Future Proofing Midsized Law Firms

A guide for strategic and innovation leaders.

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Details

  • Publication date: May, 2020
  • Pages: 135
  • ISBN: 978-1-78358-392-8

Description

Sometimes, the future doesn’t wait politely for us off in the distance. It steps forward and right into our face. We need words for when that happens, and so we borrow them from other disciplines. Thus, lawyers are already saying that the COVID-19 pandemic will force a “reset” in the legal marketplace. Firms will need to rethink how to practice in a post-pandemic world. But before plunging into the particulars of how to survive in a world reshaped by social distancing and its economic fallout, it’s worth considering our use of the word “reset” itself… because it is fundamentally misleading and reflects our own misapprehension of how the future works.

As we most often encounter it, the term “reset” speaks to the need to interrupt an errant computer process and restore a system, either back to normal operations or to its start-up condition. But, over the short life of this computer term, we’ve repurposed it, and made it a metaphor for redefining “normal” after a calamitous world or national event of some kind. Used in this way, we’ve had “resets” after the October 1987 stock market crash, after the 2000 dot.com bust, after 9/11, after the 2009 real estate bust, and after the Great Recession. And now we will have another reset in the wake of the pandemic.

Just counting these major events, it looks as though we should expect resets every five or six years, on average. And that’s not counting the smaller-scale resets that rain down regularly in various business sectors. Online streaming completely reset the video entertainment business. The iPhone forced a reset in the mobile phone industry. The CCD camera reset the world of photography – and the chemical companies that served it.

And our world is no different. Just to name one example, powerful machine learning search tools and legal process outsourcing have completely reset the business of document discovery and stripped away a major line of revenue from law firms. More resets are lined up in the legal anteroom.

These resets, rather than being episodic, occur almost continuously. They’re part of our global economic ecosystem, for better or worse. It’s just that we often overlook those less-than-global resets taking place right under our noses. Events like the pandemic interrupt our inattention, grab us by the lapels, and force us to recognize and respond to change. But the change is not new; rather, it’s a state of being, both in business and in the world at large.

When seen that way, “future-proofing” our practices become a matter of cultivating the ability not just to recognize and respond to change as it happens, but to actually lead in times of great change. Nobody wants to lead a pandemic. But already some companies and some law firms are employing the new skills they’ve built, using the new resources they’ve developed, and putting in place the new processes they’ve been perfecting, in order to emerge from the chaos of this moment in a dominant position in the marketplace. These companies and firms have future-proofed their businesses by equipping themselves to lead change, not just respond to it.

In the words of Peter Drucker, whose prescient business wisdom we will look to a good deal in this book:

“In a period of upheaval, such as the one we are living in, change is the norm. To be sure, it is painful and risky, and above all, it requires a great deal of very hard work. But unless an organization sees that its task is to lead change, that organization – whether a business, a university, or a hospital – will not survive. In a period of rapid structural change, the only organizations that survive are the “change leaders”. It is therefore a central 21st century challenge for management that its organization become a change leader.”

Not every day brings a pandemic, but nowadays we operate in an environment so change-riven that we need to act as though pandemics are always around the corner, and be prepared to lead through the chaos that will certainly ensue in one segment or another – or sometimes all of them – on an ongoing basis.

This book is a curriculum for shifting your organization from institutional passivity and the consequent recurrent need for resets, to real change leadership. It draws its lessons both from decades of experience transforming one of the world’s largest firms into an acclaimed innovation leader, as well as from best practices harvested from leading firms of all sizes around the globe… and, of course, from Peter Drucker.

The intended audience for this curriculum is the strategic and innovation leadership in dynamic midsized firms. That focus reflects what may be the ripest opportunity in the legal marketplace. The world’s most forward-looking and best clients have for decades been declaiming the large firms in their panels for lack of innovation and general stodginess. And they’ve begun to shift work into the midsized market.

Now, therefore, is exactly the time to transform your firm from one battered by reset after reset to one that others look to for leadership and best practices in difficult times.

Now is precisely the time to learn how to thrive rather than just survive

Contents

Executive summary
 
About the author
 
Selected publications
 
An introduction to the future
“Firms of any size, from any region in the country, can create conditions for marketleading growth with concerted strategy and careful management. Midsize law firms enjoy many advantages in the market: they are viewed as more cost effective; they are often more nimble; expertise does not have to suffer simply because of smaller scale. These are all factors which clients value. Those midsize firms that can position themselves to be seen as catering to these desires on the part of their clients will be well situated for success in 2019 and beyond.”
  • Avoiding the ovine
  • Follow the nimble path
  • Here’s the plan
  • Cause for optimism
Section 1: A legal innovation primer
 
Chapter 1: Why innovate?
“Unless an organization sees that its task is to lead change, that organization…will not survive. In a period of rapid structural change, the only organizations that survive are the ‘change leaders’.”
  • A piscine metaphor
  • Survival
  • But change how?
  • It’s not the technology
  • Killing the “merge, grow, or die” myth
Chapter 2: How the Information Revolution will destroy law’s economic model
“Beginning in the medium-term, we can expect many of the mainstays of law firm cash flow to come under attack by automation. Processing power will melt away human labor, so hours-based economics will suffer greatly. Document automation is still a kludge today. It will not be by 2025. Just as happened with eDiscovery, document assembly and AI technologies will begin to merge and strip the hours out of legal drafting, and then a succession of other legal tasks.”
  • Justifiable skepticism
  • Understand the exponent – understand the future
  • Rice and chess
  • Exponents in law
Chapter 3: Service is the real revolution
“Notwithstanding its early exposure to client demands for more speed, and an opportunity to seize the initiative with, for example, document automation technologies, the legal sector has largely foregone those opportunities. It has responded to client demands for quicker turn times by asking more of its lawyers rather than asking more of its systems. As a consequence, law has  metamorphosized from a deliberative and esteemed corner of commerce into an hour-crunching machine.”
  • Faster
  • Better
Chapter 4: Client dissatisfaction is an engine of opportunity
“Every year since 2009, the survey has asked law departments to assess law fi rms’ seriousness about changing their legal service delivery model…. for the eighth year running, CLOs rated law fi rms at a median three on a zero to ten scale in which zero equals ‘not at all serious’ about change and ten equals ‘doing everything they can’.”
  • More and more dissatisfied
  • Active unrest
  • Institutional versus individual dissatisfaction
  • Finding opportunity in the unwinding of the traditional law firm economic model
Chapter 5: Blockchain technology and the corporate self-help revolution
“The pool of risks managed by traditional legal means is vast, and the methods by which we now manage those risks are almost comically inefficient. That mismatch between the scale of risks and the capacity of traditional law to manage them is precisely the genesis of blockchain technology and its ‘smart’ means of recording, acting on and enforcing agreements in commerce. Smart contracts are, more than anything, a rebuke of our reluctance to change methods in an age when virtually all commerce is becoming digital.”
  • Mistaking the importance of blockchain
  • What is blockchain, anyway?
  • Why is blockchain important to lawyers?
  • Smart contracts
  • A lawyer end-around play
  • The blockchain bottom line
Chapter 6: Entrepreneurial firms will turn ELM systems to competitive advantage
“The net of all this growth in the ELM sector is that clients will continue to acquire unprecedented powers of discernment with respect to the law firms they employ. This area of endeavor will become the most economically significant application of artificial intelligence in the near term, and probably through the medium term. And all that will shift the competitive environment profoundly.”
  • Operations management for law
  • Powerful economics
  • The permanently tight belt
Chapter 7: What the competition looks like – ALSPs and other New Law entities 
“The 24 percent compound annual growth rate for ALSPs may be a floor, rather than a ceiling. And it’s worth remembering that, at a 24 percent growth rate, market share will double every three years. Higher growth rates will approach the power of Moore’s Law for achieving transformation – a doubling of power every two years.” 
  • Law firms are losing increased law department spending
  • ALSP 24 percent growth
Chapter 8: Recognizing and overcoming internal barriers to innovation 
“One cultural variable does need closer examination, because it can be singlehandedly determinative of the degree to which a firm can effect significant, truly innovative changes in business models. That variable is the degree to which a firm either does, or is willing to, recognize, recruit, nurture, and reward entrepreneurship.”
  • Archipelago management
  • Cultural barriers
  • Defining entrepreneurship
Chapter 9: Structuring for innovation
“Effective innovations start small. They are not grandiose. It may be to enable a moving vehicle to draw electric power while it runs along rails, the innovation that made possible the electric streetcar. Or it may be the elementary idea of putting the same number of matches into a matchbox (it used to be 50). This simple notion made possible the automatic filling of matchboxes and gave the Swedes a world monopoly on matches for half a century. By contrast, grandiose ideas for things that will ‘revolutionize an industry’ are unlikely to work.”
  • Mining the seven sources
Chapter 10: Where AI fits in a future-proofing strategy
“Rather than focusing on the particulars of AI, lawyers, legal technologists and others with impact on how services are delivered need to be developing a real intention to shift the service model. They need to emulate the ALSPs that first adopted AI. Those companies did not choose AI because it was a hot new technology. Instead, they envisioned a completely different service model and then began shopping for technologies that could serve that vision.”
  • The AI landscape1
  • AI in law
  • The opportunity for law firms
Section 2: Six steps toward transforming legal service delivery
 
Chapter 11: Do client feedback like you mean it
“What does the [client] value? may be the most important question. Yet it is the one least often asked. People are so convinced they are doing the right things and so committed to their cause that they come to see the institution as an end in itself. But that’s a bureaucracy. Instead of asking, ‘Does it deliver value to our [clients]?’ they ask, ‘Does it fit our rules?’ And that not only inhibits performance but also destroys vision and dedication.”
  • Ride-share as a template
  • Formalizing feedback as a market strategy
Chapter 12: Bring Information Age business skills to your firm
“Every company has to be a software and analytics company.”
  • A guild undone
  • Questions for a new age
  • Necessary and sufficient skills
  • Immelt’s Law
  • Adaptive skills
  • A framework of quantitative curiosity
  • Conditional reasoning
  • Statistical and probabilistic analysis
  • Filling the skills pipeline 
Chapter 13: Become measurably better at business operations and client service
“It is not possible to manage what you cannot control and you cannot control what you cannot measure.”
  • Testing your claim of superior service
  • Questions to ask as you begin to optimize internal KPIs
  • Measuring because we care
  • Can our documents help measure efficiency? 
  • A real business case
  • How law departments might approach the problem
  • Problem finding
Chapter 14: Start doing process management with your own documents
“The traditional document creation process is very nearly perfect where fees are calculated by the hour. It’s defensible, since law departments likely use the same methods for creating their own documents. And its inherent inefficiency generates significant revenue flow for law firms built on leverage and a cost-plus approach to pricing.”
  • Legal Process Management
  • The transient beauty of inefficiency
  • Document review as the bellwether
  • Powerful document assembly
Chapter 15: Make legal project management a discipline rather than an accident
“Legal Project Management (LPM) is not rocket science. It’s simply a structured way to manage legal projects. And it is not just for complex litigation. It applies just as well to mergers and acquisitions, to complex one-off contracts, and to simple, but high-volume matters (e.g. high volume litigation like the foreclosure work done during the Great Recession, or to high-volume contract management). Indeed, there is an argument that all projects in law, of whatever scale, can benefit from the best practices involved in LPM.”
  • Project complexity
  • What is Legal Project Management?
  • Why do LPM?
  • How to begin LPM at your firm
 
Chapter 16: Institutionalize service innovation in your practices
“And this gauntlet that each young lawyer runs teaches, above all else, the value of the correct – the correct way of thinking, the correct factual distinction, the correct advice, the correct result. It teaches that lawyer thinking, lawyer correctness, is the province of the few. There is law. There are lawyers. And then there is the rest of the world. And it is, to quote Kingsfield, mush. Which leads lawyers to the notion that being correct is also sufficient. Nowhere in three years of law school or in the subsequent years of apprenticeship are lawyers taught the necessity of also being helpful. It simply isn’t on the curriculum.”
  • The ivory tower
  • Design Thinking. Really?
  • What is it?
  • Empathy?
  • An experimenter’s mindset
  • Putting Design Thinking into practice
 
Section 3: On the surprise consequences of innovation
 
Chapter 17: Transforming your service models transforms your fi rm too
“In each of these cases, partners and their teams, managing large and profitable books of business, were retained despite heavy recruiting by other fi rms, because the support structures provided for them were not duplicable at other firms.”
 
Addendum: Additional practice innovation and service design resources
Full Overview

Authors

John Alber
John Alber serves as Futurist for the International Legal Technology Association and for the Institute for the Future of Law Practice. He writes, speaks and consults on the need to reshape the delivery of legal services to suit a future demanding excellence far beyond substantive legal skills.  John has served as a transportation industry CEO, as a practicing attorney and as a law firm leader. During his 16 year tenure as Bryan Cave’s Strategic Innovation Partner, that firm came to be recognized as one of the most innovative law firms in the world. While at Bryan Cave, he also served for 7 years on the firm's Operating Group (its management committee). At Bryan Cave, John created one of the first practice economics consulting groups, one of the first client facing software development groups, and one of the first in-firm legal process outsourcing (LPO) organizations. The groups he created developed innovative web-based, client-centric applications that delivered legal advice to clients, managed complex workflows and even created pleadings automatically. They also developed client-facing knowledge management, project management, project estimation and business intelligence systems and highly technology- leveraged alternative staffing solutions for engagements of all types.  John is an Emeritus fellow of the College of Law Practice Management. He has received a number of awards, both in the legal field and in information technology generally. Among other awards, he received ILTA's first ever Premiership Award, was named American Lawyer Media’s first ever ‘Champion of Technology', was given a Lifetime Achievement Award by Law Technology News and recognized as one of the ‘Top 25 CTOs’ in the world by Infoworld. In addition, while under his leadership, Bryan Cave received recognition as a CIO Magazine ‘Top 100 Company' and was twice recognized as ILTA’s Most Innovative Firm

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