I have just returned to Melbourne (and winter) last week after a couple of weeks in the USA. In addition to unexpectedly seeing The Who live at The Staples Center Los Angeles, I found my way to the Legal Marketing Association Practice Innovation Conference in Chicago (LMAP3) and the Association of Legal Administrators Conference in Los Angeles (ALA LA), as well as many meetings, workshops and a few meals & wine in between.
Aside from The Who, highlights from the trip included:
- Catching up with my friend and colleague Ron Baker, the world leader and authority on value pricing in professional firms.
- Working with the master of positioning for professional firms, Tim Williams , in beautiful Park City Utah.
- Enjoying dinner with VeraSage resident accountant/comedian Greg Kyte, and Art Of Value's Kirk Bowman at The Roof Restaurant in Salt Lake City (no alcohol, tea or coffee thankyou).
- In Chicago, catching up again with game changers Patrick Lamb and Nicole Auerbach, founders of Valorem Law Group, plus legal-tech wizz, Ron Friedmann from Prism Legal.
- Meeting and listening to a stimulating key note presentation by ex uber (small “U" intended) General Counsel, now ValoremNext President Jeff Carr at the LMAP3 - turns out there are 3 more "P's" innovative law firms should subscribe to.
- Meeting fellow value pricing devotee and corporate legal department advisor, Ken Callander, plus dozens of law firm personnel that have "Pricing" in their job title (see Patrick Johansen's "roll call" of law firms which employ at least one pricing professional as a guide).
- Meeting with veteran legal consultant William C.Cobb (creator of the Cobb Value Curve) at ALA LA and hearing him talk sensibly about the coming tsunami that will completely change the legal profession over the next 5 years.
- Listening to great ALA LA presentations on innovation (and lack of it) in law firms by Kristin Stark, as well as participating in an inspiring leadership workshop by David Knapp of Marathon Leadership.
What I learned
Where to start?
At LMAP3 & ALA LA I learned that:
- It is getting harder and harder for law firms to differentiate their services from competitors, and most US law firms are cannibalising themselves in the flat "new world" market.
- Despite this, the volume of work brought in house continues to increase.
- Predictability and certainty around legal spend is a key imperative for corporate clients - corporate America no longer just accepts open ended billing practices, poorly scoped and poorly thought through estimates of fees, nor wide fee ranges that benefits no one but the law firm.
- AFA's are part and parcel of every law firm’s armoury - and again, are expected by GC's.
- Clients want value (and price is only one component of that value), and more of it for less. Majority of US law firms are still challenged as to how they can increase their profits and margins in this environment while operating under the ‘Oldlaw’ people X hours leverage model.
- Project management and process improvement have moved from buzz words to action and are expected of law firms by GC’s. Corporate clients also have increasing expectations of their external law firms capabilities to effectively use eBilling, provide concrete examples of successful use of AFA's, evidence how they manage and measure themselves internally to stick to agreed budgets, exhibit proficiency in technology, bigdata and the imperative of IT and cyber security. Now more than ever, RFP’s are an art form in themselves.
- Sophisticated VMS (Vendor Management Systems) are increasingly utilised by legal departments to track and measure everything, including realtime time entry by external law firms.
- Labour arbitrage is still king for the Oldlaw firms.
- While personal relationships with clients still predominate and excellent legal work is merely a table stake, increasingly the C suite influencers in law firms are people like Project Managers, Pricers, Technologists, Customer Service Managers (genuine-not the pseudo kind) - that said, the tsunami of technology may mean the next wave of C suite influencers are not people at all.
Given my prejudices and bias for the professions moving away from measuring everything by time and discarding the traditional partnership model, from a personal perspective there were a few lowlights:
- "We sell time" continues to be the predominant way firms measure and reward themselves and are being measured and rewarded by many GC’s.
- Unfortunately many of the people I spoke to from law firms with "Pricing" on their name tags, were costs and data analytic experts in disguise and often internally rather than externally focussed.
- While the "innovative" Oldlaw leaders wax lyrical about law in the future utilising technology, even a begrudging acceptance of Artificial Intelligence, predictive coding, robots and the like, any suggestion of running a law firm without timesheets is met with vacant stares, total disregard or cries of heresy.
- There is a very liberal interpretation of the words "Alternative Fee Arrangements" (AFA's) by both law firms and in house counsel, with AFA's often deemed to include hourly rate discounts, capped fees, blended rates, collars and fixed fees based on time - all of which to my mind are simply billable hours in drag.
- The prejudice against sharing profits with "non lawyers" shows no signs of abating and any serious consideration of alternative business models or more corporate structures for US law firms seems light years away.
Be under no illusions, LMAP3 and ALA emphasised just what a changing world the legal profession is now part of. Conferences such as these are incredibly beneficial and imperative to those lawyers that truly want to differentiate themselves by making a paradigm shift or, as Jeff Carr would say, want to practice "Nextlaw" which might just be more about preventions than cures.
Unfortunately, many leave and implement process efficiencies, changes to service offerings, improve the firm's use of technology, and have a better understanding of the need to provide more predictability around fees (coupled with more than a smattering of innovation by some firms) - nevertheless they essentially return to ‘Oldlaw’ law firms.
As good as incremental improvements may be, the impact of these changes is limited because underpinning everything is, in my view, an irrational obsession to continue using a business model that leverages people x time x hourly rate. As the old saying goes "you can apply all the lipstick you like on a pig, but.............."
While The Who may have hit 50 and for a diminishing number of devotees of baby boomers like me they still provide nostalgic pleasure, they are unfortunately not the future of music.
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