Shift happens — even in law firms. Are you ready? That’s the question that kept surfacing at the ILTA09 conference last week.
You’d have to be living under a rock not to have noticed the impact of the economy on law firms and their clients alike. Thankfully, ILTA09 didn’t just remind us of the bad news all around. The conference did something more helpful — it provided information and real examples of how lawyers and technologists around the world are rising to the challenges of the shifting landscape.
While I’ve provided some fairly detailed reporting of several ILTA09 sessions during the course of the past week, I want now to take a step back and try to convey some general themes that emerged across sessions. My first focus is on delivering value. This theme was launched officially with a keynote address by Richard Susskind entitled, “The End of Lawyering?”. Over the course of his keynote address and panel presentation, he made the following points:
- If law firms are serious about addressing client concerns regarding the rising cost of legal services, those firms will have to increase efficiency radically. In order to manage costs, clients are going to have to consider collaboration with other clients and thereby share costs.
- The best way to reduce costs intelligently is to start by analyzing your current costs of delivering services. Once firms break down service into its component parts and price those parts, firms can then experiment with finding cheaper ways to provide those components. This may mean sub-contracting the work or moving it offshore, for example.
- One way to reduce costs is to standardize services (e.g., creating model or standard form documents). Going further, you can systematize or automate those services (e.g., by using document assembly tools). Once automation is complete, a firm can then package these services and make them available online to clients, who can use the packaged services as and when needed. The example Susskind cited was Wilson Sonsini’s contract generator for start ups. He described packaged services like this as a means for firms to “make money while you sleep.”
- Central to rethinking how we deliver services more efficiently is disrupting the current business model and deploying disruptive technologies in our firms. However, while these disruptive technologies will give a firm competitive advantage, Susskind believes that most firms don’t seek this. In his experience, firms are more concerned about suffering a competitive DISadvantage rather than having a competitive advantage. In other words, they are more worried about being left behind than blazing a new trail.
- Here are the top 10 disruptive technologies Richard Susskind identified:
- Automated document assembly.
- Relentless Connectivity. (Clients expect 24/7 availability, so lawyers need to use online tools to provide a continuous online presence.)
- Electronic legal marketplace. (Like on ebay, clients will have better pricing information and will be able to auction/bid for legal services.)
- e-Learning. (Laws schools are beginning to use online simulation tools train students for modern legal practice circa 2009 not 1980.)
- Online Legal Service. (There are many English public sector websites that offer online legal guidance, so you don’t have to hire a lawyer.)
- Legal Open-Sourcing. (Some legal resources are now gathered and offered free of charge. This trend will grow like wikipedia.)
- Closed Legal Communities. (More clients will form online communities to collect and share legal know-how.)
- Workflow & Project Management. (Automation and enhanced project management can improve margins on high volume, low value work.)
- Embedded Legal Knowledge. (More systems will embed compliance requirements, thus removing the need for separate legal advice.)
- Online Dispute Resolution. (Moving dispute resolution online eliminates the expense of having to meet in a physical location.)
At a later session, Fred Krebs (President of the Association of Corporate Counsel in Washington, D.C.) spoke about the ACC’s Value Challenge, which is based on the premise that it is the clients that define what constitutes “value” in legal services. He started by pointing out that while overall costs to corporations have increased by 20% during the past 10 years, their legal costs have risen by 75%. In order to address this imbalance, the members of the ACC have issued the Value Challenge to counteract what they describe as the “perverse incentives of the billable hour.” The Value Challenge aims to help corporate counsel manage costs by increasing transparency in the process for setting prices for law firm services. Their hope is that this will bring about more efficiency and cost predictability.
Moving from theory to action, we then heard from some firms that were taking concrete steps to address the new economic realities. One firm that has moved significantly down this path is Bryan Cave. As John Alber and Connie Hoffman told us over the course of two sessions, they have spent significant time analyzing their services and business processes and now believe they know what it really costs to deliver services to clients. With this data in hand, Bryan Cave can model the impact on price by changing the components of service (e.g., what happens if you change the staffing?). Along the way, they created an online tool to help with this analysis and then licensed that tool to Redwood Analytics, who now provides it to other firms. (This is another example of what Susskind calls “making money while you sleep.”) Bryan Cave has also rethought how to conduct a due diligence review and created an online tool that streamlines the due diligence process. They have been able to push due diligence work down to less expensive personnel while ensuring quality through a training component embedded in the tool. In addition, they are providing transparency by allowing clients to obtain reports on demand regarding the process and cost of the due diligence effort.
On the subject of transparency, Mallesons in Australia has blazed a new trail with Mallesons Connect. As described by Gerard Neiditsch, this new extranet application gives clients real-time information regarding lawyer activity, progress against project goals, and fees incurred. It also provides information on billing history and outstanding invoices. In the process, Mallesons learned that this transparency can have unexpected benefits. Besides keeping everyone accountable, Mallesons discovered that once their law department clients saw the invoice information, they were able to expedite payments.
If your firm would like to rethink how it delivers value to its clients, the panelists advise you to start by analyzing your business processes. Using a simple Gantt chart, identify the components and dependencies of your process. Once you really understand the workflow, introduce simple technology to help automate parts of the process. If it works, extend it. If it doesn’t work, learn from it. Throughout this process, however, don’t forget the advice of Steven Levy, as quoted by one of the panelists: “Technology cannot replace thinking. Automating broken processes won’t make us smarter; it can make us stupider faster.”
For more information on delivering value to clients, see the following resources:
Andrew McLennan-Murray’s summary of Richard Susskind’s keynote and panel presentation.
Susan Jacobsen’s post on the the ACC Value Challenge session at ILTA09.
ACC’s resources on Leveraging Knowledge, including specific measures taken by various law firms.
[Photo Credit: dasmart]