Practice Innovation Feed

Are Traditional Law Firms Unsustainable? A Debate.

ThinkstockPhotos-142079574As many law firms struggle to recover from the near-death experience of the Great Recession, there's a bracing debate going on in the legal futures community about whether the traditional law firm economic model (partners, associates, equity, etc.) will lead back to prosperity through standard growth strategies like mergers and lateral hires or whether a total overhaul is required via a new profitability analysis. (A third doomsday view says it doesn't much matter as most legal services will be delivered via artificial intelligence anyway. To book your trip down that rabbit hole, start here.)

As for the growth strategy versus complete overhaul debate, you won't do any better than to read  "Growth won't solve your firm's problems" from Am Law Daily (re. req.), which features the dueling prescriptions of Harvard Business School's Felix Oberholzer-Gee and Bill Henderson from Indiana University's Maurer School of Law. Henderson thinks "off-the-shelf" corporate strategies are ill-suited to the law firm model:

The law firm market is different because of the ethics rules (around) non-compete agreements and non-lawyer investment and the cultural norms that have grown up around partner-associate models. In particular, those cultural norms require growth in order to maintain comfort and satisfaction inside of the firm,” he said.  For instance, Henderson said, associates work hard, long hours in the belief that doing so may earn them equity partnership while clients mainly pay for the expertise of the experienced partners. Without equity partnership as a motivator, firms would stagnate from lack of new associates, their energy and their ideas and eventually wither from lack of successors. In the long run, Henderson said, the legal industry probably has to move away from the partnership model, as so many professional advisory services like tax and accounting firms have done. But in the meantime, law firms remain dependent on growth, he said.

Overholzer's response? "If the firm grows larger in a less and less profitable fashion, the incentives to become partner get weaker. Why work hard to become partner in a firm that is large but barely profitable?”
 
George Beaton posts on the Am Law piece here.

Monopoly: How The Game Has Changed for Lawyers

monopoly boardRichard and David Susskind's new book, The Future of the Professions: How Technology Will Transform the Work of Human Experts, posits that the application of artificial intelligence to services like law, medicine, and even spiritual guidance, will ultimately replace most of the traditional work of the professionals who have long held a monopoly on these services. They argue that a traditional "grand bargain" struck by society with the professions will wash away in the face of the superior product that artificial intelligence will offer. The "grand bargain" they describe is this:

In acknowledgement of and in return for their expertise, experience, and judgement, which they are expected to apply in delivering affordable, accessible, up-to-date, reassuring, and reliable services, and on the understanding that they will curate and update their knowledge and methods, train their members, set and enforce standards for the quality of their work, and that they will only admit appropriately qualified individuals into their ranks, and that they will always act honestly, in good faith, putting the interests of clients ahead of their own, we (society) place our trust in the professions in granting them exclusivity over a wide range of socially significant services and activities, by paying them a fair wage, by conferring upon them independence, autonomy, rights of self-determination, and by according them respect and status.

For lawyers, the bargain has been fraying around the edges for decades. It's not because our commitment to the standards of the profession has changed. What's changed is that broader literacy has opened up access to legal knowledge, and that access is now vastly expanded and accelerated by the Internet. Case in point: just last week Harvard Law School announced its “Free the Law” Project with Ravel Law to digitize all U.S. case law and provide free access.

While the Grand Bargain was fully in effect lawyers didn't have much incentive to market the value of their training in applying knowledge of the law to the needs of potential clients or to compete to deliver legal services economically. The game has changed. The ethical rules still apply, but strategies must adjust. Hence the astonishing proliferation of new marketing tools and advice, and new business models. Lawyers need to make sense of the new landscape to continue to be relevant. And bar associations must help their members negotiate the change to continue to be relevant. The State Bar of Michigan accepts the challenge


Self-Represented Litigants: Turns Out We North Americans Really Are Alike

ThinkstockPhotos-121024995Hockey. Humor. English common law. And, apparently, legal services in the 21st century. All things that U.S. and Canada have in common. The University of Denver's Institute for the Advancement of the American Legal System IAALS has released the preliminary results of a study of self-represented litigants that turns out pretty much to mirror the results of a 2013 study of Canadian self-represented litigants. Among its key findings: 1/4 of those surveyed had previously retained a lawyer, and, most significantly for the practicing bar, the most common advice that self-represented lawyers had for others was “get a lawyer.” Both studies showed that the primary motivation for self-representation is financial but that the motivation is "complex and cumulative."

HT @WillHornsby


No Joke: Endemic Pessimism May Be Killing Us

GrinchAtticus Grinch (guessing that's a pseudonym) in "An Inside Look at the Depressed, Substance-Abusing World of Law," entertainingly catalogues the various miseries of modern legal practice and recounts the bad news about lawyers' mental health: depression rate 3.6 times higher than non-lawyers, the highest among all occupations; alcohol and drug use twice the national average; suicide rate six times greater than the national average. (Seems these are Canadian statistics, which somehow feels even more depressing.)

Creating the best legal future requires trying to figu re out what's going on and how to turn things around. There's evidence that the traditional law firm model and business practices may not be economically sustainable. Is it also not sustainable as a healthy way of life?

Grinch reminds us that law school is perhaps the only endeavor in life in which pessimism appears to provide a competitive advantage. If you're a glutton for bad news, see Pessimists Do Better in Law School. But Then What? and The Role of Optimism And Pessimism In Professional Success As A Lawyer. And if you would like assistance, the State Bar's Lawyers and Judges Assistance Program offers help.  

But back to Atticus. Amidst the depressing statistics about lawyer depression is a good joke about lawyer jokes: "Y'know what the problem with lawyer jokes is? Lawyers don't think they're funny, but no else thinks they're jokes." 

An optimist thinks we can figure out how to make that joke not funny in the future. Who's in?


The Patience of Job(s)

ThinkstockPhotos-465782285Full disclosure: this blog post is inspired by a friendship with fellow Michigan Law '88 grad, David Rowland. At a reunion brunch in Ann Arbor many years ago, David was the first lawyer I ever heard describe the satisfaction and rewards of really getting to know his clients' business and needs. David is the managing partner of the Chicago office of Seyfarth Shaw, where devotion to the principles of Lean Six Sigma process improvement gave rise to SeyfarthLean®, the firm's proprietary client service model.   

Here's an interview with four Seyfarth Shaw leaders that's worth a read for several reasons. If you're curious about the application of six sigma methodology to lawyering, it's quick and helpful. But what struck me most are the insights offered about culture shift.  Here's what Seyfarth Chairman Steve Poor has to say:

You have to recognize that people won’t necessarily accept change just because of a flash of insight that you so graciously share with them. It’s a matter of taking pride in the small victories, rather than needing the big victory. 

I've always been fascinated by the tension between impatience as a catalyst for change and the importance of persistence, which requires patience. Thomas Edison's relentless quest for a practical, affordable electric light required testing more than 6,000 materials. Steve Jobs was a notoriously impatient manager, but his perfectionism also was grounded in patience, waiting until the product met his exacting standards, inside and out.

The world of lawyering is transforming rapidly, offering new ways to deliver legal services, and threatening old ways. As the licensed custodians of the practice of law, do we have the right ratio of patience to impatience to protect the centuries-old values of our profession while taking advantage of the breakthroughs in access that technology can offer? Ours is not a world that cultivates patience. The jobs we do are framed by deadlines and discrete outcomes. Our work cultivates a disposition toward decisiveness and finality and moving on to the next case, the next problem.

As a repository for our collective professional stories, bar associations can provide a hopeful orientation in the face of the turmoil in the world of lawyering. This blog is looking to find and showcase the small victories in improvements in access to justice, ethics, and professionalism in our changing world, in order to fuel the energy for persistence.  Send your story to blog@mail.michbar.org.


Nurturing Innovation In A Challenging Environment

ThinkstockPhotos-rbrs_0240If you're looking for engaging and provocative inspiration about making meaningful change in obdurate professional problems like access to justice (and if you're not, why not?), look no further than physician Atul Gawande's writing in the New Yorker. In Sharing Slow Ideas, Gawande writes about his experience with newborns in rural India to explore why some breakthrough innovations take hold right away while others require persistence and luck and time. Bottom line: "We yearn for frictionless, technological solutions. But people talking to people is still the way that norms and standards change." That is why it is so encouraging that 166 members of the State Bar of Michigan have signed on to tackle the big questions about the practice of law in the 21st century. One of the tasks of the Task Force will be to sort out the already-in-motion opportunities from the slow ideas that need nurturing.

Data is important to ground our thinking but talking to one another about what the data mean can't be short-circuited. From Sharing Slow Ideas:

'Diffusion is essentially a social process through which people talking to people spread an innovation,' wrote Everett Rogers, the great scholar of how new ideas are communicated and spread. Mass media can introduce a new idea to people. But, Rogers showed, people follow the lead of other people they know and trust when they decide whether to take it up. Every change requires effort, and the decision to make that effort is a social process.

Use this blog. Challenge its content. Spread the word. Create trust based on skeptical reasoning.


Canadian Chief Justice on Change in the Legal Profession

800px-Beverley_McLachlin_(crop) 

When a country's chief justice embraces key concepts of legal futurism you know that the ideas are going mainstream. In an address to the Canadian Bar Association in Calgary last month, Chief Justice Beverly MacLachlin emphasized that technology threatens the very relevance of the legal profession:

 

In the age of the Internet, people are questioning why they, the consumers of legal product, should be forced to go to expensive lawyers working in expensive office buildings located in expensive urban centres. Why, they ask, should a client retain lawyers, when integrated professional firms can deliver accounting, financial and legal advice? Why are simple disputes not resolved in simple, cost-effective mediation rather than by elaborate and expensive court proceedings? Public attitudes and demands are changing.

She identified four basic opportunities for positive change and challenged the profession to:

  • embrace flexibility and innovation
  • expand service to sectors that may not have benefited from legal services in the past
  • restructure the ways law firms have traditionally organized their internal operations
  • collaborate with other lawyers and other professionals, in recognition of the fact that clients’ problems are often complex, polyvalent and incapable of solution on uniform cookie-cutter models

And she offered two jokes to light the way:

“How many lawyers does it take to change a light bulb?” The answer, “What’s change?”

But, she said,  she prefers this one:

“How many psychiatrists does it take to change a light bulb?” The answer, “One, but the light bulb has to want to change.”

Photograph: Agência Brasil