legaltech

“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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Are law firm structures moving from ‘pyramids’ to ‘rockets’?

The graph below, from slide 19 of the latest Investec ‘LegalTech & NewLaw update’ (April 2019), caught my attention last week:

rockets

Until reading Investec‘s report I had heard of law firms moving away from the ‘pyramid structure’ to both ‘inverse pyramid structures’ and ‘diamond structures‘ post the GFC in 2008, I had also read/heard of Peter Connor’s excellent ‘The T-shaped In-house Lawyer™’, but I had never heard of a ‘rocket‘ structure.

And you know what, I like it. Well worth some further thought.

Your thoughts – have you seen something like this before?

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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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