Posted by: johnocunningham | March 23, 2017

Alternative Legal Service Providers Rising Rapidly

A recent study highlighted by the ABA Journal has noted that a majority of corporate clients and law firms are now using alternative legal service providers (“ALSPs”) to help them with defined tasks, such as e-discovery, automated document review, economic damage assessments and other tasks.

According to the ABA Journal article, 51 percent of law firms and 60 percent of corporations are now utilizing the services of ALSPs to save costs, reduce labor and/or improve and expedite results.

As noted in a recent article on Law.com, the trend is not just about cost savings and it is likely to continue growing.

Furthermore, the current numbers of ALSP users are projected to be 72 percent of law firms and 74 percent of corporations within the coming year.

Law firms must figure out not only how to incorporate the services of the very best ALSPs to save money and improve efficiency for their corporate clients, but how to communicate the benefits and results of this adoption to clients who are clearly aware of and shopping for these alternative services already. If this is not in your messaging already, law firms, then it should be.

A story that appeared last month in Bloomberg Law – about a coming overhaul in the way Microsoft hires law firms – may well be harbinger of things to come for outside law firms of other large clients.

Based on interviews I have done with GCs over the years, I see the following story highlights as likely trends that will gain momentum in the coming years:

  • A continuing move toward hiring specific lawyers with specific expertise rather than hiring firms for one-stop shopping
  • A move toward greater emphasis on building relationships between in-house counsel and minority associates at law firms, which will likely result in more minority partners eventually
  • A shift toward greater use of data and management dashboards by in-house lawyers, who will be able to examine historical data on the performance of individual lawyers in various engagements over the years, their rates, their previous engagements, and the history of who has hired them

The story also notes that Microsoft will be requiring in-house legal managers to hit certain targets for alternative billing. Data from other sources suggest that the alternative billing trend may have slowed in recent years, but that could just be a temporary pause until more creative ways of working with fixed fee arrangements and performance contingencies can be developed.

An Assistant GC at Microsoft said that the company is pushing its outside firms to make better use of data, technology and automation to deliver more value. Law firms that become quick adopters of technology, data analysis, and process improvement disciplines could benefit in the years to come.

This is my 51st post in a series of monthly features that I have dubbed “Best of My Blog Roll.” The concept is simple – at the end of a month I peruse my own blog roll (see that column on the right) for material created by other bloggers that I think is most worthy of sharing with others, and then I report on it here.

Reviewing blog posts for the month of February, 2017, I have chosen to highlight the following five blog posts:

  1. A post on the Clockwork Design Group blog, offering a step-by-step guide to content marketing for professional service firms.
  2. A post on the Prodonovich Advisory blog, offering up seven tactics for taking more market share.
  3. A post on the LawVision blog about why you must do more than just satisfy your client.
  4. A post on the Cordell Parvin blog about the importance of listening and communication in client development work.
  5. A post by Susan Duncan on her InFocus blog about the sales and service cycle for professional service firms.

Michael Rynowecer of the well-known and highly reputable BTI Consulting Group recently published a Linked-In post entitled “The Six Traits of a BTI Client-Service All-Star,” which neatly summarized client opinions on a number of key components of client service.

One of the interesting take-aways from this survey is that “all-star” service performers (as rated by clients) have dramatically improved in one key ranking for “exceptional understanding of the client’s business.” Thus, the legal service all-stars have clearly started paying attention to what corporate clients have been saying for years – you must understand our business better.

A total of 22.8 percent of client service all-stars merited this praise from clients, up from just 11.4 percent only a year ago.

This score, while indicating big improvement, shows that there is still plenty of room to gain an edge on legal service competitors by ratcheting up the understanding of a client’s business.

Law firms would do well to study industries and individual businesses harder, especially considering that at least one 2012 poll by Altman Weil showed clients ranking knowledge of industry and business ahead of all other components for lawyer selection (including references from other lawyers).

If you need help with learning clients’ industries and individual businesses, I can help with that, having served as Chief Legal Officer to two companies and having interviewed hundreds of clients from numerous industries. My contact info is on this site.

Posted by: johnocunningham | February 20, 2017

As Law Firm Salaries Rise, Competition Increases

At least one law firm has now bumped starting salaries for first year lawyers to $200,000 per year, as noted in a January posting at Above the Law. Good news for young lawyers, but perhaps not such a great omen for things to come.

Based on interviews I have conducted with various Chief Legal Officers for large companies over the years, I have concluded that sizeable first year salary bumps are the prime catalyst for the growth of in-house law department staff. Simply put, CLOs and CFOs are making an economic decision that it is much cheaper to bring work in-house than to farm it out, and that translates to a shrinking outside counsel hiring budget in the future.

Furthermore, every time salary structures and hourly rates push higher, CLOs look harder at alternative providers, many of whom are now selling all-in-one turn key solutions to corporate problems, featuring not just legal advice, but advice on how to restructure corporate org charts, utilize developing technologies, train and develop people better and get maximum bang for the buck in attacking any given problem. Such comprehensive, integrated, multi-disciplinary solutions are being offered by Big Four providers, such as Deloitte Legal Services, and by new entrants into the competitive landscape, such as United Lex.

Law firms can compete with this broader, more integrated approach by partnering with technology providers, financial experts and human resource experts to offer their own broad-based solutions, but as of now, that does not appear to be happening on a large scale.

This is one more competitive puzzle that law firms need to solve while pitching to their clients how they are the best, most economical and prudent choice for legal problem solving, despite rising first year salaries.

This is my 50th post in a series of monthly features that I have dubbed “Best of My Blog Roll.” The concept is simple – at the end of a month I peruse my own blog roll (see that column on the right) for material created by other bloggers that I think is most worthy of sharing with others, and then I report on it here.

Reviewing blog posts for the month of January, 2017, I have chosen to highlight the following three blog posts:

  1. A post on Adam Smith Esq. about the 2017 Report on the State of the Legal Market put out by the Georgetown Law Center and Thomson Reuters. This post presents some interesting and likely controversial analysis based on data provided in the report, concluding that law firms need to choose one of two paths to success now – either selling to high-end clients who want customized service, or providing low-cost services more efficiently than competitors. I am not sure it is just that simple, but the analysis and the underlying report are worth considering.
  2. A post by Bruce Alltop on the LawVision blog about “The Importance of Trust” in professional development, which focuses on the benefits and challenges of building trust among partners within firms so that partners can better cross-sell services to clients, potentially enabling those clients to benefit from having a more complete service experience.
  3. A post by David Ackert on the Ackert Advisory blog, entitled “A Client Feedback Lesson from Uber.” As he often does, David provides a great anecdotal illustration of the value of a marketing tool – in this case the value of knowing how you are scored by others and asking why.

 

Posted by: johnocunningham | February 6, 2017

E-Discovery: Encroachments on One More Piece of Law Firm Turf

As if law firms did not have enough competition, statistics show an increasing outflow of e-discovery work going to firms that specialize in technology solutions for litigation tasks.

Thus, law firms have to make a strategic decision now on whether to outsource their own e-discovery work to pass on efficiency savings to clients or compete with the outsource providers on efficiency and results.

They also have a challenge to meet in communicating the results of their strategic decisions to clients in order to convince clients that they are getting the best, most thoughtful solution to their needs.

A recent blog post by Dan Meyers, asserting that law firms are not the preferred one-stop e-discovery solution for clients, summarizes the case for outsourcing, but the future has yet to be definitively written on this subject.

E-discovery, like many other aspects of legal service, is rapidly evolving, and law firms have to decide whether to defend this piece of turf, or let it go so that they can focus on defending and owning the strategic ground where they are clearly at their best in providing superior value for clients.

If large law firms can establish e-discovery practices that are truly world class, those practices (which will ultimately look more like operating divisions of a company) may be able to attract work from other law firms, especially smaller ones looking for mutual referrals, who have chosen to outsource this work. Law firms that can effectively operate and innovate in the e-discovery space will also be able to attract direct hiring by some corporate clients who are parceling out pieces of litigation work, thereby gaining an opportunity to get more work from those clients.

Firm leaders need to make up their minds now on what kind of work they want to do, what they don’t want to do, and how they will communicate those decisions to clients.

Posted by: johnocunningham | January 23, 2017

The New Normal for Law Firms

A recent story about a 2017 Report on the State of the Legal Market by Thomson Reuters asserts that law firms must find new ways of adapting to permanent and growing shifts in the way that corporate clients fill their legal needs.

According to the report, clients are demanding lower costs per matter and disaggregating services, sending many tasks to non-law firm service providers, and often reducing the use of less efficient first- and second-year associates.  They are increasingly putting fixed caps on total fees per matter as well, forcing law firms to figure out how they can be more efficient in process improvement and project management.

As noted in many local press outlets, clients are also favoring firms that have figured out how to deliver services at fixed or predictable costs or even on contingent fee arrangements. (See for example, this story about firms that are ditching hourly fees).

In this brave new world, corporate clients are also scrutinizing firms to see how well they can collaborate with others, pushing them to consider sharing of information, resources and staffing in order to accomplish goals. Forward-looking firms are also responding, as indicated in a recent National Review story by Eilene Spear.

The new normal is anything but normal for law firms, but it presents tremendous opportunities for those who are willing to distinguish themselves from competitors by collaborating with their clients on innovative ways to produce high quality work more quickly and cost-effectively over time, using technology, knowledge sharing, resource sharing and other techniques.

 

This is my 49th post in a series of monthly features that I have dubbed “Best of My Blog Roll.” The concept is simple – at the end of a month I peruse my own blog roll (see that column on the right) for material created by other bloggers that I think is most worthy of sharing with others, and then I report on it here.

Reviewing blog posts for the month of December 2016, I have chosen to highlight the following three blog posts:

  1. A great piece of advice from the Cordell Parvin blog on the subject of integrating your hobbies and passions with your client development habits. This post has plenty of links to other useful, related topics too.
  2. A short, tidy post by Vanessa Schaefer of Clockwork Design Group, offering three tips for better personal branding, which lawyers should consider because their personal brand or reputation is what clients say they hire – more so than the brand of the firm.
  3. A good story-telling post on the Law Firm 4.0 Blog by Deb McMurray, which not only describes what lawyers can learn from a sports-casting legend, but offers links to similar posts on what lawyers can learn from other people and experiences.

If you have recommendations for great blogs or blog posts, don’t hesitate to share them.

Posted by: johnocunningham | January 9, 2017

Most Popular 2016 Blog Posts on Legal Service Industry

One of the nice features of a WordPress blog is the analytics that come with it, enabling you to look at the most popular posts on a site by day, week, month or year.

With regard to my own site, the analytics show that the following blog posts of 2016 were most often viewed and disseminated to others:

  1. A post on “Internet Tools for Writers, Bloggers and Content Creators
  2. A post on “Law Firms Using Data Analytics to Enhance Client Development” and
  3. A post on “What’s New in Law Firm Innovation

WordPress also summarizes the entire multi-year history of a site, and reveals that the most popular blog post on my own site during the past ten years is this one from 2012:

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