(This is part 2 of a 4 part series.  You can download the entire SOLP 2013 here.)

In-house legal departments are now facing the same cost savings pressures as other corporate departments. In the past “legal” was able to largely avoid this conversation with leadership. They would dodge the question by insisting that they could not predict the number of lawsuits or deals they would have and therefore could not provide an estimate of legal fees. After all, without this base-line budget, how could they possibly reduce it? Consequently, outside firms were long spared the indignity of managing costs, and the cognitive strain of lowering rates.

During the economic downturn of 2008, when leadership broached the subject, they no longer accepted the standard answer. One CEO commented that “the legal department was the last bastion of cost savings” for the company. The issue was not the amount of legal work, but instead the cost of it. Now the General Counsel (GC) has to toe the same line as every other department head; minimize the costs and increase the productivity.

Discounts

The first and most obvious line of attack for in-house legal departments to reduce legal spend was to request discounts. In recent years, many have significantly increased pressure on their outside firms for larger and larger discounts. As one lawyer commented in 2010, “15 is the new 10” as in a 15% discount off of standard rates. (I have heard that some GCs even attend conferences and write the level of discount they are getting on their name tags for all to see; a spontaneous market level reaction to the lack of clear pricing across the sector.) Another type of discount is the rate freeze. As firms make their annual move to raise rates, many GCs are asking for, or in some cases demanding, they stay the same.  Discounts and freezes are an easy and quantifiable way for GCs to demonstrate the appearance of savings to corporate management.

Distrust

Another market level reaction (in addition to the Conference Name Tag Exchange) is a general and growing distrust of outside firms’ billing practices. As budgetary pressures mounted, clients began focusing on very specific aspects of legal pricing that they deemed “abusive.” One easy target was billings from first-year associates. A number of clients viewed this as training; something for which they believed they should not have to pay.. In many cases, the backlash against paying for first-year hours may stem from the public awareness of young lawyers’ salaries thanks to the lock-step increases across the industry. At $160,000, first-year associates often make higher salaries straight out of school than many senior in-house attorneys, plus they get additional bonuses for billing lots and lots of hours, which only adds insult to injury. Unsurprisingly, first-year associates have become a lightning rod for client anger and distrust.

AFAs and RFPs, PDQ

Some clients have continued experimenting with Alternative Fee Arrangements (AFAs) and have expanded their use of Requests for Proposals (RFPs) in securing legal work. Here they often ask for fixed fee proposals in order to compare pricing between competing firms. This effort has led to market drops at the fee level for certain types of legal work, such as patent litigation, where fixed fees, or fixed fees per phase – and in some cases fee caps (hourly billing with a ‘not to exceed’ amount) – have been more widely adopted. However, since in-house legal departments have never before faced the challenge of defining the scope of a matter, many RFPs lack a useful scope. Consequently, too many RFPs are vaguely worded or provide outdated metrics with an eye towards getting competitive bids from various firms. Many firms struggle to give coherent responses to these RFP questions and too often this results in completely incomparable bids to the same RFP. One large client confided in me that they have never awarded work under their RFP, because they had no clear way of choosing the lowest cost or best value firms.

Of course, these examples are from the more savvy clients. If you look at the broader market, you will find a very wide range of adoption levels. Some clients are simply implementing the suggestions they have read in the latest magazine article (e.g. “Ask for a fixed fee!”). Others have entire teams and large scale efforts focused on overall savings (e.g. Pfizer Legal Alliance). While some have not yet even begun asking for discounts.

Procurement

As in-house legal departments struggle to understand their legal spend and attempt to bring it under control, the corporate procurement department has increasingly been present in legal pricing discussions. Procurement often gets involved at the request of the legal department , but occasionally at corporate leadership’s insistence. In the long run, this effort should produce measurable results, however, there are numerous challenges facing procurement when evaluating legal services.

Procurement typically assesses current costs of a product or service on a per unit basis, and then works to lower that per unit cost. As I have already established, the legal market does not currently have a mechanism to set these prices, nor does it have a clear understanding of the “unit” for sale. This leads procurement to measure billing rates as the per unit cost of legal services, which may result in lower rates, but may or may not actually save the client money. And just as importantly, the risk factors of going to lower cost providers are not always factored into the equation. To procurement, a lawyer is a lawyer, much like a widget is a widget. Many procurement departments seem to be advancing to a better understanding of legal services, but it is going to be some time before these efforts play out. Absent market pricing mechanisms at the fee level, procurement will continue to struggle to find cost savings and then attain them.

One GC for a food services company commented that he was holding procurement at bay, since they may be good at reducing costs, but they do not live with the consequences. The point here is that procurement may have value, but the current level of chaos in the legal pricing market makes it hard to achieve that value.

Data Analytics

What most clients ultimately want to know is that a patent litigation will cost $X through the Markman hearing or that an acquisition will cost $Y for Due Diligence, and $Z to close the deal. But an acquisition service may have a price range of $10,000 to $10,000,000 – from experience, that type of fee range is not an exaggeration – and what drives the range is a combination of scope, size and client goals related to the deal. For the reasons outlined above, it may be impossible for a market to ever establish a fair price within that environment.

A lack of clear or consistent market pricing information has led many clients to begin looking for pricing information elsewhere. Many have started looking to e-billing vendors to use their billing data to determine a market price for a given service. The CT Tymetrix Real Rate Report is one example. Tymetrix has, by their own account, about 42 billion dollars in legal spend logged down the to time entry level. Services like this are attempting to analyze their data to determine average rates for categories of timekeepers, variances in rates by location, variances in rates by type of work, and fees per type of work.

I would caution both firms and clients to use this type of data very thoughtfully. This is not “market data” in the classical economics sense. It is pulled from relatively small samples with known and unknown biases. Relying exclusively on this data as a market mechanism to establish pricing would be unwise. However, this data might, on some level, give a sense of current legal prices, and more importantly, it may reveal how work is managed within firms. As clients are trying to lower legal costs, and firms are trying to keep clients happy, the real trick will be more cost-conscious management of legal work. This kind of data may provide real insights into how work is staffed and where efficiencies can be realized.

In summary, the client-side of the market is flailing about, grasping for ideas, latching on to any data they can find, and hoping for some level of rationality to emerge. But they are not the only players creating chaos while hoping for some sense of calm.


(This is part 1 of a 4 part series.  You can download the entire SOLP 2013 here.)

Friends, Romans, Countrymen! (8423468943)
IMage [CC] –  Frank Kovalchek   

Partners, Executives, CFOs, CIOs, CPOs, Marketers, and Legal Pricing Aficionados of all types, titles, and roles, I have come to report that the current state of legal pricing is absolutely chaotic.

There are three methods of dealing with a chaotic situation. First, the completely rational approach is to dig a hole, climb inside, and wait for the noise overhead to subside before coming out. Personally, I fight the urge to do that on a regular basis. The second option is to lower your shoulder and plow into the fray, driving hard and hoping beyond hope that the chaos has another side upon which you might one day emerge. This is the approach most of us are now valiantly attempting. And finally, you can stop pushing and seek a higher vantage point from where you can watch the chaos unfolding below. From there you can study the movement of the mob and look for patterns, repetitions, possibilities, and opportunities.

This State of Legal Pricing is my first attempt to describe our current situation from that higher vantage point.  From this modest beginning, and with the help of my colleagues and the community at large, I hope we can begin to calm the chaos and create a rational market for legal services.

The Current Legal Market

The market has fortunately grown tired of the Alternative Fee Arrangement (AFA) buzz-phrase-term and has begun to more properly focus its attention on the broader function of pricing. Pricing as a profession has been around for some time now and generally refers to the task of determining best prices for products and services in order to maximize profits. It should be noted, especially for those in the legal space, that profit maximization is not focused on a single sale. Instead it is measured at the firm, client, or product offering level. So for this discussion about the legal market, we will presume that the legal pricing function serves at that broader level, where prices attract customers and support the business.

Every market craves rational pricing. That is to say pricing where the buyer has some understanding of the value associated with their needs or the goods they are purchasing, and the seller has an expected revenue for each type of good or service. Unfortunately, the extreme range of services provided by law firms and the dynamic nature of the legal market itself have worked against the establishment of rational pricing for legal services at a product level.

The dynamism in the legal market comes about for several reasons. First, in my experience, there are not a lot of truly comparative legal service offerings from firm to firm, or even from matter to matter within firms. Litigation in a given category has a broad range of service types and pricing levels. From the highly complex to the mundane, prices vary to a significant degree. While we may eventually see fee-level pricing appear at the more commodity level for certain kinds of offerings, even there, we may never see a transparent market pricing mechanism.

Secondly, we don’t sell widgets. While there is a push for task coding of time entries as an attempt to establish pricing data on a per task level, a client does not buy one deposition, two filings, and a side of legal research. They buy resolutions to disputes. Even if we were to offer a fee per task pricing option, clients rarely if ever make purchasing decisions at the task level.

Suppose, for example, we set a standard price of $25,000 per deposition. Then in the course of a matter, we determined that a CEO or CFO needed to be deposed. Such a deposition would very likely require much greater resources and attention than the deposition of a mid-level executive.  Should the firm honor their “standard deposition” rate for the deposition of a CEO and perform a lot of extra work for free? Should the firm differentiate low, medium, and high level deposition rates? We are now descending a slippery slope hoping for a rational stopping point.

Third, even if universal task codes were adopted across the industry, and were used effectively, the per task market price would still not be achieved without establishing much more detailed market information. As a market we haven’t even determined standard case types at this point. How much resource will we expend to agree upon task-level pricing for one sub-type? In the process, we may commit a significant amount of industry resource to develop a standard number that ultimately has no meaning within the specific confines of any specific case.

A rational market does not ascertain useless pricing data. It has no patience for that. So unless clients start buying depositions rather than resolutions, there will never be an incentive for the market to determine a price for depositions. Even if the market could determine such a price, it would only be for a certain level and type and would not be universally applicable. I just don’t see the market needing that level of detail in product pricing especially when it struggles to find reasonable pricing mechanisms for much higher product levels (e.g. – the matter level).

The most likely outcome of any overt attempt to create something like a legal pricing market is that rational pricing behaviors will only appear within tiny pockets of the market. To some degree, we can already see this beginning to happen at the far end of the commodity spectrum (e.g. patent prosecution). It is reasonable to expect that this commodity pricing will “evolve up” within certain market segments over time, but I question how far up it will or can go.

Given this challenging market environment, tomorrow we will turn to the behavior of the market participants driving such chaos.


Today’s Guest Blogger, Kristina Lambright, brings us a review and explanation of Jordan Furlong’s new book, Evolutionary Road. Kristina serves as the Manager of Strategic Pricing for Akin Gump Strauss Hauer & Feld. Prior to that she was the Pricing Analyst for Vinson & Elkins. Kristina has a JD from South Texas College of Law and an MLIS from the University of North Texas. Welcome to 3 Geeks Kristina!

Evolution, by definition, is a process of continuous change from a lower, simpler, or worse to a higher, more complex or better state: growth.  Evolutionary Road is both a timeline and in-depth perspective of the legal marketplace which draws out an insightful explanation of its changing nature.

Legal industry forecaster Jordan Furlong has an exceptionally high accuracy rate in forecasting the direction and fate of the legal market. He is a prolific orator and author who has elicited respect and support from professionals in all areas of the legal industry. His new e-book Evolutionary Road provides both retrospective and prospective views into the legal marketplace as well as a practical strategic discussion guide.

Futurists and non-futurists who follow Jordan’s Law21 blog will recognize much of the content; however, Jordanites who wish to both drive change within their environments and effectively navigate the Evolutionary Road, will appreciate the compilation of historical observations, anticipated events and overall prognosis of the legal industry.

In his book, Furlong expounds the Stages of the legal market:

  • Stage 1: Closed market (pre-2008) – Lawyers run the show with no real competition or pressure to innovate; Legal knowledge & tools largely inaccessible without lawyer involvement
  • Stage 2: Breached Market (2008-2016) – Lawyers face increased competition & recognition of vulnerabilities; Declining demand for lawyers; Beginning of the end of the “BigLaw” business model
  • Stage 3: Fully Open Market (2016-2024) – Legal jobs disappear; Golden age of Legal technology; Legal knowledge & tools universally available
  • Stage 4: Expanding Market (2020-Future) – Emergence of a more dynamic legal market; Increase in range and depth of accessible legal work; Legal job growth; Collaboration between lawyers and non-lawyers; Transformation of legal education
  • Stage 5: Multidimensional Market (TBD) – Lateral thinking; Creative brainstorming; Lawyers reinvent themselves

Appreciation of each stage is essential to facilitate the change necessary for successful navigation of the legal market’s Evolutionary Road.

As opined many times and in multiple venues, the legal market has traditionally been slow to adopt new or advanced technologies, operational efficiencies, or structural changes as compared to other markets and business organizations.  Past, present and future market change and external forces have and will necessitate change (or evolution) and those that adapt will survive.  Those that choose to innovate will thrive.

Also addressed are all the areas of the legal landscape that have and will continue to impact participants striving to prosper in an evolving market.  Specific topics discussed include Law School practices, Market Competition (to include Legal Process Outsourcers and Alternative Business Structures), Pricing, Law Firms and Industry Regulation.

Other areas discussed include the battle for market share, availability of legal knowledge and tools and the reversal of growth in the legal profession.  Furlong coins new terms such as “the lost generation”, “non-school” legal education providers, mobile/virtual solo firms, streamline megafirms and super boutiques – all of which are born by a more complex market.

To this day, MANY naysayers truly believe, and boldly state, that the market will never change or change very little.  These naysayers are the MANY that experienced and enjoyed the “easy” money of the Closed Market (pre-2008) and have only been marginally affected by market pressures.  Those unwilling to embrace (or even entertain) the concept of change and evolution within the context of their own organizations, will undoubtedly become the next case study used to further support the argument that inability or unwillingness to adapt leads, ultimately, to extinction.

Some readers will classify Furlong’s latter stages as unfounded, grandiose and/or over-the-top.  And while Furlong prefers to be labeled a “legal market analyst”, he might have to concede that many of his forecasts in Evolutionary Road provide justification for branding him a “legal futurist.”

Evolutionary Road’s message is not all doom and gloom.  The future, according to Furlong, brings hope and optimism for legal professionals.  Many positives are revealed including one stunning prediction found in Stage 5 – LAWYERS are driving change – that profound prediction ALONE is enticing enough to add Evolutionary Road to your must read list.

Image [cc] –  顔なし 


Jane:  Have you noticed that this job has become more and more about the correct usage of IT approved technology?  I mean, years ago, I practiced law.  I worked with my clients to determine the best way to work together.  Now, I spend an inordinate amount of time trying to learn the tools that IT has decided will make my practice more productive.  Ironically, the more and “better” tech they add, the less productive I become.  Meanwhile, in my personal life I am using technology more than ever.  I don’t need training, and most of it actually makes me more productive. Paying bills has gone from an all-afternoon Saturday exercise to a 2 minutes on the bus thing. Keeping up with friends has gone from a series of weekly or monthly hour long calls to a couple of minutes each day on Facebook. Even doing my taxes, and planning meals have changed from all-consuming tiresome activities to near-afterthought minor annoyances.  All the while practicing law gets more and more complicated.

Dan:  OK. Here is where you say, you should just be allowed to use whatever technology you want to at work.

Jane:  Yes, as a matter of fact, it is.

Dan:  That is asinine.

Jane:  Why!?  Why should some committee of techies – most of whom don’t know their amicus curiae from a hole in the ground – decide what tools I should be required to use to practice law?

Dan:  Jane, they are nerds! They know technology.  They know what’s safe and efficient to use.  A competent IT department does their due diligence on every system, learns it inside and out, and makes sure it’s easy enough for even a tech-challenged attorney like you to use.

Jane:  That’s bull.  And to be clear, I have no problem with my IT people.  They are smart and diligent, but they don’t know the law, the business of law, or the practice of law.  How can they possibly determine what technology is going to be most efficient for the firm, let alone my practice?

Dan:  Would you rather decide what technology your firm uses?

Jane:  No.  But I would love to decide what I use.

Dan:  And who will support that technology when it doesn’t work as expected?

Jane:  They will.

Dan:  Do you know how many possible configurations and variations an IT department would have to support if everyone picked their own tools?

Jane: OK. I can see the need for some limits, but COME ON! Give me a little flexibility here!  If I want to bring in, at my own expense, my personal Mac Laptop, because… well… the damn thing works, then IT should be prepared to support it.  Also, I should never have to carry around both a clunky old Blackberry and my sexy Android phone because IT can’t figure out how to enable a secure connection on the modern device. Plus, if there is no known virus or security threat, I should be allowed to go to whatever websites I want. I am not a child, I have the self-restraint to avoid porn, scams, and excessive use of personal social media while at work.  The point is: I know what I do on a daily basis, and they don’t.

Dan:  And all of the attorneys in your firm are as knowledgeable, self-restrained, and tech-savvy as you?

Jane:  Not remotely.

Dan:  So when one of your moronic partners clicks on a phishing link that takes him to the seedy underbelly of the inter-webs on his personal, but firm-networked, laptop and contracts the digital equivalent of tertiary syphilis, bringing down your firm’s entire network for a week or more…

Jane:   Well…

Dan: Or when one finally gives in to the incessant whining of her 6 year old and lets him play Candy Crush on her semi-secured Android device that has direct access to all firm records and documents, and the kid decides to play “Hey, I wonder what this does?” instead…

Jane:  That’s not what I…

Dan:  Or when you, moderately intelligent and tech-savvy as you are, plug your camera into a photo store kiosk on vacation to print out a couple of snaps for grandma, then come home and plug the same camera into your firm notebook to upload a new wallpaper image, and unknowingly unleash the Trojan Horse that gives hackers on the other side of the world carte blanche access to all of the firm’s client information…

Jane: That’s not possible.

Dan: No, that’s statistically unlikely, but it is extremely possible.  Which would be more inconvenient: learning the firm’s approved technology to do your job safely, or looking for a new job when your firm has lost all of its clients due to a security breach that you unwittingly caused?

Jane:  Ummmm….

Dan:  I know what you’re thinking. “How statistically likely is that?” Well, to tell you the truth, I don’t really know. But being as such a thing would ruin your career, your clients’ business, and would probably blow your firm clean off the map, you’ve got to ask yourself one question: “Do I feel lucky?” … Well, do ya, punk?


This is one of those things that catches everyone by surprise right before the annual AALL conference. W.S. Hein and Fastcase announced this morning that they are forming a partnership to integrate content on each platform and create a more extensive legal research database. This is the sort of thing that everyone expected from Aspen/CCH/Loislaw a few years ago, but never really happened. Having worked over the years with both Fastcase and Hein Online, I have to personally say that this partnership has great potential. I’m looking forward to seeing how it all works out and what the final products look like.

Here’s the press release from this morning.

Hein and Fastcase Announce Publishing Partnership
Hein to Include Hyperlinks to Caselaw and Bad Law Bot;Fastcase to Offer Law Reviews and Historical State Statutes and Session Laws


BUFFALO, NY and WASHINGTON, DC (PRWEB) July 09, 2013

Independent legal publishers William S. Hein & Co. and Fastcase today announced a new partnership in which the companies will share complementary strengths for the benefit of their members.
Under the agreement, Hein will provide federal and state case law to HeinOnline subscribers via inline hyperlinks powered by Fastcase. In addition, Fastcase will completely integrate HeinOnline’s extensive law review and historical state statute collection in search results, with full access available to Fastcase subscribers who additionally subscribe to Hein’s law review database.
The partnership combines Hein’s expertise in publishing law journals and historical statutory materials and Fastcase’s experience in publishing American primary law. It offers users of both services a complete, integrated legal research experience.
“Fastcase and HeinOnline are two of the largest independent legal publishers in America,” said Ed Walters, CEO of Fastcase. “Integrating these two libraries is a home run for our members. Both services create unique values based on citation analysis and the information architecture of the law. Beyond the fantastic new libraries our users can access, we’re also making our tools smarter as they learn from these new citation relationships.”
As a result of the agreement, Hein’s federal case coverage includes the judicial opinions of the Supreme Court (1754-present), Federal Circuits (1924-present), Board of Tax Appeals (vols. 1-47), Tax Court Memorandum Decisions (vols. 1-59), U.S. Customs Court (vols. 1-70), Board of Immigration Appeals (1996-present), Federal District Courts (1924-present), and Federal Bankruptcy Courts (1 B.R. 1-present). The state case law covers all fifty states with nearly half of the states dating back to the 1800’s. Coverage for the remaining states dates back to approximately 1950.
HeinOnline subscribers also will be able to take advantage of Authority Check, an integrated citation analysis tool developed by Fastcase. When cases are called by HeinOnline, Fastcase’s Authority Check tool will include one of Fastcase’s newest features, “Bad Law Bot”, which uses algorithms to identify negative citation history. These services will be integrated into all HeinOnline subscriptions, which will add tremendous value at no additional cost.
Concurrently, Hein will provide HeinOnline materials to Fastcase, allowing Fastcase users to search across content available in the Law Journal Library, Session Laws Library, State Attorney General Reports and Opinions, and State Statutes: A Historical Archive. The new libraries will be fully integrated into Fastcase’s search system, and Fastcase users will see Hein results and abstracts for free, with subscription options for the full articles. The Hein collection will include more than 1,800 law reviews back to their first volumes, and represents the first secondary material to be integrated into the Fastcase legal research service.
The integrated libraries will be available on both services at the end of the summer.
About HeinOnline: Produced by William S. Hein & Co., Inc., HeinOnline includes nearly 100 million pages of legal history available in an online, fully-searchable, image-based format. HeinOnline bridges the gap in legal history by providing comprehensive coverage from inception of more than 1,800 law and law-related periodicals. In addition to its vast collection of law journals, HeinOnline also contains the Congressional Record Bound volumes in their entirety, complete coverage of the U.S. Reports back to 1754, famous world trials dating back to the early 1700′s, legal classics from the 16th to the 20th centuries, the United Nations and League of Nations Treaty Series, all United States Treaties, the Federal Register from inception in 1936, the CFR from inception in 1938, and much more. For more information about HeinOnline, please visit http://home.heinonline.org.
About Fastcase: As the smarter alternative for legal research, Fastcase democratizes the law, making it more accessible to more people. Using patented software that combines the best of legal research with the best of Web search, Fastcase helps busy users sift through the clutter, ranking the best cases first and enabling the re-sorting of results to find answers fast. Founded in 1999, Fastcase has more than 500,000 subscribers from around the world. Fastcase is an American company based in Washington, D.C. For more information, follow Fastcase on Twitter at @Fastcase, or visit http://www.fastcase.com.
###

Time is Money
Image [cc] Tax Credits

Back in January, Tom Wolfe wrote a Newsweek article called Eunuchs of the Universe where he articulated the new style of Wall Street versus the Wall Street that most of us knew. Instead of a raucous gathering of traders in a pit, scrawling information on sheets of paper and signaling wildly to buy or sell the next trade, today’s traders work on computer networks designed to take advantage of milliseconds and use it as a strategic advantage over competitors or to find flaws within the system to nearly guarantee a profit. High-speed networks were optimized and placed along specific geographical corridors in order to have bids, orders and sales conducted ahead of other traders. These days, speed, technology, and out-geeking the next trader is where it’s at. A few milliseconds meant the difference between a good deal and a great deal. It was no longer about being Gordon Gekko and the sexy, ruthless player in a pinstriped suit… now the hero of Wall Street would be to find Doctor Who and travel milliseconds back in time to make trades.

Imagine how powerful you could be if you could beat the competition by two-seconds? Wolfe would have had a field day in his article had he known that a mere $6,000 a month could buy you that information a full two-seconds earlier than your competition. I’m sure he would have written an entire chapter on that story and how the geeks could upload financial outlook reports into massive supercomputers and have trades ready to buy or sell a full one-second before the competition even had the report in hand. What a story that would be.

The only problem is… it isn’t really fiction at all. Turns out that Thomson Reuters has been doing this very thing with the University of Michigan’s Consumer Confidence Index. It pays Michigan an amount North of $1 million each year to release the information five-minutes before UM launches it on its website. The money management companies pay a premium to Thomson Reuters for the information. That practice is well known. It is the secondary practice that goes on that has caught the eye of New York Attorney General, Eric T. Schneiderman. Apparently, a five minute head start over the public is not good enough. A five-minute and two-second advantage has been given to an elite group of about a dozen clients from Thomson Reuters. Schneiderman seems to think that this little group may be receiving an unfair advantage and investigating whether this preferential treatment is a fair and appropriate business practice.

Thomson Reuters claims that the tiered pricing is not illegal and that as a private company it can disseminate the information any way it pleases, so long as it disclosed to those purchasing the information. Schneiderman seems to be channeling his inner Eliot Spitzer on this one and is bringing out the Martin Act to challenge practices that are deemed unfair, even if technically legal. Regardless, it would be naive to think that this type of tiered access is limited to this one report.

Luckily for us in the legal field, we aren’t tied to milliseconds like our counterparts in the financial industry. However, what if we could pay a premium to Thomson Reuters to let us know of law suits filed against certain companies a few minutes before they let our peer firms know? Would law firms pay to be on the top-tier of that knowledge? It makes me wonder if anyone on the financial side of Thomson Reuters is brainstorming of ways to bring this practice over to the legal side of the house as a way of enhancing revenues? What could law firms do with a few two-second head start over our competitors? Most of us believe that law firms are far to slow to react to this type of advantage, however, the idea is a fascinating one to contemplate.

A truly gifted and uniquely skilled artisan
crafting an iron nail by hand. 


Image [CC] – Calvin Lee 

Jane:  Legal Process Outsourcing is a brilliant idea whose time has come, Dan. I think we will see a number of high profile firms begin to partner with LPOs in the next few years. Whereas it was once unthinkable for a firm to take on low margin, high-volume work, now they can provide those kinds of services to their clients without making a large investment in specialized technology or increasing headcount.  An LPO partnership is that rarest of business opportunities, the win-win-win for the client, the firm, and the third party LPO.

Dan:  More like a draw-lose-win, if you ask me.  The client’s going to get their high-volume busy work done by some lesser entity whether the firm gets involved or not. Meanwhile, the firm takes on the administrative headaches and expenses for commodity work that, if word got around, would only serve to diminish their reputation as a purveyor of fine legal services. Even worse, the firm loses the margin on work that, if they had done on their own, would have been profitable.  In fact, by my reckoning, the only real winner in an LPO/BigLaw partnership is the LPO, who would no longer need to invest in marketing or sales people.

Jane:  So, say a client comes to you with a serious problem that involves high-volume work – you would turn them away saying that such work was beneath you?

Dan:  You may not have noticed Jane, but the P in LPO stands for “process”; clients just don’t bring “process” work to elite law firms like mine. But for the sake of argument, if they did, we would politely explain that, while we are certainly capable of such work, having us perform such menial tasks would be the artistic and financial equivalent of having Van Gogh and Vermeer paint your bathroom walls. 

Jane:  Well, maybe if your attorneys all wear White Shoes, you can afford to turn away higher volume, lower value work, but….

Dan:  The petty little firms you work with, Jane, may benefit from partnering with LPOs. But our BigLaw attorneys are legal artisans.  Process, who cares about process?  We recruit only the top tier of law school grads from the tippy-top tier of law schools. The legal counsel we provide our clients is the product of the finest, most creative, and talented legal minds on the planet. That kind of craftsmanship is simply incompatible with the industrial processing of an LPO.  Do you think any of the law schools we recruit from even have a clue what process is, much less teach it?

Some guy working through a process
to build a high performance truck engine. 

Image [CC] – Scania Group

Jane:  As usual, genius, your ego has been partying with your ignorance leaving you a little too impaired to see the opportunity right in front of you.  If you hadn’t cut me off, I was going to say that despite your BigLaw and Top 10 Law School snobbery, you are actually making very good arguments for an LPO partnership.  OK, so process work is beneath you, fine; all the more reason to pass it on to someone who specializes in the process. All clients, no matter how elite, have commodity type legal work that needs to be done.  Rather than sending your client away to look for another provider, why not partner with an LPO that can do that work for you?  The client gets one stop legal shopping, the LPO gets an endorsement from your firm, and your firm gets all the benefits of more staff, specialized technology, and process expertise, without actually investing in any of it. Plus, you get additional billable hours for supervising the LPO!  With a formal partnership, you will never have to scramble to do high-volume work when you suddenly wake up one day and realize it’s in your interest!    

Dan:   Like I said, we are artisans, not engineers or short order cooks.  

Jane:  Forget about what kind of work you do or don’t do! With an LPO partnership you’ll get a better price for LPO services and you might even make a little profit on the outsourced work.  You’ll get to offer your clients a better value than they could get on their own and keep more of their business – maybe even more of that high end work you covet.  And, if you’re lucky, some of those industrial processes might just rub off on your firm. Tracking a few metrics, better information governance, productivity monitoring and reporting; these could all improve the efficient delivery of your uber-artisanal legal product.

Dan:  In the history of the world, Jane, no high quality custom craftwork has ever been improved through systematized process improvement. 

Jane:  Have you heard of the Industrial Revolution? 

Dan:  Were they a hair band in the 80s?  

Jane:  Um… sure.

Dan:  What did they sing again?

Jane:  You’re too stupid to live.  

Dan:  Oh yeah!  I loved that song! 


[Ed. Thanks to Ron Friedmann for suggesting this D&J topic and for providing the bulk of their arguments this week.  Dan and Jane and the rest of us Geeks thank you Ron!  If you have a suggestion for a future D&J post, shoot Dan and Jane an email at dandj3geeks (at) gmail (dot) com.]

I knew that July 1st would be its final day, but I hoped that someone at the “Don’t Be Evil” Empire of Google would call upon the leaders of the company and give it a last minute reprieve. No call was made, and no last minute stay of execution was issued. Sometime last night my good friend and companion, Google Reader, ceased to be. A switch somewhere in Mountain View, California was flipped and the sparkling lights that flickered on some piece of hardware went dim and was replaced by a cold, stern message that pointed me to alternative friends and companions that could be just as good. But, we all know that it is not true.

Like many of you that I know, Google Reader wasn’t just a place to pull all of your blogs and websites together for easy navigation. It was a launching point for passing that information along to others, or building upon the results in ways that made the sum of the whole greater than all of the little RSS feed parts. It was sent to things like Flipboard, or on to Twitter feeds. It was linked to portal pages and into databases. It was more than a simple RSS feed, it was a conduit to passing and pursuing more information. It was a touchstone that pulled so many different pieces of information together and made it all make sense, at least in my head.

As with most disaster relief plans, you hope for the best, but prepare for the worst. We’ve all pulled our data out of Google Reader and went on to the next best thing, but it still doesn’t replace the old companion we’ve known for so long. I understand Google’s reasoning for killing off a great product (they are, after all, about revenues and profits), but I don’t agree with their rationale. The push for their Google+ product could have brought Reader into that fold, and brought many of us along with it. However, that logic never played out.

Reader was great. Reader was reliable. Reader was a constant that was swallowed up by the constant change that faces us these days. I’ll survive. I’ll move on. I’ll find another. Eventually the habit of checking my various Reader outlets will be replaced by other habits. But, just like my old Mustang I had as a teenager, I will remember Reader with a fondness.

Goodbye.



Five
Image [cc] Aftab Uzzaman

Interesting post from Julie Neidlinger entitled, “Who You Follow on Social Media Is Changing You.” I read it over the weekend and really didn’t think too much about what she was saying at the time, but I sent out at Tweet to let others know the article was worth a read. Caren Silverman sent a follow up to my tweet where she asked “Have you experienced this?” It was that response that made me go back to the original article and begin asking how much am I affected by those that I follow on social media??

The juxt of the article says that the five people you spend the most time change your Mind, Attitude, and your Interests, and that you should select those people carefully… both in your physical world, and your online world.

I have a pretty small circle of people I hang out with in the ‘real world’, but a very large circle of people I hang out with in social media. In both worlds, there is such a diversity in the relationships that I feel that I really shouldn’t introduce them to each other as they have such different opinions that they wouldn’t get along. I especially noticed this during the 2012 presidential election, and right now I see serious divides along the whole Paula Deen situation. I really like this diversity because it gives me different perspectives, even though I’m pretty set in my opinions. Hearing multiple opinions of the same topic really helps me solidify my own ideas, while remaining empathetic to those on the other side of an issue.

The diversity also helps expose me to things that I might otherwise miss. If I only had Law Librarian friends, I might miss out on issues related to pricing or marketing. If I only had friends that listened to girl-punk-bands from Los Angeles, I might miss out on a great Jazz musician that died thirty years ago. If I only listened to my current friends, I might miss out on some events that are happening with my friends in the Army or in High School, or even from Grade School.

Speaking from my own experience, I’d have to say that who you follow does affect you because it expands your experiences. How you let it change you is really up to you. Neidlinger says that it is okay to be selective in your networks, that it is okay to say no when you don’t like how you react to certain people, and that you can be exclusive in who you include in your networks. The results of how you let others impact your own personality, beliefs, and practices are really up to you. So, choose wisely, add and weed occasionally, and always remember who were yesterday, who you are today, and who you want to be tomorrow.

Richard and Maya Hsu of The One Page Blog

“Today, with the help of my thirteen year old daughter…”

This is how my former colleague, Richard Hsu, now a partner at Shearman & Sterling starts his “HsuTube” videos on complex transactional legal concepts. We’ve covered Richard before when he and I both worked at the same law firm. We’ve since moved on to new firms, but keep in contact a lot via Twitter. He has a way of presenting information through video that is quite interesting, informative, and unique. Of course, as great as Richard is, his 13 year old daughter, Maya, is really the star of these videos.

Richard recently pointed me to some of the remastered videos that he and Maya recorded. He rented a studio for the videos that came with a lighted backdrop and a translucent board so that Maya could sit down and draw. Even so, he said that it took 8 hours to complete all the drawings and that Maya is probably retiring after this session. Let’s hope not because the finished videos are amazing.

I wondered what he does to get Maya to help him. After all, I’m still trying to get my 13 year old daughter to sing punk rock songs with me… (maybe I can have her draw for me instead!) Richard commented to me that:

The main reason I did these videos was not necessarily to do something that looks corporate or professional, but because it gave me a chance to do something creative with my daughter.

After looking at them, I knew I should share them with our readers for a couple of reasons. First, it is just good information and explains a complex topic in a way that even a law school grad like me can understand (it never really sunk in during law school.) Second, I’m a big fan of people that find creative ways of displaying information. Richard and Maya do that in spades. So, was it all Richard’s idea and concepts on how to display it? Turns out that Maya actually brings a lot to the [drawing] table according to Richard:

A lot of the drawing ideas were her suggestions and it was fun to bounce ideas off her and come up with the final pictures

So, go take a look at the videos below. It might make you want to become a transactional attorney… or, it may inspire you to find unique and creative ways to present your own expertise on a subject. Being able to visualize along with teaching is a great way to make teaching a difficult subject a little easier. Great job Maya… oh, and you did a good job, too, Richard!

IP Assets in an M&A Transaction: http://hsutube.com/ip-assets-m-a/

Assignment in a Change of Control: http://hsutube.com/assign-coc/ (inspired by Mike Kennedy)

Collaborative Development Financing: http://hsutube.com/collab-dev-fin/ (inspired by Mark Kessel)

IP Ownership in a Joint Development: http://hsutube.com/ip-ownership/

Reseller vs. License: http://hsutube.com/reseller-vs-license/

What is the Licensed Property? http://hsutube.com/licensed-prop/