainees something to shoot for and, as Hectus informed me, gets the competitive juices flowing (objective measurement is conducive to gamification). But, at the end of the day, it is all about the training. Proving that many lawyers and staff struggle with technology is an exercise in confirmation bias. Correcting those deficiencies in a way that translates into day-to-day improvements in quality and efficiency is the object of the exercise:

KYL does not merely claim to have enhanced legal service delivery. The firm actually has enhanced legal service delivery and can prove it. From diagnostic assessment to certification testing, KYL’s tailored training program implemented by trainer Mike Carillo improved the average LTA score more than 40 percent with substantial gains in both time and accuracy. Each participant met KYL’s competence threshold with firm personnel earning 47 portable COBOT badges (Certified Operator of Basic Office Technology) for exceptional acumen on Word, Excel, or PDF.

Most critically, the users were able to transfer what they learned to their daily practice. Associate Erin Weesner-McKinley remarks, “some tasks that I previously delegated can now be done with the click of a button, and I have a better understanding of other tasks which I still choose to delegate to nonbillable personnel or colleagues with lower billing rates.”

The idea of certifications as a means to measure and drive improvement was not new to KYL. As Hectus explained to me in an exchange (reprinted with permission) that is not part of the case study:

From the top down, the firm has committed to developing a community of experts requiring baseline competency and giving its professionals at all levels the latitude to follow their passion and become measurably “the best” in their area of choice. KYL has produced more Certified EDiscovery Specialists (through ACEDS) than any firm in the world as a % of timekeepers and KYL was the first firm in the U.S. to have certified Eclipse SE admins on staff. We have been proud contributors to the development of standards outside the firm and that has resulted in two ILTA Distinguished Peer Awards, top individual and firm honors with ACEDS, and an InfoWorld 100 designation. Our staff participated in developing our award-winning certification program in 2008 and from that point forward we have recognized that pulling out the measuring tape is one of the most important parts of continuous improvement. We support each other and take great pride in our shared accomplishments as individuals and as a firm.

It is this commitment to being a learning organization that enabled KYL to avoid the kind of staff reductions outlined above. When machines replace clerical work, clerical workers need to find new employment. Yet individuals who have been trained to work with the machine and get the most out of it are scarce. Rather than engage in a cycle of (i) waiting too long to purge staff perceived as deadweight and then (ii) scrambling to find staff with the requisite technology skills, KYL has chosen to train the talented, hard-working people already embedded in the firm’s unique culture.

I am reminded of a quote from Tyler Cowen’s Average is Over that I use often:

This imbalance in technological growth will have some surprising implications. For instance, workers more and more will come to be classified into two categories. The key questions will be: Are you good at working with intelligent machines or not? Are your skills a complement to the skills of the computer, or is the computer doing better without you? Worst of all, are you competing against the computer?

KYL is committed to making sure that its staff fit squarely in the first two categories. This requires the disciplined pursuit of better.

Measurement is central to the disciplined pursuit of better. KYL’s analysis started with measuring who spent how much time in which applications. It continued with empirical evidence that the appropriate users had increased their skill set. That evidence was then bolstered by survey data that the new skills were translating to daily work. Finally, Hectus investigated how the improvements might affect the firm’s bottom line. While it will be a while before enough post-intervention data is accumulated, Hectus was able to compare initial LTA scores to historical realization rates:

To validate this ostensible relationship between tech acumen and firm performance, Hectus compared the diagnostic test results to the firm’s realization data. Unsurprisingly, he found a correlation between high initial LTA scores and high historical realizations. More efficient service delivery appeared to translate into greater value for the firm’s clients even before the formal initiative.

My reading of this finding is that the partners were already doing a pretty good job of trimming client invoices. Although they might not have been able to identify the root cause, their gut instinct that some tasks were taking certain timekeepers too long seems validated by the data. And while the firm is dedicated to improving legal service delivery whether clients notice or not, that clients do take note is not lost on KYL:

Continuously improving client service is embedded in KYL’s DNA. But the firm is also cognizant of the way that clients are shifting the burden of proof. Beyond the merits of the LTA itself, Hectus knew that corporate law departments were already rolling out the LTA internally and asking law firms for their LTA scores. In fact, the leader of a renowned Silicon Valley law department encouraged Hectus to help KYL become the first law firm to have its support system pass the LTA. The firm did just that.

KYL recognizes that it is no longer sufficient for a firm to claim to be something—secure, efficient, innovative. Clients demand evidence. In addition to a number of traditional IT security audits, KYL has recently been through (and passed) a client review of firm-generated PDFs. The client wanted to ensure that PDFs were being properly redacted and secured. This kind of scrutiny, and the attendant marketing opportunity, suggests a greater emphasis on third-party verification.

There are some firms that, in retrospect, would have been well served to be similarly pro-active. Candidly, however, corporate law departments inserting LTA score requests into RFP’s (there was a fair amount of informal pressure) took much longer than I initially expected. I will absolutely write a post on the pace of diffusion of innovations in legal including all sorts of admissions of my own naiveté. But that is for another day. Here, I want to heap as much glory as I can on KYL.

KYL did not need to do this. The firm is what Bruce McEwan might label a “synergistic super-boutique.” I attended USC Law where the eponymous Skip Keesal is a legend. USC is not the only place. Keesal was named the most powerful person in Long Beach (the mayor was 3rd). His firm could probably get away with simply being a collection of exceptional legal minds. Yet, KYL has committed to data-driven, continuous improvement of legal service delivery that goes beyond purchasing new toys:

In 2008, KYL proclaimed “Everyone is in the IT department.” The firm recognized that information technology contributes to stellar client service. Superior lawyering remains paramount. But client communication, securing client data, and methods for generating client documents all factor into client satisfaction and retention. Much of legal service delivery—turning legal insight into concrete deliverables—now entails a technology component that combines infrastructure with user input.

At KYL, the investment in the infrastructure is ongoing. Users keep pace through the KYL Keeps You Learning framework, a program that produced the 2014 ILTA IT Professional of the Year (Hectus) and 2015 ACEDS eDiscovery Person of the Year (Janice Jaco) and utilizes the workflow-based training of the Legal Technology Core Competencies Certification Coalition (LTC4), on whose board of directors Hectus serves.

Julie Taylor, a partner in the firm’s San Francisco office, explains, “Buying the best technology is the easy part. Making sure that every member of our team knows how best to use it to the greatest effect and in a manner that is seamlessly integrated into our daily practice is the challenge. That is where we focus our efforts.”

At KYL, improvement is the way forward, not an indictment of the past. And the firm has constructed a team that is superb at driving and managing change. I know this from first-hand experience, not only from watching them run the LTA program, but also in the ways they helped us improve the LTA. Everyone could stand to get better. Everyone includes me.

My original conception of the LTA was as a single, unified assessment. One score that would indicate whether an individual possessed basic tech competence. But KYL’s empirical data on who spent how much time in which applications convinced me to break up the LTA into software specific modules (i.e., there are now stand-alone modules and micro-certifications for Word, Excel, and PDF).

Excel is a prime example. As inside counsel, I spent more time in Excel than Word. I ♥ Excel. Excel is the “most important software application of all time.” But for many lawyers Excel is an ignored green icon. Fair enough. As inside counsel, my expectation was not that every external resource be an Excel expert. My expectation was that each firm had a few identified Excel experts and a workflow designed to send spreadsheet-intensive work their way. A tool like the LTA can be used to identify and certify those internal experts. Skill validation can be as much about proper team assembly as it is about individual competence.

Further, KYL’s suggestions as to new/different content, phrasing, etc. also had an impact on the way we approached modularity. We redesigned our software so that the individual tasks became building blocks. We can now offer a menu of features and then custom build assessments based on the features selected. So as not to lose the ability to benchmark as our feature set grows, we intend to divide the micro-certifications into levels (X set of features in Level 1, Y set in Level 2). The client can then select a level for which the end user will be certified and add features from other levels to create a customized assessment. As we expand vertically (more levels) and horizontally (additional applications), we would like to get to a place where firms can construct custom, continuous micro-learning paths that culminate in competence-based assessments and micro-certifications. That vision would have been unlikely without the feedback from the KYL team.

Learning means training, not just testing. My original opinion was that many lawyers and staff already have access to training, they just don’t take advantage of it. Legal tech trainers are excellent. Training companies know their business. And the web is replete with free training content. My role, as I saw it, was to change the incentives around training, to give it some urgency. But witnessing what Carillo did with his trainees altered my conception of when and how training should be delivered. By sitting with the trainees while they took the diagnostic assessment, Carillo delivered synchronous, active learning. Though nothing can replace a live trainer like Carillo, we designed the LTA Training Edition to approximate the experience for those who don’t have immediate access to such a resource.

In short, I’m eternally grateful to KYL. They played an instrumental role in developing the LTA and in my understanding of how the LTA can fit into advancing the delivery of legal services. The amazing thing, of course, is that the LTA is only one among a host of initiatives that KYL has underway. I’m the first to admit that basic tech competence is not the be-all and end-all of legal service delivery. It is one piece of a much larger puzzle. KYL demonstrates mastery at putting those pieces together. The firm’s initiatives in knowledge management, ediscovery, information governance, and risk management are just as ambitious and just as successful. I’m honored that the LTA is counted among those successes.

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D. Casey Flaherty is a consultant at Procertas. He is an attorney worked as both outside and inside counsel. He is on the board of advisors 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.

It is hard to feel sympathy for extremely successful people. The problems of the powerful pale in comparison to the problems of the powerless. But the thing about power is that those who lack it have a difficult time understanding its limitations. Those who earn at the poverty line don’t really see the gap between the person making $100K and $1M, let alone the orders of magnitude that separate $1M from $100M.

Among the many great exchanges in The Wire is a former mayor giving advice to the mayor elect. The soon-to-be mayor is so enthralled by the potential of his new position that he cannot take seriously his predecessor’s warnings about being beholden to those who put you there. The ambitious politician cannot imagine feeling powerless upon achieving such heights. Pride goeth before destruction, and an haughty spirit before a fall.

Many politicians find themselves straining to hold together loose coalitions in order to govern effectively. Many politicians have it easy compared to managing partners (MP) of law firms. MPs’ constituents are mostly lawyers. Dr. Larry Richard, the expert on lawyer psychology, explains, “Managing lawyers is like herding cats.”

MP’s most powerful constituents are really successful lawyers who can take their book of business elsewhere in the blink of an eye. During a lateral frenzy, it is probably not that much fun to run a “hotel for lawyers.”

To the extent one deems the legal market as insufficiently dynamic–change occurs but is not fast enough, broad enough, or deep enough–you might be inclined to think that the people nominally in charge are burying their heads in the sand. But the data suggests otherwise. While there can be an unbridgeable gap between knowledge and action, the MPs seem well versed in the shifting economic landscape.

In the 2016 Altman Weil MP survey, the MPs provided their opinions on the permanency of important trends.

Many of these questions have been asked before. Below are trends of trends—i.e., how MPs have responded over the past eight years as to whether or not they think certain trends are permanent. First up is a graph with all the data points from 2009 to 2016. For example, the percentage of MPs who think the profit slowdown is permanent increased from 13% in 2009 to 47% in 2016 while the percentage of MPs who think price competition is permanent increased from 42% to 95% over the same period.
Next is a table that provides the results from 2009 and 2016 only but also calculates the difference between them as a raw number (Δ) and a multiple. There was, for example, a 62.8 point increase (25.5% to 88.3%) in the percentage of MPs who believe commoditized work is permanent while the percentage of MPs who believe the reduction in first years is permanent has increased 5.5 fold (from 11.4% vs. 62.8%).

In short, an MP’s job has gotten appreciably harder. Yet they mostly remain confident that their firms will be able to adapt to the changing economic landscape.

This question has been asked six years in a row. While the median response is consistent, look at what has happened at the tails. About a quarter of the MPs used to be highly confident. But that number is now below ten percent. Instead, where less than ten percent of MPs used to be pessimistic, now almost a quarter are.

The confidence question only goes back to 2011. By 2011, the MPs were already convinced that many of the trends identified above were permanent. The average increase in perceived permanence between 2009 and 2011 was 36 percentage points. The average increase from 2011 to 2016 is only 10 percentage points.

The shift in MPs’ confidence does not appear to be rooted in a changing perspective on external forces. My supposition is that the shift is due largely to internal dynamics. In 2011, the MPs were were fully convinced change was needed. By 2016, they realized just how hard real change is.

We don’t have the same kind of historical data on MPs’ views on the barriers to change. Altman Weil has only been asking my favorite question for two years. But the evolution in the MPs’ response in the last year is fascinating.

2015

2016

In one year, the response that Partners resist change jumped 20 points. Clients aren’t asking was down slightly (3.6 points). Despite “crummy” economic results even at the top of the industry, the law-firm pain threshold seems to have increased by more than 10 points. Partner (un)awareness makes its first, and very strong, showing. Less importantly, but not necessarily less interestingly, MPs appear to have slightly more misgivings about their organizational capacity (up 2.6 pts), are less likely to be convinced that their model is not broken (down 5.2 pts), and are less apt to believe that they’re already doing enough (down 4.6 pts).

Next post, I intend to further explore partner resistance and economic pain.

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.