Legal Services "Big Bang:" A brief history of how we got here
The global legal market is in the early stages of its own version of "big bang," creating a constellation of different structures and models for providing legal services.
By Chris Bull
The marketplace is witnessing a shift in the way legal services are delivered and organized, replacing a structure that has survived for decades: lawyers structured as partnerships, working from their own offices and delivering services face to face with, only fairly recently, a modest amount of technology support.
The story of "how we got here" is complex but some immediate triggers - or "accelerators" - have ignited deeper, tectonic shifts. This is not some short-term response to the global economic malaise but deeper and more structural and, therefore, more permanent. The drivers are rooted in economic and societal changes that have affected every part of our world but have been slow to make their impact felt in the legal market. Included are some of the basic trends from "The World is Flat," the advent of the internet, the globalization of services and access to powerful personal computing tools. But, we have barely begun to appreciate how they will transform the legal services sector of the business world.
Other trends in society have combined with these to create a combustible mixture for the law and wider professional services. Not enough time has been devoted to the game-changing shift in generational attitudes with regards to the deference to and respect accorded to the professions, the creation of "always-on" consumer expectations fuelled by new retail service experiences (especially but not exclusively online) and the empowerment of buyers with the information they need to assess and compare value for money. Pioneering elements inside the world of law (in the US the ABA have neatly tagged many of these folk as "legal rebels") have been tracking and responding to these developments for many years, of course. But it has taken a very powerful shock to truly ignite these tentative sparks.
That powerful shock - the primary "accelerator" that has created this watershed shift - has been the deep and sustained economic crisis that has arrested the seemingly inexorable growth in demand for and profitability of law firms. According to Citi Private Bank LawWatch survey data the crisis has triggered the first net reduction in demand for legal services in recent memory (2008/2009).
A secondary accelerator has also been at work for the last five years as regulators in some jurisdictions (initially in Australia but most notably in the globally influential UK market) have announced and begun to enact legislation that will open up the legal market to external (non-lawyer) investment, ownership and competition.
These regulatory changes are a second fundamental accelerator of change for the entire global legal market, as they will influence activity and decisions far beyond the shores of the UK and Australia. However, the really interesting and significant fact here is that deregulation has stimulated the creation of a host of new business models in anticipation of enactment. The extended period since the UK government initiated the Clementi review into legal services and then passed the Legal Services Act 2007 has provided fertile ground for the development of new models. These have begun to emerge and operate in spite of the delay in getting to the ultimate "pay-off'"moment when the licensing of Alternative Business Structures (ABS) with external ownership begins, something we now expect in early 2012.
Contact the Author, Chris Bull.
The Excess Capacity Problem: When is Hiring Required?
The capacity for performing legal work in most law firms vastly exceeds its normal demand. So how do you know when to hire?
By Ed Wesemann
Most large law firms have far more lawyers than the availability of client work requires. This is, in part, driven by the law school hiring programs that require firms to predict their staffing needs almost two years in advance. But an equal culprit is the fear by most law firms of having a client come to their door with an engagement and not having the people to do the work. New business is so difficult to obtain that, for many lawyers, the fear of not being able to perform it in an acceptable manner causes the firm to err on the side of excess capacity.
No one benefits from over capacity. Typically, the partners become aware of the problem first. To keep themselves busy, they, effectively, reach down and take work off the plates of younger partners and senior associates. This causes the non-equity partners and senior associates to hoard work by not assigning work to mid-levels and juniors. Young lawyers must then either find "make work" to keep themselves busy or take work back from paralegals. The result is dissatisfied clients paying rates that are too high for the sophistication of the work performed, and dissatisfied associates who are not getting the experience-building work they crave. Eventually, a dissatisfaction level builds that causes associates, in whom the firm has a high investment, to move to another firm where they hope for better opportunities.
Unfortunately, firms become accustomed to overcapacity, particularly in the young associate ranks. As a result, the first reaction of not having someone immediately available to perform work is to hire as rapidly as possible. Legal headhunters observe this routinely as law firms call them in a panic about the immediate need for a third year litigation associate. Then, a week later, the firm sits on the resumes of the candidates the recruiter sent over because the panic demand has passed.
The test of hiring comes in the answer to three questions:
- How long term is demand for additional staffing? Is it in response to a specific deadline, a unique circumstance (maternity leave, back to back trials, etc.), or is there a systemic need for assistance?
- How much assistance is required? Does it look like 2000 hours a year or is it more likely 150 hours one month and 15 the next?
- Given the known volume of work and high probability of potential engagements, what will the additional lawyer be doing in three months? Six months? A year?
So, if it is a slam dunk for hiring, do it. If it's a close call, consider finding a capable lawyer who might be available on a periodic basis or part time. A number of firms are having great success with lawyers on a "mommy or daddy track" who want to continue practicing but not commit to a full time position. If there is a risk of not needing a person after the current crisis - tough it out.Contact the Author, Ed Wesemann
Using the Pareto Principle in Decision-making
A technique for avoiding analysis paralysis.
By Nick Jarrett-Kerr
Law firms often have huge problems with their decision-making processes. In the first place, lawyers are infamous for the glacial speed of their decision-making. Analysis can often result in paralysis. Caution and a tendency for risk aversion can often mean that decisions are delayed further and further until everyone is totally satisfied that there are no further avenues to explore, no more analysis to be done. Additionally, the lawyer's desire for perfection leads him or her to seek the perfect solution. Even when decisions are made, they are often reversed on further reflection or when a vital constituency raises objections.
There are a number of tools and methodologies to help with decision-making and I have written a number of articles on the subject - please contact me for further details. One very simple method which is often effective is to use the Pareto Principle. Pareto discovered that most wealth and income went to a minority of people and that this pattern of imbalance is repeated throughout society: 80% of what you can achieve comes from 20% of the effort. This can help in cutting back on over-analysis in decision-making. The principle is that the firm should apply resources where they have the most powerful effect, whether it is time or money. The 80/20 rule can apply to decision taking and analysis in law firms, by following five golden rules:
- Rule 1 : not many decisions are very important.
- Rule 2: the most important decisions are often made by default. Stand above your data and ask yourself questions like: in this industry sector what sort of work do we find ourselves providing to clients almost unintentionally? What opportunities are mounting up without us noticing?
- Rule 3: for important decisions gather 80% of the data and perform 80% of the analyses in the first 20% of the time available, then make a decision 100% of the time and act as if you are 100% confident in the decision.
- Rule 4: if what you have decided isn't working, change your mind earlier rather than later.
- Rule 5: when something is working well, double and redouble your efforts.
The value of urgency in creating strategy.
By Gerry Riskin
Your law firm's success in 2012 may require considerable ingenuity under extreme pressure just as it did from the crew of Apollo 13 for their safe return to Earth.
Apollo 13 was the third mission in the American Apollo space program intended to land on the Moon. The number 2 oxygen tank in the Service Module exploded en route to the Moon, approximately 200,000 miles (320,000 km) from Earth. The developing drama was shown on television and depicted in the Apollo 13 movie based on the mission.
If you saw the movie, you may recall that the head of Mission Control assembled a team in a conference room and requested that the materials available to the astronauts in the Service Module be brought to the room because they had but a few hours to learn how to make oxygen to save the astronauts' lives.
By contrast, when the senior leadership team in most law firms meets to explore strategy, there is no sense of urgency. Worse, after extraordinarily bright people come up with some amazing plans, in most firms they are doomed to atrophy due to a lack of execution.
As you consider 2012, I recommend that you:
* Take off the rose colored glasses... the apparent good economic news is at best an exercise in extreme optimism and at worst the willful concealment of the truth
* Clients have tasted economic power in the lawyer/client relationship and they are not going to give it up. In fact, if you are not exploring legal process management (LPM) in harmony with some of your most important clients, your firm is headed for rough seas.
* Make your plans as if they were a matter of life and death because they very well may be. In today's perilous times, your firm's fate may be as precarious as that of the 3 astronauts when the oxygen tank exploded.
I confess that I have framed this in a slightly melodramatic way in order to be provocative. The serious lesson I ask you to take from this is that your plans need a deadline and they must be executed as if life itself dependent upon them. That is why in Edge, we make no apology for being obsessed with action. Contact the Author, Gerry Riskin.
The Need for Training of Lawyers in India
As the Indian legal market matures, so do the requirements for the professional development of lawyers.
By Bithika Anand
Gone are the times when being a professionally qualified lawyer was good enough. With law being a highly competitive profession the need for training and skill development is all the more imperative.
Many lawyers feel, even after the completion of their course work, that they know very little and lack skills that the changing time demands. With increasing attrition and the cost of hiring laterals, it makes a perfect case for upgrading the skills of an existing talent pool and placing them in a befitting position of the firm.
One needs to understand that attending a single training program does not change people or a Firm's culture overnight. Training should be an integral part of the law firm. Legal and soft skills training will strengthen professionalism, improve the performance of legal professionals, enhance service quality and stimulate client respect.
Looking for something that will give them a competitive advantage over their adversaries, lawyers are turning to legal, soft skills and leadership training. One law firm has a designated partner responsible for ascertaining the continuous training and skill development needs of the organization and ensuring conduction of such training programs in the firm. Lawyers are also inclined towards going for management programs to hone their managerial skills.
Through continuous and effective training programs for lawyers, law firms can address the critical problems like high turnover of lawyers and clients, revenue shortfalls, client complaints, malpractice suits, and falling reputation over a period of time.
These programs cost a significant amount of money and therefore law firms should have a budget allocated for the same. There is a growing body of evidence that improving the quality of lawyers in the firm will increase law firm profits and improve lawyer satisfaction. This in turn, will also ensure continuing professional excellence.
Indian law firms, though, have felt the need for continued training and skill enhancement but have done very little to upgrade the skills of their lawyers. This calls for a need to foster a culture of sustained training and skill development which meets the needs of the different sectors of the economy and society. The top management of the law firms should envisage a mandatory and supportive soft skills, computer application, leadership and team management training program which will continuously allow lawyers to upgrade their knowledge throughout their careers. Contact the Author, Bithika Anand.
Legal League Consulting, LLC
Dehli and Mumbai,
|At The Podium: Upcoming Appearances by Edge Partners
January 21, 2012
Gerry Riskin speaks to the Managing Partners' Roundtable in Williamsburg, VA
January 25, 2012
Jordan Furlong addresses the ACLEA Meeting in New Orleans, LA
February 3, 2012
Pam Woldow speaks at the ABA Mid Year Meeting in New Orleans, LA
February 25, 2012
Pam Woldow gives the Keynote address at Managing Partners' Forum in Queensland, Australia
March 21, 2012
Gerry Riskin addresses the Pittsburgh Legal Administrator's Partner/Administrator event
April 16, 2012
Jordan Furlong gives the Keynote at the Canadian Judical Council Conference in Ottawa, Canada
April 18, 2012
Pam Woldow presents a Webinar on the Role of Legal Administrators in Legal Project Management for the ALA
April 19, 2012
David Cruickshank speaks at the National Association of Law Placement in Austin, TX
June 8, 2012
Pam Woldow speaks to the ALFA in Palm Beach, USA