Bruce MacEwen: Growth is Dead, Now What? #ArkKM

Bruce MacEwen is president of Adam Smith, Esq. LLC and president, JD Match. Bruce is an influential blogger at Adam Smith Esq. and author of Growth is Dead.

[These are my notes from the 2013 Ark Group Conference: Knowledge Management in the Legal Profession.  Since I’m publishing them as soon as possible after the end of a session, they may contain the occasional typographical or grammatical error.  Please excuse those. To the extent I’ve made any editorial comments, I’ve shown those in brackets.]

NOTES:

  • Excess Capacity. There is a an excess supply of law school graduates. There simply are not enough jobs for them. The national average is approximately a 2:1 ratio of new JDs to jobs. A recent NALP survey shows that summer associate programs are 51% lower now than 10 years ago. Citibank estimates that the firms that bank with them have about 6% excess capacity.
  • Impact of 2008 Recession. When you have a recession driven by a credit crisis, it takes much longer to recover. GDP per capita declines by 10%. (Compare this to the dot.com bubble recession, which was an equity-driven recession.)
  • Law Firm Pricing. Law firms are following the path of other desperate industries. They engage in suicidal pricing (depressing prices to the point that they no longer make money). For examples, see the department store industry, the airlines industry, the automotive industry.
  • Empowered Clients. Clients are finally waking up to the fact that they can make choices when it comes to their law firms. Sometimes this means moving to lower cost firms. Sometimes it means handling matters internally for much longer. Sometimes it means disaggregating services so they source services from a variety of providers who offer more favorable pricing. The law firm can no longer depend on a steady stream of business.
  • Advice to Managing Partners. (1) Focus on Innovation. This means you need to create a culture that allows you to produce a lot of ideas. Most will fail, but some will work. Set aside 20 hours of revenue annually for a research and development budget. (2) Focus on Firm Management. Get lawyers out of the business of managing law firms. Instead, bring in management professionals. And, while you’re at it, banish the term “non-lawyer”!
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It’s Time for a Law Firm Hackathon

Yahoo! Hack Day In the world of law firm blogging there is Bruce MacEwen…and then there are the rest of us. Writing as Adam Smith Esq., Bruce has just completed an extraordinary series of posts entitled “Growth is Dead.” In his final installment, The S-Curve, Bruce says that if law firms wish to survive the current economic headwinds, it’s critical that they identify the next S-Curve and jump on it. The problem is that for all the hand-wringing we’ve seen since 2008 (usually accompanied by dire mutterings about the “New Normal”), there don’t appear to be many well-considered, internally coherent proposals for that new S-Curve.

For those of you coming to the conversation late, S-Curves illustrate, among other things, life cycles (of technology, for instance) and the diffusion of innovation. Clayton Christensen showed us in The Innovator’s Dilemma how upstarts can enter an industry with disruptive innovation that creates a new S-Curve and lets them eat the lunch of more established players in their vertical. The challenge for those more established players is to innovate sufficiently so that they don’t become footnotes in history.

If only innovation were that easy.

In reality, innovation can be extremely hard work. To begin with, organizations are too often rather hostile towards innovation. Further, individuals within those organizations sometimes lack the right mindset for change. (If you’re interested in learning more, read Why Innovation Fails.)

So how do you work around these problems in order to find the disruptive innovation that is right for your organization? As far as the legal industry is concerned, we don’t have the luxury of waiting until the stars are aligned. We need answers fast. It’s time for a Law Firm Hackathon.

What’s a Hackathon?

Hackathon is a portmanteau of hack + marathon, and is used to describe a brief, intense period of hands-on collaboration to solve a specific problem. Invented in the world of software development, hackathons initially were used to develop usable code by pooling the efforts of many over the course of a short period (e.g., a day, a weekend, or a week). Since then, hackathons have been used to re-imagine everything from a better New York City government website to social justice in Africa to the world’s sanitation crisis to improved management practices and reinventing business itself.

Here are some key elements of a hackathon:

  • Issue an open invitation so that you involve people who might otherwise be trapped in organizational silos — this event has to be more than the same old folks talking about the same old things
  • Frame the problem clearly at the beginning of the hackathon
  • Be sure to provide for creature comforts — food, drink and work space

The critical thing is to move past brainstorming to creating a workable prototype within the time period of the hackathon. The result need not be a final product. However, it should be something tangible or concrete on which you can build.

How to do a Law Firm Hackathon

  • Read Late Night Pizza: Extending Hackathons Beyond Technology (see the “hackathon-in-a-box” materials)
  • Recruit widely from across the firm, but ensure that the firm’s senior leadership participates fully
  • Follow the good advice from the Mix Management Hackathon:
    • Be radical — the hack should make a discernible difference in your firm
    • Be practical — the hack should be easy to implement
    • Be simple — if the hack is too complicated, it won’t gain traction
  • When the hackathon is over, don’t waste time before you implement the winning hacks. In the words of Frans Johansson, the key is to “start with the smallest executable step.”

Start planning your law firm hackathon now. Time is running out. As Bruce MacEwen says: “We have no idea yet what BigLaw will look like in the future, and the only way to find out is to invent that future.”

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Here is some additional reading regarding hackathons:

[Photo Credit: Scott Beale]

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Bruce MacEwen: Why ROI is a Bogus Measure and What Might be Better#ILTA12

Bruce MacEwen needs no introduction. He is known world wide for his incisive commentary on law firm economics, the business of law and law firm strategy. You can find his thought-provoking posts at Adam Smith, Esq.

[These are my notes from the International Legal Technology Association’s 2012 Conference 2012. Since I’m publishing them as soon as possible after the end of a session, they may contain the occasional typographical or grammatical error. Please excuse those. To the extent I’ve made any editorial comments, I’ve shown those in brackets.]

NOTES:

  • What Does ROI Mean?. It depends on what approach you use: present discounted value (PDV), net present value (NPV), internal rate of return (IRR).
  • What’s the Problem With Them?. They are too easy to manipulate, we often forget what they are, they have a false precision to them and they don’t always tell us what we think they do.
  • How to manipulate ROI?. Smooth out the numbers, display them on a pretty graph, then print it on thick glossy paper — in color.
  • Why do we waste time on ROI?. Lawyers like evidence. Besides which, lawyers feel that asking about ROI is the responsible thing to do. Unfortunately, most of them do not have a grasp of basic economics and many are “allergic to numbers.” As a result, they aren’t always in the best position to understand the ROI implications. Nonetheless, if they ask for an ROI, they can’t later be faulted for failing to consider ROI.
  • False Precision. Since ROI is expressed numerically, it seems more concrete and reliable. Yet we forget that ROI by itself is meaningless without context. While the numbers remain, we all too often tend to forget the context. As a result, the sense of precision is fleeting at best.
  • There are Three Kinds of Investments. Investments that involve unknowns; investments that are one-of-a-kind events; investments that are structural and make other things possible. Few conventional projects involve complete unknowns. With one-of-a-kind events, no one can predict outcomes, so it’s very hard to talk sensibly about ROI. With structural investments (e.g., high speed rail), while the project itself may not always pay for itself, chances are that it will allow other positive returns to arise. (In his example, there has been a great deal of real estate development around rail lines or extra tall buildings near New York City express subway stops.)
  • If not ROI, then what’s a better way to analyze IT projects? First ask if the proposed project is plausible. Then, ask if it would make a difference. This second question introduces common sense into your deliberations. It forces you to consider your business context and the impact of the proposed project on the top line or bottom line. At the end of the day, the greater the positive impact on the top or bottom line, the better the project and the easier it should be to win support.
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Don’t Harm the Humans

Robot baby quilt top In the midst of a lively, thoughtful discussion, one of my friends and colleagues asked for a moment’s silence to take note of the fact that Mary Abraham had just endorsed automation over human action. This led to gales of laughter. Why? Because over the years I’ve become reasonably well-known in legal knowledge management circles for repeatedly reminding people that technology won’t solve every problem (note the banner of this blog) and that we might get further if we spent at least as much time and attention on people and processes as we do on the technology.

That remains my position, but with time and experience it has become slightly more nuanced. While I still don’t think that technology is the silver bullet, I also don’t believe that simply throwing more people at a problem is the best path to a solution either. Further, given the advances in technology today, it could arguably be abusive to humans NOT to adopt appropriate technology.

Not convinced? Think about the many processes within law firms that to this day still are not automated. They haven’t been studied, standardized or streamlined to improve efficiency and efficacy.  Rather they depend on a variety of people operating consistently at their personal best to ensure good results. In fairness, these folks have probably been doing a good job for many years.  But what if someone becomes ill or disengaged? What if they retire?  Where’s the safety in this system? There’s also the problem that you’re asking human beings to do work that a properly equipped machine could do. How demoralizing is that?

In the 1940s, Isaac Asimov introduced the Three Laws of Robotics (see video below). The first of these laws was:

A robot may not injure a human being or, through inaction, allow a human being to come to harm.

It’s helpful that he identified this way to reduce the likelihood that a robot might harm a human. However, that still leaves the human race very much at risk of harm from members of its own species.  With this in mind, consider what would change if law firm IT departments and KM departments adopted the following variant of the first law of robotics:

An IT department or KM department may not injure a human being, or through inaction, allow a human being to come to harm.

What would the practical implications of this be?

  • We would have to spend much more time upfront considering user interface and user experience.
  • We would have to pay closer attention to HelpDesk inquiries and customer complaints — what keeps going wrong?
  • We would have to think harder about the “unintended consequences” (or, as Bruce MacEwen writing at Adam Smith Esq states more accurately, the “unanticipated consequences“) of the innovations we introduce.
  • We would have to stop asking our colleagues and our own staff to do things that more properly should be done by machines.
  • We would have to be willing to review and revise what we’re doing to ensure the humans we serve are not harmed.

As you think about your work and its consequences, can you honestly say that it does not harm humans? If not, what will you change?

[Hat tip to Michael Mills of Neota Logic for reminding me of Asimov’s Three Laws.]

[Photo Credit: Chelsea Wa]

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The Purpose-Driven Organization

What’s the purpose of your organization? (No, that’s not a trick question.) Deb Lavoy and her colleagues at OpenText believe that answering that question is the first critical step every organization must take.

Putting their money where their mouth is, OpenText hosted on July 11 the first of what promises to be a thought-provoking series of conversations about the purpose-driven organization. The speaker at the event* was Simon Sinek, author of Start with Why. Drawing on examples as diverse as the civil rights movement, Navy SEALS, the Wright brothers, Apple and Disney, he explained that the primary role of a leader is to have a vision of the world as it can be, and then to articulate that purpose with enough clarity and energy so as to inspire others to work towards that purpose.

Granted it’s promotional material, but here’s a synopsis provided by his publishers:

In studying the leaders who’ve had the greatest influence in the world, Simon Sinek discovered that they all think, act, and communicate in the exact same way — and it’s the complete opposite of what everyone else does. Sinek calls this powerful idea The Golden Circle, and it provides a framework upon which organizations can be built, movements can be lead, and people can be inspired. And it all starts with WHY.

Any organization can explain what it does; some can explain how they do it; but very few can clearly articulate why. WHY is not money or profit– those are always results. WHY does your organization exist? WHY does it do the things it does? WHY do customers really buy from one company or another? WHY are people loyal to some leaders, but not others?

Starting with WHY works in big business and small business, in the nonprofit world and in politics. Those who start with WHY never manipulate, they inspire. And the people who follow them don’t do so because they have to; they follow because they want to.

Why does your organization need a well-articulated purpose? Simon Sinek believes that without a clear and compelling purpose, you cannot recruit, retain and inspire the highly motivated people who are so committed to a shared sense of purpose that they will move mountains to achieve it. It’s this willingness to go above and beyond that sets them, and ultimately their organization, apart.

For my readers in the legal industry, don’t assume that this conversation about purpose is only for our clients.  Bruce MacEwen writing at Adam Smith Esq covered some of this territory in Thoughts on IBM’s 100th: Idea or Product, where he attributes IBM’s nimbleness and longevity to its view of itself “not as an organization creating products but as an organization loyal to an idea.”  He then summarizes a list from The Economist of companies that are animated by ideas versus those focused on products:

  • IBM:  Package technology for use by business
  • Apple:  Package the latest technoology in simple, elegant form and sell it at a premium
  • Amazon:  Make it easy for people to buy stuff
  • Facebook:  Help people share things with friends easily
  • Dell:  Building PCs very very efficiently
  • Cisco:  Routers
  • Microsoft:  Windows

Taking this dichotomy straight to the door of law firms, he asks: “Are there firms premised on fealty to ideas and firms premised on selling products (practice areas)?” After naming a couple of firms that might be “idea” firms, and one sad example of a “product” firm, he reaches a sobering conclusion:

Alas, I suspect that law firms premised on a widely recognized idea are rare.   Many would insist they are idea-based, but dig under the surface and I bet you’ll find a mutating assemblage of practice areas and geographies without–in most cases–an overarching idea that all the partners could tell you in their sleep motivates the firm.

If he is right about this, how will firms recruit, retain and motivate excellent people? How can firms ensure their own longevity? Is it really just about paying market salaries?  I suspect it has a great deal more to do with the type of culture a firm nurtures, and the quality of the clients and work a firm attracts.

As we continue in this period of economic uncertainty, it’s worth considering whether your law firm, company, business unit, department, school or nonprofit has what it takes for the long haul.  You should start by asking WHY.

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If you’d like to hear more about the importance of knowing your purpose, here’s Simon Sinek’s very popular TED Talk:

 

*Disclosure: This event was sponsored by OpenText and free to the public.

[Photo Credit: Godserv]

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Are You Creating Value?

Am I creating value? That’s the key question to start and end every working day.

For knowledge management professionals, it can be a tough one to answer honestly. Why? Because many of us struggle with proving the value of knowledge management efforts. We know that we’ve helped individuals, but we are often hard pressed to explain how much we have in fact helped.  For example, you might truly believe that the enterprise search engine you’ve painstakingly implemented will save lawyers time and effort, ultimately saving clients money.  But do you have any metrics to prove it?  Unlikely.  So how do you know that your search engine project creates value?

One approach is to sit next to your colleagues with a stop watch measuring the time spent on searches before and after your enterprise search engine is implemented. Then you should have the data necessary to prove value numerically.  But how do you measure user satisfaction? You could ask users to complete a survey.  With tools like zoomerang or surveymonkey, it’s almost too easy to do this.  However, the real challenge lies in how the survey is constructed and interpreted.  An additional problem is that it can be hard to coax busy lawyers to complete your survey.

If you’re looking for ways to show how much value you’ve created, consider the example of Morrison & Foerster.  On a page whimsically entitled “Geek Power,” the firm makes the following claims about their knowledge management program:

In order to take maximum advantage of the collective experience of our lawyers, we have developed a number of important knowledge management systems and tools.  These systems improve our efficiency.

AnswerBase. AnswerBase is our award-winning enterprise search engine.  The search engine enables us to access the firm’s best and most pertinent practice materials, internal research, attorney experience, client and matter information and other important firm information.  AnswerBase has won a number of awards, including an award from Law Technology News (“Best Collaboration in Implementing Enterprise Search”) and Citytech Global Tech Leaders Top 100 (“Law Firm Project of the Year”).

Knowledge Exchange. Our Knowledge Exchange database makes documents, forms, templates, precedent, briefs, practice materials and internal research available to all attorneys.

They back this up with an exercise they undertook in 2006 to prove value.  Specifically, they retained Bruce MacEwen of Adam Smith Esq to talk to MoFo attorneys about their experiences before and after AnswerBase.  According to Bruce MacEwen:

I was retained by Morrison & Foerster to lead an analysis and review of AnswerBase vis-a-vis its predecessor Knowledge Management system during last summer and fall, and reached the resounding conclusion that AnswerBase was strongly superior to the firm’s legacy systems, by providing highly relevant documents and discovering genuine subject-matter experts within the firm with impressive accuracy.   By interviewing a broad cross-section of lawyers at the firm’s New York offices, I was able to determine that the design and functionality of AnswerBase essentially replicate, as I put it in my report, “the way lawyers think” rather than reflecting technical considerations or limitations.

Admittedly, hiring someone of Bruce MacEwen’s caliber will be hard to justify for every small project on your to do list.  However, I’ve recounted this story to remind you (and me) that sometimes it makes a lot of sense to bring in an impartial third party to help you and your colleagues see what is right in front of you.  And if in the process you manage to demonstrate that your KM efforts have created value, that’s all the better.

[Photo Credit: Dave Elmore]

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