Blog – Aderant http://www.aderant.com Software Enabling the Agile Organization - Aderant Tue, 25 Jul 2017 19:52:01 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.5 Five Actionable Ideas for Lawyers to Advance their Market Knowledge http://www.aderant.com/blog/lawyers-knowledge/ Wed, 12 Jul 2017 17:51:48 +0000 http://www.aderant.com/?post_type=blog&p=35511 The legal market is enduring drastic change. The business model, the source of competition and the technology that enables the business of law, are all evolving. While there’s been a great deal of academic emphasis placed on preparing emerging lawyers for such the change – practicing lawyers have been “largely[...]

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The legal market is enduring drastic change. The business model, the source of competition and the technology that enables the business of law, are all evolving. While there’s been a great deal of academic emphasis placed on preparing emerging lawyers for such the change – practicing lawyers have been “largely overlooked.”

That’s according to Mark A. Cohen who published his ideas in Forbes: Legal Education’s Other Challenge: Retraining Practicing Lawyers For A New Marketplace.   “Most practicing lawyers were prepared for a legal marketplace that is vanishing,” he writes.

In Mr. Cohen’s view, legal service delivery and the practice of law are no longer synonymous.  The delivery of legal services today, he says, requires expertise in legal, technology and process. And that’s the challenge:

“…legal service delivery and the practice of law are no longer synonymous.  The delivery of legal services today, he says, requires expertise in legal, technology and process.”

“The vast majority of practicing attorneys have had little or no preparation for navigating the impact of technology and process/project management on legal delivery. Nor have they learned about collaboration, leadership, financial fluency, or other skills at law school or on the job where they are consumed by billing hours and making a living.”

His solution goes well beyond the CLE, which he labels a “box-checking exercise.” He calls for legal executive education programs including immersive “boot camp” style classes, continuing academic programs, and applauds the efforts of LawWithoutWalls, which he calls “a multi-disciplinary think tank.”

Such ideas are big and ambitious and good for the legal community. If there’s fault to be found, I personally don’t see it, but I did have a visceral reaction:  What about those practicing attorneys who don’t want to wait for such monumental thinking to unfold? What can an individual lawyer do right now to advance their own knowledge?

When we get right down to it, there’s quite a bit an individual lawyer can do today.  Below are five ways to get started.

1) Audio podcasts on tech and business.

While podcasts have been around a while, research shows podcasts have recently grown a sizable audience that’s affluent, educated and dedicated to listening.  Some large law firms have even taken to producing podcasts for their own communications efforts.

The Legal Talk Network currently offers roughly 40 different podcasts on a range of topics from legal marketing to law firm staffing to legal technology.  A sample of programs worth considering include:

  • Law Technology Now “explores the latest in legal technology.”
  • The Kennedy-Mighell Report provides “in-depth analysis of the latest advancements in legal technology, in addition to best practices for utilizing existing tools.”
  • ABA Journal: Legal Rebels “features men and women who are remaking the legal profession.”
  • In-House Legal provides a view through the client lenses by covering “issues pertinent to the general counsel and in-house legal departments.”
  • Robert Half Legal Report covers “important issues regarding hiring, compensation, staff management, and more.”

The benefit of podcasts is the ability to listen on-the-go, during a commute, while at the gym or even doing chores.  These are just a sample of podcasts available on your drive home today. For those who have never listened to a podcast, all you need is to download an app such as iTunes or Audible to your mobile device and then enter a few keyword searches.

2) Peruse the resources from professional associations.

Professional membership organizations in the legal community have clearly recognized the challenges Mr. Cohen writes about for Forbes. Over the years, many of these associations have put together an impressive wealth of educational information – much of which is freely available.

  • American Bar Association. If your level of engagement has been limited to the occasional letter or journal article, it’s worth looking perusing the resources the organization has amassed. One of our favorites includes the Legal Technology Resource Center (LTRC), which offers links to webinars, books, guides and publications.  The LTRC also maintains a law technology YouTube channel that currently hosts some 70 videos that can be viewed on demand.
  • International Legal Technology Association. There’s a good chance the technical staff in your law firms are members of International Legal Technology Association (ILTA). However, this organization produces plenty of information that will help lawyers get their arms around process, technology and new service delivery models too. ITLA maintains a searchable directory of content and recordings from podcasts, webinars and previous conference sessions. There’s an entire section dedicated to downloads stemming from its annual conference and it keeps an archive of video presentations on Vimeo.
  • Legal Marketing Association. If generating new business is important to your firm or practice area then the Legal Marketing Association (LMA) could be a valuable resource. In the same way, your technical staff probably belong to ILTA, many law firm marketers and business development professionals are members.  Many lawyers are not comfortable doing such activities, but it’s become increasingly important in a competitive market.  LMA provides podcasts, webinars, publications and an e-commerce store with modest premiums to resources for learning about business development, the business of law and technology management.

Many professional organizations also have local chapters that develop, curate and categorize useful information along these lines. In addition, the IT or marketing staff in your firm would probably be delighted to help you organize a self-development program.

3) Tap into legal consultant sites and blogs.

The legal community has a long line up of lawyers and consultants who have developed substantial bodies of work around the business of law, legal technology, or the general pace of change in the market. A few that stand out for me include the following:

  • Adam Smith, Esq. Bruce MacEwen and his team pursue “an inquiry into the economics of law firms.” The arguments made are both philosophical and data-driven.
  • Corcoran’s Business of Law. Timothy B. Corcoran provides straight talk with smart strategies for business development, compensation and other business of law topics.
  • The Mad Clientist. Michael B. Rynowecer is something of a scientist when it comes to law firm clients and understanding what’s on their mind.
  • Prism Legal. Ron Friedmann has maintained a widely-respected technology blog for many years from staple topics like KM and business intelligence to the emergence of A.I.

These are just a handful of the consulting resources available online.  The ABA Journal, for example, keeps a tally of authors by topics worth perusing.

4) Legal industry newsletters that curate news and trends.

There are several email newsletters in the industry that do a great job of curating business of law and legal technology viewpoints from across the industry.  While these newsletters capture key trends, one of the main benefits is that they often also include views you might have seen covered elsewhere – and that’s important in a changing market.

If the email deluge is a concern, you can create a “read you later” folder in your Outlook account and set a rule to automatically place these newsletters there.  Another good technique is to sign up for a separate email account – Gmail for example – and use that to manage subscriptions.  Both options will allow you to read at a time of your choosing and avoid adding to the distraction that surely already exists in your inbox.

5) Don’t overlook vendor resources.

In the pursuit of knowledge about a changing market, don’t overlook the vendor community. This is because vendors, including Aderant, study the market to understand the challenges law firms face and anticipate future needs.

Although we’d like to believe we do it better, many vendors provide resources like ours.  We certainly work hard at it.  Some of the resources include live webinars, on-demand webinars, a video gallery, case studies and market reports. Our market reports are generally neutral, free to download and never require registration. Some of the recent titles are as follows:

The Key to Knowledge is Discipline in Pursuit

The challenge for many is the vast array of options in the business of law and legal technology, which leaves some lawyers feeling overwhelmed.  However, you don’t need to do them all, instead, try a sample and see what works for you.  If a resource fails to deliver information that helps expand your knowledge, then it’s pretty easy to shuffle the deck.

In Mr. Cohen’s conclusion, he notes that “practitioner re-education must be a part of the legal education reform discussion.”  Indeed, we agree, and for those who don’t want to wait, there’s no reason you can’t get started today.

Recommended Reading:

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Why it Might be Time for Law Firms to Rethink Case Management Tech http://www.aderant.com/blog/rethink-case-management/ Wed, 21 Jun 2017 12:42:44 +0000 http://www.aderant.com/?post_type=blog&p=34681 In many law firms case management technology has been traditionally perceived as a workflow solution almost exclusively for the high-volume and low-margin category of legal work.  The law firms that take on this type of case typically find much of the work to be routine – setting appointments, filing forms[...]

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In many law firms case management technology has been traditionally perceived as a workflow solution almost exclusively for the high-volume and low-margin category of legal work.  The law firms that take on this type of case typically find much of the work to be routine – setting appointments, filing forms and scheduling court appearances.

In this category of law, case management enables the firms to establish task lists and templates to manage the process.  These firms manage hundreds of cases simultaneously and keeping track of all the steps would be nearly impossible without a case management system.

“Clients today are far more focused on value and predictability in legal budgets… expect more information, and not just legal information…”

This view point has enabled firms in these practice areas, to develop highly efficient and profitable processes.  However, it’s also prevented firms focused on other practice areas from examining or benefiting from modern technology and comprehensive case management.

It’s time to rethink case management.

Market Changes and Technological Advances

The quintessential argument against case management is that legal work isn’t like making widgets.  The practice of law is based on expertise and knowledge and it would be difficult to place a structure or system around what a fee earner does on a day-to-day basis.

While we agree some elements of law are indeed different, when viewed holistically, there are also many similarities.  For example, we find most fee earners, regardless of practice area, usually engage in tasks along the following lines:

  • send engagement letters
  • file documents with courts
  • establish service level agreements (SLAs) with clients
  • are asked for client facing reports on status and budget
  • need to better understand costs and time to price competitively

These are classic examples of legal processes that are generally similar, well documented, and therefore can be automated. However, it’s not just about what the technology can do, but what clients are demanding because of these new possibilities.

Clients today are far more focused on value and predictability in legal budgets.  Clients expect more information, and not just legal information, but also financial data with respect to legal budgets. As a result, it’s imperative the entire process from pricing to reporting becomes more transparent and agile.

Technology has enabled new sources of competition, which is also reshaping client expectations.  For example, some legal work is being shipped to outsourcers and other lower cost centers.  This has brought efficient legal project management, the sort that case management can facilitate, to the forefront.

Eight Myths of Case Management 

All this is prompting senior legal leaders to re-evaluate technology and how it can augment a law firm’s capacity for greater efficiency through innovation and process improvement.   As such, we’ve observed law firms often re-visit and dispel common myths in the process of assessing technology options.  The most common myths – and the realities – follow below.

Myth #1: Case management is too expensive.

Case management is an investment in the future of the law firm that drives down the cost of matters and pays returns in the form of more efficient service delivery. Clients, competitors and new market entrants are all investing in technology so the reality is, firms cannot afford not to invest.  Chances are, the chosen case management system will be the system of record over the long run – often for 10 years or even more.

Myth #2:  Case management is too complex to use.

This myth is not without merit because in the past it’s largely been true.  Yet, modern case management is engineered to be easy-to-use and puts new capabilities into the hands of non-technical law firm staff and fee earners.  For example, where in the past building workflows required technical skills, a fee earner today can model their own without any IT support.

Myth #3:  Case management software is clunky.

Clunky isn’t an elegant adjective, but it’s clearly earned a place in the legal software lexicon.  However, the legal technology community has really gotten its collective arms around the concept of user experience, or UX.

Modern software both looks and feels new – and the interfaces are sleek and intuitive. This matters because it eliminates a key barrier to adoption: no fee earner wants to use clunky software and they no longer have to do so.

Myth #4:  Fee earners don’t have time to learn technology.
In previous years, enterprise legal systems required extensive training and classroom time to get up and running.  This is no longer true.

The usability of every day devices, like smart phones and tablets have increased user expectations and ushered a trend called the consumerization of business software.  This means software today is designed to work from the outset with the same ease as you’d expect in unwrapping a new phone and turning it on.

Learning to use modern legal technology won’t take nearly as long as you might think and we often find staff and fee earners can be using modern case management software in a matter of hours.

Myth #5:  It’s not broken, don’t fix it.

The intense competition in the market is real.  It’s coming from other firms, alternative legal service providers and even from clients themselves.  Things might not be broken at this very moment, but the market is sending very clear signals it is evolving.  Maintaining client satisfaction is going to become increasingly difficult in the status quo.

Myth #6:  Most case management solutions are not adaptable.

Previously case management solutions were rigid and law firms force-fit their processes within the limitations of the software.  Modern solutions integrate seamlessly with tools fee earners are already using including email and electronic calendars.  Case management systems of today are designed to be flexible to fit a law firm’s process and work how you work.

Myth #7:  Mobile access on case management is problematic.

In the past, mobility was an afterthought – a feature or extra software module bolted on after a software product was already developed.  With web-based case management systems, mobility is a core concept baked into the foundation of the software.  It provides increasingly mobile fee-earners with the same depth and breadth of functionality on a tablet that they’ve come to expect on a desktop.

Myth #8: Case management is only for commodity legal work.

Market pressures for greater transparency and efficiency are redefining how law firms can use case management. Clients have higher expectations of their law firm partners and leaders can see the value automation can provide in meeting those expectations and reducing the risk of failing to meet an SLA.  Case management augments a fee earner’s capabilities and enables them to become more efficient as a fee earner.

The Benefits of Modern Case Management

Case management might have grown up in commodity type legal work, but the efficient and agile abilities enabled by technology are clearly applicable to other practice areas.  Technology that fosters efficient process reduces the risk of forgetting or missing tasks, provides a better understanding of the law business and that leads to more satisfied clients which drives higher profitability.

Recommended Reading:

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AFAs: Facts, Stats and Debates on the State of Alternative Fees in 2017 http://www.aderant.com/blog/afas-facts-alternative-fees/ Thu, 08 Jun 2017 17:25:03 +0000 http://www.aderant.com/?post_type=blog&p=34261 What is the state of alternative fee arrangements (AFAs) in 2017? The proverbial legal answer – “it depends” – could well be an appropriate answer.  This is because credible arguments can be made both for and against AFAs. On one side of the scale, opponents say AFAs are more hype[...]

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What is the state of alternative fee arrangements (AFAs) in 2017?

The proverbial legal answer – “it depends” – could well be an appropriate answer.  This is because credible arguments can be made both for and against AFAs.

On one side of the scale, opponents say AFAs are more hype than substance. Most clients aren’t asking for them – and those that do are either dabbling or just it as a negotiation tactic to ask for a discounted hourly rate.  After all, many GCs earned their stripes in law firms operating under an hourly billing model.  The billable hour remains familiar and old habits die hard.

“…advocates point to a drumbeat of industry reports and surveys, that generally suggest more and more legal work is being priced under a model other than the billable hour. “

On the other side, advocates point to a drumbeat of industry reports and surveys, that generally suggest more and more legal work is being priced under a model other than the billable hour.  This is a result of a confluence of factors including flat demand for legal services, falling realization rates, new competition, and the corporate mandate for predictability in legal pricing.

Alternative Fees Facts and Stats

At Aderant, we’ve observed, most law firms have historical records that can facilitate data-driven conversations about pricing with clients.  In fact, we’ve been focused on providing firms with the integrations and analytics to mine case management and practice management systems in order to drive competitive and profitable pricing.

As such we’re are very interested in AFA trends, as are our clients, and in turn, our clients’ clients.  As we scan legal sources for current statistics and benchmarks as to the state of AFAs in 2017, we thought it useful to share what we’ve found.

1) AFAs account for 26% percent of outside spend

Twenty-six percent of the work corporate legal sends to outside counsel is structured under an AFA, according to Corporate Counsel magazine.  Moreover, 42% of top corporate legal leaders are inclined to increase this percentage over the next 12 months.

The article is citing data from the 2017 Chief Legal Officers Survey by the ACC. In 2017 the ACC surveyed nearly 1,100 in-house counsel in 42 countries.

The annual survey has found similar trends for the last several years.  For example, the same survey in 2016 found the larger the law department, the more likely it was to use AFAs – and most favored flat fees for an entire matter (41%).

“Across the board, use of AFAs continues to trend upward,” according to an ACC statement.

2) Total value of AFA work is estimated at $20 billion

According to a report titled, BTI State of Alternative Fee Arrangements 2016, AFAs added up to “$21.1 billion of outside counsel spending in 2015, up from $13.1 billion in 2013.”

The report, produced by the BTI Consulting Group, Inc., says this accounts for 35.6% of outside counsel spend, much of which stemmed from larger companies. Flat fees were also the preferred AFA in this study. The consulting firm says “60% of clients prefer fixed fees – 3 times more than the next runner up – capped fees at 20%.”

The findings are based on 322 “in-depth telephone interviews” with corporate legal decision makers. The reports note the analysis, in part, is also derived from conducting 4,500 corporate counsel interviews over 16 years.

3) AFAs as a competitive law firm advantage 

While just 28% of firms proactively initiate AFA conversations with clients, the vast majority (84%) of this segment report a profitability level comparable to traditional hourly billing.

That’s according to the 2016 Law Firms in Transition report by Altman Weil. The consulting firm says that 40% of this group found AFAs to be more profitable (i.e. 40% of the 28%).

“We see a 7-year trend of compelling success enjoyed by firms that take a proactive approach to alternative fee arrangements,” according to the report. “The lesson is that firms that make a rigorous effort to understand and manage a new or evolving market tactic like alternative fees generally succeed in doing so, and enjoy increasing benefits over time.”

It’s worth pointing out, the study also found 97% of law firms invoice some legal work “on a basis other than rates times hours.”

Is this the Death of the Billable Hour?

If the data points towards a tipping scale in favor of the AFA, the 2017 Report on the State of the Legal Market could add weight:

“One of the most potentially significant, though rarely acknowledged, changes of the past decade has been the effective death of the traditional billable hour pricing model in most law firms.”

That “effective death” is more nuanced than merely counting billable hours – the report is quick to say most firms still follow an hourly billing model for most matters. However, it’s the stark contrast of the data the report depicts visually that demonstrates even as law firms have increased standard hourly rates, realization rates have continued to fall.

So, while the report says “AFAs probably account for only 15 to 20 percent of all law firm revenues” the effect of “budget-based pricing” arguably pushes this percentage higher. The report concludes that AFAs and budget-based pricing “combined may well account for 80 or 90 percent of all revenues.”

The high percentage was a stretch too far for D. Casey Flaherty, a legal operations consultant and the founder of Procertas. He compiled a list of 20 links dating back to 2005 – all foretelling of the impending death of the billable hour.

While many legal departments do have documented budget requirements, few actually enforce them “in any meaningful way,” he wrote. “And it is [a] passing few that seem to impose discipline around the budget number to the point where it functions as a cap.”

Yet it there’s another way of looking at this as Toby Brown, a reputable pricing expert, who is often spotted on the speaking circuit, noted in the comments of Mr. Flaherty’s commentary.

He tends to answer the AFA question with another question: When someone asks him how much legal work is structured under an AFA he responds, “How much work done by firms is performed without pressure on rates or hours?”

So, what is the State of AFAs in 2017?  It depends.

Recommended reading:

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How Law Firms are Using Business Intelligence to Improve Profitability http://www.aderant.com/blog/business-intelligence-law-firm-profitability/ Wed, 17 May 2017 13:39:31 +0000 http://www.aderant.com/?post_type=blog&p=34111 What should legal services cost on a per square foot basis? That’s the sort of pricing pressure a real estate development client once placed on a large law firm – and amazingly the firm was able to accommodate the client. Real estate clients just “think” in terms of square footage[...]

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What should legal services cost on a per square foot basis? That’s the sort of pricing pressure a real estate development client once placed on a large law firm – and amazingly the firm was able to accommodate the client.

Real estate clients just “think” in terms of square footage and in that industry, pricing often varies by volume. As a result, the client couldn’t understand why legal work for 4,000 square foot building was priced the same as for a 400,000 square foot building, according to a case study published in CIO Magazine.

The law firm used business intelligence (BI) software to analyze internal data and acted to develop a remarkable solution.  The law firm found “while there was risk of underpricing large buildings, the deal volume in small buildings offset that risk for the law firm. The result made per-square-foot pricing possible.”

“The challenge for law firms is how to best accommodate the demand for AFAs to remain both competitive and profitable. “

That case study stems from 2008 – a year that marked what many believe to be the onset of the “new normal” in the business of law.  The new normal has been underscored by the rise of alternative fee arrangements (AFAs) and undeniably, the use of AFAs has grown slowly but surely ever since.

The most recent annual study by HBR Consulting, for example, found of the 275 corporate legal departments surveyed, 85% are currently using AFAs.  Moreover, this legal pricing trend shows no signs of slowing as the same survey also found 80% want to do more AFAs next year.

The challenge for law firms is how to best accommodate the demand for AFAs to remain both competitive and profitable.  This is driving a need to analyze existing data in law firms in order to make more intelligent business decisions.

Indeed, as a recent Aderant white paper titled, Actionable Intelligence:  Successful BI for Law Firms, noted: “Law firms have more data than ever about their businesses, but effectively using that data to make quick, proactive and strategic decisions has proved more challenging.”

Consequently, many law firms – like the very forward thinking example above – are increasingly turning to BI tools to glean such insights.   In fact, market research stemming from ILTA suggests about half of all firms are using BI. As the chart in the aforementioned white paper illustrates, adoption of BI in law firms has been a slow and stated increase over roughly the same period of time.

What is Law Firm Business Intelligence?

According to Gartner, an IT consultancy, BI is defined as follows:

“Business intelligence (BI) is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance.”

In law firm circles, the definition is similar, although slightly more refined for the subtle but important nuance of the legal community:

“BI solutions combine software applications and business analysis content, drawing on best practices, enabling firms to better manage their performance and improve their bottom line. In simple terms, BI is an enabler for better strategic decision-making.”

So in unpacking these definitions a bit, this means providing law firms with access to insight they might not otherwise have discovered – actionable information on which a firm can act. Business intelligence tools help law firms, especially the financial department where the data responsibility usually rests, surface previously unobserved trends.

A Tale of Two Partners and Profitability

I’ve seen, first-hand, BI tools reveal a difference between revenue and profit margin of two partners with similar books of business.  Partner A has generated and collected annual fees totaling $4.1 million with a net profit of 20%.  That’s a healthy margin until the firm realizes Partner B has collected fees of $4.3 million with a net profit of 54% – or more than double the profitability of Partner A.

Why the difference?  There could be several factors at work.

One factor could be simple leverage – shifting work down to the lowest cost timekeeper – where Partner B is simply using less expensive people. Second is the amount of time required to generate $4 million in revenue – meaning that Partner A may have needed significantly more billable hours to produce that revenue than Partner B.

This is the backstory to law firm profitability that business intelligence can surface.  Here we’ve compared books of business for two partners based on revenue – and the variability that profit margins can play once the cost-basis is considered.

The epiphany for many partners is that billing more hours doesn’t always mean more profit.  This is because every hour that a firm produces has a cost – yet most firms don’t look at things this way.

The implications of this sort of insight are enormous when a firm is considering how to grow profitably.  More importantly, it demonstrates the value of BI far beyond just pricing.  BI enables law firms to transition from a reactive to a proactive financial analysis environment.

How are Firms Using BI for Profitable Insight?

As most law firm CFOs can attest, the finance department gets multiple ad hoc requests for information. BI helps meet these requests by augmenting and simplifying the ability to access, analyze and publish data available from a time and billing or a case management system.

Accessing this data used to require highly technical resources to map or reconcile data.  Law firm-specific BI software eliminates this requirement and means a non-technical resource, like a financial analyst, has access to previously untapped law firm data.

Similarly, fulfilling these requests used to take days or even weeks.  For example, it entailed considerable time to massage spreadsheet data into a report to send to partners.  BI tools designed around the needs of a law firm can dramatically improve efficiency and shorten the cycle time from request to publication down to hours or even minutes.

Typically, I see law firms segment the output of BI into three primary categories rendered in the form of a dashboard. Those categories are as follows:

1) Firm-wide business intelligence.  While dashboards can vary widely from firm to firm based on strategic initiatives, these often include visualizations of various inventory and production metrics broken down by category. Sometimes this is segmented by client or by billing partner, and other times by department or industry.  Often it is closely tied to utilization and realization rates to understand the financial effects of both.

2) Individual partner intelligence.  BI tools can easily publish metrics to analyze an individual’s book of business.  I see partners comparing their current statistics to target metrics for hours, billings and collections among others. Sometimes this will include profitability metrics or cross selling metrics with all data designed to help a partner understand his or her contributions to the firm.

3) Client-specific intelligence. Time and again we’ve seen attorneys running into a client meeting with a need for client-specific data. The status of open invoices, the pace of work for that client, and the categories of work being performed are all prime examples.  This type of business intelligence allows partners to be better prepared for that client conversation – and empower them with the information they need to earn more work.

Intelligence is, by definition, a collection of information of value. In the business of law, that value is determined by whether or not a firm can take action.  It’s one thing to know the realization rates, but quite another to understand why the firm is earning these rates.  The former is useful, but the latter is actionable.

Surely no law firm sets out or aspires to price legal services by the square foot.  Yet if a client inquires and the firm has the data to determine if it is achievable, then that business intelligence becomes a competitive advantage – and ideally a profitable one.

Recommended reading:

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Seven Legal Tech Inefficiencies Silently Sapping Law Firm Margins http://www.aderant.com/blog/law-firm-inefficiencies/ Wed, 03 May 2017 13:30:02 +0000 http://www.aderant.com/?post_type=blog&p=33851 The vast majority of law firm leaders believe pricing pressures, competition and the need for efficient legal service delivery are permanent trends. That’s according to the 2016 Law Firms in Transition report by Altman Weil. In other words, this is the new normal and demand for legal services will never[...]

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The vast majority of law firm leaders believe pricing pressures, competition and the need for efficient legal service delivery are permanent trends. That’s according to the 2016 Law Firms in Transition report by Altman Weil.

In other words, this is the new normal and demand for legal services will never return to the pre-2008 recession levels.  If the market isn’t growing, then it’s essential to maintain profits through market share and efficiency.

“If the market isn’t growing, then it’s essential to maintain profits through market share and efficiency.”

Yet, law firm leaders are so busy in the day-to-day of solving client legal problems, few have time to step back and really reflect: Where and how can the firm better organize people, process and technology to boost efficiency?

We’ve identified seven areas in legal technology that are silently sapping law firm margins.

1) Disparate sources of case and financial data. Managing client data in two different systems creates inefficiency when the data in one system conflicts with the other. Reconciling the differences is both labor-intensive and time-consuming. Like Murphy’s Law, this question has a tendency to arise at the most inopportune time – such as when a partner asks for a report in preparation for a client meeting.

2) De-centralized case and client information. Client information that is stored and managed across attorney email or spreadsheets is a pitfall in client service.  It prevents the firm from providing clear client updates about cases, documents, deadlines and budgets. The decentralized storage of data also introduces the unnecessary risk of losing client information.

3) Barriers to collaboration.  Disparate data sources prevent shared understanding and create barriers to collaboration. By definition, silos separate data and slow process. For example, discovery requests locked inside a spreadsheet maintained by a paralegal on a local hard drive is a good illustration.  The rest of the team cannot access the information and therefore cannot gain a shared understanding as to the timing and steps that move a case into the pre-trial phase.

4) Risk of missing critical deadlines.  Decentralization leads to disorganization and grows the risk of missing critical deadlines. Modern legal technology enables a law firm to build process templates that keep projects on track. For example, an insurance defense firm can build a workflow process for high-volume cases to meet deadlines with claims adjusters or to provide case assessments.

5) Heavy reliance on manual processes.  Sorting through a list of folders and files to ensure the firm is sending the most current legal document is a waste of time.  Yet this style of ad-hoc activity persists and results in a high volume of emails, phone calls and team meetings in order to check and double-check on files, tasks and deadlines.

6) Difficulties maintaining in-house custom solutions. Custom solutions are often cobbled together from existing technology implementations, which were initially designed to support other processes. This often forces law firms to force-fit how staff works into the technology, rather than using technology to improve the process.

7) Continuous improvement in operational efficiency.  In the absence of a mechanism to manage both case work and process efficiently, law firms are making educated guesses on pricing.  Leaders need systems and processes to better understand how to best budget and staff cases. This enables the firm to offer both competitive prices and continuously improve operational efficiency.

Where to Begin Improving Efficiency

These inefficiencies all point to a case management solution as an ideal place for law firm process improvement and for two very good reasons:

First, case management is at the very center of everything a law firm does to deliver legal value for clients.

Second, and perhaps more importantly, new advances in technology have integrated financial data with case management data to provide one place for law firm attorneys and staff to find all the information they need about a client or case.

Note:  This blog post is based on a white paper titled Efficiency is the Future of Law: the New Role of Modern Comprehensive Case Management Technology in Competitive and Profitable Law Firms. The white paper may be freely downloaded without registration in PDF format.

Recommended Reading:

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Setting the Conditions for Success in Law Firm Tech Implementations http://www.aderant.com/blog/law-firm-tech-implementations/ Wed, 19 Apr 2017 14:14:51 +0000 http://www.aderant.com/?post_type=blog&p=33631 I’d estimate the average person uses just 15% or so of the capability available in a conventional word processor, spreadsheet or presentation software. This means upwards of 85% of the available functionality in desktop tools found in the typical productivity suite goes unused, oftentimes needlessly complicating tasks and confusing users.[...]

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I’d estimate the average person uses just 15% or so of the capability available in a conventional word processor, spreadsheet or presentation software. This means upwards of 85% of the available functionality in desktop tools found in the typical productivity suite goes unused, oftentimes needlessly complicating tasks and confusing users.

This happens in legal technology sectors as well.  In product management, we refer to this as feature bloat. We lose sight of the business objective and the problem the software was engineered to solve.  In place, we just start adding features and the product becomes difficult to maintain for the vendor, and difficult to use for an end-user because there are far too many options.

“Across the many hundreds of projects with which we’ve helped law firms, one lesson stands out in my mind: the seeds of success are planted long before any switch is flipped, giving a user access to new technology tools.”

Consequently, the business case and cost for the product comes into question.  In fact, management pushback, risk aversion and lack of vision are among the biggest barriers to implementation according to research as reported by the technology trade publication CIO Insight: How a Skills Gap Impedes the Use of New Tech.

This a classic illustration of losing sight of the business goals and implementing technology for technology’s sake. These lessons have taught product management teams, like my team here at Aderant, to really observe and listen to the end-user before establishing new product requirements and priorities for development.

We literally sit down with our end-users – partners, associates and the finance team– and just observe how they work.  We’ll ask probing questions to understand where their challenges really are, and analyze this information to define a business problem to solve for law firms long before any of our developers start writing code.

Seven Tips for Law Firms for New Implementations

We strive to set the conditions for successful new products and capabilities even before building them – and this same philosophy can help law firms better prepare their organizations for new technology implementations.

Across the many hundreds of projects with which we’ve helped law firms, one lesson stands out in my mind:  the seeds of success are planted long before any switch is flipped, giving a user access to new technology tools.  Here are some of the ways we have found, based on our experience, that law firms can set conditions for successful implementations:

1) Nest technology to business objectives

Software implementations don’t solve business problems; the software solves the problem.  This means any implementation project must be tied back to business objectives. Before picking a product it’s important to really understand the true challenges for the law firm, and define these clearly.  Where is the pain?  Is it growth?  Greater profitability?  Efficiency? Collaboration? Risk mitigation? Is it a higher level of client service?

Whatever the goal the firm decides, the implementation must trace back.  The purpose of an implementation isn’t to get a law firm to use new software; it’s to get attorneys and staff to use software to benefit the firm in some way.

2) Set reasonable expectations

One of the single largest problems we see is aiming for a big bang.  Firms are tempted to view new implementations as a chance to re-engineer the entire business.

“We want to do everything” we hear some law firms say, but this carries risks.  This is because while such ideas look good on paper, in reality these grandiose plans make change management much harder.

Focus instead on how you will earn incremental, but steady, improvements over time.  Plan to capitalize on early or quick wins to build momentum for success. Instead of aiming for 100% in 3-5 years, aim for 80% in a year.  Setting a strong foundation allows for quick wins and future successes.

3) Build executive support

Building executive support is the hallmark of new technology roll-outs.  From our perspective, this has become easier in recent years.  This is because firms see peers using technologies – so there’s precedent that lawyers are trained to look for – and vendors have learned to better communicate value.

This is an important point because, from a law firm leader perspective, they need to understand the value a new technology brings to the business.  If they don’t, or can’t, then technology looks like a cost.  For many law firms, such costs are literally out-of-pocket.

For example, the value of a modern time and billing system isn’t limited to the finance team but extends to the fee-earners.  Such systems help attorneys analyze and manage their book of business and that, in turn, helps grow the law firm more profitably.

4) What’s in it for the attorney

Similar to executive support, new implementations require preparation to earn the support of attorneys at all levels within the firm.  It isn’t enough for an attorney to understand that the clerk in accounts payable can do a better job if they use a new billing system – they have to understand what’s in it for them.

From a timekeeper’s perspective, this means understanding that the new system provides mobility options that enable them to be more productive, or to better understand how they are progressing on a matter.  The value for the attorney is the simplicity of insight and the ability to better communicate with a client.

Wherever possible, bring those attorneys into the process, from problem definition, to solution identification and evaluation.  Some firms have established technology committees for this reason, but it’s important to ensure these remain representative of the population that the firm intends to use a new tool.

5) Examine the implementation team

More than just technology, law firms need to evaluate the individual team members that a proposed vendor is putting forward to help get an IT project off the ground. There is no mistaking that experience matters and laws firms should look for a track record of success with projects specific to the solution they are considering implementing. These teams should bring best practices based on previous experiences in addition to knowledge of what works and what doesn’t inside a law firm.

It’s useful as well to speak with multiple teams from multiple vendors to focus the perspective. These conversations will allow a law firm to better tailor their requests for proposals (RFPs).  By our observation, RFPs that are clear, concise and specific pave the path for smoother implementations.

6) Plan for communication

The importance of communications in law firm technology implementations cannot be overemphasized.  New technology often requires change management and the management of that change is facilitated by sound communications before, during and even after implementation.

Firms have realized communications require an effort far beyond the “build it and they will come” approach.  However, a series of lunch-and-learn sessions, while helpful, are not independently enough either.  New implementations require what is, in essence, an internal marketing plan complete with materials that articulate both the benefits and “how-to” information.

7) Access to immediate help

Few things are more frustrating for an attorney, who is trying to complete work for a client and has to pause to fiddle around looking for a button to click on a new system.  Sure, vendors have put greater emphasis on user experience (UX) and training programs can help mitigate this sort of issue, but these won’t catch every misunderstanding.  Before an implementation is undertaken, successful firms develop plans to provide immediate support for users.

One technique we’ve seen work well is the concept of “floorwalkers.”  When a firm begins the initial roll-out, a floorwalker is present to help staff with a question or challenge immediately.  This does not require a support ticket request and it’s not a help desk function, rather it’s literally providing a dedicated subject matter expert (SME) on the floor during implementation.

Implementations are a Journey, not a Destination

A successful technology implementation never really ends.  This brings us back to the notion that implementations are undertaken not merely to be completed – they are done to provide a tool to solve a problem.

Modern systems begin collecting data to help solve problems almost immediately.  Law firms are able to understand how long a pre-bill sat on a fee-earner’s desk, how much time it took in the review and how many times the narrative was edited.

This is all information a firm can analyze and benchmark for continuous process improvement. It’s also a means to ensure a law firm can avoid investing the time and resources into a product and only wind up using a small fraction of the capabilities available.

Recommended reading:

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Five Questions with Aderant President Deane Price http://www.aderant.com/blog/legal-tech-aderant/ Wed, 05 Apr 2017 13:45:12 +0000 http://www.aderant.com/?post_type=blog&p=33361 Law Firms, Legal Tech and Remaining Curious: Five Questions with Aderant President Deane Price The legal industry is in a period of evolution.  While we’re not going back to the pre-recession days of annual rate hikes – this isn’t the new normal either. The business of law will continue to[...]

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Law Firms, Legal Tech and Remaining Curious: Five Questions with Aderant President Deane Price

The legal industry is in a period of evolution.  While we’re not going back to the pre-recession days of annual rate hikes – this isn’t the new normal either. The business of law will continue to evolve, according to our own top executive Deane S. Price.

Earlier this year, Aderant announced Deane was promoted and taking the helm of the legal technology business following Chris Giglio’s retirement.  Of course, she’s no stranger to our company or clients, given she’s spent six years here and previously served as the Chief Operating Officer (COO).

What people inside and outside the company may not know is that Deane has a long and tenured history in technology. In fact, she’s held a range of executive and leadership roles before joining Aderant.  For example, as a working mother in her early thirties, she took part in a rather audacious management buyout after an acquisition went awry.  In many ways, she attributes that experience to her overall success as a business leader.

“We want to help law firms become more agile, to enter their time on their mobile devices, to take a tablet with them to sit down with their clients and review together where their matter stands.”

We’ve received a lot of questions from the legal community since she took charge, and so we’ve gathered up the most common and sat down with Deane for this question and answer (Q&A) entry for the Think Tank.

 

1) What do you think are the biggest challenges facing law firms over the course of the next year?

DP: This could be a very long list, but I’ll limit it to the three I’ve heard from managing partners and CFOs at two separate but recent law firm conferences.

The first challenge is alternative or complicated fee structures, the second challenge stems from increasing competition, and the third challenge centers on technology and the complicated process of change management that accompanies innovation.  Let’s take these each one at a time.

Law firm clients have implemented complicated fee structures through billing guidelines that are proving very challenging for law firms to meet. For example, I was having lunch with an AmLaw 200 law firm partner recently who explained some of the nuances he felt were overzealous.

If he and an associate attend a conference call, the two of them could bill for that time.  However, if he attended the conference call alone, and later met with the associate to bring him or her up to speed, the associate is not permitted to bill for that time.

That partner felt this was “ridiculous” and that just goes to show the problems partners are having to work through.

The second challenge is the rising competition.  Globally speaking, there are more options available to clients and as a result, firms are structuring themselves differently in order to meet demands in terms of price.

The third challenge is with technology.  Historically law firms have been slower to adopt new technology but that’s changed. The law firm desire for innovation has accelerated and so too has the pace of technology adoption.   However, that comes with the cultural challenges of change management; not everyone is open to change.

2) While the legal market has improved since the economic downturn in 2008, some say it’s never going back to the pre-recession levels – that this is the new normal. As head of a leading vendor serving this community, what is your perspective on that?

DP: I don’t think things will go back to the pre-recession era and I also don’t think that this is the new normal.  The practice of law and business of law are continuing to evolve.

Law firms want more analytics and better matter management.  These two capabilities are at the very core of their ability to deal with the demands that their clients are putting on them:  They want to be more agile and they want to be able to react more quickly. Our role at Aderant is to enable that for law firms.

We want to help law firms become more agile, to enter their time on their mobile devices, to take a tablet with them to sit down with their clients and review together where their matter stands – and to provide technology to the new millennial associates that make them part of an agile culture.

The generational aspect is important for law firms.   Millennials don’t want to deal with paper and law firms traditionally have been paper-based organizations. I think about my kids now who are both in college and the concept of printing something out is just completely foreign to them. They don’t print out anything – they submit their college research papers all online.

3) How would you describe large law’s relationship with legal technology?

DP: It’s speeding up. Law firms are more interested in doing away with paper.   It’s expensive to touch a piece of paper and it becomes more expensive the more times you touch it.  Law firms are concentrating workflow-enabled technology that eliminates paper.

The other important change is that law firms are warming to the idea of the cloud.  Five years ago, you would never hear the word cloud in large law circles.   Today, it’s no longer a dirty word.  Large law firms are getting their arms around the cloud and beginning to realize the cloud can offer better security than what they are able to do independently with on-premise technology.

4) Aderant leadership has spoken of a vision for the future of technology called “Your Firm 2020.” How has this vision changed over the past year (if at all)?

DP: The core of “Your Firm 2020” is a promise that Aderant will provide mobility, automation, and collaboration in everything that we do. Those three pillars really remain the same, but I think how we think about those pillars is evolving just as law firm needs are evolving.  For example, there’s a lot more discussion around artificial intelligence. Not as in A.I. will replace a lawyer, but how it can help make their lives easier.

One of the things that I was talking about with that AmLaw 200 partner was how inefficient it is for lawyers to do some relatively simple tasks like put an email from a client into the right place in their document management system. I think there could be opportunities for artificial intelligence in solving problems like this – to predict where and how an attorney wants to file a client email and just put it there for them.

5) You’ve been in charge at Aderant for a few months now. Were there any specific experiences, anecdotes, or mentors that significantly shaped your career or helped you along the way?

DP:  Yes, I was very fortunate. At a young age, I was part of an organization that was acquired by Electronic Data Systems (EDS) and it was a terrible acquisition. Anything that could go wrong, did go wrong and I learned a whole lot from that experience.

And so, at just 33 years old, and with two kids – a six-month-old and a three-year-old – I joined a team that did a management buyout of the business. I did that with two other very seasoned professionals who were absolutely great mentors to me, each in their own way. I learned a lot and I learned very quickly.

My career advice to people is to remain curious, take new approaches, embrace change, and do whatever needs to be done.  It drives me crazy if anytime someone feels like something is not their job.  It’s just better for everyone if you figure out what needs to be done, and how you can help get it done.

Ultimately, I believe that you should always surround yourself with the best available people and that is why I like Aderant so much. We’ve got an amazing group of people who are very passionate about providing the absolute best to our clients.

Recommended Reading:

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Lateral Hiring: Five Metrics for Benchmarking Top Performers http://www.aderant.com/blog/lateral-hiring-benchmarking/ Wed, 15 Mar 2017 17:36:47 +0000 http://www.aderant.com/?post_type=blog&p=32311 There’s an old adage in marketing that half the budget is wasted, we just don’t know which half.  The same might be true for law firm lateral hiring, as stated by a recent ALM survey which found a disconnect between the goals and results of these programs. Most law firms[...]

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There’s an old adage in marketing that half the budget is wasted, we just don’t know which half.  The same might be true for law firm lateral hiring, as stated by a recent ALM survey which found a disconnect between the goals and results of these programs.

Most law firms say lateral hiring is important to growth, however, about half of these hires deliver below expectations. More specifically, the survey found “30 percent of laterals deliver less than half their expected book of business in their first year at the new firm,” according to an article in the American Lawyer titled Law Firms Struggle With Lateral Partner Due Diligence, Report Finds. “Another 21 percent deliver only half to three-quarters.”

“Law firms have come a long way in developing due diligence processes for lateral hiring but the subsequent evaluation process appears to be coming up short.”

Law firms have come a long way in developing due diligence processes for lateral hiring but the subsequent evaluation process appears to be coming up short. Due diligence quantifies expectations, while evaluation helps a firm understand if a lateral hire is meeting those expectations.

The lessons gleaned from a continuous measurement program ought to feed back into the due diligence process. In this way, the effects snowball: the true failures in lateral hiring become less likely and the lateral hires that were good become great. This is important because law firms that crack the code on lateral hiring can develop a competitive edge.

“Based on recent experience, lateral movement between law firms has become a way of life,” wrote Andrew E. Jillson in a piece titled Law Firm Lateral Hiring: Preparing for the Upcoming Free Agent Season. “With a widening gulf between the top law firms in the AmLaw 200 and the rest, the better performing firms have a significant advantage in the lateral hiring space.”

Five Lateral Hiring Metrics to Consider

When developing metrics for evaluating lateral hires, I recommend law firms review historical data. This is because the lateral success measures you want to analyze ought to be long term.  Data is easier to mine today, so going back between two and five years is common. Even looking as far back as 10 or 15 years is feasible with modern data mining techniques.

Precisely which metrics your firm should monitor will vary from firm-to-firm based on the market focus, staff organization and firm growth strategy. For example, the metrics to measure a lateral hire specializing in litigation will be different from a patent or trademark attorney. Therefore, the metrics I offer below are suggestive – based on my experience with hundreds of firms – rather than prescriptive.

1. Responsible billable hours. This measure isn’t about the 2,000 hours the lateral logs individually, but rather the 14,000 hours the individual is responsible for on the matters they manage. This number will be compared year-over-year to understand whether the book of business the lateral brought over is growing, declining or staying steady.

2. Effective rate. This metric looks that the value of the work versus what the law firm actually billed. This is effectively long term billing realization, but I call this the “effective rate” because it highlights the hours for which a firm cannot invoice. However, to use this metric effectively the firm also has to understand the pricing process. For example, if a firm bumps the standard rate of a specific lateral from $500 per hour at his or her previous firm – to $750 per hour – it puts existing clients at risk. The firm must understand how this will impact long-term realization, even while benchmarking for improvement.

3. Cash Collections. I often recommend firms use cash as a metric rather than collection realization because the latter gets murky. For example, if I bill $1 million this year, but also finally collected on billings from previous years, it clouds the metric and can look far better – or far worse – depending on the circumstances. Cash is a straightforward metric for measuring over time, as long as it is used in conjunction with other, more nuanced metrics.

4. Profitability Margin. In a manufacturing business, calculating profitability is relatively easy: revenue – costs = profitability. In law and other professional services, it’s more challenging because of the need to use different allocation methods for attributing the cost of resources that do the work. So long as the firm has a profitability model established, the end-margin is the ultimate measure of success to track over time. With regard to laterals, using an established profitability model and a “same-store sales” concept can provide useful insights into potential trouble areas.

5. Business development hours. A lateral hire that brings in a book of business provides an obvious immediate gain, but law firms should also measure business development hours (BDH) in the long run as well. There are two basic ways to measure BDH. The first is through new client billable hours, which measures new clients earned. The second way is by tracking new matter billable hours on existing clients, which shows whether or not the firm is gaining more work from the existing book of business the lateral brought to the firm.

Making Meaningful Comparisons

Just as important as the metrics that are selected, ensuring that comparisons are adequate and meaningful play a large role in determining success. Laterals aren’t operating in a vacuum so the firm shouldn’t measure them as such. To the extent the firm can, it should group laterals into classes, the lateral class of 2017 for example or a lateral group based on a geographical presence, and then benchmark these groups against the aforementioned metrics. This gives the firm a holistic view of its lateral hiring program and helps determine benchmarks at various points in the process. This can provide both an early warning system as well as the opportunity to determine where a process can improve over time.

Also valuable is to compare lateral classes against native firm attorneys. This is an effective means to understand what the firm has gained. Lateral hires are something akin to a “free agent” in sports, so the firm wants to ensure it’s getting something over and above the price of acquisition – and without subsidy. It also can provide a reasonable expectation of the time required to see a return on investment from lateral hires. With enough time and data points, the firm should be able to identify the time horizon for a lateral to reach (or exceed) the expectations of existing attorneys.

Guiding Principles for Lateral Metrics

A law firm must have metrics in place before a lateral joins a firm – and the metrics selected should answer this question in the long run: What does a law firm expect from a lateral that’s been with the firm for 10 years?

Keep in mind it’s easy to come up with a number, but it’s really hard to tell if that number is giving you what you want. If law firms continuously seek to answer that question, they will inherently link lateral due diligence with performance – and, by extension, expectations with results.

Recommended reading:

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Will the Cloud Ever Take Hold in Large Law? http://www.aderant.com/blog/cloud-large-law/ Wed, 01 Mar 2017 14:41:34 +0000 http://www.aderant.com/?post_type=blog&p=32071 What role will the cloud have in the law firm technology stack of the future? It’s a challenging question to answer because the legal community is divided on the benefits and drawbacks of the cloud. What one law firm sees as a benefit, another cites as a risk. Security is[...]

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What role will the cloud have in the law firm technology stack of the future? It’s a challenging question to answer because the legal community is divided on the benefits and drawbacks of the cloud. What one law firm sees as a benefit, another cites as a risk.

Security is a prime example.  A 2015 ALM survey of 79 Am Law 200 firms found 86% said security was among the top barriers to cloud adoption in legal.

In a day and age where data breaches seem to be a daily news event, and law firms are accused of being the “soft underbelly of corporate America,” it’s unnerving to hand data over to another company and hope that it’ll be safe.

“A 2015 ALM survey of 79 Am Law 200 firms found 86% said security was among the top barriers to cloud adoption in legal.”

On the other hand, a 2016 ILTACON session, presented in part by Rick Varju, a director responsible for infrastructure at Foley and Lardner LLP, cites security as a benefit of the cloud.  In a presentation titled What To Expect When Considering the Cloud, he noted many enterprise cloud vendors field entire teams of people dedicated to security.  In addition, these vendors maintain an arsenal of technology tools, that most law firms can’t afford, to ward off threats.

By contrast, a team of three full-time engineers is responsible for security at his firm. Those three very talented IT security experts support 2,200 people, including 900 lawyers fanned out across 20 offices – three of which are international locations.

“That is scary to me,” he said in the session which was recorded in audio and is publicly available online.

A Cloudy Outlook for the Legal Cloud

The mixed law firm perspective of the cloud can be observed in opinion surveys.  The answers to cloud questions vary greatly, which only underscores the lack of industry consensus.

The 2016 ILTA/InsideLegal Technology Purchasing Survey, which included larger law firms in the sample set, suggested law firms are increasingly warming to the idea of a “cloud-first” approach.

The survey did show law firms are investing more in cloud tools: 34% of respondents said they purchased cloud storage in the last 12 months. In addition, another 25% said they planned to purchase more over the next year, which is a considerable increase compared to 15% in the same survey the previous year.

Yet this all seems rather experimental in the larger context.  The purchase of some additional cloud storage hardly seems like the beginning of a significant migration to the cloud.

The same ILTA survey found a lukewarm attitude toward consuming cloud technologies as a primary means of delivering legal software or services. More than half of respondents indicated that less than 25% “of firm software and service solutions will be cloud-based” in the next few years. Moreover, that answer slid 7% from the same survey the previous year which dampens the cloud-first outlook.

Legal Innovation Will Drive Cloud Adoption 

The ILTA survey did reveal what might motivate firms to adopt the cloud: profit. These investments in cloud tools aren’t aimed at cost savings, but rather at “turning increased productivity, efficiency and automation into profits,” according to the report.

It’s a sentiment similar to that which Mr. Varju expressed in his ILTA presentation.

While he acknowledged cost containment as one of the reasons firms should consider the cloud, it shifts costs from capital expenses to operating expenses. He noted, rather profoundly, the cloud is about “more than just saving money.”

The purpose of the cloud in a law firm is about “doing things differently,” he said. The cloud, or even a partial adoption of a “hybrid model” cloud, will enable law firms to refocus IT resources on innovation rather than reacting to “recover an Exchange server.”

In a highly competitive legal market, finding innovative new ways to deliver legal services is what may ultimately brighten the cloud’s future in large law firms.

Recommended Reading:

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Large Law: 11 Considerations in Practice Management Technology http://www.aderant.com/blog/large-law-practice-management/ Wed, 15 Feb 2017 14:11:41 +0000 http://www.aderant.com/?post_type=blog&p=31501 Practice management is the true backbone of a large law firm’s technology. From time and billing to invoices and reporting, it is the system on which a law firm manages its business, and also encompasses a lot of the ways they interact with their clients. The decision to procure a[...]

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Practice management is the true backbone of a large law firm’s technology. From time and billing to invoices and reporting, it is the system on which a law firm manages its business, and also encompasses a lot of the ways they interact with their clients.

The decision to procure a practice management solution is obviously significant given the central role it plays in both the day-to-day and strategic operations. However, it is also a lasting decision, it’s a big-ticket technology acquisition that occurs at best once every decade and usually longer. The solution a newly minted partner uses today is likely to be the same system that attorney used as an associate. Once a law firm has committed to a practice management solution, they are essentially wedded to that decision for a while.

“The decision to procure a practice management solution is obviously significant given the central role it plays in both the day-to-day and strategic operations.”

It is a decision that has a lasting impact in several additional ways too. One example is implementation. The implementation can take anywhere from nine months to two or more years depending on the scope of the project. Once implemented, both staff and attorneys will interact with the selected system on a daily basis for much of their tenure with the firm.

Over the next few years, Aderant believes many large law firms are considering making a switch from their current practice management system to something different. Multiple practice management platforms are outdated and several will not continue to be supported by their vendors. In fact, our estimation suggests this will affect nearly half of the Am Law 200.

Three Market Trends Driving Law Tech

If a practice management solution is a decision with such longevity, what is driving the reconsideration now?  In addition to vendors forcing the issue with end-of-life software decisions, based on conversations we’ve had with law firms, we believe there are three primary drivers:

  • A generational workforce shift
  • Fundamentals change to the business of law
  • Advances in modern technology and innovation

First, as an industry, we are in the midst of the largest generational shift in modern history. Millennials are forecasted to be the majority of the workforce in five or so years. This group grew up with mobile devices that have shaped strong preferences in technology, especially around simplicity and ease-of-use.

Millennials anticipate a consistent and responsive user experience (UX) with legal IT across devices from desktop to tablet.  This is because that’s the way it’s always been with their consumer devices.

Second, the business of law is changing as well.  The industry is moving away from the billable hour and gravitating toward alternative pricing, since more and more clients are demanding this pricing structure.  Legacy practice management and financial systems were not designed, or not designed well, to support alternative fee arrangements.  More importantly, legacy systems are not equipped to provide law firms with the data to offer this pricing while maintaining their overall profitability.  In my conversations with C-level Executives and Managing Partners in law firms, it’s often hard for them to answer the question, “What does a billable hour actually cost?”

Finally, technology itself has changed.  Security is paramount and mobility is no longer an afterthought.  Integrations are pivotal to synchronize different data sources in order to uncover new insights and provide a competitive advantage.

An example of this is duplicate sources of data.  Case management and financial management, have long been in separate data points in law firms.  In modern legal technology, having all of your data available is a bare minimum requirement and it is even better when built to work together on the same platform. Clients are demanding more transparency into the business that law firms are actually providing for them.  Having access to not just the case work or the financials, but both, gives clients the true transparency into the work a law firm is doing and the budget they should be adhering to.  At the end of the day, it’s all about efficiency and streamlining processes.

What Large Law is Looking for in Practice Management

As large law firms weigh the available options on the market today, we’ve thought carefully about what our customers have told us they found important.  Here are the most common considerations we consistently see law firms identify:

1)  Collaboration.  Within practice management, collaboration means shared situational awareness across teams and with clients.  We’ve noted law firms are seeking technology options that not only enable them to work more efficiently but to create shared understanding with clients. For example, the ability to flip open a tablet or a computer and show a client, with precision, the progress the firm has made on a matter in terms of results and budget.

2) Automation without coding.  Law firms want to put automation in the hands of the everyday user without requiring them to have coding skills. This means, for example, automated rules that alert an attorney when he or she has used the phrase “legal research” on a time-entry, and that poses the risk of invoice rejection.  It also means a lawyer should have the ability to quickly create automated workflows with nothing more than a few mouse clicks.

3) Mobility.  The notions of where work gets done are changing.  Increasingly attorneys are on the move and need untethered access to their law firm’s systems from wherever they are located.  That experience must also be responsive and consistent across devices.  In other words, the ability to edit a pre-bill on the go should function the same way as if making that edit from a computer in the office.

4) Agnostic integration.  Most law firms have existing investments in technology – and do not want to forgo what they’ve already spent with a new acquisition. As such, integration – whether data is going in or out – ought to be bi-directional and agnostic.  Law firms are seeking vendors and technologies that play nice and work well with one another.

5) Trusted reporting.  Trusted reporting means one single version of the truth.  Often sound reporting flows from seamless integration or technology that’s built on the same platform. Whether that’s analyzing time entry, billing or collection activity, there is no question law firms want assurance as to the veracity of data being surfaced for partners and clients in reporting.

6) Flexibility.  Flexibility is the capacity to customize technology to meet a law firm’s specific needs. For example, practice groups and clients will have their own preferences for workflow, document formats and invoice information.  Law firms want tools to fit their process and requirements, and not be held down to a vendor’s requirements.

7) Security.  Encryption technology has never been more important because people want access to their work product from anywhere. Law firms are seeking practice management systems that provide the ability to set security policies that meet their specific needs.  Especially with the advent of mobility, it is not just the system that needs robust security, but the tablets and laptops used to access firm data as well.

8) Support.  Law firms need to know they will get the technical support they need in a timely fashion, no matter the time of day.  Support is not limited to just technical help with an issue on an emergency basis, but rather the ongoing support for implementation, training and user adoption.

9) User experience.  A system interface has a profound impact on user adoption.  Users will maximize their use of an interface if they like using it.  The user experience however, is so much more than just the interface itself.  It is the entire experience the customer gets with the vendor.  This ranges from product communications all the way to access to vendor executives.  Law firms are looking for a vendor to provide a complete and positive user experience.

10) Evidence of innovation.   Law firms are looking for evidence of innovation in several ways. First, a history of successfully executing on promises and delivering enhancements when they say they will. Second, a mechanism for incorporating customer feedback and a track record of doing it.  Third, law firms want to see a vision, they want roadmap to the future of legal technology.

11) Vendor culture.  Once a technology procurement decision is made, law firms are going to be working with that vendor for a long time.  Law firms want to like the people they are working with for the next 10 or more years.  They want it to be a partnership and not simply a vendor client relationship.  They want to be truly invested in not only the company but the people they will be working with.  Simply said, the people they will be dealing with matters.

A Legal Technology Partner

For a technology decision as significant as choosing a practice management system, the common denominator we see law firms seeking is not a checklist of requirements, rather a true partner.  Law firms are seeking out a vendor to work with them, provide them with superior service and partner with them to provide the technology they need to compete in the future.

Recommended Reading:

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Navigating the Complexity of Billing Guidelines http://www.aderant.com/blog/billing-guidelines-complexity/ Wed, 01 Feb 2017 11:02:47 +0000 http://www.aderant.com/?post_type=blog&p=30491 The purpose of outside counsel guidelines, or billing guidelines, ought to be to strengthen the relationships between corporate counsel and law firms.  Such guidelines are intended to be a level set that establishes an agreement between client and service provider for legal value – the best possible outcome at an[...]

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The purpose of outside counsel guidelines, or billing guidelines, ought to be to strengthen the relationships between corporate counsel and law firms.  Such guidelines are intended to be a level set that establishes an agreement between client and service provider for legal value – the best possible outcome at an efficient price.

Unfortunately, these guidelines have a tendency to devolve into mechanisms primarily focused on cost-cutting – a long list of things for which clients say they will not authorize payment.  Outside counsel guidelines have become a “counterproductive combination of micromanagement and blunt instrument,” according to D. Casey Flaherty, a former corporate lawyer, turned entrepreneur, and an early advocate of fostering technology skills in legal.

100 Pages of Legal Cost Cutting?

Law firms we speak with say these guidelines usually cover three primary categories:  invoicing, new matter assignments or intake, and general corporate policies for security and diversity, for example. Yet those three categories can grow into sizable volumes that some large law firms say inhibit their ability to act in the best interest of the client.

“For example, some general counsel impose 20, 40, or even 100 page outside counsel guidelines, much like governments erect more and more regulatory boundaries,” wrote Ken Grady, the Lean Law Evangelist for Seyfarth Shaw LLP, in a piece titled, Indifference and Micromanagement: Twin Evils.

And that’s just one client.  For a big law firm with dozens or even hundreds of clients, managing 40-page guidelines from each is an incredibly complex endeavor.

Too often this complexity causes delays between work-in-progress (WIP) and cash flow or realization.  This is because invoices are passed back and forth between partners, attorneys and the law firm billing department – all in an effort to comply with a client’s guidelines.

This business problem is exasperated for large law firms, when after all that effort, an invoice submitted to a client is flagged or kicked back by a client’s e-billing system, over a line item rule that was mistakenly overlooked in the process.

Citing research from the International Association of Defense Counsel’s (IADC) second annual Inside/Outside Counsel Relationship Survey, the publication, General Counsel News highlighted open-ended commentary that underscores the frustration inside law firms. For example, the publication reported “an outside counsel respondent suggested that in-house counsel should ‘eliminate budget requirements when a case is new and remove absurd billing guidelines.’”

Spending Volume Makes Guidelines “a Necessary Evil”

Yet clients have a valid perspective too.  For the last several years, corporate legal has been under intense pressure from business to reduce spending, or at least maintain costs. To their credit, long-held beliefs – that legal work tends to be complicated, unmeasurable and therefore unpredictable in price – have cracked.

More to the point, there’s big money at stake. According to the 2015 HBR Law Department Survey, “The median total legal spending was $27 million worldwide” or more than double the median spend inside which was “$12 million worldwide.”

The challenge is that averages, even a median, hide the fact that the larger the company is, usually the larger the legal spend is as well. This is especially true when factoring rising litigation costs, a large bank, for example, can easily spend billions with outside counsel.  It’s obviously a lot of money and so the corporate legal desire to place parameters around what it will – and will not pay for, in an effort to control costs, is quite understandable.

Outside counsel guidelines may be far from perfect, but these agreements are “a necessary evil” in Mr. Flaherty’s assessment.

How to Manage Complex Billing Guidelines

In our discussions and surveys with our large law customers, we’ve discovered that for all the complexity, many law firms don’t have a consistent process of managing guidelines.  Some law firms even go as far as to maintain physical copies of agreements in binders on their desks and review these in conjunction with invoicing intervals.

This lengthens the process of getting invoices generated, approved and distributed to clients.  It adds substantial overhead in both valuable time and staff to manage the process.  Worse still, ad hoc processes risk missing important aspects of the billing guidelines and potentially jeopardizing the client relationship.

However, billing guidelines aren’t going away in the foreseeable future.  To that end, there are several ways law firms can reduce the strain in managing complex rules, including the following:

  • Build a process for managing guidelines. Many law firms already have processes in place for new client intake or in taking on new business from existing clients.  Analyzing, distilling and publishing guidelines to a central location in order to communicate the essentials to a law firm team is simply pragmatic. Often, these rules can be categorized to find common components among different clients. Classic examples of this range from service level agreements around responsiveness and reporting – to the day-to-day requirements of which staff or attorneys can work on an account and at what billing rate.
  • Make a case for alternative fee arrangements. AFAs continue to seep further into the legal community at the behest of clients and fierce competition. Some of the law firms we’ve spoken to suggest flat fees can potentially reduce the requirements for billing guidelines since they are designed for an hourly billing model.  With the promise of new and modern technology linking case management with practice management, law firms are in a much better position to gather the data required to get flat-fee pricing right. This would stand to transform AFAs into to a welcomed law firm solution and even a competitive advantage.

Process and Tech:  Faster WIP to Cash

The benefits of applying just one or a combination of all three of these suggestions are all aimed at improving billing accuracy and reducing invoice rejection.  In trade, the law firm receives payments faster, which in turn has a positive influence on realization.

Most importantly of all, a standardized process and system for managing guidelines enable law firms to deliver a higher level of customer service which can measurably improve the client relationship. That would take us all the way back to the very purpose of what outside counsel guidelines are intended to achieve.

Recommended Reading:

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Beyond the CLE: Legal Tech Ed is Anything but Optional http://www.aderant.com/blog/cle-legal-tech/ Wed, 18 Jan 2017 17:43:26 +0000 http://www.aderant.com/?post_type=blog&p=29921 In 2017, continuing education in technology will no longer be optional for lawyers in Florida.  New changes just went into effect requiring training in technology as part of the Minimum Continuing Legal Education (CLE) Standards. The modification “requires attorneys to complete 33 hours of CLE over a three-year period, with[...]

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In 2017, continuing education in technology will no longer be optional for lawyers in Florida.  New changes just went into effect requiring training in technology as part of the Minimum Continuing Legal Education (CLE) Standards.

The modification “requires attorneys to complete 33 hours of CLE over a three-year period, with three hours in an approved technology program,” according to reporting from Big Law Business by Bloomberg.

While Florida is joining the ranks of two dozen other Bars that already say licensed attorneys have an ethical duty for technology competence, the new CLE requirement is the first of its kind.

“The benefits of technology are well documented – greater operational efficiency, improved attorney productivity, and better insight into the business of law. The challenge that often remains is: How can firms improve adoption?”

It is conceivable to believe a new learning requirement, which also increases the number of CLE hours required, would face some opposition.  Yet amazingly, that didn’t appear to happen in this case.

There was very little “pushback” on the changes according to John M. Stewart, an attorney, and  proponent of the changes – as cited by the ABA Journal.

From Client Requirement to Advantage

We suspect the lack of pushback is indicative of a growing and broader acceptance of legal technology as a necessity.  GCs have been demanding technical competence for years, and firms are increasingly realizing a culture of technology tends to also be a key point of differentiation.

For example, on my flight to the 2016 ITLA conference, the CIO of a global law firm told me his entire law firm was going through the LTC4 technology training process.  LTC4 is a non-profit organization that provides standardized technology skills assessments, training and certification programs.

What was the driver for such a massive effort? The law firm’s client.

It was a GC who wanted assurances that attorneys in law firms representing his company are working most efficiently.  In other words, clients are no longer going to simply expect their law firms are using the right technology tools to get legal work done efficiently – they may require evidence.

Legal Tech Parallels in AFA Adoption

In many ways, the trajectory of legal tech and training is similar to the path of alternative fee arrangements (AFAs).  AFAs have been making headlines in legal publications for many years, but until recently have faced stiff cultural resistance.

However, identifying opportunity amid client demands, some law firms broke with the tradition of billable hours and began exploring AFAs.  Those firms committed to mining data and adding new roles, such as pricing professionals, to optimize value without sacrificing profitability.

At Aderant, we believe a similar evolution is underway with technology.  What started as a result of client pressure is becoming an opportunity to streamline law firm operations, enhance attorney productivity, drive financial health, and ultimately, improve client collaboration.

This is because technology systems are a logical place for law firms to study for growth opportunities in a highly competitive market: Who are our most profitable clients?  How do we earn more work from them? How do we find more clients that share the same characteristics? For many law firms, the data to answer these questions already exists within a law firm – but this requires technical know-how to harvest it.

Ideas for Fostering a Culture of Technology

The benefits of technology are well documented – greater operational efficiency, improved attorney productivity, and better insight into the business of law. The challenge that often remains is: How can firms improve adoption?

Our experience tells us internal communications are under-utilized resources.  Firms need to grow a movement to change the culture.  We find the firms that have the most success with new technology implementations usually do one or more of the following:

  • Seed ideas with champions. Every law firm has technology champions – identify them and enlist their help. These internal “influencers” can be instrumental in changing old habits. Hearing about new tools from peers usually resonates more deeply than hearing about a new tool from IT, or even from leadership.
  • Leverage familiar platforms. Most people, regardless of age, are very comfortable with mobile devices. Mobile devices are ubiquitous – at home, at work and even in transit.  Find ways to incorporate these devices into every aspect of technology the firm wishes to develop further.
  • Show, not just tell. Time entry is a good illustration of showing and telling. If staff and employees dislike entering time, then demonstrating an easier way is a proven technique for changing behavior…bonus points if that application can be shown on a mobile device!

Legal Tech is Anything but Optional

What is happening in the Sunshine State is likely to be just the first of many.  It is both an interesting and positive step toward advancing the technical skillset of the broader industry. We’re fairly certain that in subsequent years, other states will likely follow suit.

Yet many law firms are already pursuing educational opportunities in legal technology to gain a competitive edge and better serve clients.  These firms are getting a head start and creating a skills gap that might prove challenging for others to make up later.

CLE credit or not, in many ways, a legal technology education is already anything but optional.

Note: Aderant recently published a new white paper titled “Efficiency is the Future of Law.” The paper explains, in part, the new role of modern technology in competitive law firms.  All Aderant white papers are available for download – no registration required – on our law firm resource page.

Recommended reading:

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Five Business of Law Studies in Summary http://www.aderant.com/blog/business-of-law-studies/ Wed, 04 Jan 2017 15:20:02 +0000 http://www.aderant.com/?post_type=blog&p=29241 The beginning of a new year is an appropriate time for both reflection and forward thinking.  I read through a number of newly published studies, in part, to reflect on the state of the business of law – and what it means for the coming year.  In considering the sum,[...]

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The beginning of a new year is an appropriate time for both reflection and forward thinking.  I read through a number of newly published studies, in part, to reflect on the state of the business of law – and what it means for the coming year.  In considering the sum, it is apparent to me the trends in people, process and pricing all share technology as a common denominator.

For example, the issues around people aren’t simply about talent management or lateral hiring, it’s also about communication.  Communication includes using enabling technology tools – like case management – to add value and transparency for clients.

Process is also a good case in point.  Process is not just about documenting the next step in a workflow, it’s about using technology to automate routine tasks – and keep the team focused on delivering value. More importantly, this means putting these tools in the hands of a non-technical audience who can automate tasks without submitting a helpdesk ticket every time.

“…the issues around people aren’t simply about talent management or lateral hiring, it’s also about communication. Communication includes using enabling technology tools – like case management – to add value and transparency for clients.”

Technology is also increasingly a factor in pricing as well.  Corporate counsel continues to invest in spend analytics to examine historical legal budgets and uses this as leverage when negotiating with firms. Likewise, law firms should use technology and business intelligence to sort through their own data in unprecedented detail to understand the effort and cost to deliver competitive pricing.

Now that we have turned the corner into 2017, that’s my take on the current state of affairs based on these reports.  Below are my notes to five business of law studies in summary.

1) Clients Value the Legal Expertise They Lack

Inside and outside counsel have divergent views on the business of law – and the International Association of Defense Counsel (IADC) has quantified it in hopes of fostering greater understanding.  The organization recently released its 2nd annual 2016 Inside/Outside Counsel Relationship Survey which garnered responses from 679 respondents.  About half of the respondents work in a law department and the other half work for law firms.

The report suggests clients see firms at their finest when they provide expertise that the law department does not possess.  Clients also say firms stumble over billing topics too, including timely or realistic budgets and lacking options for alternative fee arrangements (AFAs).

Similarly, firms see their clients at their finest, when corporate counsel is responsive to “to questions, feedback, or requests for authorization.”  Billing also surfaced as a key point of contention – in timely payment within 30 days.

Additional key statistics from the survey include:

  • Both inside and outside counsel say the trend in outsourcing legal work continued to grow but differ on just how much.
  • 61% of inside counsel say outsourcing grew compared with just 39% of outside counsel.
  • 56% of inside counsel expect outsourcing to grow in the next year.

“The significant variance in opinion between the two groups on how much work is going to law firms tells us that companies are consolidating more work with a smaller number of law firms, and that’s a trend that is having a significant impact on our industry,” according to the IADC President-Elect in a piece for General Counsel News.

2) Consulting Firm Urges Law Firms to Invest in Tech

Fees have risen and headcount is up but fewer firms are reporting growth according to the 25th edition of the 2016 Annual Law Firms’ Survey by PwC.  The survey is focused on the top 100 firms in the UK and presents several useful benchmarks including these statistics:

  • 7% is the average net profit margin; staffing accounts for 65.9% of costs on average.
  • North America remains a tough market for UK firms, “with average margins in 2016 being as low as 10%.”
  • Most law firms “(83% of Top 10 and 69% of Top 11-50 firms) have increased global fee income, although increases have been modest and, for international firms, favourably impacted by exchange rate movements.”
  • Headcounts have grown in the UK and abroad, “with average numbers rising by 7.6% in Top 10 firms and 7.1% in Top 11-50. This investment has yet to pay dividends however, as headcount increases have yet to yield significant revenue growth.”

Based on the data, the consulting firm concludes several strategic priorities are emerging for law firms. At the top of the list is heavy investment in new technology and process, followed by the workforce and structural re-engineering.

“There are a number of priority areas where more effective use of IT can assist the business,” according to the report. “Pricing and resource management are identified as two increasingly important areas of focus which directly impact profitability.”

3) The Law Firm Client: Talent, Tech, and Pricing

Corporate counsel continues to place “heightened attention on resource optimization – the right resources, doing the right work, in the most cost-effective and efficient manner,” according to an announcement for the 2016 HBR Law Department Survey.  While corporate legal anticipates demand for services to increase in the next 12 months, most are focused on internal efficiencies in talent, legal pricing and technology.

The survey, which is the 13th annual, garnered responses from 276 law departments in 22 industries and found that most respondents say their legal departments are using AFAs.  The study found “fixed-fee per matter and flat fee for all matters in an area of work were the most common.”

Other key findings from the survey include:

  • Overall legal spend is up 1%, however outside counsel investment decreased by 2%.
  • Corporate legal median spend on technology is $204,000; up 2% from last year.
  • 85% of survey respondents says they are using AFAs.
  • 80% are looking to increase the use of AFAs over the course of the next year.
  • 79% expect their legal needs to increase in 2017.

The focus on legal pricing spilled over into technology as well, as legal spend analytics was among the top three areas of tech investment, alongside document management and contract management.

“Law departments are now looking to leverage their historical data in more sophisticated ways, as we see a growing emphasis on data-driven matter planning and budgeting. In addition to rationalizing outside counsel spending, many departments are focusing on internal operations and performance measurement as more and more work is being performed in-house,” an HBR spokesperson said in the public statement.

4) Client Loyalty, Technology and Responsiveness

Many law firms define a loyal client as one they’ve worked with for five or more years. Another 22% deem a client loyal after two years and another 22% after three years.

That’s according to a small survey conducted by the legal staffing agency LibSource at the 15th Annual COO-CFO Forum event. The company polled “a small group of law firm executives” with just two other questions and found:

  • 64% of respondents think all or most clients expect law firms to adopt new technology in order to provide greater value at lower cost.
  • Most ranked “responsiveness” as the top benefit a firm can provide to clients; among the other top benefits: cost-effectiveness ranked #2 and efficiency #3.

“The Forum confirmed law firms should remain on the lookout for technology and services that allow them to respond more quickly to changing needs and requests,” LibSource said in a blog post on the survey.  “Clients are demanding change and progressive firms are responding with greater urgency and innovation.”

5) Law Firm Economics by the Numbers

Revenue per partner slipped in the 44th annual Survey of Law Firm Economics by ALM, however, the drop could be due to the fact that “this year’s report included sole practitioners for the first time,” according to reporting by The American Lawyer.

The publication said this year’s survey counted 574 firms and suggested larger firms may be faring better than smaller firms.  The publication cites Peter Zeughauser who “noted that Am Law 100 firms, which struggled during the recession, have bounced back. Smaller firms that could offer lower rates attracted clients more successfully during that time, and now it’s the smaller firms that aren’t doing as well.”

Citing the study, the article points to the following benchmarks:

  • $468,511 is the average revenue per partner across all firms.
  • Firms cut expenses per lawyer an average of $8,681.
  • Overwhelmingly, respondents seemed “ambivalent” about the next year.

“Demand is soft,” according to a consultant with Altman Weil who was cited in The American Lawyer article. “Quite a few firms still have more lawyers than work for them.”

This all leaves little doubt in my mind, that we’ll see a lot more on people, process and pricing in the business of law conversations in 2017.  Technology has an enabling role to play in all three.

Recommended reading:

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A Special Holiday Gift from Aderant http://www.aderant.com/blog/special-holiday-gift-aderant-1/ Wed, 07 Dec 2016 13:43:57 +0000 http://www.aderant.com/?post_type=blog&p=28731 We’re in the holiday spirit here at Aderant, and giving you exclusive insight into how other firms view legal technology as a means to improve their business. At the 2016 Momentum Conference in London, Aderant’s Chris Cartrett, Senior VP of Strategy & Growth, led the Law Talks panel discussion with[...]

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We’re in the holiday spirit here at Aderant, and giving you exclusive insight into how other firms view legal technology as a means to improve their business. At the 2016 Momentum Conference in London, Aderant’s Chris Cartrett, Senior VP of Strategy & Growth, led the Law Talks panel discussion with Colin Wardale, CFO of Hill Dickinson, Karen Jacks, CIO of Bird & Bird and Nick West, CSO of Mishcon de Reya about technology trends in the legal industry.

We have giftwrapped 11 videos for you and will release one each business day from now until December 20th through Aderant’s LinkedIn page and Twitter account. Follow one of our social media channels and you can receive these gifts.

Gift #1 – The experts answered the question: “How do you see technology having a significant impact on the strategic direction on firms now and in the future?”

We hope you have a wonderful holiday season, and we hope you enjoy these videos!

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Attracting Millennials: Seven Tips for Large Law Firms Leaders http://www.aderant.com/blog/millennials-large-law/ Wed, 16 Nov 2016 12:27:33 +0000 http://www.aderant.com/?post_type=blog&p=27731 Many times we are quick to dismiss millennials – which Pew Research defines as those born after 1980 – as idle, disloyal and entitled. “Countless articles have depicted millennials as a spoiled ‘everybody gets a trophy,’ ‘special snowflakes’ group reared by overly involved ‘helicopter’ parents,” wrote MP McQueen, in an[...]

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Many times we are quick to dismiss millennials – which Pew Research defines as those born after 1980 – as idle, disloyal and entitled.

“Countless articles have depicted millennials as a spoiled ‘everybody gets a trophy,’ ‘special snowflakes’ group reared by overly involved ‘helicopter’ parents,” wrote MP McQueen, in an article titled Here Come the Big Law Millennials for the American Lawyer.

“But studies and interviews indicate that millennials themselves resist the label, while boomers generally accept theirs: Only 40 percent of millennials identify with the tag.”

Perhaps millennials are misunderstood.

The Generational Effect

Historically, major events have had a clear impact on generational thinking.  For example, the impact of the Great Depression, the Second World War and the civil rights movement, all profoundly influenced the collective view of the traditionalist and baby boomer generations.

“At this point, millennials make up more than 60 percent of our workforce, and it’s fun to note that it’s sometimes the people with less work experience who invite us to innovate, try something new, or reconsider doing something the way we’ve always done it”

Significant events that took center stage as millennials were coming of age included things like global warming and the financial recession. But perhaps more significant in the lives of millennials during their formative years were the technological revolution and the rise of social media.

These events have helped shape the world view of a generation, which according to the U.S. Census Bureau, has surpassed baby boomers as the largest generation.  Money alone isn’t the motivator it was for previous generations. These facts are having a transformational impact on the workforce, including within legal circles.

In 2014, the consulting firm Deloitte published a landmark survey of millennials that illustrated this notion:

  • Value ethics. 50% want to work for businesses that emphasize ethics;
  • Seek innovation. 78% said innovation was an influential factor in deciding on employers;
  • Desire opportunity. 75% say organizations “could do more to develop future leaders;”
  • Admire generosity. 63% donate to charity while 43% “actively volunteer or are a member of a community organization;” and
  • Get Involved. 52% have put a signature on petitions.

“Millennials believe the success of a business should be measured in terms of more than just its financial performance, with a focus on improving society among the most important things it should seek to achieve,” according to the study, in the summary of findings.

“Millennials are also charitable and keen to participate in ‘public life.’”

In essence, the research suggests millennials are highly engaged, caring and even idealist.  What has traditionally enabled employers to motivate, attract and retain talent in the past – factors such as financial rewards – do not appear to move millennials.

Millennials in Large Law

The impact on law firm talent acquisition mirrors the effects being experienced by the broader business community.

For example, reporting by Debra Cassens Weiss for the ABA Journal, and the aforementioned American Lawyer, noted the average age of partners within the top 200 law firms was 52 years of age. At the same time, partners between the ages of 71 to 88 hold three percent of the overall partner ranks, while millennials account for just two percent.

These numbers indicate the generational change coming the next couple of decades in large law will be tremendous. The challenge for those large law firms thinking about succession planning, and the years it takes to mentor a protégé, is that millennials seem disinclined to hang around the law firm long enough.

A case in point stems from data presented by Michelle C. Nash at the 2015 ALA Annual Conference and Exhibition: “Cumulatively, 70% of entry-level associates who departed during 2006-2011 left their firms within five years or less of their arrival.”

Seven Tips for Large Law to Attract and Retain Millennials

The trend line and magnitude of the potential problem is increasingly becoming a key talent focus for law firm leaders concerned about future competitiveness.  Indeed, some firms have developed lateral programs dedicated to millennials, while others have honed in on modifying the culture.

Orrick, Herrington & Sutcliffe LLP is an example of a large law firm molding its culture in an effort, not just to attract millennials, but for the benefit of the overall firm.

“One of the great things about Orrick is we are really committed to listening to what millennials value and adapting our culture,” according to Siobhan Handley, the chief talent officer at Orrick in a public statement.  “It’s caused us to get a lot more creative in our programs – and I think it’s benefitted everyone on our team, regardless of generation.”

Her analysis was part of a law firm announcement noting that Orrick was the only law firm to earn a place on the 2016 list of 100 Best Workplaces for Millennials by Fortune.

This got us to thinking:  what else should law firms be doing differently to attract and retain millennial talent?  Below are a few tips we’ve curated from around the legal web.

1) Create an agile work environment

Millennials hold strong opinions for how technology is leveraged in the workplace. Most use or bring their own devices into the workplace (something CIO’s really appreciate…not). Therefore, effective use of technology is key to attracting and keeping millennials.

The time spent at a desk isn’t always a good measure of productivity.  At Aderant, we refer to this as enabling an “Agile Culture” where people can do their jobs whenever, and wherever they need to be, not confined to a specific space or location. Access to the information they need to do their jobs and the enablement of mobile workflows are critical components in developing an agile culture.

In fact, a Nielsen study in 2014 talked about how “technology is baked into every Millennial’s DNA.” They have an extremely positive attitude and acceptance of technology because it has made their personal lives so much easier. It stands to reason that they think technology can make their professional lives easier too.

2) Build alternative career paths

Law firms spend as much as $250,000 to recruit and train lateral hires including millennials, according to Ru Bhatt, a managing director at the talent agency, Major, Lindsey & Africa.

“Firms that implement strategies that embrace a millennial lateral candidate’s characteristics and career goals are most successful in achieving their hiring objectives,” he wrote in a piece posted to LinkedIn titled, The Millennial Lawyer: Not Your Average Millennial.

“Law firms that are going to come out ahead are those that can build alternative career paths into their models and eliminate that stigma of non-partner posts.”

3) Provide workload predictability

Much has been written about the millennial desire for work-life balance, but Alex Wolf, a reporter for Law360, captured a more insightful remark in his piece titled: 4 Ways Millennials Are Changing BigLaw.

He cites Ru Batt mentioned above in his article:

“A lot of them are really focused on a balance in their life. It’s not that they don’t want to work hard. They do. I think what they really do want is predictability in their schedule. That is what enables them to make their life plans.”

Millennials seek balance, health and time for family relationships, according to Pamela DeNeuve. “If these things are not available, they have no hesitation to leave the firm,” she says in a commentary published to LinkedIn called Can Millennial Attorneys Work Successfully With Baby Boomers?

4) Foster a culture of inclusiveness

Millennials grew up with the internet and social media. They love being allowed to collaborate. Research shows millennials thrive on feedback, opportunity and participation, which is perhaps why Silvia L. Coulter wrote, “Leaders who care about their firms will do well by inviting all levels of the firm to participate in feedback.”

“We ask clients what they think and, well, it’s time to ask the members of the firm what they think, which includes all lawyers, all generations, all business professionals and all support staff,” she continued in a piece called Law Firm Talent Retention: Culture Matters.

She makes a point to say her piece was reviewed by millennial Geoffrey Schuler.

5) Harness millennials for innovation

Millennials tend to be tech-savvy, having grown up with the advent of the web.  That interest in technology and penchant for creativity could prove useful for law firm innovation according to Dorie Blesoff, chief people officer at kCura in this blog post: How Your Team’s Millennials Will Up Your e-Discovery Game

“At this point, millennials make up more than 60 percent of our workforce, and it’s fun to note that it’s sometimes the people with less work experience who invite us to innovate, try something new, or reconsider doing something the way we’ve always done it,” she says.

The fact that millennials look at the world differently sometimes, is a really good thing for innovation.

6) Really do something about diversity

Diversity has increasingly become important to corporate counsel. Indeed, the Association of Corporate Counsel recently added diversity questions for the first time to its annual Chief Legal Officer survey.

Similarly, millennials are likely to put a greater emphasis on diversity because as a generation, they are a far more diverse group, according to an opinion piece in Bloomberg Big Law Business: Diversity is a Business Imperative for Law Firms (Perspective).

“For example, while 28 percent of baby boomers are made up of ethnically diverse individuals, 48 percent of millennials are ethnically diverse,” writes author Steven Wright, a partner with Holland & Knight, LLP.

7)  Be more charitable with time and donations

Law firms can go a long way toward winning the hearts and minds of millennials with a genuine focus on charity and civic duties.   Certainly donating money counts for a lot, perhaps even having the firm match individual attorney donations,  but donating time is just as important.

“The first and most important step is to make space in your practice for regular civic engagement,” write two millennial lawyers in an article titled, Perspective: Millennials in Big Law — Let’s Get to Work.

“Commit to billing 10% of your hours to pro-bono matters and board work. You will be a better attorney, and a happier person, for having done so,” they add.

At the time of publication, co-authors Corey Laplante was employed by Skadden Arps Slate Meagher & Flom, LLP and Katie Larkin-Wong hailed from Latham & Watkins, LLP.

Millennials want to make their communities better and have an impact. Firms would be wise to shout from the mountaintops their community involvement. It matters….a lot.

Future Leaders of Big Law

Time will have its way and one generation will surely replace another at the helm of leadership in large firms.  However, this process takes years, even decades, to transpire, which provides the current leadership the opportunity to facilitate a culture ensuring the longevity of their firms. To that end, attracting and retaining millennial talent is a pivotal piece in succession planning.

As befuddling as millennial management may seem on the surface, the research suggests it isn’t harder to motivate young or aspiring attorneys, it’s just different. Understanding the nuance may well be a competitive advantage in the large law talent war.

Note: Aderant recently published a new white paper titled “Efficiency is the Future of Law.” The paper explains in part, why mobility is a key aspect of the new role of the modern and comprehensive case management technology for competitive law firms.  All Aderant white papers are available for download – no registration required – on our law firm resource page.

Recommended Reading:

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What is the Impact of Mobility on Large Law Productivity? http://www.aderant.com/blog/mobility-large-law-productivity/ Tue, 01 Nov 2016 17:47:06 +0000 http://www.aderant.com/?post_type=blog&p=25041 We bank online, we shop online, we work online, some of us even find love online. Increasingly, we’re not just doing these things online, we are also doing it on the move. And so too are lawyers. The trend has been steadily tipping toward mobile for some time: In 2014,[...]

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We bank online, we shop online, we work online, some of us even find love online. Increasingly, we’re not just doing these things online, we are also doing it on the move. And so too are lawyers.

The trend has been steadily tipping toward mobile for some time: In 2014, we began spending more time accessing the internet on mobile devices than on desktops.  In 2015 Google reported more searches were being conducted on mobile devices than on desktops.  In the first half of 2016, the U.S. population literally poured money into mobile:  top US retailers said more than half of all e-commerce sales (52%) occurred on a mobile device.

Connectivity Requisite in Large Law

The trend has steadily seeped into the legal community as well. For example, the 2015 Legal Technology Survey Report, an annual survey conducted by the ABA, found about half (49.6%) of participating attorneys reported using a tablet for work. While the ABA finding includes lawyers from firms large and small, there is evidence to suggest the reliance on mobility could be even greater in the large law segment.

“Lawyers don’t sit at their desk, waiting for information to come to them. They are out and about, wanting and needing access to information anywhere: from the road, from the hotel, from the client site or from home.”

“You could not do this job if you couldn’t get connected from everywhere,” according to a large law partner cited in the Mobility Metrics report published in 2015.  The report, commissioned by kCura and completed by Ari Kaplan Advisors, was based on both quantitative and qualitative research stemming from interviews with 25 senior partners from the Am Law 200.

Another partner cited in the study noted that law firms are equipping staff with mobile options to provide that level of connectivity. “Litigators, associates, and all partners get a choice of a tablet or a laptop in addition to their desktop workstations.”

Interestingly, the study found on a personal basis, more large law partners owned an Apple iPad® (72%) than owned a PC laptop (60%), which mirrors the consumer trends.  More importantly for the business of law, most large law partners report mobile technology in the courtroom is commonplace.  Indeed, 83% of the lawyers interviewed in the study “are either comfortable or very comfortable using mobile devices in the courtroom.”

What is the Impact on Productivity?

So what’s the impact of all these mobile devices on productivity in large law?  It’s not where it should be because the software vendors are still catching up, according to Jeffrey Brandt, the CIO at Jackson Kelly, PLLC and editor of the PinHawk Law Technology Daily Digest.

Devices simply provide “access,” he wrote in a piece for Legal IT Professionals titled, “True Mobile Productivity for Lawyers: Beyond The Basic Plumbing.” He notes that many legal technology applications used in large law are designed for desktop use – and mobility and remote access tend to be an afterthought.

In other words, lawyers have to be at their desks in the law firm office to access the systems and data they need in order to be productive.  This simply does not match the reality of legal work or day-to-day experiences of an attorney in a large law firm today.

“Lawyers don’t sit at their desk, waiting for information to come to them. They are out and about, wanting and needing access to information anywhere: from the road, from the hotel, from the client site or from home. True mobility for lawyers is about access to the data and applications they need when they need and wherever they need it,” wrote Mr. Brandt in the article citing a vision laid out in 1999 by Microsoft co-founder Bill Gates. “True lawyer mobility is seamless access and links to existing stuff in the firm. It is completing workflows and collaborating, accessing and sharing information – all in a secure and protected manner.”

At Aderant, we couldn’t agree more with Mr. Brandt’s assessment.  We’d also like to believe we’ve taken that idea to heart and have made mobile access a central theme in the development of enterprise-grade legal software products for law firms.

Three Mobile Recommendations for the Agile and Productive Firm

In large law firms, the entire team needs access to both financial and client information such as tasks, appointments, and documents on the move.  To make this possible, mobile options need to be baked into the software – as opposed to being bolted on after a product release.

As such, we’ve identified and recommended large law firms seek the following in legal software solutions such as case management, practice management, and business intelligence:

1) Clear focus on user experience.  Legal software UX on a mobile device must work in the way in which lawyers are already familiar.  For example, if a lawyer accesses a case management system on a tablet, the interface should be responsive and touch-friendly.  Accessing data should not require the equivalent of fingertip gymnastics to click a button or view a screen.

2)  Built for the web.  New legal applications for a large law firm should be built in HTML5 which makes them ready for the web.  HTML5 makes the applications easy to access and use through the common browsers most popular with attorneys.  In addition, it also allows the product to be deployed where it best suits the firm – in the firm’s environment or hosted securely through a third-party managed service provider.

3) Precision of functionality. In the courtroom, litigators want to have specific legal mobile application functionality that is tailored toward the tasks they are most likely to perform on-the-go. When mobile applications attempt to mirror desktop applications, the excessive functionality causes poor application performance leading to poor user experiences. For successful adoption and ease of use, mobile applications need to be precise in functionality, providing utility for only those relevant mobile tasks like time entries, expenses, and workflows.

Mobile as Minimum Expectations

Mobility has graduated from a perpetual trend on the horizon to one that has clearly arrived.  Legal work by the very nature of its importance and intensity requires mobile access. If law firms truly want to achieve the benefits of the mobile lawyer, then well-equipped mobile applications are a minimum standard, rather than the exception.

“You don’t have to impose overbearing security. You don’t have to rely on consumer apps. What you have to do is proactively deliver the tools that lawyers need,” wrote Mr. Brandt in the conclusion of his piece.  “Don’t let your systems be built on one concession after the other. Technology has come a long way and so have attorney expectations.”

Note: Aderant recently published a new white paper titled “Efficiency is the Future of Law.” The paper explains in part, why mobility is a key aspect of the new role of the modern and comprehensive case management technology for competitive law firms.  All Aderant white papers are available for download – no registration required – on our law firm resource page.

Recommended Reading:

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Your Firm 2020: The Essential Triad in Legal Technology http://www.aderant.com/blog/legal-technology-2020/ Wed, 19 Oct 2016 13:47:19 +0000 http://www.aderant.com/?post_type=blog&p=23631 By the year 2020 smart machines and legal process outsourcing (LPO) will “radically disrupt” the legal profession. That was the prediction first put forth by market research firm Gartner, Inc. in a 2014 report called Legal IT Scenario, 2020.  The project examined four possible, perhaps even controversial, scenarios affecting the[...]

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By the year 2020 smart machines and legal process outsourcing (LPO) will “radically disrupt” the legal profession.

That was the prediction first put forth by market research firm Gartner, Inc. in a 2014 report called Legal IT Scenario, 2020.  The project examined four possible, perhaps even controversial, scenarios affecting the buyers of legal services.

As we look ahead to 2017, we draw ever closer to the once seemingly distant 2020.  The question remains –what does disruption mean for large law?

“As we approach the future of law, and the opportunity technology affords, we are proving to the legal community that we are already thinking ahead.”

The answer largely depends on how we define disruption.  On one hand, the word has become so common in the legal vernacular it risks devalued meaning.  On the other hand, it’s quite clear the industry has, and will continue to experience, meaningful change at the provocation of clients, technology and competitive pressures.

Unquestionably, the word disruption has earned a permanent spot on the legal industry’s glossary.  For example, consider the following:

  • “The legal profession will be radically different in ten years. Changing client demands, employee expectations, technology and other external factors will alter the nature of the jobs and skills required in the future,” concluded a study by Deloitte dated February 2016.
  • “The future law firm will be driven by leaders who understand technology, efficiency and innovation,” according to a piece by Norton Rose Fulbright LLP published in May 2016.
  • “Technology has disrupted and transformed virtually every service area, including travel, banking, and stock trading. The legal services industry, by contrast, has not yet fully harnessed the power of technology to improve the delivery of, and access to, legal services,” reads the Report on the Future of Legal Services in the United States, by the ABA.

The common denominator in each of these outlooks is technology. While the degree of radicalism remains a topic of healthy debate, Aderant believes technology has never presented a greater opportunity for law firms.  As such, we are firmly focused on facilitating those benefits for the large law community.

 

3 Principles of Tech-Enabled Law Firm in 2020

When we examine the market and consider the impact to law firms, Aderant sees potential in three specific technological principles: mobility, automation and collaboration.

More importantly, in each aspect, we challenge the legal community to think beyond just what is happening in this moment – that is merely trying to just complete legal work faster or cheaper.  Instead, we are focused on solving the legal IT problems law firms are likely to face in 2020 – that is executing legal tasks better.

Here’s how we define those principles:

1) Mobility: the antidote to anchored working stations.

Mobility is the minimum barrier to entry in legal IT.  Of course, attorneys and staff need access to critical systems and client data outside the office. Yet, this is just the beginning. Mobility also means enabling timekeepers and fee-earners to be more effective in the workplace too.

Whether roaming the office, meeting with clients or at a working-lunch, law firms need to put mobile tools in the hands of a staff that provide the same access, features and benefits they’ve come to expect on a desktop. The notion of mobility in 2020 rests on the idea that law firm staff are not anchored or locked to a specific work station.

2)  Automation: augment headcount to drive growth.

One of the most prevalent misconceptions in professional services, including law firms, is that people are the catalyst for driving growth. Many firms are reliant on increasing the number of timekeepers in order to increase revenue.  Yet, this model is not sustainable in the long term – it’s simply too expensive and clients are clearly demanding alternatives.

Automation means improving workflow and task flow with technology.  This means standardizing manual steps and replacing human intervention with software where applicable.  For example, in a law firm, finding ways to initiate a process without someone being physically present.

3) Collaboration: breaking down the barriers to efficiency

Improving collaboration requires both the culture and tools to do it.

Collaboration doesn’t just mean cooperation between an attorney and his or her team.  As it is with mobility, that’s just the minimum standard.  Collaboration also means breaking down silos of information between practice groups and from lawyer to client and vice versa.

This level of collaboration provides transparency that is a source of motivation for collaboration, and can potentially yield new compensation models.  For example, it opens the door to jettison old models of incentives based on utilization alone. The efficiency benefits both the firm and the client.

 

Better Together, the Future of Law

Over the past few years, Aderant has aggressively developed legal specific solutions in these areas.  In this year alone we’ve rolled out a half-dozen mobile applications, built automation tools that non-technical staff can use, and have added unprecedented collaboration capabilities.

This law firm vision for 2020 is not as far away as we as an industry might think.  As we approach the future of law, and the opportunity technology affords, we are proving to the legal community that we are already thinking ahead.

Radically disruptive?  We’ll leave that question to the analysts, but you can bet we’re focused on helping law firms solve for future scenarios affecting the buyers of legal services.  There’s no mistaking, we’ll be better together.

 

Recommended Reading:

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Three Overlooked Elements in Law Firm Lateral Hiring Analysis http://www.aderant.com/blog/lateral-hiring-analysis-overlooked/ Wed, 05 Oct 2016 15:54:44 +0000 http://www.aderant.com/?post_type=blog&p=23181 The promise of lateral hiring is accelerated growth.  For that reason, hiring more laterals consistently ranks among the top law firm growth strategies. A recent study published by Robert Half Legal found that nearly a quarter of lawyers surveyed said their firms “will increase its hiring of partner- or senior-level[...]

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The promise of lateral hiring is accelerated growth.  For that reason, hiring more laterals consistently ranks among the top law firm growth strategies.

A recent study published by Robert Half Legal found that nearly a quarter of lawyers surveyed said their firms “will increase its hiring of partner- or senior-level attorneys in the next two years.”  In addition, more than half of the attorneys in the survey believe lateral hiring was “very effective” or “somewhat effective.”

The lateral hiring rationale is straightforward: convince a leading lawyer from another firm to join yours and bring their book of business.  It’s a category of growth that looks great on paper but is far more challenging to achieve in practicality.

“Inflated expectations are a sure fire way to transform an appealing plan into an expensive mistake.”

Why?  Because most laterals are either oversold or the expectations are simply not realistic.  In fact, our internal research suggests that unrealistic expectations are the biggest misstep law firms make in pursuit of laterals.  Inflated expectations are a sure fire way to transform an appealing plan into an expensive mistake.

Clients, for example, have the deciding vote in whether or not they move legal work with a lateral. At the same time, law firms are working hard to strengthen client relationships – making client accounts sticky – in order to reduce the risk of that happening.

None of this means that lateral hiring isn’t a viable strategy.  Instead, it means it is a growth strategy with inherent risks that should be addressed prior to hiring a lateral with a thorough analysis.

Here are three overlooked elements we routinely observe in the lateral hiring decision process.

1)  Ensure laterals hiring meets a strategic purpose

Wall Street dealmakers strive to avoid falling in love with a deal and for good reason.  Passion or personal interest can cloud judgment and lull business into fruitless transactions.

A similar notion is at play when law firms fixate on hiring a lateral or a group of laterals based on a gut feeling.  This only serves to increase the level of risk assumed.

A better approach is to analyze the law firm’s business and identify a clear strategic purpose for lateral hiring. Is the purpose of laterals to grow a new practice area, strengthen an existing practice area or break into a new geography?  What does the firm really want to achieve with a lateral?
2) Benchmark lateral hires performance metrics

Before hiring new laterals, a key question law firms should strive to answer is:  What is our lateral hiring track record?  In this context, past performance can be an indication of future results.

We recommend firms forensically review lateral benchmarks.  For example, did that lateral or group of laterals meet the first year objectives?

Baseline metrics include revenues, billings, production and the number of net new clients brought to the firm.  It’s important to analyze not just the working metrics of an individual attorney, but also the collections they are responsible for managing.

In addition, firms should examine how laterals continue to grow a business rather than just the book that may or may not have followed. This means, for example, looking at new matters opened, the frequency with which they are opened, and whether or not that work is shared or siloed.

Tools like Aderant Spotlight Analytics, a business intelligence application, are very useful for such quantitative analysis.  The software enables law firms to track some 200 key performance metrics in support of lateral hiring, including billing, revenue and collections.

3) Analyze the cultural fit

For all the above discussion of the quantitative, lateral analysis should also include the qualitative.  This means comparing the culture of the gaining firm and the losing firm alongside the adaptability of the individual attorney.

For example, some law firms are known for a collegial environment where others relish an “eat what you kill” culture.  The latter will likely find it is better served by hiring a rainmaker rather than a technical legal expert.  On the other hand, that technician is likely to be a better fit for a law firm seeking to fill a skill or practice area gap.

In culture, the firm size and environment are factors to consider as well.   A lawyer moving from a firm with just 20 partners to a firm with 700 partners may experience culture shock in grappling with the many systems and tools for collaborating and getting legal work done.  Likewise, an attorney in a big firm moving to a smaller firm may be surprised by the apparent lack of support systems.

This is a critical part of the analysis beyond just the “fit” because too many lateral hiring mistakes may disrupt a law firm’s existing culture.

 

Lateral Analysis is Just the First Step

A systematic analysis of lateral hiring is just the first step in executing on a plan to use laterals to drive law firm growth.  This examination focuses on thinking through the potential pitfalls in lateral hiring and building a business case for mitigating the risks.

In our conversations with law firms, we have observed the most successful lateral hiring programs also develop a clear plan for integration and support after a lateral has joined a new firm.  Law firms should develop a blueprint for how it’s going to help laterals get to where they need to go – the expectation may be for the book of business – but the ultimate goal is growth.

Note:  Don’t forget to register for our complimentary webinar series:  Analytics in Action: Lateral Hiring.  The third in the three-part series is being held on October 13, 2016 at 2:00 p.m. EDT. Recordings of the webinar will be made available – so register for notification. 

 

Recommended Reading:


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Can You Improve Your Firm’s Realization Rate? http://www.aderant.com/blog/can-you-improve-your-firms-realization-rate/ Mon, 14 Mar 2016 13:01:40 +0000 http://www.aderant.com/?post_type=blog&p=19721 A decline in your realization rate can sometimes be indicative of larger problems in your firm and, as the ABA Law Practice Magazine notes, time and effort written-off by your firm can have a number of causes. Sometimes “it represents time invested that is not well spent; in other situations, it is time that cannot be justified based on the intrinsic value of the work or the arrangement with the client. Some lawyers have to write off time due to inefficient work or poor practice methods.”

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A discussion of your firm’s billing rates, discounts or alternative fee arrangements (AFAs) can remain mostly academic, unless you take into account what portion of the time spent and fees billed that you will actually collect from your clients. The ABA Law Practice Today explained that a firm’s realization rate “reflects agreed-upon discounts from standard rates, write-downs (fee reductions taken before sending the bill) and write-offs (fee reductions after sending the bill).” More specifically, a firm’s billing realization rate reflects the percentage of time spent on a matter that is actually billed to the client. The collection realization rate is simply the percentage of billings actually collected.

A decline in your realization rate can sometimes be indicative of larger problems in your firm and, as the ABA Law Practice Magazine notes, time and effort written-off by your firm can have a number of causes. Sometimes “it represents time invested that is not well spent; in other situations, it is time that cannot be justified based on the intrinsic value of the work or the arrangement with the client. Some lawyers have to write off time due to inefficient work or poor practice methods.”

Unfortunately for most firms, time and billing realization rates have been steadily dropping. According to the 2015 Report on the State of the Legal Market from Georgetown University, billing realization fell from 93.5% to 86.7% over the ten-year period, and collected realization declined from 92.7% to 83.0%. This is the lowest collected realization rate on record, having dropped below the previous low of 83.3% recorded in Q1 and Q2 2014. To get some perspective on the magnitude of this decline, consider that the near 10% drop in collected realization means firms are losing almost $10 million for every $100 million in recorded time. (See graphic below).

Aderant Expert

Source: 2015 Report on the State of the Legal Market, Georgetown Law

The significant decline in realization rates has increased the need for firms to improve their processes for billings, discounts, and of course, collections. A recent post from CNB News and Insights suggested that firms closely examine three aspects of their practice to improve their realization rate:

  1. Firms should create clear policies and procedures for write-downs and require their lawyers to explain the reasons for doing so in writing.
  2. Firms should improve timekeeping procedures and consider technology applications that specialize in “making it easier for attorneys to track their time accurately.”
  3. Firms should follow best-practices in their collections. This includes being prompt with billings, tracking all past-due accounts with detailed aging reports, regularly contacting late-paying clients, being aggressive when necessary and constantly reinforcing value to your clients.

The key to higher billing and collection realization rates for your firm is communication. Be sure to communicate write-down policies to your lawyers and staff, and provide adequate training for these situations. You also need systems that clearly track time and billing information and communicate that to your users.

Perhaps most importantly, communicate with your clients. Pursue slow or late payers persistently and methodically, but continue to emphasize the value you provide to them. Realization rates may be dropping across the legal industry, but they can increase at your firm by implementing a few strategic policies and practices.

Join the discussion on LinkedIn or Twitter @Aderant and let us know what you think!

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Is Now the Time to Think about Your Firm Metrics? http://www.aderant.com/blog/time-to-think-about-your-firm-metrics/ Thu, 14 Jan 2016 19:57:44 +0000 http://www.aderant.com/?post_type=blog&p=18461 Over the years, law firms have used the same metrics to measure their success or failure, most (if not all) of which are internal facing.

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Over the years, law firms have used the same metrics to measure their success or failure, most (if not all) of which are internal facing. With the changes we are now seeing in the legal market itself, one has to ask a couple questions:

  1. Are these metrics still relevant?
  2. If so, are these the only metrics we should be using to measure our firms success?
  3. Should these metrics be used as a basis for remuneration?

Following on from the recent Aderant white paper, titled Your Partner Compensation Can Be Better: Here’s How, let’s think about what many firms are measuring and whether this is conducive to servicing clients in the best way possible.

What do our clients want? If the customer is king, we need to be considering what our clients are asking for. Accepting George Beaton’s premise that the legal market has reached a state of maturity and is now driven by the consumer rather than the provider, we must consider the “What” clients are looking for when we measure our firm’s performance.

The recent IADC Inside/Outside Counsel Relationship Survey 2015 tells us that Corporate Counsel requires the following general requirements for Outside Counsel:

  1. Value billing, fixed or capped fees for projects or project components
  2. Discounted fees in exchange for volume of work
  3. Submit detailed budgets
  4. Submit strategic or financial plans
  5. Knowledge management software, AI to reduce cost
  6. Fixed budgets for each project
  7. Legal project management systems or tools

Common across all of these requirements is controlling matter spend and making law firms accountable for the time and value of a matter. Ultimately, the Corporate Counsel is responsible to their board for their legal spend and expect the law firm to be equally accountable. Fail to note this at your peril!

Based on this, surely at least part of our metrics should be based on how we are performing against our budgets and the ability to keep to budgets should be incorporated into our firm health metrics and also into our remunerations.

Why include such metrics in remuneration? If a metric has no impact upon the ultimate income of a partner, it will never be attributed the level of importance it truly requires and will not be acted upon.

I would suggest that it is time to change our measures to truly consider the client and incorporate metrics into our remuneration process to emphasise the importance of the client to our business. Taking this step will be changing our processes to truly put the client first, and will show law firms taking the first steps in redefining their practice to the new paradigm of client-centric business processes.

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