I realize that when bankruptcy lawyers charge hundred of millions of dollars for handling bankruptcy cases that a measly $183,000 is a drop in the bucket. Nevertheless, I was shocked to read in this article, Legal Fees Pile Up for Delta, Northwest, that in the Northwest bankruptcy proceeding, one law firm billed more than $183,000 for online research.
How do you justify that kind of charge? For starters, by now, most firms can purchase top of the line, full service LEXIS or Westlaw, which allows for unlimited searches, for several hundred dollars a month. Let's just assume for the sake of argument that the firm in question pays $1000 per month for LEXIS or Westlaw for each attorney in the firm. At $183,000, that's 183 months worth of service. Even assuming that twenty attorneys are working the case, that would mean that each is working on the bankruptcy matter for nine full months (I assume that if they are working on other matters, the cost would be pro-rated). So that's my first point: I just don't understand how a firm could pay so much for online service.
Second, and more to the point, the cost of online service ought to be rolled into a firm's overhead. Firms never billed clients to retain libraries and online research service has in most cases effectively replaced law firm libraries. Moreover, online research is now priced at flat fees, rather than per search, which makes it more amenable to inclusion in overhead rather than pro rated.
What's sad is that the sophisticated clients that hire these firms don't even know that they're being overcharged. And that's why these types of fees will continue: because until clients put pressure on law firms to charge less, the firms have no incentive to do so.
Wednesday, March 29, 2006
Monday, March 13, 2006
"What Differentiates Our Firm Is..." [Nothing]
A very interesting article about how marketing works in the legal industry from Adam Smith Esq's blog - http://www.adamsmithesq.com/blog
A reader (partner in an AmLaw 10 firm) writes:
"Most businesses know their leading indicators of sales. For example, if the company increases the number of sales calls in January, there will be more sales in April. "Has anyone analyzed empirically what the leading indicators of sales are for AmLaw 200 law firms? Do the indicators include ads in the trade press? Fancy dinners with potential clients? Rounds of golf with potential clients? Publishing articles in legal or trade journals? Giving speeches? Winning jury trials? Closing big deals? "It strikes me that law firms have very little idea of what business development activities they really want to encourage among their lawyers and so take a scattershot approach to the effort. "Has anyone thought intelligently about this?"
This is a fascinating question. So, after a relative drought of pieces on law firm marketing, we have our second in one week.
My immediate response is: Most firms are probably clueless about this. (And if someone out there really is doing empirically-driven marketing, please raise your hand; I would be delighted to give you the recognition you deserve [unless you would deem it be revealing a competitive advantage, in which case we can talk not-for-attribution].)
All the activities the reader cites contribute to "name recognition" for a law firm, but the actual "sale" (read: engagements to handle a piece of litigation, a corporate transaction, a tax problem, etc.) only occurs when the client has the precise need, i.e., is at the point of pain. No one in the history of the world ever woke up and said, "What I need today is to buy myself a really good contract...."
The marketing of all sorts of other goods and services can often generate induced demand, simply by providing information about the features and benefits of a product. For example, a really good campaign could get me thinking about moving up to a Nikon digital SLR when my film Nikon still has many miles left on it, but you would never achieve anything remotely similar with a law firm's campaign.
To be sure, it's possible (although I would wager very uncommon) for a corporate lawyer to generate demand for, say, a review of corporate governance structures and policies at a client; but in general matrimonial lawyers don't generate divorces, white-collar crime lawyers don't generate securities fraud, and tax lawyers don't generate IRS audits. In this sense, then, all the marketing in the world can't generate a "sale" for a law firm. First, the client has to have the need.
But, as the marketers in the audience are starting to protest, can't the right marketing campaign achieve the holy grail of "differentiation?"
I'm here to tell you I think not.
Let me step back: Your firm can be "differentiated" in clients' eyes—and remember it's only the eyes of the clients that matter, not those of you and your partners—only if it stands for one consistent value, commonly thought of or referred to as its "brand." [ Note: Do not confuse "name recognition" for a "brand"—Martha Stewart has had very high name recognition for quite some time, but the value of the Martha Stewart brand has swung from the heights to the abyss and now maybe back.]
A "brand," in turn, is simply a promise: A promise of consistency, of a certain set of nearly immutable qualities that remains the same each time you come back. So every can of Coke is alike, every tube of Crest satisfies whatever it is in you that you like about Crest, and every BMW occupies the high-performance rung in its vehicle class.
But even though one of the most recognizable names in law-firm land is Skadden, every client interaction with a Skadden lawyer (or Clifford Chance, or Jacoby & Myers, for that matter) is different from every other client interaction with other Skadden lawyers, or that same Skadden lawyer on a different matter or a different day of the week.
In other words, law firms, even the mighty Skadden, cannot "promise" consistency. Thus they can't really have a brand that stands for anything in particular, and so they can't be meaningfully differentiated from their competitive set.
Understand what I'm not saying: I'm not saying that firms can't have reputations for being particularly expert in specific areas. Weil-Gotshal may be the go-to firm for big-ticket bankruptcies, Schulte-Roth for private equity, Sullivan & Cromwell for commercial bank regulation, etc.
That still doesn't mean the aura of those practice groups rubs off on completely unrelated practice groups within those exact same firms. In other words, if you're Fidelity or Vanguard and will never have anything to do with private equity, does anything still make Schulte-Roth distinctive to you? I think not.
But looking at these examples reveals something else: What clients want when they're in the market for a law firm is the capability that speaks most directly to their legal need du jour.
The only reason the articles, golf outings, fancy dinners, speaking engagements, etc., have any value is because they all amount to opportunities to show the client (you can't tell them—that's an exercise in futility if not self-inflicted humiliation) that you understand their business and the legal environment in which they function. In other words, they are efforts to demonstrate that what you offer could be, at the right time and place, germane to the client's legal needs.
The trenchant and always-reliable Bruce Marcus has written about this, more than once. The heart of the matter is this:
"The truth is, you probably can’t specifically articulate what you think you know to be better about you or your firm, because without tangible evidence, there’s no way to be credible. You can’t say, “We do better briefs and write better contracts,” or “We do better audits,” or “We’re better litigators.” "You can’t say these things because they’re outrageous and self-serving statements. Because you can’t prove it, in most cases. Because the Canons of Ethics won’t let you. And for most clients, because the real difference between one professional and another is not what you think it is – it’s what the client thinks it is."
Essentially, the goal of all the marketing tools we started with—the articles, the golf games and dinners, the speeches—is to create opportunities, through action not assertion, to demonstrate to the client that your firm stands ready to be truly useful when legal needs arise.
Marketing, in other words, gets you a seat at the consideration table. But you and your partners still have to "close the sale" in person.
And there won't be any "differentiation" or "branding" pixie dust in the room with you.Posted by Bruce at March 9, 2006 12:25 PM TrackBack
Sunday, March 12, 2006
Law is the latest in outsourcing to India
LegalEase featured in the Asian Age and Deccan Chronicle
With the world getting flatter, legal eagles in India, especially here, are fighting cases for US lawyers though not side by side. Legal outsourcing to India might have gained a foothold in the US legal system. Attorneys in Grand Forks and other companies now turn to lawyers in Bangalore, Delhi, and Chennai for help in drafting legal briefs and research work for cases to be fought in American courts.
Larry Newman, author of Texas Corporation Law and corporate transaction specialist, is similarly impressed by the quality of work done by Indian lawyers. He cites them as being instrumental to getting favourable results in even the most complex of cases. He is partial to legal outsourcing from India for the cost efficiency, fast response, and good work quality — all of which explain why the practice is fast catching up. Similarly, Tariq Akbar and Tariq Hafeez, partners of LegalEase Solutions in Michigan, US, discussed the impact of outsourcing and identified the potential of combining Mr Hafeez’s legal and Mr Akbar’s offshoring experience. They hire and retain both American and Indian lawyers to provide actual legal work to American law firms and corporate legal departments.
About a year ago, West — the best-known name in legal publishing in the US — began publicly ruminating about joining the stampede to India. For the past few months, West has been running a pilot programme in Mumbai, in which several Indian lawyers are preparing summaries of unpublished US court decisions.
General Electric (Research), America’s fifth-largest corporation, has taken the idea the farthest and set up a subsidiary in India that employs about 30 lawyers. In-house law departments of some multinational firms — DuPont, General Electric, United Technologies, Bayer, Microsoft, Cisco, Oracle and Sun — are here.
India has a huge potential in legal outsourcing, with the number of jobs in the field increasing to 79,000 by 2015, a study by Forrester has said. Though India had earned over $6.7 billion in US-based outsourcing services, such as software and call centres, till March 2005, the field of legal outsourcing was largely untapped.
The study estimated that jobs in the field — which was poised to increase dramatically from about $80 million annually to approximately $4 billion — would grow to 29,000 in 2008, 35,000 by 2010, and 79,000 by 2015.
Indian outsourcing offers the following economic advantages: a significant wage differential with Indian firms report paying legal researchers around $12,000 per year and also savings in perks, overhead, and working conditions, the study said, adding time zone differences allowed for overnight and 24x7 operations.
Says Mr Akbar, chief executive officer of LegalEase Solutions, "Our offshore attorneys in India are among the brightest in the legal community and are willing to direct their talents and energy towards providing some world class products. They have been extensively trained on US law and online tools like Lexis Nexis."
"This is because Indian lawyers are positioned to assist the US legal market," claimed Rocky Dhir, whose Atlas Legal Research has lawyers in Bangalore. "There is no difference between Indian and American advocates. The quality of work is the same," said attorney at law Jay Ethington, specialising in criminal defence.
A former assistant United States attorney, Mr Ethington said he had tried Indian advocates to do research and complete the paperwork for about half-a-dozen cases. "Results have been very good all the time," he said.
Indian advocates do not fight the case directly in US courts. Sitting thousands of miles away, they do the research work, analyse the case and draft the legal brief for advocates, who fight the case in US courts. This saves a lot of time and energy, besides money, for American attorneys.
The advantage is, Mr Dhir said, "India, like the US, has a common law jurisdiction." The fact that the entire legal system, from studies to debate to court orders, is conducted in English is also an advantage. Also, the time difference between India and the US is appropriate.
"While our legal research associates are busy preparing the case, US lawyers sleep. As such our company works 24 hours," Mr Dhir said. It would also be an added advantage for a large number of Indian companies, too, like Infosys, Tata and Wipro, who have business in the US, to access this legal facility. With the help of lawyers from India, these companies can very well compete with their rivals in courts here and that too at a fractional cost.
This proves that offshoring is benefiting both sides and Americans are opening up after much dissent. Agrees, Mr Akbar, "The practice of law requires court time, client development meetings and a certain amount of personal research and writing. You cannot replace an American attorney. We help American lawyers tap the intellectual capital of the world to meet the demands of the legal market through outsourcing. There are small law firms who could definitely use the affordable legal support and there are large ongoing expensive litigation cases (case in point Enron) which continue to consume millions of dollars which can be made a lot more cost effective."
So far, the legal services work consisted of paralegal, secretarial and litigation support. However, according to financial consulting firm Fulcrum Financial Inquiry, Indian firms now offered more valuable services, including contract review and monitoring, document review for due diligence, patent drafting, simple filings and legal research.
According to a report published last year by the University of California at Berkeley, paralegals and legal assistants based in India earn on an average between $6 and $8 an hour, compared with the nearly $18 an hour their counterparts in the US make. "But it is more than what a lawyer in India would make. I took up working for an outsourcing firm because the money is definitely double," says Ms Nadini Pai, a lawyer in an outsourcing firm in the city.
Will this boom in India too fizz out like the dotcom boom did? "The boom will have to level out as with everything else. There is a demand supply logic which commands the world economy. Once the demand and supply levels off, the boom will subside but the need will continue. BPO is not an industry per se but a concept which will cease to be an attention grabber but more of the norm of things to come as the world continues to get flatter," says Mr Akbar.
- By Raziqueh Hussain
With the world getting flatter, legal eagles in India, especially here, are fighting cases for US lawyers though not side by side. Legal outsourcing to India might have gained a foothold in the US legal system. Attorneys in Grand Forks and other companies now turn to lawyers in Bangalore, Delhi, and Chennai for help in drafting legal briefs and research work for cases to be fought in American courts.
Larry Newman, author of Texas Corporation Law and corporate transaction specialist, is similarly impressed by the quality of work done by Indian lawyers. He cites them as being instrumental to getting favourable results in even the most complex of cases. He is partial to legal outsourcing from India for the cost efficiency, fast response, and good work quality — all of which explain why the practice is fast catching up. Similarly, Tariq Akbar and Tariq Hafeez, partners of LegalEase Solutions in Michigan, US, discussed the impact of outsourcing and identified the potential of combining Mr Hafeez’s legal and Mr Akbar’s offshoring experience. They hire and retain both American and Indian lawyers to provide actual legal work to American law firms and corporate legal departments.
About a year ago, West — the best-known name in legal publishing in the US — began publicly ruminating about joining the stampede to India. For the past few months, West has been running a pilot programme in Mumbai, in which several Indian lawyers are preparing summaries of unpublished US court decisions.
General Electric (Research), America’s fifth-largest corporation, has taken the idea the farthest and set up a subsidiary in India that employs about 30 lawyers. In-house law departments of some multinational firms — DuPont, General Electric, United Technologies, Bayer, Microsoft, Cisco, Oracle and Sun — are here.
India has a huge potential in legal outsourcing, with the number of jobs in the field increasing to 79,000 by 2015, a study by Forrester has said. Though India had earned over $6.7 billion in US-based outsourcing services, such as software and call centres, till March 2005, the field of legal outsourcing was largely untapped.
The study estimated that jobs in the field — which was poised to increase dramatically from about $80 million annually to approximately $4 billion — would grow to 29,000 in 2008, 35,000 by 2010, and 79,000 by 2015.
Indian outsourcing offers the following economic advantages: a significant wage differential with Indian firms report paying legal researchers around $12,000 per year and also savings in perks, overhead, and working conditions, the study said, adding time zone differences allowed for overnight and 24x7 operations.
Says Mr Akbar, chief executive officer of LegalEase Solutions, "Our offshore attorneys in India are among the brightest in the legal community and are willing to direct their talents and energy towards providing some world class products. They have been extensively trained on US law and online tools like Lexis Nexis."
"This is because Indian lawyers are positioned to assist the US legal market," claimed Rocky Dhir, whose Atlas Legal Research has lawyers in Bangalore. "There is no difference between Indian and American advocates. The quality of work is the same," said attorney at law Jay Ethington, specialising in criminal defence.
A former assistant United States attorney, Mr Ethington said he had tried Indian advocates to do research and complete the paperwork for about half-a-dozen cases. "Results have been very good all the time," he said.
Indian advocates do not fight the case directly in US courts. Sitting thousands of miles away, they do the research work, analyse the case and draft the legal brief for advocates, who fight the case in US courts. This saves a lot of time and energy, besides money, for American attorneys.
The advantage is, Mr Dhir said, "India, like the US, has a common law jurisdiction." The fact that the entire legal system, from studies to debate to court orders, is conducted in English is also an advantage. Also, the time difference between India and the US is appropriate.
"While our legal research associates are busy preparing the case, US lawyers sleep. As such our company works 24 hours," Mr Dhir said. It would also be an added advantage for a large number of Indian companies, too, like Infosys, Tata and Wipro, who have business in the US, to access this legal facility. With the help of lawyers from India, these companies can very well compete with their rivals in courts here and that too at a fractional cost.
This proves that offshoring is benefiting both sides and Americans are opening up after much dissent. Agrees, Mr Akbar, "The practice of law requires court time, client development meetings and a certain amount of personal research and writing. You cannot replace an American attorney. We help American lawyers tap the intellectual capital of the world to meet the demands of the legal market through outsourcing. There are small law firms who could definitely use the affordable legal support and there are large ongoing expensive litigation cases (case in point Enron) which continue to consume millions of dollars which can be made a lot more cost effective."
So far, the legal services work consisted of paralegal, secretarial and litigation support. However, according to financial consulting firm Fulcrum Financial Inquiry, Indian firms now offered more valuable services, including contract review and monitoring, document review for due diligence, patent drafting, simple filings and legal research.
According to a report published last year by the University of California at Berkeley, paralegals and legal assistants based in India earn on an average between $6 and $8 an hour, compared with the nearly $18 an hour their counterparts in the US make. "But it is more than what a lawyer in India would make. I took up working for an outsourcing firm because the money is definitely double," says Ms Nadini Pai, a lawyer in an outsourcing firm in the city.
Will this boom in India too fizz out like the dotcom boom did? "The boom will have to level out as with everything else. There is a demand supply logic which commands the world economy. Once the demand and supply levels off, the boom will subside but the need will continue. BPO is not an industry per se but a concept which will cease to be an attention grabber but more of the norm of things to come as the world continues to get flatter," says Mr Akbar.
- By Raziqueh Hussain
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