To Move The Legal Industry

When I was general counsel of a Fortune 1000 company, we started looking for a new firm to handle our trademark work. It was an important part of our portfolio absorbing a significant part of our legal budget and we wanted a firm that would bring new ideas to us on how to manage it. The search took us over a year. Each firm we would talk to presented us with the same, tired story. They touted how many marks they handled, the credentials of their lawyers, and other miscellaneous facts. But, when it came down to what each firm did, you could not tell one firm from the other. Remove firm names from the marketing materials and they all sounded the same.

Finally, we found one firm that brought a different approach to the table. That firm talked in data and metrics. It talked about processes and process improvement. It brought us new ideas about handling our portfolio and it was willing to work with us on continuous improvement. We selected that firm for our portfolio, but that was just the start of the story.

We had to negotiate a fee arrangement. Again, we wanted to do things differently. We did not want to have a “bill by the hour” fee structure. We wanted incentives to improve built into the arrangement and we wanted to share the risk of mismanagement with the firm. We decided to do one other thing — we shared our negotiations real-time with the legal world. Each week, one of the lead lawyers on the account at the firm and I posted our views about a negotiating point on a blog hosted by the Association of Corporate Counsel. Anyone could read along as we discussed how to structure our fee arrangements. We did not share numbers, but we did share our philosophies, concerns, challenges, and some key percentages. Eventually, we reached a deal (which was publicized, again without the dollar amounts).

The players were Wolverine World Wide, Inc. and Seyfarth Shaw LLP. Having the negotiation in full view of the world was a bit risky for both of us. We did not know where the negotiations would go or what challenges we would encounter along the way. But, the benefits outweighed the possible downsides. When we thought about it, the risks amounted to public “failures” from which we both would learn. Neither party would be seriously harmed by failure if there was one and we both might benefit from the insights of others.

All of these are valid explanations for why lawyers may be reluctant to share stories backed with data. But, in my view, they are weak excuses.

Secrecy. Every company outside the legal industry is in a fiercely competitive industry. And yet, those companies share much of what they are doing. In many of the most competitive industries, sharing your work is a badge of “good citizenship” in the industry. As in the Wolverine/Seyfarth story, you may hold back some details (the dollar amounts) that are sensitive competitive information. But, sharing the process, the challenges, and the means to overcome those challenges marks you as a leader. Companies in industries as diverse as pharmaceuticals, technology, energy, insurance, and retail routinely share their efforts to improve. Indeed, tech companies have learned they must let their gurus publish or they will go elsewhere. On the academic side (outside the law), professors and students must publish or perish. Their research presentations are not just to inform, but to test their theories in the marketplace. Industries do not move forward, and individual players do not excel, when they hold back. No one is asking law firms to tell their client’s secrets. But sharing stories (with data) about implementing processes, project management, and even pricing helps everyone, including the party sharing.

Perfectionist. Lawyers may view themselves as perfectionists, but the data suggests they are far from that goal. Spoiler alert: no one achieves perfection. A new process that is installed 100% as planned is defective from day one. A project management plan is flawed from the start, no matter how much time was spent ironing out the details. This is not because we are all failures, it is because anything we do is subject to improvement. We simply decide at some point the value of going ahead with what we have done is greater than the value of waiting for more improvement. In lean thinking, we recognized and embrace this concept. Five percent improvement every day is much better than waiting three months for “perfect,” because we never get to perfect. Daily 5% improvements compound. It is far better to find out areas where you can improve or change during the process, than wait to the end and find out you can no longer make the changes (or only do so at great cost).

Objectivity. The brutal truth comes out: much of what lawyers do can be judged objectively. Let’s take on a controversial topic: Can we objectively measure the quality of a legal brief? In some ways, we can. Does the brief have typos? Does the brief cite cases that support the propositions in the brief? These are factors that we can reduce to numbers and use to “score” a brief. What about things like “quality of legal arguments,” “style,” or “persuasive value”? These may be more difficult to objectively value. Was Hemingway a great writer or a hack? Was Emerson insightful or a misguided dreamer? Scholars have argued these points for years and most would agree there is no absolute right or wrong answer. So, to a certain extent, getting into an argument over whether Scalia wrote better opinions than Holmes is something we can’t resolve. But that does not negate the value of being objective where we can. We can use objective measures to inform our decisions about quality. As we move forward in the 21st century, this practice of combining data with judgment will become more prevalent, so it would help lawyers to get used to it now.

Incomplete. Wait until the sausage is made and do not let anyone see the messy process as you make it. This may be the argument that lawyers use that does the most damage to our attempts to improve. Attempting change always is messy. But by sharing that messiness, we learn from the insights and experience of others. Elon Musk publicizes every attempt to land parts of his rockets on platforms in the ocean. Some succeed and some fail. His failures are expensive and messy, and one could argue that in this industry showing video of a $6 million rocket part crashing into the ocean is bad for business. But the opposite is true. People recognize he is trying to do something audacious. He is pushing the boundaries and that deserves our admiration. Lawyers who push forward with new ways to deliver legal services more efficiently, with better quality, and more timely, risk far less than Musk. If you do have a spectacular failure, then you can choose whether to share it. But, for ordinary failures and successes, you will do more to burnish your reputation if you share them with the world. Innovation may be messy, but it is valuable for all to learn from.

Technologists Moving Past Lawyers

While the legal industry has been around for centuries, in many ways it is an immature industry. This immaturity was quaint and profitable for many years. But, that time has passed. Instead of “quaint and profitable,” today that immaturity drives “backward and wasteful”. In a highly competitive, fast-moving world, no industry can afford to hope that its customers — and here I mean the real customers, not in-house lawyers — will sit still for slow progress.

Technologists are already moving past lawyers and taking over part of the industry. Some argue that lawyers have lost control of the future of law and that technologists now have the upper hand. The number of discussions about turning governance, legislating, dispute resolution, and other functions over to computers or individuals augmented by computers increase every year. Left out of most of these discussions are lawyers. Many no longer see the law as something requiring a legal degree to do. Whether lawyers agree or disagree with that view becomes irrelevant. If lawyers cannot keep up with what society wants, then society will move to fill the demand and leave lawyers at the side of the road.

To change course, the legal industry must recognize that progress requires sharing, collaboration, and a willingness to talk about failures as well as successes. Law companies are working with clients on an improved way to proved legal services. These new arrangements are reminiscent of the early days of outsourcing by computer and human resource departments. Some of the arrangements will work spectacularly and some will run into problems. But it is those failures as well as successes that will move the industry forward — if clients let them share. Clients who hold back and try to cover up either the successes or failures harm themselves and the rest of us and slowly kill off any advantage the legal industry still has over competitors.

Academics need to join in these discussions with the law companies and the clients. Just as in other industries, academics can bring the depth of analysis, perspective, and other skills to successes and failures that practitioners do not have the time or inclination to do. Indeed, the Harvard Business Review and Harvard case studies have been built on the idea that successes and failures should be studied and shared.

Sharing is a sign of maturity, strength, and leadership. We already have a few firms and companies in the legal industry who share what they do. Rather than suffer from their sharing, they have become the firms and companies we look to for leadership in our industry. We need more — many more — who are willing to take on the leadership role.

Most lawyers still view competition in the legal industry in a narrow sense. It is firm against a firm or perhaps firm against disrupters (usually technology-focused companies). They miss the larger picture of what is going on in the world and therefore miss the real competitive threat. In her book, The Signals Are Talking, Amy Webb, a professor at the NYU Stern School of Business and a quantitative futurist, talks about 10 dimensions with technology as the “primary connector” that we should watch to determine future trends. Those 10 are wealth distribution, education, government, politics, public health, demography, economy, environment, journalism, and media. I doubt most lawyers look beyond one or two of those dimensions when thinking about trends in the legal industry. That failure to look broadly is what has led lawyers to misdiagnose threats to the industry.

For lawyers, law firms, law departments, and law companies, sharing will become increasingly important if they want to capture the impact of those 10 dimensions on what they are doing. Using data to analyze objectively the impact of changes will become not just a “nice thing” but a “necessary thing”. So I go back to the position I articulated in my prior post on meetups, hackathons, and conferences. We need to move past the PR stage and aggressively pursue sharing hard realities backed by substance. The few examples of sharing today pale in comparison to the hundreds upon hundreds of examples where sharing is non-existent.