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We know the business of practicing law is evolving into … something. But what? That’s the question the College of Law Practice Management wrestles with each year at its annual Futures Conference. With some of the best minds on the topic on hand for the conference last month in Washington, D.C., the sessions were reliably provocative. We asked Tim Corcoran to report back on what he heard that got him thinking.
At the 2012 Futures Conference, the wide-ranging discussion included topics from diversity to the evolving role of law firm leaders to value billing and much more. But here are five things I found particularly intriguing.
1. It’s possible for corporations to obtain 100 percent of all legal services using alternative, value-based, non-hourly billing methods. Jeffrey Carr, general counsel of FMC Technologies, simply refuses to invest any of his significant budget for outside counsel on data, which he believes to be a commodity. He happily pays premium fees, however, for advanced know-how and partner expertise, all of which is based on his patent-pending Alliance Counsel Engagement System (ACES™) model. Jeff can sound unsympathetic when addressing outraged partners who believe such an approach puts the traditional law firm model at risk. But, to the surprise of some, he says corporate counsel must accept their share of responsibility for allowing the flawed model of hourly billing to persist for so long.
2. Moving away from management by consensus. Managing partners recognize that successfully leading complicated enterprises requires modern business practices. They also know that means moving away from the inefficient and largely ineffective management-by-consensus model. And by golly, they won’t stop until they have every partner’s agreement that this is the right approach! Kidding aside, there remains a tension between partners who, by nature of the partnership business form, have a right and obligation to assert themselves in ownership decisions, and who generally lack formal business training, leaving any number of their policies suspect. The new breed of law firm leader recognizes the critical necessity of strengthening the firm, even though the policies necessary to achieve this outcome tend to weaken the traditional stranglehold of top rainmakers on the firm. Until this tension is resolved, law firm leaders are competing at a significant disadvantage.
3. “Everyone talks about the weather, but no one does anything about it.” In the legal marketplace that might as well be “Everyone talks about legal project management, but no one is really doing anything about it.” But two law firms earned distinction for investing significant time and energy in service delivery programs that reduce prices, reduce costs, improve quality and consistency, and create more loyal relationships with their clients.
4. The British aren’t just coming—they’re here. The Legal Services Act that was passed in the United Kingdom allows for outside investment in law firms, following on the heels of similar legislation in Australia. Several law firms have taken advantage of this new approach to accessing capital, establishing boutique firms staffed by premier firm refugees, adopting more modern business practices … and notably establishing a foothold in the U.S. And while U.S.-based firms are unable to capitalize in this fashion, some have nonetheless adopted an approach to client service, billing and legal services delivery that will position them as solid investments with appealing multiples and significant growth potential if legislation of this type comes to the states. Just as the recent global recession upended conventional wisdom about, say, the immutable law of nature that residential property values always go up, these law firms have demonstrated that a firm can eschew hourly billing and yet grow profitably by focusing on efficiency, client satisfaction and predictability. The jury is still out on whether the U.S. will adopt U.K.-style rules for law firm governance, but the evidence is already clear that such approaches can be quite lucrative.
5. Finally, and perhaps a bit wistfully. I observed that many of these conversations have taken place year after year at the Futures Conference, and yet the vast majority of the legal marketplace clings to outdated views of how to manage a law practice. To clients, it’s frustrating to hear talk of change in terms of how it disrupts the traditional law firm model. As one general counsel scoffed:
“I’m sick of hearing of alternative fee arrangements. In the business world, we call billing based on the value of the goods or services delivered simply ‘billing.’ The faster law firms realize that their reluctance to embrace change will put them out of business, the faster we can get to the business of evolving together.”
Perhaps there will come a day, not too far ahead, when the market changes discussed at the Futures Conference will be so commonplace that we can simply call it “The Conference.”
Timothy B. Corcoran provides advisory services to law firm leaders in the areas of legal project management, alternative fee arrangements, business process improvement and business development. Tim blogs frequently at Corcoran’s Business of Law Blog.
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