September 2008

The Marketplace section of today’s Wall Street Journal  features the headline, "Food Marketers Cook Up ‘Value’ Campaigns."  Seems like, in today’s world, value is is de rigueur.  We at Valorem certainly hope that it informs purchasing decisions in the legal world.

What?!?!?!?  Value in the legal world?  Yes.

I’m being serious here.

I know, it’s hard to believe.  The law, particularly BigLaw, is not where one would look to find a focus on value.  Until now, the focus has been on buying and selling hours–high priced hours.  I’ve written before about the Perfect Storm altering the profession.  But evidence is accumulating that change is coming faster than many believe.

On Friday, the Association of Corporate Counsel unveiled its Value Challenge, which ACC describes this way:

The ACC Value Challenge seeks to reconnect value to costs for legal services. Our aim is to provide networks, tools, and dialog for both in-house and outside counsel to help us all better manage our clients’ legal affairs.

I was on-hand at the launch on Friday.  It was an impressive affair, with a number of prominent in-house lawyers and representatives of several large firms reflecting on the necessity of change.  ACC’s goal in spearheading this effort is provide their members the tools and support needed to change the way legal services are consumed, with the anticipation that firms are smart enough to see that change will help them attract the clients looking for value instead of hours.  Nothing but best wishes to Susan Hackett and her fabulous team who have worked incredibly hard to start the ball rolling.  The success of this effort won’t be able to be judged for several years (it is the legal profession–change does happen at a pace somewhat slower than the business world), but if the launch reflects the future, the legal profession will look back to Friday as a watershed moment.

On this same note, I draw your attention to an article by Paul Lippe, CEO of Legal On Ramp, in today’s The AmLaw Daily,  Paul’s article is Welcome To The Future: Law After The Boom.  Among Paul’s many important points:

Many folks in law firms have come to believe that the law business operates according to a different set of economic rules than their clients’ businesses, but the truth is much simpler: when you’re inside a boom, you always think your industry has achieved immunity from the laws of gravity because it’s the only reality you can see. I was in Silicon Valley in 1998, believe me, I know.

Paul characterizes his goal this way:

I will relentlessly challenge the conventional wisdom of today’s law firms. Those of you who think I’m way off, I ask, indeed beg, that you comment on my post and explain why I’m wrong.

I, for one, think he is right on the money.

Let me close this post with a quote from General Eric Shinseki, Retired Chief of Staff of the United States Army:

If you don’t like change, you’re going to like irrelevance even less.

Welcome to the revolution.

 

As many of you know, I was privileged to attend the Association of Corporate Counsel launch of the ACC Value Challenge this past Friday.  The entire program was recorded and is will be available soon on the ACC website.  One of the things that caused me to smile was the repeated reference to "commodity work".  The firms present ran from that label faster than than a political candidate in Mississippi runs from the dreaded "liberal" label.  They did so by trying to distinguish their routine work for clients from the routine work others do for their clients.  Apparently, one gi-normous document production is really not the same as other gi-normous document productions.

The lame efforts to draw distinctions that don’t exist got me thinking.  Is "commodity work" a meaningful label?  I think not.  Commodity work originally meant repetitious, paint-by-numbers kind of work such as collections.  The term has evolved over time to mean something more routine, eventually coming to encompass anything that isn’t "bet-the-company" work.  The  distinction was become too vague to be meaningful.

Let me suggest a different concept.  Picture a continuum ranging from "everbody-chuckles-and-the-GC-pulls-a-dollar-from-her-wallet-to-settle-the-dispute" on one end to "the-CEO-sweating-bullets" at the other end.  On that continuum, the closer the case is to the perspiration end, the more the client will be willing to invest in the matter.  At the other extreme, short of the time necessary to send the matter to a paralegal to prepare the paperwork, no time or real money will be spent on a matter.  And everywhere in between, the challenge will be to find the right balance between time, money and result.  This approach eliminates the "either-or" debate about whether work is (picture guy in really expensive BigLaw suit turning his head to spit) commodity (gasp!) work or (BigLaw suit dude smiling) bet-the-company. 

I think the Lamb Continuum Theory helps focus the issue on the client’s interest–the client doesn’t care what label firms apply–and not on the firm’s desire to look like they are better than everybody else.  At the end of the day, my law firm colleagues, let’s keep our eye on the ball.

"When the going gets tough, the tough get going."

This quote is frequently attributed to legendary Green Bay Packers coach Vince Lombardi, but it appears to have been uttered first by Joseph P. Kennedy.  The source is less relevant than the concept.   When confronted with a problem, some give up.  Some turn the problem into an opportunity and, in so doing, not only survive, but thrive.

I wrote about this in my most recent post, Silver Lining in Black Economic Cloud.   This morning, I ran across a similar group of entries on Tom Peters’ blog.  His first is Thriving on Chaos.  The second is Surviving and Even Thriving Amidst the Perfect Storm.  The last of the trilogy is The Basics Are the Basics Are the Basics Are the Basics: The Worse the Times the Better They Work; Or, Listen to Grandfather Snow.  Excellent lessons for those who believe in opportunity.

 

 

In my last post, I picked up on Gerry Riskin’s most recent post on our troubled economy.  Gerry first raised the red flag on the economy last August, and I have picked up on the issue from time to time, including posts about the Perfect Storm, the bad economy being a long term issue and a discussion of whether lawyers had any reason to smile yet in light of economic news.  The moral of these posts is that the economy is a once in a century meltdown, things are not getting better yet and the magnitude of these problems is such that one must anticipate profound change in the profession.

There, I said it.  Profound change in the profession.  I using the C word given how it has become the centerpiece of the US Presidential election and there both overused and misused.  But here is the inescapable fact:  General Counsel, indeed all in-house lawyers (save, perhaps those in the oil and gas industries) are facing unimaginable pressure to lower legal costs.  The pressure is no different than that experienced by those in charge of procurement, sales and others responsible for the business of business.  But the key factors are (1) the pressures to save are enormous, and (2) law department leaders are not immune from the pressure, or the accountability that goes along with it.

I recently was having a discussion with an in-house lawyer about cost control.  He said his boss was very interested in the topic.  His next sentence will stay with me forever: "What interests my boss fascinates me."  I’m sure that line or at least the sentiment has been used by many, but what a lesson for we outside lawyers. 

The title of this post asks if there is a silver lining in the black economic cloud hanging over our clients’ heads.  If you don’t see the opportunity to restructure relationships in ways that produce savings for your clients while at the same time strengthening your relationship with that client, you need to open your eyes.  There is no formula–I’d write about it if there was–because each client’s situation is unique.  But there is surely a topic of discussion there that all should pick up on.  If you do it right, you’ll like back and say that your response to these unprecedented difficult times was your finest hour (with my respects to Sir Winston Churchill).

Alan Greenspan appeared on This Week yesterday and indicated that the black cloud hanging over the US economy would not be leaving us anytime soon.  See his comments here.  These pessimistic comments led Gerry Riskin to restate his challenge to Law Firm leaders:

Punchline:  You are getting fair warning – are you acting on it?  This is not a time for traditional strategic planning – it is time for scenario planning that will create "dynamic resilience" that may become the life support system your firm will need should the economy worsen.

Gerry, you may recall, was one the earliest to raise the specter of economic meltdown and its impact for the legal profession in his Doom and Gloom For The Legal Profession from last August.  Those listening to Gerry had more than a year to prepare for today’s environment.  But with the likelihood that the economy will continue to worsen, law firm leaders who do not take the difficult but necessary steps to prepare will have only themselves to blame.  But beyond Gerry’s comments, in light of the comments by Alan Greenspan, the bankruptcy filing of Lehman Brothers, the meltdown of the banking industry, and all the other economic problems,partners who firms where leaders fail to pick up the phone and reach Gerry or others who advise law firms and talk through the difficult choices firms must make if they are to survive should reevaluate whether they are receiving the leadership they need.  As Greenspan said, it is a once in a century experience.

Is there a silver lining in this black cloud?  See my next post.

My friend Paul Lippe at Legal On Ramp brought an important survey for in-house counsel to my attention, and I thought it prudent to post the information.  (Here’s the link.)  The survey is the effort of my friends at American Lawyer and fellow blogger (and friend) Rees Morrison.  Here’s the introduction to the survey from Aric Press at American Lawyer:

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Friends,

We write to ask for a little help on a research project that we think will interest you. Bur first, who are we, then why are we bothering you. Rees
Morrison is a leading consultant to legal departments; Aric Press is the editor in chief of The American Lawyer.

For months we¹ve heard a great deal of conversation about the prospect of change in law firms, in-house departments, and in their relationships. For
all the enthusiasm and dire warnings, it has been difficult to separate the noise from the action. To help move the discussion along‹and to try to learn something, we¹ve composed a brief survey. We are inviting participants from Legal On Ramp to respond.  

Our plan is to report on the results in a variety of venues including The American Lawyer and Law.com. We will hold individual answers in confidence.

Please take a few minutes to review and complete the questionnaire. We plan to close the survey on September 25.

We want to start with some baseline information about your legal department, and then ask you where you expect to see major changes between now and 2013.

Thanks very much for your help.

If you have questions please contact us at:
Aric.Press@incisivemedia.com and Rees@Reesmorrison.com

Aric Press
Editor in Chief
The American Lawyer
120 Broadway
Fifth Floor
New York, NY 10271

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Anyone can see the survey questions on the link   (but can’t answer unless you’re inhouse), but here’s the one that should get a few law firms’ attention:

In general, how do your law firms compare in quality, value and service to the quality, value and service your company delivers to your customers?

Here’s the one I am looking forward to seeing the responses to:

We will increasingly choose non-AmLaw 200 firms (i.e. local or regional small to medium size law firms, including "new model" firms) for general commercial and/or routine work (including most litigation matters).

If you work as an inhouse lawyer, please take just a few minutes to complete the survey.  I’m sure I’ll be writing about the results!