The Association of Corporate Counsel Value Challenge

The Association of Corporate Counsel continues their Value Challenge in 2010, pursuing an initiative designed to meet head-on the seismic shifts currently taking place in the traditional delivery model and cost structure of legal services.

According to the ACC:

"With the economic meltdown, law firms are now facing additional pressures: loss of clients and business, reduced access to bank lines of credit, a need to downsize and better manage overhead, and at the same time, keeping as many people employed as possible.

Believing that solutions must come from a true dialog and a willingness to change things on bothsides, the ACC Value Challenge is based on the concept that firms can greatly improve the value of what they do, reduce their costs to corporate clients and still maintain strong profitability. Our task is to help shift the discussion to a focus on value and to find solutions that work for all sides."

It's noteworthy that as part of the value challenge, the ACC endorses a number of practical approaches to bring change to your company, one of which is to:

"outsource, offshore, and farm-shore process oriented work to increase efficiencies."

Also of note is their Covenant For Counsel, a philosophical agreement between client and counsel created to advance mutual goals. Included in the covenant are pledges to:

"Proactively offer value-based alternative fee structures"

and

"Seek to reduce our costs creatively and constantly"

Law School R.O.I.

The current economic recession, which according to the National Bureau of Economic Research is soon to enter its third year, has had two significant effects on law students.

1) Law school admissions have increased, as prospective students seek the shelter of an ostensibly secure profession.

2) The profession of law may not be as secure as it once was, with all reports showing decreased hiring and the postponement of new associate hiring (and even an instance of a law school asking incoming students to defer their start date.)

With that in mind, the New York Times' Economix column featured a recent research paper written by Vanderbilt professor Herwig Schlunk measuring the return on investment for a current law school education.

In general, the paper looked at what kind of salaries law students could have been pulling in if they weren't in law school, factored in some time value for that period, and added tuition to that "opportunity cost" to arrive at a number that needed to be surpassed by earnings as a lawyer.

For the group of law school applicants deemed Hot Prospects (those who would have made $80,000 a year without a law degree), the paper concluded they'd need to earn a starting legal salary of slightly more than $198,000 to break even on their law school investment.

Unfortunately, according to the ABA Journal:

"...top BigLaw starting salaries paid to a small fraction of the nation's graduating law students are now around $165,000. Even many major firms, however, are paying significantly less, and a number of law graduates are having difficulty finding legal work even at much lower salaries due to the economic downturn that hit the legal profession hard last year."

So, the cautionary note to prospective law school applicants is to run the numbers on your investment first. And an MBA might help with that.

More Year-End Numbers

The National Law Journal released the results of their 2009 census of the largest 250 law firms, and the numbers are predictably gloomy.

A few of the lowlights:

The number of employed attorneys at these top 250 firms plunged by more than 5,200. That's a 4% decline.

This is only the third year since the NLJ started tracking in 1978 that saw a decline. 1992 saw a 1% decline, and 1993 dropped 0.9%.

Of the top 75 firms, 15 had reductions of more than 100 lawyers.

The number of associate attorneys dropped by almost 9%.

Many firms declined to near or below where their numbers were five years ago.

113 firms reported deferring nearly 2,800 new associates.

Interestingly, the number of partners increased by .9%. Of the top 50 firms, 30 reported an increase in partners.

A consultant with Altman Weil, Ward Bower, concludes that "the cuts made were done primarily to preserve workloads for partners." Which means that clients can only conclude that work currently being done by partners is work that would have previously been executed by associates. And that is exactly what clients have been trying to avoid.

The National Law Journal has a number of accompanying features, analysis, and breakdowns.

To Tweet Or Not To Tweet

Any conversation about marketing legal services these days is bound to include a discussion about social media. For some professions and industries, Twitter and Facebook are a slam dunk.

For others, including attorneys, it's not quite as simple.

There are those who maintain that anybody not utilizing Twitter and Facebook are completely out of step. But Eric Turkewitz has an interesting blog post about the less discussed but equally relevant downside of social media as a professional marketing tool.

The first potential pitfall pertains to overly enthusiastic posting. Anyone who has been waiting on a colleague or vendor for work to be delivered, only to see semi-hourly tweets or FB posts, knows the resentment that can build.

The lesson here is to make your posts occasional and relevant.

The other potential downside to social media posts is the appearance of sloppy work. The nature of the legal profession requires reason, accuracy, thoughtfulness, and thoroughness. So a type-o riddled, grammatically butchered post is going to immediately defeat its purpose.

Now, many may think that the risk of undercutting your credibility with poorly written posts might be short lived. But, interestingly, they might be wrong.

Anecdotal evidence seems to suggest that the algorithms used in Google's searches disproportionately weight Twitter and Facebook accounts to appear on the first page of search results. According to Eric Turkewitz's personal research:

"I wondered, if a potential new client was given my name by another, and that person Googled me, what would they see?

Well, the first page of my results shows three separate social media sites: Twitter, Facebook and LinkedIn. They show up there despite the fact that I've not exactly been the biggest user of those sites over the last year.

So this is what the potential new client will see, even if you have an active presence on the web. Since I've written over 800 posts in this space since I started in November 2006, and received thousands of inbound links, I probably fit the definition of active presence. And yet, those three sites still manage to crowd out links from so many others."

Of course, this is all fluid, given google's very recent announcement of "social search", which may ultimately be a competitor of facebook, as well as their new agreement with twitter to bring real-time tweets to search results.

Regardless, the lesson for attorneys considering -- or already exercising -- a Facebook or Twitter presence is this: Your social media contributions may carry disproportionate weight within search engine results.

Potential clients may form opinions and make decisions based on those search results.

If you are an attorney using social media, do a general google search on yourself and monitor the page ranking of your social media accounts.

And then tweet accordingly.

Sam Glover

Continuing with our discussion on lawyers embracing an entrepreneurial approach to their work, Legal Rebels recently featured attorney Sam Glover.

Mr. Glover, a Minnesota-based legal entrepreneur who manages a consumer rights practice, is also the author of the always useful lawyerist.com, which manages to weave together insightful commentary on legal practice, technology, productivity, and marketing.

Some of the highlights from Mr. Glover's profile regarding the state of the industry:

• Today, the internet-informed public needs lawyers less, but there are more lawyers than ever.

• There is little imagination in the practice of law.

• There are many smart but unemployed lawyers with little to lose by trying some new things.

• Lawyers must think more like entrepreneurs. Clients' changing needs will demand it. The economy demands it.

• To distinguish your practice from the next, look for an opportunity to serve new clients, or a new way to serve existing clients.

• Never be afraid to experiment. All you stand to lose is money. But if your experiments work, you could make even more money and gain happier, more-loyal clients and employees.

Taking Issue

Misleading. At best.

Law.com reported today on Kroll Inc.'s annual survey on corporate fraud. And for some reason law.com used the following headline:

"Legal Pitfalls of Outsourcing May Outweigh Benefits, Says New Survey"

Except, that's not at all what Kroll's report says.

The first sentence of law.com's post reads:

Companies that choose to outsource work to save money may be buying themselves more legal trouble than it's worth. That's one conclusion from Kroll Inc.'s annual global corporate fraud survey released Monday.

Except, um, that's not even close to any conclusion reached by the survey.

Based on that headline (at a legal-based web site) and that opening sentence, you might think the survey discussed Legal Outsourcing. It doesn't.

Based on the headline and that opening sentence, you might think the survey discussed the legal ramifications of other types of outsourcing. It doesn't.

The second paragraph of law.com's post opens with:

Asking if outsourcing is really worth the risk, the survey says companies often make the decision "without a thorough assessment of the risks involved in determining what is to be outsourced, and to whom."

The quote from the Kroll's report is pulled from a section solely dedicated to the discussion of IT Outsourcing. The title of that section is IT Outsourcing: Is it Worth the Risk?

But not even in this section are legal ramifications discussed. The intent of this section of the report -- in the report's own words -- is to present "a strong reminder that technology companies, including IT outsourcing ones, are vulnerable to the same common frauds - such as internal financial fraud, vendor or procurement fraud, and the theft of physical assets - that can occur in any other business."

The survey never intimates that the risks outweigh rewards. The survey simply says do your due diligence. Just like you would do in any other business capacity.

What does the report actually have to say?

It says that the financial services industry has been hit the hardest by fraud.

It also says that the professional services sector (which includes legal services and legal outsourcing) reported the lowest level exposure to fraud.

So, at the end of the day, the report says that while the internet has expanded business services, it has also created additional sources of potential fraud. Nothing earth shattering there. The report says to make sure that any vendor or business partner has proper data security safeguards in place.

Again, business as usual.

But nowhere in the survey does it conclude that legal pitfalls may outweigh the benefits of outsourcing.

Unbound

Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today is a timely and relevant new book for anyone tracking emerging trends in the legal profession.

Wasting no time, the opening paragraph dives right in with observations we've been discussing for the better part of this year:

"The financial and economic crisis of 2008 delivered the final blow to any skeptics still resisting change in the legal industry. The legal industry is now rushing toward dramatic transformation. Change is long overdue... Over the next three to five years, the legal landscape will be dramatically reshaped. Law will continue on its global march. Even small firms are outsourcing legal support work overseas."

Author David Galbenski founded Lumen Legal, a legal staffing and consulting company, in 1993. His fifteen years as a legal consultant has informed his identification of a number of major trends that he believes will affect the legal industry in the coming few years. Some of those trends are:

• New ways to buy legal services. Consumer demands will force the legal industry to behave less like a profession and more like a business.

• New ways to provide legal services. Globalization is a force that will expand the ways in which legal services are provided to the end consumer.

• New ways to organize legal services. Tasks will become unbundled, as a result of both business pressures and globalization.

• New categories and types of people will be called upon to perform legal services.

Unbound underscores many of the opinions in Richard Susskind's The End of Lawyers? Rethinking the Nature of Legal Services.

Additional quotes from the Financial Times' review of Unbound:

"The highlight of the book is a series of interviews with leading general counsel, who explain the changing global landscape their companies operate in and the pressures in-house lawyers face to rein in costs since the economic collapse. Their observations are stark and should raise the hairs on the arm of every managing partner, group practice leader and legal marketing expert in the business."

"The legal industry is facing unprecedented change, and law firms that don't modify the way they run their businesses face extinction."

"Law firms may be coping with a downturn in business by trimming their costs, but the recession is moving the entire industry toward a range of new, entrepreneurial models that will eventually put the legal industry more in line with other types of businesses."