Wednesday, September 25, 2013
Somehow I missed this interesting Bloomberg Law interview of Mark Harris, CEO of Axiom Law. Anyone interested in the future of the legal industry ought to be watching and listening to Mark. Why? Because his company -- which now grosses north of $150 million per year -- has the ear and the pocketbook attention of the general counsel of the world's largest companies.
In the 15 minute video interview below, Mark answers several hard questions:
- Is Axiom Law a law firm? No. That is why it can take outside non-lawyer investment.
- Is Axiom Law competing with BigLaw? In some contexts, the answer is clearly yes.
- Is Axiom Law considering an IPO? Not now, but perhaps someday in the future. "There would be some advantages to being a public company."
All of this adds up to a lot of potential disruption. Mark uses that very word. For additional background on Axiom Law, see American Lawyer story, "Disruptive Innovation."
Monday, September 23, 2013
A few years ago I had the good fortune of teaming up with Rachel Zahorsky for a series of feature stories in the ABA Journal, including "Paradigm Shift" (July 2011), "The Law School Bubble" (Jan 2012), and "The Pedigree Problem" (July 2012). The fourth article, "Who's Eating Law Firms Lunch," is now online; and without a doubt it is my favorite.
Why? Because of the final vignette in the story, which features Dan Katz of ReInvent Law fame. We were sitting at the bar at the January 2013 AALS Conference in New Orleans when Dan told me this story. My jaw just dropped. Dan has faith in his students, just like Bellotti had faith in him. Dan believes, so Dan just does. No fear. No bullshit. It was, suffice to say, quite refreshing.
I am reposting the whole vignette in the hope that a few more academics, lawyers, and law students will read it. The title of the post is the last line in the story. To my mind, that Dan Katz line sums up the next ten years of innovation in legal education. Please keep reading until you get to that final line. The insight is worth the effort.
For the past two years, MSU’s Katz was the only full-time law professor who spoke at the LegalTech conference. Katz and Knake are creating a curriculum relevant to the emerging law and technology sector, albeit primarily for companies like Novus Law and Recommind, whose competitive advantage is rooted in process and technology.
Within the legal academy, Katz is an anomaly. Aside from his JD, he has a PhD in political science and public policy from the University of Michigan. However, he focused almost all of his graduate study on complex systems. It’s a relatively new scientific field that uses mathematical modeling to understand how a multitude of human and nonhuman factors interact and influence one another. Human society and the human brain are two examples of complex systems. Neither can be effectively modeled by conventional math or statistics.
The late Larry Ribstein at the University of Illinois was one of Katz’s early mentors. When he went into teaching a few years ago, Katz says, Ribstein told him: “I bet you must feel like an alien. I greatly admire your work. You are definitely on the right track. But the rest of the legal academy is just not ready for you.”
In June 2011, Katz joined the faculty at MSU Law. Michigan State partnered with the Detroit College of Law in 1995 and moved the law college into a building in East Lansing two years later. Though the school’s rebranding efforts did raise its profile, to most of the profession, MSU Law remains a nonprestigious regional law school located in the heart of the Rust Belt.
None of this dissuades Katz from his sincere belief that it is possible to turn any institution into the preferred recruiting grounds for the nation’s emerging law-and-tech industry.
“When I was 18 years old,” explains Katz, “I had the privilege of joining a transformative organization”— as a kicker for the University of Oregon football team, the Ducks. “We were in the Pac-10, but it’s in Eugene, Ore., where it is often cloudy and raining. We had no shot at all with the top recruits from Southern California. So coach Mike Bellotti had to figure out ways to stretch and optimize what some might call second-tier talent.
“Oregon is now a national powerhouse, but the seeds of that success were sown much earlier. It was difficult to be bigger or faster than USC or UCLA. So Coach Bellotti decided we would be better on the details of the game. We would be better conditioned and we would pay significant attention to special teams. Our emphasis on special teams got us better field position. And by the third or fourth quarters, our opponents would have their hands on their burning legs. But because of our conditioning regimen, we had more stamina. Our success became contagious. Over time, we were able to get prized recruits. It was a culture of innovation.”
During Bellotti’s tenure at Oregon, from 1995 to 2008, the Ducks had only one losing season, blotting out decades of mediocre performance. The year that Katz graduated, the Ducks were co-champions of the Pac-10, a feat that makes him beam with pride.
Katz’s “secret sauce” for ReInvent Law is arguably much more important than a degree in complex systems. He looks at the 25 students entering the ReInvent Law Laboratory as raw human potential. Katz also actively recruits potential law school applicants to his program, though he declines to discuss his strategy.
Katz understands that the most attractive candidates for the law and technology sector are those with special skills that are often obtained through prelaw work experience. “But there is no reason why some of those key skills and experiences cannot be learned and obtained right here,” Katz says of the MSU program.
He notes that virtually all law students have high cognitive ability. He feels the key to their future success is mastery of domain-specific knowledge—often in areas that are complementary to law—and the ability to collaborate across disciplines. This requires engagement and an immense amount of time spent on the task. So how does one develop the educational program that will prepare the law student for legal-tech jobs—some that may not yet exist?
“This,” Katz says, “is just an education design problem."
Perhaps the key insight is that "data by itself is useless. To extract value from it, you need the ‘three Ts’: talent, technique and transformation.
- Talent. "When you start out, you don’t need the top experts to start making sense of your data. You may just need people with curiosity, good statistical skills and a desire to learn. These are the kind of people who will quickly see how data can be managed and packaged to solve problems. And once they do, they will want to get better at it."
- Technique. "Big Data needn’t mean Big Complexity. ... [A]nalytical techniques can be sophisticated, but it’s also possible to keep it simple – especially at the start of the journey. Get the basics right first, and then you can become more advanced as you get better at it."
- Transformation. "Becoming a data-driven legal team – law firm or corporate – is a journey. Change is slow, so don’t expect an overnight transformation. The best approach is to bring the whole organisation with you - if everyone from the partners and CEOs to the interns buy into your data strategy, it will start delivering returns faster."
So who will be the big winners when it comes to Big Data? Definitely some start-ups become they they don't have to transform -- it's a clean sheet operation from the very beginning; they also have more patience and tolerance for trial and error. Yet, BigLaw is sitting on top of a lot of the essential data, so there will be some winners there too. To my mind, it will turn on the ability of some BigLaw shops to leverage talent and technique into some early victories that will aid the tranformation project. If it works, it will be a case study in strategic leadership and effective change management.
By the way, Wolters Kluwer Corporate Legal Services is a sophisticated place. They own TyMetrix, which is the perhaps the best current example of BigData operating in the BigLaw ecosystem. TyMetrix's Real Rate Report is being used to agressively control lawyer billing rates.
Sunday, September 22, 2013
Disruption in the legal industry appears to be crossing an important milestone -- the emergence of the revolving door among the first generation innovators. Evidence comes from this press release published on the Wall Street Journal website.
In 2010, a BigLaw partner leaves BigLaw (DLA Piper) to take a high-level job at Axiom, the most well-known disruptor in the legal industry. Then, 2.5 years later, he leaves to run the Discovery Services practice at Huron Consulting Group. Huron Consulting, by the way, is a publicly traded company (NASDAQ: HURN) with $626 million in revenues in 2012. Legal is one of Huron's core industries. It currently has 1,500 "seats" for conducting 24/7 document review services in the U.S., Europe, and India.
Let's summarize: BigLaw to legal start-up to publicly held company trying to expand its wedge in the legal industry. Granted, career moves are motivated by a wide range of factors, not just a string of successes that create better oppportunities. Outsiders can only speculate why someone changes jobs. That said, in a start-up environment where the market opportunity is large but the know-how to tap into it has to be developed through trial and error, false starts are just part of the learning curve -- the building block of future success. Indeed, there are books and articles on this topic.
What is revealed by the emergence of the revolving door among legal innovators is that there is tremendous opportunity to make traditional legal services better, faster, and cheaper. Talented people are persisting and betting their careers on it. The biggest unknown is timing -- it is risky to get there too early, and disastrous to get there too late. Alas, it is better to wrestle directly with the issue of timing than to deny that the change is real.
Saturday, September 21, 2013
Lawyers can successfully adapt to the disruption of the Information Age just like we adapted to the legal challenges of the industrial era -- build a system to create the human capital that is in short supply. This was original logic of the Cravath System, which created teams of specialized business lawyers who could handle the legal needs of rapidly growing industrial and financial clients in the early 20th century. This Clockworks approach still works, but the specifications of the system need to be updated. At the end of this presentation, I offer a prototype of what we might include in a 21st century Clockworks approach to lawyer development.
Presented at the "Innovations in the Law: Science and Technology" Conference, Oregon District of the Federal Bar Association (Sept 20, 2013)
Tuesday, September 17, 2013
Monday, September 16, 2013
The trend toward outsourcing of legal work to India may be giving way to "onshoring." What is the attraction of moving legal jobs back to the US? The wage gap between India and the US is closing, but more importantly, innovation and continuous improvement are significantly aided by proximity.
I heard this perspective from a friend of mine who was part of the management team of a successful LPO that was sold (at a substantial profit) to a much larger legal conglomerate. Indeed, he contemplated getting back into the business, but this time running an onshoring operation.
This identical perspective is on display in a recent Minneapolis StarTribune story on Black Hills IP, a 2.0 legal process outsourcer that provides various types of managed services for all things related to intellectual property. According to its website, Black Hills IP is a "US-based IP paralegal service that is faster, more accurate and more cost-effective than in house departments and off-shore providers." The company appears to be growing, as it did a PR-blitz to commemorate its 100th client. The company was originally started in Rapids City, South Dakota but has since expanded to Minneapolis.
What make this story especially interesting is that many of the folks who started Black Hills IP were sophisticated Minneapolis corporate lawyers who created a company in the early 2000s called Intellevate, a 1.0 LPO that was sending legal work to India. In 2006, Intellevate became part of CPA Global, a much larger LPO. In other words, the folks at Black Hills IP are industry players with much better information than the rest of us who are making bets with their own money.
Unlike traditional law firms, these types of legal vendors are growing rapidly. Their secret sauce appears to be combining high-quality processes with capable, motivated paraprofessional talent.
The challenge for law schools and many practicing lawyers is getting our heads around the fact that, from a pure market perspective, bright legal minds may be less valuable than well-designed and well-executed legal processes and systems. This state of affairs is just as much an opportunity as it is a threat.
One last interesting note suggesting that companies like Black Hills IP are part of the same ecosystem as traditional law firms and law schools: The CEO of Black Hills IP is Ann McCrackin, a former professor of law at Franklin Pierce (now University of New Hampshire School of Law), where she was director of the Patent Prosecution and Procedure Program. Prior to that, McCrackin was a shareholder in Schwegman, Lundberg & Woessner, a large patent law firm based in Minneapolis that specializes in high technology.
posted by Bill Henderson