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December 2005

The Silliest American Lawyer?

My post on "Law Firms Are Fat, Not Flat" has drawn the ire of one commentator Moe Levine, who has also taken issue with numerous other posts on this site here and here.  Recall my "Fat Law Firm" post essentially noted that law firms have largely remained insulated from change and innovation, and are way behind other industries in terms of delivering added value to clients.   In response to my post, Moe states:

You write, "Law firms are insulated from the pressures of innovation because of liscensing restrictions."

What do you do, just sit around and make up silly stuff?

American law is probably the most competitive business in the world. There are zero barriers to entry, save for education and a 2 or 3 day test, once. There are no capital requirements, etc. etc.

Competition does not spur investment. The opportunity to earn a return on an investment yields investment. There are no opportunities in the law to make more money.

There are no deals not being done because of legal cost, no real property not being sold, no crimes not being committed, or probate estates not being closed.

Legal services are sold as they are because the market is working.

Moe obviously thinks that the legal services market is, in fact, both innovative and market driven.  I disagree with most of the points made by Moe, above.  I have worked for several of the largest law firms in the United States, as well as some smaller ones.  I see what is happening on the ground every day. I  Observe an insular and uninspired profession which is so self-regulated and self-absorbed, that relative little is being done to incorporate new technologies and business models to deliver more value for less cost to the client (although I certainly see plenty of firms using technology to find new ways to create billing events for clients).  When you look at what is going on in other markets with outsourcing, insourcing and order fullfilment, law firms with few exceptions are still sitting on the beach waiting for the swells to come up. Without doubt, Wal-Mart is the king of delivering more for less regardless of what you think of the politics of Wal-Mart's approach.  Is there any firm which is even remotely analgous to Wal-Mart in terms of reducing cost and increasing value? 

I wanted to take the opportunity to respond to one of Moe's comments which I find interesting.  Moe says "e; there are no deals not being done because of legal cost."  Actually, I see something worse every day. Yes, the criminal commits the crime, but the real question is can they afford an attorney.  And even the wealthy accused have the right to get more for their legal buck.  On the civil side, I see attorneys still charging thousands of dollars for contract review and drafting because they are using a process which drives hours up, ignores all of the great efficiencies offered by technology and software and are using billing techniques which offer no incentives for the lawyer to deliver maximum value for the least cost.  I see that the average small and medium-sized business avoid lawyers like the plaque when they do deals because they don't see value being delivered by those lawyers.  I deal with litigators every day who have no idea what they are trying to achieve for the client in court and are driven only by a sense that they need to fight without any sense of what they are really fighting for.  These trial attorneys go into a comma 30 minutes after the hourly retainer is signed and become barriers to resolution until after their client runs out of attorney fee money.

The very concept that an hourly billing model where the attorney has absolutely no 'skin in the game' could actually drive a market to efficiency (as opposed to maximizing revenue) is puzzling to me.  But many lawyers are so blinded by the way things are that they don't see how bad things have gotten.  And any attack on the hourly billing model is akin to treason against the profession. A thoughtful rational analysis yields one conclusion.  The legal services business is ripe for reform and innovation.  Market alternatives are the next step.  In order for market alternatives to become readily available we need the market to open up and alternatives to become more accessible to clients,  Someone needs to turn the light on. Without more traditional marketing and sales, how could that ever happen?

And yes, Moe, I do sit around sometimes and make silly stuff up, but that material I share with my kids. Knock Knock. Who's there?  ... Hourly ... Hourly Who? Hourly Gonna Accept The Future?

The Self Interest of Bloggers Drives The Blogosphere

There has been some discussion on the internet about the appropriateness of self interest in blogging.  All bloggers are clearly marketing at some either subtle or overt level in order to achieve something for themselves. That something may be more traffic on their blog, notoriety, acceptance as an authority in a particular area of interest or to sign up customers for their business.

The blogosphere sometimes, but not always, encourages and freely accepts comments and linkbacks from other bloggers who may have a “Horse in the Race.” It is my belief that self-interested commenting is not only acceptable but desirable as we cross link resources across the blogosphere.  As you all know, I am certainly in favor of more comments being posted and have advocated that bloggers should spend more time posting comments, even if they have to spend less time creating posts on their own blog.

      What do you think? Where is the line between link spam and legitimate comments?

Law Firms Are Fat, Not Flat

When you look at what is happening in so many other industries, the so called flattening of those industries, you cannot help but be struck that the legal industry is so resistant to incorporating efficiencies into the legal process. While market forces in other industries drive companies to find the lowest cost alternative to handle a particular task, law firms seem almost impervious to the thought of innovation or efficiency. The same technology which is used in call centers, production, manufacturing, and other professional services is equally available to law firms. Yet, incorporation of the technology to save clients money or reduce legal costs is relatively non-existent across the legal services market, relative to other industries. It has been suggested that until clients demand that law firms deliver lower cost and higher quality services, law firms will not be motivated to act. While there may be something to this notion, I am not buying it.

In other markets, new market players and old market players embrace technology and outsourcing in order to gain market share and stop the competition. They don't wait for the market to demand. They create the market. Law firms are insulated from the pressures of innovation because of licensing restrictions. For instance, lawyers need to be licensed in every state in which they regularly practice. Most lawyers are only licensed in one state. Ethics rules limit law firm marketing. In addition, there is a negative stigma to law firm marketing. Thus, law firms have very limited ability to get the message out to prospective clients that they are doing it differently, or are able to do more for less. Those law firms that are embracing change and innovation are hard to identify from the outside in. And from the inside out, law firms don't have sales forces which are devoted to knocking on doors, making phone calls and otherwise providing comprehensive information to prospective clients about their services.

So, what needs to change in the legal market in order to for innovation to ensue? Does the change have to come from the client side? It is my belief that law firms and lawyers will have to employ traditional marketing and sales people who can go out into the market without the demands and pressures of having to bill time or work for clients on important matters and evangelize what they are doing. Without a marketing and sales force, the reach of any particular law firm to distinguish themselves in the market and reach new clients is extremely limited. The market must be educated as to how and why the flattening of the world and the availability of technology can revolutionize the way law is practiced. Without this important piece of the puzzle, the legal market will continue to be the caboose of the global train of innovation and technology adoption.

Virtual Law Clerks And Paralegals Prove The World Is Indeed Flat

I just started reading "The World Is Flat" by Thomas L. Friedman. My new litigation manager, Tom, recommended the book to me. I am only on page seventy-three, but I have already been struck by a couple of thoughts.

Mr. Friedman has developed the basic premise that the world is flattening out where the individual person and their talents has become available on a global scale to any company, other person, or government that can use those talents. Work is being outsourced to places like India, where the prevailing wage is less than one-fifth of what it is in the United States. Where presumably equally competent or, more competent people, do the work. The same phenomena is occurring within the United States, wherein a worker doesn't have to be located inside the corporate walls in order to provide value to a particular company, project, or task. Housewives in Salt Lake City, UT, are doing reservation scheduling for airlines from the comfort of their homes.

My most pervasive thought thus far is that Friedman's observation of individual empowerment is exactly the same premise as our virtual paralegal, law clerk, and case manager program is built upon. Just like doctors don't need to be located in the United States in order to read an x-ray or CAT scan, law clerks, paralegals and other litigation support people do not need to be located within the walls of a law firm in order to provide value on a particular task. Our virtual workers work from the comfort of their homes, where they bring their particular specialization and knowledge to bare on a particular legal problem. I can pay them a competitive rate of twenty dollars per hour, and bill them out to the client at forty or sixty dollars per hour, still way below market levels for in-house workers. On certain projects, I can bill the virtual workers out at cost, say twenty dollars per hour, in order to develop a relationships with a particular client. For ten hours of great law clerk or paralegal work product, I charge the client two hundred dollars. That is a single hour of attorney time. You can see from this simple example what kind of value can be provided by this approach.

More Information On Developing Real Relationships With Your Clients

Mr. Patrick McEvoy, President of RainMaker Best Practices, at the Rain Maker Best Practices website, had the pleasure of interviewing Dave Maister in connection with his new article "Do You Really Want Relationships?" I have posted about his article and other blogs that discuss it previously (here). The interview is available (here) online (simply provide your email address in order to log in) and includes a discussion of the following issues:

1. The "give to get" attitude in professional services and why you need to develop it.

2. Why you must learn how people (i.e. your clients) "actually" think and function.

3. Learning how to apply the lessons of romance, dating and marriage to your practice development efforts.

4. Discover the difference between an expert and an advisor and when to apply these differences.

5. Why you should deal with clients that "reciprocate."

6. The difference between transactions and relationships.

7. Learn what your marketing "should really" be about.

8. How to start thinking like a "buyer" when you're selling.

9. Why you must "demonstrate" NOT simply "tell."

10. The most important thing that will determine the quality

Getting Clients To Rethink Their Views On Lawyers

There is a great blog called "What About Clients?" this blog asked the question "True Service--are we lawyers delivering?". The What About Clients? blog delivers severel great rules about improving client service.

The first rule (here), which is really my favorite, is "represent only clients you like." The author indicates that you can't deliver true service to a client, unless you like your client. I have to say that I agree with this 100%. If your client is a jerk, human nature will cause you to aviod that client. Human nature will cause you to dred the return phone call. Human nature will cause you to funnel that person to voicemail. Human nature will preclude you from wanting to go that extra mile for that client.

His fourth rule (here) is that you must do more than under promise and over deliver. You must change the way people think about lawyers in general, in order to put clients in a position to appreciate the services you are providing. This a great post on getting clients to rethink the way they think of you as a lawyer.

Lawyers And Clients Shouldn't Be Like Kids And Parents

Patrick Lamb over at In Search of Perfect Client Service has an interesting series of posts worth reading. In one post, he talks about the "under promise and over deliver" concept. He notes that it is not simply falling over the goal line, it is blowing through the back of the end zone. Of particular note is his question as to whether or not the concept can ever apply to lawyers, becuase clients expectations of their lawyers are so low. Here is my money quote:

            As I understand Dan's argument, the philosophy doesn't apply to lawyers because client expectations are so low that "over delivering" does not really accomplish much. Sort or like being the tallest midget.

I agree one hundred percent with Patrick's conclusion that in order for lawyers to really distinguish themselves in the market, they need to change the market. I am always evangelizing the way I deliver services to clients, including my innovative billing approaches to other lawyers locally. They eventually ask why I am sharing this information with them, given that I have been so successful with my model. My answer is always the same. Until the market starts demanding for my brand of services, then my clients are simply finding me by dumb luck. Unless I can get other lawyers to start doing business the way that I do, clients will never seek out my brand of service. One of the things that I hope this blog accomplishes is to inspire other lawyers to start thinking out of the box when it comes to client service. Over the course of my career, I expect that there will be significant diversification in the legal services market. I also expect that blogs will be a large part of the motivation for change.

Patrick Lamb also has a great post about something Tom Kane has written about at his Legal Marketing Blog. Patrick notes that sometimes he feels like a big wallet to his kids. He asked the relevant question, "Do we treat our clients the same way that our kids sometimes treat us? Are our clients really just sources of money?". Tom Kane notes that Jerry Riskin over at Amazing Firms Amazing Practices has also weighed in on this important topic (here). All of these posts spring off of David Maister's post titled "Do You Really Want Relationships". Maister provides the following examples of a dysfunctional "client as enemy" approach by law firms:

  • Focus on rehearsing what you are going to say to the client in proposals and presentations rather than how you plan to get a true conversation going.
  • Avoiding conversations with clients because you want either to remain in control or avoid having to treat the client as a person.
  • Avoiding contact with clients unless there is something concrete to talk about.
  • Too obviously trying to sell more work to get what you want rather than serve the client.
  • Requiring that all agreements and decisions be documented and formally approved, rather than trusting each other’s word.

If you really take a hard look at the above list, you will realize that lawyers do all of the above things. It is part of the bread and butter of the practice of law as we know it today. Of course, all of these "client as enemy" indicia come from our feeding frenzy mentality when it comes to generating billable hours. Because our profession is so focused on creating and capturing billable time, there is very little attention given to creating relationships.

At my firm, we work hard to build relationships with our clients. Our clients are constantly evangelizing us to their friends and business associates. We are constantly discussing budgets, expectations, providing discounts on fees for no particular reason, meeting with our clients at their business location at no charge, having conversations with clients at no charge, and generally treating our clients as our friends, as opposed to as if they were giant talking wallets.

Case Manager Starts January 2nd

      As you may recall, I have hired an ex-in-house counsel for a large corporation, as an independent contractor. He has been a client of mine for some time in matters concerning a small business which he owns. He has been very enthusiastic about our business model and the way that we are approaching the practice of law.

      His role in the firm will be to manage tasks for other virtual workers as well as to keep litigation matters on track towards conclusion. I look forward to him joining our crew and will certainly let you know how it goes.

      Of course, the key to this particular brand of virtual worker is the same as with my other virtual workers. They only work if there is work that needs to be done. They work within defined budgets. They work on defined documented tasks. There is no inefficiency in the process. Clients get great value for each legal dollar spent.

Being Independant Makes You Dependant

      When you are unexpectedly out for a week as I was recently, you realize how dependent you are on your staff to get things done when you are not sitting in your chair. Luckily, I have a great staff that managed to keep the boat afloat while I was trying to mend.

      I would have thought that technology would have been a bigger asset for me, being sick and away. Unfortunately, I felt so horrifically bad that I had no aptitude for helping clients, reading and responding to emails or otherwise getting stuff done. I realized that my mental capacity, agility, and ability, were so compromised that I would be adding no value to clients by trying to suffer through work while feeling sick. During the week I was out, I did very little by way of email, remote access to my office, or even cell phone voice mail. I simply noted on my voice mail that I had pneumonia and that they should contact my office if it was an emergency. It is interesting to see how the voice mail messages dropped off from a flood of ten to twenty early in my sickness to virtually none by the end of my sickness.

       Also of note is the fact that my clients were extremely understanding and supportive during this time. I did not receive a single complaint from a client about my unavailability. Instead, they rolled with it, were patient and have simply waited for me to get back in the saddle.

      One of the difficulties of being an independent practitioner is the fact that you are not a interchangeable piece with a bunch of other lawyers at a large law firm. No one could step into my shoes while I was gone and things simply had to wait. While my staff kept things moving while I was gone, it was a great opportunity for them to get caught up as well.

      Being sick is part of the ebb and flow of life. Thank you to Carolyn Elefant at My Shingle for her advice and good wishes during the time I was down and out.

Back In the Saddle Again

      I am slowly getting my energy back after a bout of pneumonia. I have to say, it is no fun having a high fever and being stuck in bed. I got pneumonia from my eldest son,who had it several weeks ago. As noted in a previous post, I did not go to the doctor quickly enough.

      In any event, I am back in the saddle and ready to go. You should expect some more posting from the Greatest American Lawyer over the next several weeks.