Being popular or populist? Innovation in law firms.

Deploying innovative processes and technology solutions in law firms can be a punishing experience. Directors and managers who raised the ire of partners will tell you: it’s no fun. In fact, it can be downright brutal. So it’s not surprising that some choose populism as their path; If  lawyers ask for it, they’ll do it. Other than that, they simply keep the lights on.

A couple of weeks ago I sat with the CAO (the equivalent of a COO) and CIO of a large firm, reviewing the firm’s major capital projects for the year. We were musing over one of the more innovative initiatives and its value to the firm’s lawyers. The CAO asked: “What would Steve Jobs do?”.  A startling question. In a year when everyone is cutting back, no project is considered unless immediate value is proven, considering a framework for innovation was almost surreal coming from a results oriented CAO.

Steve Jobs did not build Apple or Pixar into the innovation hubs they are based only on focus group feedback. Even now, decisions made by folks at Pixar are challenged. In reality however, few of us have Jobs’ genius for recognizing what consumers want, especially when they don’t yet know it themselves. Trying the same in your firm is suicidal. Yet some of the most exciting innovations were not at all obvious back when. Voice mail, email, blackberries and even document management systems, were far from mainstream when they were first introduced to law firms.

I know managers, directors and even ‘C’ level executives in law firms who are perfectly content (and have success) simply maintaining the status quo.  That’s O.K.  But for those who have different aspirations, would like to leave their mark, and most importantly, see their firms make (small or large) strategic strides forward, the alternative is to figure out how to be popular, not merely a populist.

Remember voice mail?
What an unpopular decision this was 25 years ago. Lawyers hated it! I suspect that the initial introduction of email was also fraught with uncertainty. And what about BlackBerry’s?

Choose your timing carefully
For some, the current atmosphere presents a challenge. Time to batten down the hatches. For others its an opportunity. Firms are fearful, edgy, and therefore open to ideas that could help them change client perception. Outsourcing, alternative billing methods, improved matter management practices, client billing extranets could be considered strategic projects that a year ago would have been D.O.A. during the budget process. It helps if the firm has a strategic focus.

Choose your battles and build strong alliances
In 2001 one of my clients, a senior partner, had a vision for a unique KM solution.  He teamed up with another ‘heavy’ in his firm to introduce a solution that required ‘warm bodies’ and change to lawyer behavior. As you can imagine, that was a bold move and a hard sell.  It worked.  Nine years later, the system, processes and resources required to maintain it, are still around, waiting to be moved into their new technology framework.

Horde enough good-will capital.
Make sure you have enough good-will ‘capital’ to spend. Enough wins with ‘run of the mill’ initiatives that give you ‘chips’ to spend on more innovative solutions. If you have a big idea around unified HR services in the firm, you’ll need to battle existing fiefdoms. You’ll need a strong vision, motivation, and good-will with the firm’s heavy hitters, to pull it off.  The good news about being bold is the rewards, for yourself and your firm, could be substantial.

Be a marketer and a sales person
What makes all this possible is knowing, promoting and selling your ideas to your target market. Like any market, it’s segmented and should therefore be addressed differently.  Sr. partners, from managing partner.  Fellow directors, from assistants and paralegals.  You need to speak the language of the listener.

If you don’t have a big idea, don’t fake it
Sometimes it’s the right thing to let excellent execution of mainstream projects be your focus. At the same time, keep your eyes open for new trends, your finger on your firm’s pulse, stay close to its management and their vision and the BIG IDEA may reveal itself.  Perhaps invention is seeing the obvious that nobody else sees.  Which is proof; it’s not what you’re looking at that matters, as much as what you see.

Believe in your solution. Believe in yourself.
Confidence and gut level belief in oneself is the fuel that feeds the creative fire. Fear of failure can cloud your trust in yourself, in your ideas, and the value they bring your firm. I know of a CIO who rolled out a unified messaging system, an unpopular decision with the senior partners in the firm. He knew however, at a deeper level, that this was the right step, and is therefore seeing it through, converting skeptics to believers one partner at the time.  Because as Steve Jobs said: “Innovation distinguishes between a leader and a follower.”

Additional reading:

In her blog WorkingKnowledge, Andrea Mayer wrote an excellent post on the topic of innovation. I also found the New Yorker’s James Surowiecki’s “Hanging Tough” to be an illuminating historical lessons on innovation during tough economic times

22 Tweets

I remember a conversation I had with a client, circa 1995, about the world wide web and the Internet. “But will anyone make any money from this thing?” he asked. My answer was: “I am making money from this thing right now. Am I not consulting you on building your first Intranet?”.

Of course, the Internet is now a multi-billion dollar business and a paradigm changing technology etc. But this story should remind us that yes, one can benefit in all kinds of ways, even from seemingly nascent and not so obvious aspects of emerging trends.

Let’s go back to the future: I recently joined the already hot Twitter community. I’ll reserve for a forthcoming post, a more thorough analysis of this latest incarnation of Web 2.0/social networking tool and how it could (or not, as the case may be) help my clients, who are large law firms. It is clear however, that Twitter recently hit the exponential growth curve that propelled the likes of FaceBook and YouTube to be the juggernauts they are today. You can like, love, be obsessed, or hate some or all of them. But don’t be indifferent. If you are in the business of providing professional services, be it a consultant or a lawyer, investing time in digital networking is now more compelling (and in some ways, bewildering) than ever. So is Twitter the right platform for you? There are plenty of other blogs by lawyers who discuss this very issue, so I’ll stay out of the fray, for a bit longer. For now, I’ll share a revelatory moment I just had.

While working away on my computer, I noticed a stream of short Twitter messages (that are only sent around to a consenting community) consisting of 22 questions and answers. This turned out to be a real time interview, between Lance Godard, aka @22Tweets on Twitter (@ is preceding all of Tweeter’s alias names) and one of the lawyers in this community, the New York based Fred Abramson (aka @fredabramson). So how is this innovative interview process on Twitter, equal real business you ask? As I was glancing at this rapid fire interview, I learned (within minutes) that Abrams’ target market is entrepreneurs and consultants. Guess what? That’s exactly what I am!

I found the idea to be brilliant. Lance (a marketing consultant to lawyers and law firms) created the equivalent of an interview show called @22Tweets on the Twitter platform. By only asking 22 questions – keeping it short is the name of the game here on Twitter – he also created a memorable brand. By connecting a vendor to a potential client, he demonstrated why some consider Twitter a viable business development tool. I can assure you that the founders of Twitter didn’t dream of this kind of application. But here it is. And there’s more. @22Tweets shows the emergence of Twitter as a great ‘mashup’ tool. It’s email, RSS, FaceBook like, Instant Messaging, and otherwise a communications channel, like a real time podcast, or a radio show of sorts.

For some like Fred Abramson, and Lance Godard, this platform is showing real promise.

Billable hour – exaggerated rumors about its death

Those sounds we’ve been hearing since the deafening implosion of the economy are lingering protests over the hourly rates bubble charged by some law firms. Now, more than ever, there’s renewed interest in alternative billing models shifting away from billable hours to fixed or value priced engagements. Noted articles in mainstream media such as the New York Times, and countless posts in the “blawgosphere”, are now trendy. But the debate about the value of the billable hour is not new. A 2007 article by Scott Turow as well as others before him, foresaw its demise over the years. It seems that this time it could be different. The shock waves hitting the legal trade may actually change the way law firms charge for their services. But are we burying time billing a little too fast? Let’s look at a different industry for some clues.

As a CEO of a knowledge management and technology consultancy, I often tell my legal clients that our business model is not that different from theirs. In order to help clients, consultants, like lawyers, charge for knowledge, advise and research time. Although it has always been pretty standard for firms in our industry to charge by the hour, clients have asked that consulting firms will shoulder some of the risk, and provide ‘fixed price projects’. For a period of time, fixed price engagements were all the rage. There are however certain complex engagements that are virtually impossible to estimate up front, so consultancies had to build into their ‘fixed price’ high contingencies in order protect themselves. More recently we’re swinging back into a more rational mix of fixed price, ‘gated’ deliverables, and hourly billable models that suits the tasks at hand.

My consulting firm for certain activities, can offer some services as a fixed price model, with some cost overrun protection built in. In other cases, it makes sense to bill by the hour, but also to cap expenditures based on deliverables and other such goals. The client retains control over costs, ensuring the latter will not spiral out of control. This, by the way, works well for both parties, not just the client.

Inevitably the issues that must be addressed when discussing billable hours are how much to charge per hour, how long will the work take and the mix of legal resources on the file. In our industry, no one charges $1000.00 per hour. It’s simply the rules of supply and demand. Where we, as a consultancy have an obligation to our clients, is to staff our engagements (the equivalent of ‘matters’ in law firms) with a healthy mix of expertise and ensure that younger consultants provide good value for their time, and do as much as the work as it makes sense, while limiting the time senior consultants are used for.

In order to consider such models, firms will need to develop more sophisticated estimation and matter management practices. One of my clients, a large law firm here in Toronto, developed a model that allows lawyers to to price their engagements more effectively, using advanced spreadsheet, which is in turn connects to various systems in the firm. They can now provide their client with target fees, which enables them to then measure their progress as the matter progresses. This level of transparency is great for all parties. The firm controls costs, the client benefits.

It’s all common sense really. Looking around, law firms will find that other professional services organizations already dealt with this issue. There’s no need to ‘kill the billable hour’. But instead find ways to provide different types of service models that will serve the client, their specific needs, and the different types of engagements. Billable hour will be one of the arrows in the firm’s quiver.

(P.S. Ron Friedman posted a succinct reply to my post, and I was just told about Lance Godard’s blog post discussing this issue back in January!)

Adoption or adoption? (part I)

The word ‘adoption’ has at least a couple of meanings to a law firm. In Ron Friedman’s blog post, Can Law Firms Continue to be Late Adopters?, he asks whether law firms can afford being late adopters of technology and automation. My focus here is on lawyer adoption. Or more specifically, why lawyers do not use tools and processes that IS, and others in the firm are working long and hard to design, develop and roll out. Here are some lessons I learned over the years:

1. Initiative perceived to require too much change and have little value (“it was working fine before”)
2. Resistance to any form of change
3. ‘Carrot’ not sweet enough, and the ‘stick’ non existent
4. Lawyers did not remember it was coming (even if you sent emails announcing it)
5. Solutions do not seem to meet expectations (e.g. poor usability, cumbersome functionality, confusing processes etc.)
6. Poor attendance in training sessions

During one of my engagements with a large law firm, I interviewed a number of lawyers, including past managing partners in the firm. I was given a mixed bag of advice from which to glean pearls of wisdom:

1. Don’t launch during busy season (e.g. just before Xmas)
2. Send more reminders that something is coming, but keep emails short
3. Make sure it’s important to me. If it’s meant to be used by my assistant, don’t bother me
4. If you change things, make sure it’s for a very good reason and that it improves things substantially for me
5. One size does not fit all. I make great use of a ‘cheat sheet’, others may require training
6. I liked it when <name of any high energy assistant goes here> kept dropping by my office to check in on me
7. Get support at grassroots level as well as the firm’s management. The first is more important!
8. Be especially careful with initiatives that alike affect me immediately, email

Big Law: “Skate to where the puck will be”

The picture is bleak. After years of tremendous revenues and profit per partner growth, upheaval in the credit markets all but dried up the flow of M&A deals, the lifeblood of corporate law practice and a substantial source of revenues for large law firms everywhere. With so much pain and fear, should law firms do anything but batten down the hatches? As the owner of a professional services organization myself, I understand the need to be cautious. But I also see an industry that is heading for renewed growth sometime in the next 6-18 month. Lack of credit and dramatic uncertainty (now coupled with meltdown in the financial markets – a large source of revenues for law firms) is hurting ‘big law’. Here in Canada we had a grace period. We’ve managed to avoid some of the pain. But commodities and energy markets, the under-pining of the Canadian economy, are now in a recession, and therefore lower demand. Gravity takes its toll everywhere. From my vantage point as a  consultant to large law firm, I see troubling issues as well as a dawn of new opportunities. Unlike some who see a silver lining in the form of mounting bankruptcy work, I doubt that troubled times related work will completely replace the ultra lucrative ‘deal making’ side of corporate law. When a very large multi-national is about to be bought or merged, there’s little choice but to employ a large team of lawyers in order to manage risk, paper legalities and perform complex due diligence. It’s a fiduciary responsibility at the highest levels of management and directorship. Spending (or investing) 10 million in legal fees is therefore considered a ‘no brainer’. while there’s little doubt that bankruptcy work increases in hard times I doubt that it will increase enough to compensate for the revenue shortfall from the shrinking deal flow. Recent resesarch indicates as much:

…The conventional wisdom has been that litigation work, which represents nearly a quarter of the revenue generated by the legal industry, increases in economic downturns. But the West Peer Monitor Economic Index, a survey of law firms around the nation, shows that while demand for bankruptcy and regulatory work grew, litigation declined 2 to 5 percent in each of the past 10 months. Mark Medice, who oversees the survey, attributed the decrease to cost-conscious corporations curtailing their legal filings…

–Law Firms Tightening Belts — By Request. By V. Dion Haynes. Washington Post Staff Writer

In contrast with this less than happy situation, my humble prediction is that the market is starting a build-up towards a crescendo in corporate legal services and It’s about 6-18 months away. There’s a strong probability that the credit crunch, the very issue that stemmed the tide of corporate acquisitions, will be resolved due to global efforts now under way. Flow of capital and credit, some of which is sitting on the sidelines, will come back into the market. Hungry, opportunity seeking buyers will be looking for great deals. The financial work WILL sort itself out. The vacum created by the demise of venerable names like Lehman Bothers and AIG is palpable. As a result, things will heat up again in corporate law. In fact, I also predict that for some firms, residual business from downturn related activities (as an example, legal work related to government funding now made available to large financial institutions all over the world) could result in a lucrative overlap between the two types of legal activities.

Warren Buffet’s weekend op-ed in the New York Times expressed confidence in the future of the American economy and specifically, equities as a source of growth and wealth. Not withstanding his role as an American patriot and cheerleader for its ailing economy, his quote of Wayne Gretzky’s adage: “skate to where the puck is going to be, not to where it has been” was indeeed timely. While some firms cut back on ‘nice to have’ expenses like premium cookies and Starbucks coffee, or more serious fire lawyers and associates, others are hunting for merger opportunities. Judging from recent history of downturn cycles,  those with vision and fortitude will be better positioned for the next upswing. As always, it’ll come quicker then most think.