Edge International Communiqué
Insights and Analysis from Edge International, the Leading Global Consultancy to the Legal Profession

January, 2013    
Happy Differentiated New Year


You need good answers to client questions like "Why should we hire you?" and "What makes you different and better than anyone else?"  


By Jordan Furlong  




Readers of a certain age will remember when U2 first said: "Nothing changes on New Year's Day."

Not the most uplifting message, perhaps, at this happy time of renewal and fresh starts. But we all know that it's largely true nonetheless. Resolutions break; old leaves turn back over; life on January 2 tends to go on much as it did before.

Something, however, does need to change within your law firm over the course of this upcoming year. Specifically, your firm must visibly differentiate itself from its competitors in its key markets.  

Clients believe, with good reason, that law firms are all the same. Every law firm has very good lawyers, does fine work in most areas, computes fees by the hour, communicates with clients sporadically, anticipates client needs not terribly well, can't really manage time or budgets effectively, and so forth. These features are common to almost all modern law firms.

Nonetheless, you might believe, as your website asserts, that your firm stands out in the market for its "excellence" and "expertise." Well, it doesn't. Every other firm in your market says the same thing. From the client's perspective, the outside counsel sector is a giant aquarium filled with all the same basic fish.

You need a good answer to these client questions: "Why should we hire you? What makes you different and better than anyone else?"

Poor answers include:
  • "Because you've hired us before."
  • "Because of our excellence and expertise." 
  • "Because we'll do your work for a bargain-basement fixed fee even though we have no idea how to turn a profit on it."  

Here, on the other hand, are some great answers to those questions:

  • "Because we use qualified low-cost providers for basic legal work and pass the savings on to you."* "Because we implement legal project management to improve process efficiency and communication."
  • "Because we know our business so well that we can fix a reasonable price for your work ahead of time."
  • "Because we will convene a one-hour legal risk management session with your senior leadership every month at no charge."
  • "Because we've invested in software that streamlines our operations and we'll share it with you." 

All these responses, and others like them, have two things in common: 

  1. They positively differentiate you from other firms that can't (yet) say the same, and
  2. They can be accomplished, or can at least start to be implemented, this year. 

You cannot let 2013 go by without using your leadership and influence to differentiate your firm - to create an identifiable, remarkable, memorable narrative that sets you apart from the faceless law firm crowd. And if you can pull it off, then by January 1, 2014, you'll be able to tell Bono just how wrong he was.

Contact the author, Jordan Furlong.

Metrics That Matter: Revenue Per Lawyer Billable Hour


Metrics must metrics must function in both the hourly rate and alternative fee environments 

By Ed Wesemann


As law firms respond to demands to make the delivery of their services more efficient, the entire scope of how we view and measure the economics of legal practice is changing.  As we change, I believe that one of the most valuable metrics for law firm managers is becoming Revenue Per Lawyer Billable Hour. 


The problem with most of the metrics being used is that they are either focused on the traditional system of hours times rate, or on alternative billing options (fixed fees or contingent fees).  But this "either one or the other" view of pricing ignores two issues.  Firms continuing to focus exclusively on billable hours are missing an inevitable change in client relationships: law firms will be driven to alternative fees, particularly fixed fees and blended rates.  This is not so much because clients demand it (which many clients seem ambivalent about), but because it is the only means firms have to increase their revenues.


When billing by time expended, inefficiency is to the advantage of the law firm.  Ergo, if law firms are being pushed by clients to become more efficient, they must, at the same time, change to a billing system that allows them to share in the financial benefits of their efficiency.  However, the traditional measures of law firm performance, especially for compensation purposes, are built around billable hours and the realization from those hours.  To encourage efficiency, the metrics must be reconstructed to recognize efficiency. 


The other issue ignored by the "either one or the other" forms of economic measurement is the unlikelihood that the transition of billing practices will magically happen overnight.  Undoubtedly, for the foreseeable future, firms will continue to bill a portion of their work on an hourly basis; therefore, metrics must function in both the hourly rate and alternative fee environments.


While not a perfect metric, there are three things I like about Revenue Per Lawyer Billable Hour.  First, the metric works simultaneously with fixed fee, contingent fee and hours times rate billing by measuring how much effort was required to generate the fee charged to the client - essentially creating a comparative cost accounting system.  Second, Revenue Per Lawyer Billable Hour can be measured by the matter, client, office or an individual billing lawyer, thereby providing maximum flexibility. 


But most importantly, the metric encourages lawyers to actively manage engagements.  The win at the client, matter or office level is to generate the highest amount of revenue with the fewest lawyer hours, which incentivizes the use of para-professionals and outsourced resources.  At the same time, it rewards the engagement manager who moves work to the most efficient resource, regardless of whether that is a partner or an associate.


There are most likely other measurements that might even make more sense in the new economic environment.  The key is for firms to define the outcomes they wish to achieve and design a set of non-traditional metrics that are appropriate to their objectives.


Contact the author, Ed Wesemann 

Leaders: Are You Truly in Touch with Those Who Report to You?


Issues in this area have caused enormous disruption and in some cases incumbents to lose their jobs. It is that serious.

By Sean Larkan


It is vitally important that leaders (managing partners, CEOs or COOs) remain in touch with their direct reports, whether they be support service managers or practice group leaders. This seems obvious doesn't it? How could leaders possibly not do this?


Unfortunately, it happens more often than one would imagine. I have had no fewer than three assignments in the past six months where issues in this area have caused enormous disruption and in some cases incumbents to lose their jobs. It is that serious.

  • A CEO of a 50-office, +$100m national professional service firm practice (which was sold to external investors with an independent board) so lost touch with her managers and vice versa that when her board and chairperson asked for a 360° review of her role it proved terminal. With memories of Steve Jobs at Apple, this arose notwithstanding that she had founded the organisation only five years prior;
  • The successful CEO of a trusted, large national charity had consistently failed to provide timely or in fact any structured feedback to managers, despite urging and advice to the contrary. She has since found the management group have become disconnected, trust and respect has broken down and in some cases this has seriously undermined her role and authority; and
  • The managing partner of a mid-size legal practice became so embroiled in and distracted by his professional practice that he overlooked the importance of taking a professional and personal interest in support service managers and team leaders. It has caused various issues and a feeling amongst direct reports that he doesn't care, is incapable and in any event 'they are doing the job.'

What are the danger signs? How does this detachment and misalignment commonly arise? Here are some examples:

  1. A lack of understanding by the leader of their own natural style of thinking, behaving and interacting with others, coupled with low levels of emotional intelligence (EQ);
  2. A lack of direction, clarity of vision and strategy by the leader causing confusion and frustration amongst direct reports;
  3. Leaders, particularly in recently established firms, constantly throwing up new ideas which have little to do with existing priorities, key objectives and strategy but in regard to which immediate implementation is demanded;
  4. A leader who is more interested in his own priorities and successes and who tends to look in the mirror rather than out the window when dishing out praise where successes have been achieved;
  5. Not truly listening or hearing what direct reports are truly saying, coupled with poor body language related to this;
  6. Not taking a personal and professional interest in the development, progression, success and well-being of direct reports;
  7. Paying favourites and engaging in political side plays;
  8. Being guilty of passive avoidance styles of behaviour in addressing issues amongst reports or questions of underperformance which undermine the whole team or the firm;
  9. A leader who micro-manages others to such an extent that it disempowers and undermines confidence on the part of direct reports;
  10. A leader who believes their sole job is to think big and strategically and shows no interest in or respect for structured systems and processes in an orderly way of doing things in following up and following through.

There are various ways to prevent these issues arising in practice. In many cases it simply requires an adjustment of thinking or behaviour on the part of the leader, possibly supported by personal leadership development coaching. In serious cases it might require careful analysis, scientific diagnostics and possibly even expert psychological treatment to address issues.


In all cases I believe that leaders should:

  1. Clearly understand their own strengths and weaknesses around emotional intelligence and styles of thinking, behaviour and interaction with others;
  2. Have an understanding of and know how to apply the various accepted styles of leadership which are appropriate depending on circumstances;
  3. Ensure that there is clarity around vision, strategic key objectives and a clear strategy which is being implemented and followed up on to achieve these, with all this ideally summarised on a page or two to provide ready reference;
  4. A genuine interest in the personal and professional development, progression and well-being of those who report to them;
  5. Truly live the firm's values and cultural attributes, bearing in mind it is what they do not what they say that counts.

The danger, if leaders do not do these things, is that by the time a managing partner or CEO/COO has awoken to the issues, the relevant relationships and underlying trust and respect may have disintegrated to such an extent that they have irretrievably broken down. Sadly this happens all too frequently. Equally sadly, it is entirely unnecessary and avoidable.


Make sure you are doing all you can in this regard or get advice to ensure you are.


Contact the author, Sean Larkan

The Antifragile Law Firm


Nassim Nicholas Taleb's concept of antifragility is useful for law firms struggling to adapt and thrive in the changing market for legal services.

By Ahna Severts


In his new book, Antifragile: Things that Gain from Disorder, Nassim Nicholas Taleb (the bestselling author of The Black Swan) divides businesses and institutions into three categories: the fragile, the robust, and the antifragile.  An organization is fragile if it is vulnerable to unexpected and consequential events -- what Taleb has labeled "Black Swans."  An organization is robust if it can withstand shocks, at least for a time, but does not improve or benefit from the trauma.  And an organization is antifragile if unexpected adversity helps it to grow stronger and more creative, better able to adapt to new challenges. Because of the difficulty of predicting Black Swans (witness the 2008 financial crisis), Taleb believes that organizations need to be antifragile.


Taleb's concept of antifragility is useful for law firms struggling to adapt and thrive in the changing market for legal services.  For decades prior to the 2008 recession, corporate law firms benefitted from a surge in demand for corporate legal services, dramatic gains in compensation, and relatively stabile firm infrastructure.  In recent years, however, the nation's corporate clients have tightened their legal budgets, pressured their outside counsel to do more with less, and turned to new types of service providers in search of greater efficiency and more predictable fees.  Harsh economic conditions have also accelerated changes in law firm structure and culture: the erosion of partnership as a permanent status though de-equitization and mandatory retirement, increasing lateral movement between firms, and greater acceptance of large differentials in compensation.  


Taleb does not specifically address any of the challenges currently faced by law firm managers, but he does offer general principles to help organizations reduce fragility.  Here are three of his suggestions that have relevance for law firms

  1. Learn from your mistakes. In the airline industry, every plane crash makes travel safer.  A tragedy leads to a thorough examination and elimination of the cause of the problem.  Taleb argues that this process is the essence of antifragility, because the business as a whole benefits from the fragility of individual components.  The same thing should happen in law firms.  Setbacks such as client defections and prominent partner departuresare opportunities to identify and improve weaknesses in firm processes and capabilities.
  2. Minimize debt. Taleb points out that a highly leveraged company has no room for error; it has to be extremely good at predicting future revenues.  A corporation with equity financing, on the other hand, can survive unexpected drops in income. The collapse of Dewey & Le Boeuf provides a cautionary tale of the risks of debt expansion and compensation guarantees to lateral recruits.  When the financial crisis flattened demand for legal services, Dewey was left without sufficient cash flow to cover its capital expenses and fulfill compensation expectations.
  3. Small is beautiful? Taleb argues that while size may bring economies of scale, it also increases exposure to the probability of large losses.  Decentralization of decisions and projects mitigates this effect, by spreading errors across a wider range of sources and reducing their impact.  He compares the success of canton-based decision making in Switzerland to the failure of the authoritarian regime in Soviet Russia. Historically law firms have been managed much more like Switzerland than the USSR, with partners given wide berth to manage their individual practices.  But as law firms have grown into complex multimillion dollar international enterprises, many have moved to stronger centralized management.  Taleb's analysis suggests that while the traditional approach of loose committee management may no longer be viable for today's large law firms, centralization has a downside.  Firm managers who insist on standardization and uniform procedures at the expense of individual innovation and entrepreneurship may ultimately weaken the firm.

At bottom, Taleb's book cautions managers against making themselves and their firms too comfortable and cosmetically stable.  Instead the challenge is to learn to love volatility.


Contact the author, Ahna Severts

Archived Edge International Communiqués 
In This Issue
Jordan Furlong explains why your firm needs to differentiate itself from its competitors
Ed Wesemann discusses the "Revenue Per Lawyer Billable Hour"
Sean Larkan points out why it is essential that leaders stay in touch with their reports.
Ahna Severts shows how Nassim Nicholas Taleb's concept of "antifragility" can be applied to law firms
  Gerry Riskin

Gerry Riskin 





Ed Wesemann

Jordan Furlong 


Pam Woldow
Doug Richardson 

John Plank 

 John Plank








New York,

Ft. Lauderdale, 

Mike White

St. Paul, 

Of Counsel 

Legal League Consulting, LLC  
Dehli and Mumbai,
At The Podium: Upcoming Appearances by Edge Partners    



Gerry Riskin Jan. 10

C4CM audio conference: Business Development Best Practices to Drive Revenue Growth in 2013 


Jordan Furlong Jan. 21
Keynote Presentation
Technology on the Legal Frontier: The Future of Legal Practice in Canada
Queen's University Faculty of Law, Kingston, Ontario


Jordan Furlong Feb. 06
Keynote Address
National Association of Bar Executives (NABE) Mid-Year Meeting
Dallas, Texas


Doug Richardson Feb. 14

Lateral Leadership: Tactics and Techniques for Effective Influence Without Formal Authority
Leadership Philadelphia 


Ed Wesemann, Gerry Riskin, Mike White 

Feb. 22 - 23

Edge International Southeastern Mid-sized Law Firm Forum The Planters Inn in Historic Downtown, Savannah, Georgia 

Edge Blogs

Jordan Furlong's  



Ed Wesemann's: Creating Dominance


Pam Woldow's At The Intersection


Gerry Riskin's Amazing Firms, Amazing Practices

Nick Jarrett-Kerr's NJK

Edge Inter
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