David Munn's Old Legaltech.com Blog - Visit new blog at davidmunn.wordpress.com - The Changing Practice of Law

Law Firms Starting to Get It?

david.munn@comcast.net (David Munn) — Tue, 24 Apr 2007 07:05:33 -0400

I've tended to be somewhat critical of US law firms for not adopting practices that would allow them to serve their clients more efficiently and cost effectively. So I do try to take note when I learn of a law firm taking a different approach. Here's a short list of some interesting items I've run across recently.

Legal OnRamp "Legal OnRamp provides content, connectivity and execution services to help legal professionals deliver higher quality work in less time and lower cost. Were working with leading professionals from major corporations and leading law firms to provide technology and services that will meet the business imperatives of the future."

You can read more about Legal OnRamp on the Adam Smith, Esq. blog.

Law Firms Adopting Six Sigma. There may be a reason this hasn't been getting a lot of attention. Larry Bodine wrote in 2004 on his LawMarketing Blog that "The law firms are keeping it secret that theyve adopted Six Sigma, because its such a huge competitive advantage." However, you can find a presentation about how Morgan Lewis is using Six Sigma in its mortgage loan practice here. According to Richard Sabat, a Six Sigma Green Belt at Morgan Lewis, they have been able to reduce time charges by 25% while significantly increasing quality. I wouldn't be surprised to find that they have also made their clients more efficient by adopting this program.

Alternative Fee Arrangements. Finally there's this item from Law.com's Small Firm Business Site about Small Firms Turning to Flat Fees for Rising Profits. The article features the Ambrose Law Group of Portland, Ore., and their switch from the billable hour to a flat-fee model. According to the article, The results have been dramatic, with the five-attorney firm reporting a 90 percent increase in profits." "Technology is fueling the drive for firms to switch to flat fees, said David Ambrose, founder of the Ambrose Law Group." "In the past, something that would have taken two hours, we can now do it in 10 minutes," he said. "If we only bill for that 10 minutes, obviously, we lost that revenue."

It is good to see that there are firms that are starting to think in different ways.

Is the legal profession finally positioned to take advantage of the technology revolution?

david.munn@comcast.net (David Munn) — Fri, 20 Apr 2007 07:52:31 -0400

I find it fascinating how certain themes sometimes come together in interesting ways all at once, and this is even more interesting to me now, as I'm just finishing reading Malcolm Gladwell's The Tipping Point.

A reader posted a comment yesterday asking about an item I had written more than a year ago called A Glimpse of the Future? In that post I referred to something I had seen that I thought had the potential to cause a revolution in the way corporate counsel practice. I hadn't thought about that in a while.

I still cant talk about the specifics of what I was referring to, but the general theme is no longer terribly novel. It has to do with the convergence of two major trends. The first it that the web (Web 2.0 if you like) is giving us access to powerful technology that is much easier to use than previous generations of software. The second trend is the outsourcing of legal work.

I havent written about outsourcing for a while, but, starting with the outstanding IACCM/Americas conference in New Orleans last week, and continuing with several items that have crossed my desk this week, the inevitability of that trend is really hitting home.

Several of the speakers at the IACCM/Americas conference talked about how they are using offshore resources, including lawyers, for some of their contract functions. Then yesterday I saw Ken Adams interesting article on Sending Contracts Offshore. His article is definitely worth reading.

Adams discusses two companies that are offering offshore services for contracts, and notes both companies dont simply offer an India-based version of business as usual. Instead, they emphasize their process-based approach. Reed and Perla each described to me how his company has systems in place to ensure optimal workflow and has invested in proprietary systems to handle tasks such as contract monitoring. As a result, the economies they offer arent driven only by the lower salaries they pay their Indian lawyers.

But heres another reason why I think offshoring of legal work is ready to take off. Adams writes Like Guarente of Oracle, Reed and Perla both note that the morale of a companys contract personnel will improve if they are freed of lower-value, repetitive tasks. It's not just cheap labor anymore. It's also systems that allow offshore teams to work more effectively.

Finally, this item on The Effects of a Flattening Legal World by David Galbenski came to my attention. The theme is similar. Galbenski writes about "legal architects" who "can act as a trusted advisor for in-house counsel to help them integrate labor outputs into their strategy."

As for the implications for law firms, Galbenski writes: "The downside for law firms is one word: change. There will not be the opportunity to practice law in the same way since competition with legal outsourcers may take work that used to be very profitable. Law firms will need to evolve how they deliver service to their clients. Theyll need to discover how they can do it faster, better, and how to make it less expensive. Theyll need to think like entrepreneurs. It will constitute a dramatic cultural shift. And, law firms will need to change with the timesor wait until the market forces them to change."

Many of us have been waiting for years for the technology revolution to really take hold in the legal profession. Besides the general tendency of lawyers to resist change, I believe there have been two primary impediments to greater use of technology in the legal profession: (i) software has been too hard to learn and too hard to use, and (ii) often the use of technology actually results in a greater workload, as lawyers have been forced to become administrative assistants. We now are seeing ways to address both of these issues emerge.

So, I think we may finally be on the verge of the long-promised technology revolution, which will result from a combination of better technology and lower-cost, but skilled resources using sophisticated dedicated systems who can free us from some of the drudgery that now prevents the legal profession from using technology to its full potential.

This change will probably take hold in corporate legal departments well before it makes significant inroads in private law firms, but it will eventually take hold there as well.

In addition to the disruption that will come to private law firms, these trends will inevitably result in the loss of some in-house jobs in the US, the UK, and other areas as well. But the lawyers who are able to take advantage of these trends will be doing more interesting and more valuable work much more efficiently, and at a lower costand as a result serving their clients better. With better and easier-to-use tools and routine and administrative work being done by overseas colleagues using sophisticated compatible and integrated tools, I wouldn't be surprised to see lawyers more satisfied with their careers as well.

From my point of view, all of this is very promising.

The Future For Lawyers

david.munn@comcast.net (David Munn) — Wed, 21 Feb 2007 05:57:27 -0500

At the IACCM Americas Conference in New Orleans in April, one of the discussion topics will be The Future For Lawyers. Here's the program description:

"A golden profession, an expansive career path - or the final bastion of the old craft guilds, struggling to avoid extinction? There is plenty of debate and uncertainty right now over what exactly the role of lawyers will become."

Panel members include general counsel and former Cornell Law School lecturer Russ Stevenson, fellow GC Loretta Cecil, and Professor Tom Barton from California Western School of Law (and current head of the worldwide 'proactive law' movement) and representatives from major law firms.

I'm sure the panel will have a lot to talk about. They could easily devote the entire program to the issues raised by Cisco GC Mark Chandler in his recent speech at Northwestern School of Law's 34th Annual Securities Regulation Institute on the state of technology in the law, which has generated a huge amount of discussion, such as this on the law.com blog. Then there are the seemingly daily news stories about higher and higher first-year associate salaries at major law firms. Here's one example.

I know there are some brilliant lawyers at these major US firms, but I've also seen some very poor quality work from them. I recently had to spend quite a bit of time fixing the drafting of an associate at a very large firm (who undoubtedly makes more than I do). I'm sure we paid him to draft the agreement, paid some partner to review it, and then paid them again to incorporate my revisions and comments. What kind of value are we getting for the huge amounts we pay them, and what incentives do they have to improve in the current system? I could have spent even more time fixing the associate's drafting. It was obvious that this huge US firm doesn't do a very good job of training their associates in contract drafting. Why should they when they sometimes get paid more for doing poor quality work than if they'd done it right the first time?

The legal profession has been notoriously resistant to change. But how much longer can that continue? How much longer can the legal proession avoid the pressures that affect nearly every other industry to become more efficient and hold, or even lower, costs? From the point of view of a consumer of legal services, the industry clearly needs more competition.

Companies are already starting to move some of their work to India. I know results have been mixed, but I've also heard of companies that have been quite happy with the work product of experienced lawyers in India, who make much less than 10% of the salary of a first-year US associate at a major firm.

In The World is Flat, Thomas Friedman discusses how tax and accounting firms have created systems that allow workers in India to efficiently process US tax forms, and how these systems have allowed even small US tax preparation firms to outsource their routine work to India. There are a lot of smart lawyers in India who have been trained in a legal system very similar to that of the US. How long will it be before similar systems are applied to allow Indian lawyers to do some of the work that US lawyers currently do? Although there will undoubtedly be outcries about the unauthorized practice of law, the consumers of legal services, particularly US corporations, will eventually find ways to force the legal profession to become more efficient and cost-effective.

I'm sure the discussion at the IACCM conference will be interesting.

In response to comment on Wisconsin State Bar Association vs. the World

david.munn@comcast.net (David Munn) — Sat, 18 Mar 2006 09:34:39 -0500

A reader posted the following comment in response to my previous post on the Wisonsin State Bar Association's efforts to crack down on the unauthorized practice of law (UPL) (State Bar Column):

"Less expensive equates to better client service?"

That wasn't my point. What I wrote was that more competition is likely to lead to better client service and that legal services need to be provided at a price the public is willing to pay. If lawyers price their services too high (which is often a result of inefficiencies in the way legal services are provided), fewer people are going to use the services -- or someone else is going to provide the services clients want at a better price.

The legal profession in general has been slow to adopt changes needed to provide services more efficiently or in innovative ways that better meet the needs of the client. I believe that situation has to change. The lawyers and law firms (and alternative service providers in some cases) that can figure out how to provide the services clients want at prices that reflect the value of those services to the client are going to succeed in the future. In some cases that should mean that lawyers can actually charge more because they are providing better client service by adopting new ways of doing business.

But we need to realize that it's not always going to be lawyers and law firms that are going to deliver services that we traditionally have viewed as "legal" services. The Internet is going to empower clients looking for "legal" services just as it has in many other areas. Clients are going to vote with their dollars and decide who is best positioned to provide the services they want at a fair price. The primary point I was trying to make is that we need to figure out how to adapt to the changes that are going to come - and the Wisconsin State Bar Association's President's column did nothing to address this important issue.

To be clear, I have no problem with the bar association working to protect the public from harm, and clearly there are examples where UPL has harmed the public. My concern (apparently shared by the Wisconsin Supreme Court*) is that a crackdown on UPL not be used as a pretense to restrict competition that, if allowed to flourish, would actually be good for the public.

* From Inside the Bar, Feb. 2006: "In response to a 2003 State Bar petition, the supreme court asked the State Bar to collect evidence of instances in which the UPL harmed members of the public, thus demonstrating that the lack of a definition of the practice of law is detrimental to the public interest."

A glimpse of the future? - Clarification

david.munn@comcast.net (David Munn) — Thu, 26 Jan 2006 23:15:06 -0500

Edited 1-30-06 - I realized today that this post was somewhat misleading. What I meant to write was that there were two separate events that led to this post. First, on Wednesday of last week I saw a webinar put on by Hummingbird and Andy Kyte. That was interesting, but nothing revolutionary for anyone who follows the enterprise contract management (ECM) market. ECM may be revolutionary in its own right, but there are lots of vendors pursuing that idea.

The next day I had a chance to see a preview of another business concept (not from Hummingbird) that I do think is revolutionary. That concept intends to tie together technology, processes, and people to target the specific needs of corporate legal departments in a way I don't think is currently being done.

I apologize for the confusion.

Original Post Follows:

I was able to see a preview today of something I think could actually lead to a revolution in the way corporate counsel practice. More on that later.

Yesterday I attended a webinar on enterprise contract management (ECM) put on by Hummingbird and featuring Andy Kyte of Gartner. What I remember most from the program is that Andy mentioned that the filing cabinet was invented in the 1880s (see history) and actually created a revolution in office practices. Andy went on to say, and I agree, that to a large extent we (lawyers and companies) haven't made that much progress since then, and we're still using a number of processes invented in the 19th century. For example, while nearly all of us use computers, the way many lawyers file documents still relies on the concept of the filing cabinet. In spite of the availability of document assembly products, many lawyers still go to the file cabinet (admittedly more often today a virtual file cabinet), pull out a document or two and cut and paste to create a new document. This model of lawyering is clearly inefficient and has to change.

Many of us who follow the legal technology world have been waiting for years to see real progress in using technology to revolutionize the way we practice law, not to simply do old things with new toys. Unfortunately, unless they work at a company like Cisco, most of us corporate lawyers have a long way to go. However, today I saw a preview that gives me hope that some of the promises of technology may actually come true.

Technology itself is, of course, not the sole answer. Processes, people, and systems need to work together in ways that solve real-world problems. And today I learned of a start-up company that is working to merge these three elements in a way that is specifically targeted at the needs of corporate counsel.

The view of the future I saw is both scary and exciting. Scary because this vision of the future clearly doesn't need as many lawyers (in-house or outside), but exciting because it could allow corporate legal departments to significantly improve efficiency and the value we provide to our employers. It should be even more scary to outside counsel who rely on inefficient processes for their livelihood.

If this company is able to pull off their dreams, it could make nearly everything I've written about on the legaltech.com site obsolete. They have big ideas, but I think they are on the right track. I can't disclose more information at this point, but I will try to follow this company and provide more information in the future.

New Legal Research Site

david.munn@comcast.net (David Munn) — Fri, 06 Jan 2006 07:16:28 -0500

LawyerLinks Advantage is a new legal research site targeted at corporate counsel and other corporate advisors. According to the company, it is "the first topic-based online corporate law research toolprovides legal professionals with faster and complete research results through easy to use navigational features. Instant access to all relevant legal precedent, practice and source materials reduces the amount of research time significantly. Subscribers quickly find answers, gain expertise on unfamiliar topics and keep up-to-date on the latest developments all from a single resource."

I've long thought that what corporate counsel (particularly those in smaller departments) need is a research tool that directs them quickly to the most important and practical information they need for whatever issue they are confronting at the moment. We don't usually have the luxury of time to do in-depth research, and often don't want to pay outside counsel to do basic research. If Lawyerlinks Advantage delivers, it will be useful.

LawyerLinks is getting positive reviews from legal bloggers, including Dennis Kennedy and Robert Ambrogi.

You can try it for free for 30 days.

Clueless Outside Counsel

david.munn@comcast.net (David Munn) — Wed, 21 Dec 2005 23:46:53 -0500

I've seen three articles in the last two days about offshore legal services - primarily India.

Here's a great quote from an article in the Minnesota Lawyer's In House Counsel quarterly special on offshore legal services, written by Amy Johnson Conner:

"[Rocky] Dhir [CEO of Atlas Legal in Dallas, which offers offshore attorneys for hire] said he spoke with a partner at a large U.S. firm in an attempt to convince him that outsourcing was so much more efficient than the partner's current operations. However, the partner explained that his firm makes money by being inefficient. When Dhir asked about profit margin, this partner said the firm wasn't focused on profit margin, it was focused on billable hours."

Anybody surprised?

Outsourcing of Legal Services

david.munn@comcast.net (David Munn) — Mon, 19 Dec 2005 22:42:14 -0500

If any lawyer doubts that we are subject to the globalization trend, just check out the December 18 post on excited utterances - New Offshoring Legal Services Report http://excitedutterances.blogspot.com/. Corporate legal departments may be particularly affected by this trend since they are generally seen as cost centers.

"The International Legal Technology Association's 2005 Technology Survey was published this month. A summary of the findings, includes among other things, some very interesting feedback on the topic of outsourcing."

"Then in late 2001, two of General Electric's (GE) businesses added Indian lawyers to its Gurgaon, India office. Other multinational companies, with in-house counsel, followed (see Corporate captives below)."

"These are in-house legal departments of companies like Allstate Insurance, American Express, Bayer, Cisco, DuPont, GE, Microsoft, Morgan Stanley, Oracle, Sun Technologies, and United Technologies."

This is probably just the beginning. All the more reason for those of us in corporate legal departments to embrace new ways of practicing law to ensure that we continue to deliver value to our employers.

Wisconsin Bar Association vs. The World

david.munn@comcast.net (David Munn) — Wed, 07 Dec 2005 22:49:44 -0500

I read what I thought was an amazingly short-sighted column in the most recent issue of the Wisconsin Lawyer magazine. I wonder if others will have the same reaction I did. http://www.wisbar.org/AM/Template.cfm?Section=Wisconsin_Lawyer&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=54131

The column is titled The World is Flat ... and What That Means to You. That sounded like an intriguing title, and the first part of the column talked about how globalization is affecting the practice of law and about the offshore outsourcing of legal jobs. Interesting so far.

But then, rather than challenging the legal profession to find innovative ways to compete and provide better client service in a new world, the author makes an abrupt segue into a diatribe about the unauthorized practice of law.

"The globalization of the practice of law hits home in several areas of long-standing concern for the State Bar: the unauthorized practice of law (UPL), multidisciplinary practice (MDP), and multijurisdictional practice (MJP). Whether we like it or not, lawyers and nonlawyers in other locales, as well as members of other professions, appear ready and willing to step in and do the work that Wisconsin lawyers are currently doing. These persons may or may not have the ability to recognize all of the legal issues involved in that work and, unfortunately, sometimes the public will be harmed. We must do whatever we can to avoid or minimize the potential for such harm."

The rest of the article is devoted almost entirely to a discussion of UPL and potential harm to the public, and it concludes "Regulation of the practice of law by lawyers is often criticized as 'protectionism.' In reality, however, it is not only the legal profession, but also the public, that is harmed by the unauthorized practice of law by nonlawyers." Ok. Protecting the public is a legitimate issue, but this has very little to do with the original topic of globalization and nothing at all to do with determining who (or what expert system) is in the best position to provide high quality, cost-effective services or information to a given consumer, whether the services or information are characterized as "legal services" or not.

Connecting a discussion about globalization and competition to a discussion about UPL indicates to me that the real issue is "we need to protect our turf against the foreigners and real estate agents and others who want to cut into our business."

Competition if a fact of life we all have to live with, and competition is certainly going to force changes in the practice of law. Overall, that's probably going to be a good thing from the perspective of the public. There will be examples where the public is harmed (but that's hardly unique to nonlawyers), but in general the public will be better off with greater competition. The legal profession should be focusing on improving its ability to compete by providing services the public wants at a price they are willing to pay -- and this will require us to rethink the way the legal profession itself works. Isn't that a better use of our time and energy than trying to to stop the inevitable march of competition under the guise of UPL?