Tag Archives: law firms

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.

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Midsize law firms showing vigor

A glass building in downtown Greensboro,North Carolina. Notice the reflection on the glass.

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.

 

The ecosystem of our kind: consultants to consultants to consultants

evolution-013First-of-the-year projections are still arriving at my inbox.

Added to the traditional providers now there’s a lively and growing new ecosystem of law firm consultants. There are all kinds of them. They do M&A, marketing, strategic planning, headhunting, IT, cyber security, all kinds of risk management, and more. Their categories are subdividing, their numbers multiplying. And they are projecting up a storm.

Many report that demand for legal services is growing again. “Exciting,” one of them said this morning. Transactional work for lawyers at all levels is growing, they say.

But just about as many say that demand is flat. That group tends to say that relatively few firms are taking work away from everybody else.

Still others are looking a bit further out. They are assessing artificial intelligence, non-lawyer legal services providers, the growth of legal departments, and the continuing expansion of accounting firms onto old-time lawyer turf. Most of them predict different kinds of long term demise. Some not.

I’m seeing a trend, myself. Demand for law firm consultants is up (it must be because there seem to be so many of them). But, wait, maybe it’s down (it must be because they are marketing so hard with their projections and all).

Anyway, I project a growing market for advisors to law firm consultants. Consultant consultants.  Just like anybody else, law firm consultants need advisors: someone to help them with their elevator speeches; someone to advise them about their mergers; someone to think about the impact of artificial intelligence on what they do.

They need somebody to tell them to be agile. We all do.

Holiday special: low rates for legal research and document review if you act now!

Xmas still life - red balls, tinsel with blurred red Christmas lights bokeh background

Holiday prices on selected services. Order now!

Did MidLaw recently say that “non-lawyer competitors are thriving based on the proposition that much that law firms do is not the practice of law”?

Well, you can get holiday pricing with that.

MidLaw received an email message that same day (subject: “Christmas Blast”) from somebody in India who offered an “end of the year special.” Special low rates, good only until December 31, for

  • Legal research
  • Summarizing medical records, depositions and trial transcripts
  • Indexing, proofreading & cite-checking of legal documents
  • Preparing case chronologies
  • Review of legal documents
  • Preparation of discovery requests & responses
  • Contract review and abstraction
  • Drafting of summons & complaints
  • Doing redactions, and applying bate-stamps on legal documents
  • Data entry, form fill-ups, template based drafting
  • Making entries on accounting systems.

I am serious. This offer came from a firm that is “not a law firm and neither provides legal advice nor practices law.”

Cut-rate legal research and document review. But you must act now!

How beautiful on the mountains are the feet of those who bring good news.

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

165hThe 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.

ABA studies the future; Axiom opens an office: hires lawyers in Charlotte

cat-in-tieThe American Bar Association recently released its Report on the Future of Legal Services in the United States. Not long afterward, the ABA House of Delegates refused to approve outside investment in law firms. The ABA Commission on the Future of Legal Services contemplates state-by-state examinations of the issue, to be followed by local decisions state by state.

Last week, Axiom, a provider of “legal solutions” and “leader in the business of law,” announced opening an office in Charlotte.

Axiom is not a law firm. It is a business. It employs lawyers. It delivers legal services. It is an “alternative to the traditional law firm” — “more flexible, elastic, and commercially-minded”.

Axiom has begun hiring lawyers for Charlotte. It is hiring “elite talent that wants to practice in the Axiom mode.” And “looking at every practice area.

So, there’s them that studies and them that does.

 

Video interview with NC Chief Justice on future of legal services

future-legal-services-hero_jpg_imagep_980x179-2-png-imagep-980x179North Carolina Chief Justice Mark Martin represented the judiciary on the American Bar Association’s Commission on the Future of Legal Services whose report was published earlier this year, and so Chief Justice Martin was interviewed recently by Ralph Baxter, Chairman of Thomson Reuters’ Legal Executive Institute, who asked the Chief  (i) about broadening the scope of those who can participate in delivery of legal services (that is, who beyond licensed lawyers can provide legal services?); and (ii) about opening the door for non-lawyer investment in the business of legal services (can law firms issue stock?). Chief Justice Martin described the process by which such changes could come.

New proposals can come either through the ABA or directly at the state level. The ABA’s House of Delegates has already refused to approve outside investment in law firms. Even so, the Commission recommends that the states continue to consider the issue.

“So [non-lawyer investment in law firms is] one of those things that might happen,” Ralph Baxter observed to the Chief Justice in the video interview. The Chief’s response, a nonverbal chuckle, is the very model of making a noise without making a comment. Judicial and judicious. Worth the price of the (free) video.

 

MidLaw chauvinism

A photo by Charlie Harutaka. unsplash.com/photos/Gacd_XeSGQk

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 worm at the core of law firm management

Blake2Writing for Bloomberg Law, Aric Press gives an account of a presentation made by Albert Bollard from McKinsey about the nature of “expert organizations” like law firms.

There’s a worm at the core of law firms. “Expert work,” Bollard says, “is misaligned with customer value.”

Clients want “higher levels of service, delivered faster and more responsively, in a rapidly evolving landscape.” But, expert practitioners value expertise, autonomy, and independence, which they understand as the foundation of their ethics and the core of their identity as advocates and advisors.

In traditional law firms,

  • expertise is “valued for its own sake, rather than for contributing to customer value;”
  • knowledge is not “codified or shareable”, but is transmitted by apprenticeship;
  • individual practitioners own their separate engagements, and they are not oriented to improve “the way their organizations perform tasks;” and
  • there is no “end-to-end ownership” of the client’s experience, and limited ability to create and enforce “standard ways of working.”

Independence and autonomy foster counselors and empower advocates; but not managers and processors — and not efficiency.

It’s the rare law firm of any size that functions for very long as an integrated, cohesive, centrally directed team. The phrase “herding cats” comes to mind. And cat-like independence impedes efficiency. It breeds misalignment between lawyer and client. It feeds the worm.

Commercial and institutional clients are themselves, managers and processors. They want service, fast and efficient. Don’t talk to them about autonomy. Don’t try to get them to care about expertise for its own sake.

The worm is a core challenge for lawyers. The misalignment between professional values and commercial values generates tension. Expertise and independence are GOOD. Efficiency and responsiveness are GOOD. If managed well, the tension between them can be creative.  

Easily and obviously, mid-size law firms are the practice setting best suited for aligning values, for keeping clients close and fostering creativity.

 

The nature of the law firm – it’s about the client

pellicansLawyers are going now for 10 years contemplating The End of Lawyers? and how legal services organizations might be configured in the future. New taxonomies have emerged: Big Law, Mid Law, Alternative Services Providers, legal process managers, and more.

The thinking of economist Robert Coase has been rediscovered. Coase wrote The Nature of the Firm. Firms are needed, he said, only where performing functions within an enterprise costs less than outsourcing.

And so lawyers have taken Coase for guidance in how to build law firms. They ask themselves what advantages are won by taking functions in-house (specialty practices, IT, etc.) and what functions should be outsourced. “Full service law firms” are a challenged model. Is it better to be a one-stop organization, possibly with multiple offices; or a niche-oriented, highly networked shop?

But, wait.  Are law firms asking the right question?

The driving question is not so much how law firms should be configured. It is how will clients configure themselves? Can businesses obtain legal services better in-house or outside? If they go outside, are they better served by law firms or alternatives?

For law firms, the truly strategic question is not whether they need an ERISA capability, or a healthcare practice. It is what services will clients do for themselves? And, when clients choose to go outside, what can a law firm do better and cheaper than alternative providers? These are questions that are answered quite differently, depending on the size, location and practice competencies of different law firms.

The concept that legal services are best delivered from a stand-alone professional services partnership – in order to assure independence, competence and objectivity – has modest appeal for clients who have concluded that they can obtain the same services more efficiently elsewhere.

What can traditional law firms do best by these measures?

It’s about the client’s economics, not the law firm’s.

Quentin_Massys_-_Portrait_of_a_Man_-_National_Gallery_of_Scotland