Image [cc] Global X

Thomson Reuter’s flagship financial product, Eikon, is turning out to be more like the Titanic after hitting an iceberg. According to reports from the New York Observer, Thomson Reuters has laid off around 3,000 employees, most from the financial sector, including sales, training and analysts’ divisions. In addition to these, it is also reported that there were also layoffs in the Editorial ranks, including big names like:

Peter Bohan, editor of Reuters America Service, has reportedly been let go. Mr. Bohan had been at Reuters for two decades, most recently as the Midwest bureau chief. Brad Dorfman, Reuters’s U.S. retail and consumer products company news editor, and Lee Aitken, who had been in charge of political coverage since 2012, were also reportedly let go from the company.

While most of the departures occurred at the managerial level, the majority of the Reuters TV team is out as well, after YouTube’s decision not to renew its one-year-old contract with the news service.

It’s not a good time to be an Editor these days, as Lexis has also recently announced the closing of the Matthew Bender’s Albany, New York office.

The Eikon product has already cost one Thomson Reuter’s CEO (Tom Glocer) his job, and hit TRI’s stock considerably since 2011. Plus, the Eikon flop placed Thomson Reuters on a list of 12 Companies that Could Go Bankrupt Very Soon. (Which caused us to write Could Thomson Reuters Be In Trouble? back in October 2011.)

The pain isn’t just being felt in the Financial Sectors of Thomson Reuters either. Anyone at Thomson Reuters with a good salary (this should include our friends at TR Legal) will feel the pain, too.

All Thomson Reuters employees, not just those in editorial, who make more than $100,000 will not receive raises in 2013.

All of these issues are pointing to a company that is struggling to pull all of its different acquired pieces together (think how well BNA/Bloomberg has merged, and then think of all the different platforms TR is still supporting.) It also seems that Thomson Reuters is not taking the market share away from Bloomberg in the financial market. It also seems to point to the need for TR’s Legal group to ramp it up and start bringing in more revenue and profits.

Those of us in the Legal Industry should be on the lookout for more sales pressure on the horizon.

I would like to take this opportunity to respond to your letters dated January 17, 2013 and January 23, 2013, respectively.  As is quite common amongst your kind (attorneys), I believe you may be talking past each other.  Ms. Elefant’s point is well taken, as techie at a large law firm, I am sometimes a little surprised at the lack of technological intelligence of young lawyers. They enter the firm with bright and shiny JDs from Ivy League schools and yet for many of them the internet is simply magic, like indoor plumbing. They don’t have any idea or any desire to know how it works or how they can use it better. To be fair, in my experience, this is also how most senior attorneys view the internet, except they believe that the internet is evil black magic to be kept at a distance. You know, like indoor plumbing.

Mr. Camson also makes a very good point.  He’s focused on being the best attorney he can be.  He can’t be bothered with things like sharing his considerable experience with personal and consumer technology to improve his firm’s footprint on the intertubes. Or for that matter, with helping a senior attorney learn something new. This is about him and what you can teach him before he blows this popsicle firm and gets a cushy corporate gig.

Enter Uncle Ryan with a solution for everybody.  Ms. Elefant, you write a blog about solos and small firms, I recognize that these operations do not have the budget for tech support personnel like the big firms do.  But the kind of thing you’re looking for doesn’t require an expensive tech consultant or full time IT staff.  You need a sophomore in college, studying computer engineering or art history, who can tinker for a couple of hours a week after class to solve the problems you are looking to solve.  If you get the right kid with a couple of linux boxes and a handful of open source softwares, you can get virtually anything you want for $10/ hour and pizza for lunch on Fridays. While I agree that it would be efficient and convenient to hire young attorneys that can do both the tech and legal side of things, I think that will be hard to find. I’m not sure of any law schools that are actively churning out tech-savvy, responsible, team players looking primarily to contribute to the success of their firm.  Sadly, most of them are still developing young lawyers.

I’m a little behind in this news, but the Texas Bar Association has recently launched the new Casemaker platform for all of its members. The new interface is definitely a step up for Casemaker and makes searching across the different library database a lot easier. The Casemaker access is free to all members of the bar, and even to librarians within the state that register using the Texas Bar’s CLE website.

We here at 3 Geeks think that what Casemaker and Fastcase are doing through the bar associations is a valuable benefit for the bar members. Although we love to pit all of these competitors against each other, we also realize that they offer a great service that is far too often overlooked by the members of the bar. If you’re not sure if your bar offers Casemaker or Fastcase, here’s a quick list of which bars are covered:

Fastcase
 
·  State Bar of Arizona
·  Arkansas Bar Association
·  Cincinnati Law Library
·  Cleveland Metropolitan Bar Association
·  D.C. Bar
·  The Florida Bar
·  State Bar of Georgia
·  Hawaii State Bar Association
·  Illinois State Bar Association
·  Iowa State Bar Association
·  Kern County Bar Association
·  LA Law Library
·  Louisiana State Bar Association
·  Maryland State Bar Association
·  Minnesota State Bar Association
·  The Missouri Bar
·  State Bar of Nevada
·  New Jersey State Bar Association
·  State Bar of New Mexico
·  North Carolina Bar Association
·  Oklahoma Bar Association
·  Oregon State Bar
·  San Fernando Valley Bar Association
·  State Bar of South Dakota
·  State Bar of Wisconsin
·  Tennessee Bar Association
·  Virginia State Bar
·  West Virginia State Bar
Casemaker

I’ve been in beautiful Rancho Palos Verdes, California this week attending the Marketing Partner Forum.  Yesterday, I caught a couple of sessions that stood out because they discussed the need for law firms to be focused on the prevention of litigation, rather than the representation of ongoing litigation. That, in and of itself, wasn’t new, but the way firms should charge for that type of work did strike me as ‘interesting.’

First up, there was Keynote Speaker Trevor Faure, Global Leader & Partner, Legal Services, Ernst & Young Global. Trevor’s topic was “The Smarter Legal Model: Replacing the Traditional Zero-Sum Game Client Relationship with a Profitable Partnership.” He wrote a book in 2010 entitled The Smarter Legal Model: more from less, through the recently acquired PLC. If you’ve ever caught a Richard Susskind presentation, the themes would sound very similar, especially since they are both British.

Toward the end of his talk, Faure pointed to an alternative method of doing client work that will sound familiar to many law firm librarians. The idea was to look at the trends in client litigation, say labor disputes, and determine how much they spend in a typical year. The firm would then work with the client to change the structure of the business, the policies regarding the actions leading to the disputes, and training on how to change the behavior of the client as to avoid the disputes altogether. The firm would not charge the client up front for this work. Instead, it would take a percentage of the reduction in cost over a period of time. If the client reduced its spend the next year by $100,000 the firm would be paid $50,000. The idea being that the client is still money ahead and the firm would also be a winner.

For librarians, we have seen this model before in taking a percentage of the saving when consultants come in and evaluate a firm’s research collection, suggest cuts, and then take a cut of the saving for a few years. Many of us have done this, and the process can be a bit tricky, and can lead to a bad relationship with the consultant if everyone is not on the same page. It’s also something that most firms do once, and then never again.

The issues usually arise around what did the consultant actually do,versus what the firm was in the process of doing already. The same issue could arise around the firm and the client. What was the client already implementing to modify their behavior, versus what did the firm actually cause them to change. It can make a difference in how much actual savings occurred and how much the firm is owed by the client. If not performed carefully, a billing dispute could occur and cause damage to the firm’s overall relationship to the client.

I actually think that this can work, and there may be many firms out there already doing this, but I would suggest that everyone involved needs to have clear communications on exactly what the changes are, who came up with the changes, and how much was actually saved.

The second presentation happened later in the day and was comprised of a panel of General Counsel from big corporations and law firm lawyers and chief knowledge officers. The same ‘lawyers need to be proactive’ theme ran through this presentation, and there was a streak of bitterness amongst the GCs that you could feel as we listened as story after story talked about how the GCs felt that law firms were not trusted to give the best services for a fair price. In fact, one GC gave a blanket statement that GCs hire lawyers, not firms. This sent a visible shutter through many of the members of the audience.

The GCs began telling the audience what they really want their outside counsel to do. They want the partners to better understand their business. They want a better line of communication. They want firms to better manage the matters to a budget and keep them informed, to the penny, on where we are at all times. They want firms to install practice management processes. They want to be able to call the firm from time to time to get answers on immediate needs. They want the firms to send their lawyers into the client’s business and walk in their shoes for a while in order to think as a GC would, and not as a law firm lawyer would. They want CLE. They want their outside counsel to make them shine to their bosses.

They want most of these items at no additional cost.

Kevin O’Keefe, wrote about the dueling Lexis and Thomson Reuters blogger summits on Tuesday in his post, Who’s Influencing Who. He seems to be concerned that the big L and TR are trying to curry favorable blog content by lavishing a few bloggers with fancy perks.  I happened to stumble across his post as I was lounging on my pillow top King Size bed and perusing my Twitter feed on Tuesday afternoon in the St. Paul Hotel, in St. Paul, Minnesota.  I even mentioned it to my dinner companions later that evening at the St. Paul Grill, where I enjoyed a wonderfully buttery cream of mushroom soup, bourbon glazed Pork Chops, and asparagus with hollandaise, washed down with a very drinkable (and free flowing) Cabernet Sauvignon, all of which was kindly paid for by my very good friends at Thomson Reuters.  In return for this spectacular treatment, Thomson asked exactly two things of me: 1) venture to the Twin Cities in January! and 2) listen to five hours or so of the marketing pitches, development road maps, and executive presentations that they will be presenting at Legal Tech New York in a couple of weeks. The one thing no one ever overtly asked me to do was to write about the event or the product announcements.  Now, I’m not stupid, and they’re certainly not either.  If you invite bloggers to a summit, you’re looking to create buzz.  If you ply them with good food and wine, you’re hoping it’s really good buzz.  I’m sure the Lexis event was much the same.

Some of my colleagues who were in Eagan are, in fact, journalists as well as bloggers.  I’ll let them speak for themselves, but speaking only for me, I am not a journalist.  I do not have pretensions to be a journalist.  My lifelong friendship and goodwill can be openly bought for the price of a couple of rounds of drinks and a few hours of good conversation.  And I will gladly say nice things on this blog and elsewhere about anyone who wishes to purchase my friendship in such a manner. (BTW, Toby and Greg: really great guys.) That said, drinks, presents, perks, and “flights to Eagan, Minnesota in January” on their own, don’t buy much from me, it’s much more about the good conversations.  Please feel free to take that into account as you read anything I write.   Including the following.

Back to Thomson…

I came away from the excursion to Eagan having learned a couple of things.

1) Thomson has a lot of really smart, very interesting, and incredibly nice people working for them. 

2) Thomson now sees itself as primarily a software and solutions company, rather than an information and news provider.  Interesting.

3) Thomson is moving a number of their new and existing products to the cloud.  (I’m pretty sure Mike Suchsland, President of the Legal group at Thomson, paused momentarily after he said this as if  expecting a gasp of shocked surprise from the bloggers around the table. And he seemed just a little disappointed at the “yeah, we figured” response he got.)

4) Thomson has a “new class of products, tools, and technologies that [they] think will define the next generation of technology for the evolving legal marketplace”  Um… maybe.  We (the bloggers) didn’t get to play with any software. We saw a couple of demos and some screen shots.  Two new products, Concourse (for corporate, government, and large firms) and Firm Central (for small firms) are matter centric collaboration and communication hubs that nicely incorporate existing and future TR products into a single, simple, intuitive user interface, that can be customized to meet your firm’s needs.  My take is that these are pretty early products.  They could definitely grow into generation defining products, but I don’t think they’re there yet.  And I think Thomson would probably agree.  Concourse looks very much like a consumer, rather than enterprise, product. (Which is good thing.) It has larger fonts and plenty of white space. It’s designed to work on a tablet as well as a desktop.  I can imagine it would require very little user training and moderately savvy users who are familiar with consumer products like Dropbox and GoogleDocs will probably pick it up very quickly.

My big takeaway from the event is that in their new role as a software and solutions provider, Thomson is focused heavily on design, seamless integration between products, and overall ease of use. They are very much trying to bring the consumer experience to the enterprise, so I think they are moving in the right direction.

As I didn’t get a chance to use any of the software, I can’t say for sure whether the new TR products are any good or not, but I can say that the people working on them are pretty good conversationalists and they bought me a few drinks. So they’re OK in my book.  Does that impugn my integrity?
 

P.S.
Some of the more journalistic attendees at the Thomson Reuters event took copious notes and I’m sure some of them will post extensive “reviews” of the products we saw.  Rather than duplicate their efforts, I will take the easy (lazy blogger) way out and link to other posts below as I find them.

Monica Bay: Thomson Reuters to Debut Concourse at LegalTech New York

Jean O’Grady: Thomson Reuters Legal Announces New Strategic Direction: Content no Longer King, Shift to Client Centric Platforms

Bob Ambrogi: Thomson Reuters Unveils New Tools for Litigators, Corporate Counsel and Small Firms

Lisa Solomon: Thomson Reuters’ Firm Central doesn’t measure up to its small law practice management competition

image [cc] KevinLouage

Answer: Zero

An old economics adage is that the value of anything is the price someone will pay to purchase it. Therefore the market value of any large law firm will be zero.

When valuing a company for a potential purchase, buyers will determine the various assets held by the target,along with their brand value, customer base and revenues. Depending on the type of industry, each factor will carry a different weight. However, revenue tends to carry the most weight since that factor has a direct monetary value. So how would a buyer value a large law firm?

Assets:
Office Equipment: Fire sale value
A/R: Maybe 75% of face value
(Although this reflects a hard value, the cost will equal the value and therefore it is just the purchase of receivables and not of a functioning firm. The only way this might have value to a buyer is if they think they can collect more than the firm would have.)
IP: Knowledge base is poorly organized and partially owned by clients. Knowledge assets walk out the door every night.
Offsetting Liabilities: Expensive long-term office leases. Possible short-term debt.

Brand:
A large firm’s brand may have some value, but since any one player owns such a small piece of the market, law firm brands are not that distinct. So the real brand value comes from being classified as an AmLaw 100 firm, versus the specific law firm brand. Most clients these days view a firm as Top Tier or not. So the brand has value only in that classification and not as a separately valuable commodity. Result: BigLaw brands will not have much, if any, market value

Customer Base:
Definite value here.
Problem #1: Per ethics rules, the firm does not own the relationship, the individual lawyers do and the client has full authority to move its business at will.
Problem #2: A customer base is specific to the individual partners, and therefore ‘owned’ by the individual to a greater degree than the firm. Therefore these are not easily transferred in a sale.

Revenue (or multiples of revenue):
Per the customer base note, revenues are tied to individual lawyers, so a buyer would be valuing the revenue based on whether the lawyers with the relationships will remain as part of the entity. And why would they? They were just bought-out of the partnership.

When valuing a business on multiples (or fractions) of annual revenue, an obvious issue is how sustainable is the revenue stream? If only a portion of annual revenue will recur year-over-year, then the multiple is reduced. The problem for large firms is that a significant portion of revenue is episodic. Large cases or mergers come and go. Therefore not much of the revenue is reproducible year-over-year on a per client basis. Typically, the on-going revenue comes from other clients having large matters appear. Accounting practices, in contrast, have very sustainable revenue, since much of the work they perform is recurring. This suggests firms that strive for Tier One work will suffer in a valuation, since Tier One work is episodic and only sustainable over a larger client base. Or in other words, BigLaw’s phobia towards ‘commodity’ work reduces their market value, since commodity work is typically repeatable and therefore sustainable.

So on a good day, the best valuation of a large law firm will be a shrinking portion of their annual revenue. I say shrinking, since the market is currently redefining Tier One work and the competition for that work is increasing significantly.

But all of this analysis is for naught. Even if you could determine a reasonable purchase value, the only potential buyers will be other law firms, since ethics rules (in the US) prohibit ownership by non-lawyers. And other law firms have no capital or a real ability to raise capital to make such a purchase. So back to our economics adage – there is no one willing or able to pay any price for a large law firm, therefore they are worth zero dollars in the market.

Imagine a company with a billion dollars in annual revenue having a market value of zero. This might be one reason why large firms struggle to act like a business.

Last week while having lunch with a librarian friend, we wondered if associates schooled in electronic research were losing the serendipity of stumbling across new resources while browsing bookshelves.

But then I mentioned that I have seen serendipitous posts on social networks, like when two of my friends, unbeknownst to one another, post similar items back-to-back on my social feed.

I’ll give you a great example.

Last Sunday, January 4, 2013, a friend posted the Back to the Future meme that has swept through the social media sites.

Immediately below it, another friend posted a NYTimes aticle, “Why You Won’t Be the Person You Expect to Be.” Basically, the article was about a study that describes a phenomenon that demonstrates that we under-estimate our future selves. For example, when I was in law school, I could never imagined that I would be doing internet marketing for a law firm.

Ok, so that’s one serendipitous act. But it gets better.

So after sharing the meme to Facebook, I accidentally tagged the wrong friend for posting the NYT story. When I corrected the error in the comments of my Facebook post, the incorrectly tagged friend chimed in, saying “I was JUST looking for this online–I literally just clipped it from the paper!”

So if you can follow the spirality of all of this, basically I was having serendipity3 event.

And you want to know why I waited until now to post this? Well, I was reminded of the incident while  watching the “Bank to the Future” episode from Raising Hope on Hulu, featuring the famous DeLorean and Christopher Lloyd.

All of this just confirms that synchronicity is every where. I need not fear its demise.

And with that, I will leave you with this video …

image [cc] EJ Images

Bruce and Janet of AdamSmithEsq recently published an article on ATL about the reasonableness of firms providing PPMs to in-coming laterals. I believe the idea is sound. Since in-coming laterals are effectively investing in a privately held company, they should have access to the full financial picture of the company. A PPM is a classic tool for making such a disclosure to a potential investor, giving revenue numbers, forecasts, risks and other key factors that reveal the value of an on-going operation..

Yet I would extend or broaden this analogy (which Bruce and Janet may do in the series) and suggest the in-coming lateral arrangement might be better treated as a mini-M&A deal. In many respects a firm is acquiring the lateral (or laterals) just a like a business would acquire a smaller company.

So why shouldn’t the party being acquired also disclose a complete financial picture to the acquirer?

It’s the old story of the cobbler’s kids going without shoes. Law firms would never advise their clients to make an acquisition under such conditions, yet they do it all the time. These people have a deep understanding of due diligence, yet keep a blind eye to it in their own businesses.

Typically laterals provide very simple revenue stats about their book of business. There is no profitability disclosed or any other risks associate with their practice and their key relationships. Some firms may ask these types of questions of laterals on an ad hoc basis, but I am not aware of firms requiring something along the lines of a PPM to document such claims. And you have to assume most of the answers laterals give in interviews are the ‘sales pitch’ versus full disclosure approach, since they are trying to get the firm to invest in them. That is why PPMs exist – to make sure a sales pitch is balanced by an objective documentation.

Here we go again. Law firms need to adopt basic business practices in this new environment or suffer the consequences. Given the typical track record of success with laterals, you might think firms would have picked up on this by now.

 Here’s my advice: Both firms and lateral candidates need to, “Look Before You Leap.”

 Well done to Bruce and Janet for bringing this topic to the surface.

I think this is one of the best awards that AALL presents to an outstanding member. Actually, it just makes me think back to when I was within my first 10 years of the profession (really, not that long ago) and how eager I was to get into the association, be involved, and make a difference. Looking at the past list of winners, you can see how much of an impact they have had on the association already.

If you know of anyone you would like to nominate (or if you want to nominate yourself… which is completely fine), the deadline is February 1st, so you need to get moving!!

Here’s the instructions:

Help us honor AALL’s emerging leaders!

The Leadership Development Committee is now accepting nominations for the AALL Emerging Leader Award, which celebrates the contributions of newer law librarians. The award honors members of AALL who, in their first 10 years of law library experience, have made a significant contribution to the Association and/or the profession and who show outstanding promise for continuing service and leadership to AALL. The recipient will receive a certificate and a $500 cash prize.

Nominations should include evidence of the nominee’s contributions to AALL and/or the profession and may include up to 3 supporting letters.  (Petitions and letter writing campaigns, beyond those letters included with the application, are discouraged and will not be considered in the evaluation process — nor will they influence the Committee.)

Selection Criteria:

The nominee must:

·         be an AALL member in good standing
·         not have more than 10 years of law library experience
·         never have received the Emerging Leader Award
·         have made a significant contribution to the Association and/or the profession
·         show outstanding promise for continuing service and leadership. (Specific examples of continuing activities must be provided)

Self-nomination is acceptable.

If someone you nominated in the past did not win – but still satisfies the eligibility requirements — please consider nominating him or her once again!

Previous Winners:

Nominations and recipients come from all parts of the Law Library community. Take a look at our previous award winners:

2012:     Margaret Butler, Associate Director for Public Services, Georgia State University College of Law Library, Atlanta, GA

2011:     Kathleen (Katie) Brown, Assistant Director for Public and Faculty Services, Oklahoma City University School of Law, Oklahoma City, OK

2010:     Sarah K.C. Mauldin, Head Librarian, Smith, Gambrell & Russell, LLP in Atlanta, GA

Application Information:

Download Emerging Leader Award Nomination Form

Nominations:

Send the completed nomination form and all accompanying documentation to AALL by February 1, 2013.

American Association of Law Libraries
Leadership Development Committee Chair
105 W Adams Street
Suite 3300
Chicago, IL 60603-6225
Phone: (312) 205-8010
Fax: (312) 205-8011
Email: vcastillo@aall.org

The award winner will be announced in April, and the award will be presented during the AALL Annual Meeting. 

 

 

 

 
image [cc] jo.marshall

Legal Project Management (LPM), perhaps THE legal buzz-phrase of 2012 continues to increase in popularity. The basic thinking behind it is centered on efficiencies. Many clients are asking their firms to become more efficient. As I have noted in the past, they might want to be more specific about what they mean by efficiency. However, LPM will likely be an effective tool for firms to use in providing legal services for clients at lower costs.

Recently I met with some project managers (PMs) to learn from them and increase my knowledge on the subject. These were project managers involved in commercial real estate building projects. What is unique about their business is that they represent clients, versus general contractors or architecture firms. My first question for them was: Why Clients? I assumed the project managers working with the building contractors would be more than sufficient. Why would a client pay more for their own project managers?

The reason was made clear by some of their comments. They said architects were focused on building the most functional and attractive buildings. Construction contractors meanwhile were focused on delivering on spec and under budget. Neither of these goals were entirely focused on the client’s agenda. Therefore the role of the client-side PM has the potential to bring significant value.

I saw a direct analogy to project management in the legal space. Here the law firm functions as both the architect and the contractor. The law firm agenda is delivering the most effective legal service with the best possible outcome. Or in other words, they want to be the best lawyers they can be. It’s not that they don’t care about the client’s agenda; it’s just that they can never fully appreciate it. Added to that situation – the client’s agenda can shift over time.

As a pricing guy, I am always focused on developing fee options that align law firm and client interests. Yet even the best fee deal is not a full alignment of agendas. In fact that full agenda alignment is unattainable. Two people will differ on agendas, so we can’t expect two organizations to ever come close to that ideal.

The project managers shared with me a number of examples where their involvement increased value and lowered costs. One of their clients I know commented that they easily saved more on their project than the cost of the extra PMs. And the client was happier with the results.

Obviously not all legal matters will benefit from a similar client-side PM resource. However, there are likely savings for clients to realize in many practice areas. And beyond savings, the client will realize more effective legal services. (This comment should make Ron Baker happy.)

Of course I am crystal-balling here a bit. The LPM space is embryonic at best. I predict a bit more evolution will be needed before a client-side LPM option is embraced. Either way, it was interesting to learn from another industry and see that new ideas are being employed in other industries as well.