Tag Archives: innovation

Change Needed to Survive. But Can Big Law Adapt?

Posted on April 11, 2013 by | 1 Comment

The business model of large law firms needs to change, but no one can agree on how to change or even if we can. That’s the takeaway of a recent poll by business-of-law blog Adam Smith Esq., which found that of the nearly 150 respondents, well over half agreed that law firms need to reexamine the fundamental premise of the law firm partnership model.

“The legal recession has lasted so long that some observers are beginning to question the fundamental business model of Big Law,” said Lee Pacchia of Bloomberg Law, who discussed the findings with Bruce MacEwen, publisher of the blog, in a video chat sponsored by ABA Journal.

“I would say the biggest news coming out of [the poll], the biggest surprise to me, was how there’s a strong consensus that things need to change and there is no consensus on whether law firms can change,” MacEwen said. “Well more than half of these people who are in these large law firm partnerships were saying our model cannot invest to keep going in the future, and we need to question the whole structure.”

When asked if, as partnerships, firms “won’t invest—or invest enough—in new ways of doing business or delivering service,” 56 percent agreed that they aren’t and that the partnership business model needs to be reexamined. Yet 32 percent said firm investment doesn’t matter; firms can create “‘retained earnings’ and investment capital in a law firm partnership.”

The poll followed up by asking if firms need outside investment to innovate. And while 43 percent said firms can do it on their own, MacEwen isn’t convinced. “My view is,” he said. “Show me; prove to me that we can innovate on our own.”

The poll also asked readers if they believe technology and legal process outsourcing (LPO) companies are taking work from traditional firms, the results:

  • 48 percent agree that LPOs are taking business away and that it is “really beginning to hurt” their business
  • 46 percent believe LPOs are taking away business, but on an insubstantial scale.
  • 6 percent disagree that LPOs are taking business, but do believe they eventually will.
  • Only 1 percent believe that LPOs are not and will not take business away in the future.

When asked about whether Big Law will be able to fight back and how:

  • 42 percent said law firms will fight back through honing their conventional model
  • 30 percent believe law firms can only fight back by creating their own captive LPOs
  • 27 percent think that law firms have no credible or effective defense in the long run

MacEwen discusses these and other findings on Adam Smith Esq., which you can read here. The post also includes the video chat with Pacchia.

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Only the ‘Most Adaptable’ Firms Survive

Posted on March 5, 2013 by | 1 Comment

The news is a bit grim. While U.S. firms had an OK 2012, a recent U.K. survey of partners found that 95 percent expect more law firms to collapse in the next two years. What’s a law firm to do? Evolve, according to a partner in a recent Wall Street Journal (sub. req.) story.

How?

Take a lesson from nature. It’s no longer “the survival of the fittest,” but the most adaptable who survive.

“Adaptability is the power to detect and respond to change in the world, no matter how surprising or inconvenient it may be,” writes Rafe Sagarin in an HBR Blog Network article. “All of Earth’s successful organisms have thrived without analyzing past crises or trying to predict the next one. They haven’t held ‘planning exercises’ or created ‘predictive frameworks.’ Instead, they’ve adapted.”

Drawing on what nature has to teach us, he found four practices of adaptable systems:

  1. Decentralization. For the most success, structure your system to avoid centralized control. This allows many individuals to independently see and adapt to change.
  2. Redundancy. While it’s not efficient, redundancy helps solve many problems. “Adaptable systems,” Sagarin writes, “make multiple copies of everything and modify the copies to hedge against uncertainty.”
  3. Symbiotic relationships. Symbioses extend an organism’s (or business’s) adaptability. They can occur between the most unlikely of pairs, with profound results.
  4. Recursive processes. Continuously build upon your successes.

Adaptation is a both a proactive and reactive process—and balancing the two processes is often difficult.

Robert Fafinski Jr., a founding partner of Minnesota-based Fafinski Mark & Johnson, got the balance right. He “knew the good times weren’t going to last forever and starting thinking ahead,” an ABA Journal article states. In the face of the recession, the firm cut partner pay yet expanded base practices. This positioned the firm to come back strong once the economy picked up.

“Everybody here as partners made less money, but we kept everybody employed,” Fafinski is quoted as saying in the article. “When the economy did come back in 2010 for us, we probably took off faster than most firms because we had the team ready to go. We’ve ended up getting rewarded for our patience.”

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Monday Clicks: Innovation, Performance & Which Dog is Best for You?

Posted on March 4, 2013 by | Leave a comment

It’s all about innovation and performance today, folks. From asking the right questions to leadership ROI, law firms must actively manage their business models to best serve clients—and increase their profits. But if that makes your head hurt, cuddle up with one of the best dog breeds for lawyers.

  • Innovation is often undefined. So before you can innovate, you must ask the right questions. The HBR Blog Network post “Before you innovate, ask the right questions” takes you through the steps to help you first define the problem so you can solve it.
  • Does innovation pay? It did for 37 percent of the respondents to a BCG Perspectives survey who saw a 23 percent increase in profits over last year thanks to business model innovation. This innovation addressed “the fundamental choices a company makes about what it is offering to whom, as well as how it leverages its value chain, cost models, and organization.”
  • When it comes to innovation, some companies are just better at it than others. But you can learn from the 10 winners of the Innovating Innovation Challenge, part of the new HBR/McKinsey M-Prize for Management Innovation. See “Who’s the Best at Innovating Innovation?” for full details.
  • “Your Innovation Problem Is Really a Leadership Problem,” or so says Scott Anthony at HBR. “It’s time for leadership to step up,” Anthony writes. “Innovation is enough of an unnatural act in most companies (which were built to scale yesterday’s business model, not discover tomorrow’s) that it requires the day-by-day attention of the company’s top leadership team or it simply won’t stick.”
  • Of course, you need the right leadership in the right place to innovate and, thereby, increase performance and profitability. “The right allocation of time, to the right people, in the right amount, will result in a vastly improved return on the firm’s leadership investment,” writes Altman Weil’s Thomas S. Clay. See his report, “Leadership ROI,” for the full details.
  • Rituals—such as coffee breaks and annual meetings—can help increase team performance. Or so writes Paolo Guenzi in “How Ritual Delivers Performance.” Ritual affects performance in four ways: it creates a shared identity, brings team members’ external networks into the fold, stimulates emotions while reducing anxiety, and reinforces desired behaviors.
  • Had enough of innovation and performance? Cuddle up with a furry friend. Greedy Associates undertook the tough task of picking out the “Five Dog Breeds for the Busy Associate Attorney.” See which pooch would best suit your lifestyle.

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Monday Clicks: Business Skills for the New Normal

Posted on February 25, 2013 by | Leave a comment

Strategy, marketing and sales—three skills law school didn’t teach. But managing a law firm through the “new normal” of a changing, uncertain legal market requires these business skills, as well as building trust and loyalty among your clients. We’ve collected several articles to help show you the way.

  • It’s all about having a clear strategy to survive the changing market, according to Legal Week’s Tom Wood (sub. req.). His five-point plan for success includes: connect strategic plans to growth, control costs carefully, structure for success, look after your own and remember that the client is king.
  • In “Strategy Is All About Practice,” Roger Martin writes that strategy is a discipline that must be believed in and requires “work, work and more work” to become skilled at it. Therefore, to become a successful strategist you must “work, work and work some more.”
  • Scenario planning is, according to Legal Week, a “strategic planning tool to help organizations manage uncertainty, and if there is one profession that is definitely facing uncertainty now, it’s the UK legal services market.” The article states that the changes in the legal market are structural and require using scenario planning to create a long-term, responsive strategy to ensure future success.
  • “The sophistication of consumers of legal services will cause law firms to move away from the traditional ‘full service’ approach and adopt tighter, targeted strategies which play to their strengths,” reports the Global Legal Post. The article details a recent white paper from Huron Consulting that examined the shift away from traditional law firm service models.
  • “Customers aren’t idiots; they know when they’re being sold,” writes HBR Blog Network’s Michael Schrage. “They’re both smart and wired enough to seek out—and appreciate—quality assistance.”  In “Invest in Your Customers More Than Your Brand,” he uses Amazon’s misunderstood core values to illustrate how it’s all about “helping customers” not “selling things.”
  • In an hour-long webinar, “Smarter Marketing: The New Partnership for the CMO and CIO,” the Cleveland Clinic’s C. Martin Harris, M.D., and Paul Matsen talk about how chief marketing officers and chief information officers can “drive growth by collaborating and transforming their organizations” by using “social media technology to deepen their connection with customers, employees, and citizens.”
  • Whether it’s our law firm’s services or convincing our kids to do the dishes, we’re all selling something. That’s according to Dan Pink, author of To Sell Is Human, in a podcast interview “Why We’re All in Sales” on the HBR Blog Network. As Heidi Grant Halvorson writes, “In a nutshell, Pink argues that moving people (i.e., selling, but also persuading or influencing) has become an essential component of nearly everyone’s job in the modern workplace.”

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How to Succeed: First, You Need to Show Up

Posted on February 14, 2013 by | Leave a comment

Success doesn’t come easy. But as a recent Harvard Business Review blog article by Rosabeth Moss Kanter points out, nothing will happen if you don’t show up and be present.

“For companies,” she writes, “being there means having a presence on the ground to deeply understand places that hold resources important for the future.” That’s something that law firms understand, as illustrated by the uptick in global expansions that Hildebrandt Institute has reported on before. But why, in this increasingly Internet-connected world, is it so important to have feet on the ground? She explains:

It’s an apparent paradox: The declining significance of place is associated with the rising significance of place. Technology helps us connect with anyone anywhere nearly instantaneously, crowdsource ideas, and work on virtual teams without ever being in the same place. But being in the same place at the right time means being able to make serendipitous connections…. Showing up in a particular place is also critical to the new globalization, which increasingly means localization. Instead of inflicting one-size-fits-all standardized universal products on every market, companies realize the importance of adapting to local customs and tastes and learning from them.

For law firms, that means expanding into emerging markets, especially in Asia and the Middle East. The first 11 months of 2012 saw 56 foreign-office openings, which was the same number of openings for the whole of 2011. (Our records indicate that there were three more foreign-office openings in December 2012, rounding out the year’s total to 59.)

Moss Kanter also gave a talk at TEDxBeaconStreat on the “Six Keys to Leading Positive Change. (You can view the video in full at the bottom of this post.) In the talk, she outlines the six keys and what they mean for success:

  1. Show up. If you don’t show up, nothing really happens.
  2. Speak up. No one knows what you’re thinking unless you express it.
  3. Look up. Remember your vision and values.
  4. Team up. Everything goes better with partners.
  5. Never give up. Everything can look like a failure in the middle.
  6. Lift others up. Share the credit and recognition for success to motivate further success.

For the most part, law firms seem to have No. 2’s speaking up (lawyers are a loquacious bunch) and No. 4’s partnering for success down pat. But how do you think we do on the others? We’d love to hear your thoughts in the comments.

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Monday Clicks: 2012 Not Bad, 2013 Forecasts and You Could Use a Plan

Posted on February 11, 2013 by | Leave a comment

It turns out that 2012 wasn’t a bad year, just slow—but what will 2013 bring? Lots of litigation and strategic plans, apparently. From technology and cyber security to marketing and business development, the advice on what your firm needs abounds. Also: Poor leaders can become good…with effort and a continuous commitment to improve.

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Is It Time to Burn the Ships?

Posted on February 6, 2013 by | Leave a comment

That’s the question asked by the 2013 Report on the State of the Legal Market. Prepared by The Center for the Study of the Legal Profession at the Georgetown University Law Center and Thomson Reuters Peer Monitor, the report examines the legal market trends in 2012 and the factors that will impact the market in 2013 and beyond.

While the 2012 U.S. legal market did show moderate growth in demand—an overall 0.5 percent as measured by billable hours—it was hampered by “the combined impacts of sluggish demand, declining productivity, falling realization rates, and the need for further expense reductions.” We were not alone; the U.K. market also showed low growth (a reported 5 percent to 6 percent increase in revenues over 2011 figures). And although the growth in Asia and Latin America was high, “as 2012 drew to a close, however, even the  powerful economic engines of China and Brazil had begun to slow somewhat,” the report states.

Broken down by practice area, only labor and employment and corporate practices experienced an increase in demand (4.1 percent and 1.2 percent, respectively). All other practice area demand declined. Other measurements and their growth rates included in the report:

  • Productivity was down 1.5 percent.
  • Billing rates went up an average of 3.4 percent, but realization rates decreased to an all-time low of 83.6 percent.
  • Expense increases, however, appeared to level out.

Good things did happen in 2012, however. “These included the rapid continuing pace of globalization, the shifting economic and demographic realities resulting from persistent overcapacity, and the growing pressures on the traditional partnership model of law practice,” the report says.

“It is becoming increasingly apparent that the market for legal services in the United States and throughout the world has changed in fundamental ways,” the report says. “[It] is an increasingly difficult and challenging environment, one that calls for clear thinking, strategic focus, and flexibility in addressing rapidly changing realities.”

The report cites the legend of Spanish conquistador Hernando Cortez who, upon landing on the shores of the Yucatan in 1519, ordered his men to burn their ships so they had no choice but to move forward and conquer the Aztec empire.

“Perhaps it’s time for us, like Cortez, to burn the ships,” the report posits, “to force ourselves to think outside our traditional models and, however uncomfortable it might be, to imagine new and creative ways to deliver legal services more efficiently and build more sustainable models of law firm practice.”

To read the full 2013 Report on the State of the Legal Market, please visit Peer Monitor here.

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Insider Offers View of Biglaw-Client Relations

Posted on February 5, 2013 by | 1 Comment

What do clients really think about and need from their outside counsel? Above the Law’s Anonymous Partner found out. In a four-part interview with an in-house insider, they discussed the state of Biglaw-client relations and “what is both right and wrong with the ‘current law firm service delivery model.’”

In Part 1, the focus was on how firms rates have outstripped inflation and the use of high-rate junior associates.

The insider warns that clients are interested in the most cost-effective solution. To that end, they are “looking for alternative vendors (small firms or Axiom) that can deliver equivalent service for less cost for labor-intensive tasks…, keeping more work inside and alternative fee arrangements … [and] stressing efficient handling and staffing of matters through a holdback earned by performance measurement.”

As for the junior associates, due to the high cost and no real gain in services, clients often feel like they’re paying for a firm to train these associates.

“There are some things that junior associates can do effectively and efficiently,” the insider wrote in Part 2. “But the value proposition must be there for us as your clients.”

In Part 3,  Anonymous Partner asks how, from a billing perspective, the insider determines if his company is receiving the appropriate level of service. The insider states that “when I choose firms for assignments and analyze bills, my focus is on value (which is a package) rather than price.”

Further exploring the use of associates in Biglaw, Anonymous Partner asked “Why have clients drawn such a line in the sand when it comes to paying for associate time?” The insider answered:

“From my perspective, firms do not recognize basic market dynamics. I work for a company whose product’s prices fluctuate based on many factors. You work for a firm that sells legal services for which demand fluctuates. Yet rates always go up, and firms pay compensation to junior lawyers that does not seem to reflect market reality for the client demand for their services…. If we saw value in paying several hundred dollars per hour for a junior lawyer to work on our matters we would…. Firms must justify the cost of junior associates relative to the value they deliver and invest in training associates better through boot camps, shadowing senior lawyers, mentoring, etc.; firms talk about this stuff, but I don’t think most take associate development seriously.”

In Part 4, the final installment, the continued struggle over associate development and the importance of knowing your firm’s business on a granular level are discussed.

The insider recommends the following key areas for improvement:

“If you want your clients to pay the rates you charge for junior lawyers, you need to invest in developing them to the point where they are worth it…. So in response we look at our legal tasks, unbundle them, and allocate the parts to the most cost effective provider….”

To read the entire series in whole, go to Above the Law.

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Monday Clicks: Challenges, Learn New Skills and a Coloring Book

Posted on January 28, 2013 by | Leave a comment

From low law school applications, layoffs and few firms paying attention to their capital structures, the business of law continues to be a challenge. But there are things you can do. Learn to argue, give feedback and write better. Also: a free, downloadable coloring book for kids illustrates what lawyers do (in case you didn’t already know).

  • The number of law school applications is down by 20 percent since last year, with only 27,891 people applying so far. If the trend continues, that number could drop below 60,000 applicants for the first time in 30 years.
  • Fewer applicants isn’t a bad thing, according to Above the Law’s Elie Mystal, who writes that the drops in the numbers “show that prospective students are becoming educated about the realities of the legal job market … [and] the market is reacting properly.”
  • Layoffs in the U.K. have U.S. firms asking if they’ll be next, according to AmLaw Daily (sub. required). They report that Allen & Overy, DLA Piper and Eversheds confirmed that they are “shedding dozens of jobs through office closures and other structural overhauls.”
  • “Law firms seldom pay much attention to their capital structures,” says Legal Leaders Blog’s Sean Larkan. But, he believes, it’s a risky option. “It doesn’t matter whether your firm is big or small, your capital structure matters.” He asked law firm management consultant Cameron Taylor what law firms should do.
  • Need help winning legal arguments?  David L. Smith over at Associate’s Mind is here to help. In the first of a series of posts using classic military battle strategy to build your debate techniques, he illustrates how to use misdirection to win.
  • Once you’ve learned how to argue, it’s time to learn the importance of giving negative feedback. In “Sometimes Negative Feedback is Best,” Heidi Grant Halvorson reports on new research that “sheds light on the seemingly paradoxical nature of feedback, by making it clear why, when, and for whom negative feedback is appropriate.”
  • Is bad writing getting you down … or causing your readers to snooze? Whether it be in email, a report or a presentation, HBR Blog Network’s Bryan A. Garner offers several tips on “how to keep your readers alert and responsive.”
  • And last, but not least, the North Carolina Bar Association offers a free, downloadable “A Day With a Lawyer” coloring book for kids (or kids at heart) that “tells a story about a day with a lawyer from a child’s perspective.”

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Get Bloggy With It

Posted on January 24, 2013 by | Leave a comment

The business of law is ever-changing—and it seems like everyone has an opinion about it. To help keep up with the latest news, advice and trends, check out a few of these law firm business-related blogs from the sixth-annual ABA Journal Blawg 100:

  • For “sweeping” coverage on the legal profession at large, Above the Law is your go-to destination. Its posts cover issues “from the heights of the U.S. Supreme Court to the depths of disgraced and depraved attorneys.”
  • Adam Smith Esq. covers law firm economics. Consultant Bruce MacEwen writes about the latest trends in the BigLaw industry, including a 12-part “Growth is Dead” series that is now available as an e-book.
  • Am Law Daily covers everything “from firm finances and business models to the latest lateral moves and partner defections.”
  • The consultant-written Attorney at Work blog offers “tips on productivity, positivity and persistence,” asking experts for help when tackling issues of law practice management.
  • The Careerist is written by former lawyer, now reporter Vivia Chen. She “asks the legal profession’s big shots how they got to where they are and what they look for when they’re interviewing and hiring.”
  • If liability insurance is your thing, the D&O Diary should be on your to-read list. It examines such issues as managerial liability insurance, fiduciary liability insurance coverage and the occasional travel tour posts.
  • Law21 “focuses on innovation in the legal industry and how firms can keep up in 21st-century markets…[and] forecasts the impact of the changing legal market on lawyers, law firms and legal organizations.”
  • Ride the Lightning’s Sharon Nelson covers the privacy and security risks that new technologies can bring, as well as how companies are combating them.
  • Small Firm Innovation “is intended to offer first-person anecdotes and advice for solos and small firms. With a concentration on rainmaking and creating mobile, tech-savvy offices, the blog encourages firms to be flexible and responsive to the changing legal market.”
  • 3 Geeks and a Law Blog covers law practice management, law firm pricing, legal research, marketing and more.

View the full Blawg 100 list here.

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