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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.
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
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
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
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
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,
Inquiring Leaders Want To
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
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
Read my entire article as
posted on LinkedIn
Rant #702 – Tuesday, May 13,
Best Practices Aren’t Always
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
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
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:
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).
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
Best Practices For Leadership
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
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
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
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
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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