Tag Archives: organizations

Opportunity among the ruins

Opportunity among the ruins?opportunities among the ruins

Change is afoot.

In traditional law firms this demands wakefulness.  In fact, it demands wakefulnesss; a capacity to change; the ability to act; a willingness to invest ahead of coming developments; creative approaches to low-margin work; and an appetite for trial-and-error.

This is a field of opportunities for those with eyes to see.

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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.

The business models of big and mid-size law firms

hummingbirdDr. George Beaton has reservations about PwC’s recent survey of large British law firms, which reported a “Return to Growth.” He says a return to growth for law firms is a “mirage.”

I’m not following the fortunes of British firms particularly closely, but Beaton sets out problematic aspects of “the BigLaw business model” that have implications for mid-size firms, too. Quoth Dr. Beaton:

The BigLaw business model is characterised by:

+ A partnership-based structure with little or no real business balance sheet strength

+ A human capital pyramid that is treated as a fixed cost

+ The productivity of lawyers being measured by hours recovered from clients

+ Tight restriction of equity to maximise profit per point of equity

+ The major price structure is (still) based on the billable hour

+ A mind-set of top-line growth is good

+ Equity partners’ rewards (largely) linked to revenues introduced and managed.

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Mid-size firms must to steer among these same rocks. But we have more choices, easier alternatives and better opportunities for change.

Think nimble. Be agile. Today though, it takes up-front money –  and it’s got to be about more than revenues.

MaximiSe.

“Classical” lawyering has not gone away

Peter Kalis, K&L Gates’ managing partner, published a crackerjack piece at The Lawyer.com in which he asserts that “classical” or “traditional” lawyering is no way threatened by new, alternative providers of legal services.Greg

“Highly personal lawyer-client relationships” will not be displaced by technologies, he says.

The alternative providers of legal services –  “LPOs, consultants, accountancy firms, in-house law departments” and limited-service law firms – cannot displace lawyers and firms who advise and represent clients facing “vexing new legal challenges.”

Kalis did not say it this way, but the “vexing new legal challenges” that will always require traditional lawyering must surely be those (identified at this station before now) fraught with complexity, uncertainty and ambiguity. That work cannot be done by those whose competence is to meet and manage challenges that have been overcome oftentimes before.

Kalis says that just now there’s plenty of work to be done that’s new and vexing. He says it’s flowing largely from globalization, regulation and innovation (intellectual property).

So, law firms might ask:

What should the firms that practice “classical law” look like? There is surely demand for Big Law firms to do some of this work, although perhaps not demand for quite as many large firms as were crowding the market some years back. And, keeping those big firms humming will be a bit of a trick in times to come.

More than size though, there is culture. My bias is that the right culture for handling what’s new and vexing is achieved more easily  in smaller organizations.  Hierarchies, specialties and internal process (rules) seem not the ticket, although they are almost unavoidable in large organizations.

Broad experience, trial-and-error, independence, self-reliance, flexibility and creativity sound like attributes needed to navigate uncertain waters. Where is that best developed?  Large places or small?

What resources are called for? More agility, networking, collaborating and practical skills, than static boxes of knowledge, I’d say. What kind of firm develops those?

How do new problems find the right lawyers? Big firms may have some advantages over smaller ones in this. How do smaller firms market their capabilities for “classical lawyering?”

Come to think of it, I’m not so sure that big firms have a great advantage. Marketing is a “classical” challenge for large firms and small.

So, maybe it comes to this: new means of delivering legal services are sprouting. This does not mean that the classical model is no longer there. It is.

What is the best sort of organization for new, challenging work? What kind of firm is the most fun to be part of? How does work find the right firm? I’m pretty clear that one size does not fit all. I’m also pretty clear about what suits me.

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.)

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.

Epic Principles

Epic Systems is the hugely successful and interesting digital health records company based in Madison, Wisconsin.Principles

It is guided by twelve principles which are published throughout the company’s campus.

Those principles are interesting in themselves. They are also interesting to me because Epic is a software company, which is to say it is a kind of knowledge organization and professional services firm. I hold that priests were the first knowledge workers and lawyers were second. Computer programmers came later, but they have gotten to be where the action is — at least in the thinking that has been given in recent times to their management. So, I am interested.

Epic’s 12 principles are: 

  1. Do not go public.
  2. Do not be acquired.
  3. Expectations = reality.
  4. Keep commitments.
  5. Be frugal.
  6. Have standards. Don’t do deals.
  7. Create innovative and helpful products.
  8. Have fun with customers.
  9. Follow processes. Find root causes. Fix processes.
  10. Don’t take on debt, no matter how good the deal.
  11. Focus on competency. Do not tolerate mediocrity.
  12. Teach philosophy and culture.

Is it just me, or is there a certain crispness in the air?

Being Mid-Size and the Future of Law Firms

David Rosenblatt is the Managing Partner of Boston’s Burns & Levinson. Burns & Levinson is … well, let David tell it:

rosenblatt_david

David Rosenblatt

For many years Burns & Levinson has been a mid-size, regional law firm. While growth in the industry has swirled around us, we have stayed true to our initial premise – we need to be large enough to take care of our clients effectively, offering the depth of expertise of the larger firms with the personal touches and attention offered by the smaller firms. Individuals and businesses select Burns & Levinson because of the relationships they build with our attorneys. They know they will get the best legal services and the most attention available anywhere.

Burns & Levinson is “very comfortable marketing itself as a regional firm whose rates are considerably less than the city’s largest firms.” This continues to be true, as most of the city’s largest firms have now expanded nationally, and other national and international firms have opened offices in Boston. The value we offer today stands out even more than it did back in 2004!

David is a champion of the mid-sized firm. He’d say that mid-sized firms are the model that best delivers sophisticated legal services for both clients and for members of the firms. His January 2014 message does say that.

You might argue that, in saying this, he is promoting his firm.

And the problem with that would be …?

Mid-Sized Firms to the Fore?

mid-size-law-firmConfirmed with fresh data, the Center for the Study of the Legal Profession and Thomson Reuters have published the “2014 Report on the State of the Legal Market.” It is the latest testimony of the “disruption” of Big Law’s business model.

This report rounds out the new world view reported recently in

From my my MidLawish point of view, here are the latest report’s conclusions, which speak mostly to the big firms:

  • Unless law firms  change how legal services are delivered, they will not be able to adjust to outside forces that are reordering the industry.
  • Management of legal talent and pricing strategies are more important than economies of scale. Growth for growth’s sake is risky. There are no economies of scale past about 100 lawyers.
  • The law firm market has become much more competitive. Supply exceeds demand significantly .
  • Competition has changed fundamentally.
  • Clients have more diverse options, including shifting work to smaller firms, bringing work in-house, and using non-law-firm providers such as legal process outsourcing.
  • Traditional law firms’ organizational, pricing, and service delivery models must change.

Note the “diverse options” point – the one about work shifting to smaller firms.

On the heels of the “State of the Legal Market” has come a clarion restatement of the case for mid-sized law firms from one of the champions of the species, David Rosenblatt at Burns & Levinson

Says David,

Over three decades ago, the pundits who commented on the practice of law were suggesting that the “mid-sized law firm” was dead – that there was no future in that type of organization. The idea at that time was “bigger is better,” and that offering greater depth in all areas of expertise and experience along with a wider geographic spread was of value to everyone. The other extreme, they argued, was that law firms could be successful only if they were very small.

Since then “Big Law” has gotten bigger; many small and mid-size firms have been swallowed up and become parts of these large national and international firms. We heard the stories of the successes of these very large firms, and this growth appeared to be very good for them. But was it good for the clients and for the people who work in these firms? We’re not so sure.

I heard that.

The linked materials revisit issues and themes that have sounded often in this space in the past. They are soon to return.