Tag Archives: legal processing

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.

Job description for the midlaw managing partner

He was writing about something else altogether, and suddenly, there it was. Somehow, he had written the best job description I know for the managing partner of a traditional, mid-size business law firm in the 21st Century. He said,

Organizations are complex systems, in which cause-and-effect is nonlinear, path-dependent (history matters), and often unknowable in prospect. Deciding what to do (or not do), and how and when to do (or not do) “it,” is a matter of judgment and experience, as managers try to accomplish short-term objectives while keeping their longer run options open.

David K. Hurst, Why Business Books Still Speak Volumesstrategy+business, S+B Blogs (November 17, 2015).

RabJust now, law firm management starts from that place (that is, from the place of nonlinear, path-dependent unknowability). The same may also be true for other kinds of organizations (maybe all of them, as the author says), but just now it is more true of law firms than almost anybody else. Indeed, to the extent that this proposition is not true of a law or legal process organization, then – to that extent – I say it is not a law firm. Instead, it is probably best characterized as a “legal services organization.”

Firms in which cause-and-effect is linear and for which management outcomes are predictable, likely are process managers, and likely to be replaced one day by machines. Members of those firms are likely not seasoned and rounded “attorneys and counselors.”

The task of the manager of a law firm is to understand the path upon which the firm is dependent; to find the opportunities that path has created in the present; and, to identify new domains of uncertainty, ambiguity and complexity, toward which to boldly go. Yes, keeping options open.

More grandly, the same writer says, “we all need narratives.”

Data is not the same as knowledge; information is not, in and of itself, insight. As humans, we need narrative “centers of gravity” to make sense of our experience.

* * *

Although the advent of big data calls for a good deal of calculation, it also demands more judgment — “big” judgment, which will require more and better-disciplined analogies to help us synthesize our experiences and grasp their meaning.

Such is the nature of strategic planning for non-linear, path-dependent professional services organizations. The process is sometimes described as “herding cats.”



The future of work, the practice of law and computers that drive cars

unclear complexIBM’s Watson Computer famously can play chess better than flesh-and-blood chess masters can, and it is a Jeopardy champion. It has cousins that can drive cars. Now Watson is coming after lawyers.

Pretty clearly, Watson can pass a bar exam already. But, it doesn’t just come up with answers to questions. It synthesizes information, develops arguments and puts them forth in a logical way. IBM’s general counsel modestly avers,

Watson won’t replace the judgment of a senior law firm partner, but it could eventually handle tasks of senior associates. [IBM] sees [Watson] researching and writing a memo summarizing the law and suggesting the most persuasive arguments and precedents. Or it might quickly review stacks of contracts . . ..’It would have encyclopedic knowledge and an inexhaustible work ethic.’

It’s not just Watson and lawyers. Lawrence Summers, Vivek Wadwha, Ray Kurzweil are asking what work will be left for anybody to do — when machines begin doing all they are capable of. (I particularly like Wadwha’s suggestion that, within 20 years, it will be illegal for people to drive automobiles.)

The “future of work” is a topic keeps coming up.

The thinkers don’t agree about where we are headed. But they do agree that, in this second machine age that is upon us, education and laws will be key — because what’s coming will be, well, new. People are about to be pushed out of the knowledge business. What’s left for people will be skills. And, principal among needed skills will be the ability to boldly go where we have not gone before. The skills for doing what’s new, that’s what will be needed.

To me, that says (i) the educations we will need must be of the liberal arts, and (ii) the skills we must bring must be those that lawyers came in with.

Lawyers are often hung with the label of being precedent-bound. Look at that another way: applying precedents wisely is a skill needed to understand and manage new problems.

The lawyer skills that are depreciating most rapidly are the abilities to extract answers from existing data, and to process almost anything.

The skills that are appreciating most are the abilities to navigate uncertainty: to discern how precedent provides guidance on new ground, to advise when answers are not known, and to act where outcomes are hard to predict.

It will be a good computer that has those skills.

“When sorrows come, they come not single spies, but in battalions.”

From the law firm consultants, Beaton Capital comes a post entitled : “What William Shakespeare and BigLaw business model firms have in common.”  Optimism

The Shakespeare is: “When sorrows come, they come not single spies, but in battalions.” – Hamlet.

OK, now it’s time for some optimism. I’ve got some.

One key is don’t be a big firm.

Another is: Do what lawyers were meant to do. So many consultants with their diagnoses of doom are focused on lines of work that rose up among lawyers only relatively recently. Those lines of work tend to be “processing” in fields that lawyers got into in the first place because they were the only ones who knew what to do. Well now others know what to do, there is a lot more of that kind of work, and there are new tools. So lawyers don’t need to do it. Some firms may need to retool and to re-price. Law schools that graduated lawyers dependent on that work for employment, the same.

But there’s still the work we came here to do — not, the processing, but the problem solving. And that is out there for every kind of client — from low-resourced individuals to international business organizations. We boldly go where problems need solutions and answers are not easy.

And there also remain emerging opportunities for persons trained as lawyers to manage this processing work. Maybe in the context of law firms; maybe not. From my, mid-sized, middle market perspective though, that work is still growing. There are opportunities. Pricing may be changing, but this is the kind of work where you can make it up on volume.

Anyway, I like the quotation from Hamlet. It’s better than, “When it rains, it pours.” I just don’t buy that we are faced with battalions of sorrows right now. Only spies — and we can take’em. Brooks Pierce can.

PwC Legal

Here’s how PricewaterhouseCoopers Legal LLP describes itself.London_skyline_2012_large

Welcome to PwC Legal LLP, a member of the PwC international network of firms. We provide clients with a unique style of integrated legal advice on complex commercial projects requiring a range of complementary specialists from other parts of the PwC network. We also offer clients a general counsel service and access to an extensive global network, including locally qualified legal expertise in over 80 countries and immigration law services in 116 countries. Working alongside market-leading experts from the PwC network in tax, human resource services, corporate finance, investment funds and financial services regulation, our legal team provides innovative, commercially-aware solutions to some of the most challenging business issues. Our focus is to help you find the right solution and to add value to your business.

If you go to the website, look at the images they use on the homepage. (They don’t have to wear ties there.)  And read the text on the careers page.

Machines should do the work that machines can do

robot-tease-4x3.grid-4x2We are in a time when the software programmers are rushing to hack off great chunks of what used to be law practice and computerize them. Programmers see the promise of innovation – as is happening in the medical world and other domains without end. Outside the United States, acccounting firms are acquiring law firms at a steady pace. They see similar opportunities.

This is a great thing. Machines should do work that machines can do.

Law practice (the work that only lawyers can do) is getting pushed onto narrower and narrower turf.

This is good, too.

Those who have law licenses will not be confined to the narrow turf of law practice. They can manage the machines or join the accountants. There are many opportunities in that.

Still, there will be work that only lawyers can do. Partly, it entails making use of what the machines do. Partly, it is the core work of lawyers: handling law-related matters whose outcomes are hard to predict. This can be advising or advocacy. It centers on charting workable courses and making practical connections in the face of hard problems. In the face of uncertainty, ambiguity, complications, and new kinds of problems.

Maybe this work does not require as many lawyers as were graduating a few years ago. Maybe lawyers need to be schooled in ways that do not necessarily leave them “practice ready.” Maybe the work does not require so many large law firms.

Lawyers and law firms must pick their way through these changes. There are implications here for the personal attributes lawyers must bring to the practice and for how lawyers are trained. And, there are implications for what resources firms should bring, for how large a law firm should be, for how it should develop its business and how it should grow.

What’s at risk here are not so much law jobs as how we organize to deliver legal services. (OK, the computers will take some work, but they are welcome to it.) There are fresh opportunities in this for the nimble.

Machines should do the work that machines can do.

No technology remotely replicates in-person connections

Not email, voice mail, conference calls, video conferences, telephone conversations, letters even.                conference_call

Douglas Rushkoff, Present Shock, page 126:

In the real world, 94 percent of our communication occurs non-verbally. Our gestures, tone of voice, facial expressions, and even the size of our irises at any given moment tell the other person much more than our words do. There are the cues we use to gauge whether someone is listening to us, agrees with us, is attracted to us, or wants us to shut up. When a person head nods or his irises dilate, we know – even just subconsciously – that he agrees with us. This activates the mirror neurons in our brains, feeding us a bit of positive reinforcement, releasing a bit of dopamine, and leading us further down that line of thought.

Nassim Taleb, Antifragile, page 89:

Eye contact with one’s peers changes one’s behavior. But for a desk-grounded office leech, a number is just a number. Someone you see in church Sunday morning would feel uncomfortable for his mistakes – and more responsible for them. On the small, local scale, his body and biological response would direct him to avoid causing harm to others. On a large scale, others are abstract items; given the lack of social contact with the people concerned, the civil servant’s brain leads rather than his emotions – with numbers, spreadsheets, statistics, more spreadsheets, and theories.

No technology-enabled medium of communication replicates the in-person, face-to-face mode served up to us by millenia of evolution (or intelligent design, as you prefer). Choose your tools accordingly.

The Structural Changes that Are Driving Lawyers’ Numbers Down

What are the permanent structural changes that have driven down law firm hiring and law school class sizes? structural changes

Professor Burk says the market has produced new, cheaper ways to do tasks once done by associates in large firms. And, now we can “disaggregate” those tasks from other law-firm-delivered legal services. This gives clients the ability to move that work to lower cost providers. All has been enabled by data processing and other technologies; by instant, remote communications; and by networked providers.

Legal processing.  So, clients with large legal processing needs – document discovery, litigation holds and due diligence (but also loan closings, collections, foreclosures, legal forms) – now have alternatives to hiring law firms who assign that work to associates. Those include:

  • Outsourcing – law firm sends the send the work to an outside contractor.
  • Insourcing – client itself does the work or hires the contractor.
  • Downsourcing – law firm assigns the work to contract lawyers or others who work in the firm but at lower rates than conventional associates.

Costs of training lawyers. Also, training law graduates to practice law in firms is time-consuming and expensive. Traditionally, many large firms financed that training, in effect, by charging clients for associates’ time. As new, technology-enabled economics take hold, law firms are recognizing the value of keeping trained lawyers who may not become practice leaders in their firms. So, more big firms are keeping more lawyers longer – in new categories: non-equity partner, senior attorney, contract attorney. That is, trained lawyers are retained to do work that might once have gone to new associates — thus cutting the need to hire more graduates.

Other structural changes. Professor Burk does not mention explicitly other structural changes that may also have reduced the demand for large firm lawyers. These might include: (i) the expanding role, sophistication and capabilities of in-house legal departments; (ii) expanded multi-jurisdictional and multi-disciplinary commerce and law practices; (iii) competition from new law firm models: boutiques, mono-line firms, virtual firms; and (iv) competition from newly-enabled networks of smaller firms. These are both alternatives to large firms, and also modes of practice that are less dependent on hiring large numbers of new lawyers every season.

Quicker, Better, Cheaper. In short, new technology and shifting market forces are creating opportunities for new ways to deliver legal services and new ways to organize legal services providers. New ways only emerge where they represent improvements: quicker, better, cheaper.

In almost every case, “quicker, better, cheaper” means finding new ways to get more legal work done with fewer lawyers. And that drives down hiring, and law-school applications and class sizes.

The horror! The horror!          horror_animaatjes-44

The Numbers that Shape Our Lives

Here are the numbers that underpin, What’s New About the New Normal: The Evolving Market for New Lawyers in the 21st Century.   not hiring

  • Law jobs. In 2007, 70% to 77% (depending on how you count some jobs) of law school graduates got law jobs within 9 months of graduating. In 2011, those numbers had fallen to 50% to 59%.
  • Where jobs were lost. Over half of the lawyer jobs lost since 2007 were lost at firms of over 100 lawyers.
  • Big firm hiring. Hiring by firms of over 100 lawyers has dropped since 2007 from 19% of law graduates to 12%.
  • Applications to law schools. Applications to law schools have dropped from 100,000 in 2004; to 59,000 in 2013.
  • Law school enrollments. Law school class sizes dropped from 52,500 in 2010; to 42,500 (estimated) in 2012.

Perhaps, you spotted the trend? The entire system has ratcheted down, mostly driven by what has happened at the big firms. Burk says it’s because work formerly done by new lawyers at large firms is now being  insourced, outsourced, downsourced and given to machines. He points to document discovery and due diligence (“what often amounted to legally literate clerical work”).

This is the new normal. We’re not going back.

And, it prompts questions about what a lawyer is, how lawyers are best organized and how they should be educated and trained. (Thoughts on that later.)

New Normal Confirmed, Characterized

UNC Law Professor Bernie Burk observes in his article, What’s New About the New Normal: The Evolving Market for New Lawyers in the 21st Century,  that since 2007 (i) law hiring has fallen substantially, (ii) most of the fall is attributable to reduced hiring by firms of more than 100 lawyers, (iii) applications to law schools have dropped, and (iv) law school enrollments and classes are now much smaller than they used to be.           new lawyer

Professor Burk says these drops are not merely reflections of normal cycles in the economy. Instead, he says they reflect structural changes in how legal services are delivered. Functions once performed by associates in large law firms are now being provided in new ways (outsourcing, downsourcing, insourcing and such). So you don’t need so many associates.

These are permanent changes, Burk says.

Bernie does not say it, but I will: the structural changes he identifies (and others he does not) have important implications for our evolving understanding of what “law practice” is; how we organize to deliver legal services, what law firms will look like; and how we educate new lawyers.

The world is steadily shaping itself to predictions made in a string of posts that appeared right here some time back.