Tag Archives: #Social Era

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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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

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.

 

 

21st Century law practice: multi-jurisdictional and cross-border practice

Simply put, there is no way to hold back multi-jurisdictional and cross-border law practice, and that is reshaping traditional structures and the economics of law practice. cross-border

When there are many small local markets, there can be a ‘best’ provider in each, and these local heroes frequently can all earn a good income. If these markets merge into a single global market, top performers have an opportunity to win more customers, while the next-best performers face harsher competition from all directions. Brynjolfsson & McAfee, The Second Machine Age

Geographical boundaries, even political and jurisdictional ones, have less and less grip on law practice every day. This is thanks to:

a)      the digitization of more and more information, goods, and services,

b)      the vast improvements in telecommunications and, to a lesser extent, transportation, and

c)      the increased importance of networks and standards.

(Brynjolfsson & McAfee, again, but not them alone.)

These are not changes that can be held back for long by local rules, especially as business has crossed borders in a fever, and because federal and uniform laws have cleared away field after field of what once were domains of state law.

Law firms – no, legal services organizations – of the future will be shaped by these changes forevermore. They already have been.

The only real question is how to take advantage of these changes? The opportunities available to small and mid-size firms are unique to them – different from those open to large firms, and not the same for all small and mid-size firms. This requires knowing who you are and identifying your opportunities. And, focus. Not following, not copying.

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.

An Omnibus Plan for Law Firms, Students

In the Beginning, there was the Bubble. It inflated steadily over about 30 years, and then it expired in the Great Recession. The Recession put an end to the Omnibus Law Firm Business Plan, which was (i) suffer your  business to grow by 5% to 10% a year; and (ii) hire new lawyers at the rate of 5% to 10% each year.Supply

The 30-Year Bubble and the Omnibus Plan were manageable, even for a “learned profession.”

Over the life of the Bubble and fueled by the Omnibus Plan, getting a law degree and working for a Big Law firm came to be seen as a good way to school yourself into making a lot of money. So, students came. Law schools expanded. New ones opened. Law firms competed to hire new lawyers. Law schools imposed rules about when and how law firms were permitted to hire new lawyers. And law students borrowed great sums to get into the game.

The Recession ended all that. Management got tricky. Hiring slowed, stopped and started. Getting a law degree no longer appeared to be a reliable path to a lot of money. Law classes shrank. Advice came about careers other than law practice for which law degrees are a good preparation (or, not).

Current data  shows little improvement in the post-Recession law-job market (“despite signs of modest improvement, . . .  there are still signs of weakness in the entry-level job market”).

Now, there is a new debate. Will shrinking law school classes, like bad harvests, create shortages?

Slate adjures “Apply to Law School Now! Things Are Looking Rosy.”

Above the Law rejoins “Sweet Baby Seamus, Do Not Apply to Law School Now!

Slate sur-rejoins: No, We really Mean It. Go to Law School.  Seriously.

Pointers about planning for persons considering legal careers and for managers of law firms:

Sooner or later this “market” will get the supply in line with the demand. Things will settle down.

Keep your eye instead on this: Even as the market is sorting out supply and demand, the legal profession is changing in fundamental ways. This is the result of developments in information and communications technology, globalization, the evolution of  in-house legal departments, and the growing sophistication of the unlicensed workforce (we call them “non-lawyers”).

The kinds of work that the law-licensed might do in the future are morphing all over the place. So is the competition. There is no longer a single, homogeneous species called “lawyer.” (So, why should there be a single institution called a “law school”?)

The advice from this station then is: try to get clear about what kind of law-related career and legal work suit you — or your law firm. What skills do you have or can you get? How do these align with what is coming? What kind of work gets your motor running? (This is sometimes referred to as strategic planning.)

I don’t think I’d do something I didn’t want to do, even if there’s a great market for it.

The value of lawyers who (only) give answers

bigdta“Computers are useless. They can only give you answers.”  — Pablo Picasso

“Traditional computing systems, which only do what they are programmed to do, simply cannot keep up … . These new systems are not programmed; rather, they learn, from the vast quantities [of information] they ingest, from their own experiences, and from their interactions with people.”  — IBM 2013 Annual Report

“Our recommendations about how people can remain valuable as knowledge workers in the new machine age are straightforward: work to improve the skills of ideation, large-frame pattern recognition, and complex communication … .”  — Brynjolfsson & McAfee, The Second Machine Age

It’s not knowledge; it’s skills.

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.

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.

Skills from the Past, for the Future — Lawyers and People

A while back, Pat Bassett, surveyed the current thinking among educators about “the skills and values that will be necessary for students to succeed and prosper in [the] turbulent and ever-changing times” of the 21st Century.

He concluded at the time that there was remarkable agreement that those skills are

  • character (self-discipline, empathy, integrity, resilience, and courage);
  • creativity and entrepreneurial spirit;                                                                                 collaboration
  • real-world problem-solving (filtering, analysis, and synthesis);
  • public speaking/communications;
  • teaming; and
  • leadership.

In The Global Achievement Gap, Tony Wagner identifies “seven survival skills” for the 21st Century.They are:

  1. critical thinking and problem-solving;
  2. collaboration across networks and leading by influence;
  3. agility and adaptability;
  4. initiative and entrepreneurialism;
  5. effective oral and written communication;
  6. access and analyzing information;
  7. curiosity and imagination.

When I was reminded of these sources recently and looked back at them (there’s a Howard Gardner book as well, with the terrific title “Five Minds for the Future”), I was struck by how often these same skills are coming up now in discussions about law practice. The recent spate of commentary by Richard Susskind, Bruce MacEwen and Jordan Furlong covers much the same ground.

Most recently – in fact, hot off the presses – is the paper I wrote for UNC Festival of Legal Learning. In that paper, I looked at North Carolina lawyers in the 19th Century; drew conclusions about attributes they shared; and observed that the “turbulent and ever-changing times” of the 19th Century serve as a “distant mirror” for the turbulent and changing times of the 21st Century. Then (in that paper), I used the attributes of those 19th Century lawyers as the basis for suggesting management principles applicable to 21st Century lawyers and law firms.

Mirabile dictu, the same basic set of skills came up yet again (in an only slightly different form).

(The Winslow paper is A Distant Mirror: How 19th Century Lawyers from Guilford and Edgecombe Counties Are Models for the Next Generation of Lawyers & Firms Worldwide.)