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Merry Christmas & Happy New Year
Setting aside important religious implications, the visions of decorated trees, gift giving and tasty treats . . .
Christmas is all about family and being together with them. Our memories go back to our parents, our brothers and sisters and our grandparents – some of whom are with us and some who are not. It is those memories of things past and now lost, that helps us appreciate the joy of the present.
Please take the time to share joy with whomever you care about.
Have a fabulous Holiday Season with a safe, joyous New Year’s Celebration.
Post #440 – Thursday, December 17, 2009
The Emergence of Continuous Strategy Reviews
As I’m currently engaged in a number of strategy reviews with client firms, the question that I’m being asked is whether we are not now at a point where law firms should be engaging in a continual strategy review process – and the answer is a most definite YES!
In a recent poll, firms were asked how often they are updating their strategic plans:
29 percent review their plans once a year;
12 percent review their planes twice a year; and
18 percent review their plans four times a year;
The trend is clear - more regular updates are becoming more common.
Another 12 percent claim to review their plans almost continually;
While 12 percent responded that they conduct reviews whenever it seemed appropriate.
For More Information
Post #439 - Thursday, December 17, 2009
New Alternative Fees Forum Planned For March
I'm pleased to have been asked to present at a new one-day forum entitled: Alternative Fee Arrangements - From Theory to Practice. This event promises to move the discussions around alternative fees from why . . . to HOW!
In fact, this forum is designed to help participants:
• Cultivate a value-focused legal delivery system centered on the true meaning of partnership between law firm and client — sharing in both risk and reward
• Manage risk in experimenting with other fee arrangements by achieving cost-certainty yourself before offering cost-certainty to your clients
• Realize a compensation system built upon the longevity of partners and an open dialogue at the firm — rather than reliance on billable hours
• Approach alternative fees head-on—confronting the key elements that have structurally compromised the modern law firm
• Navigate engagement project stages delivering high client value with controlled costs that maintain firm profitability
• Understand how the experience / results model for quality and efficiency links to superior recruitment, training, mentoring, advancement and retention of talent
• Define value while fostering relationships that reward service
WHEN: March 10 at the AMA Executive Conference Center in New York City
FEATURING: Fred Bartlit - Bartlit Beck; James Bender - GC at The Williams Companies; Pat Lamb - Valorem; Steven Levy - Lexician; JL Novak - Asst GC at AOL; Ed Reeser; John Riccione - Aronberg Goldeghn; Michael Roberts - Shook Hardy; and yours truly.
Please have a look at the program and plan to join us
Post #438 – Thursday, December 17, 2009
A Quote For The Coming Year
"Men make history, and not the other way around.
In periods where there is no leadership, society stands still.
Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better."
Post #437 – Sunday, December 13, 2009
A New Survey on Alternative Fees
Following from a wonderful breakfast meeting I had last week with Jim Hassett, I received a bound copy of Jim’s 140-page research report on Alternative Fees. Having co-authored a few articles recently about this subject, I was eager to see what Jim had developed . . . and I must admit, I am impressed.
The LegalBizDev Survey of Alternative Fees is based on Jim conducting in-depth interviews with the chairmen, senior partners and C-level executives at 37 of the largest US law firms about their past use and future plans for alternative fees. Jim conducted interviews with nine chairmen and managing partners, 16 executives (including CEOs, CFOs and CMOs) and 22 senior partners, many of whom head their firm’s alternative fee committee.
Jim’s interviews revealed that:
1. Last year, the 100 largest law firms in the US generated approximately $7 billion in revenue from alternative fee arrangements.
2. Every single participant said that the use of alternative fees will go up, but there were dramatic disagreements about how much.
3. When different firms say they are offering alternative fees, they may in fact have radically different business models and offer totally different types of deals.
4. There are nine types of billing arrangements that are most commonly used: risk collars, fee caps, fixed fees for a single engagement, fixed fee menus, portfolio fixed fees, retainers, success fees, holdbacks and full contingencies. These terms are defined in the complete report, along with advice on when and how to use each fee structure.
This report concludes with a section on “How to prepare for an uncertain future,” highlighting key decisions law firms and in-house law departments must make in order to succeed in today’s increasingly competitive environment.
Many lawyers are gradually coming to agree with one participant in this survey, who said: I’ve heard for years about the impending demise of the billable hour. Now, for the first time, I believe it is going to change.
This is an important subject and Jim has compiled some important research. The LegalBizDev Survey of Alternative Fees is $395 per copy (with volume discounts available) and may be purchased online at www.legalbizdev.com/survey or by calling 800.498.7246.
Post #436 – Sunday, December 13, 2009
An Innovative Approach To Managing Through The Recession
Having spent some time working in Europe recently I was struck by the approach taken by two UK managing partners in weathering the recession.
‘How you approach a recession is significantly reflective of your own view of recession’, claimed Peter Martyr, the chief executive of London-headquartered international firm Norton Rose. ‘If you haven’t experienced one before, it’s all too easy to become spooked by events and what’s going on around you. To survive, you need to have confidence, and a deep understanding of your own organization and where its strengths and weaknesses really are.’
Norton Rose chose to ask staff to vote for a flexible working scheme. Their scheme contemplated allowing staff to either work four days a week on 85% of base salary, or take a sabbatical of 4 to 12 weeks at 30% of salary. 96% voted in favor of the plan (partners included). Martyr says: ‘If the recession lasts two years, the overall cost to us of the flexible working program will be neutral, but the social impact will not be neutral. We will have maintained a highly loyal and motivated group that are respectful of what we have done and think we have behaved decently.’
Norton Rose hopes to emerge stronger from the recession as a result, and is not the only firm with ambitious and optimistic intentions.
Another large, London-headquartered firm, Simmons & Simmons, was facing a similar quandary in relation to its trainees. Managing partner Mark Dawkins admited that managing the pipeline of future trainees was becoming challenging, because decisions on recruits have to be made three or four years in advance of their arrival. He saw rival firms asking trainees not to turn up, and in many cases paying them a lump sum to defer their start dates.
To preserve their pipeline of talent the firm decided to develop an MBA program focused on legal services (in conjunction with BPP College of Professional Studies) to occupy trainees for a year and give both sides a tangible benefit. ‘We thought rather than just flinging cash at people and saying go and have a nice time for six months, we could do something more constructive’, says Dawkins. ‘The trainees get a benefit, and have a real MBA at the end of it, and we will get trainees who can hit the ground running, understanding what the law firm does and what our clients need.’
The course is optional, but out of a total of 55 trainees that were due to start in September 2009 and March 2010, 29 have chosen to sign up. As well as having their course fees paid by Simmons, the students receive a £15,000 maintenance grant to cover living costs.
Post # 435 – Thursday, December 10, 2009
Are You Interested In The Asian Legal Market?
There is now a new LinkedIn group, started last week by my good friend and colleague Robert Sawhney, specifically created for those interested in making valuable contacts and learning more about the Asian legal market.
This group's profile is defined as: A group for law firm partners, executives and other legal professionals from North America and Europe that are interested in learning about the legal markets in Asia. The group will provide news and insight into the increasing business opportunities for law firms from the West interested in Asia.
If you are at a law firm who is interested in exploring the vast array of opportunities in the Asian market, may I suggest that you join this group and participate in the discussions that are going on there now.
Post #434 – Thursday, December 10, 2009
This Storm Is Not Over
I just received an e-mail from my economist friend who helps me interpret and understand what might be going on out there in the ‘new normal’ that we are all experiencing. According to Eric, he tells me that . . .
If the credit crisis is genuinely over and the economy is genuinely on the mend, someone forgot to notify Capital One Financial, one of America's largest issuers of consumer credit. Yesterday afternoon, at the Goldman Sachs US Financial Services Conference in New York City, Capital One's Chairman and CEO, Richard D. Fairbank, wowed the crowd with a dizzying collection of grim assessments and forecasts. In no particular order, Fairbank observed:
• The storm is not over and we continue to face several significant risks.
• With respect to commercial real estate, I believe we cannot see line of sight to the peak yet. I kind of feel it's going to get worse before it's better. (See my post #427 on November 17th)
• The housing market remains severely dislocated.
Fairbank placed this last observation in the context of an economy that is still wobbling on its feet and unable to generate employment growth.
"Despite last week's modest improvement [in the jobs report]," he observed, "the average time to find a new job remains very high, a sign that the job market is more frozen than in past recessions. Similar to labor markets, the housing sector remains severely dislocated, despite some signs of stabilizing home prices. There is a growing backlog of foreclosures. Inventories of homes in foreclosure or with severely delinquent mortgages are increasing. This is likely to put downward pressure on home prices as the foreclosure inventory hits the market. Continued weakness in housing puts pressure on the broader economy and makes any emerging recovery fragile. And some of the apparent improvements in the economy may not be sustainable. As government stimulus programs like Cash for Clunkers, first-time home buyer tax credits and other direct cash payments to consumers may have only fleeting effects."
During his presentation, Fairbank also sprinkled in a few dashes of optimism about Capital One's ability to "weather the storm." But apparently other company insiders have not shown the same optimism. Ryan Schneider, President of the Card division, sold 31,848 shares of COF during the last four months, and just announced his intention to sell another 84,518 shares. All totaled, these sales would represent more than half his holdings. Over in the accounting department, the CFO just sold $2.3 million worth of COF stock, or about one quarter of his holdings. NEWS FLASH: as a rule of thumb, insiders do not sell when they believe their companies stock will be going UP.
Post #433 – Wednesday, December 2, 2009
Raising The Bar On Transparency
While I have personally admired (for over five years now) the advances in client transparency provided by a couple of forward-thinking UK-based law firms (and find nothing yet comparable in North America), I am now intrigued to report that Mallesons‘ (Australian Law Firm of the Year for the past four consecutive years) has a new client service tool that raises this bar.
Mallesons Connect is an extranet that provides clients with an unimpeded view showing how Mallesons is working rather than just what Mallesons has done. This system provides information via a direct feed from the firm’s various systems that clearly shows:
• Finances - project estimates, what fees have been incurred to date, aged invoices, etc.
(Work in progress information is an optional feature that is provided as a composite rather than in detail. Clients understand that the financial information is indicative rather than final, and is intended to help avoid surprises.)
• Projects - real-time status of projects and resource availability.
• Personnel - a directory of all Mallesons personnel working on projects for a particular client.
(The directory is tailored for each client to show the personnel organized in a manner that reflects that client’s business units rather than Mallesons’ internal organization)
• Current awareness information - news feeds, client alerts, etc.
• Deal rooms and Data rooms.
• E-mail - a complete real-time collection of all e-mail exchanged between the client and the firm.
(Imagine – your clients can see an organized real-time collection of firm correspondence)
Apparently Mallesons monitors client usage of the service very closely and then adapts the tool to suit each client particular needs. As a result, Mallesons will know, before anyone else, exactly what clients want and will be able to provide it while other firms are debating the merits of increased transparency.
Rumour has it that Mallesons put an extraordinary level of transparency into the process of developing the tool itself. They created a prototype and took it to their clients, only to discover that it wasn’t what their clients wanted. Rather than retreating, they worked closely with clients to develop a tool that met client's needs. This is probably a departure from the way most law firm techies are used to working. And, it will require a change in the way lawyers have come to view the process of developing practice support tools.
Stepping back from the detail, the key to making this work politically within a law firm is probably to start by providing non-controversial information such as prior invoices, completed and current work product, and e-mail the client has already seen. Once this is automated and functioning well, you and your client can then begin to think about what other information would be useful to make your relationship more effective and to help both of you manage the work. Taken from this perspective, it’s a win-win situation.
Here’s MY PREDICTION for 2010: A number of US law firms may yet see the competitive advantages available to them and considering entering this brave new world of enhanced transparency.
Post #432 – Tuesday, December 1, 2009
Are You Ready For The Future?
My friends, George and Margaret Beaton in Australia, have just produced a fabulous 3-minute video on the changes impacting the legal profession that is worth you having a look – here.
Some of the highlights include:
• The US legal profession is worth close to $200 Billion
• The US has 5 times as many lawyers as India
• LPO professionals in India earn about $6000 US annally
• During the past 3 years, the legal outsourcing industry in India has grown 60% annually
• The India market for outsourced legal work is approaching $200 Billion
• In the US, the LPO industry grew 495% in 2009
• As yet, only 2% of General Counsel’s outsource offshore
• By 2040 India and China will have over 5000 firms, each with more than 100 lawyers . . .
and over 100 million lawyers!!!
ARE YOU READY?
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