May 2009

I just finished reading What I Wish I Knew When I Was 20, by Tina Seelig.  Dr. Seelig is a neuroscientist and the executive director of the Stanford Technology Ventures Program, the entrepreneurship center at Stanford’s School of Engineering.  I wish I knew this now, at 52.  I have spent a lot of time talking about change in the legal profession, developing new business models and other the rapid development of new technology and the effect it will have on us.  Here’s Dr. Seelig’s lesson:

It’s incredibly easy to get locked into traditional ways of thinking and to block out possible alternatives.  For most of us, there are crowds of people standing on the sidelines, encouraging each of us to stay on the prescribed path, to color inside the lines, and to follow the directions they followed.  This is comforting to them and to you.  It reinforces the choices they made and provides you with a recipe that’s easy to follow.  But it can also be severely limiting.

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Uncertainty is the essence of life and it fuels opportunity.  To be honest, there are still days when I’m not sure which road to take and am overwhelmed by the choices unfolding in front of me.  But I know that uncertainty if the fire that sparks innovation and engine that drives us forward.

The book is a quick read.  It should be mandatory for every child in high school, and every 52 year old who wonders what life is putting on his or her plate.

The need to improve is never satiated.  Just as true is the fact that "fresh eyes" frequently see things that those closest to something cannot see themselves.  These two facts were the impetus for Valorem Law Group forming an Advisory Board.  It features current in-house lawyers,current and former GCs, advisers to the legal profession, consultants, bloggers and thought leaders.  Many are not clients of the firm.  All are terrific people and we are profoundly thankful for their participation.  Details on the group members are available here. 

I have said in the past that I hope to avoid using this blog as a platform to promote Valorem, and I remain true to that sentiment with this post.  The point isn’t to promote Valorem, the point is to underscore the value to involving others in your efforts to improve.  It can make a difference.

Over 1,300,000 American soldiers have died in battle.   Countless others have served in uniform.  Honor them.  Thank them.

 

In the last two days, the legal market has been greeted with more layoffs, a prediction that many more layoffs of associates and partners is inevitable, further deferrals of starting dates for new associates, buy-outs of new associates (also called firing them before they start), rollbacks in associates salaries, further cuts in partner income, let’s see, have I forgotten anything?  Oh yea, there’s that little matter of Skadden deferring  the starting date of associates from the class of 2010.  Maybe I’m wrong about this last thing, but I interpret this to mean that Skadden, the rock of the top AmLaw firms, is telling this summer’s crop of summer associates that even if they get an offer, they will be deferred until 2011.  That, to me, is hardly a vote of confidence in any kind of prompt recovery.
 
I’ve been talking for along time now about what all this means for firms.  I won’t go into that further here, but everyone with enough brain cells that they occasionally collide with one another knows the message for firms is grim and getting grimmer.  But what does this mean for clients?  It hardly bespeaks a smooth, predictable relationship, does it.  Maybe you’ll be the lucky one to avoid personnel turnover on your matters, but most clients will see (and pay for) that turnover.  Beyond paying for it though, is there any doubt that turnover of personnel hurts in the quality of work?  Its often said that clients hate uncertainty.  If that is true, there are going to be many unhappy clients over the next few years.
 
 

 

Continue Reading Does Increasing Turbulence Suggest That Now Is The Time For A Different Means Of Travel?

This headline caught my attention: "Billable Hour Hullabaloo is ‘Overblown, Drinker Partner Says."  Courtesy of the ABA Journal, The headline is true to the article. 

“The billable hour is an overblown issue,” said Drinker Biddle & Reath managing partner Ed Getz, in an interview with the ABA Journal.

Getz goes on to say that clients are focusing their attention on capping total fees and budgets, but are not so interested in abandoning the tried and true billable hour. 

This defense seems to be "because it is, it will be."  Comfort with the status quo is a given.  Were it not true, there would not be a status quo. 

In various posts on Legal On Ramp, Fred Bartlit has made the point that the last people to change are the people who do best under the old system.  Everyday, BigLaw proves the truth of this conclusion.  It is hard to see that a client concerned with budget certainty and fee caps is interested in something other than buying six minute segments of time.  By refusing to see the client’s real concern, law firms are missing an incredible opportunity to rebuild themselves and seize market share.

On a personal level, I loved this quote from a partner at my former firm:

Arthur Hahn, the national chair of Katten Muchin Rosenman’s financial services practice, said his firm will continue to increase associate training and invest in technology to increase value to clients. But, the democratic partnership structure at the core of the legal profession will survive.

Said Hahn, “The practice of law is a profession, not simply a bottom-line business."

When I left Katten in 2000, things were different.  It actually took pride in being a bottom-line business.

 

 

Continue Reading Defender Of Billable Hour Emerges

Several weeks ago, I posted about Jeff Carr’s 4 buckets of law practice–process,content, advocacy and counseling.  In the same vein, Jordan Furlong advises lawyers to Get ready for the process era.  It is an outstanding piece of work and presents a similar view much more capably.  Jordan’s conclusion:

I was listening to Richard [Susskind] deliver the keynote address at the ABA TECHSHOW last month when it occurred to me how fundamental a change this will be within our profession. We’ve never needed to worry about process or efficiency before — we dictated the terms of the marketplace, so we could take as long as we liked to do our work and in whatever fashion pleased us. That’s coming to an end, and most law firms will face a huge challenge converting their business models to adapt. I twittered as much during Richard’s presentation: “Future legal business: process consultant for law firms. Lawyers will need help mapping out and re-engineering their practices.”

In the near future, it won’t be good enough for lawyers to ignore the journey and focus on the destination — we won’t be able to focus solely on the ends and let the means take care of themselves. The nature and quality of how we do our work will become at least as important as the work itself. That’s going to be very tough for us to wrap our heads around, but I don’t see any way we can avoid it.

My only addition to Jordan’s piece is the this future is here.

 

Continue Reading The Process Era–A Follow Up On Jeff Carr’s 4 Buckets

It may be, according to this post in the Harvard Business Review Editor’s Blog.  This article discusses the relationship between buyers and Chinese manufacturers, but also notes this:

Is the buyer likely to trust any vendor again? Not surprisingly, when HBR surveyed readers in January 2009, we found that more than one-fifth of 1,024 respondents admitted that their trust in suppliers had been shaken over the past 12 months. That relationship isn’t the only casualty; the June issue of HBR, online next week, will spotlight trust. As the articles will show, trust has drained away in almost every facet of business. (emphasis added)

Has the recession hurt the trust between law firms and their customers?  Hard to imagine it hasn’t.  While I doubt the HBR articles will address this specifically, I’ll be looking forward to seeing whether any of the articles shed some light on this relationship.

 

 

Continue Reading Is Trust A Casualty of the Recession?

 

Sorry.  But I received this email from a friend and laughed so hard I had to share it:


‘Well you see, Norm, it’s like this . . . A herd of buffalo can only move as fast as the slowest buffalo.. And when the herd is hunted, it is the slowest and weakest ones at the back that are killed first. This natural selection is good for the herd as a whole, because the general speed and health of the whole group keeps improving by the regular killing of the weakest members. In much the same way, the human brain can only operate as fast as the slowest brain cells. Now, as we know, excessive intake of alcohol kills brain cells. But naturally, it attacks the slowest and weakest brain cells first. 
   In this way, regular consumption of beer eliminates the weaker brain cells, making the brain a faster and more efficient machine. And that, Norm, is why you always feel smarter after a few beers.

 

Thanks to Don Warren of Warren Benson Law in San Diego.

 

 

 

Continue Reading Natural Selection Of Brain Cells (Off Topic)

Rahm Emmanuel is famous for saying "a crisis is a terrible thing to waste."  But another crisis truism comes to mind as well: "by the time you recognize a real crisis, it may be too late to do anything about it."  The question for the day is whether law firms yet today recognize the real magnitude of the crisis they are facing.  There is scant evidence to suggest they do.

As I was driving in today, I heard a report on the unprecedented decline in business travel, business bookings at hotels and related markers showing that businesses are not close to rebounding from the extreme difficulties created by the economy.  Last night, the report was that the current recovery in the stock market is following a historic pattern that suggests a further decline is still on the horizon.  Then there was the report about the continuing decline in home values, meaning Americans continue to lose wealth and the resulting buying power.  People are forgoing retirement because they no longer can afford to retire.  And so on.  The point is that American business is facing uncertain times for longer than they care to imagine.

So what are law firms doing in the face of this?  They have played at the periphery.  A few lay-offs (but more on the horizon according to Peter Zeughauser), some salary cuts counterbalancing paid vacations for new associates, eliminating free coffee and other moves to trim expenses.  The essential model is unchanged, which leads only to one of two conclusions: a) law firms still do not understand that their business model no longer works; or b) they get it but don’t know what alternatives exist–a failure of imagination.

In the meantime, the value of the current crisis is being wasted. Law 360 contained an article today, Firms Rethinking Business Model in Recession, that initially gave me hope that more was happening than was public.  But this sums up the article:

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While legal consultants said few firms had made changes to their governance so far, all agreed that law firms were reassessing every aspect of their businesses.  Some consultants, however, cautioned that the middle of a recession might not be the best time for wholesale changes because no one knows yet where the chips are going to fall.

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Governance!  That’s like the owners of the Titanic asking is they should change the color the ship as it was sinking into the Atlantic.  Maybe that second truism has some merit to it after all.  A crisis may be a terrible thing to waste, but law firms that do not re-examine their fundamental business model are doing exactly that.

 

 

 

 

 

 

 

Continue Reading Waste Not, Want Not: Law Firms And The Current Economic Crisis

Seth Godin, a leading marketing adviser, has a fantastic discussion of the difference between luxury and premium goods in his blog today.  The entry is suitably titled Luxury vs. premium.  Here’s what he says:

Luxury goods are needlessly expensive. By needlessly, I mean that the price is not related to performance. The price is related to scarcity, brand and storytelling. Luxury goods are organized waste. They say, "I can afford to spend money without regard for intrinsic value."

That doesn’t mean they are senseless expenditures. Sending a signal is valuable if that signal is important to you.

Premium goods, on the other hand, are expensive variants of commodity goods. Pay more, get more. Figure skates made from kangaroo hide, for example, are premium. The spectators don’t know what they’re made out of, but some skaters get better performance. They’re happy to pay more because they believe they get more.

This same rationale can apply to law firms.  I know that every big firm detests the idea of doing "commodity" work ("they" do commodity work, but of course "we" don’t).  I always wonder that everyone says that everyone else is doing commodity work how it is that no one is doing commodity work.  But that’s another story. 

If a client chooses to pay enormous rates for a New York firm for work that can just as capably be handled by a firm from  Columbus or Chicago or Oklahoma City, it seems to me that they are using a luxury firm.  In these days, how many GCs can afford a Rolex when an Omega will do the trick?

 

 

Continue Reading Is Your Law Firm A Premium Or A Luxury Firm?