© 2004 Charles F. Robinson Presentation by Charles F. Robinson Clearwater, FL Forces Shaping the...

Presentation byPresentation by

Charles F. RobinsonCharles F. RobinsonClearwater, FLClearwater, FL

Forces Shaping the Forces Shaping the Future of Law PracticeFuture of Law Practice

Kentucky Bar Annual ConventionKentucky Bar Annual ConventionJune 24, 2004June 24, 2004

Presentation MaterialsPresentation Materials

http://CharlieRobinsonFuturist.com/

Today’s AgendaToday’s Agenda

• Why worry about the future?

• The 2004 environment

• Trends v. Cycles

• How to create your preferred future

The Big QuestionThe Big Question

Will the Legal Profession Reinvent Itself In Order to Provide Highly Valued Twenty-First Century Services to Twenty-First Century Clients?

It Feels Like Something is HappeningIt Feels Like Something is Happening

• We feel uneasy• We feel tentative• We feel angry and frustrated• There is competition everywhere we turn• Will the massive change we are going

through continue?• Can we return to the way it

used to be?

Tom Peters predictsTom Peters predicts

• Ninety per cent white-collar jobs will disappear in the next ten years.

• What color collars do lawyers wear?

• Is there an exception for lawyers?

Nicholas NegroponteNicholas Negroponte

Incrementalism is Innovation’s Incrementalism is Innovation’s Worst EnemyWorst Enemy

Never in history has Never in history has incumbency been worth less. incumbency been worth less.

Examples include:

Peter DruckerPeter DruckerManagement InventorManagement Inventor

What can explain the fact that policies, practices, and behaviors that worked for decades (and in the case of GM are still working well when applied to something new and different) no longer work for the organization in which and for which they were developed?

Polaroid StoryPolaroid Story

““What Are the Forces Already at Work in What Are the Forces Already at Work in Our Profession That Have Our Profession That Have the Potential to Profoundly Transform the Potential to Profoundly Transform Our Profession’s Structure?”Our Profession’s Structure?”

• Each Force a “Discontinuity”• Examine Implications for

Each Discontinuous Force

Current Forces Impacting Current Forces Impacting the Professionthe Profession

• Nonlawyer competition

• Diminished perceived value in attorney services

• Technology displacement

• Lawyer supply exceeds demand

• Discontinuity- Precedent has no value

• Disintermediation- Out with the middle person

Areas of PracticeAreas of Practice

• Family Law– >70% Pro Se

• Rules of Civil Procedure gone

• Real Estate– Realtors

– Internet

• Tax and Estate Planning– Wills on-line

– IRS electronic tax filing

– Century Business/ American Express

• House Counsel– Trade Association legal

advice

• PI Defense– Insurance companies

• Litigation– Sport for the wealthy

– Contingent Contingent fees

The real threat is irrelevance.The real threat is irrelevance.

Chief Justice Major Harding Chief Justice Major Harding 2/5/20002/5/2000

• Dispute resolution as we know it may be a dinosaur

• Must look at reforming the jury system• The big issue before the court system

is relevance

Litigation

Wired Magazine Wired Magazine (January, 1998)(January, 1998)

Guardians of the old order are trying their best to hold back change and preserve their power.

Stare Decisis- Stare Decisis- Walking Through Life Walking Through Life BackwardsBackwards

Bill Gates WarningBill Gates Warning

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

• “There is nothing more difficult to handle, more doubtful of success, and more dangerous to implement than initiating change.

• Innovation makes enemies of all those who prospered under the old regime.”

Machiavelli, The Prince

Tom PetersTom Peters

“If you don’t like change, you are going to like irrelevance even less”

Marconi v SarnoffMarconi v Sarnoff

“There is no reason anyone would want a computer in their home.”

Ken OlsonPresident, Chairman and Founder

of Digital Equipment Corp., 1977

“This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.”

Western Union internal memo, 1876.

“I’m just glad it’ll be Clark Gable who’s falling on his face and not Gary Cooper.”

Gary Cooper on his decision not to

take the leading role in “Gone With the Wind”

“Everything that can be invented has been invented.”

Charles H. Duell,Commissioner,

US Office of Patents, 1899

Ten Toxic Assumptions of the Ten Toxic Assumptions of the Legal ProfessionLegal Profession

1. Effort is equal to value.1. Effort is equal to value.

2. Lawyers have a monopoly on 2. Lawyers have a monopoly on the interpretation of the law.the interpretation of the law.

3. The lawyer determines what is 3. The lawyer determines what is value added service.value added service.

6. The practice of law is a 6. The practice of law is a profession and not a business.profession and not a business.

8. Market needs have nothing to 8. Market needs have nothing to do with the strategy and structure do with the strategy and structure for the delivery of legal services.for the delivery of legal services.

9. What lawyers have done in the 9. What lawyers have done in the past past isis the practice of law. the practice of law.

Our ParadigmOur Paradigm

• Our most deeply held, unconscious set of assumptions and values.

• The things we take for granted.

• That which determines our expectations, frames the questions we ask, and structures our approach to what we do.

Going Back to ZeroGoing Back to Zero

• Our old strengths offer little protection against the new world.

• Learning to forget becomes the ideal talent.

• Discontinuity the Word of the Hour

The Impossibility QuestionThe Impossibility Question

• Search for new paradigms in our organization.

• What would be the impact of this impossible task if we were able to do it?

Joel Barker Joel Barker Paradigm PrinciplesParadigm Principles

Principle 1Principle 1Joel Barker cont.Joel Barker cont.

New paradigms show up sooner than they are wanted or needed.

The person who is most likely to shift your paradigms will be an outsider.

You don’t have to be the paradigm shifter to get all the advantages.

Principle 4Principle 4 Joel Barker cont.Joel Barker cont.

Our old paradigms keep us from seeing new paradigms.

The Paradigm ParadoxThe Paradigm Paradox

• We need our paradigms to make sense of the world, yet because of these we become trapped or constrained.

• If we want to change the structure and leadership of our organizations, we have to address change at this fundamental paradigmatic level. We have to change the thinking behind our thinking.

Dana Zohar, Rewiring the Corporate Brain

NH BAR OUTREACH 2000NH BAR OUTREACH 2000

Can the legal

profession

survive

the “dot.comet”?

• Lawyers charge excessively and add significantly to the cost of a legal need.

• Lawyers add significantly to the time it takes to satisfy a legal need.

• Lawyers complicate already-complicated problems.

Results of a poll conducted by Franklin Pierce Law Center graduates of their clients:

Law School Client Survey contLaw School Client Survey cont

• Lawyers don't take time to learn enough about a client's legal need, and then do not adequately address the need. When they address the need, they are paternalistic and arrogant.

• Lawyers don't know when to step aside.

• Lawyers' expertise in litigation and advocacy impedes problem solving.

Jennifer James - Jennifer James - Guild MentalitiesGuild Mentalities

Education

MedicineLaw

Guild Power DimensionsGuild Power Dimensions

1. Power and control over the association- right to create own rules

– Bar ethics rules promulgated by court, not legislature or executive branch

2. Control over the workplace– Number and status of workers

• Bar examination and education requirements

– Pricing of output• Bar minimum fee schedules• Prohibition on advertising

Guild Power Dimensions Guild Power Dimensions ContCont

3. Control over the market– UPL civil and criminal statutes (except Arizona)– Power to define law practice

4. Power over the relation between the guild and the state

– State had to grant monopoly to the bar• State trying to undo bar regulation ever since

– Right to control availability = right to set the price Death of the Guilds- Professions, States, and the Advance of Capitalism 1930 To the Present

Elliott A. Krause 1996

Guild Status DeclineGuild Status Decline

• Goldfarb 421 U.S. 773(1975)– End of pricing control

• Bates 433 U.S. 350 (1977) – Advertising allows for competition

• Guild status gone since 1975 but many in denial in 2004

The Cobb Value CurveThe Cobb Value Curve

Competitive PositioningHIGH

INSENSITIVE

SENSITIVE

RELATIVE

VOLUME OF WORK AVAILABLE

NUCLEAR

HIRED FOR

EXPERIENCE

BRAND NAME

SERVICES

COMMODITY

SERVICES

0% 100%20% 40%

Internet

Cycles and TrendsCycles and Trends

Trends v. CyclesTrends v. Cycles

• Cycle says wait it out and it will come back. – Weather

– Markets

• Trend says will not likely return to status quo– We must deal with it or

– Let it take us wherever the trend goes

• Watch out for Wild Cards

Trend or CycleTrend or Cycle

1. Tort “reform”

1.Tort Reform1.Tort Reform

• “Economically destructive litigation”

• US most expensive tort system in the world

• $179 billion 2002 direct costs– $636 per capita– 150% of amount spent on pharmaceuticals

• Bills pending in 20 states

• 11 states have passed legislation“Trends” Volume 1, Issue 3, July 2003

Tort Reform TargetsTort Reform Targets

• Joint and several liability

• Size of jury awards ($250,000) pain & suffering

• Asbestos liability

• Medical malpractice

• Judicial review of jury awards

Trend Newsletter PredictionsTrend Newsletter Predictions

• Asbestos special legislation limiting awards by 2005

• Pain & suffering caps state/federal 2006

• Federalize class-actions over $2 million

• Federal preemption of auto insurance litigation to include no fault coverage for pain and suffering

Update January 2004Update January 2004

Associated Press January 8, 2004

• Senate compromise to keep some cases in state court likely to allow bill to pass.

• Curb on class-action suits• Limit attorney fees for “coupon settlements”

– Link fees to redemption rate of coupon or hours x rate

Senator Chuck Schumer, D NYSenator Chuck Schumer, D NY

• “Lawsuits have gotten out of control in America and something needs to be done to rein them in.”

• “While he believes in the right to sue, he also believes that there have been excesses and there ought to be reform.” Phil Singer, Schumer spokesman. AP 1-8-2004

Lawyer’s Fees Come Under Fire Lawyer’s Fees Come Under Fire Miami Herald 1-4-2004Miami Herald 1-4-2004• Massachusetts lawyers seek $2.1 billion

paycheck for winning $8.3 billion settlement.– Argue $775 million insufficient

• Efforts in Florida and 13 other states to rein in contingency fees.

• “Law is supposed to serve people, not lawyers” Nancy Udell, Gen. Counsel Common Good

• ABA Tort Trial and Insurance Practice Section appoints 11 lawyer task force

President Bush- January 26, 2004President Bush- January 26, 2004

• “Lawyers walk away with up to 40% of every settlement….for frivolous suits…driving a wedge between them (doctor) and patient.”

• Unnecessary lawsuits drive docs to prescribe drugs and procedures to avoid lawsuits.

Tort Reform- Trend or Cycle?Tort Reform- Trend or Cycle?

• If cycle make low priority

• If trend firm must actively decide– Effect on practice

• Strategic Plan to – Make tort practice cost effective and

profitable to firm– Reinvent the practice and pricing, or– Find a new practice area to replace tort

practice

2. Declining image of bar/lawyers

2. Declining Image of Bar Associations from 2. Declining Image of Bar Associations from ABA to State and Local-Trend or Cycle?ABA to State and Local-Trend or Cycle?

What is greatest problem facing the bar and its members today, ignorance or apathy?

Battle Lines – London Times 7-29-03 Battle Lines – London Times 7-29-03

• Law Society looking extinction in the face

• Government wants to strip bar of self regulatory powers

• Client complaints up 50%

• Banks, insurance companies and building societies to handle probate

• Government wants one-stop shops

Tesco Plan for Legal Reform- Tesco Plan for Legal Reform- The Guardian 7-25-03The Guardian 7-25-03

• Lord Falconer- probate by banks, building societies, insurance companies

• Government favors “one-stop shops”• Government to regulate not lawyers but

legal services• Big corporations to be allowed to practice

law.• Existing regulation framework is

“outdated, inflexible, over complex, insufficiently transparent”

Revolution Overseas- December 2003 Revolution Overseas- December 2003 ABA Journal- “Shot Through Hull”ABA Journal- “Shot Through Hull”

• Government commissioner to oversee grievance process– Strip the bar (Law Society) of regulatory

powers

• Liberalize MDP– Various pros mix and mingle money– Banks and insurance companies to sell

legal services and software.

Lord Falconer of ThorotonLord Falconer of ThorotonDecember 3, 2003December 3, 2003

“Justice, Rights and Democracy”• “Justice for all as central as education for all”• “That means a justice system that works… and

in which people have faith.”• “Both of these objectives- better service in the

justice system, better government and democracy in the political system- are driven by one overriding point-serving the public.”

Lord Falconer ContinuesLord Falconer Continues

“For too long, the courts, the law, the justice system and constitutional issues have been seen as the preserve of their key interest groups. They are not. They play a vital part in everyone’s daily life…..”

UPL- A Dog That Won’t HuntUPL- A Dog That Won’t Hunt

Gemini Ventures of Tampa Inc. v. Hamilton Engineering Gemini Ventures of Tampa Inc. v. Hamilton Engineering 26 Fla L. Weekly 927 (226 Fla L. Weekly 927 (2ndnd DCA April 2001). DCA April 2001).

“We, as part of the legal profession, should be ever vigilant to protect the public from those who seek to provide legal services without the requisite training and knowledge. However…

we must also recognize that there are people with experience and expertise capable of providing valuable service to persons involved in legal proceedings without crossing the line between legitimate consulting and the unauthorized practice of law. We do a disservice to the public if we prevent access to these services.”

UPL ProblemsUPL Problems

• What is PL?

• No harm no foul?

• Protect public or profession?

• Protecting anybody?

• Limiting competition from nonlawyers?

ABA Task Force on the Model ABA Task Force on the Model Definition of the Practice of LawDefinition of the Practice of Law

Presumed law practice when• Giving advice or counsel regarding legal rights

and responsibilities• Selecting, drafting, or completing legal

documents that affect legal rights of person• Representing person before adjudicative body,

including but not limited to, preparing of documents or conducting discovery, or

• Negotiating legal rights or responsibilities on behalf of a person

Happy Days Are Here Again!!??Happy Days Are Here Again!!??

Justice Department and FTC• Proposed definition would reduce competition

and force consumers to pay higher prices for a smaller range of services

• Prohibit lay service providers from closing real estate loans

• Prohibit accountants, investment bankers and insurance adjusters from advising clients about various laws.

Utah DefinitionUtah Definition

• Appearing as an advocate in any criminal proceeding or before any court of record in this state in a representative capacity on behalf of another person.

• Can’t claim to be a lawyer if you are not by using JD, Esq, attorney, attorney-at-law

Mary Ryan, ABA Committee on Mary Ryan, ABA Committee on Delivery of Legal ServicesDelivery of Legal Services

“A lawyer is best defined as someone who provides the best services in a free market, not the only services in a protected market.”

Are We Really Prisoners of Are We Really Prisoners of Nostalgia??Nostalgia??

Changing Role of Bar and Lawyers in Changing Role of Bar and Lawyers in General- Trend or Cycle?General- Trend or Cycle?• Should we be concerned with New

Hampshire survey?• Should the firm look to different

structure to practice and expand horizons to – Ancillary Business

– MDP

– Local, regional, national, global alliances

• Offense or defense?

M PJ MDP AB P

What Does It Mean For Your Practice?

How Much of Your Day Will Be How Much of Your Day Will Be Spent on Nonlegal Services?Spent on Nonlegal Services?

• Services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, that are not prohibited as UPL when provided by a nonlawyer.

• All nonlegal services are fair game for any provider including out of state lawyers

Ancillary BusinessAncillary Business

Entity separate from law firm providing law-related (nonlegal)

services

Ancillary Business ABA HistoryAncillary Business ABA History

• 1991 Litigation Section version

• 1994 Current Version

• Florida Committee trying to go back to 1991 version

• Julie Williamson demanded RPPTL presence on committee

• AB but no MDP

Compare MDP and ABCompare MDP and AB

• MDP for all size firms- not just big 5 (4?)

• AB easier for large firms– Separate space– Separate entity– More management

Did Arthur Andersen Demise End MDP?Did Arthur Andersen Demise End MDP?

• Who were Enron’s lawyers?– Arthur Andersen?– Vinson & Elkins et al?

• An imaginary scene at Enron outside counsel offices.

3. MJP

3. Multijurisdictional Practice3. Multijurisdictional Practice

• Florida Rule 4-5.5(a) UPL– Lawyer shall not practice in jurisdiction

where doing so violates the regulation of the legal profession in that jurisdiction

• 5.5(b) assist another in UPL

• Birbrower et. al v. Superior Court of Santa Clara County, 949 P.2d 1 (Cal 1998)

MJP IssuesMJP Issues

• Protection of public and clients- Home state/Host state– Or is the rule protectionist for host state

lawyers?

• Host state interests– Competence- Model Rule 1.1- measure by

• Bar exam?• Accredited law school graduate?• CLE requirements?

ABA RPPTL PositionABA RPPTL Position

• Many federally consistent issues in estate planning and administration

• Research allows competent preparation in out of state matters

• Model Rule 1.1 Competence

New Jersey MJP ArgumentsNew Jersey MJP ArgumentsApril 2003April 2003

• “Specific knowledge of New Jersey law, or the laws of any state, is overemphasized.”– “You go to the computer or have someone

do it for you.”– “What are we, Planet New Jersey?”

New Jersey MJP contdNew Jersey MJP contd

• There are 60,000 New Jersey residents working in Philadelphia, and many thousands more in New York state.

• What is rationale to place arbitrary borders on regional practice?

Update January 23Update January 23

• Connecticut attempts to seal border from out of state encroachment

• Model Rule 1.1

Breaking News-Pennsylvania Adopts Breaking News-Pennsylvania Adopts MJP Rule 4-30-2004MJP Rule 4-30-2004

• Out of state lawyer may provide legal services on temporary basis if

1. Pennsylvania lawyer associated

2. Related to pending or potential proceeding in another state

3. Related to ADR without pro hac vice necessity

4. Not in paragraph 2 or 3 and arise out of or are reasonably related to the lawyers practice where admitted.

MJP and reciprocity -MJP and reciprocity -breaking down the bordersbreaking down the borders

The essential elements for reciprocal admission of Washington, Oregon, Utah and Wyoming attorneys in Idaho are:

• Graduation from an ABA approved law school. • Prior passage of the Washington, Oregon, Utah

and/or Wyoming bar examination. • Three years of practice in Washington, Oregon,

Utah or Wyoming.• Good moral character. • Fifteen hours of CLE

– Practice– procedure – ethics

Borderless World Borderless World

• Regional/National reciprocity 26 states now

• GATS Treaty

• Driver’s license approach in 5-10 years

MJP- Trend or CycleMJP- Trend or Cycle

If trend several questions what are strategic threats and opportunities for the bar/firms

• How can you take advantage of national positioning?– Is firm ready to model a national presence without

physical offices everywhere?

• Will bar/firm deny change possibilities?– Railroads– Western Union

• Opportunity for firm– Technology to identify differences in state law

4. Technology changing the practice

3. MJP

Law Office of the FutureLaw Office of the Future

• A computer + a dog + a lawyer.

• The computer will practice law.

• The dog is there to keep the lawyer away from the computer.

• The lawyer is there to feed the dog.

Dr. Peter Bishop, Associate professor of Human Sciences

University of Houston-Clear Lake

4. Technology 4. Technology DisintermediationDisintermediation

• Internet Available to Everyone– Wills, Tax Return

Prep On-line

• Like Printing Press to Church/Temple

• Literacy Brings New Relationships

The Future of Law: The Future of Law: Facing the Challenges of Information TechnologyFacing the Challenges of Information Technology

• Legal Profession Will Change Beyond Recognition

• Three Types of Legal Service– Traditional– Commoditized– Latent

Richard Susskind

TraditionalCommodity

Latent

Susskind’s Key QuestionsSusskind’s Key Questions

• Likely developments in IT over next 10 years

• Possibilities for law practice in light of IT changes

• Future for lawyers and what part is the world wide web likely to play

Transforming the Law; Essays on Technology, Transforming the Law; Essays on Technology, Justice and the Legal Marketplace- Justice and the Legal Marketplace- Richard Susskind 2000Richard Susskind 2000

• Introduces the “Susskind Grid”

• First work tying together technology use and strategic future planning for lawyers

External

KnowledgeTechnology

Internal

Information

Figure 1.1 The Grid

Richard Susskind 2000C

External

KnowledgeTechnology

Internal

Information

Figure 1.2The Quadrants

externaltechnology links

internal useof technology

internal managementof knowledge

provision of access to knowledge

C Richard Susskind 2000

Client

KnowledgeTechnology

Internal

Information

Figure 1.4Examples of systems

document managementpractice management

human resource managementmarketing databases

hardwarenetworks

operating systems

online financial reporting

status reportingdeal-rooms

document archiveselectronic mail

know-how databasestemplate librariesprecedent librariesIntranet services

2nd generation web sitesvirtual lawyers

online legal guidance systems

expert systems

Client

KnowledgeTechnology

Internal

Information

Figure 1.5Business impact

keeping basic systems runningrisk management

providing robust infrastructure

new, improved ways of delivering traditional service

efficiencyproductivity

leveraging knowledge

new service opportunitiesnew business models

turning knowledge into value

Client

KnowledgeTechnology

Internal

Information

Figure 1.3The Legal Grid

client relationship systems

back-office technology internal knowledge systems

online legal services

Upper rightUpper right

Client

KnowledgeTechnology

Internal

Information

Upper rightUpper right

Client

KnowledgeTechnology

Internal

Information

back-office technology

internal knowledge systems

New ChangeNew Change

Client

KnowledgeTechnology

Internal

Information

Client

KnowledgeTechnology

Internal

Information

Figure 2.6Sustaining and disruptive technologies

Sustaining Sustaining

Sustaining

Disruptive

Client

KnowledgeTechnology

Internal

Figure 1.12Strategy 1Consolidation

Strategy 1Consolidation

Client

KnowledgeTechnology

Internal

Figure 1.13Strategy 2Putting the house in order

Strategy 2Putting the house in order

Client

KnowledgeTechnology

Internal

Figure 1.14Strategy 3Client relationship systems

Strategy 3Client

relationshipsystems

Client

KnowledgeTechnology

Internal

Figure 1.15Strategy 4Knowledge management

Strategy 4Knowledge

management

Client

KnowledgeTechnology

Internal

Figure 1.16Strategy 5Legal electronic commerce

Strategy 5Legal

electroniccommerce

Client

KnowledgeTechnology

Internal

Figure 1.17Strategy 6Entrepreneurial

Strategy 6Entrepreneurial

Client

KnowledgeTechnology

Internal

Figure 1.18Strategy 7Progressive

Strategy 7Progressive

Client

KnowledgeTechnology

Internal

Figure 1.19Strategy 8Complete Commitment

Strategy 8Complete

Commitment

Selection ServiceRecognition

Figure 2.1 - Today’s Client Service Chain

blatanttrigger

selection of lawyer

consultativeadvice

Figure 2.2 - Transforming the Service elementof the Client Service Chain

unbundledservices

onlineservice

consultativeadvice

• commoditized• latent market• multi-disciplinary

• high-end, traditional

• project management • document management• legal research• strategy

Transforming the Serviceelement of the Client Service Chain

from consultativeadvice to

Figure 2.3 - Transforming the Selection elementof the Client Service Chain

selection of source of

guidance

selection of online service

selection of adviser

• assessment of need• infomediaries

• infomediaries

• infomediaries• online auctions• virtual teams

tofrom selection of lawyer

Transforming the Selectionelement of the Client Service Chain

Figure 2.4 - Transforming the Recognition elementof the Client Service Chain

blatanttrigger

proactiveservice

• infomediaries• legal audits• push technology• intelligent agents• embedded expertise• Intranet implants• business-episode based

Transforming the Recognitionelement of the Client Service Chain

blatanttrigger

from to

Selection ServiceRecognition

Figure 2.5 - Tomorrow’s Client Service Chain

blatanttrigger

selection of source of

guidance

unbundledservices

proactiveservice

selection of online service

selection of adviser

onlineservice

consultativeadvice

Mark Deal Technology ConsultantMark Deal Technology Consultant

You show me a failed implementation of technology and I will show you that the company/firm did one or more of four things wrong:

(Four Horsemen of the Legal Tech Apocalypse)

1. Only considered the cost of the tool and not the cost of implementation: poor planning poor planning and researchand research;

2. Failed to invest in RELIABLE consultants to assist with the experienced implementation of the solution: false economyfalse economy

3. Failed to implement the tool from the top down: Upper management did not use the tool and did not encourage others to do so: poor managementpoor management;

4. Pushed the implementation entirely to a poorly staffed IT department who had no interest or buy in to make it successful: inadequate resource inadequate resource allocationallocation.

Technology Disintermediation- Technology Disintermediation- Trend or Cycle?Trend or Cycle?

What are implications if Susskind is correct?

• Traditional- large firm, large client only

• Commodity- better, faster, cheaper

• Latent- may be no direct client contact– Upper right quadrant of Susskind grid

5. Offshoring/Intermediation-5. Offshoring/Intermediation-Trend or Cycle?Trend or Cycle?

Intel CEO Craig BarrettIntel CEO Craig BarrettJan-Feb 2004 Business 2.0Jan-Feb 2004 Business 2.0

• In space of 5 years close to 3 billion people have been brought into mainstream capitalist economic infrastructure (India, China, Russia and some Russian satellite countries)

• Substantially lower wages with comparable or superior education to US applicants.

• “Unless you’re my auto mechanic or plumber, I don’t care where the hell you’re located.”

Brad Hildebrandt 1-14-04Brad Hildebrandt 1-14-04

• Outsourcing to India $10 billion in next 5 years

• Hildebrandt offering 3 choices– Consult with firm re outsourcing– Several clients form captive outsourcing

firm– Joint venture with existing

outsourcing company

Ted MartinTed Martin, CEO of Martin Partners, , CEO of Martin Partners, an executive-search firm in Chicago:an executive-search firm in Chicago:

“As far as off shoring goes, the bottom line is, when a consulting firm can replace a $48,000 hire with an $8,000 hire in India, it's going to be very difficult for this trend to reverse itself. Not only are you saving $40,000 on an annual basis per person……… but you often are getting a more qualified and experienced individual than you could in the States.”

Business Week 2-9-2004

Lou Dobbs ReportLou Dobbs Report

• 8-10% of all associates hired by large law firms will be offshore hires (as in India) by 2011.– 2000 1,793 off-shore– 2005 14,200– 2010 34,673– 2015 74,672

– U.S. Dept of Labor & Forrester Research

• The new associates will take on roughly the same work as new associates handle in the firms now at less than 20% of the cost.

Outsourcing Hits Legal Services Outsourcing Hits Legal Services Star Tribune 1-16-2004Star Tribune 1-16-2004

• “First it was apparel workers-the working class-who saw their $10-an-hour jobs go overseas.”

• “Now six-figure lawyers and legal support staffs are starting to sweat.”– Westlaw has test office in Bombay

• GE and other behemoths using Indian lawyers to supplant work formerly done by outside law firms.

Outsourcing Hits Legal Services Outsourcing Hits Legal Services contdcontd

• Forrester Research- by 2015 489,000 U.S. lawyer jobs will shift to lower cost countries

• Mindcrest Inc. legal process outsourcing– Enhanced levels of service and a 30-70%

lower cost to customer

Bye-Bye Associates?Bye-Bye Associates?

• “…the kind of work now being sent off shore, and expected to be increasingly sent off-shore, is work normally done by first/second-year associates in the largest law firms -- research, legal memos, that kind of thing.

• They gave a comparison of how much it costs a firm to hire an American lawyer here, and how much it costs them to get the same work done in India.

• They didn't get into the "practice of law" issues, but my guess is that the firms are using, or planning to use, some sort of American lawyer supervision to get around that issue.

Bye-Bye Billable Hours-Bye-Bye Billable Hours-Strategy & InnovationStrategy & Innovation Harvard Business School Jan/Feb 2004Harvard Business School Jan/Feb 2004

• “Doctors price on the basis of commonalities, lawyers have priced on the basis of differences.”

• Best lawyers can’t claim to be best and in the same breath profess an inability to estimate cost.

• Fixed fee shifts risk from client to law firm.

Lexadigm.comLexadigm.com

Legalmatch.comLegalmatch.com

Legalpath.comLegalpath.com

Elawforum.comElawforum.com

John Henry- Founder/CEO elawforumJohn Henry- Founder/CEO elawforum

• Aggregates large company legal problems and negotiates fixed-fee deals

• “We just saved a client $55 million in 2 deals.”

• “Our challenge now is to do a thousand of these deals.”

Tom Peters predictsTom Peters predicts

• Ninety per cent white-collar jobs will disappear in the next ten years.

• What color collars do lawyers wear?

• Is there an exception for lawyers?

So Now What Do We Do?So Now What Do We Do?

• First question- Is status quo an option? – Will our guild return to those glory days of

yesteryear?– Are we experiencing discontinuous trends or are

we merely in a cycle?

• If answer to #1 is no, how do we get into the change process?– Role of the bar– Role of the individual lawyer/law firm

Must Develop a Must Develop a Sense of UrgencySense of Urgency

Three Year Initial Three Year Initial CommitmentCommitment

• Long Range Planning or Futures committee in firm

• Top down, bottom up– Need enthusiastic support and

visionary firm leadership

– Need to have diverse members do the work from new associates to senior partners

First YearFirst Year

• Study current state of the practice and profession.– Use as a platform to

examine the challenges and opportunities of• Change and• How the firm can and should

define its own future

Second YearSecond Year

• Use a strategic planning tool for futurists

• Scan extensively, particularly outside profession, for major trends affecting the profession and particularly the firm.

• Seek widespread input from inside and outside the profession.

• Develop alternative futures for the firm

• Choose preferred futures for the firm

Third YearThird Year

• Engage in back-casting, focusing on a particular future and tracing back how it would have come to be and what changes must have occurred at each step to create that future.

• Determine action steps that would foster the preferred future

• Engage the firm lawyers and nonlawyers in the process and the follow through required to continue the process.

Fourth Year and BeyondFourth Year and Beyond

• Monitor the environment for new trends or cycles

• Continue the action steps toward the preferred future

• Build on existing competencies to deal with the issues now and in the future

• Learn new competencies to be able to perform relevant services in a 5-10 year future window

Thinking About the Future- Thinking About the Future- Stuart ForsythStuart Forsyth

• No one can truly predict the future

• But we can:1. See different possibilities (alternative futures)

2. Pick the future we prefer

3. Take actions designed to foster our preferred future

4. Seek to maximize our viability in the event of another future (not the one we prefer)

Leading the Profession to a Leading the Profession to a Preferred FuturePreferred Future

• If we don’t drive the vehicle to our future we will end up wherever we are taken

• Doing nothing will produce the worst results

• Institutionalize future planning• We can create positives or default to

negatives

Mary Ryan, ABA Committee on Mary Ryan, ABA Committee on Delivery of Legal ServicesDelivery of Legal Services

“A lawyer is best defined as someone who provides the best services in a free market, not the only services in a protected market.”

What To Do If Any Trends SpottedWhat To Do If Any Trends Spotted

1. Preempt the dispute resolution market beyond ADR

2. Live a new lawyer image1. Truthteller

2. Integrity

3. Play offense in the MJP trend

4. Technology= strategy not reluctant necessity.

5. Reinvent relationship with clients.

Dakota tribal wisdom says that Dakota tribal wisdom says that when you discover you are riding a when you discover you are riding a dead horse, the best strategy is to dead horse, the best strategy is to dismount.dismount.

In law firms we often try other In law firms we often try other strategies with dead horses, strategies with dead horses, including the following:including the following:

Changing ridersChanging riders

Saying things like . . . Saying things like . . .

This is the way we always have

ridden this horse!

Dead Horse?Dead Horse?

What dead horse?What dead horse?

Appointing a committee Appointing a committee to study the horseto study the horse

Arranging to visit other firms to Arranging to visit other firms to see how they ride dead horsessee how they ride dead horses

Increasing the standards Increasing the standards to ride dead horsesto ride dead horses

Declare the horse is Declare the horse is "better, faster and cheaper" dead"better, faster and cheaper" dead

Harnessing several dead horses Harnessing several dead horses together for increased speedtogether for increased speed

Kouzes and Posner, coauthors of Kouzes and Posner, coauthors of The Leadership ChallengeThe Leadership Challenge

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