Bright long-term future of the right lawyers and mid-sized firms affirmed by tech guru

Kai-fu Lee, leading artificial intelligence exponent, makes the following observation about lawyers and artificial intelligence. He’s in line with MidLaw’s dogged confidence in the prospects of lawyers who focus on core (indeed, 19th Century) lawyer skills and MidLaw’s confidence in the mid-sized law firms that provide the best setting left for cultivating those skills. 

Top lawyers will have nothing to worry about when it comes to job displacement. Reasoning across domains, winning the trust of clients, applying years of experience in the courtroom, and having the ability to persuade a jury are all examples of the cognitive complexities, strategies, and modes of human interaction that are beyond the capabilities of AI. However, a lot of paralegal and preparatory work like document review, analysis, creating contracts, handling small cases, packing cases, and coming up with recommendations can be done much better and more efficiently with AI. The costs of law make it worthwhile for AI companies to go after AI paralegals and AI junior lawyers, but not top lawyers.

10 Jobs That Are Safe in an AI World

MidLaw has been saying so:

• The Case for the Mid-Sized Law Firm
• Mid-Sized Firms Are the Only Hope for the Future of the Legal Profession
• 10 practice management challenges for mid-size law firms
• Oswald get your hammer, it’s a computer fight
• The once and future legal profession – 10 things (plus 4) lawyers had in the 19th Century they should get back
• We Are Not Running Railroads or Fighting Land Wars
• “The Competitive Advantages of Scale Have Been Commoditized”

MidLaw among the mortals

I am back from Quebec where I was invited to present again my topic from last year in Vienna, “The Aging of the Professions and How to Stop It.”

Again, I brought my message of aging, disability, and death.

By some accounts, 25% of the legal profession is 65 years old and older.

And I bring this further insight: the older you get, the more you depreciate. If you are 60, it’s time to start counting.

Yes, I know.  Actuarially, your life expectancy actually begins to lengthen modestly after a certain point on the principle that, if you survive for long enough, then that implies that you will continue to survive modestly longer than what the projection might have been earlier.

But (in the end) life expectancy is really death expectancy, and it never goes away.

Of course, this insight, that the older you get, the more likely you will experience the depredations of age, has major implications for individual professionals (“Old Lawyers Not Fade Away“). But in Quebec and Vienna, my point was that there are different implications for the management of professional firms that demand separate attention from the implications for individuals.

More than that: BigLaw has options — mandatory retirement, client succession, senior status — that may not be open to MidLaw. And, increasingly, small firms and solo practices have options to sell that are not open to mid-sized firms.

So, the issue of aging in mid-sized law firms demands separate, different management. The issue is strategic and the solutions are not as simple as the terms “mandatory” and “retirement” may imply.

A different discussion ensues.

What lawyers are for: what Montaigne said: a respite from artificial intelligence, alternative providers, and accountants

Michel de Montaigne

Now is a time when great chunks of law practice are breaking away. Law work is going to alternative providers and artificial intelligences and accountants. Lawyers are challenged to get clear about what their core function is. What, if anything, do lawyers do better than machines and bureaux and accountancies?

“Advocacy” is an answer that comes back soonest and most frequently. “Managing uncertainty” is another. Often these come down to acting in the moment: functioning on your feet in courtrooms, boardrooms, and conference rooms. In those contexts, the unexpected can break out. When that happens, who are you going to call?

Artificial intelligence, quick as it is, can’t yet come into a room and take up the lists. Alternative service providers want stacks of documents and time to sift through them. Accountants want to classify and quantify. They want time and premeditation.

For now anyway, it’s still left to the lawyers to manage uncertainty — controversy — in the moment. Particularly lawyers in mid-size firms are called for that. They are the ones that get the most experience with it.

Michel de Montaigne, himself a lawyer in the middle market, was the brain scientist of the 16^th Century. He commented on the lawyer’s brain and on acting in the moment — and he distinguished between what he called “the mind”, on one hand, and “judgment”, on the other. His comments (in his essay Of Quick or Slow Speech) call to mind the work of his fellow (albeit modern-day) brain scientist Daniel Kahneman and Kahneman’s recent book, Thinking Fast and Slow.

In the gift of wit or eloquence, Montaigne said

some have facility and promptness, and, as they say, can get it out so easily that at every turn they are ready; whereas others, slower, never speak except with elaboration and premeditation.

[I]f I had to give advice regarding these two diverse abilities …, which seems in our time to be the profession principally of preachers and lawyers, the slow man would do better as a preacher, it seems to me, and the other better as a lawyer. For the former’s calling gives him all the leisure he pleases to prepare himself, and then his course is run in a straight continuous line, without interruption; whereas the opportunities of the lawyer press him at every moment to enter the lists, and the unseen replies of his adversary force him off his course, so that he must immediately take up a new line.

It seems to be more peculiar to the mind to be prompt and sudden in its operation, and more peculiar to the judgment to be slow and deliberate. But a man who remains completely mute unless he has leisure to prepare, and also one to whom leisure gives no advantage for speaking better, are both abnormal cases. They tell of Severus Cassius that he spoke better without having thought about what he was going to ay; that he owed more to fortune than to diligence; that it was an advantage to him to be interrupted in speaking, and that his adversaries were afraid to goad him, for fear that anger would redouble his eloquence.

These two temperaments, thinking fast and slow, have their different characteristics, each its limitations. Reflecting on himself, Montaigne observes:

I know by experience this sort of nature that cannot bear vehement and laborious premeditation. If it doesn’t go along gaily and freely, it goes nowhere worth going. We say of certain works that they smell of oil and the lamp, because of a certain harshness and roughness that labor imprints on productions in which it has a large part. But besides this, the anxiety to do well, and the tension of straining too intently on one’s work, put the soul on the rack, break it, and make it impotent; …

It is no less peculiar to the kind of temperament I am speaking of that it wants to be stimulated: not shaken and stung by such strong passions as Cassius’ anger (for that emotion would be too violent); not shocked; but roused and warmed up by external present, and accidental stimuli. If it goes along all by itself, it does nothing but drag and languish. Agitation is its very life and grace.

I have little control over myself and my moods. Chance has more power here than I. The occasion, the company, the very sound of my voice, draw more from my mind than I find in it when I sound it and use it myself. This its speech is better than its writings, if there can be choice where there is no value.

This also happens to me: that I do not find myself in the place where I look; and I find myself more by chance encounter than by searching my judgment.

There is insight here for lawyers who advocate and counsel and negotiate – and also some respite from the onslaught of artificial lawyers, alternative lawyers, and accountants.

Be the one who can bring surprise and uncertainty, but also be prepared to welcome uncertainty when it comes upon you. Lawyers are the ones who are best in the moment, but they must bring judgment in those moments. Maybe artificial intelligence will be able to do that one day; I can’t see accountants getting there.

Be the one who goes along “gaily and freely.” Be the guy who brings the hammer to a computer fight.

 

 

Law firms: consider the pilot fish and the shark

For all the well-known reasons, aggregate demand for legal services delivered by traditional law firms is flat. That has been pretty well documented. (In fact, enough already.)

So, the firms that are succeeding are the ones taking business from others (they are taking business from other law firms and taking it from alternative legal services providers, as well).

Here are three opportunities for midsize firms in this jungle:

Midsize firms can take business from big firms when clients elect to hire smaller firms where (i) the service is equivalent or better, (ii) costs are lower, and (iii) firm principals are more directly engaged in direct client service.

Midsize firms can take business from small firms where the midsize firm can bring broader and deeper capabilities.

Midsize firms can take business from anyone, anywhere, any time a midsize firm can provide experience-honed legal judgment delivered person-to-person by empathetic, seasoned professionals.

But “taking business” from others need not be all tooth-and-claw. Think instead pilot-fish-and-shark.

Artful midsize firms can build lasting, mutually beneficial relationships with other firms — large and small — law firm and alternative provider —  by networking, collaborating, complementing.

Midsize firms are uniquely apt for networking.

Mid size law firms doomed to planning, diligence

Guilford College president Jane Fernandes once counseled the College’s board of trustees that there is a difference between “planning” and “hoping.” (She communicated this very diplomatically, a measure of her fitness for her job.)

In a word (well, two words) the difference is “due diligence.”

British law firm consultants Edward Drummond & Co recently advised “mid-tier” firms in England that the largest London firms are shouldering mid-tier firms out of high-margin work. Mid-tier firms, Drummond says, are in danger of losing their ability to attract new business.

But, there is hope. Drummond, itself a planning consultant, says there is

scope for mid-tier firms to improve their margins by placing greater focus on ‘rigorous strategic planning’. For their new ventures to be effective, the consultancy said, it was imperative that mid-tier firms dramatically ramp up in-depth market research and competitor analysis while also ensuring a thorough understanding of the potential opportunities and risks of the work.

Firms were warned that without carrying out detailed due diligence, they could risk seeing seemingly profitable new business ventures suffer or even fail.

Before firms commit to “new lines of business” though, a Drummond partner counseled

• analysis of competitors,
• identifying gaps in the market, and
• targeting potential clients

Failure to commit to rigorous due diligence is more strategic hope than strategic planning. It risks doom.

What all this means in the context of mid-size American law firms is a horse of a somewhat different color than what British mid-tier firms face, but still a horse.

 

Midsize law firms showing vigor

An outfit that calls itself “MidLaw” and extols the virtues of midsize law firms probably has an obligation to call attention to January 12’s Georgetown Law Thomson Reuters “2017 Report on the State of the Legal Market” wherein it is reported (pages 13 and 14) that

midsize firms saw a consistent upward trend in demand growth and fees worked, as well as an improvement in productivity from the beginning to the end of the [last 3 years]. … One possible interpretation of these results is that clients, while still directing some types of work to high-end, fairly specialized, premium firms (like the AmLaw 50) are increasingly willing to move substantially down market to smaller firms (midsize firms) in order to achieve significant price savings.

For purposes of discussion, MidLaw is going to be large-minded about these references to what is “high-end” and what is “down market.” We could have found more directionally accurate terms.

Much in the 18-page report confirms what you’ve heard here at MidLaw for years in multiple posts.

 

Law firms are surrounded. We must circle the wagons. But around what?

The Financial Times recently published a very good, short article about legal technology: “Artificial intelligence disrupting the business of law.” It drives home the point that law firms are surrounded by new technologies, by alternative providers, by accounting firms providing legal services, and more. Big Law is under attack and it is beginning to fight back by investing in big technology.

MidLaw can never do that. Mid-size firms must look to third party providers to bring technology solutions.

But that’s fine. It frees mid-size firms to focus on their particular competencies, their core clients, and their home markets.

What does a mid-size firm do uniquely well? What is its focus? Get clear about that. There is a different answer for every firm. Context matters. Identity matters. Competence matters. Ethos matters.

The counter-intuitive next step after finding focus is to go beyond it. After you know who you are, the next step is to ask what goes with that? How do you grow it? What else can you be? What other services are natural expansions of core competencies?

And here is a key: growth beyond core competencies may not be limited to services that require a law license. The definition of the “practice of law” has limited relevance to the growth of a law practice. Do not allow the fact that you are a law firm delude you into the belief that you are limited to delivering legal services. Non-lawyer competitors are thriving based on the proposition that much that law firms do is not the practice of law.

Context matters:

• who are you?
• what are you good at?
• what are you uniquely good at?
• who are your clients?
• what services can you provide to them, whether the practice of law or not?
• what markets do you reach, can you reach?

The definition of the phrase “law firm” is shifting, shaking, and shrinking. Potential clients don’t see law firms as alternatives that all do about the same thing. And they don’t much care what the legal definition of  “the practice of law” may be.

MidLaw chauvinism

Photo by Charlie Harutaka.

Occasionally MidLaw has been characterized as diagnosing the obsolescence of mid-size firms. Sometimes we’re even said to be predicting the demise of mid-size firms. So I was glad that Kathryn Whitaker titled her JD Supra interview with me as “The Case for the Mid-Sized Law Firm.”

Of course, from time to time MidLaw does seek to understand the changes around us. And, from time to time it adverts to those who predict the end of the practice of law as we know it. Sometimes, MidLaw countenances those who proclaim the end of law firms altogether. But withal — MidLaw is solid – firm – in the conviction that mid-sized firms will be the last to go.

Kathryn quotes me as saying

A mid-sized firm is the best place on the planet to be a lawyer. The key is direct engagement with clients and colleagues.

Well, that’s what happens with oral interviews. You get all wound up and then you say something that you can’t take back. So, I am staked out. But, at least I believe what I said. No pivot here.

[In an earlier post, MidLaw proposed to republish Kathryn’s  JD Supra interview in this space, but I have come to the conclusion that the thing is just too long to put here, especially when it’s already been published over there. So, here’s another link instead.]

The main thing is: We will be the last to go!

Henceforth please understand: when MidLaw acknowledges the challenges that beset us, I am  simply setting the stage for us once more to demonstrate our resilience – to flex our agility. Remember, it was MidLaw who said these five years past, “Mid-Sized Firms Are the Only Hope for the Future of the Legal Profession,” and, later, more modestly, “I like MidLaw’s chances.”

The Case for the Mid-Sized Law Firm

When MidLaw was interviewed by Lawyers Weekly, it was written questions, written answers. NC Lawyers Weekly Interview, Part I; and Part II

Just recently, Kathryn Whitaker for JD Supra Business Advisor also interviewed MidLaw. This time with oral questions, oral answers: The Case for the Mid-Sized Law Firm. Oral questions and answers are not exactly like having your deposition taken, but …

Here’s another thing. With oral questions and answers, there’s a (perhaps regrettable) tendency for the witness to speak at greater length. (Unlike a deposition, there’s nobody sitting next to you telling you to shut up.) So, with JD Supra‘s assent, MidLaw will set out JD Supra‘s piece in two parts in the near future.

If you want to see the whole thing, right now, in JD Supra‘s stylish format, go to JD Supra right here.

Organizations, including law firms — the new “defining archetype”

“The defining archetype of the new world of organizations is no longer the middle manager but in fact the free agent.“

Venkatesh Rao said this in the Podcast, “Venkatesh Rao on the Three Types of Decision Makers, Mental Models, and How to Process Information,” at The Knowledge Project.

Law firms planing for the #Social Era should start from this insight, which, as MidLaw has been saying, throws back to 19th Century models.

The ascendancy of free agents goes to the core of why the mid size is the right size for law firms. Rightly ordered mid size firms have no middles, and they are best suited to foster autonomous professionals.

New members of law firms, be wary of settling into roles that are too narrowly focused on your firm’s internal hierarchies or structures. Focus on external networks.