Monday, September 23, 2013
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
Monday, August 5, 2013
Two constituencies are really worried about their futures. The first is law students and recent law graduates -- they are worried about jobs. The second are state and local bar associations -- they are worried about being relevant to the next generation of lawyers.
So here is my idea. The new guard and the old guard should be talking to each other. It does not take a rocket scientist to see the real opportunity for synergy. If all of us are willing to step outside our comfort zone -- just a little -- we can create new types of bar association events where young lawyers come to have fun, contribute to the community and profession, and develop relationships that put their careers on a clear upward track.
Toward that end, this week's ABA Annual Meeting in San Francisco provides us with a golden opportunity. On Friday, August 9 at 8 a.m. at the Hilton SF Union Square, Michael Bossone (co-creator of LawWithoutWalls) and I will be facilitating a plenary session entitled, "A New Age for the Legal Profession Requires a New Age for Bar Associations."
Well, we could not preside over a session where panels of white guys, 50 and older (my own demographic), sit at a head table and opine on the likes and needs of millennial lawyers. So we have invited a large cadre of law students and recent law grads to take part in a more interactive session. The session is big -- nearly 300 bar association presidents and executives from around the country. And we need 1 to 2 students or recent grads per table -- perhaps for the first time, you are the subject matter experts. Michael and I are looking for a few more qualified volunteers. Interested?
If you are proximate to SF and looking to meet some well-connected lawyers from around the nation who are genuinely interested in listening to your (constructive) point of view, please send me an email with #NewAgeBar (our Twitter hashtag) in the subject line. We have a few slots left -- RSVPs are mandated for this event, as space is limited and name tags are required.
If you are a law student or recent law grad and you think going to a bar association event early on a Friday morning is a grand waste of time, I suggest that you read Mark Granovetter's classic book, Getting a Job. This book is a vivid empirical demonstration of Granovetter's seminal 1973 article, "The Strength of Weak Ties," which is one of the most cited social science articles of all time (23,000+ citations and counting).
An example of a strong tie is you and your sorority or faternity friends. Not too good for getting a job. An example of a weak tie might be an acquaintance in the same profession but part of a different generation or living in a different part of the country. As Granovetter shows, these "weak" ties act as bridges and are profoundly influential in opening doors for people. Believe it or not, academic knowledge can accelerate your career. Get out of your comfort zone and give it try.
[posted by Bill Henderson]
Friday, May 31, 2013
That's right, law students now have an opportunity to add hands-on e-discovery training to their skill set. Surely, a first-of-its-kind program is being offered by one of the 200 ABA-accredited law schools struggling to adapt to a changing legal market, right?
Well, actually, no. It is being offered by Bryan University, which began life in 1940 in Los Angeles as a stenography school for court reporters. It subsequently evolved into Bryan College, which offered associates degrees in various vocational tracks. More recently, it has received accreditation as a university, with a masters degree in applied medical informatics and a cetificate program in e-discovery. Both are offered exclusively online.
The e-discovey certificate program has some interesting features (press release here).
- It's an actual graduate program. Enrollment is limited to law students who have completed a course in civil procedure (so, functionally, 2Ls and 3Ls) or, at most, completed their JD studies in 2013.
- It's real-world relevant. The program is organized around the Electronic Discovery Reference Model (EDRM), which is a detailed yet evolving set of industry standards that flow from nearly a decade of meetings involving literally hundreds of major and minor players in the litigation industry -- law firms, tech start-ups, Fortune 500 companies, consultants, etc. I have been at an EDRM meeting. Just learning the arcane, technology language of this massive subfield could itself a big value-add for students.
- Students learn how to use tools. The program is an immersion experience in which students will learn how to use high-end software related to predictive coding and machine learning; after that, they move to human review using another industry software suite. This event is supported by several legal vendors, mostly software providers, because they want their tools to become industry standards. Lexis and Westlaw used this same playbook 30 years ago.
- It's compact and efficient. The program meets online in real-time two hours a day, four days per week, for four weeks.
The faculty is comprised of practitioners and technicians in the e-discovery business, not full-time law professors. The tuition is $1,495 (very cheap if measured by contact hours), which can be paid online via credit card. Alas, May 30th was the last day of registration!
Signficance of the Bryan University program
Is the Bryan University e-discovery certificate program evidence of law's slide into vocationalism, or are 200+ ABA-accredited law schools missing the boat on the future of law? This may frame a provocative debate among academics, but it gets us quickly onto the wrong track.
Let's separate changes in the legal economy from debates over academic identity, which tend to arouse our emotions. In other words, let's respond to these circumstances like level-headed lawyers and acknowledge the substantial evidence that the world of lawyering is changing in dramatic ways. If this is true, by extension significant changes to legal education are likely on their way.
If we focus on facts, Exhibit #1 has to be access to justice. Resolution of disputes through state and federal courts --the paradigmatic work of lawyers -- has become prohibitively expensive for the vast majority of U.S. citizens. Further, it is now getting a too rich even for major corporations. Part of the problem is proliferation of electronically stored information (ESI). Finding and analyzing the law, it turns out, is the easy part. We teach that in law school. But in this permanently digital world, facts never get lost. Rather, they accumulate. This creates large problems for litigants.
Instead of redesigning our judical system to deal with this challenge -- something a conservative legal profession is loath to do without a decade or two of deliberation -- we are now witnessing the rise of a massive industry of legal vendors trying to make electronic discovery more efficient.
Exhibit #2 in our factfinding journey is that a huge proportion of these new legal vendors are owned and controlled by nonlawyers. See Henderson, Losing the Law Business. It turns out that the MR 5.4 ban on fee-splitting is, to a large extent, not much of a barrier at all. Virtually everything up until the courthouse door or the client-counseling moment can be disaggregated and turned into a process or product delivered by a nonlawyer vendor adept at technology and systems engineering. Because there is so much money to be made by the application of technology and process to legal problems, the nonlawyer genie is not going back into the bottle. It is time to accept that fact.
Below is a chart I use in a lot of presentations to law schools and bar associations.
The point of this chart is very simple. A legal services industry has arisen around the traditional legal profession. Now, increasingly, the word "service" is falling out because products and mechanized processes are taking their place, driving up quality, and driving down cost and cycle time. Society wins. Lawyers adapt.
So, at a practical level, what does all of this mean?
Let's start with the good news. Law is not going away. In a highly interconnected, complex globalized world, law is actually becoming more important.
But here is the realistic inner lining. Law is also suffering from a productivity imperative. The average citizen -- including the typical lawyer -- can't afford to engage the services of an artisan lawyer. And large firms filled with high-priced artisan lawyers are becoming a less attractive option for even large corporations. They want better, faster, and cheaper legal solutions.
So, for law professors anyway, here is the bad news: Training artisan lawyers -- what U.S. law schools do -- is indeed a mature industry. The U.S. economy can't fully absorp 45,000 law graduates per year, at least not doing traditional artisan-type legal work. So, if we want reliable employer demand for our graduates, some retooling needs to take place. Is the retooling process hard and complicated? Absolutely. Does this type of change occur in other industries? Yes, as reliably as the sun rising in the east. Now is our turn.
How do we retool?
The most difficult hurdle is just accepting the need to change. It's purely an emotional obstacle. The cheese has been moved. It's gone. It will not reappear. We need to find new cheese. Not familar with the reference? See Who Moved my Cheese.
The next step is just showing up to industry events and accepting the fact that we are not the smartest person in the room, at least when it comes to intersection of technology, process design, project management, knowledge management, big data analytics, machine learning, and modern law practice, etc. Instead, it is time to just soak and poke. Practically speaking, this means listening to others and trying to decipher patterns that simplify and unify what we are observing.
Third, with the help of some adjuncts we deputize along the way (both lawyers and nonlawyers), we design and offer some new courses that capture these new realities. Fumbling through a very crude version of this methodology, I taught project management back in 2010. Not only was it a lot of fun, I learned new skills, both as a problem solver and as a teacher, made dozens of industry connections that opened doors for my students, and obtained a more realistic view of the legal profession. In short, it changed my life -- for the better.
Fourth, a subset of the legal academy needs to really dive into the topic of institutional design. The rise of the e-discovery business is entirely a artifact of how our legal system is structured. Perhaps it is time to think about better ways to resolve disputes and facilitate transactions. See, e.g., Disputes in the credit care industry. To me, law schools are the exact right places to think about, and wrestle with, these critically important issues. These are mountains just waiting to be climbed by the next iteration of law schools and law professors.
Fifth, with some smaller victories under our belts, we need to collaborate with colleagues to begin the messy process of organizing our new insights into a coherent curriculum that produces graduates with the most valuable skills sets in the shortest supply. With a world ramping up in complexity, I doubt these will be vocational skills. That said, we are probably a decade or two away from a more settled law school curriculum. But we will get there, and when we do, we will be incredibly proud of what we have accomplished.
[posted by Bill Henderson]
Wednesday, May 29, 2013
Matt Bodie has noted my recent article in the National Law Journal, "The Calculus of University Presidents," and written a response that says, essentially, I am pushing the envelope too far. Matt cites a lot of shortcomings with my article. I will limit my response to three points:
- I was given a 1,000 words by the National Law Journal. So I am going to fail to address or consider a lot of relevant points, including many points cited by Matt. Oh well. See Parts II and II of my Blueprint of Change for a more serious treatment of this topic.
- I am closer to the financial conditions of law schools than most law school faculty, and the problems are indeed serious at many places. The 15% application drop and a $1.5 million budget shortfall were made up for the purposes of the essay. These figures are not critera, or my criteria, for anything, including the closure of law schools. That is all I am going to say about that.
- I have offered one possible response to the large scale structural change taking place -- I wrote it up in detail last fall because I felt it was irresponsible to write up the bleak news on law schools without offering at least one comprehensive action plan. See Legal Whiteboard, January 18, 2013. That's it. Other ideas are welcomed.
I grew up in Cleveland, Ohio during the 60s, 70s, 80s and witnessed the slowness of the region to accept that its industrial glory days were behind it. All people, including really smart people, have a hard time accepting large-scale institutional change--emotion obscures a reasoned analysis of the facts. This is why Who Moved by Cheese, My Iceberg is Melting, and other change management classics are written as fables. And yes, I see the same slowness to respond within the legal academy. That slowness has costs.
I am not the only academic who sees the world this way. One prominent law school dean tells the same story--often publicly--of his years as a youth growing up in Rochester, NY, home of now-bankrupt Eastman Kodak. The president of Eastman Kodak was on his paper route. When asked about the truthfulness of rumors that photographs could indeed be saved and displayed on a computer, the president brushed aside the question and instead waxed about the virtues of chemical film that built their bocolic neighborhood.
Truth be told, I probably did risk some reputational capital writing "The Calculus of University Presidents." But I am deeply worried about the future of legal education, and using the history of other industries as a guide, we are likely to underestimate the realities of the emerging legal landscape. See Richard Susskind, Tomorrow's Lawyers (discusing this future in intricate detail). So why not risk some of my reputational capital? I will make some people, like Matt, angry, but I might spur others to actions sooner rather than later. So be it. The purpose of tenure is to facilitate these judgment calls. I can live with that.
[posted by Bill Henderson]
Monday, May 20, 2013
This week's National Law Journal has a Special Report section on the challenges facing law schools. Karen Sloan has several stories on how law schools are finding alternative sources of revenues beyond tuition dollars for JD degrees (masters's degrees for nonlawyers, online LLMs, and lawyer executive education).
I contributed an essay entitled "The Calculus of University Presidents." Although the essay is posed as the letter I would write to a university president seeking advice on how to handle a significant, unexpected shortfall in law school revenues, the intended audience is lawyers and legal educators seeking to get a handle on the brutal economics that are now threatening the survival of a large swath of law schools.
From the perspective of many, it would be nice if things would go back to the way they used to be. But that is not going to happen. Good lawyers understand that we gain no long-term advantage from hiding from these facts. Instead, we need to confront them honestly and proactively.
[posted by Bill Henderson]
Saturday, April 27, 2013
Below is 1972 video of Viktor Frankel, a renowned psychologist and author best known for his book, Man's Search for Meaning. Frankel's greatest accomplishment was becoming an unflinching realist and idealist -- a person who simultaneously sees what is and what could be. To my mind, it would be impossible to get both concepts into proper focus without reading Frankel's book, which I found to be one of the most emotionally jarring and difficult, yet necessary and valuable, experiences of my life. If you are wondering how this could be, read the book.
In the rare footage below, Frankel explains how we harm the world by not hoping for and expecting the very best in others.
I think the point Frankel makes here has special significance for educators. [posted by Bill Henderson]
Friday, April 26, 2013
Earlier this week, I participated in the ABA Taskforce on the Future of Legal Education (see NLJ coverage here). Ordinarily when I am part of a deliberative meeting of a regulatory or accrediting body, I don't write about it, as it would be a breach of decorum and chill a candid exchange of views, at least prospectively. But this event was different -- it was webcast live and internet archived, and thus a public meeting. See ABA website.
These programs are laudable and, from an institutional perspective, necessary. But will an ABA taskforce, or AALS, LSAC, or some other industry group taskforce produce substantial change? History suggests that the answer is no and that, instead, meaningful change will come from the bottom up rather than the top down. Change will occur at the bottom from either the desire to survive or the opportunity to do something great. Other similarly situated institutions that feel less urgency or inspiration will eventually perish. It is just that simple
The accreditation system we have created is an anchronism. But if we think the ABA Standards are holding back the forces of innovation in legal education, we are kidding ourselves. Any law school or law professor who wants a better way can have one -- we are all like Dorothy and her red slippers in the Wizard of Oz: we have had the power all along.
To illustrate this point, I am going to share some personal history that I rarely discuss among my academic colleagues because, well, it would never come up in the course of ordinary conversation. Before I went to law school at age 35, I was a firefighter-paramedic for nine years. For the last five, I served as our Local's union president. To this day, I proudly pay union days so I can stay retired-active.
When I look at the ABA Accreditation Standards, I am reminded of Ohio Revised Code 4117, which is the state's collective bargaining law for public employees. For police and fire, unlike teachers, we had binding interest arbitration for collective bargaining. What does this mean? Basically, if we were unhappy with the offer made by the city -- and we always were -- we took our case to a state-mandated arbitrator, compared our wages and working conditions to firefighters who were getting a better deal (the city would do the opposite), and we got a decent wage & benefits increase, every time. It was not if we would get a raise, but how much. The teachers, in contrast, had to go on strike. The effect of this law was not lost on me. My sister was a teacher in an adjacent city, and over time I made a lot more than her.
This law was in place because those who came before me organized themselves into an interest group, lobbied, and got a favorable law put on the books to benefit them. My fire chief, Joe Sweeney, was one of those elders -- he would point to the union charter posted in the hallway to remind me that he was one of original signatories. By forming a union and working for over ten years to pass 4117, Joe and others ended the era of "collective begging." The resulting union wages enabled him to raise six kids and enjoy a decent pension. And in exchange for that, Chief Sweeney, when he was a captain and later as a chief, demanded, absolutely demanded, that we comport ourselves as public servants.
In truth, the public-private deal struck by 4117 only advanced the public interest when we had guys like Joe Sweeney who lived and breathed a sense of fairness. Joe, just through how he led this life, kept several dozen firefighters honest and focused. As the old guard retired, and our pay kept getting ratcheted up, it became harder to educate the new guys about how this great job came to be. Many believed they "earned" their positions through merit because, after all, they rose to the top of a competitive hiring process. So, through the way we behaved, the public interest case for 4117 was made marginally weaker.
I see the the same dilemma when I review the ABA Accreditation standards. For example, take a look a Standard 405, which pertains to "Professional Environment."
(a) A law school shall establish and maintain conditions adequate to attract and retain a competent faculty.
(b) A law school shall have an established and announced policy with respect to academic freedom and tenure ...
(c) A law school shall afford to full-time clinical faculty members a form of security of position reasonably similar to tenure ...
(d) A law school shall afford legal writing teachers such security of position and other rights and privileges of faculty membership ...
These provisions were the result of the same type of collective action that produced 4117. And their purpose, just like 4117, is to lock-in privilege. We academics can offer a plausible justification for this privilege -- for example, without 405(b), writing this essay could cost me my job. But the fact is we need to justify that privilege through our behavior; otherwise, just like now, we become vulnerable.
At the behest of the ABA Task Force, the formal rules governing legal education may or may not change. But that is largely irrelevant to what the public, including prospective students, perceive as the value of legal education. And that value is, in the aggregate, quite low.
Reform in legal education is not a light switch. It is mindset that affects how we spend our time and who we spend it with. If we want reform, well, let's work on it and actually get something done that will inspire others. Eventually it will take hold and take off, with or without changes to the ABA governing standards.
[posted by Bill Henderson]
Thursday, April 4, 2013
The revolution is here. It is going to happen. For a detailed analysis of the rise of what I call "Susskind's World" and the new legal entrepenuers, see Part II.C of The Blueprint for Change.
Monday, April 1, 2013
I continue to be grateful to the National Jurist for giving me an opportunity to write a column targeted directly to law students. As an educator, I have found these assignments very useful toward developing a better understanding of my own students at Indiana Law. In the process, I hope I am providing some useful, realistic guidance to the next generation of lawyers
In my 2013 column, I urge law students to ask us law professors tougher questions about the current state of legal education, albeit with respect. If they ask tough questions, we will all be better off. It is republished below. [Original PDF]
Question Authority: Law students have an important role to play in the future of legal education, National Jurist (Jan. 2013)
by William D. Henderson
I recently gave a keynote address in which I admonished a large group of law students to “question authority.” It certainly sounds cliché – after all, it was the rallying cry of countercultural icon Timothy Leary during the 1960s. A decade later, it was mainstream bumper sticker. But the admonition has a much more distinguished pedigree. Benjamin Franklin is reported to have said that “the first responsibility of every citizen to question authority.”
I wish I had known the source of the quote when I gave the speech. But regardless, it fit the context. Today’s law students are embarking upon an uncertain future. Although I can understand the impulse to trust your elders, there are times of extreme upheaval when they cannot be counted upon to deliver wise counsel.
Reluctantly, through the passage of time, I have become an elder. And for the legal profession and legal education, we are entering one of those periods of great tumult. To come out the other side, better and stronger, we need two things from the up-and-coming generation of law students.
First, we need your skepticism to question our methods and our motives. The legal marketplace is undergoing significant changes. We did not adequately anticipate these disruptions. In addition, we do not fully understand their breadth and depth. Because we are human, we are reluctant to admit our confusion. Even worse, we may even deny there is a problem. After all, the confluence of high student debt and a soft legal market happened on our watch.
Second, we need your youthful energy to refashion legal education in a way that is much more consistent with our professional ideals. All lawyers covet prestige, but over the last decades we have confused prestige with money and rankings. As a historical matter, lasting legal reputations are disproportionately traceable to a lifelong willingness to doggedly and creatively advance the welfare of others. Even today, the best lawyers find ways to faithfully serve their clients while simultaneously advancing the public good. We need your generation to lay the foundation for a renaissance in which our collective behavior more closely hews to our ideals. This is a goal worthy of your time and talent.
If you are going to be effective at questioning authority (and unless you are going to be effective, why do it all?), you need to practice. Well, I am 50-year old tenured law professor. I create the syllabus, I decide how you will be evaluated, and I assign student grades. Much to my chagrin, I have accumulated some authority. So feel free to practice your questioning on me.
Here is the world as I see it. I could be wrong. But even worse, I may be partially right.
The entry-level job market for law graduates is tough right now. But if you had not enrolled in law school, your employment prospects would be no less murky. As noted by the popular author, Daniel Pink (himself a law school graduate), in his book, A Whole New Mind, we are living in time where every young person must compete against three formidable forces: Asia, Automation, and Abundance.
The Asian continent is formidable because nations such as India and China are leapfrogging into world economy with enormous quantities of ambitious, technically competent young people.
Automation is formidable because so much of human activity, including law, is reducible to patterns. This means solutions can be standardized, thereby displacing a significant amount of mental analysis that lawyers now perform for clients on a matter-by-matter basis. (See also my September 2012 column, “Why are we Afraid of the Future of Law?”)
Abundance is formidable because the flipside of the consumer society that has given us so many cheap, high quality choices is a producer economy in which expensive university educations provide us with skills that becoming more and more fungible.
To my mind, today’s university educators are not responsible for the challenges created by Asia, Automation, and Abundance. These are massive structural and economic forces that are hard to forecast and impossible to control. Yet, as university educators who benefit from your tuition dollars, we are responsible for formulating effective responses. Although we might prefer to focus on a different set of challenges, this one should take top priority because its weight falls disproportionately not on us, but on you.
So you need to ask us, “How well is this education helping us adapt to the challenges of Asia, Automation and Abundance?” Some of us might reply that the threat is overstated. Well, are you convinced? What evidence supports this assessment?
Alternatively, others of us might reply that the challenges are very real, but fortunately, the core elements of traditional legal education are an excellent preparation. Well, are you convinced? Further, is it possible that our inability or reluctance to retool may cloud our judgment and influence our reply? The iconoclastic author and economist John Kenneth Galbraith once observed, “Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.”
A third response may be, “I don’t know. These are a hard set of issues. And they need to be solved.” When a professor responses in this way, it is hard to question their motives. Further, you may have found someone with authority who is willing to take up your cause.
At the beginning of this essay, I failed to mention one key proviso to my “question authority” admonition. I told the law students that when they question authority, they should do it respectfully. Indeed, all of my life experience has shown me that effectiveness in human relations requires a foundation of mutual respect. Your elders did not create the challenges that lie ahead. We are not your enemy. Our limitation is that we are human, and therefore imperfect; and so are you.
Yet, if you question authority persistently but respectfully, you will be doing yourself, legal education, and the legal profession an enormous service.
If you think my ideas and analysis are wrong, you are free to question my authority.
Wednesday, March 27, 2013
The legal industry is changing in ways that very few lawyers understand. I recently tried to explain these changes to a savvy nonlawyer, non-American audience through an essay I published in the Cayman Financial Review, entitled, "Losing the Law Business" (original PDF). I wanted to share this analysis first with an audience that was, frankly, not emotionally or financially wedded to the outcome--hence, they could be objective. Now I want to gauge the U.S. lawyer reaction, so I am republishing the essay here on The Legal Whiteboard.
Losing the Law Business, Cayman Financial Review (Jan. 2013)
by William D. Henderson
If you are not a lawyer, you may find this next sentence very good news. We are entering a period in human history in which we are going to need fewer lawyers, at least the traditionally trained variety. The world is becoming more interconnected, regulated and complex. Although regulation and complexity have historically been very good for the lawyer business, something very fundamental is changing. Clients are increasingly struggling to pay the bills of artisan lawyers who prefer to craft individual, customized solutions for each transaction and each dispute.
In essence, law is facing a productivity imperative. To cope with globalization, the world needs better, faster, and cheaper legal output. The artisan trained lawyer just can’t keep up. To address the productivity imperative – or, more accurately, to turn a profit from this business opportunity—a new generation of legal entrepreneurs has emerged.
Lawyers continue to have a lock on advocacy work and client counseling on legal matters. But an enormous amount of work that leads up to the courthouse door, or the client counseling moment, is increasingly being “disaggregated” into a series of tasks that does not need to be performed by lawyers. Indeed, it may be best performed by computer algorithms. Further, the entire process is amenable to continuous improvement, driving up quality and driving down costs. This is a job that is likely more suitable for a systems engineer, albeit one with legal expertise, than a traditionally trained lawyer.
Although this change may sound radical, it is actually the logical next step in an evolutionary progression that began in the early 20th century as the practicing bar transitioned from generalist solo practitioners to specialized lawyers working together within law firms. Now, as clients search out ways to stretch their legal budgets, specialization is losing market share to process-driven solutions, akin to how Henry Ford’s assembly line methods supplanted craft production.
To illustrate this progression, consider the U.S. legal market at the beginning of the post-War period. At that time, 61% of all lawyers worked as solo practitioners. Not surprisingly, incomes were low. In 1948, the average lawyer in private practice made $5,200 per year, which was several hundred dollars less than his government lawyer counterpart. There were private practice lawyers, however, who defied this trend. Less than 2% of U.S. lawyers worked as partners in law firms of nine partners or more, but these “large” firm lawyers made, on average, five times more than their solo practitioner peers.
Why so much more? Because the world was becoming more regulated and complex. And sophisticated, specialized lawyers with deep technical expertise were in short supply. By combining into a firm, lawyers could specialize in new or existing areas of law, handle bigger and more complex matters, and otherwise coordinate their efforts to better serve clients. Indeed, the most successful large law firms, such as the New York City firm of Cravath Swaine & Moore, organized themselves so as to optimize the training of junior lawyers in both substantive law and the ability to supervise and delegate (the “Cravath system”). Fittingly, during the 1930s, the press dubbed these firms “law factories.” The best junior lawyers eventually became partner; the rest obtained the benefit of excellent experience and training, thus obtaining jobs with clients or partnerships with other law firms.
For the next several decades, firms with significant business clients and a partner-associate training model tended to prosper. As a measure of longevity of the specialist model, among the largest 100 law firms in the U.S. as measured by gross revenues (the AmLaw 100), the average name partner was born in 1895 and died in 1964 – yet the growth has marched on for another half century. The period of greatest financial success has occurred during the last three decades. Between 1978 and 2003, total U.S. legal expenses as a percentage of GDP increased from .4% to 1.8%. From this growing pie, large firm lawyers where getting the biggest slice. By the mid-2000s, the profit share of the average partner in an Am Law 100 firm was over $1 million per year.
One obvious drag on the legal industry’s reluctance to embrace innovation is the financial success enjoyed under the old model. It is hard to convince a group of millionaires that their business model is broken. A second drag is insularity. The U.S./U.K system of lawyering is premised on the idea of independence. In the U.S., ethics rules prohibit lawyers from splitting fees with nonlawyers. Thus, only lawyers have an equity interest in law firms. In the U.K. and Australia, in contrast, the ban on fee-splitting has been significantly relaxed, enabling the public listing of law firms and the entry of name-brand companies, such as Tesco (a supermarket retailer), into the consumer legal business.
Ironically, the insularity of the U.S. legal market may have created a more attractive target for capitalists. Among corporate clients, the combination of high law firm profits and low innovation has created discontent among C-suite executives. They ask their general counsel, “why are legal expenses going up faster than other departments? What value are we getting for these higher fees?” The general counsel has no persuasive reply.
Perhaps the best example of new entrepreneurs serving corporate clients is the large number of vendors working in eDiscovery and document review. The explosion in digital data over the last 10 to 15 years has made it untenable to continue using expensive law firm associates for an exhaustive manual review.
Initially the work went to registry services, which assembled large crews of temporary low-wage “contract” lawyers for large document review projects. After building a sufficient data infrastructure and security controls, the work flow has gradually expanded to legal process outsourcers (LPOs) in places like India, where a fraction of the wages paid to U.S. contract attorneys could attract highly motivated and able Indian lawyers. Having achieved sufficient success and scale, the best LPOs are now turning to process engineering, combining this highly motivated and able labor with superior technology and workflow design.
More recently, new vendors have emerged who specialize in “predictive coding.” In a case that considered acceptable methods of conducting electronic discovery, a federal judge in New York City reviewed studies comparing the cost and accuracy of computer-based machine algorithms (predictive coding) with manual human review. Finding that the predictive coding was at least as accurate as manual methods and reduced the number of documents for human review by a factor of 50, the judge ruled that predictive coding was judicially reasonable in many cases involving large numbers of documents.
Although many large U.S. law firms may perceive document review as “commodity” legal work not worthy of their efforts, the new legal vendors getting into this space are remarkably well capitalized. For example, one of the larger suppliers of contract attorneys is Robert Half, which has 26 locations through the U.S. and Canada. Its corporate parent, Robert Half International, is publicly traded on the New York Stock Exchange (RHI). Another company in the contract attorney space is Special Counsel, which has 36 U.S. offices. Special Counsel is a subsidiary of Adecco Group, which is listed on the SIX Swiss Stock Exchange (ADEN).
In the LPO space, Pangea3, which opened in 2004 with $1.5 million in venture capital, was sold in 2010 to Thomson Reuters (NYSE symbol TRI) for an amount reported to be in the $35M to $40M range. [ed: I later learned from a highly reliable source that the true price was just under $100M.] The original management team was kept intact, as the company has been growing between 40% and 60% every year since its founding. The company now employs over 850 lawyers, mostly in India. Because of its emphasis on process improvement, Pangea3 and other high-end LPOs are obtaining a competitive advantage beyond mere wages. Thus, LPOs have become a much more attractive option for Indian law graduates. Another competitor is Huron Consulting Group (NASDAQ symbol HURN), which recently announced a new document review facility in Gurgeon (a booming suburb of Delhi), bringing its total global document review workforce to 1,500 in 17 offices worldwide. Since 2007, Huron Consulting Group’s annual revenues have nearly doubled, growing from $315 million to $606 million.
The major players in the predictive coding space are also well capitalized. One of the leaders is Recommind, a privately held company with $15 million in revenues in 2011 and approximately 100 employees in facilities in California, London, Germany and Australia. Similarly, Kroll Ontrack, which started in the hard disk recovery business nearly 30 years ago, has information management services that include predictive coding as part of its broader eDiscovery services. Kroll Ontrack is owned by Kroll, Inc., which was recently acquired by Altegrity, an information conglomerate owned by Providence Equity Partners. Providence Equity is a global private equity firm with over $27 billion under management.
Since 2008, revenues in large U.S.-based law firms have been relatively flat. A recent article in Managing Partner magazine acknowledged that law firms are losing market share to the LPOs –which broadly includes all the companies mentioned above—as general counsel are increasingly contracting with LPOs directly. The savings are perceived to be in the 50% range with no diminution in quality. According to the article, the LPO business is estimated to be a $1 billion per year industry that will double in size over the next two to three years.Unlike traditional lawyers, the competitive advantage enjoyed by these new entrants is that they have learned how to learn. If law is like other industries, these companies will move up the value chain and find new ways to satisfy the needs of large corporate legal departments. Law is not just for lawyers anymore. This genie is permanently out of its bottle.
Sunday, March 24, 2013
Each year, the instructors in Indiana Law's 1L Legal Professions class coordinate with Indiana Law's Office on Career and Professional Development (OCPD) to run the Career Choices Speakers Series -- 16 lunchtime forums on Thursdays and Fridays throughout the second semester. It has been an enormous hit with students. Although our 1Ls are required to attend at least three, a huge proportion of the 1Ls attend over ten.
Below is a photo of this Thursday's pizza run for the session on Direct Service Public Interest Lawyers -- 22 pizzas and the laptop/scanner used for attendance. Over the course of semester, we will purchase well over 300 pizzas. Who pays for all of this food and equipment (plus about a dozen dinners for students and alums that occur before and after these events)? An Indiana Law alumni who profoundly believes in the role of ethics and integrity to achieve personal and professional success in life. And he has done so quietly, behind the scenes, every year for the last five.
I thought our alum would enjoy seeing the pizza gurney. Thank you! You are opening students' eyes and helping them make better decisions, all through relationships with other lawyers.
[photo credit, 1L Dakota Scheu, via iPhone]. For additional information on this highly effective program, see my prior post, A New Tool for Lawyer Professional Development.
[posted by Bill Henderson]
Wednesday, March 13, 2013
I was at the ReInvent Law Silicon Valley event last week. Following up on Jerry's thorough remarks, I can honestly say it was unlike any legal education and lawyer conference I have ever attended (the only thing close is Law Without Walls). There is a new guard in the legal academy taking shape, and it is led -- truly led -- by Dan Katz and Renee Knake at Michigan State.
Admittedly, Dan and Renee lean heavily toward my bias. Most of us law professors talk. Dan and Renee, in contrast, are doers. Shortly after becoming assistant professors, they each moved quickly from ideas to action to actually having the audacity to attempt to build new and relevant institutions. Moreover, they both did it untenured--Dan is only in his second year of teaching and Renee just cleared the tenure hurdle earlier this year. They did all of this without a net. To my mind, they are winning the "Game of Life." If other junior faculty follow their example, the legal academy is going to truly change. And right now, that is what we need.
One of my favorite Paul Lippe quotes is this, "In hindsight, the new solutions are all going to look obvious." ReInvent Law was 40 speakers tied together by a common interest in experimentation. Were all the ideas good? If history is any guide, and the criteria is moving from concept to implementation to financial and institutional sustainability, the answer is surely no. But it was invigorating to be in a room of doers who are all willing to risk failure. That is the courage and leadership we need right now. To me, it looked obvious that we need a place like ReInvent Law where insurgent ideas can be expressed with enthusiasm, even if only a handful or fewer will transform the legal landscape.
I was fortunate to be one of the presenters. Dan Katz was kind enough to take my picture when I gave my Ted-style talk (all the talks were Ted-style or "Ignite"). If you zoom-in on me, I look ridiculous. I am no showman. But you have to admit that the lighting is pretty spectacular. The green screen, by the way, is the running twitter feed, an idea that I can assure you was not stolen from the ABA or the AALS.
Amidst all these "revolutionary" ideas, I think my presentation was probably the most conservative. My central claim is that 100 years ago, as the nation struggled to find enough specialized lawyers to deal with the rise of the industrial and administrative state, some brilliant lawyers in cities throughout the U.S. created a "clockworks" approach to lawyer development. These clockworks filled the enormous skills and knowledge gap. Firms like Cravath, Swaine & Moore, through their "Cravath System," finished what legal educators started. (I use the Cravath System as my exemplar because its elegant business logic was written out so meticulously in the firm's 3-volume history.)
The whole purpose of the clockworks was to create a "better lawyer faster." This is a quote from volume II. The company I co-founded, Lawyer Metrics, incorporated it into our trademark -- the value promise is that compelling. See the slides below.
Here is the Slideshare description:
The original Cravath System circa 1920 demonstrated the power of a "clockworks" approach to lawyer development. The system was a meticulously designed and mechanized way to create specialized lawyers who could service the needs of America's rapidly growing industrial and financial enterprises -- lawyers who were in perennial short supply because the requisite skill set could only be learned by doing. The System endured for a century because it solved the specialized lawyer shortage by making every stakeholder better off -- junior lawyers (received training), partner-owners (large, stable profits), and clients (world class service and value).
Today's legal employers and legal educators would benefit by revisiting this system's powerful business logic. The clockworks approach to lawyer development still works. The only difference is that the specifications for a great lawyer have changed. Like the original Cravath System, a new clockworks would create a "better lawyer faster."
[posted by Bill Henderson]
March 13, 2013 in Current events, Data on legal education, Data on the profession, Fun and Learning in the classroom, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change | Permalink | Comments (0)
Sunday, February 17, 2013
On March 8, 2013 - The ReInventLaw Laboratory - Founded by Daniel Katz and Renee Knake from Michigan State will host ReInventLaw Silicon Valley 2013 @ The Computer History Museum in Mountain View, CA.
Topics to be covered include:
LegalTechStartUp, Lawyer Regulation, Quantitative Legal Prediction, Legal Supply Chain, Project Management, Technology Aided Access to Justice, Design, 3D-Printing, Driverless Cars, Business of Law, Legal Education, Legal Information Engineering, New Business Models for Law, Lean Lawyering, Augmented Reality, Legal Process Outsourcing, Big Data, New Markets for Law, Virtual Law Practice, E-Discovery, Information Visualization, E-Discovery, Legal Entrepreneurship, Legal Automation … and much more.
What do I need to know?
- At all price points, the legal services market is rapidly changing and this disruption represents peril & possibility. This meeting is about the possibility ... about some of the game changers who are already building the future of this industry.
- This is a 1 day event featuring 40 speakers in a high energy format with specific emphasis on technology, innovation and entrepreneurship.
- It will highlight the new and growing portion of the legal services industry. It will not be boring.
- For more on our lab and related events please see: http://reinventlaw.com/
How Much Does it Cost?
This event is generously sponsored in part by the Ewing M. Kauffman Foundation, Michigan State University College of Law and the ReInvent Law Laboratory.
Thus, tickets are FREE but limited.
There will only be 400 tickets for this free event. Many of them are already taken and when they are gone, they are gone. Thus, if you or your friends/colleagues/students would be interested in attending -please sign up today.
Final Thoughts …
As I mentioned to Bill Henderson the other day … the old internet adage applies with equal vigor in the legal services industry "the future is here … it is just not evenly distributed."
Come join the future already in progress at #ReInventLaw Silicon Valley March 8th, 2013 (and at our other free public events in London and New York later in 2013).
February 17, 2013 in Current events, Fun and Learning in the classroom, Important research, Innovations in law, Innovations in legal education, New and Noteworthy, Structural change | Permalink | Comments (0)
Wednesday, February 13, 2013
My previous post on Washington & Lee's 3L Program stirred a lot of interest and commentary, including some disbeleiving critics. Fortunately, Professor Jim Moliterno agreed to write a reply essay, below, that completes the cycle. [Bill Henderson]
Jim Moliterno Replies [This is a long reply, so a PDF version online here]
A number of comments to Bill’s January 28 post and posts regarding it on other blogs cause me to enter this conversation.
Are students really coming to W&L because of the new curriculum? Yes, to a significant extent. How do we know? Because the entering students say so. As do many law schools, we administer a questionnaire to our enrolling students. Among the questions asked is the obvious one: why are you here?
In the most recent such survey the students were asked to rank the strengths of the law school. Here are the top ten, in order, according to the entering students:
- Third Year Curriculum
- Ranking / Prestige
- Quality of Life
- National Reputation
- Job Placement
- General Cirriculum
- Clinical Program
- Financial Aid Award
- Size of Lexington
The curriculum reform was first. Financial aid awards were 9th, just ahead of the “size of Lexington.” The data does not support the unsubstantiated claims of some bloggers that students are choosing W&L because of the generosity of financial aid awards.
The curriculum reform has steadily moved higher on the “strength” rankings given by enrolled students since 2009. The 2011 and 2012 surveys are nearly identical, and the written comments of students about their reasons for coming to W&L (none reprinted here), are more striking than the numbers themselves.
I don’t know of any better data on this proposition but the statements of those whose reasons are under study. If that data is unsatisfying to some, then they will continue to be unsatisfied.
Are there other reasons students come to W&L? Of course. W&L has a highly productive, highly visible faculty engaged in scholarship and projects at the highest levels. Some students undoubtedly value W&L’s faculty prowess. W&L is highly ranked. Some students undoubtedly are affected by a top 25 ranking. It has an excellent reputation as a small, closely-knit academic community. Some students select for the sense of community and size. No reason will ever be the only reason for prospective students to choose a law school. Changes made by law schools will affect student choices for or against a particular law school. The W&L curriculum reform is positively affecting a significant number of students’ calculus about choosing W&L.
And some do come because of the financial aid package they were offered. But the financial aid reason is unlikely to explain the increase in applications since 2008. Some students, the recipients of aid, undoubtedly come in part because of the aid. That is no different than the students who choose [insert name of any school] because of the financial aid they were awarded. In 2012, about the same number of offers of admission were made as in previous years, but instead of the usual 130 or 135 admittees choosing to attend, more than 260 made deposits. Some were asked to defer their attendance until 2013 and once the dust settled we had a class of 187 instead of the usual 130 to 135. This same class entering in 2012 listed the curriculum reform first and financial aid ninth as strengths of the law school.
What else was happening in 2008 and 09 when the applications increased by nearly 33% per year?
In 2009 and 10, while W&L applications were on the rise, the US News ranking fell from 25-34 (while its reputation rank among academics stayed steady). It has now recovered to 24. If anything, that should have led to a drop in applications during 2008-2011 rather than the sharp increases that actually occurred.
Can we exclude all other possible explanations than those previously mentioned? Of course not. It could be that being in a small, beautiful mountain town is all the rage among young adults and 33% more students want that now than wanted it in 2007. I know of no data to prove or disprove that proposition, so it remains one that could be true. The reality is that the students who have come in recent years rate the curriculum reform among the top reasons (often the most important reason) for their attendance at W&L. That matters.
There is empirical evidence that the W&L curriculum reform is engaging students more than in the traditional “no plan” third year curriculum. Is it perfect evidence? Of course not. Is it definitive evidence that has no flaw? Of course not. Is anything ever supported by perfect, definite evidence that has no flaw? Not to my knowledge. We make all of our most important decisions in life based on the best available evidence. As long as the evidence is empirically sound and statistically significant, it is worthy of respect. The evidence of W&L 3L engagement increases is sound and statistically significant and marks a path toward further research and verification.
One commenter suggested that the data is suspect because the peer schools have not been identified. Their data belongs to them, not W&L. LSSSE does not make specific school data available to other schools. So W&L has only a composite score for those peer schools. And it would be unseemly for W&L to reveal the specific schools. I will not do so here. But to be sure, W&L asked LSSSE to calculate the data from a list of schools because they are the schools with whom W&L competes for students and competes in the rankings. It would not have served W&L’s research interests to learn how it compares with a list of schools that it does not compete with in the marketplace. No one at W&L has the data for any specific school.
Nonetheless, do not be mistaken, the schools with whom W&L is compared in LSSSE data are the schools anyone would expect them to be: schools that by their geography, rank and quality compete with W&L in the relevant markets for students and placement.
One observation: in the legal profession and legal education in particular, the status quo never seems to need empirical justification. Only change is suspect and wrong until proven definitively to be otherwise. Is there any empirical evidence that the status quo third year is the best possible third year except that it has been done that way for a long time? None that I know of. The old adage, “if it ain’t broke don’t fix it” does not apply here. The third year of legal education is “broke”.
Amid calls for its abandonment by some, dating back at least to the early 1970s report by Paul Carrington, the third year is widely acknowledged to be of the least value among the three years. (See below on W&L’s largely unchanged approach to years 1 and 2.) The Roman Legions (and more than a few other military powers) have found out that the mere fact that something has been successfully done before is not sufficient evidence that it will prevail in the present or future. Arguing in favor of the status quo based on no empirical evidence, . . . based only on instinct and the argument that it is the way things are currently done, is an approach doomed to failure. Just ask Kodak. (And see my forthcoming book: “The American Legal Profession In Crisis,” Oxford, March 2013.)
How about the claim that “[W&L’s LSAT has] gone down every year since [the new curriculum was announced], while its GPA rank has, after a plunge, more or less returned to where it was.” The blogger made that claim, once again without any data, let alone empirically credible data. Actually the W&L median LSAT was steady at 166 from 2005-2010, dropped 2 points to 164 in 2011 and stayed at 164 for 2012. It has not “gone down every year since [the new curriculum was announced in 2008].” Meanwhile, the GPA of entering classes, which was in the 3.5 and 3.4 range in 2008-2010, has gone up to the 3.6 range (3.65 and 3.62) in 2011 and 2012. The two modest changes in LSAT and GPA have essentially off-set one another in US News points. Hardly the reason for pause suggested by the blogger.
It seems that as long as someone is arguing against change, no rules apply to the arguments’ underpinnings.
Here is what the empirical evidence from the LSSSE surveys shows and what it does not show: students are more engaged in their work and their work includes more writing, more collaboration and more problem solving. Here are a few charts even more striking than those Bill used in his post. Together they say that significantly more than their peers or their predecessors at W&L, current third year students are working more, writing more, collaborating more, applying law to real world problems more, and preparing for class more often. Overall, they describe a harder-working, more engaged student body. And they are working harder at acquire the skills that matter to success as a lawyer.
February 13, 2013 in Blog posts worth reading, Current events, Data on legal education, Innovations in law, Innovations in legal education, New and Noteworthy, Scholarship on legal education, Structural change | Permalink | Comments (6)
Saturday, February 9, 2013
That is the title of this video interview of law firm consultant Kent Zimmermann of the Zeughauser Group. In the interview, Zimmermann relates a story from a recent large law firm retreat in which one of the partners raised her hand and said that one of her major clients in the healthcare industry recently used Axiom in an M&A deal. Not for due diligence. They used Axiom for the whole deal.
For what it is worth, I think we have a language / perceptions gap at work here. At least in the winter of 2013, the phrase "Legal Process Outsourcers" tends to connote masses of low-level attorneys toiling away doing low-level work in India, the Philippines, South Africa or in small or middle market cities in the U.S. -- i.e., a simple labor arbitrage play.
But Axiom's competitive advantage is in understanding the clients' needs and working backwards to a solution. The value here is in (a) listening carefully to the client (e.g., "we want the same or better quality but lower and more predictable pricing"), and (b) in designing and building a system that delivers that outcome.
For background on Axiom, read this eyeopening article, "Disruptive Innovation", from The American Lawyer. Axiom has backing from Sandhill Road venture capital and Wall Steet private equity. One of their investors is quoted, “Axiom has an opportunity to disrupt an industry that hasn’t materially changed in a century. ... With a worldwide legal market that is a trillion dollars each year, there is plenty of running room to build a successful business."
Water runs downhill. There is a lot of money to be made by making law more efficient and affordable. Lawyers need to facilitate this outcome, not obstruct it, as society needs and wants better, more affordable access to legal solutions. Process-driven legal services and legal products are the future. Indeed, as the cyberpunk science fiction writer, William Gibson, once quipped, "the future is already here — it's just not very evenly distributed."
For my own views on the incipient revolution that threatens 100 years of established hierarchy, see "Losing the Law Business," Cayman Financial Review (Jan 2013); for the implications for legal education, see Section II.C of A Blueprint for Change.
[posted by Bill Henderson]
February 9, 2013 in Blog posts worth reading, Current events, Data on the profession, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change, Video interviews | Permalink | Comments (3)
Saturday, February 2, 2013
Below is a photo of the exhibitor list at the LegalTech New York trade show. [Click on to enlarge]
There was a lot of money sloshing around this trade show. What do these companies sell? How do they make money? Who are their clients? Who founded these companies and who financed their growth? Are lawyer-employees a key part of their business models? These are the questions I am asking.
[Posted by Bill Henderson]