My new partner Jeff Carr, the iconic former General Counsel of FMC Technologies, sometime ago defined the four stages in the evolution of law. The first stage is what Jeff refers to has Old Law. I think PaleoLaw better describes those in this stage. But the OldLaw/PaleoLaw stage describes firms and lawyers who bill by the hour, raise rates annually and see their clients as a giant wallet. My kids and firms in this stage have a lot in common. One of the major drivers of daily life is to get more money from the relevant wallet.
Everything about firms and lawyers in the PaleoLaw stage revolves around billing for time. Firms buy software to help lawyers capture more time. Associates and income partners receive bonuses entirely dependent on how many hours they bill. Partners are compensated on revenue (more hours equals more revenue). And so on. The entire system is so built on the premise of hourly billing and “more, more, more” that many lawyers can’t even see that hours are the basis of everything they do, let alone acknowledge the truth of the premise.
The second stage is “NewLaw.” Lawyers and firms in this stage are trying to lower costs by trying to reduce the cost of hours. Hourly rates are lower. Firms might be based in Indianapolis or some other low cost metropolis, but have an office in New York that serves as a portal to send work back to HQ in the lower cost locale. Overall costs to the client might be lowered, but the focus of the firms remains on hours and “more, more, more.”
The third stage, according to Jeff, is EngagedLaw. Firms and lawyers in this stage are focused on value, cost of production, operating and profit margins, and lowering the clients’ costs of legal service permanently and structurally. EngagedLaw is a major step forward, where EngagedLaw entities act like real businesses. But the focus remains on solving problems.
The problem with these the second and third models is that savings, while potentially meaningful, have limits. More problems cost the client more money, no matter how efficiently they are solved. As corporations grow, become more global, or both, the range of problems increases, often without a corresponding increase in resources to address those problems. In-house lawyers, a great talent pool, spend their time as clerks rather than true partners with the company’s business units, adding value by preventing fires.
Because in-house lawyers can add such great value if they prevent problems, Jeff counted the term NextLaw to describe the next stage of evolution for law departments. They must identify how to prevent problems so can focusing on helping the business grow. The problem is lack of knowledge about how to move from current state to future state, lack of knowledge about the right tools and processes to employ or lack of resources to effectuate the transition: the current fires still need to be fought.
That is the space in which we seek to establish a presence. So it only made sense to combine the NextLaw moniker with Valorem. Valorem. NextLaw. ValoremNext.