Insights on the “New Normal” from Law Firm Managing Partners and Corporate Counsel
Last week in my Law 2050 class we held two panels of speakers–a panel of three BigLaw managing partners on Monday (Ben Adams of Baker Donalson, Richard Hayes of Alston Bird, and Steve Mahon of Squire Sanders) followed by a panel of three in-house counsel of large corporations (Reuben Buck of Cisco, Jim Cuminale of Nielsen, and Cheryl Mason of Hospital Corp. of America). First, my enthusiastic thanks to our panelists, who provided a lively, engaging, deep, and quite candid forum for the students.
Indeed, the speakers covered so much ground I could not possibly cover it all in one or even several posts. So what rose to the top in my assessment? Four things:
- The Rise of MediumLaw. Both sets of speakers suggested that medium-sized firms (MediumLaw) are increasingly a source of competition for BigLaw and of legal services to large corporations, confirming Richard Susskind’s prediction that, while MediumLaw firms will face pressures to consolidate, they now have “an unprecedented opportunity to be recognized as credible alternatives” to BigLaw. One reason is the basic “world is flat” effect, making it easy to access legal talent everywhere. As for legal talent, all the speakers recognized that MediumLaw is brimming with top legal talent. The there is the lower fee structure a client is likely to enjoy by hiring a regional MediumLaw to handle a matter in the region. While all the corporate counsel confirmed that “bet the company” litigation or massive, complex transactional work is likely to go to BigLaw because of its repository of experience on such matters and ability to scale up to a matter of any size, there was no question that they considered MediumLaw a substantial and growing source of their legal service needs.
- The Corrosive Effect of Lateral Partner Movement: Both sets of speakers emphasized the importance, now more than ever, of establishing strong relationships between firm and client. The corporate counsel stressed the need for firms to “know my business,” and the managing partners pointed to many new kinds of practices they are taking to get there. And both panels identified the acceleration of lateral partner movement as one of the chief obstacles. Indeed, when asked what keeps them up at night, the managing partners concurred that the fallout from actual and potential partner exits is a constant source of stress (though I imagine each of the firms represented has done its share of lateral partner hiring).
- Value: The corporate counsel kept coming back to their primary concern in selecting outside counsel—value, value, value. What wasn’t as clear is how clients evaluate it and how firms are rethinking how they deliver it. For example, Cisco is well-known for using fixed fees arrangements for much of its work, but one of the corporate counsel suggested that fixed fee is not necessarily the silver bullet. If the fixed fee is simply a number that aggregates the expected revenue from an hourly billing method, how is that delivering better value? My strong sense from this representative group was that while firms and clients are willing to experiment with ways to wean off of the billable hour, there is no consensus yet on what alternative fee model will consistently deliver better value over time.
- Law Firm Financial Structure as an Obstacle to Innovation: A strong theme the managing partners panel returned to several times was how the nature of partnerships as financial entities constrains innovation. Firms manage tax consequences by flushing out profits and limiting retained earnings, which puts a disincentive on investing in R&D and makes experimenting in costly new business models or products quite risky. To be sure, the managing partners described some innovative practices–for example, one firm maintains a “venture fund” in the form of an allotment of “billable” hours groups of attorneys can apply for to free them up for practice development projects, with the firm standing behind accounting for the hours as counting every bit as much as hours actually billed to clients. As the partner from that firm explained it, that kind of practice development project is highly valuable to the firm, but not to individual lawyers if they don’t get credit for it, so they won’t do it with this kind of incentive. Yet the appetite for that kind of innovation necessarily is limited by the partnership financial profile as well, not just by the billable hour itself.
This is just a taste of the range and depth of topics our panels covered. Again, I can’t thank them enough. as for my students, I know from the “buzz” that the panels made a tremendous impression on them. They handed in their reaction papers yesterday, so I will soon learn just what that impression was!
Law 2050 (the Class) has Launched!
I am pleased to report that my Law 2050 class here at Vanderbilt Law School is now up and running. Our first two sessions last week consisted of a broad overview of the class and a brief history of the modern American law firm. The class has 45 very bright and enthusiastic students enrolled, and based on their personal statements they are keenly aware that it is to their advantage to learn more about today’s dynamic legal industry environment. Today and Tuesday we will hear from panels of managing partners and in-house counsel on their perspectives and practices. For those interested in the scope of the class, I have set out the syllabus after the jump.
Law 2050 Class Speaker Schedule
My Law 2050 time the past few weeks has been devoted to getting the Vanderbilt Law School class up and running, thus no blogging. As I mentioned in my post introducing the class, I have been overwhelmed by the enthusiasm invited guest speakers have shown. We have a wonderful speaker schedule planned. I will be blogging about these events as the semester progresses, but with the understanding that that these are busy people with fluid schedules, I wanted to thank all who have agreed to appear in case any have to drop out later due to unforeseen schedule conflicts. So, here’s the schedule as it stands today, and many thanks to all of you for agreeing to share your insights with our students:
Monday, August 26: Guest Speaker Panel – Law firm managing partners discuss the state of the practice
• Ben Adams – Baker Donelson
• Richard Hays – Alston & Bird
• Stephen Mahon – Squire Sanders
Tuesday, August 27: Guest Speaker Panel – Corporate in-house counsel discuss the drivers of change
• Reuben Buck – Cisco
• Jim Cuminale – Nielson
• Cheryl Mason – Hospital Corporation of America
Monday, September 23: Guest Speaker Panel – Legal Project and Process Management
• Larry Bridgsmith – ERM Legal Solutions
• Marc Jenkins – Cicayda
• Dan Willoughby – King & Spalding
Tuesday, September 24: Guest Speaker Panel – Law firm associates discuss life in the modern law firm
• Ashley Bassel – Bass Berry
• Daniel Flournoy – Waller Lansden
• Sarah Laird – Bradley Arant
• Chris Lalonde – Nelson Mullins
Tuesday, October 1: Paul Lippe of Legal OnRamp
Monday, October 7: Guest Speaker Panel – Alternatives to the Big Law model
• Walt Burton – Thompson Burton
• Lindsay Grossman – Axiom
• Eric Schultenover – Counsel on Call
Tuesday, October 15: Guest Speaker – Michael Mills of Neota Logic
Tuesday, October 22: Michael Bess, Vanderbilt History Department, on the Bioengineered Superhuman
Tuesday, October 29: Guest Speakers: John Murdoch of Bradley Arant and Nancy Lea Hyer of the Owen Business School – Implementing LEAN Law
Tuesday, November 12: Guest Speaker – Prof. Bill Henderson of Indiana University-Bloomington Law School
Announcing Law Practice 2050 — The Vanderbilt Law School Class
I am pleased to announce that Law 2050 will move beyond the blogosphere this fall to the four walls and PowerPoint slides of a law school classroom. With the tremendous support of my dean, Chris Guthrie, I have designed Law Practice 2050, a course designed to immerse students in the dynamic environments forcing change in the law and in legal practice, the goal being to develop the skills necessary for actively participating in and taking advantage of those changes. There are four distinct but related themes embedded in the course scope:
- Understanding the structural changes taking place in the private sector legal services industry (e.g., changing firm models; new fee structures; online services; outsourcing)
- Gaining familiarity with established and emerging legal technologies (e.g., e-discovery; routinized compliance software; data aggregation and analysis)
- Exploring new kinds of legal services and employment (e.g., legal risk management; legal knowledge management; legal process management)
- Anticipating scenarios of the future of law and building skills useful for identifying and developing future practice opportunities (e.g., climate change; 3D printing; robotics; demographic shifts)
Through a series of readings (e.g., Tomorrow’s Lawyers is required reading), individual and group projects, and guest speakers and panels, we will explore the forces acting to transform the legal services industry and survey established and emerging developments. We will also explore scenarios of future social, economic, technological, and environmental change and brainstorm their possible impacts on the law. Students will engage in active small group discussions, prepare reaction papers, make group presentations, and develop practice development proposals and legal industry case studies.
I have been overwhelmed with how willing people in the industry have been to contribute to the course as speakers and panelists. Currently we have scheduled a rich variety of outside speakers including:
- a panel of managing partners of three Big Law firms
- a panel of in-house counsel of three major corporations
- a panel of representatives from several lawyer staffing firms
- a panel of representatives from legal process outsourcing firms
- a panel of associates from three Big Law firms to discuss their perspectives
- speakers from several law+tech companies
- speakers on legal process and knowledge management
- speakers from several non-law disciplines offering visions of the future of the environment, technology, and society
I will be blogging about the course as we move through it and hope to get feedback from students, academics, and practitioners. More to come…
The President’s Climate Action Plan – What’s In it for Tomorrow’s Lawyers?
In June 2013 President Obama became the first U.S. president to issue a climate action plan. Needless to say it got a lot of press. Some climate change policy watchers panned it as nothing new (meaning no new proposals for regulation); others condemned it as, well, nothing new (meaning it keeps all the old proposals for regulation); and some praised it as visionary. That’s not my topic for this post. I want to ask what the Plan, whether it’s anything new or not, means for lawyers of the future.
I hope not to sound perverse in suggesting that there is opportunity for lawyers in climate change, but of course there is. Change of any kind often creates opportunities for lawyers, especially the ones who think about it before it happens. So I ask, what’s in the Plan for lawyers, particularly tomorrow’s lawyers–the kind I care about here at Law 2050?
A study commissioned by the Natural Resources Defense Council claims that the Plan–specifically, the part of the Plan that proposes to regulate carbon emissions–will create jobs. Alas, nowhere in that study does it mention new jobs for lawyers. Can it be that there will be no new opportunities for lawyers? I doubt it. Rather, to paraphrase Mr. McGuire from The Graduate: I want to say three words to you. Just three words: Energy and Land Use. OK, I guess that’s four words, but let me get to the point.
As with most climate change policy discourse, there are two main components to the Plan: (1) mitigation, which is how to reduce climate change, primarily by reducing carbon emissions (and/or increasing sinks), and (2) adaptation, which is how to respond to the climate change we will experience regardless of (1), particularly given that (1) isn’t exactly going gangbusters. So if you step back and look for the legal action in the Plan, Energy and Land Use should hit you in the face.
ENERGY: The Plan’s mitigation component is largely about energy policy. In fact, it may be the closest we’ve come to having a national energy policy, ever. Most of the headings in this part of the Plan contain the word energy or are energy focused, such as:
- cutting carbon pollution from power plants
- promoting American leadership in renewable energy
- accelerating clean energy permitting
- expanding and modernizing the electric grid
- unlocking Long-term investment in clean energy innovation
- spurring investment in advanced fossil energy projects
- instituting a Federal Quadrennial Energy review
- increasing fuel economy standards
- reducing energy bills
- establishing a new goal for energy efficiency standards
- reducing barriers to investment in energy efficiency
And the list goes on. Energy, Energy, Energy! Once again, Mr. McGuire said it for me: Tomorrow’s lawyers, there’s a great future in Energy Law. Think about it. Will you think about it?
LAND USE: Although more subtle in its delivery, the adaptation part of the Plan is largely about land use. In climate change policy speak, the term “resilience” is widely used to mean that we need to be better at handling effects of climate change, and a big part of that is about better planning for the built environment and its infrastructure. Plan headings that pop out in this respect include:
- building stronger and safer communities and infrastructure
- directing agencies to support climate-resilient investment
- supporting communities as they prepare for climate impacts
- boosting the resilience of buildings and infrastructure
- rebuilding and learning from Hurricane Sandy
- conserving land and water resources
- maintaining agricultural sustainability
- managing drought
- reducing wildfire risks
- preparing for future floods
There is more in the adaptation part, to be sure, including health, insurance, and science, but mostly its about…Land Use! Tomorrow’s lawyers, there’s a great future in Land Use Law. Think about it. Will you think about it?
Decomposing Compliance Counseling
One of many useful insights Richard Susskind has delivered on legal industry transformation is the idea of “decomposing” legal practice into discrete components of work, which allows one to think more clearly about how to identify opportunities to make the delivery of legal services more efficient. He aims this approach only at litigation and transactions, however, leaving out the third major domain of legal of legal practice–compliance counseling.
Compliance counseling is the neglected child in the legal practice family. Most law school course offerings emphasize litigation and transactions. Most law students decide soon into their second year that they want to do litigation or transactions. Most of the legal reinvention discourse is about litigation and transactions. But the reality is that there is a vast amount of legal work out there that is neither litigation nor transactions–it is compliance counseling. Believe me, I billed a lot of hours in this category as an environmental and land use lawyer, and there is no shortage of work like this in employee benefits, securities regulation, health care regulation, and the list goes on. It may not be as sexy as the courtroom or as glamorous as billion dollar deals, but it’s legal work so you can bet it’s going to be the target of optimization initiatives.
What is compliance counseling, and how would one “decompose” it to identify efficiency opportunities? The answer is not as clear as it is for litigation and transactions. Both litigation and transactions follow fairly standardized process paths. Litigation has its rules of procedure, and transactions center around the closing. Compliance counseling has nothing like that, and it comes in many forms. Yet, as my previous post on Neota + Littler reviewed, there clearly are opportunities to make compliance counseling more efficient, so it is worth devoting some thought to how to unpack what goes into it. (more…)
Neota + Littler = Smart Legal Innovation
There was an interesting news feed last week about “Neota Logic…collaborating with Littler Mendelson, P.C., the world’s largest employment and labor law firm representing management, to power Littler’s new Healthcare Reform Advisor. The Advisor enables Littler’s most experienced employee benefits attorneys to counsel employers on complex issues under the Affordable Care Act.” This is the kind of teaming up between innovative legal technology developers and innovative law firms that “rethink” theorists Richard Susskind and Bruce MacEwan say is a must for the survival of many segments of the legal services industry. (Note: I have no association with Neota or Littler)
Neota Logic uses proprietary technology and software to enable legal experts to “deliver knowledge in an operationally useful form as expert systems that can be consulted interactively online or embedded directly in business systems.” Littler is what MacEwan calls a “category killer” law firm–very good at one thing and not trying to be anything else. Littler’s one thing is employment law. The firm’s “single focus on employment and labor law has created a cartel of attorneys whose knowledge of and experience in these areas of law is unsurpassed. With lawyers who practice in more than 36 areas of law, there is no employment issue a company has faced that hasn’t been addressed by one of Littler’s attorneys.”
The Health Care Reform Advisor the two firms have developed allows an employer to use an online interface to upload general information about employees and benefits and receive some basic feedback about HCR impacts. Think of Turbo Tax, but this is for navigating the HCR. Sure, it’s designed to lead employers who decide they need more counsel to contact Littler, but unlike websites and blogs most firms use to do the same, this tool provides specific feedback to the user’s circumstances and educates the user about key HCR issues. It also signals that Littler knows its stuff and is in problem-solving mode.
I think of this as an example of how the term “disruptive technology,” which is hurled around liberally in “rethink” space, can misstate the case. Neota brings to the table a technology that enhances Littler–like any technology that has this potential, it’s only disruptive to the firms that don’t use it or something like it.
(My thanks to Marc Jenkins, formerly of the law firm Hubbary, Berry & Harris and e-discovery firm Hubbard & Jenkins, now with e-discovery software firm Cicayda, for alerting me to the story)
The Artificial (Intelligence) Restatement of the Law?
As I write, the 2013 International Conference on Artificial Intelligence and the Law is taking place in Rome. I wish I had been able to attend–anyone remotely interested in the scope of Law 2050 should take a look at the program.
Most of the discourse on AI and the Law in the popular press has focused on the capacity AI to predict the law, as with Lex Machina and Lexis’s MedMal Navigator. But if you take a close look at the ICAIL program, the sleeper may be the capacity of AI to make the law. Many of the presentations delve into methods of using algorithms to extract and organize legal principles from the vast databases or cases, statutes, and other legal sources now available. The capacity to produce robust, finely-grained, broad scope statements of what the law is powerful not only for descriptive purposes, but as a force in shaping the law as well.
Consider the American Law Institute’s long-standing Restatement of the Law project. As ALI explains,”the founding Committee had recommended that the first undertaking of the Institute should address uncertainty in the law through a restatement of basic legal subjects that would tell judges and lawyers what the law was. The formulation of such a restatement thus became ALI’s first endeavor.” As I think any lawyer would agree, the idea worked pretty well, pretty well indeed. The Restatements have been so influential that they go well beyond describing the law–they contribute to making the law through the effect they have on lawyers arguing cases and judges reaching decisions.
How did ALI pull that off? Numbers. Anyone who has worked on a Restatement revision committee has experienced the incredible data collection and analytical powers that ALI assembles by gathering large numbers of domain experts and tasking them with distilling the law of a field into its core elements and extended nuances. The process, however, is protracted, costly, tedious, and often contentious.
Many of the ICAIL programs suggest the capacity of AI to generate the same kind of work product as ALI’s Restatements, but faster, cheaper, and perhaps better. ALI depends on large committees of experts to gather case law, analyze it, and extract and organize the underlying doctrines and principles. That’s exactly what AI for law does, only with a lot fewer people, a lot more data, and amazingly efficient and effective algorithms. Of course, you still (for now) need people to manage the data and develop the algorithms, but once you have it all in place you just hit the run button. When you want an update, you just hit the run button again. When you want to ask a question in a slightly different way, just enter it and hit the run button.
As the Restatements demonstrated, a reliable, robust source of reference for what the law is can be so influential as to become a part of the making of the law. As AI applications build the capacity to replicate that work product, it follows that they could have the same kind of influence.
One feature AI could not produce, of course, is the commentary and policy pushing one finds in the Restatements. The subjective dimension of the Restatements has its own pros and cons. The potential of AI to produce highly-accurate, real-time descriptions of the law, however, might change the way in which we approach normative judgments about the law as well.
Reflections on the Good Old Days of Legal (Non)Technology
I showed up for work my first day at my law firm–then (and still) one of the largest in the world–in September 1982. I was assigned to a nice 4th floor window office overlooking Connecticut Avenue in D.C., which gave me a great view of the daily protest parades. My technology consisted of: a phone (land line–there was no other kind), a dictating machine, a wall switch to turn the lights on, and some electric sockets to plug in my desk lamp. That was it. My secretary (the term in use then) had all that plus an IBM Selectric typewriter. Virtually all research was done in the library using books. Somewhere in the library there was a dial-up Westlaw terminal and printer. Wow, we had it all.
Somehow, we managed to practice law.
A few years later we got some newfangled thing called “mag cards,” which allowed our assistants to revise documents by loading a huge stack of floppies into a slot in their IBM typewriters. Soon after that came the first computers. Our firm adopted a Wang system (Wang was one of the leading computer companies in the 1980s, then went bankrupt in 1992) with some kind of intranet e-mail network. Only staff had them–no one could imagine why the attorneys would want or need one.
Somehow, we managed to practice law.
But I wanted one of those things. (If you haven’t caught on by now, I am a tech junkie.) I had moved to the Austin office by then and was put in charge of the summer associate program (a/k/a/ party coordinator–how things change!), so I concocted a total BS story about how I needed a computer at my desk to help me do that. The firm bought it and soon after I had mine, my peers wanted one. Then I bought an IBM PS/50 for home and figured out how to hook into the firm intranet. I discovered telecommuting! One day I was exchanging e-mails with a colleague about a litigation matter and he said he would rather come down to my office to chat about it. I waited. Then the e-mail came: “Where the *&%$ are you?” Wow, were we ever wired up!
Somehow, we managed to practice law.
On the Training of New Lawyers (Part I)
I have just returned from three weeks of back-to-back conferences, exhausted but ready to jump back into Law 2050.
The conferences were not about the legal industry—they were environmental law and policy gatherings—but I found plenty of time to discuss the legal industry with practitioners and academics. A number of conversations led me to think more deeply about the training of new lawyers in the new legal environment. One was with a friend who had recently left 20 years of practice with a law firm to become the general counsel of a mid-sized energy company. One of the first steps he took in his new position—following the trend among corporate clients—was to inform all his outside law firms (including his old firm) that he would not pay for any first or second year attorneys working on matters for his company, no exceptions. I asked him how he thought new lawyers at law firms handling complex litigation and transactional work will receive adequate training as this trend spreads throughout the industry. His answer boiled down to, “not my problem.” Well, maybe it’s not his problem, but it is a problem.
For the past 60 years the training of new lawyers—and here I mean training in complex corporate litigation and transaction environments—has been financed by law firm clients in a tacit, though sometimes explicit, agreement between the firms and their clients. This arrangement worked best when there was an expectation of long-term engagement between a firm and its clients as well as long-term employment of a lawyer at his or her firm. The idea was that the client would foot the bill to train a new lawyer at the front end and in return would after some years be able to work with an experienced attorney knowledgeable in the client’s business affairs. Both of those expectations began to fall apart in the 1990s, however, as clients diversified their firms and lateral movement by lawyers became the norm.
Although it is now widely discredited by legal “rethink” pundits, the old system worked—it produced very capable senior attorneys. So, what to put in its place? What system will produce just as capable senior attorneys under the condition that clients will not pay for new attorneys working on their matters? As I have observed in other posts, the answer clearly is not to replicate the Axiom and Clearspire model of firms staffed solely by senior attorneys. Their approach, though hailed in the “rethink” media as brilliant, obviously is unsustainable as an industry norm.
Law 2050 