Technology Reaching Into The Courtroom

The New York Times recently featured an investigation of how technology -- especially online searches -- is shaping jury selection.

One striking part of the article is how reticent attorneys and jury consultants were to even speak to Reuters Legal on the subject.

"Ten law firms and five jury consultants declined requests from Reuters Legal to observe them building juror profiles, many saying they weren't sure judges would approve."

"Lawyers don't know the rules yet," said John Nadolenco, a partner at Mayer Brown in Los Angeles. "It's like the Wild West."

But while few are talking about it on the record, it's clear that this is a topic begging for official guidelines.

"Jurors are like icebergs -- only 10 percent of them is what you see in court," said Dallas-based jury consultant Jason Bloom. "But you go online and sometimes you can see the rest of the juror iceberg that's below the water line."

While most agree there is a lack of hard and fast rules as of now, one firm did provide access.

Alabam's Wooten Law Firm allowed Reuters Legal access as their paralegal "scanned Facebook, MySpace and Twitter, and used Google searches to find jurors' names on the websites of government agencies, school boards, local companies, and sites that contain property records. Links to each site were assembled in a spreadsheet."

In terms of precedent, a New Jersey Superior Court judge did bar counsel from googling potential jurors in the courtroom because the opposing counsel had not brought laptops to court, ruling that use of the internet provided "an inherent advantage regarding the jury selection process."

However, appellate judges held that the trial judge had improperly prohibited the online research, writing that the "playing field was, in fact, already level, because Internet access was open to both counsel -- even if only one of them chose to utilize it."

As the article summarizes, "the federal courts so far have not addressed the issue of online vetting of jurors, and just two states, Missouri and New Jersey, have said it's acceptable in some forms. But judges and lawyers, even in those states, still seem to be grappling with the practice."

Additional 2011 Projections

Last week we looked at legal market projections from Hildebrandt Baker Robbins in their 2011 Client Advisory.

That report also contains additional data compiled by the Citi Leaders Council Survey and Thomson Reuters.

The Citi Leaders survey comprised 48 large law firms and found:

• Respondents project using AFA's for 15.4% of their firms' revenues in 2011, up from 12.9% last year.

The Thomson Reuters survey polled the leaders of 78 large law firms last year as part of their Legal Executive Briefing and found:

• 96% of respondents indicated they expect increased use of AFAs during the next three years.

• 89% forecast increased use of pre-matter budgets.

• 71% expect increases in their use of teams to manage matters/projects.

• 61% percent expect increased use of contract lawyers.

• 55% expect increased use of non-lawyer project managers.

• 43% expect an increase in the outsourcing of routine legal activities.

These are significant expectations for evolving business models, and the Hildebrandt Client Advisory summarizes these projections with this:

"We fully expect that the experimentation with new service delivery models and new pricing strategies that we have seen over the past couple of years will continue and expand in 2011. Thus, we believe that firms will continue to focus on project management skills and other techniques for improving efficiency, including the outsourcing of legal and non-legal aspects of their work and the use of technology to automate workflows and to reduce the number of staff required."

Re-Thinking The Service Delivery Model

Professional services and firm management consultants Hildebrandt Baker Robbins released their 2011 Client Advisory for the legal market.

Their comprehensive surveys highlight perceived legal trends in 2010, as well as the trends they believe will impact the market this year. Their discussion of Management Challenges opens with two telling paragraphs:

"Much has been written over the past two years about the changing delivery model for legal services and the need for firms to re-think their underlying assumptions about work processes, pricing, infrastructure, and administrative support. While some of the bold predictions of revolutionary changes in the structure and work of firms have no doubt been overblown, there is no denying that the market is changing and that some firms are beginning to use the redesign of their service delivery models to good competitive advantage."

"As Mike Dillon, the General Counsel of Sun Microsystems has observed, “The reality is that we are in the early stages of a seismic shift in the traditional cost and delivery model for legal services. I see it every day in my interactions with the law firms that support us and in my discussions with peers at other companies.”

The report notes that while the billable hour is still considered the "normal" model, "there has clearly been a noticeable increase in the use of AFAs (alternative fee arrangements) and the evidence suggests that this trend will continue in coming years."

The Hildebrandt survey encompassed more than 200 companies, and looked at 2009 actual number along with expected 2010 numbers and found:

• 41 percent indicated they had used contractually fixed fees in 2009 for up to 10 percent of their outside legal work.

• 20 percent also reported they had used contingency fees for up to 10 percent of their outside legal work.

• 19 percent indicated they had used value or incentive billing.

• 8 percent stated they had used portfolio pricing (i.e. the use of fixed fees for a series of projects or cases or for projects occurring).

• 61 percent projected an increase in the use of contractually fixed fees in 2010.

• 55 percent projected increased use of value or incentive billing.

• 45 percent projected increased use of contingency fees.

• 36 percent projected increased use of portfolio pricing.

The Hildebrandt survey certainly seems to indicate that alternative models have moved beyond simply gaining traction; they seem now to be part of the permanent landscape.

Five Forces

While Richard Susskind's book "The End of Lawyers?" is always a hot topic when discussing trends in the business of law, Mark Gerow makes a compelling argument in Law Technology News that the market forces Susskind describes were first outlined by Michael Porter's "Five Forces" back in 1979.

"Five Forces" detailed the following market forces that impact any industry (not specifically law) as:


Within this context, Gerow highlights how these forces are effecting the current state of the business of law.

• "Clients have more bargaining power due to increased options for sourcing legal services (both geographically and in terms of method of delivery.)"

• "The threat of new entrants has increased in certain segments due to globalization."

• "The threat of substitute products (such as outsourced e-discovery) has increased."

• "Rivalry within the industry is high due to the barriers of exit (a law firm can't choose to switch to healthcare services if the legal market becomes too crowded, it must "stand and fight".)"

It's interesting to view the legal industry through this broader lens, crystallizing the impact the internet has had in increasing competitive pressures on a legal industry that had been largely insulated from theses dynamics in the past.

The E-Discovery Balance -- Technology And The Legal Team

Last week we looked at the role of some software technology in e-discovery, concluding that while software is an important tool, it is not a substitute for attorney participation.

Freelance writer Jason Krause wrote an interesting piece last month for Legal Technology News that delves further into the burgeoning studies being conducted to try to determine that optimal balance between technology and human activity in large scale data collection.

Krause highlighted the Text Retrieval Conference (TREC), an initiative co-sponsored by the National Institute of Standards and Technology (NIST) and the U.S. Department of Defense. One of TREC's missions is to encourage research in information retrieval based on large text collections.

According to Law Technology News, "for several years now, the Text Retrieval Conference Legal Track has tested different types of computer searches to create industry best practices for searching electronic records in litigation. In 2008, the project added a new investigation into the role of human researchers in improving the search results from computers, called the Interactive Task."

"Dan Brassil, manager of Linguistic Technology with H5 says, "Computer algorithms are getting better, but they will never get the same results as when there is a person in the loop or human intervention is part of the search process. The question is where the humans fit into the picture."

"Researchers in the TREC project are discovering there are roles that are best provided by machines and those done by human beings. "We use humans to do what they are very good at, which is to make nuanced judgments in specific cases," says Brassil. "But they are not so good at judgments across a lot of documents. People get tired, allow inferences to creep in, and you never know what a person will say in terms of consistency. That's where machines come in."

While the test groups employed fundamentally different approaches (e.g. using complex questionnaires to refine the up-front search scope vs. employing a computer-based learning tool to rank responsiveness), the TREC researchers concluded:

"Machines should do the grunt work of review, but members of a legal team need to:

• Consider scope, timing, and nature of the request to determine what approach may work best. Think about whether there is time to gradually seek every responsive document possible, or if a more targeted approach is needed.

• Identify the custodians who understand the documents in a collection and discover what they know about those documents.

• Capture the language from responsive documents and incorporate it into search terms that approximate the language actually used.

• Continually perform control checks. If responsive documents are not being found, reconsider and refine search strings.

Unfortunately, there is no definitive answer about the division of labor between man and machine. But the TREC topic authorities noted that teams that failed to think ahead about how to define relevant documents and relied on computing power to find documents fared the worst. "It's well understood that human review and machine review have limitations," says TREC Legal Track researcher Gordon Cormack. "In the next few years we hope to find the balance between them that mitigates those natural flaws."

E-Discovery Software

Last year, The Wall Street Journal reported on a BTI Consulting Group survey indicating that large companies intend to spend more than 7% of their litigation budget on e-discovery this year.

The ABA Journal cited the article, noting that:

"The right software can help reduce the number of documents needing attorney review, helping save money..."

For example, Morgan, Lewis & Bockius used “predictive coding” software made by Recommind Inc. to review millions of pages of documents in less than a month.

Cisco recently started utilizing the same software.

As Recommind explains, Predictive Coding is "a patent-pending technology and workflow which automatically analyzes, prioritizes and codes all documents in a collection as part of litigation or regulatory or internal investigations."

However, as the Recommind site also explains, predictive coding is not a replacement for attorneys.

It is simply a more efficient addition to the sorting component of the workflow and documentation process -- a process that still requires attorney review and analysis, which is itself an area abundant with potential added efficiencies and cost savings.

Less Than Happy Holidays For Associates

The outlook gets grimmer for associates, as several sources highlight their rough road.

As we previously discussed, The National Law Journal last month reported a 1.5 percent drop in the total number of associates at the country's 250 larges law firms.

Last week, the AmLaw Daily reported on the latest Robert Half Legal Hiring Index, in which seven percent more respondents said their firms intend to add jobs in the first quarter of 2011 over the the fourth quarter of 2010.

That would appear to be good news, except for this caveat:

"Fifty-two percent of respondents reported difficulty in finding skilled legal professionals. According to Volkert at Robert Half, this suggests that while law firms and legal corporate departments may have openings, they are mostly interested in candidates who are currently employed."

To dampen the outlook even further, simply being an employed associate doesn't seem to mean what it used to. The ABA Journal recently wrote:

"Some associates who managed to avoid layoffs now lack the exposure and experience of their peers from three to five years ago."

According to that article, the unexpected consequence of the recession is that many associates who retained their jobs spent the last two years doing "pro bono work and marketing", resulting in an unprecedented lack of real experience.

"Across the board at leading law firms in Chicago, Los Angeles and New York City, there are associates who haven’t gained the experience compared to years past, says Sheri Michaels, a partner at legal recruiter Major, Lindsey & Africa in New York City."

Which leads legal recruiter Amy McCormack to observe yet another potential change to the business of law:

"The dearth of experienced associates is even more reason for firms to abandon traditional class distinctions and evaluate junior lawyers on actual experience and legal skills."

The Law School Disconnect

A couple interesting posts this past week highlight conflicting trends on a collision course.

The Law School Admissions Council reported that the number of people taking the Law School Admissions Test last October was the second highest ever.

A closer look at the LSAC's chart shows this is part of a greater trend.

• The highest number of October test takers in the history of the exam occurred last year.

• The highest number of June test takers ever was this year.

• The second and third highest number of June test takers was last year and the year before.

• The highest number of December test takers was last year, with the second highest number of December test takers being the year prior.

• The highest and second highest number of February test takers also took place in the last two years.

However, as The American Lawyer summarizes their 2010 Survey of the Am Law 200 they conclude:

• The survey "suggests that many of the changes implemented during the recession--smaller associate classes, postponed start dates for new hires, reductions in the equity pool, and scaled-back profit expectations--are here to stay, at least for a while."

While at Above The Law, a debate over whether a 1L with "only" $21,000 of debt invested in law school should read the writing on the wall and drop out now.

80% of the responders concurred that the fiscally wise move would be to drop out now.

So we have a record number of potential law school students facing a record squeeze on entry to the profession. Something has to give.

The Survey of Small Firm Economics

Last week we looked at the survey of the 250 largest U.S. firms, and this week we'll look at The Survey of Law Firm Economics, a joint project of ALM Legal Intelligence and The National Law Journal, for which the majority of respondents were firms with fewer than 150 attorneys.

Consistent with the largest firms, the small and mid-size firms also saw an historically unprecedented double dip.

According to law.com:

In 2008, revenue per lawyer declined by the largest percentage in 25 years — nearly 5%. In 2009, the figure dropped again, this time by less than 1%. Although the decrease was slight, a two-year drop in revenue-per-lawyer figures is unprecedented for firms taking this survey.

And yet, according to the report, small and mid-size firms actually increased profitability by:

• Aggressive cost cutting.

• Expense per attorney dropped by 5% in 2009, the largest ever decrease in expense-per-lawyer.

• Expense-per-lawyer also dropped in 2008, making it the first consecutive year drop in that category since numbers have been tracked.

• Net income was also up by 2.7%.

• However, actual realization rates dropped 2%, and partners wrote off 7% more of their time than in 2008.

• Billable hours also dropped for both partners and associates.

So, if billable hours were down and clients were paying less of their bills, was aggressive cost cutting the sole component of the rise in net income?

No. According to the report, small and mid-size firms also compensated by raising rates.

Hourly rates for the average equity partner are now at an all-time high among surveyed firms.

Which means we seem to have a disconnect. Because most observers feel the balance of power has shifted to the client side. And, as we've discussed, the current ACC Value Challenge expects firms to drop costs by 25% next year.

It would appear that expectations on one or both sides of the equation will have to change.

Results from the NLJ 250

The National Law Journal's annual survey of the 250 largest U.S.-based law firms by headcount is out, and the numbers are starting to crystallize our collective perceptions from the last two years.

The largest U.S. law firms trimmed another 1,400, making this the second consecutive year of cuts and the largest two-year decrease in headcount in the ranking's 33 year history.

Over the last two years, the NLJ 250 have shed more than 5% of their attorneys. The only other consecutive two-year decrease was 1992-93, which saw cuts totaling less than 2%. So, we're clearly in uncharted territory here.

Digging a little deeper into the numbers we see:

• More than half of the 250 saw decreases, while more than 2/3 of the top 50 saw declines.

• Some firms even saw double-digit percentage cuts.

• Associates, again, took the biggest hit, accounting for the majority of the decreased headcount.

• Where headcount did rise in 2010 was in the "other category", which includes non-associate attorneys, contract lawyers, and temporary attorneys.

According to Altman Weil consultant Ward Bower, "There are fewer lawyers producing more work and more revenue." Which means "there's been a reset."

"Law firms are unlikely to hire hordes of associates as they had before the 2007 recession any time soon, if ever."

And this seems to be another indicator that what used to be considered associate-level work is now being accomplished via new, emerging channels.

Collecting Law Firm Data

Last week we discussed the ACC Value Challenge's latest initiative to reduce law firm spending by 25% in 2011.

One obvious question was what tactics will Law Firms ultimately embrace to tackle such a hefty directive?

Corporate Counsel reported last week on one interesting new tool that may factor into the mix.

ACC's longtime general counsel Susan Hackett announced the organization's new initiative to ask law departments to post their internal data -- anonymously -- on an ACC site so all firms can compare how their departments are performing.

The vast majority of law firms track internal data like:

• Outside Legal Expenses

• Actual Performance Compared to Amount Budgeted

• Department Spending as a Percentage of Revenue

But this data is of limited value if it can't be measured against other firms, and that's what the ACC's new database seeks to correct. According to General Counsel:

"Only 24 percent of the survey's respondents said they have the tools or capacity to benchmark their legal departments against others. And that inability to compare, Hackett said, is preventing them from making more effective use of the numbers."

Hackett said they hope to have something up and running, "even if not fully 'populated,'" by mid-2011.

The New Normal

The ABA Journal is hosting The New Normal, an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, and Patrick Lamb, founding member of Valorem Law Group, about the changes occurring in the delivery of legal services.

The phrase "New Normal" describes how technology and global competition are creating a new normal of relentless change, and this past discussion focused on the next wave of value demands from GCs.

According to the article, from GCs perspective, they are now coming from a place where "most things we buy are getting cheaper while law is getting more expensive."

Which leads GCs to question how can law firms can "say you’re putting our interests first when you don’t realize global competition could put us out of business if I don’t manage every aspect of my operations more efficiently?”

We've discussed the ACC Value Challenge before on this blog, but now according to its chairman, Mike Roster, “25% in cost savings for 2011 is the new target."

Roster continues, "I've spoken to many top GCs and this is what they're planning to get to next year, and it's achievable. And by trying to get there, they’ll actually do a better job.”

The New Normal wondered if a goal of a 25% cost reduction would be a "catastrophe or an opportunity", and they postulated that in their experience "seeking modest, incremental improvements usually changes little; seeking dramatic improvements (which requires simultaneously redefining objectives, resources and constraints) often – but of course not always – leads to breakthroughs."

25% cost reductions in 2011 is no doubt an aggressive goal. It will be interesting to see how adamant GCs remain, and what tactics law firms ultimately embrace to tackle such a hefty directive.

Trends Gaining Traction in Bureau of Labor Statistics Report

The ABA Journal last week highlighted the recent U.S. Bureau of Labor Statistics Report that contained good news for paralegals.

But if you really look at the actual BLS Report, it is striking how the trends that have emerged over the last two years are now shaping projections for the legal job market.

According to the report:

• "Corporations in particular are expected to increase their in-house legal departments to cut costs. The wide range of tasks paralegals can perform has helped to increase their employment in small and medium-size establishments of all types."

There has been debate whether cost cutting is a trend during challenging economic times or whether it is the new reality, and this report seems to assume the latter.

• "Demand for paralegals also is expected to grow as an expanding population increasingly requires legal services, especially in areas such as intellectual property, healthcare, international law, elder issues, criminal law, and environmental law. The growth of prepaid legal plans also should contribute to the demand for legal services."

There has been no shortage of talk about alternative billing models, but it is noteworthy to see one gaining enough traction to factor into government labor projections.

• "Employment of paralegals and legal assistants is projected to grow 28 percent between 2008 and 2018, much faster than the average for all occupations. Employers are trying to reduce costs and increase the availability and efficiency of legal services by hiring paralegals to perform tasks once done by lawyers."

At the core of legal service outsourcing is the idea that some rudimentary, associate-level legal work can be effectively executed by lower cost regional or international lawyers. But this government report takes that idea one step further, implying that some functions can be delegated to non-lawyers, which is something clients may want to watch warily.

Challenges of Constant Connectivity and Instant Communication

A couple articles this week highlighted the challenges and considerations arising from our current state of constant connectivity and instant communication.

We've all hit 'send' on an email, only to feel that wave of doubt. Should I have sent it? Could it be misinterpreted?

If that concern with an overly hasty missive exists with email -- which at least forces us to slow down a little and compose a thoughtful (hopefully) message -- the potential for rushed and ill-considered communication exponentially increases with text messaging, which is by nature immediate and fragmented.

Other potential pitfalls of instant communication for lawyers were assessed by Samantha Southall at Law Technology News, including texts from new/potential clients, inflammatory texts from opposing counsel, texts that contain derogatory comments about colleagues or judges, and inquiries from reporters.

One of Southall's observations turns out to be the best rule of thumb: Treat every electronic response as though it is going to be seen in print, attributed to you, in a newspaper. And we'll take it one step further: Act as though your comment in that newspaper is going to be read by your mother.

The other timely article appeared in law.com, where Harry Valetk discussed the challenges of a socially networked jury.

Valetk's conclusion that trial courts must "adapt to jurors hopelessly dependent on information" includes the following focal points:

Probe jurors during voir dire on Facebook and Twitter use. Establish frequency of use and a juror's ability to refrain from using social networking tools during trial.

Monitor juror Facebook and Twitter activity during trial. Tools like Social Mention allow you to search blogs, microblogs, networks, videos and much more. This engine also allows you to create alerts for your search terms that you can have e-mailed to you daily.

Ask the trial judge to remind jurors that they may come forward to report a fellow juror's misconduct. The judge should also remind jurors about the fines and other potential consequences for failing to follow the court's ban on communicating with others about the case.

Warn jurors before and after every jury break about the court's ban on communicating with others about the case during trial, including the use of Facebook, Twitter and other web-based tools.

Explain the logic behind the presumption of juror prejudice. Jurors today may be more receptive to complying with court-ordered bans on communicating with others during trial if they understand the logic behind the ban.

Survey of Law Firm Financial Performance

Last month's midyear survey results from Citi Private Bank's Survey of Law Firm Financial Performance offered some much needed good news, however each positive nugget came tempered with caveats.

According to coverage in AmericanLawyer.com:

The Good News: Law firm expenses decreased, compared with the first half of 2009.

The Mitigating Factors: Lower expenses are largely due to the reductions in lawyer head count that firms implemented last year. Also, since these reductions took effect mainly in the second half of 2009, we will now start to see much flatter year-to-year comparisons.

The Good News: The impact of head count reductions has been positive, with productivity up about 4 percent and contribution per lawyer (revenue per lawyer minus expense per lawyer) up almost 20 percent.

The Mitigating Factors: We're coming from a low base, and there will be a bump in head count created by the new incoming class starting in the third quarter, so firms may still have excess capacity.

The Good News: Billing rates are up, trending at 4 percent. This is a good result, albeit lower than the historic 6-7 percent.

The Mitigating Factors: We have two caveats. These rate increases are before realization, and we're still hearing that realization is under pressure (though not falling as steeply as in 2009). Further, since leverage is declining, rate increases may be artificially inflated because a higher percentage of more senior lawyers with higher billing rates are doing the work.

The Good News: Net income and profit per equity partner for the first half of 2010 show improvement over the same period in 2009.

The Mitigating Factors: Given the traditional bump in fourth-quarter collections, this may not be an accurate reflection of net income and profit per equity partner for full-year 2010 and cannot be taken as a prediction.

The Good News: As a sector, demand at global firms is up by almost 2 percent.

The Mitigating Factor: Global firms underperformed the industry over the last two years.

Taken as a whole, there seem to be enough rays of sunshine to argue that we may have at least reached the bottom. But there are more than enough caveats to argue that we're still deep in the canyon.

Tech Savvy Cost Reductions

Florida commercial litigation lawyer Marc Dobin wrote an informative article for law.com on cost saving tech solutions for smaller firms.

Starting with securing a firm's web presence, Dobin recommends GoDaddy.com, which offers domain name registration, very low cost web hosting, and has tremendous customer service to assist the novices.

While GoDaddy also offers adequate, free website templates, Dobin points to justia.net for the free version of their search engine optimized websites specifically for law firms. According to the article: "It is a template-based, form-based, legal-specific website, but is very professional looking and has good SEO. It is probably 75 percent of what I would want with a website with 0 percent of the cost."

For the firm's blog, he utilized the free Google product blogger.com, and then he registered his blog's domain name to protect against domain name poachers.

For email he turned to another Google product at Google Business Solutions that provides email accounts that function just like Gmail accounts -- but they also allow a firm to use their registered domain name.

The Google Business email accounts also have POP3 access, so IPhones and BlackBerries can access the mailbox.

Rather than a land-line fax, Dobin highlights unityfax.com -- a site that allows you to send and receive faxes (using a traditional fax number) via the web or email. For only $4.99 a month for unlimited inbound faxes, it is cheaper than a fax line and you can keep your fax number permanently (in fact, they can even port your existing fax number).

Dobin explains the way unityfax operates: "The faxes are sent to an e-mail address that can then forward them, using a Google Mail filter, to any user on the domain." And because the faxes are received as PDFs, they can be read on your computer or smartphone.

And for document delivery, he recommends yousendit.com, which allows password protected large volume delivery of electronic documents. You can send up to 2 GB of files in a password protected zip folder for $3.99, which is a significant savings over Fed-Exing hard copies.

As every legacy form of communication and marketing now offers a digital complement or alternative, Mr. Dobin underscores the advantage enjoyed by the technologically savvy.

Ernst & Young's Global GC on the Evolution of the Business of Law

Each week there seems to be a new indication of the evolution of the business of law.

This past week, American Lawyer.com posted a video of a conversation with Ernst & Young's Global General Counsel, Trevor Faure, discussing the future of the law firm model, as well as the client model.

Some of the highlights of the interview include:

• Currently, GC's are facing the application of world class business methodology to the practice of law.

• Attorneys across the board are being asked to increase coverage, compliance, and client satisfaction, while minimizing costs and stabilizing headcount.

• To do this, attorneys need to -- on some level -- define, measure, and analyze elements of the business, including financial efficiency.

• If GC doesn't address the issues of efficiency, then Finance or Procurement will.

• While lawyers may be conservative by nature -- and perhaps not the most comfortable with data and financial management -- they are nonetheless facing demands for financial efficiency driven by globalization.

• The challenge for lawyers is to become business astute, which means facing the imperative of translating complex, subjective, unpredictable services into some sort of metric-based management.

• This challenge applies to every size of law firm or general counsel.

• Even when the economy completely rebounds, the re-evaluation of the attorney/client relationship is not going to revert to pre-recession status, because...

• Globalization is a one-way street. The movement of capital around the world seeking the highest return is resulting in both law firms and clients building and designing efficiencies that they are not likely to give back.

Corporate-Minded Law

September's ABA Journal has a feature story on the growing momentum of private equity legal-service companies taking market share away from the traditional law school model.

According to the article, "Backed by institutions, private investors and hedge funds, these entrepreneurs and financiers employ a growing legion of lawyers in the United States and offshore."

"Even though their enterprises don't counsel clients—they are prohibited from doing so by the ABA Model Rules of Professional Conduct—they are changing expectations about how legal services are priced and delivered."

The common denominator for these legal service companies' business models is the unbundling of traditional legal disciplines and then providing specific efficiencies.

• Some drive down costs by automating routine legal tasks.

• Others assemble dedicated teams of lawyers for in-house legal departments to draft simple contracts, review documents and conduct research.

• Still others use proprietary models to predict probable outcomes in complex commercial litigation, then contract to finance the most promising cases, freeing up corporate litigants' capital for other uses.

This emerging hybrid of lawyer-entrepreneurs "speak a language investors understand. Rather than profits per partner, they talk about market share and return on invested capital. They converse as easily about finance, technology and management as finer points of law. And their enterprises produce steady returns even when unemployment soars and stock markets tank."

The Return of Legal Rebels

The ABA Journal started their Legal Rebel's project last fall, with a manifesto announcing their commitment to innovation in the legal profession, questioning the status quo, and using technology to serve clients and society.

After an eight month hiatus, the Legal Rebels site looks to be back in the saddle, with profiles featuring a slew of innovative and off-the-beaten-path approaches to the business of law.

Included in the updates are:

• A young lawyer who purchased a 100-year-old firm on craigslist and is now thriving in a small town.

• Continued coverage of SoloCorps.

• The story of an ex-prison guard's path to law school.

• The need for bookkeeping skills in a solo practice.

• How the lessons of military intelligence apply to a solo practitioner.

Add these to the 50 existing profiles, which weigh in heavily on technology, and the Legal Rebels project remains an important look at the stew of ideas shaping the next generation of lawyers.

Leaving Big Law Behind

Much of what we've been discussing on this blog for the past year went mainstream last week, with Slate profiling the evolving Big Law model as a field "rife with upheaval".

Listed as one of Slate's five most read articles, the piece touched on many of the hot buttons that insiders have been watching, including:

• The assault on the billable hour, via The Economist.

• The wide range of alternative models currently testing the waters.

• Outsourcing internationally to teams of attorneys in India, via the New York Times.

• Onshoring to lower cost regions within the U.S., via The Washington Post.

• The Great Recession's squeeze on the legal field.

The article also identifies "companies below the $100 million revenue level" as the primary target clients of Big Law ex pats.

Finally, the piece notes that the transformation taking place in the business of law is not unique; rather it is simply the legal profession catching up with most other industries:

"Partners who ditch overcomplicated Big Law practices for nimble, flexible shops that facilitate simpler client relationships are like other denizens of the little-guy economy."