March 2010

Bias disclosure upfront.  I consider myself a disciple of Paul Lippe, the CEO of Legal OnRamp.  He’s a very smart guy (and much taller in person) and a visionary (and a member of Valorem’s advisory board).  I always learn a lot when he speaks.

So here’s the latest.  I am in Playa Del Carmen, Mexico with my two sons this week for a bit of dad and son bonding.  As a result, I missed attending the program on law firm evolution sponsored by the Center For Study Of The Legal Profession, part of Georgetown Law School.  But courtesy of tweets by Ron Friedmann, Jordan Furlong, and others, I was able to follow the program from poolside.  (There’s a post in there about use of technology for clients, but that is another day.)

Here’s the post that just made me smile:

#GtownLFE Lippe – Law firm model is ‘Lewis & Clark’ – go out and explore. Rest of world uses Google maps

Lewis and Clark,of course, conducted the first overland expedition to the west coast.  They had no maps.  They followed rivers without knowing where they were going, climbed mountains not knowing that there were more mountains yet ahead.  In hindsight, it seems terribly romantic and all that, but in truth it was treacherous, painful and so very inefficient.  Imagine if they just could have pulled down satellite imagery.

Paul’s point is that law firms always seem to insist that “law is different and therefore we lawyers have to figure out how to do whatever we are going do ‘the lawyerly way’ even though so many other businesses have done exactly what we are trying to do.”

Elsewhere, Paul has described the “new normal” for the legal world as being many things simultaneously.  The billable hour monolith will give way to different structures and different modes of delivering legal services.  I accept this as the new normal, and what this new normal likely means is that some lawyers or firms will recognize the value of Google maps and their trip to the future will be fast and easy compared to those who choose the Lewis and Clark model.  Some lawyers invariably will benefit from the accelerating pace of change, while others will simply be passed by.

Hopefully those following the Lewis and Clark model will enjoy the scenery.  Regardless, it’s a great bit of imagery and insight from Paul Lippe.

 

Imagine this scenario: 

Bill, the General Counsel, walks into the CEO’s office.  "Jane, I have great news.  You know our problem with ABC Widget?  I have figured out a great way to get rid of those problems.  I am going to walk out on the street and find a stranger walking by and have her decide whether we’re right or ABC is right.  OK?"

Or, the same characters, Bill speaking: "Jane, I have an even better idea on how to get rid of our problem with ABC Widget.  I am going to go out on the street and find 12 random people and put them in the room to discuss our problem while we’re not there and then vote on whether we’re right or ABC is right."

How many of you believe Jane would be impressed with Bill’s approach to dispute resolution?  Of course, Bill would be using the words "judge" and "jury," but the thought’s the same.

With the caveat that I love trying cases more than anything else I do, let me say that it is a good tool for resolving business disputes only as a last resort.  With my caveat out of the way…

1.    Almost 99% of all cases settle.  The percentage is increasing.

2.    A very high percentage of the cases that settle do so after all the discovery is taken.

3.    Law.com article: Life in the Doldrums Continues for Civil Litigators

4.   Commercial verdicts down in 2009 from $1.4 billion to $420 million.

These points raise two questions:

Are in-house lawyers learning that litigation may not be the best tool to resolve business disputes?

If they are learning this lesson, how do you help them?

 

 

Continue Reading Getting to the end sooner

I just saw an article from my rebel buddy Rachel Zahorsky in the ABA Journal reporting on an event featuring Chief Legal Officers at Foley & Lardner.   The article states:

The pressure to reduce costs has also pushed general counsel to become more assertive when voicing billing and staffing concerns to their outside lawyers.

It seems that many in-house lawyers are realizing what I have been saying for a while: The acquisition of legal services is inherently a buyers’ market.  There are so many competitors and movement from one to another is relatively easy compared to most movement in most other industries.  If your law firm isn’t responsive to your pricing needs, move the work.  You will, in the end, be able to get what you want.  And if you try even a bit, you can get more than you want.

 

 

Continue Reading Note to GCs: It’s Your Money. Act Like It!

Above The Law is reporting that my old firm, Katten Muchin, has made an announcement on associate salaries.  Apparently the firm has decided that for an associate to advance a pay level, the associate must have met the firm’s target hours requirement.

Unimaginative management in action.  Defaulting to an hours standard only reaffirms the premium of hours over quality and efficiency.  I wonder how long before clients realize how badly they lose out when firms employ these discredited systems.

 

Continue Reading Yet another firm sacrifices its young at the alter of hours

In the opening paragraph of its 2010 Client Advisory, the joint Hildebrandt-Citi advisory ominously notes:

While the year ended with some hopeful signs, we enter 2010 with little prospect of a robust recovery and with mounting evidence that the profession is entering an era in which the fundamental economics of legal practice are likely to be significantly different.

The report later notes:

we expect that the economic recovery during 2010 will be quite
gradual. While we anticipate further improvement in demand for legal services – particularly in areas like M&A and other transactional practices – that demand growth will be tempered by pricing pressures that we expect to be even more severe than in 2009.

No client is going to willing return to "the good old days."  Those old days were good for for law firms.  Not so much for clients.  And it speaks to law firms’ self-centeredness when they fail to recognize the strain their freewheeling spending and pricing placed on their clients.

The report is sobering, especially if you operate in cost-plus environment.

Along the lines of my last post on lessons from a scoundrel, I urge you to visit Brains on Fire and read On the people right in front of you. Eric Dodd was visiting a coffee shop named the Ugly Mug in Ypsilanti, Michigan–I’ll let him pick up the story here:

When I went up to the counter to get my fix, I noticed something that caught my attention and made me smile.

They had this little sign on the register that said: “Get off your phone! Thank you!”

On first glance it seemed like all of the other notes taped on registers by employees that are annoyed with phone-distracted customers not ordering and slowing traffic down in the morning caffeine rush.

Or maybe it was getting at something deeper. Either way, it made me think.

You see, the Ugly Mug takes a lot of pride in their coffee, but they take even more pride in their baristas. I had a chance to meet one of them – he knew incredible amounts about coffee, matching tastes, roasting, tasting, testing and crafting incredible beverages. They don’t just pour coffee and make lattes – they’re experts. And they want to do everything they can to match a drink to your palette that will blow you away.

Okay, makes sense so far.  To provide a great experience, the baristas want to be able to talk to you so they can provide a custom experience.  Great.  Works for me.  But Eric goes further:

I think sometimes we get so busy staying connected to other people we know through the electronic devices that have become necessary in our lives that oftentimes we miss the people right in front of us. In fact, we don’t only miss them – we miss out on them. Bad customer service aside, face-to-face interactions are one of the most powerful things we can experience – personally or when we’re interacting with a brand. If I had been calling, texting, emailing, tweeting, etc. while I was ordering coffee, I might have missed out on one of the coolest baristas I’ve met – and consequently his guidance to one of the best espressos that I’ve ever had.

Let us focus on the value of personal contact.  Put the phone down.  Invest in real contact.

 

"Don’t write anything you can phone.  Don’t phone anything you can talk.  Don’t talk anything you can whisper.  Don’t whisper anything you can smile.  Don’t smile anything you can nod. Don’t nod anything you can wink."

Former Louisiana Governor and legendary scoundrel Earl Long.

Normally, one does not turn to scoundrels for lessons in client service, but an exception is due in the case of Earl Long’s advice.  People communicate by email.  Somewhere between the formation of thought in your brain that you need to talk to your client and actually having the conversation, stupidity kicks in and you find your fingers do the talking via a keyboard.  Email, as it turns out, is one of the worst things that has ever happened to client development and service. 

So what should learn? 

Don’t email anything you can call.  If your client is local, get off your butt and go to her office.  If not, give your fingers a rest and have a real conversation.  Have enough of them that you can appreciate the nuance of a nod or a pause or a wink.  Email is good tool to transmit information.  It is not a tool for conversation. It is not the way to get to know your clients. 

Patrick Lamb 2010

 

"You have to decrease the size of your law department by 40%. I know it’s at a time when the demand for in-house legal services will be going way up, but such is life."

"You have to reduce your spend on litigation by 50% with no drop-off in quality."

How would you like to be on the receiving end of such an edict?  Well, the edict part is made up, but the March issue of Corporate Counsel contains two stories that are must-read.  The first is on the story of David Leitch, General Counsel of Ford, and how he had to cope with reductions of 40% in his department.  40%!!!

The second article is about Kevin Blodgett of Dynegy, and his restructuring of that company’s law department and the reduction of its external litigation spend.

There is HUGE lesson to be learned.  David Leitch summarizes it best:

Leitch acknowledges that the downsizing was painful.  By the end, he says, "I thought we were really cutting into the bone."  But his misgivings have dissipated: "As I sit here now, I realize it was necessary."  Plus, Leitch says, "people have adapted, and are more efficient and effective than they ever thought they could be."  His department continues to perform at the same level, he says.  And it hasn’t increased its use of outside lawyers to make up for the loss of in-house attorneys.

Think about that for more than a bit.  A 40% reduction in in-house personnel.  No fall-off in performance.  What does that mean?  I am not suggesting there was fat in the Ford law department.  To the contrary, I am suggesting that when forced to do so by circumstances, lawyers like those at Ford find a way to get the stuff done that needs to get done, that necessity is a fantastic driver (pun sort of intended).

My guess is that if forced to do so, a lot of law departments could go through the same trial by fire and emerge much as Ford did. 

Is there a lesson here for law firms? 

Once again, the real world provides wonderful lessons.

My wife calls to tell me to cancel a credit card–the bank had raised our interest rate to 30% "because we didn’t carry a balance."  Our primary card is at 9%, so 30% isn’t going to cut it.  I call the bank (which I won’t identify , but if you guess Citibank, well, let me just say you’re an incredibly good guesser) and they tell me they are sorry to lose me as a "terribly valuable" customer after 20 years.  Would I consider staying if they lowered the  rate to 7.9% for six months?

Put aside the financial aspects of this decision.  How should I feel knowing that I am a "terribly valuable" customer but they were raising my rates to 30%?  They could have offered me the Taj Mahal and I would not remain a customer. 

This is the world of credit card companies, cable companies and phone companies.  Never treat your best customers like your best customers.  Give your new customers better rates and keep milking your loyal customers for all you can get.

Sad way to run a business.   But then again, when law firms seek new business, how many of them do the very same thing?

At some point loyal customers are going to respond like I did: if my loyalty only matters when I complain, "cancel the damn account."

 

Continue Reading How do you treat your best customers?