Articles by John

Legal Innovation: Who are the normal ones?



As if 2018 has not been busy enough for law firms in Australasia already?

What with law firms completing yet more of the seemingly dozens of legal industry surveys that come across an MP's desk*, February and March have seen, and will see, a plethora of excellent legal events and conferences.
I know I will miss mentioning many but these include the Chilli IQ Managing Partners Forum, ALTA demo days, Centre For Legal Innovation Digital Legal Practice & Innovation Masterclass & CLI's Legalpreneurs Roundtables, InPlace Solutions "Taking IT to the Cloud 2018" events, Law Fest-Innovation & Technology in Law, La Trobe University New Law:New Lawyers Symposium, ALPMA Pricing Masterclasses.
And these are all in addition to both the 100's of technical sessions and events all available to lawyers prior to CPD season finishing end of March and in between reading thought provoking articles from legal commentators and observers all over the world! (HINT: if you want an easy way of catching up on some of the best legal industry articles subscribe to Richard Smith's Weekly Digest)

I have been fortunate to be part of a couple of these events to date and will be involved in a couple more. For a veteran recovering lawyer like me it is- all at the same timeencouraging, exciting, scary, mindblowing, complex, and threatening to see both the array of innovative technology offerings out there and what some individuals and firms are doing not only with the use of technology but with adopting different mindsets and business models to the Oldlaw model (leveraging people x time x hourly rate).
I was particularly fortunate at the recent CLI Digital Legal Practice & Innovation Masterclass referred to above to co present and hear some great personal stories and presentations by wonderfully courageous and innovative professionals such as Melissa Lyon from Hive Legal, and Jannelle Kerrisk and Sarah Roach from Helix Legal, among several others at that Masterclass.

As I mentioned at the Masterclass they, and an increasing number of other legal providers who have shunned the Oldlaw business model, might feel-and be made to feel-like they are the outliers, the abnormal, the crazy ones when it comes to the legal profession. In reality they are the ones that are normal and behave more like business owners and entrepreneurs do in "the real world". They are the ones much more aligned with their clients ways of thinking and operating.
They are the ones for instance that genuinely have embedded a culture of :
understanding the importance of not trying to be all things to all people, utilizing technology where appropriate for the benefit of their customers, when you don't care who wins, how genuine collaboration benefits professionals and their customers lowering their costs to serve without compromising quality, understanding its their customers perception of value that matters, having value conversations with each customer before they commence any work, agreeing on scope of work, offering options, and then agreeing price(s) and terms of payment up front with their clients using the right people for the right tasks, and project manage both the matter and the customer relationship.

It is, regrettably, many professionals in Oldlaw that are abnormal and have over the last decades distanced themselves from the real world of business economics, acumen and customer focus.
Similar to the CLI Masterclass- and from the great reports of the ALTA demos-there were some really amazing products and offerings being showcased at the InPlace Solutions event (all Cloud based of course).
I was privileged to be asked to do a short key note welcome at the InPlace Solutions event and be part of their "innovation" panel where some great discussion ensured.
For someone who- as Patrick Ng will be the first to attest- has not had access to a help desk for over a decade now and who is technologically challenged (even though my wife says I spend much more time with my Apple family than my real family)- I found the products, the offerings, the conversations and in particular the stories of firms journeys into the Cloud with all their challenges and opportunities, fascinating. A credit to both the vendors and firms for what they have developed and implemented.

I could not help by reflect that if there are still IT Directors today in law firms (and those roles have not been outsourced or if the IT Director is not teenager on work experience) the role of technology in any self respecting law firm has changed profoundly.
It has very much transformed from a support function, morphed to an enabling function and in many firms has now developed into a lead function. Indeed advances in technology & the expectations of technology-real or imagined-has meant that in an increasing number of progressive firms, the technologists-the geeks-now hold “C” Suite positions.

Blasphemous I know to many lawyers but I suspect sooner than we think (and in some firms it is happening already) such geeks will be valued and remunerated more highly than many of the lawyers!!
Now and increasingly in the future in the most progressive and innovative firms technologists are expected to be real “fee earners”. Imagine- a world where "fee earners" don’t take days off sick, don’t have bad hair days, are on call 24/7 and don’t have to fudge their timesheets? I do.
I read firms websites and PR all the time and it is difficult to find a firm any more that is not “innovative”, “tech savvy”, "client focussed" and “different from our competitors”. But just because I can purchase technology from a vendor the same as my competitors can, does this makes me innovative or materially different from my competitors? I suspect not. After all if everyone is "innovative" no one is.
Unlike when I ran law firms many years ago perhaps the adoption of any sort of technology may have given us a slight competitive edge, and without in any way derogating what is on offer and what some firms have accomplished with technology, These days the adoption of technology per se is merely a table stake-it gives law firms an opportunity to continue to play in the game-but is no guarantee whatsoever of ongoing sustainable success.
What might be a guarantee of ongoing sustainable success?
One short answer to this maybe the way that you think about technology-a tech business model, mindset & culture if you like- not something just tacked onto Oldlaw. The way you implement certain technologies can, and are, giving some firms a real edge over their competitors-even those competitors that don’t look like you.

But if firms are just adopting technology for technology sake or just because your competition is, then at best you are missing out on enormous opportunities and at worst you run the risk of being exposed for what you still are. Applying lipstick to a pig…………….?
There seems to be some healthy- and unhealthy- scepticism out there about the real benefits of many law firms innovative technology and the recent report in the AFR of Beaton Consulting’s most recent client survey where it was reported that only 15% of 154 clients of law firms surveyed believed their external law firms were innovative. This engendered plenty of discussion at the InPlace event as I am sure it does elsewhere.
Are law firms innovating and not telling their clients? ( I doubt it, most firms are good at shouting from the rooftops their innovation).
Are firms doing what they think is innovative in the technology space and their clients don’t think it is innovative?
Or are the benefits of innovation not being passed onto their clients?
It’s not as though clients don’t want innovation according to the same Beaton Consulting Report- they are crying out for it just not enough are getting enough of it from the firms they are using it seems.

As the late Peter Drucker said;
"Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” (Sorry Oldlaw lawyers seems you are actually a cost centre not a profit centre)
Law firms ought find out pretty quickly whether they truly are innovating and/or whether they are spending resources on innovating the wrong things and/or whether such innovation is in the best interests of their clients.
After all if innovation is not benefitting your clients why bother period?
I am continually told by firms that technology makes them more efficient. It may well, especially given that the business model of most Oldlaw firms have enormous inbuilt inefficiencies. But I doubt most clients of law firms care whether their firms are efficient or not-they primarily care whether their firm is effective in solving whatever it is they came to the firm for. Perhaps that is the same for technology? Perhaps some clients don't want much in the way of innovative technology from their firm-perhaps all they want is better service (apropos the wonderful work Carl White is doing in this area), better access, or just the best lawyer or better value or.......? For some clients those changes will seem innovative enough.
The lesson here is all clients are not the same, don't expect the same & so don't want to be treated the same.The better firms don't assume.
Having said that, the most innovative professionals I have met are often the most curious. Curiosity leads to creativity. Creativity will usually lead you to genuine innovation that benefits all.
Curiosity will not kill the cat- but lack of it might.

* Personally staggering to me that many firms seem to have absolutely no problem in sharing their financial data, their hourly rack rates, realised & utilization rates, their budgeting, the salaries of their employees, etc with their competitors and yet most don't share that info with their own teams? I am assuming this with the goal so they won't look any different to their competitors?

The Great Illusion that is Communication


The following post was originally published in the Australian Legal Practice Management Association Blog as part of the series "A survival guide for legal practice managers". Click here to view original post.    "The greatest enemy of communication is the illusion of it.” Pierre Martineau

Earlier this year, Jordan Furlong, a Canadian lawyer turned consultant, commented in a blog post that as lawyers, “we pay close attention to the nature and quality of the legal work we do, but we pay relatively little attention to how we deliver that work, how our services are received, and how the client feels about it.”

In an environment where the market for legal services per se is contracting, firms are cannibalising each other to get more work, our best people are regularly being poached by our competitors or other industries and new game changers are entering the market with ever increasing frequency, it seems odd that firms are still struggling with something as seemingly simple as communicating with their clients.

It is also somewhat ironic is it not, given that lawyers pride themselves as being amongst the worlds great orators and wordsmiths, that most client complaints (and for lawyers the majority of costs disputes) are in reality "communication misunderstandings”, much more so than complaints of technical incompetence? Particularly given (or some might argue because of?) the advances in technology and the variety of communication channels now available, theoretically there should be no reason (or excuses) for poor communication. There is a general perception that some professionals, despite being technically brilliant, are sometimes "bad" communicators. I prefer to believe that our problem might be we are communicating ineffectively.

We do communicate, but sometimes it is out of necessity or in order to adhere to rules and process (regulations of course govern how, when & what lawyers should communicate with their clients- presumerably because without such regulations we would not communicate at all ?) rather than because we have given consideration to the effect we wish to have or how our clients feel about a chosen communications approach.

Today more than ever before effective communication = effective service.

Of course, ‘effective’ will mean different things to different people, and below are a few examples suggested to us by clients of firms as to what they believe constitutes effective and ineffective communication by their lawyers.

1. "We want usable and relevant content - not something we have to decipher”

What might your client ultimately do with your advice?  You might enjoy drafting an 18 page advice, but if your client General Counsel needs your advice for a presentation or report to their Board or Executive, or to give a simple answer to their CEO, the last thing your client wants to do is spend their time or that of their team translating 'legalese’ or 'accountonian' into some kind of usable format. I know of one General Counsel who uses a particular external lawyer because they don’t use unnecessary legalese- instead they provide “user friendly” communication often including things such as charts, flow diagrams, decision trees and other visualisations. Another client recently told me they use a particular lawyer because they always use the phone to explain often complex advice-before asking whether he is required to send follow up written advice.

Another GC bemoaned the "lost art" of the phone conversation and pondered whether it is now replaced by emails, memos and lengthy advices because some external lawyers think they can charge more for those? Good lawyers do not make assumptions but instead always ask a new client what mode of communication they prefer and how regularly they would like it.

2. “Please understand what we value - if you don’t know, ask us”

Sorry, but all clients are not the same, do not have the same needs, values or requirements and as such- they should not be treated the same. We often make assumptions as to what clients want and need when really, the only way to understand what your clients actually value (what they see as important and what they don’t) is to have a conversation with them about it. Whether you ask them or not, every client will have their own expectations in relation to non technical aspects of what you provide, such as:

  • turnaround times and milestones,
  • accessibility and  responsiveness (if and when you- or anyone-will return their call or email them),
  • resourcing (who will I be working with? who’s names on the bill?), and
  • the total fees (how much is this going to cost me- not how are you going to charge me?).

Our ability to understand and manage these types of clients expectations will be the biggest factor in determining whether or not they perceive value in what we do- and if your client doesn’t understand (or agree with) the value you provide - whose fault is that?

It is best to discuss those expectations before the work is done rather than during or after, is it not?

Use your initial conversations with your client to discuss (not tell) with them how you will work together, and how you will manage and meet their expectations.

3. “Talk with us about price, and be open and honest from the outset - we don’t want surprises”  

Clients are increasingly saying they want some certainty around fees, would like more options and that they want to be sure their law firms will deliver on whatever promises they make - within budget. Doesn't sound unreasonable - does it?

Unfortunately, time and time again, clients relate experiences with firms that routinely under quote or underestimate (or over-service) without a word of warning or explanation (until they’re asked for one), and many still refuse to provide any form of price certainty (because “we don’t know how long this will take”). Rather than having open discussions about pricing up front and providing some certainty, many clients continue to suffer what professional firm consultant, Michelle Golden, calls the “bill and duck” approach. That is, firms invoice a client at the end of the month and then duck for cover hoping the client will pay it, or at least part of it.. eventually.

Clients increasingly prefer firms that scope the work, agree on prices (not estimates) and ensure they regularly communicate with them. If there is likely to be a change in scope, they want to know before the scope has changed-not afterwards. Sure sometimes we like little surprises, but only if they are good surprises (like birthday parties, lottery wins, sporting results). No one likes bad surprises-especially if a cost is associated with it.

If you get the scope and price out of the way early on and then you can concentrate on solving your clients needs. Danny Ertel, of Vantage Partners, puts it well when he says, “When firm partners and their clients set out to problem-solve, rather than posture about the size of the discount, they actually come up with some fairly clever arrangements.”

Finally even if we do communicate effectively, whether we get engagement & connection from that communication is another topic altogether.

Corporates rail against time-charging


This article by Chris Meritt was published by the Australian on 19th October 2012. (Click here to view the original)

Corporates rail against time-charging

A MAJOR survey of in-house legal departments has revealed that billable hours are on the nose with the people who count: corporate consumers of legal services.

Most in-house legal departments dislike being confronted with time-charging by their external law firms but are not being presented with alternatives.

The survey of 346 organisations debunks the notion that law firms are under pressure to keep using time-charging in order to satisfy client demand.

It found that just 4 per cent of in-house counsel endorsed the use of billable hours as the best approach to billing and 24 per cent said they were dissatisfied with billable hours.

Another 52 per cent believed the use of time-charging was not ideal but they were not being offered alternatives.

The widespread dislike of billable hours has come to light in a benchmarking study of in-house legal departments conducted by the Australian Corporate Lawyers Association and the Corporate Lawyers Association of New Zealand.

While most in-house legal departments did not like time-charging, the survey found it was reluctantly being accepted; 57 per cent of organisations paid standard hourly rates and 55 per cent - generally the larger consumers of legal services - paid discounted hourly rates.

Of those organisations with turnover of more than $1 billion, 68 per cent had won discounts from normal hourly rates. At organisations with turnover of less than $25 million, just 35 per cent were on discounted hourly rates.

ACLA chief executive Trish Hyde said the key message from the survey was that in-house legal departments wanted greater certainty about their legal bills.

"There is a gap between what law firms are able to offer and what in-house would like," she said.

She believed law firms and their in-house clients needed to use the survey's findings as the basis for discussions about future pricing strategies.

In order for that to happen, she said ACLA would today launch a separate version of the survey's results that has been repackaged for use by law firms.

"That conversation needs to start because there are more effective ways of doing things," Ms Hyde said.

The survey found that 28 per cent of legal departments commonly use alternative billing methods and 24 per cent are planning to implement alternative billing methods.

It also found that legal departments were very selective about the type of work they would do in-house instead of sending it to their panel law firms.

The areas of work that were most commonly sent to outside law firms were litigation, arbitration and alternative dispute resolution.

The survey found 62 per cent of legal departments sent this work to their law firms.

The area of work that was most likely to remain in-house was privacy. Just 12 per cent of legal departments sent this type of work to law firms.

Ms Hyde said that even though litigation was the most likely area of work to be outsourced, some legal departments were building up their in-house capability in this practice area.

She said Shell, the international oil company, had brought all of its litigation work in-house.

"I presume they use some law firm support but their strategy was to insource their litigation because they know their organisation best and are best placed to decide when a case needs to be settled and when it needs to be fought," Ms Hyde said.

The decision to outsource legal work was also being complicated by the rise of what she referred to as project management principles.

"It's quite a different decision-making process," she said.

Legal departments now considered whether their work should go to top-tier, mid-tier or boutique firms. They also considered whether they should develop a direct-briefing capacity in order to take litigation work directly to the Bar.

They also needed to consider the relative benefits of legal process outsourcing and whether they should engage lawyers on short-term contracts for particular projects.

"There are now more options and unless the relationship between client and firm can overcome the differences, there will be more of these in-house decisions made on how they can best achieve their business objectives."

Despite the widespread unhappiness about the use of time-charging, the survey also found widespread satisfaction among legal departments with the standard of work completed by outside law firms.

It found that 34 per cent of legal departments were extremely satisfied with their main outside law firm and 50 per cent were satisfied, leading to an overall positive rating for the primary outside firms.

"For law firms, this is a pivotal time. It is a real opportunity," Ms Hyde said.

"If law firms can get it right, they will unblock a big problem that has existed in the relationship in pricing."

When pitching for work, she said law firms needed to break down the complexity of legal matters and look at them as projects that needed to be managed so they came in on time and on budget.

She said law firms needed to understand that it was no longer acceptable for the general counsel of corporate clients to approach their chief financial officer and simply assert "we had this over-run".

"Every other function is asked to meet budgets and the legal function is also asked to do this."