Firm Leadership

Rants, Raves, Rebuttals, Reflections, Revelations & Ruminations

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Post #707 – Sunday, June 15, 2014

Banking Industry Disruption

It’s bad enough when law firms are facing major disruption throughout the profession but when one of their most lucrative client sectors is also going through unprecedented upheavals it does not make future demand for legal services look promising.

At a recent high-level New York conference on the future of finance the news was grim for the world’s banking community.  According to industry soothsayers there is a steadily downward forecast for employment and profits in the banking sector.  Ric Edelman, CEO of Edelman Financial, manager of $13 billion investment fund, predicted that most advisors will be out of business in five to 10 years.

In the legal profession today, more legal apps are being made available to consumers and small businesses.  One example is Shake, an app for creating legal contracts on the fly from your phone.  You answer a few simple questions, the contract is compiled, you can review it and sign right on the phone, then hand your phone to the other party to sign, or email it to them.  Simple consumer level document automation in your pocket, resulting in legally binding agreements.

Concurrently, innovative tech startups are popping up to offer the same services as traditional banking for a fraction of the price.  Cellphones are becoming the banks, wallets and credit cards of the world.  One commentator explained how she paid a consultant on the other side of the globe by simply writing a check, photographing it on her cellphone and emailing it to the consultant’s email address.  The consultant then took the image and with a simple app on her mobile was able to cash the check without problem.  Banking can be delivered by cellphone instantaneously and accounts cleared in minutes, not days.

With traditional banking, slow clearance provides huge profits as institutions earn profit as they hold your money. One commentator explained, “in 2013, US banks made $32 billion on overdrafts, more than is invested into breast or lung cancer.”

Meanwhile startups are attacking the credit card business model.  One interesting disruptor is Dwolla who charges 25 cents per transaction and no fee to those who spend less than $10 – compared to the 2.5% that companies charge merchants per transaction.  In but a few months Dwolla has attracted 35,000 merchants and 500,000 consumers who can open an account by providing a simple piece of identification like a driver’s licence.

Post #706 – Sunday, June 1, 2014

The Hurdles To Initiating Change

Firms are navigating a tough financial climate, suppressed growth rates, and declining demand. Whatever kind of economist-speak you prefer, there’s no getting around the fact that now is a scary time to be a firm leader. Whether you choose to call it the digital age, the knowledge economy, or even “the New Normal,” it seems clear that we are in the throws of an economic revolution as profound as that which gave birth to our modern times.

Wherever you look within the professions, you will see two kinds of firms: laggards who have fallen behind the change curve, and challengers who are in front of the curve or at least at the leading edge of it. The laggards fail to see the future coming. They fall out of the driver’s seat. They cede the role to somebody else and then fight to catch up.

There are reasons, if not excuses, for many firms not to take action. From their early days in school, professionals were rewarded for success and still are today, based on their ability to look backward in history – to find precedent, to find the experience-based rule that will control the adjudication of the situation at hand. The need for change is not welcomed and the more dramatic the change required, the more acute the resistance from nostalgic past-worshippers. In order to take decisive action, most firms have some acute change hurdles to overcome – hurdles I have come to label: denial, perfectionism, precedent, competence, and agility. 

Read my entire article as posted on LinkedIn

Post #705 – Wednesday, May 28, 2014

Join Me Next Week In New York

Come join practice leaders from Clark Hill, Ogletree Deakins, O’Melveny & Myers, Proskauer Rose, Robins Kaplan, Wilson Elser and others at my Ark workshop entitled: Firing On All Cylinders.

This is an intensive full-day workshop for Practice Group Leaders – June 4th at the AMA Executive Conference Center (1601 Broadway).  Registration and agenda specifics can be found on the Ark website.

It promises to be a highly productive day.

Post #704 – Wednesday, May 28, 2014

What is Your Firm’s Business Model?

This is a comment from Jeff Carr.  Jeff is Vice President, General Counsel and Secretary of FMC Technologies Inc.  I think his thoughts here are worth reflecting on:

“Let me take a minute of your time to describe the market from my perspective (that of the true customer).  The true gist is:

• “Big Law” or “Old Law” (aka a traditional law firm) is not in the business of solving legal problems – it is in the business of billing hours to solve legal problems.

• “New Law” (e.g., LPO’s, Axiom, Huron, etc.) is in the business of billing lower cost hours to solve legal problems.

• “Enlightened Law” (e.g., Riverview, Valorem, etc) is in the business of solving legal problems effectively and efficiently.

• “Next Law” is the business of preventing legal problems from ever arising.

In-house counsel teams are uniquely situated to understand and deliver on the prevention focus – precisely because that’s what a high performance legal team does.  The problem is that most in-house teams are just as risk-averse as outside counsel and generally overwhelmed with reactive work. As such, I think very few are actually focused on my vision of Next Law.  The most interesting thing about Next Law is that it co-exists with Big, Old and New Law – as providers for reactive services when legal problems do arise – but the focus of Next Law is on prevention and proactive law and therefore cost reduction by limiting the incidents giving rise to the need for the high cost remedial and reactive legal services.  We’ll never eliminate fires and as such will always need firefighters – but we can drastically reduce fire incidents and therefore leverage the costs over fewer incidents.  The truly interesting thing is that I believe that large segments of the legal market are going un-served today precisely because the cost of delivery of legal services is prohibitively high.  Many small and mid-size companies “go naked” and then when they are embroiled in a legal issue, they have no recourse but to react – and that means even higher costs.

If you wonder whether I have any basis for these views, let me draw your attention to our track record from the time of our spin-off from FMC Corp in 2001 until now: 2001 — $1.8B sales, $14.8 total legal spend; 2013 — $7.5B sales, $9.8M total legal spend — and 7% average bonus to legal service providers.

Unless you change how you provide legal services, you can’t get metrics like those below in a world where law firm rates go up 10% a year, my internal costs go up 5%-8% annually, the company has tripled in size, the regulatory burden has grown significantly – while at the same time paying your law firms more than they bill you!

Via la (R)evolution! I use that phrase because the legal industry fights change and innovation at every turn – That said, whether Revolution, Evolution or Foreverlution, I believe the tipping point has been reached – it’s just that many of the players don’t see, or don’t want to see the comet coming.”

What do you think?

Rant #703 – Tuesday May 13, 2014

Inquiring Leaders Want To Know

As the story goes, it was a warm spring day in Princeton, New Jersey.  One Albert Einstein, who was then working at the Center For Advanced Studies, was found hands clasped behind his back, pacing back and forth, mumbling to himself incoherently.  A bystander, curious to discover what it was that Dr. Einstein was so obsessed with, moved discreetly to within hearing range.  Lost in thought, Einstein continued to repeat, “If I only had the right question . . . If I only had the right question . . . ”  To this great thinker, the journey to understanding began not with solutions, but with questions.

Today, our preoccupation with finding answers must not obscure the importance of asking the right questions.  In fact, average answers to good questions, more often than not, yield better insights than astounding answers to lousy questions.

Here are ten questions to clear out the cobwebs, jump-start your creative thinking, tickle the brain, and hopefully, get you energized to take action.

Read my entire article as posted on LinkedIn

Rant #702 – Tuesday, May 13, 2014

Best Practices Aren’t Always Best

I was taken back the other day by an article wherein the author, a law firm consultant, was promoting the concept of best practices.  His proposition was that “the attaining of best practice can lead to a competitive advantage in which true excellence becomes a winning competitive formula.”  It all sounded so compelling.  He then suggested that professional service firms should engage (obviously with this particular consultant) in a 'best practice make-over' to concentrate on getting your firm to an improved operational state.  Doing a bit of research, I discovered that this idea probably had its origins in a book entitled, “How to renovate your business: the information best practice makeover that really works.”  So get ready for it.  Here comes the newest consulting trend, best practice makeovers!

These days you hear a lot about the quest for best practices in all areas.  I have a biased view in that I think “best practices” is one of today’s most overused terms.  Anyone discussing what needs to be done to improve some given situation will often use the term, as though to justify the safety in taking action.  So, what is it about the term, ‘best practices’ that makes it sound so persuasive, and yet why don’t they always seem to work as well as some are suggesting?

I’ve had a few questions come to mind over the years that I believe are worth considering . . .

Read my entire article as posted on LinkedIn.

Post #701 – Tuesday, April 15, 2014

The Spring 2014 Issue of International Review is Now Available

International Review is my 24-page glossy, printed magazine distributed to over 1600 law firm chairs and managing partners throughout North America.  The articles in this issue include The Seeds of Competitive Disruption which identifies 20 different US-based competitors that are growing and that your partners should be aware of.  Part of the job of every firm leader is to neutralize complacency and so I’m hoping that this article might be worth you passing around.

In our First 100 Days program (see: we introduce new firm leaders to the monumental task of taking the reins of leading their firms.  Firm Leadership Is Not For Wimps! is an attempt to identify eight of the more challenging truths to being an effective firm leader, and I’m grateful to those who have provided valuable input into this piece (you know who you are – and thank you).

Finally, Six Factors That Can impede Effective Firm Leader-COO Relationships had it’s origins in a Webinar that I was privileged to conduct with John Michalik, retired executive director of the international Association of Legal Administrators; while A Novel Approach To Compensation grew out of an innovative ThinkTank event that I participated in earlier this year, and Are You Getting The Minutes From Practice Group Meetings? is a prescriptive article for every firm leader who has an interest in knowing what their practice groups are really doing.

As always, I sincerely hope that you find some practical ideas, tips and techniques here that you can put to use immediately.  Please send me your observations, critiques, comments and suggestions with respect to any of these articles.

Click on the Cover to download your complimentary PDF copy of the magazine. 

Post #700 – Wednesday, April 9, 2014

Best Practices For Leadership Succession

Drawing on lessons from Robert Dell of Latham and Vincent Cino of Jackson Lewis, I had the privilege to co-author this column in Forbes discussing best practices for leadership succession in law firms.

In it we identified the six steps to take if you are the retiring firm leader and the five actions appropriate to the incoming firm leader.

Post #699 – Tuesday, April 1, 2014

To Be A Better Version Of Yourself

I spotted a great article authored by Marshall Goldsmith.  Marshall and I both had contributions included in a book published a few years back, entitled In The Company of Leaders.  In this piece, Marshall was talking about how difficult it can be sometimes when you are trying to coach someone who is resistant. 

A very wise leader once told me that being coached is about being open to all possibilities.  It is about being challenged “to be a better version of yourself.”  It follows that one might ask, how do you know when someone is coachable or not? 

The harsh truth is that maybe this particular lawyer is coachable, but just not coachable by you!  That is to say, it’s not the coaching we resist.  We are simply very discerning about who we will welcome into something as profoundly personal as coaching.  When someone is attempting to coach us we are usually thinking:

Does this person truly care about me, my career, my challenges or are they going through the motions simply because . . . it is part of their job description?

Can I trust this individual to be candid with me but also empathetic to the situation or circustances that I am dealing with?

Can this indicidual serve as a good, objective sounding board and does this individual have some valuable guidance to offer me?

Read my entire article as posted on LinkedIn

Post #698 – Tuesday, April 1, 2014

Scenarios For Economic Destruction

My economist buddy sent me an e-mail yesterday posing an interesting economic scenario . . . as a retaliation for US sanctions on Russia in the wake of the invasion of Ukraine, Russia responds like this: Hackers attack the New York Stock Exchange and force it to close indefinitely; the Russian government dumps its billions of US Treasuries in the open market, causing interest rates to rise and crashing the US real estate market. The banks go into turmoil as people panic and withdraw their money.  It would be a Russian strike on the US, without firing a shot.

That was a scenario hedge fund manager, economist and author Jim Rickards painted on the new era of financial warfare in a speech he delivered to a gathering of economists yesterday.  And if you think the Russian scenario is far-fetched, Rickards pointed out that the US effectively did something similar for real in Iran.  It was only a few years ago that the US government shut Iran out of the US dollar payments system.  This was in response to Iran's nuclear program.

The thrust of Rickards speech was whether the US dollar will survive in its role as the reserve currency of the world and hold the current system in place.  It doesn't take too much guesswork from the subtitle of his new book The Death of Money: The Coming Collapse of the International Monetary System to see where he stands on that front.  Rickards made the point that a major pillar of support for the US dollar is on wonky foundations: the Saudi-US alliance.  The deal's been simple for over forty years.  The Saudis sell oil in US dollars only.  The US provides protection and security to the House of Saud.  This deal was brokered between Henry Kissinger and the Saudi royalty in the 1970's.  But Rickards argues that the Obama administration has moved to appoint Iran as the regional hegemon, and this is regarded as a stab in the back by the Saudis, who may now move to align with Russia and China.

Also, as best selling author of Currency Wars, Rickards is now speaking bluntly about what he has labelled as the coming World War D.  The D actually stands for two things.  The first is Devaluation.

The first cannon in this war fired on September 27, 2010.  On that day Brazilian Finance Minister Guido Mantega became the first world leader to use the words ‘currency war’.  What did he mean?  Simply that countries are now using a variety of means to devalue their currencies.  They’re not doing it just for fun.  They’re doing it to try and make their exports more attractive and to bolster their ailing economies.  Think of it as something akin to a retail war.  One shopping chain tries to ‘out-discount’ another.  And it’s a race to the bottom.

It’s called currency devaluation.  And everyone’s doing it — Argentina, Brazil, Venezuela, South Africa, Turkey, Ukraine, Canada, China.  And, of course, America.  I know this is not a breaking headline.  ‘Currency War’ has been in the news-cycle for several years now.  What HASN’T been talked about is where national governments are taking us with this tactic.

The second D stands for Global Debt and to get what that means, you have a have a look at this extraordinary chart:


The blue line on the chart shows the total size of the global debt securities market (basically global government debt).  It has now hit ONE HUNDRED TRILLION DOLLARS, according to the Swiss-based Bank for International Settlements (BIS).  That mammoth debt pile is now 140% the size of global economy.  In 2007 it was 70%. It’s doubled.  Now let’s just admit the obvious right now: it’s impossible to grow out of that kind of debt.  Not gonna happen!  Nor will governments solve this problem by ignoring it, which is what they’re doing now.

I am posting this on April 1st, but must assure you that this is no April Fools joke.  This all could proffer serious consequences – most of which I don’t even fathom.  But I will be following this carefully.

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