Is your firm combining technology and innovation to serve clients? We want to know about it! The Chicago Legal Tech Innovation Showcase, brought to you by the Chicago Bar Association’s Future of the Profession Committee and Chicago Kent School of Law is October 24th. Submissions are due by September 29th, 2017.
A panel of distinguished judges will choose five “Best in Show” awards in each of the 2 awards categories: Law Firm/Legal Services and Company/Product/Service. Each award winner will present a 5 minute pitch at the Chicago Kent Auditorium on October 24 and have an opportunity to exhibit during the event. All submissions that meet the criteria will be listed in a Chicago Legal Tech Showcase Guide 2017
The Chicago Legal Tech Innovator Showcase will promote the law firms, legal aid orgs, and companies that are using technology to improve legal services in the Chicago area and highlight those whose innovations are exceptional. Whether the end result is better legal knowledge management, more affordable legal services, or improved metrics for decision making and analysis—and regardless of how the services are delivered—we want to hear what you are doing and so does Chicago’s legal community!
Certainly by now we can all agree that the Internet has transformed the legal industry, from how you market your law firm to how legal services are delivered. Still, for many lawyers, the Internet is a confusing place with so many options that can either make you or break you. So let me help simplify things for you. Here are five online marketing strategies that are gold when it comes to delivering leads and boosting your brand:
Narrow your choices. Unless you have an unlimited marketing budget, you can’t do it all — SEO, social media, pay-per-click, content marketing, email marketing, etc. If you throw a little bit at everything — the shotgun approach — you are wasting your money. Instead, focus on two things: (1) where your potential clients are, and (2) what you can measure. You have to be able to measure your success (or failure) to discover what works for your area of practice and to be able to build on the successes.
Use Facebook ads. There are 1.4 billion monthly Facebook users and half of those log in every day. One of the most powerful features of Facebook is ad targeting, the ability to layer targeting options on top of one another to create a highly specific audience. This enables you to target locally and get your ads in front of people who need your services now. Facebook ads are low-cost, so you can experiment to see what resonates with your potential clients and then repeat what works.
Capture leads with what you know. There is a vast amount of basic information you know that prospects want. And there are a number of tools available for you to disseminate this information to them, including blogs, eBooks and free reports. Offer these in exchange for contact information as added value and the leads will follow.
Think mobile. If your law firm website is not already optimized for mobile, make that happen fast. Mobile-friendly sites perform better in search results and also provide a better user experience for prospects.
Automate your lead conversion. A comprehensive law firm marketing program that embraces multiple marketing tools – SEO, PPC, ads, email marketing, social media, blogs, etc. – means leads come in from many different sources. If you don’t have an automated way to deal with them, leads will slip through the cracks and all that hard work and financial investment will be for nothing. Small law firms lose tens to hundreds of thousands of dollars every year because they aren’t tracking their leads and quickly following up with them. Mid-sized law firms are losing millions. Lost leads also hurt your reputation with your referral sources if they supplied the referral and your team doesn’t follow through on the lead.
Law firms across the country are facing a crisis in leadership, but many of them don’t know it yet. Despite all the challenges discussed in Part 1 of this series, many law firms, especially small and mid-sized firms, are not changing their strategies, in fact, they keep on doing the same old things.
Many law firms are structured where decisions are made based on consensus, and the Managing Partner is tasked with conducting the orchestra–managing the processes, focusing on firm administration and the tasks the firm is working on. Even though this decision and execution process is clunky, no one seems to be leaving it behind. According to Re-Envisioning, “Most MPs enjoy the positive aspects of the MP role, but many don’t seem to want accountability or to be responsible for holding others accountable for getting results.” Tough conversations are not had, problems are not addressed, and necessary changes are not being made because Managing Partners are not empowered to focus on the right things. David Maister, author of True Professionalism, says, “What worries me most is not that today’s law firm leaders are often imperfect in fulfilling the role, but rather than many of them aren’t even aiming at it.”
How can law firms change their leadership structure to be more like a business?
As we discussed in Part 1, one of the major recommendations of Re-Envisioning is changing the Managing Partner to a CEO, in name and in function. This requires the MP to act more as a CEO–focusing on having tough conversations to ensure client service is provided at the highest level, and that results and profits are being made. One suggestion is that the MP/CEO have a formal job description. Of the MPs surveyed for Re-Envisioning, 53% indicated that they did not have a formal job description, and an additional 20% indicated that one existed, but that it was not closely followed. In fact, only 19% of respondents indicated that they had a written job description and that it was followed, and of those 19%, 93% said that they liked having a job description–that it gave them something to “focus on.” Armed with a title change and a job description, CEO’s are better equipped to move the firm forward in the direction it needs to go.
Other changes that can help re-shape the firm’s culture can be achieved through the Executive Committee. Hiring a Chief Operating Officer and giving him or her a strong voice on the leadership team can help the firm keep eyes on the prize. Additionally, Re-Envisioning suggests morphing the Executive committee so “it functions like a CEO’s senior leadership team.”
To function like a leadership team the executive committee needs to do the following:
Oversee firm-wide strategic priorities
Members would be elected for terms by owners on a staggered basis
But with no term limits for committee members. If someone is doing a good job in a position, you want them to keep doing a good job in that position.
What kind of firm culture should the executive committee strive for?
Innovation, Change and Accountability are things the Executive Committee should promote in the firm. The new culture of legal services demands creative thinking, an ability to adapt to shifting circumstances, and a willingness to hold everyone accountable for achieving results. But what does that mean in practice? Innovation as a value will reward creativity and taking risks to find better ways to accomplish things–and looks at everything, all processes and asks “why do we do it this way?” and most importantly, makes changes as needed. With Change, the firm and its leaders are open to new ideas, conflicting opinions and constructive feedback, always looking for better solutions and embracing changes that improve results and profitability.
Finally, accountability means the CEO:
Holds himself or herself to high standards and achieving results
Communicates expectations of executive committee members, stakeholders/owners and members of the firm
Identifies the need for change and makes adjustments when necessary
Quickly and firmly addresses problematic partners and underperformers
Build trust in order to enact changes
Emphasize clients first, firm second, individuals third as a guiding principle
Expect others to follow his or her lead and hold others accountable for achieving results and performing at a high level
It’s clear that there is plenty of work to do in law firm leadership. To achieve the objectives of re-orienting law firm leadership to a CEO structure, and to encourage the adoption of innovation, change and accountability as firm-wide principles, law firm leadership needs to set priorities. The survey results that Re-Envisioning was based on indicate that the top 3 contributions that leaders should focus on were Strategic objectives, being a Change agent, and making the tough decisions and holding people accountable. These objectives can help law firm leaders make the changes in their firms that need to be made.
These recommendations may seem daunting, or a huge disruption of firm life, however, they are the changes the new industry demands. Terry Isner, President of Marketing and Business Development at Jaffe says, “Law firm leadership isn’t about boots on the ground anymore–it’s a 10,000 foot perspective with 360-degree views of the firm, its clients and the industry as a whole at all times. It’s being able to adapt to change quickly and making hard choices that will inspire and empower greatness.”
The title “managing partner” falls short of the mark in describing the work of a law firm leader. “Chief executive officer,” in my opinion, is more accurate. Terminology evolves so that some titles no longer reflect their original meaning.
Managing partner has become such a term. When a managing partner is named, is the law firm really appointing a manager in the corporate sense? A manager, after all, is a caretaker responsible for oversight of a unit or department.
A recent survey on the topic of law firm management and leadership asked those polled to distinguish between a “manager” and a “leader.” Insights that the survey respondents offered included, “Management is mechanical, while leadership is inspirational,” and “The leader sets the direction and the plan, while the manager implements the plan.”
Another survey respondent was more pointed: “Managers implement what leaders want them to do. Most law firm managers want to be loved and not to lead.” Saying that managers want most to be loved may overstate the case. But it does sum up the problem. If a law firm needs vision, inspiration, motivation, cohesion, consensus, direction-setting and the establishing of firmwide goals, it needs strong leadership committed to that work.
Leading Lawyers
The hard realities of law firm leadership are apparent. Among them:
The authority of lawyer management (or leadership) is derived from the willingness of the firm’s partners to be managed (or led).
Partners perceive themselves as being owners of the firm, having certain prerogatives and independence, not as employees to be managed.
Each firm has its own personality and culture, and the management techniques effective in one firm may or may not be successful in another.
In the face of these hard realities, many managing partners retreat into the noncontroversial confines of day-to-day management, putting aside attempts to exercise true leadership. What is needed instead is a well-thought-out plan to lead your firm forward into the 21st century.
SEVEN STEPS TO SUCCESSFUL LEADERSHIP
1. Create Job Descriptions for Yourself, Your Successor and Other Firm Leaders.
Remember, you’re drafting a job description for a CEO, not a manager. Think of your job description as a contract with your partners. At a minimum, it should delineate the amount of time you will devote to management responsibilities. A CEO’s primary responsibilities should include strategic planning, setting the future direction of the firm, cultivating relationships with major clients, and identifying and grooming future firm leaders. To compensate for time lost from your personal practice, the job description should define your pay structure.
2. Redefine the Role of Practice Group Chair.
Practice group chairs are too often treated as lions among their prides. Often they are appointed because they are the senior member of the group or the most effective rainmaker. This does not mean they are the most effective manager, the best mentor or the most committed to the success of the firm. Practice group chairs should be elevated to the level of senior management. They should be given the full authority to manage their groups. Practice group leaders need to be chosen based on the ability and the commitment to lead.
3. Get to Know the Firm’s Client Base Personally.
No partner should “own” a key institutional client. Managing partners should reach out to client contacts and underscore the message that the firm—not only the client’s chosen counsel—is pleased to be of service. Ask the client for feedback, learn the client’s business and the industry, and strategize to help the client reach its goals. Do more for the firm’s clients than simply putting out fires.
4. Identify and Hire a Strong Chief Operating Officer.
If you are going to be an effective leader or CEO, you have to get the minutiae off your desk. Delegate day-to-day administrative responsibility to a strong, competent executive director or COO. This person should head up a team of business professionals and serve as your trusted “second hand” on the leadership team.
5. Offer Reforms to “Time and Money” Matters.
You will be asking senior management to take on a more extensive and defined role in the operations of the firm. Adjust the time demands on the executive committee and the practice group leaders to allow for sufficient nonbillable time for them to fulfill their management responsibilities. Likewise, adjust the compensation criteria for senior managers to acknowledge the time they must devote to management matters and for the firm-benefitting results that they achieve.
6. Start (or Reenergize) the Strategic Planning Process.
A strategic plan is a living document that requires modification and fine-tuning from the first day it is implemented. If you have been selected as the firm’s managing partner, presumably you have a vision of what you want the firm to become, what you want it to achieve. Sell this vision and muster a supporting coalition among the equity partners. You don’t need to win them all over, but you will need an effective critical mass and working majority. With this group at your back, start small and keep the initial goals simple. Suggest three or four one-year priority items with sufficient low-hanging fruit to show short-term wins. Consolidate your gains and move forward.
7. Maintain Your Firm’s Investment in Its Future.
The challenges of launching new initiatives, creating consensus and moving your firm forward can sometimes cause a firm leader to forget about the little things that, in the end, may prove to be just as important as greater goals. Don’t forget to implement a first-rate training and associate development program. Here lies the future of your firm. Don’t forget about marketing and business development initiatives. These provide the growth that will finance your firm’s future. Don’t forget about technology upgrades. These are the essential tools that keep your firm on the cutting edge and ahead of the pack. And don’t ignore your successor. Heirs apparent need the opportunity to learn the principles of law firm management.
The old Chinese proverb says that a journey of 1,000 miles begins with a single step. Becoming a leader of a law firm is similar. A CEO must, step by step, patiently bring along the uninterested, the doubters and the curmudgeons to join the advocates and the reformers. Bold vision and small steps are the stuff of leadership.
For ten years, legal media company Lawdragon has been telling great stories about the law and lawyering. Lawdragon embraced the power of the internet early on, creating content open to all who were interested in stories about the law. Lawdragon has shown their commitment to high-quality legal journalism by crafting feature stories, a popular Question and Answer series, and an annual Lawdragon 500 Leading Lawyers in America devoted to attorneys, what they do, and what is possible with a law degree.
Lawdragon was founded by Katrina Dewey as a platform to tell stories about lawyers and lawyering. Dewey began her career as a lawyer, but in her words, “I quickly discovered that I wanted to write about lawyers instead of practicing the law myself.” She left her law firm associate job and “I did what I could to get hired as the lowliest journalist at the Daily Journal in California.” The “lowly” journalist position became Editor in 1996, a move that Dewey describes as “a huge and lucky break.” In 2005, with a desire to work more in the emerging online journalism market, Dewey founded Lawdragon. Daily Journal reporter John Ryan joined her and continues to serve as the company’s editor-in-chief.
Looking back at the first issue, Dewey describes the publication process as like “giving birth.” They wanted to kick off the magazine in an edgy, interesting way, and one of the first stories was on the idea of term limits for Supreme Court justices. Dewey remembers, “the week after we shipped our first issue, Justice Rehnquist passed away.” Another memory of the beginning was Hurricane Katrina. That disaster hit the same weekend the first publication went out, and it lingered as a sort of ghost each time Lawdragon has published an article that showcased the aftermath of the storm and the various legal issues that followed afterwards. Looking back, Dewey describes the early days by saying, “we saw ourselves as an intrepid band of journalists, taking on larger lawyer outlets that were a little slow on the digital uptake.” And that has been part of Lawdragon’s success. Dewey saw the writing on the wall about how the media landscape was changing–and she wanted to create a place for features and profiles of lawyers with a company that had “digital in its DNA.” After ten years, the company has grown into a marketing and branding platform packed with fascinating tales of the law, using the power of the internet to allow anyone who is interested access to their stories. In fact, the content had become so popular among firms and lawyers that Lawdragon created a new “Lawdragon Press” division that provides paid content, marketing and branding services for firms.
Along those lines, when asked to describe Lawdragon’s audience, Dewey says, “We write for everyone who can read and has an interest in the law.” The goal is to create intelligent, wide-ranging, eclectic content that shows what an attorney can do with a law degree. Dewey says, “The goal is to write stories that everyone can access, but are still interesting enough to appeal to attorneys.”
And true to the mission, reading Lawdragon provides perspective on just how far-reaching a law degree can be. With features on everyone from David Tolbert, President of the International Center for Transitional Justice, Adam Streisand of Sheppard Mullin, who litigated the trial that paved the way for the sale of the LA Clippers to Jodi Westbrook Flowers at Motley Rice, who has worked for over a decade for the victims of the September 11 attacks against the financiers and and supporters of Al Qaeda, the subject matter is an abject lesson on just what the law can accomplish.
“We’ve tried to cast a wide net on our coverage of interesting lawyers and legal matters, which is why we’ve done original reporting on justice issues in places like South Africa, former Yugoslavia, Rwanda, The Hague and most recently Guantanamo Bay,” Ryan said.
One essential element of Lawdragon’s philosophy is an unwavering optimism about high-quality articles and reporting. Dewey says, “We are optimists about good content; we believe there is a place for good content in the world.” With an intrinsic belief that the law has the power to change people’s lives, right wrongs, and inspire as well as an understanding that lawyers who practice law have compelling reasons to do so, over the ten years of its existence Lawdragon has demonstrated a commitment to showcasing those stories. Dewey says, “We are about the power of story, generally. We want to show the individual stories of these attorneys who are advocates of the law, who all have their own perspective and ways of contributing to justice. ”
A natural outgrowth of that philosophy is the Lawdragon 500 Leading Lawyers. This feature highlights some of the most captivating attorneys and the work they do across the nation. While the Lawdragon 500 is probably the best known element of the publication, it is not a ranking system. Through a careful process balancing editorial research by Lawdragon staff, law firm submissions, and an open online nominations form, the 500 are carefully curated, but not ranked. Instead, the guide is a way for Lawdragon to showcase attorneys and their perspectives, how they contribute to justice, and how they use the law as a tool to advocate.
As a result of the commitment to quality content and great stories, Lawdragon articles have strong SEO content and can be a great platform for the attorneys who are featured. One thing Lawdragon provides for the attorneys that are featured is objective, third party, independent recognition of their skills and reputation. Additionally, Lawdragon publishes an annual print publication, giving attorneys and their clients something to hold, beautiful pictures to see, and amazing articles to read. As Carlton Dyce of Lawdragon points out, “Our print publication is great for attorneys to have in their offices, handy for their clients to read while they are waiting. It’s a great way to showcase the attorney they are about to see.”
The tenth edition of the Lawdragon 500 will be released soon, an exciting milestone for the company. Over the years and after many compelling stories, Lawdragon remains excited about its core mission–telling stories of lawyers and lawyering. With millions of lawyers doing captivating work in many fields there is no shortage of stories, and Lawdragon remains committed to telling them.
Please join the LMA New England Chapter next week at their 2015 Regional Conference, taking place on November 12 -13 at the Hyatt Regency in Boston. This year’s theme is “What’s Your WOW Factor?” Join attendees as they learn about the best tools and approaches to stand out among the competition, succeed at winning new business and become industry trendsetters. Don’t miss out on the chapter’s most important and popular event, one that saw record attendance last year!
One of the most interesting elements of my job as a business development coach for attorneys is interviewing top rainmakers to better understand “How they did it.” While every attorney knows a rainmaker or high-level business developer, you might never get the chance to hear how they actually accomplished their goals, what it really took to do so and how to avoid the pitfalls they’ve encountered. One of my first interviews occurred with the Managing Partner and co-founder of Stahl Cowen, Jeff Stahl. He put everything on the line when he went out on his own. As he stated in our interview, it was “a combination of need and fear,” to begin developing his book of business. Here are Jeff’s top three tips for success in building his legal practice, followed by some of my own thoughts on the subject. Jump to the end for the full interview. Enjoy!
Jeff’s Tip #1: Helping versus Selling
Jeff’s first and most important revelation as a business developer was to really want to help people, not to sell them legal services. He says quite empathetically that it’s imperative to, “Recognize when someone is in need of service and then be there, and be creative to help them. Then it isn’t perceived as a sale, but as assistance that usually has greater receptivity than somebody who is hard selling.”
From my point of view, he is touching on one of the critical turning points for attorneys as it relates to sales and being viewed as a “salesman.” I don’t know too many lawyers who like or want to be seen as a salesman. What Jeff explains so clearly in his interview is that you need to switch off that mindset and turn on the idea that you are in the unique position to help people with real problems. The key here is to try not pitching and selling, but rather try asking and listening.
One of my favorite mantras is, “Prescription before diagnosis is malpractice.” Think about that. If you walked into a doctor’s office with a migraine and he suggested amputating your head, I’m sure you’d move pretty quickly to the nearest exit. The same rule should apply to prescribing legal services in the form of a pitch meeting. Just don’t do it! At least not until you’ve fully diagnosed the issues, needs and pains the prospective client is dealing with.
Jeff’s Tip #2: Market Yourself When You’re Busiest
If I’ve heard it once, I’ve heard it 1000 times, “I’m too busy to market myself.” One of the best take-aways from Jeff’s interview was his statement, “Too many people go out and market when they’re slow. You need to market when you are busy, because when you market when you’re slow, you often appear desperate. That comes across and people realize that.” Even when you’re working 60 hours a week, it’s imperative to find ways to market. If nothing comes in right away from the effort, at least you’re building your pipeline which will pay off when things do slow down.
In my experience, the key to success here is to find the time to market by getting organized with your day and opening up gaps of time for business development. A few suggestions I typically offer include:
Time blocking- Get into the office at 6:30 am once a week and spend an uninterrupted hour emailing clients, strategic partners and new people you’ve met to schedule a coffee or lunch sometime in the next few weeks. This one hour block of time each week will help ensure that you get meetings set every week without fail.
Delegating more- Do everything in your power to delegate administrative tasks to others at a lower billable rate. If you are billing $300-600 an hour, why are you making copies or doing filing? Try making a list of every administrative task that you do and add up the hours in a week. You might be shocked at how much time you’re wasting on activities that can be done for under $50 an hour by someone else. This “found time” can be better used for business development activities or even going home for supper with your family once in a while.
Never eat lunch alone- It’s the title of a great networking book for a reason. Schedule lunch at your office and invite someone to join you. Utilize a conference room so that it’s quiet and you can focus the conversation on your guest. If you did this with two of your existing clients or strategic partners every week, you will be delighted to the results you might see. Working during lunch might be helpful to get things done, however it doesn’t have to be your routine every day.
Jeff’s Tip #3: Be Impressive!
“When a client tells you what their issue is, it isn’t always their issue. Through effective listening you may recognize things that they may not even realize themselves.” Effective questioning and listening is not only important as a way to best service the client, but also as a way of differentiating yourself from other attorneys who aren’t focused on the clients story, needs and issues. From Jeff’s perspective it’s more important to be perceived as impressive and knowledgeable, than to beat your chest regarding your prowess as a successful attorney.
Jeff’s hit on something really critical here. Perception is reality and belief stronger than fact. The concept is simple if you think about it. By asking relevant, probing and open ended questions, the prospective client will perceive that you are an expert based on the way you are managing the conversation and your bedside manner. A great example here would be observing two psychologists. The first spouts off about why she is so good at what she does and her advanced degrees. The other, warmly welcomes her patient onto the couch and begins building rapport. Then the second psychologist begins asking questions about the patients reason for being here today. The patient’s response is followed up with additional questions which open up the dialogue to reveal the actual issues being faced.
If you are working diligently to find new business opportunities, and a prospective client finally agrees to meet with you, try to act like the second therapist by asking questions and being an expert listener. You will not only build greater credibility as a lawyer, but also uncover issues that your new client didn’t even know he had. A win-win outcome is inevitable.
I’d like to thank Jeff Stahl for his rainmaking insights. The reality is that there is always a way to find balance in work and in life. For many of you, it’s a matter of having the proper mindset. For others it’s obtaining new strategies and tactics to accomplish the goals you’ve set. Check in monthly for a new installment of Rainmaker 101 for more tips from the business development superstars I’ve interviewed.
Please join us for the 2015 Regional Conference, taking place on November 12 -13 at the Hyatt Regency in Boston. This year’s theme is “What’s Your WOW Factor?” Join attendees as they learn about the best tools and approaches to stand out among the competition, succeed at winning new business and become industry trendsetters. Don’t miss out on the chapter’s most important and popular event, one that saw record attendance last year!
Please join us for the 2015 Regional Conference, taking place on November 12 -13 at the Hyatt Regency in Boston. This year’s theme is “What’s Your WOW Factor?” Join attendees as they learn about the best tools and approaches to stand out among the competition, succeed at winning new business and become industry trendsetters. Don’t miss out on the chapter’s most important and popular event, one that saw record attendance last year!
The results of Citigroup’s 2015 Law Firm Leader’s Peer Monitor Report were examined by a highly informative panel[i] at Thomson Reuters’ recent 20th Annual Law Firm Leaders Conference in New York. The detailed discussion outlined overall marketplace trends and reviewed the strategies of law firms who are profitably navigating today’s turbulent legal market.
State of the U.S. Business Law Marketplace
Market conditions for law firms are stabilizing in 2015 but a fragile global economy / geopolitical climate, and changing legal department purchasing behavior are leading to continuing flat demand for purchasing legal services. Current marketplace conditions include: more work being done in-house or by non-law firm outsourced providers and law firms coming in from other markets who are competing aggressively on price and / or who are buying business growth by lateral attorney hires.
Lower demand for law firms’ services is also being driven by a decreased appetite for costly litigation and developing technology which performs more cost effectively commodity type legal work.[ii]. The most common reasons for moving work in house is more control over costs and increased efficiency.[iii] In a 2015 survey of over 300 in-house counsel from 22 industries over 47% of the companies surveyed reported an increase in the number of law department lawyers employed.[iv]
Larger Business Trends Lead to a Less of an Appetite for Litigation and a Push for More Cost Effective Service Delivery
General Counsel manage their departments in tandem with the overall goals of the business. Unresolved legal issues can have a negative impact on a company’s stock price and reserves set aside for lengthy litigation could be deployed for other business activities. Accordingly, there is an ongoing trend of companies settling earlier than before, and being more open to pursue alternatives to expensive and drawn out courtroom trials.[v] Also, the increased cost of conducting complex litigation due to e-discovery, is also causing companies to think twice about how hard and how long they want to fight.
A Look Inside: 2015 Thomson Reuters Legal Department In-sourcing and Efficiency Report
Since the great recession many law firms have become adept at trimming administrative overhead costs but seem to forget that corporate law departments are corporate overhead. In a 2013 survey of 238 managing partners and law firm chairs, over 44 percent indicated that their firms had taken steps to improve the cost effectiveness of legal service delivery, mostly in the form of changing project staffing models to include part-time and contract lawyers and outsourcing an increasing number of non-lawyer functions at their firms. [vi] Alternative service providers in the legal arena cover functions such as discovery management, document creation, dispute resolution alternatives to litigation, and talent management services. Legal process out sourcing (LPO) through alternative service providers has a predicted growth of 30% in 2015 and it is estimated that there is currently $20 billion of outsourceable legal work in the U.S. legal marketplace.[vii] It is estimated that the LPO market has only captured 5.5% or $1 billon of the estimated $437billion U.S. legal market.[viii]
A Look Inside: 2015 Thomson Reuters Legal Department In-sourcing and Efficiency Report
Practice Areas Where Demand Is Consistent or Growing for Law Firms
While businesses may have less of appetite for costly litigation, demand remains strong in certain areas due to more domestic regulatory investigations and U.S. lead examinations stemming from cross-border activities. [ix] In a survey released this month, 48% of law departments predicted an increase in regulatory work in the next year.[x] Other growth practice areas include: Intellectual Property/Patent; Cybersecurity/Data Privacy; Bankruptcy; Healthcare/Pharmaceutical, Financial Services and Mergers/Acquisitions. [xi]
Common Features of Underperforming Law Firms in Today’s Marketplace
To address the buying needs of corporate clients, firms which are surviving are becoming more efficient and predictable in their pricing and service delivery. Firms who are underperforming tend to have:
The lowest overall leverage rate (partner to associate) and less cost effective use of leverage;
A higher reliance on income partners, and a declining income partner contribution;
A high use of Other Lawyers but the use of these lawyers make a negative contribution to the firm’s bottom line;
A lower overall equity partner productivity and a decline of equity partner equity during 2009-14;
The lowest realized rates and lowest growth in those rates during 2009-14;
A heavier litigation reliance;
Less rocket science work and more commoditized work; and
Firm brands that are not as sharply differentiated or recognized.[xii]
What a Hyper-Competitive Legal Market Marketplace Means Operationally
General Counsel are generalists, who manage the legal needs of a company but are limited in the legal tasks they can and should do on behalf of their client, the company. Accordingly, there is always a set group of work that won’t be done in-house or for which third party specialized expertise is advisable. Outsourcing of ‘rocket science’ work and going to law firms who have established reputations for certain types of work are easier sells for in-house counsel who have to sell their outsourcing decisions to company management. Marketplace trends are resulting in more of a concentration of high end work in a smaller group of law firms. Notable legal market predications / observations made by the panel:
Clients will further segment the market (“financial and reputational tiering”);
Firms will further consolidate;
Lateral activity will remain high; and
Brand differentiation will help attract the right laterals and grow market share in a flat demand environment.
With continued cost pressures, the panel commented that profitable law firms will:
• Use systems and processes to improve:
Matter management;
Practice management;
Workforce management; and
Partner performance measurement.
In order to demonstrate a concern for efficiency, successful law firms need to facilitate better collaboration between the firm and client. In order to leverage internal resources and grow deeper, more stable and more profitable relationships with clients, law firms need to improve or better communicate their client service offerings and share information about legal developments. The panel identified the following ways to stay or become known for expertise and to demonstrate concern for law firm department budgets:
Knowledge sharing;
Client relationship teams, strategic and well thought-out cross selling; and
Developing associates and younger partners to ensure a sustainable business and cost effective service delivery structure.
Take-Aways
You have to have a brand – “We’re cheaper – but still really good and can do whatever you need, especially the easy stuff” isn’t working. Established brands make law firms an easier sell for in-house counsel to their management or management may even advocate for well know legal brands to their law departments. Company management does suggest particular law firms and attorneys and they pass on to the law department relevant thought leadership that they were sent by law firms or that they have come across. Executive management approves the law department’s budget. The general counsel should not be your only contact point. If you want to be considered for the less than 10% of litigation work that’s considered bet the company, shouldn’t management know you and feel comfortable that you know their needs?
According to David Cruickshank of Edge International, 96% of firms say lateral hires are part of their growth strategy[xiii]. Great legal brands help recruit great associates and laterals, as well as clients. How do you keep the attention of attorneys at regulatory agencies, high potential law grads and star attorneys with established practices? Share your knowledge. Many legal recruiters scour publications as a starting point for finding lateral candidates in niche practices. Your knowledge and service are your brand. How do you build or maintain a brand? Share your knowledge, write, speak, repeat.
How do you convey to clients and potential clients that you mean what you say – that you have deep expertise, that you can manage things in a cost effective manner, that you collaborate, that you are committed to technology – you show them. Jay Hull, Chief Innovation Partner at Davis Wright Tremaine mentioned during the conference that you go for wins on small projects with name brand clients, for proof of concept. Per Jay if you want to show a commitment to technology and innovation, you bring a legal technologist to a pitch meeting. Don’t drag your client into inter partner quarrels if you want to build confidence in your ability to manage complex multi-jurisdiction litigation. Want show deep expertise, include multiple authors on articles, rainmakers should bring along associates or new partners to speaking engagements or networking events – be a team and grow and show your depth.
[iv] 2015 HBR Consulting Law Department Survey – the Center for the Study of the Legal Profession at the Georgetown University Law Center and Thomson Reuters Peer Monitor.
[viii] Revenues estimated using AmLaw 200 data, Peer Monitor, Hackett Group Report and New York Times; Expenses from Peer Monitor Corporate Legal Dept is based on internal spend on legal matters.
[ix] A Look Inside: 2015 Thomson Reuters Legal Department In-sourcing and Efficiency Report.
[x] 2015 HBR Consulting Law Department Survey.
[xi] Citi 2015 Law Firm Leaders Survey.
[xii]2015 HBR Consulting Law Department Survey – the Center for the Study of the Legal Profession at the Georgetown University Law Center and Thomson Reuters Peer Monitor.
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State of the U.S. Business Law Marketplace
