From the Chair of the ABA Law Practice Division

Volume 40 Number 4

By

About the Author

Michael Downey is a legal ethics lawyer and litigation partner in the St. Louis office of Armstrong Teasdale LLP. Author of Introduction to Law Firm Practice (ABA, 2010), Mike teaches legal ethics and law firm practice at Washington University School of Law and professional responsibility at Saint Louis University School of Law.


Buck Up and (Really) Innovate

Law Practice Magazine | July/August 2014 | The Annual Big Ideas IssueMY FIVE PREVIOUS Perspectives columns have addressed big-picture risks facing American law firms, including gender (talent) discrimination, nonlawyer financing of legal services and conflicts arising from firms’ bring-your-own-device policies.

This, my final column as chair, draws upon the wisdom of two diverse sages—Heraclitus and Dilbert—to tackle a few more big-picture risks.

First, Heraclitus warned: “No [person] ever steps in the same river twice.”

He wrote this 2,500 years ago, but many law firms still struggle to understand that both the river and the person keep changing.

Recently the river—the market for legal services—has changed dramatically. Corporate counsel are improving internal legal talent and decreasing their use of outside legal counsel. Most importantly, outside counsel are offered less premium legal work. One in-house intellectual property lawyer supervisor said that his in-house team receives first choice of premium assignments. Only then are the remaining projects offered to outside law firms and overseas legal outsourcing companies.

The consumer law river likewise has experienced radical change. Many consumers now use legal document preparation services and online resources to tackle significant portions of their legal needs. When the consumers finally contact lawyers, it is often to seek limited representations for sharply reduced fees.

Similarly, lawyers themselves have changed but often fail to appreciate the effects of these changes. Most obvious, firms keep trying to increase rates, ignoring that many billing rates have reached terminal velocities. My firm has been approached by several large clients seeking broad-ranged expertise and solid legal counsel at rates substantially lower than coastal megafirms. These megafirms will probably not detect such client defections in time to prevent them. But megafirms effectively compel such client defections when megafirm paralegals charge more than top-firm partners midcontinent and when newbie New York lawyers often charge more, for example, than my litigation colleague who spent 20 years on the Missouri Supreme Court.

Second, Dilbert recently nailed what often passes as “strategic planning” at law firms. In the February 25 comic strip, an executive tells Dilbert:

“Our goal is to ship a million units this quarter.”
“Do we have any goals that involve making customers happy?” Dilbert asks.
“I’m talking about our goals, not their goals,” the
executive responds.
“Totally different,” Pointy-Haired Boss agrees.

Likewise, many law firms appear determined to solve problems arising from maxed-out rates and shrinking demand by trying to bill more hours on premium work, the exact work now often kept in-house.

How will all these firms increase their share of premium legal work? The firms will tell you they are “innovating.” Please. Most purported innovation is rearrangement, not revolution—the same staffing shifts and guesstimates of total hourly billings labeled “alternative fees” that virtually all law firms now offer.

Reflecting on Clayton Christensen’s teachings about disruptive innovation convinces me these efforts will largely fail. Truly innovative legal service providers will prevail in our imminent economic future by delivering a different product—a different type of legal services. They will not simply try to deliver the same product (legal services) differently.

Our Division offers resources to help foster such innovation. I have been impressed with the resources offered through ABA TECHSHOW, this magazine, the eLawyering Task Force and the Legal Technology Resource Center. I believe such resources can help keep our Division and our profession relevant.

A few firms are also offering innovative deliverables to clients. But most law firm leaders seem stuck in Plato’s cave, comforting themselves with self-affirming accolades and illusions.

Come outside. Brave the light. Do something exciting with your law practice.

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