Tag Archives: networks

Law firms: consider the pilot fish and the shark

pilotoceanic_whitetipFor 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.

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Globalization, boundaries, lawyers

BoundariesShould they have left? Should they have stayed? Should we build a wall around ours?

Technology, communications, transportation, the ability to operate at scale, the force of populations — irresistible forces. Globalization is upon us.

There will always be boundaries. Boundaries will always be crossed.

Commerce is inevitable. Ain’t no wall high enough, ain’t no valley low enough, ain’t no river wide enough.

Boundaries are terrains of uncertainty; they are where complexity grows.  That makes them hunting grounds for lawyers. Someone must make things predictable.

Mid-size firms have new tools for the harvest.

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

Knowledge project height_250_width_250_tkp

“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.

 

 

Core lawyer function not special knowledge, but managing hard problems – Mauboussin: a thinker about that

migrating canada geese

Farnum Street recently called attention to Michael Mauboussin‘s observation that the capability of IT-enabled networks, which can harness the wisdom of crowds, reduces the scope for experts to add value.

A much narrower but related point has been made here at MidLaw in the context of law firms. The growing ability of smaller firms to network with each other and harness combined wisdom, diminishes the advantage of larger firms. Much of the value that large firms bring can be replicated by networking; and technology is rapidly enabling better networking. This does not eliminate the need for law firms, but it reduces the need for so many large firms, and it affirms the growing opportunity of mid-sized firms.

Mauboussin extends this thinking beyond the observation that problem-solving is no longer something that must always be handed over to subject matter experts. He suggests methodologies for solving problems, including solving problems with networks that include experts.

This is important learning for lawyers. Subject matter expertise is not what’s at the core of lawyering. Problem-solving is. Lawyers are not so much possessors of key knowledge as they are professionals who know how to confront and manage hard problems. Mauboussin provides useful thinking about how to think about thinking about these problems.

Knowing when and how to hand things off to subject matter experts and then how to use what you get from them, is an important part of solving problems. As computering advances, this kind of competence will be a larger part of lawyering.

Seeds of destruction; seeds of renewal

Source: Siu & Jaimovich at Third Way

Source: Siu & Jaimovich at Third Way

@stephenfshaw points to a Wall Street Journal blog post entitled “Is Your Job ‘Routine’? If So, It’s Probably Disappearing” where there is a note with nifty graphs, reporting a study, which shows that new jobs focussed on routine functions are lagging, while jobs focussed on nonroutine functions are up.

Stephen Shaw says that’s right up Midlaw’s alley.

From its beginning, Midlaw has argued that mid sized law firms cannot build strategies based on providing routine legal services, or on seeking economies of scale. Lawyers and firms are, at last, falling into paradigms that have seized one industry after the next as we have transitioned from the Industrial Age to the Digital. Machines will take routine work away from people. Law firms (along with schools and colleges) are among the last to be taken down, but in the end our work is no different.

Where has this come from?

In The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution, Walter Isaacson writes,

symbiosis

 [I]n one of the most influential papers in the history of postwar technology, titled “Man-Computer Symbiosis,” … published in 1960, [J.C.R. Licklider said], “The hope is that, in not too many years, human brains and computing machines will be coupled together very tightly, and that the resulting partnership will think as no human brain has ever thought and process data in a way not approached by the information-handling machines, we know today.” This sentence bears rereading, because it became one of the seminal concepts of the digital age.

Licklider sided with Norbert Wiener, whose theory of cybernetics was based on humans and machines working closely together, rather than with their MIT colleagues Marvin Minsky and John McCarthy, whose quest for artificial intelligence involved creating machines that could learn on their own and replicate human cognition. As Licklider explained, the sensible goal was to create an environment in which humans and machines “cooperate in making decisions.” In other words, they would augment each other. “Men will set the goals, formulate the hypotheses, determine the criteria, and perform the evaluations. Computing machines will do the routinizable work that must be done to prepare the way for insights and decisions in technical and scientific thinking.”

So, more than 50 years ago, computer scientists anticipated the day when men would set goals and evaluate outcomes; machines would do the routine work.

Within a decade they were onto networking, as well. Isaacson says:

The network pioneers … realized that the Internet, because of how it was built, had an inherent tendency to encourage peer-to-peer connections and the formation of online communications. This opened up beautiful possibilities. “Life will be happier for the on-line individual because the people with whom one interacts most strongly will be selected more by commonality of interests and goals than by accidents of proximity,” they wrote in a visionary 1968 paper titled “The  Computer as a Communication Device .” Their optimism verged on utopianism. “There will be plenty of opportunity for everyone … to find his calling, for the whole world of information, with all its fields and disciplines, will be open to him.” [That would take another decade ….]

Automating routine functions and networking. In these are the seeds of destruction for those lawyers and law firms who pitch their practice on routine services and economies of scale.

Law firm strategies must go elsewhere.

Says the WSJ,

Even as robots become more skilled at more complex tasks, for decades to come it will be the province of humans to program and manage these machines. Many more jobs have critical elements that are creative, interpersonal, social and persuasive.

And that is where law firm strategies must go: to providing services that are “creative, interpersonal, social and persuasive.” The machines will take the rest.

Midlaw’s further point, is that – not only is that where we must go – that’s where we came from.

MidLaw never sleeps

Dr. George Beaton has spoken again to the future of the legal services delivery business. This time in an interview with Forbes.HiRes

In the future, the business of legal services delivery will be competitive, volatile and pressed to the margins for all but a few firms. This is happening for reasons that are well known:

  • technology is delivering new ways to provide services and displacing traditional methods and processes,
  • alternative services providers (alternatives to lawyers and firms) are delivering legal services that once required lawyers,
  • newly resourced and empowered in-house legal departments are both displacing outside law firms, and demanding that law firms develop alternatives to traditional ways,
  • law firms themselves are morphing away from full-service business models into a wide array of new forms and competitors,
  • the significance of geographic boundaries is changing, generally waning,
  • capabilities for networking are continuing to develop and evolve.

Successful firms of the future must be focused on their strengths, intent on managing expenses, and willing to spend money to build new practices as opportunities appear. Firms must stand apart and be recognized for the things that they do really well.

Neither lawyers nor law firms are well suited for this.

  • Partnerships are slow to make decisions.
  • Partnerships lack balance sheets suited to taking risks (spending money to make money).
  • Established law partnerships are biased in favor of older, well established lawyers, whose orientation to the future is naturally defensive and change-averse.
  • Lawyers are perfectionists, trained (ultimately, cultured) to take pains to identify and eliminate risk.
  • Law firms encompass incompatible practices, seeking to manage both routine process work, and also one-of-kind advisory and advocacy services, within the same culture.

In these times, when market demand for legal services will rise and fall, and within a broad secular trend toward alternative providers and new methods of competing for business, mid-size firms must strike difficult balances.

  • Right sizing. Mid-size firms must attract and retain excellent professionals, and field a roster that is broad enough and deep enough to cover strategically appropriate work, but they dare not be overstaffed. Partly, this is about having the professionals needed to do the work; partly it is about assuring clients of the firm’s capabilities. BUT in volatile times, no firm can afford to be overstaffed, or overstaffed in narrow specialties, or over-committed to the wrong practice areas.
  • Investment in new resources. Mid-size firms can rarely lead in the development of major new technologies and innovations. Neither can they cannot afford to be far behind.
  • Expense management. Beaton says that  “the traditional, so-called full-service, middle tier firm that is striving to offer better value, based on lower rates and lower overhead,”  is chasing a value proposition that is illusory. “There will be no room for profitable generalists . . .  no room at all.” Keeping costs low is critical, but succeeding in the new marketplace cannot be accomplished simply by spending and charging less.
  • Strategic growth. For mid-size firms, growth is a conundrum. Don’t grow away from what makes you good. Aimless growth, particularly growth born of defensive merging, passes beyond conundrum into disaster. Beaton says, “There will come a point when these merged firms realize that bigger isn’t necessarily better for clients, and doesn’t create more value for anybody. They’re just more difficult to manage, and the clients don’t necessarily get a better deal. And then, after that, you’ll get fragmentation.”
  • Focus. If aimless growth threatens fragmentation, what is the alternative? Beaton: “We see a component of kaleidoscope in what we call ‘back to the cottage’ — specialist, small cottage industry firms, that are really, really good at something.”
  • Culture. Law partnerships must be managed for efficiency as never before, but this must be balanced with the traditional strengths of professional partnerships: shared values, personal ties among members and a sense of purpose — in two words, professionalism and collegiality.

Attract the right number of excellent people. Always be finding and pursuing opportunities. Control growth and expenses. Only do those things that you can be really good at. And, work at partnership.

Midlaw never sleeps.

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.

The real future of legal services

A steel driving man

A steel driving man

A short while back, the comment was made here that software programmers are hacking off great chunks of what used to be law practice and computerizing them. And Ernst & Young is delivering legal services in China. Those were hardly scoops.

Two more recent developments make the same point. PriceWaterhouse has gone into law practice in a big way and so has LexisNexis. They are using organizational structures available in Great Britain.

Meanwhile, back in the States, LegalZoom is breaking down “unauthorized practice of law” barriers brick-by-brick; and Kevin O’Keefe said recently that blogs are transforming if not replacing large chunks of legal publishing.

Somehow it makes sense to me that Great Britain is getting the job done with alternative business structures, while the U.S. is doing a different version of the same thing with computers and the Internet.

Anyway, this discussion is no longer about predicting the future.

The real  discussion now is about the work that real lawyers do. And about what kinds of organizations are best suited to deliver legal services and provide cultures  in which real lawyers work best. That’s what the earlier post said.

(Hint: the personal commitment of excellent professionals to their clients and to excellent work still makes a major difference in hard cases.)

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.

Unbundling Abounding

Two good articles on what’s happening to the “legal industry.”

If nothing else, they make clear that “legal industry” is what we are talking about. How and where the phrase “legal profession” should be used in the future, needs thought (at least by me).

For people in the industry, we must get past labels and over boundaries. Who are we? What do we do? How do we best organize and develop ourselves for that? Hint: the answer will not be the same for everyone. Another hint: get thee not to a consultant. The answer lies within.