Tag Archives: Law firm

Lawyers – ask why they buy, not why they didn’t

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Have you ever thought about the reason people choose to buy legal services from a particular firm?

Sure, if you’re a lawyer in practice (or a business development professional at a law firm) you may have spent some time debriefing why you lost a tender, but have you actually talked to some clients to find out why they chose to use you in the first place? If you have, do you know why they continue to instruct you?

The firm's sophisticated accounting system registered another sale for the IP litigation practice

I was pondering this as a post from Mike Ames really reminded me of some of the timeless  fundamentals of the buying process that it’s good to revisit. It’s perhaps easier to look at the reasons why you don’t make the sale than the reasons that you do. The post addresses this imbalance, and is set is below in italics, and you can find the original post along with more solid business development ideas on Mike’s blog.

Strange really. We all buy things every day whether it’s a sandwich at lunchtime, petrol for your car or a £4m computer system the process is pretty similar but what makes us do it?

  1. Need. If you think about the obvious starting point is having a need that is either immediate or anticipated. Sometimes we may not be aware of that need (which is why the advertising industry exists, in case you ever wondered) and it needs to be brought to our attention.
  2. Capability. Who is going to buy anything that is not fit-for-purpose? Well actually loads of people but nobody does it willingly. So as a business developer you must demonstrate that your offering can meet all of the client’s needs. This can be tricky; a sort of a catch 22 – they won’t hire you until they know and they won’t know until they hire you. These are the ways round this dilemma: references; case studies; testimonials; site visits; risk and reward work; what you have said and written; you!
  3. Beliefs. People tend to buy from people who match the same beliefs as they hold (for more on this watch this brilliant TED video of Simon Sinek). It’s how all great brands work. They convince us that their beliefs are the same as ours and we buy. What do you believe in I wonder?
  4. Differences. Let’s face it if we were confronted buy two offerings that we could not differentiate between in any meaningful way which one would we select (drum roll) the cheapest of course. This is how commodities work: something that is purchased solely based upon its price. A nasty place to be and one to be avoided at all costs. Now being different is easy but being different in a way that benefits our clients is a lot harder however, dear readers, this is exactly what we have to do. We must show we are different from our competitors and that these differences somehow provide tangible benefits to the client. or we could just be the cheapest I guess.
  5. Value. We don’t always buy the cheapest but we all buy according to our own cost/value equation. Audi cars are brilliant: reliable, stylish, hold their value and make us feel cool but they are definitely not cheap and yet we still buy them by the boat-load (quite literally in fact). The reason is that Audi have provided those people who have sufficient money with a balanced cost/value equation – basically they are worth the money. We must do the same.
  6. Trust. Occasionally we are forced to buy from people we don’t trust. We don’t like it but we do it when we need to. What we really like though is to buy from people we trust so if you can build trust you increase the chances of getting a sale. Here are a few ideas: always deliver on your promises no matter how small; be open and honest at all times even if this is not in your best interests; be consistent. There are other contributories but these are the most powerful.
  7. Rapport. Probably not as important as you might think but having rapport with a buyer can swing the deal your way when its a close call. A lot of rapport stems from trust of course but try smiling more (recent research by Bangor University proved you will sell more if you do)  and just be you. When the American businessman Lee Iacocca was asked by a group of students what his best piece of advice was he answered “don’t fake it”.
So there you have it. To be successful at sales, find a client who has a need you can satisfy, demonstrate your credentials, show how you are different and how these differences can benefit the client, establish common beliefs and present your offering in such a way as the benefits outweigh their investment. If they trust you and there is a rapport between you start and draw up the engagement letter.
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The in-house law firm – the future of corporate law departments?

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I’m a big fan of Tom Peters. Not just because he genuinely interacts with his followers on Twitter, not just because he’s passionate about what he writes about, and not just because he presents (presentations, books) in some pretty cool ways. I’m a fan because he has some great ideas.

Corporate counsel Sedgwick took his boss' advice to "be a rock star" seriously as he began to address the board meeting

If you look back to his book “Re-imagine, business excellence in a disruptive age”, which was written nearly a decade ago, so much of it remains fresh and inspiring (and you should buy a copy if you’ve not seen it – it was required reading by my General Counsel when I was an in-house lawyer!).

But there’s one concept, right at the heart of the book, that seems more appropriate than ever in the legal marketplace right now. Tom describes the principle as “From cost centre to stardom – the professional service firm (PSF) transformation”.

Let me outline some of the detail behind this principle, and then I’ll tell you why I think it’s SO relevant right now.

Tom starts by ranting (his words!) that aiming to improve departmental efficiency and effectiveness is no longer enough. Heard about effectiveness and efficiency in the context of corporate law departments recently? It’s the opening paragraph of pretty much every report about General Counsel these days. Hell, I’ve written about it myself!

He goes on to assert that working 50 hour weeks in a cost centre is not sustainable – rote work will be outsourced  and the core that remains will be the traditional domain of the PSF – the accumulation and application of creative intellectual capital. With the amount of publicity the legal process outsourcing business is getting these days, this shouldn’t seem far fetched for General Counsel either.

So what’s the solution? Tom breaks it down into the following four key parts, to which I’ve added a law department spin.

  1. Outsource it – if the work can’t be done economically or the law department isn’t demonstrably great at it, outsource it.
  2. Now in a legal department this might be “volume work” which can be systemised and done off-shore cheaply, or it might be more complex but the legal team doesn’t have the skills in-house to do a great job, in which case the work might be passed to a retained law firm (or even another internal department).
  3. Productise it – if the work can be done in-house, break it into a “product” that someone will pay for. Now for lawyers care needs to be taken here as while there are certainly plenty of tasks that internal clients will pay for (doing deals, litigating etc), there are some jobs where the key beneficiaries may be the shareholders who won’t have a notional budget to cross-charge. The key point to me however is that the work creates real, demonstrable value for the organisation.
  4. Web-ify it – Tom challenges us to put everything (policies, procedures, contracts) on the web. Now many lawyers will no doubt be holding up their hands in horror here, but the reality is that this concept is already starting to take hold in the more progressive corporate legal departments. Use up a lot of bandwidth drafting standard sales contracts for the business? Take instructions, do a first draft, internal client reviews and makes changes, lawyer reviews changes, lawyer clarifies, lawyer redrafts, internal client reviews….. you get the picture. How much time has that taken? What’s the internal client satisfaction score looking like? Never mind that of the lawyer or the external client. By contrast, how about this – automate the document, internal client follows online guidance and prepares good quality first draft, lawyer reviews and amends, internal client sends document out.
  5. If it’s great, celebrate it. This to me has two important themes. The first is about communicating value to the business. There are plenty of legal departments that are really good at this, and are highly valued by their business colleagues. But there are plenty who don’t communicate success and value, and in my view they need to start. The second theme Tom mentions is more interesting – if an in-house legal team can become genuinely world class, could they start to provide services outside their company?
This is the idea that got me starting thinking about this topic.
With the Legal Services Act allowing non-lawyer ownership of law firms, is it conceivable that some in-house teams might think of converting to a law firm?
At a recent conference for in-house lawyers, the very progressive GC of a company with a global brand indicated that he was thinking using this type of framework to provide legal services to the company franchisees. Another GC joined the debate and floated the idea of pooling compliance resources with other companies in the industry – sharing the overhead for work that was mandatory but provided the company with little competitive advantage.
This is a time when radical thinking is possible. Sure, there are undoubtedly regulatory questions to answer, and professional ethics issues to resolve, but what is clear is that the future can look very different.
The obvious question is how this might it affect your legal team? Tom talks about “Exciting [legal] departments selling their creative services far beyond the company’s border”.
The more interesting question is how might it affect law firms? Will they find themselves competing with their clients? What about collaboration opportunities.

As Tom would say – to improve is not enough, now is the time to transform.

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The Tao Of Law Firm Strategy

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Differentiation is getting harder for law firms. We all know that.

Botchit & Co were delighted with the originality of their new logo - there was something fresh yet timeless about it

Clients constantly state that they want their lawyers to have deeper knowledge of their business and environment.

As the market changes, more and more firms are re-examining their business model and questioning how they are going to compete and win in the future.

Some think about doing more of the same. Some think about doing the same thing but cheaper. Some think about doing the same with a twist.

But how many think of doing less?

Actually stopping doing a lot of work types and focussing on a core that they can do better than anyone else?

  • Drop the unprofitable work.
  • Drop the work that doesn’t fit with the core.
  • Drop the work no-one likes doing.
  • Drop the work that can be done better or more efficiently or in other ways (automation, offshore etc).

What’s left? Could it work as a business?

With so much focus on consolidation in the market, who is looking for the gaps?

Where are the agile players that can really own market segments?

Finishing with a (very!) different approach to any I’ve done before. Inspired by verse 80 of the classic of Chinese culture, the Tao Te Ching (Ralph Allen Dale translation), I give you “The way of the niche”

Let us create small firms
With genuine specialists
Who, without stress, can produce
More than their clients expect
Who are so happy with their practice
They have no thought of moving elsewhere

Who forgo billing targets
Because they have no need of them
Who return to honest forms
Of serving clients,
And the simple enjoyments
Of practising law

Although these firms
May be so close to each other
That they hear the tapping
Of each other’s keyboards
And the ringing of each other’s blackberries,
Living profitably, they will have no need to invade each other’s markets.

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The five skills of highly effective in-house lawyers

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I spent some time this week with a group of in-house lawyers facilitating a discussion around the skills and capabilities that corporate counsel need to be a success, particularly if they are just making the transition from private practice.

The advanced finance for lawyers class was not well attended

The group itself was very diverse, ranging from a FTSE100 GC to a very recent convert to in-house life, after six years at a magic circle firm. However, despite this diversity, a number of key messages shone through. These are the skills that you need to learn to make it in-house, and very few are taught comprehensively in law firms, fewer still during academic training. 

I’ve hacked, shortened, edited and distilled further to come up with the following magic formula…. 

1. It’s all about the business stupid!

At the heart of everything, is a genuine understanding of their own business. Plenty of private practice lawyers talk a good game about being commercial (and to be fair, some of them do have an excellent grasp of their clients’ businesses), but there are plenty who glaze over when faced with a discussion of what’s really important to their clients. I’m not talking about their views on IP ownership, or liability clauses, I’m talking about how the business makes money. What’s the difference between a really profitable deal and an average one? What activities drive the profit margin? Where are the big chunks of cost and how can they be managed?

The discussion highlighted that this business understanding has a number of different levels. Perhaps the most important is an understanding of the commercial basics of the business – in particular how it makes money. But wrapped around that, but subtly different, is an understanding of the business environment in which the organisation operates. This encompasses (amongst other things) competitors, customers and the supply chain. Some private practice lawyers who have a deep understanding of a vertical sector may well be able to demonstrate this, which is why true industry specialists really can add value by placing their advice in context. However, as I’ve written before, many law firms’ vertical strategies only run skin deep.

Two other types of business understanding which were highlighted were firstly a solid grasp of the operational or technical detail about what the organisation does (this will be important for commercial contracts and litigation) – this is the classic “the devil is in the detail”. The old approach of “we’ll leave the contract schedules for the commercial folks” no longer works when you are in-house, because you soon realise that when there’s a problem, the chances are that it’s the service credit schedule or the payment mechanism that’s at the heart of it, and claiming that you only drafted the front end of the contract simply won’t cut it.

Secondly, for more senior lawyers particularly, an understanding of the organisation’s strategy will be important. Not only will this help the legal function start to think ahead and assess the legal implications of the business’ plans, but it will also allow alignment of legal objectives with business objectives, which is critical if the legal team is going to maximise its value to the business.

2. What language are you speaking? 

 The most fundamental rule that in-house lawyers need to learn early is the need to stop “speaking legal”. Using legal jargon and concepts is a sure-fire way to alienate business colleagues. Internal clients and other stakeholders are likely plenty bright thank you very much, but have not had the benefit (or pain!) of years of legal training, so rather than using legal shorthand because it’s quicker and easier for you, engage brain and translate into plain English. As with drafting, it’s harder and takes longer to begin with, but the end product is far more useful to a non-lawyer.

The sting in the tail is that in-house lawyers shouldn’t rely on their business colleagues to translate the “management bullshit” that permeates the corporate world (and let it be said, you can probably find a fair smattering of that in my blog posts, so I plead guilty!). A good working understanding of business terminology will make communication much faster and also facilitate communication with the consultants that will invariably appear on large projects. While easy to dismiss as “management speak” the widespread adoption of these phrases, particularly in large organisations, means in-house lawyers need at least a basic understanding to ensure key concepts are not “lost in translation”.

Aside from the actual language used, the presentation of the advice was also seen as being really important. As a general rule, avoiding really long notes of advice was seen as a good starting point, but there was also an acknowledgement that good in-house lawyers are able to tailor the presentation of their advice for their audience. This doesn’t mean compromising the advice in any way, rather that it is presented in a form that is appropriate for, and easy to understand by, the particular internal client.

One way in which the communication gap can be closed at a more general level is for the in-house legal team to train key internal groups on how to use a legal team effectively. This type of “soft” education may require an up-front time investment, but can pay dividends over the longer term and also help build relationships.

3. Cut to the chase!

A key point that emerged was that in-house lawyers need to have the ability to prioritise the issues. This helps their internal clients understand what is most important, but also if time is limited, will also make sure the lawyer focuses on the items that will have the biggest impact on the business.

The concept of “good enough means good enough” was discussed – the idea that in-house lawyers often do not have the time to do a “Rolls Royce” document review, and that there was a need for lawyers moving from private practice to become comfortable with the idea that it was better for them to spend 15 minutes looking at a document to highlight the key issues before a meeting, than either (a) for no-one to look at it at all; or (b) to wait for enough time to do a “proper job”, only to find that the business couldn’t wait for the advice and has gone ahead without any advice at all.

4. Get stuck in son!

Although not a skill, a can do, pro-active approach was seen as a valuable characteristic for an in-house lawyer. As one lawyer commented – “you’ve got get stuck in”. This might mean picking up more basic tasks that might be delegated in a law firm environment, or it might mean stepping out of the comfort zone to advise on an unfamiliar area of law, in both cases to allow the business to move faster.

For transactional lawyers, commercial expectations have risen and the in-house lawyer is now expected to have good project management skills and work collaboratively as part of a wider team (it might sound simple, but let’s not forget private practice lawyers often work in a very competitive environment, particularly when chasing partnership, and we all have stories of disfunctional cross-departmental teams). These are table stakes. The very good in-house lawyers can go a step further, and help really drive deals through, using a combination of sound transaction management, good commercial nous, and that “can-do” attitude.

5. Don’t bring me problems – they just make my head hurt

Good in-house lawyers, like the best private practice lawyers, are recognised by their businesses as problem solvers. By giving advice that is focussed on finding solutions and using their creativity to overcome roadblocks, lawyers can really help their internal clients. Making sure advice is practical and not too abstract helps achieve these goals, but it’s also a combination of many of the factors above that can lead to break-through solutions.

Take a good understanding of the business and the commercial context of the project, a pro-active attitude and the ability to prioritise the key issues, mix in the ability to communicate effectively and work collaboratively, and you’ve got in-house dynamite, capable of blowing away even the most stubborn legal problem!

Surely there must be more to it?

Well, yes, of course. There were plenty of other skills and capabilities mentioned, from understanding the organisation and its culture, through to stakeholder management, relationship building and influencing skills. But there was also recognition that if a lawyer didn’t get the five basics right, it may well be that their in-house careers wouldn’t last long enough to allow them to develop the additional skills that sees the very top in-house lawyers rightfully claim their seat at the top table of the world’s best organisations.

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A shiny new law firm

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With deregulation of the market looming here in the UK, opinion varies wildly over what the likely impact will be.

  • Some speak of decimation of the high street, and the end of the traditional law firm as we know it.
  • Others are more conservative and see a simple acceleration of the move from a traditional profession to a collection of more business orientated organisations.
  • Some see different changes in different market segments, underpinned by core drivers such as the increasing role of technology, globalisation, vertical market focus and more specialisation driven by a need to differentiate.
  • Finally, some bury their heads in the sand, unwilling or unable to contemplate large scale change in a profession that once was conservative and safe.

Simon paused a second to consider a future without his office in the most prestigious street in the City. Then he went back to work because the thought was just too horrible

So, against that backdrop, the question I ask you today looks at the changing market from a different perspective. If you were a new market entrant, free from the constraints and history of existing law firms, what would you do differently to build a successful legal service provider?

Here are some thoughts to get you started….

1. Real Estate

For a start, I wouldn’t invest vast amounts of capital in plush, city-centre offices. Sure, there’s definitely a need for an accessible meeting place both for internal and client meetings, and the space should be highly functional and consistent with the brand. But no massive atrium, no marble or fountains, and definitely not hundreds of expensive people crammed into premium real estate with the sort of eye watering rent that causes agonised soul searching within two years of every rent review.

I’m not saying all law firms should be virtual, and I’m not saying that firms should be central, but there are plenty of big, impressive organisations that work just fine without all their people in a building in a premium post code. A firm’s cost base matters, and people and property make up a pretty hefty chunk of a law firm’s cost base – avoiding the big numbers here could make a huge difference to long term profitability.

2. Technology infrastructure

Often years of under-investment, and a patchwork of applications and networking have meant maintaining and upgrading law firm systems is a nightmare. The ability to add a new application, device or method of access can be hugely time consuming and expensive. Being free of that legacy a new law firm could start afresh with proven, enterprise class software platform, that had an open architecture to allow maximum interoperability and future proofing.

The march to the cloud seems unstoppable at the moment, despite the fact that within the profession questions remain around resilience and security. Whatever the choice, a new entrant could have a fully functioning platform and a clean set of data to reside within it, all without the pain of a huge data cleanse and migration project.

3. Resource profile

Freed from the current business model of gearing and billable hours, a new law firm could sit back and work out what resources it really needed to service the work it was planning to generate.

How many partner level people does the firm really need? Are they managing client relationships, project managing or providing complex/strategic advice? If they are not doing the high grade legal work, are their other professionals who could do the work better or to a similar standard but cheaper? What is the right blend of junior lawyers? Would supervision and quality control be a separate function? What about training? What other skills would you bring to the organisation? Project management? Process expertise? Social media and digital marketing experience? Lower cost legal resource?

There are so many options, and the right combination would of course depend on the firm and the type and volume of work, but I think it’s fair to say that not many firms would start with a large number of equity partners, add a bunch of assistant lawyers and trainees to generate the fees to pay them, and then add a support infrastructure around them.

4. Corporate structure

The benefits of the partnership are clear. Consensual decision making, meaning everyone (well, the partners anyway) has a voice and feels heard. Sharing the profits gives not just a built in performance incentive, but a shared sense of ownership and responsibility. All this builds a tremendous sense of trust and an atmosphere that fosters collaboration.

What?

Your law firm doesn’t work like that?

Really?

Particularly as firms have got bigger and the pace of business has increased, the partnership model has begun to creak a little. Granted, some firms have it cracked, but I’d wager a lot more struggle. Slow decision making, turf wars, those at the top of the lockstep enjoying rewards that they perhaps haven’t fully contributed to and difficulties removing underperformers are not uncommon.

For a new firm I’d think very hard about keeping ownership and management separate, and use a structure that encouraged fast decisions and business agility. Incentives would follow the corporate model, and be performance based (which of course offers a huge amount of options, and can be tailored depending on what behaviours management wish to drive).

5. Sales force

Some lawyers can sell. They are really, really good at it. A great many however cannot.

I’m a huge fan of sales professionals – they generate the revenue that drives the business. Yes I know that other people do the delivery (lawyers in law firms), but first things first, you have to win work to do it.

Now other than the best of the best, the chances are that a lawyer is not as good at selling as a salesperson – and why would they be? The salesperson wouldn’t likely do much of a job advising on the TUPE provisions of an outsourcing deal. So surely if you accept the need to sell legal services, you’d get the best people to do it. It’s likely as well that not only might a salesperson have a lower base salary (although if good can more than make up for it through commission), but it would also free up the lawyers to do what they are best at, and generate the fees from the work that the sales people have won.

A law firm with a professional, well trained and motivated sales force would be a serious force to be reckoned with.

So what?

I know, I know – you’ve already got a law firm thank you very much. And you can’t relocate, rip out the IT and employ an awesome sales force. But, that doesn’t mean you can’t pause a minute to think about these issues, not just in terms of your own firm, but in relation to changes your competitors may make, or crucially what impact a well capitalised competitor might have if they adopted some of these ideas…..

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So you’re an equity partner – big deal!

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Last week I was given a business card by a lawyer I was talking to. On the card, underneath their name, was written “Equity Partner” in a fairly bold, not-to-be-missed font.

Tony showed the proof of his "Legal Jedi Master" card to the managing partner more in hope than expectation

It struck me, that were I ever to hit those heights in a law firm (I bailed out of private practice before putting those magic words in my email signature) I’d probably be pretty pleased with myself. And rightly so. It’s a position many people strive for and certainly for those in the upper tiers of the legal world, can be very lucrative and rewarding.

The title marks you out as an owner of the business and as a result conveys a certain status within the firm which undoubtedly provides very practical assistance in getting things done quickly through the firm’s support infrastructure.

But, the question that troubled me was the message that the title communicates to someone outside the firm.
I posed the question on Twitter, and got some fascinating comments back.

“adds pomposity and confuses clients”

“I think it’s wrong. Many clients don’t know what it means, in the real world.”

“It’s a badge of seniority but non-lawyer clients might not know what it means. Also = unlikely to do much of your actual work.”

” It would make me think, “Ah, so you’re the reason for my large bill” ”

The theme that stood out strongly for me was the internally-focused nature of the title.

Of course for fellow lawyers in private practice, and for in-house lawyers, the title and connotations will be understood. However, aside from the fact that there a huge number of purchasers and influencers who may not know what it really means, I wonder if there is an opportunity lost in not using a job title that is more aligned with the lawyer’s actual role.

There are a number of ways that could be approached. For a start, as I’ve discussed before, a market strategy that is structured around a client’s vertical industry sector is quite common. Would reference to specialism in a vertical sector as well as a practice area (or even instead of…) make sense? What about an alternative based on a description of the relationship with the client, so for example separating out relationship managers (I know the “s” word is maybe a step too far), technical specialists, project leads etc. For large scale project work this delineation of responsibility could also add credibility to the project management ethos espoused by many of the top firms.

Another driver that could force to revisit job titles is the changing career structures that have been emerging over the past five years or so. Many firms now have a senior designation for those lawyers who want to stay with the firm long term, but do not want the additional commitments (time, financial or management) that go with partnership. As the next generation of lawyers move through the ranks with their different cultural approach to work, life and career, will the old hierarchical, largely tenure-based titles still prove effective?

Perhaps the biggest opportunity for fresh thinking in this area (at least here in the UK) comes from the influx of new competitors into the market when the winds of deregulation blow through the profession over the coming months. Much has been written about the potential impact on law firms serving consumers, but make no mistake change is afoot in the world of commercial law too.

Aside from further consolidation, which I believe will be driven globally as well as in response to our own market conditions, the emergence of the LPO model and flexible resourcing models such as those from Axiom or BLP‘s lawyers on demand, will challenge incumbent firms to revisit their business models. This will invariably have implications for resources and career paths, and presents the perfect opportunity to revisit job titles.

While it may seem trivial, job titles do usually matter both to the holder, and in some contexts, to clients and prospects. A new entry to the law firm market will have the chance to think about this afresh, not restricted by history or tradition.
My sense is that these organisations will not default to titles like “Assistant”, “Associate” or “Equity Partner” and in using something a bit bolder and more relevant, will be able to send a signal to the market, both to potential clients and potential employees!

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Why timesheets rule but chargeable hours suck

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There was something deliciously ironic about me trying some new time recording software this week. It’s many years after I left life as a private practice lawyer but I can still remember that huge sense of freedom at escaping the tyranny of the timesheet. The feeling of being able to work on what mattered most and be judged on results rather than be measured purely on how much time I had spent working on client matters was incredibly liberating.

The IT director proudly unveiled the firm's latest timerecording application - robust, wireless and mobile, it represented the future of the firm's management information system

Subsequent conversations with other in-house lawyers validated that I was not alone in those feelings.

After I moved in-house a huge number of conversations with peers included the words  “….. and no-more timesheets”, with knowing glances being directed at any private practice lawyer in the room.

But within a few years, I was voluntarily tracking my time as an inhouse lawyer. Admittedly at the time it was a pretty crude mechanism – I tracked data in hour long blocks in an Excel spreadsheet over a period of months, but it did the job.

I’d been inspired to do this after reading Drucker’s book “The Effective Executive” (well worth a read) in which he makes the point that an individual can’t maximise their effectiveness unless they know where they spend their time.

In practice what it meant was that I could have much more informed discussions with my major stakeholders around how best to allocate my time to achieve organisational objectives. It allowed sensible and transparent choices to be made around different priorities (if I support this deal and this HR project, the position paper on IPR ownership will need to wait until next quarter, or we’ll need to resource things differently) which I believe kept me more aligned with the company and led to some very productive conversations.

On the other side of the fence, I’ve written a fair bit around what I believe the problems with charging by the hour are, not least the impact this has on the firms as well as how it affects the client relationship. My mind often turns to a partner I know who runs a management consultancy business, who almost immediately on taking over the department abolished time-based billing. Profitability increased along with client satisfaction and employee retention.

However, to my mind there’s a critical distinction between tracking time and charging purely based upon time. The most obvious point is that as knowledge workers, typically the cost of labour is one of the largest components of the cost of providing a legal service. Without knowing what the cost is, running a profitable firm (file, project,team, department etc) is nigh on impossible.

It’s also important to understand cost in other areas too. Law firms often talk about the challenges of calculating return on investment for marketing events such as seminars and events, but when looking at how business development budgets are prioritised and spent, much of the focus is just on the hard cash being spent on venues and collateral, rather than the cost of the people involved in preparing and administering the event.

For example, having a top partner at a City law firm prepare for, attend and follow-up at a seminar overseas which takes him or her out of the office for a couple of days is a significant cost which can be accurately measured but is often overlooked.

The other non-chargeable area that it’s important to track is product development. As law firms begin to think more about efficiency and identify some more standard, repeatable services (some firms have been doing this for years) which are nicely packaged for clients at a set price, they usually “get” the idea that the service becomes increasingly profitable as volume of sales increase. The documents needed for the service are all ready and the people involved get quicker and more skilled at providing the service as they get more experienced. But often any upfront development cost in creating the service (market research, pilot projects, legal research, designing template documents) is lost because it is recorded under a general non-chargeable code. This makes comparing the return on investment for the project challenging and without an idea of these sort of development costs for previous legal products, makes forecasting and budgeting for future product development more difficult.

So back to my current quest. I was inspired to revisit this after reading tweet from a contact saying he was trying a web-based package called timerescue. This was a million miles away from the clunky, manual time recording systems I’d used in law firms (when I first started practice it was a paper timesheet pad) – running in the background and capturing application use, automatically learning behaviour and applying tags. All in all, a fairly sophisticated tool, with some nice web-based analytics to use to understand the data.

However, while I’m a big user of many cloud services, I wasn’t entirely comfortable with sending some of this data (document names, email titles) to a company I knew little about, so after a very short trial, I binned it. I then installed a similar piece of software locally, called Manictime. I liked this a lot, but it led to stability issues, so now I’m back to a more traditional system called Grindstone2.

The application is, of course, irrelevant other than it needs to be quick and easy to use, and provide the data in a format that’s useful.

The key point I wanted to make is that while the market may be (thankfully) steadily moving away from time-based billing, there is much to be said for the discipline of recording your time.

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The International Man Of Mystery?

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Are you the law’s international man of mystery? The answer to the prayers of corporate counsel in global companies? Can you leap jurisdictions with a single bound? Effortlessly unravel the tangle of law, culture and procedure? Wrap your arms around a wriggling mass of seemingly conflicting regulations, and fearlessly work with them to make compliance a reality?

Toby, the firm's anti-trust specialist, was convinced he'd got the right look for the international project kick off meeting

No?

Well don’t worry, you’re not alone.

Conversations with in-house counsel about the difficulties supporting business overseas often have familiar themes (more on this later), but what’s becoming clear is that these challenges are becoming more acute.

Whether it’s the sheer volume of international business increases, the interest in emerging markets continuing to heighten as western markets stagnate or become saturated, or technology adoption increasing the ability to communicate effectively across the world, more and more in-house lawyers are being asked to operate in jurisdictions which are often way outside their comfort zones.

Bear in mind also, that many of the challenges described below might be experienced by those in a law firm that is supporting an inhouse client with an overseas project (and this applies even with a global firm working cross-office) almost to the same degree as an in-house lawyer.

The problems start with the ability to quickly identify what the relevant issues are. It may be that you have an idea of what they are – the big headline-grabbers like anti-trust, employee issues and anti-corruption legislation are obvious examples. However, it may be that there are a bunch of the infamous “unknown unknowns” which  might be substantive law, but they might also be difficulties around the legal process or simply understanding the legal system.

Some of them you might be able to get an overview from research or asking the right people, but others will require hands-on experience of the situation you are facing.

Which leads on to the next step in the journey – selecting and managing local counsel.

Given that the problems above (not knowing what the key issues might be) immediately cause difficulty in having productive, early-stage conversations with business colleagues, it’s not surprising that they can also make the relationship with local external counsel much more difficult to manage.

The first challenge is finding the right lawyers for the matter in hand. Existing contacts, referrals from trusted sources and directories (online, paper) are often the first port of call, but even then the answer might not be the right one.

When I was inhouse I had difficulties both with specific offices of global firms (delivering anything but a consistent global service) and local firms that were recommended at a firm level, but who had individuals that weren’t up to scratch.

The next step is of course instructing the local counsel, which is understandably more difficult than using external lawyers in your own jurisdiction. Lacking an understanding of the key issues means giving a tightly defined project scope is difficult, which has a knock-on impact on costs and timescales.

There may also be softer factors at play, ranging from the more obvious such as language and cultural barriers (“what do you mean he’s out for lunch and won’t be back for three hours, we close the deal this afternoon!”) to those that are more difficult to put your finger on such as differing views of risk and mismatched service expectations.

For multi-jurisdictional projects, this is the point at which project management skills come into play. Assuming those skills exist (which is not always the case), invariably the international element to a transaction adds a bigger administrative overhead to the project, and critically for the business, lengthens timescales.

Which leads nicely on to billing.

It’s horrible.

Managing billing on an international project, particularly one in multiple jurisdictions, is invariably a nightmare which would warrant its own post. I’ve found the best strategy is to close my eyes and wish really (really) hard that all the bills arrive in the right currency, on time and for the agreed (or a reasonable) amount. Admittedly it didn’t work that often.

So, there we are. A post full of problems this week. There are mitigating strategies at almost ever stage of course – getting contacts on the ground (folks in the business can be a mine of useful information) is a great start, as is developing your own network of trusted advisors in major jurisdictions. Getting a baseline understanding of different international cultures helps (have a look at Riding the Waves of Culture: Understanding Cultural Diversity in Business) as does up-front conversations about expectations on both sides of the table.

However, my point was really that as a profession, we need to crack this. To efficiently serve clients, whether internal or external, in a global business environment, we need to provide a seamless service. It’s difficult, but not insurmountable – don’t you think?

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Why your lawyer’s not a social media ninja

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Let me start with a confession.

It took me a while to “get” Twitter. The first time I tried it (which I think was 2008), I just used it to consume information. It wasn’t great for a number of reasons – firstly, I didn’t put a lot of time in to work out who to follow (and in particular I didn’t discriminate between those companies or people who had anything interesting to say online and those  I simply had an interest in) and secondly, at that time it wasn’t as widely adopted as it is now, so there were simply fewer good users.

Sam in IT security did not mess around when enforcing the firm's policy

The next time I tried, I switched to “broadcast mode” and used it as a one-way tool to let the world know about my blog. Of course, because I had nothing else of any interest to say (or to be more accurate, if I did, I didn’t say it on Twitter), I got very little traffic as a result and soon gave up.

The third time was when I got it. A bit of experimenting, understanding the world of hashtags, retweeting and trending, and soon I found a community of likeminded folks (two of which have been featured on this blog in the past).

This of course led to the critical step – engagement, which is where the value comes from.

Now I have an established community, the news I get is both relevant and extremely timely. In terms of sharing my content, whether it’s this blog or other work-related content, the community are generally much more receptive and interested than simply broadcasting to the world at large. And of course the more I engage, the more that community grows and the more I gain.

What I don’t pretend to be, is some sort of social media guru, but I absolutely see the benefit from it.

Twitter, Linkedin and my Blog have all provided very tangible positive benefits to my professional life (Facebook I keep separate for personal use), and given the user numbers for social media, the valuations of the main players, and the newsworthy status of the platforms (super-injunction anyone?), at first look it seems strange that more law firms are not using social media effectively.

Scratch the surface, and the reasons are obvious. At least to me.

Perhaps the reason that’s most often cited is the perceived risk involved.

Trained to be wary of defamation, and qualifying into organisations which are (rightly) protective of their reputations, the more risk-averse partners in law firms can often see huge potential danger in allowing individual lawyers to express themselves in an informal and opinionated way.

This can lead to social media being simply struck off the agenda (“it’s just a fad anyway”), or so sanitised any communication simply resembles a bland summary of the firm’s press releases. zzzzzzzzzzzz.

If you want to test this, firstly check out the more forward thinking media and look at the amount of their engagement. Are they tweeting, blogging and active on discussion groups? Is their engagement commensurate with their brand and positioning?

Or in fact do the lawyers have to engage without mentioning the firm? Or does all the comment come with the health warning “views are the personal opinion of the author” (meaning if they generate goodwill and thought leadership, the firm will promote the content and benefit, but if they step out of line, they’re on their own and we did warn the reader it was nothing to do with the firm!).

Some of the other reasons are perhaps a little less obvious, but I have some theories for you to consider.

The first is the very restrictive IT security policies than many firms enforce. While I’ve written before about the deficiencies in many firm’s information security, the need to be seen to have all systems locked-down means as well as restrictions on employee internet use (which are becoming less Draconian over time) there are pretty stringent controls on which applications can be used on mobile devices. In the age of the app, this seems to come at the expense of productivity – I certainly do much of my Twitter use remotely while walking around the building or waiting for trains. Without the ability to exploit these micro-chunks of time, the busy lawyer will find it difficult to contribute meaningfully to the marketplace.

The biggest unwritten hurdle is of course time. When the primary method of measuring lawyer performance is the chargeable hour, anything outside that category, especially something where the return on investment is less tangible, is heresy. While those who know how to use social media and can demonstrate the profile and connections they build for the firm may get some leeway to invest some time, those who are new to the game are often denied the time and encouragement to try, and it remains a mystery and missed opportunity.

The related point is the need for timeliness, and again, when lawyers are chained to Microsoft Office and their practice management system, with one eye on the clock, grabbing five minutes to check what’s going on in their network, and respond in a timely fashion to questions and comments can be doubly challenging, putting the pressure on even the most adept online legal ninja.

Now just for the record, I’m not for one minute saying that interacting with social media should take precedence over client work and critical deadlines. Holding up closing a multi-million dollar aquisition because you are engaged in a juicy debate on liability clauses on twitter is not a bright idea.

But, if law firms are going to make the most of the social media revolution, then they need to find ways to allow their best people to experiment and engage which in turn will allow their stars to shine.

I’ve no doubt as the demographics of firms continue to change and more lawyers who have grown up with social media join and have a meaningful presence, the culture will of course change. The question is, which firms can get ahead of the curve and reap the benefits before their competitors?

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The Balanced Law Firm

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Living in the corporate world, it’s easy to take scorecards, dashboards and metrics for granted. For those that recoil at management speak, they can become a one way ticket to snoozeville. For those who like to get down and dirty with data, browsing a realtime display of information can be the highlight of their week.

The Finance Director was very clear on how to measure partner performance

Most lawyers however, fall firmly into the “I prefer words to numbers” category, and so before you switch off, let me give you a 100%  money back guarantee that there will be no data analysis, spreadsheets, pie charts or pivot tables in this post.

It’s actually about how you measure and reward performance. Important in any business, surely?

I want to start with a term many of you may have heard, but perhaps not fully explored – the mythical “balanced scorecard”. Created by Kaplan and Norton, it started with the belief that traditional measurement of company performance was too one-dimensional, concentrating (as it did at the time in the mid-90s) on backward-looking financial data. The authors then developed a model that added three more areas of business performance to assess to give a much more holistic view of how the company was doing.

Now, before I go any further, take a second to pause and think about how your firm or team are measured.

What are the phrases that come to mind?

Chargeable hours? W.I.P.? Debtor days?

Don’t get me wrong, these metrics are all important. Understanding your costs and use of time are very important, and you’ll certainly never hear me criticise anyone for managing cashflow carefully……

But

There is more to a successful law firm than simply the financials. Surely the client warrants a mention? And perhaps the employees?

The Balanced Scorecard has four main categories of performance which are measured, and these are then fed in (possibly on a weighted basis) to the overall scorecard. The four dimensions are as follows:

  1. Financial performance – what is important for the partners (as the effective “shareholders” of the business)?
  2. Client performance – what is important for the firm’s clients?
  3. Internal process performance – how do our processes perform in delivering results for clients and partners?
  4. Learning and growth performance – how innovative are we and are we managing, developing and retaining human capital?

For the financial perspective, there is no shortage of common measures among law firms, but how many firms vary their metrics depending on the overall firm strategy, or departmental objectives? For example, in recent years controlling operating costs might have been a key firm-wide objective. However, if a particular team is charged with penetrating a new market, or demonstrating a tangible return on some investment, metrics like sales growth or pipeline growth may in fact be more valuable.

When looking at client metrics, client satisfaction is a measure which is only just starting to take hold in the law firm world, but to my mind is absolutely critical. Not only does it give some very clear feedback at face value, but the collection process can throw up some incredibly valuable insight that can be used to strengthen relationships and also present sales opportunity.

Another metric in this category that is common in the corporate world is NPS, or net promoter score, which essentially asks clients how likely they are to recommend the law firm to a friend. While there is a bunch of research behind this theory, for lawyers that have grown up being told of the importance of “word of mouth” marketing, investigating the use of NPS should seem like a logical step.

When assessing business processes, as readers of this blog will know, I believe there are plenty of opportunities for firms to sharpen up their operational efficiency through better processes.  There are lots of different ways to assess processes and measure improvements too – take a particular process (say drafting a consultancy services agreement), aspects that can be measured (and improved) could include the time the process takes (which doesn’t have to translate to price!), the number of defects (which might not be the same as complaints – defects might get picked up by an internal review), the number of steps in the process or perhaps the level of qualification/skill required to conduct various parts of the process.

Finally, learning and growth. Again, regular readers will know I’ve written quite a bit about the need for innovation in law firms, and it’s never been more important than in the current, highly competitive environment. New products and services, changes in operating models, adoption of new technology are all good examples of performance that can be measured by metrics that will support innovation.

Knowledge management is another critical area to investigate and could theoretically sit in either the business process category or here within learning and growth. The latter seems to me to be a better fit, but wherever it sits, it should be measured and form part of the performance management infrastructure at both a firm and an individual level given that law firms are knowledge businesses.

The other dimension to learning and growth is of course the development of human capital. Employee satisfaction and retention metrics might be a good place to start, but what about training (received and delivered) and subsequent productivity improvements? How about aligning training with strategy – for example are there new competencies the firm (or a team) needs to develop? If so, can attainment be measured and rewarded?

Ultimately, for these measures to be meaningful, they need to flow down to the individual level. In the corporate world it’s common to have a corporate scorecard that flows down to a business unit, which in turn flows down to a department, a team then an individual. The idea being that each of these levels “rolls up” to contribute to the scorecard of their parent unit.

In my experience of law firms this process happens, but only in terms of the financial data. Chargeable hours and utilisation rates roll up, but training targets and client metrics stay with the teams (if they exist at all).

This is a time when many firms are examining their strategy, their organisation and their operating model. Taking a broader perspective to performance management can provide the data to support making changes, but critically can support the introduction of changes by driving the behaviour that’s needed for successful implementation. It’s a cliche, but “if it’s not measured, it doesn’t matter”.

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