legal

“A lawyer’s time is the only commodity that we have to sell”

Earlier today I listened to a podcast on respected legal technologist expert/journalist/speaker Ari Kaplan’s Reinventing Professionals from May 2, 2019 in which he spoke with Josh Taylor, an attorney and the lead content strategist at Smokeball, a practice management software platform that started out life here in Australia and now appears to be mainly located in Chicago (although retains a presence in Sydney and Melbourne).

The first seven minutes (out of nine) I was entertained and thought were good.  But two minutes and twelve seconds from the end Ari throws out his last question (my transcript follows so sorry for any errors) to Josh:

Where do you see the use of technology in solo practices and small firms headed?

And Josh responds:

One thing that we struggle with so much, and I have saved it to the end here Ari instead of mentioning it as a pain-point upfront, the main part of the small law practice that we see people failing at day after day is accurately tracking their time and either on the the extreme cheating a client by over estimating, which is very rare, more likely and more often we see small law firms cheating themselves by under valuing every minute they have; when I go around speaking to bar associations around the country I always say “you know a lawyer’s time is the only commodity that we have to sell, we don’t make a thousand widgets in a minute that we can then sell for the same price, we have minutes in a day that is the only thing that we can sell out to our clients” because we cannot double bill people so to value and track time accurately I think is where legal tech is going to start leading the way…

Leaving aside the whole time-based billing versus value-based billing discussion, even if you only believe in time-based billing (cost-plus or however that looks) and never want to entertain the notion of any kind of alternative pricing method, to say:

a lawyer’s time is the only commodity that we have to sell

is so far removed from reality it’s not funny.

What a lawyer’s ‘commodity’ is, is the knowledge they have acquired, the experience they acquired to be able to apply that knowledge to the situation their client is facing, and the insight to do this in a valuable and respectable way.

Regardless of how you bill – as a lawyer that is the only commodity you have to sell.

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Would you use an unlicensed or unqualified legal advisor?

Last Friday’s (April 26) The Soul of Enterprise Free Rider Friday podcast (Millionaires, Marxists, and Minimum Wage) with Ron Baker and Ed Kless, included a ‘stack’ (their term not mine) by Ed on the news that “Kim Kardashian Is Right: Lawyers Shouldn’t Have to Attend Law School”. As someone who knows absolutely nothing about the Kardashian family (nor wishes to), not much in that – apart from the comment that Ed and Ron go on to make in respect of Episode #225 of their series of podcasts in relation to “occupational licensure”.

In short Ron and Ed talk about the fact that there are some jobs around the world where you need a ‘licence to practice’ – examples: a barber (hat tip to Ron’s Dad there), an accountant, and even a lawyer.

On the back of the Kim Kardashian issue, Ed and Ron then go on to ask this question:

If you know someone isn’t qualified (e.g., don’t have a law degree) or isn’t licensed (e.g. have a practising certificate), should you still be able/allowed to ask them for professional advice – provided that you sign a waiver/agreement/whatever stating that you know that persons isn’t qualified or licensed to provide the requested advice?

Never, no way, stupid idea.

And I would agree with you.

But wait, we’re all adults here and should be allowed to determine our own future and make our own decisions.

Exhibit A: this is an excerpt from the British Government’s website (April 2017) in relation to obtaining legal advice in Thailand:-

“There is no restriction on any Thai national , with or without a law degree [bolded and underlined for emphasis by me], to offer you legal advice.”

Now Thailand is a civil law jurisdiction with a codified law, but still…

…leaving aside the whole issue of how stupid you may or may not need to be take legal advice from a non-licensed, non-qualifed expert (bought a pre-pack will lately?) – here’s a precedent.

There are “lawyers” who advise “on the law” who are not educationally qualified (as opposed to possibly life) or institutionally licensed.

Interesting as that all is though, that’s Thailand – hardly the US, UK or Australia.

Well hang on a second…

Listening to Ed and Ron’s podcasts there are States in the US where you can now obtain ‘legal’ advice from someone who isn’t qualified or licensed, provided that you sign a waiver saying that you knew this to be the case.

And, in my view the following comment from legalfutures.com – reporting on The UK Legal Services Consumer Research Report 2019 yesterday:-

A smaller majority (58%) would be prepared to use freelance solicitors, due to arrive this November with other Solicitors Regulation Authority rule changes, if they could save money on fees.

means they are not a long way behind.

As always though, interested in your thoughts/views/feedback.

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* if I have misrepresented or misunderstood my take-outs from Ed and Ron’s podcast, then I apologise to them.

 

 

‘How much are you charging your client for that value add?’

It’s a question I often ask law firm partners:

How much are you charging for that value add?

And nearly always the response I get is the same:- *shocked face look*.

Why, well because in my experience lawyers are willing to give something of real value away for free to a client in the hope that same client will then given them their legal work.

But it rarely works like that.

And, more importantly, it shouldn’t work like that in today’s world (if it ever really did).

Don’t get me wrong, there will always be a cost of doing business component to our profession. CPDs/CLEs for in-house counsel would, in my opinion, sit in this category (but not all L&D activity) [tip: if you do this, open a ‘value account’ for your client and put a nominal value, say A$200 per 1 hour session per attendee, again this to try and show the client (in $$$ terms) the value you are providing here].

Rarely though do lawyers give thought to the ramifications of when they offer their clients something of real value, that really differentiates their firm, and then they give the IP away for free in the hope of getting the “more profitable” legal work.

Case in point is the following comment attributed to DHL Supply Chain Americas GC Mark Smolik in an article in yesterday’s The American Lawyer by Gina Passarella Cipriani [‘GCs Are Offering Work on a Silver Platter—and Law Firms Aren’t Taking It’]

“On the matter side, DHL Supply Chain Americas GC Mark Smolik gave an example of what he wishes law firms would do—and it’s something none of his firms ever has. He suggested a firm might want to look at, say, all of the employment cases emanating out of his California warehouses. Maybe they find that 50 percent of the cases are coming from one warehouse, and one person is the culprit. The GC can then take that information to its business units and work out a solution. It makes the GC look good and it makes the law firm look good to provide that kind of actionable intelligence. Other GCs echoed similar requests during Legalweek’s Business of Law Forum.”

Getting down to the bare bones of my point though:- Mark doesn’t suggest this be done for free. And, in my opinion, done right, there is every chance Mark will pay for this value add.

But that’s just my take – as always, would be interested in your thoughts, views, feedback.

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‘Alternative’ – but to what?

For an industry that claims to make its livelihood on the definition, use and interpretation of words, in my opinion the legal industry has become rather lax in our use of the word ‘alternative’.

Big claim. So what do I mean by this?

Well, let’s look at the word ‘alternative’:- post GFC we hear the term ‘alternative’ almost daily in respect of ‘alternative fee arrangements’ (AFAS); and, ever increasingly, we now hear ‘alternative’ in respect of ‘alternative legal service providers’.

But how often do we ask – ‘alternative to what’?

Are we talking about ‘alternative’ to what we already have and do?

Because if that’s the case then we are not being true to our esprit de corps, namely ‘words have meaning’.

i.e. there is nothing ‘alternative’ in the term ‘alternative fee arrangements’. There are merely hourly rates, fixed fees and some sort of risk sharing arrangement fee agreement. In short, fee agreements.

And, as Heather Suttie eloquently put in her post today, there are no “alternative” legal service providers. There are just legal service providers (some of which, surprise surprise, serve different clientele).

But that’s just my take – as always, would be interested in your thoughts, views, feedback.

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ps: the only thing I would add to Heather’s post is Pangea3 – 2004

KPMG: “We are not trying to be a traditional law firm.”

“We are not trying to be a traditional law firm. Our approach is different, with a focus on offering our clients integrated global legal advice and solutions, where we are able to work seamlessly with existing KPMG clients who are looking for local and multijurisdictional counsel.”

The quote above, by Stuart Fuller of KPMG Australia, in today’s Australasian Lawyer is yet another great example of why law firms need to be on their guard and wary of the Big4’s re-entry back into the legal sector.

Why?

Well, here are my big 3 take-outs from Stuart’s comment:

  1. almost nobody is trying to be a ‘traditional law firm‘ – everyone is innovating and looking to reposition themselves as strategic advisors (the current Holy Grail). In short, if you want to be a ‘traditional law firm’ – unless you are really niche, which, like many, KPMG are not – then your days are numbered in my opinion.
  2. a focus on offering our clients integrated global legal advice and solutions” – what would DLA Piper, Baker & McKenzie, White & Case, Norton Rose, Deacons (just to mention a few) make of that comment? Isn’t that precisely what they would lay claim to be trying to do?
  3. but, crucially, the following sentence is the principal reason why law firms with more than 20 partners should be concerned: “where we are able to work seamlessly with existing KPMG clients“. Why? Because the Big4 get involved earlier in the advisory/transaction life-cycle than law firms have historically done, so if the law firm is only looking to advise on the law, and not act in any consultation phase (even as early as the pre-planning phase), then they are going to be in big trouble.

But that’s just my take – as always, would be interested in your thoughts, views, feedback.

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Which kinds of businesses are most threatening to your firm’s future?

The December/January edition of Briefing magazine includes a supplementary report looking at the Legal IT Landscapes 2019. It’s a very enjoyable read, and includes the following graphic (answering the question from which the title of this blog is taken):

image 201901

What this indicates is that despite my having blogged about this issue as far back as September 2017 (‘Do you know who your competitors are?‘) senior managers of law firms still hold that other law firms like theirs are the greatest threat to their ongoing commercial success (at 26%).

As I wrote back then,

With the level of work that clients are now taking back in-house, or not bothering to do at all, they are without doubt the “overwhelming competitive threat” to the current law firm business model. And, this is not cyclical but structural.

Crucially, understanding this is of paramount importance if firms wish to survive the next 5, 10, 15 years. Because it reshapes everything we do. How we try and win work. The type of work we are trying to win. And even the nature of the relationship we have with our client.

In the long term it will determine the way we measure and reward. It will dictate how we charge, and it will determine whether we succeed or fail.

and I still hold now, this view is misplaced at best, and out and out wrong at worst.

As the following quote taken directly from the National Profile of Solicitors 2016 report (most recent I could find) published by the Law Society of New South Wales, in Australia the seriousness of the threat that in-house legal teams have on  the viability of your firm’s future success should not be underestimated:

Legal employment sectors are shifting. The great majority of Australian solicitors continue to work in private practice, with 69% employed in a law firm. However, the proportion of solicitors working in private practice has dropped from 75% to 69% over the last five years. This is due to a significant growth in the number of solicitors working in the corporate sector and government.

Between 2011 and 2016, there was a 59% increase in the number of solicitors working in the corporate sector, compared to a 17% increase working in the private sector.

Let that sink in for a second: a 59% increase in the number of solicitors working in the corporate sector [in Australia] over a 5 year period post the GFC.

Even coming from a relatively low baseline, that’s a staggering shift (indeed, some may even argue seismic)!

But ask senior management of law firms and only 10% will tell you that “in-house/client” is a business that is most threatening to their firm’s business.

Misguided pershaps?

As always, would be interested in your thoughts, views, feedback.

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2018 was a great year for AusLaw firms*!

As we close out the year that was 2018, the graph below – from the recent (December 2018) Commonwealth Bank ‘Professional Services’ report – would appear to support the fact that 2018 has been a financially beneficial one for all those involved in private practice in Australia:

Screen Shot 2018-12-30 at 8.37.01 pm

The question I have though is this: is this a true correction?

And what I’m really asking here is this:

  1. have the underlying structural changes that we all know need to be made been put in place?
  2. if so, are we starting to see the benefits of these, or does this chart represent a false dawn?

And as we entered 2019 I’m going to leave those two questions out there, as I think many of us know what the real answers are here.

As always, would be interested in your views.

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* or was it?