The business model of large law firms works – they make a lot of money. Clients could effect radical changes tomorrow in the industry that would unleash a wave of innovation by making significant changes in their buying decisions. They’d be some collateral damage and whether it would aid diversity is another matter. But there would be change aplenty. However, by and large, clients haven’t made those kind of decisions. The bottom line is that law firms are a bit like governments – you get the ones you deserve. The ones you choose. Law firms developed this model because it delivers financially, generally provides a good service and it is what clients signed up to. Is anyone surprised they’re not rushing to change?

Offer the partner a deal based on a thought experiment. Imagine a jar containing 100 balls, 70 of them red (since the estimate was 70% likelihood of a successful resolution), 30 black. Give her a choice. Draw one ball from the jar and if it’s red, the law department will pay the firm $250,000 (or some substantial amount). If the resolution of the case is not a success – as defined in advance and represented by a black ball – the firm rebates $250,000. The estimate was legitimate and confident if the partner agrees to the game; she will modify her estimate if not. A de Finetti test ultimately establishes a correspondence between subjective possibility and frequentist possibility.

True long-term success requires businesses to improve continually and reimagine how they operate in the face of changing competition and market forces. Yet this innovative urge, which drives so much of the rest of the American economy, is largely absent from large law firms.

April 30 (Bloomberg Law) -- Big law firms may be headed into a down cycle they haven't seen since the 1930s, according to Atlanta lawyer Michael Trotter, who has written the forthcoming book "Declining Prospects" about the economic cycles of the nation's largest law firms. He tells Bloomberg Law's Josh Block that the Great Depression lasted 30 years for the nation's largest firms, before billing by the hour, rather than by the matter, caught on in the 1960s. That led to a decades-long boom at big law firms, with profits and the number of lawyers employed by the firms growing exponentially, before the rise of in-house legal departments led to the current backlash against the billable hour, he says.

. Access to firm precedents - £20k per annum.
2. Access to precedents plus 2 hours consultation on any first drafts produced in-house using firm precedent - £30k per annum.
3. Provision of first draft agreements for twenty unspecified agreements over the next 12 months - £30k per annum.
4. Quality assurance audit of 15 random contracts produced by in-house team - £5k per annum.
5. Intensive training over the year for an in-house team to obtain an accredited qualification in a specialist subject (e.g. copyright) - £10k per annum.

Riverview Law, the combined law firm and barristers’ chambers that sells fixed-fee advice to businesses, is to shift its strategy of organic growth to one of acquisition to meet unexpected demand just two months after it launched.

Even if Polaroid or Kodak could have developed Instagram, it’s likely that the project would have been killed anyway. What would be the reaction of almost any executive presented with a business plan to save the company with an iPhone app that had no prospect for revenue?

There can be little doubt that in the current environment, some clients will continue to look for metrics that allow them to precisely define value and tie it to payment. But we predict that many lawyers will see the example above as excessively complicated, with a whole lot of arithmetic and price uncertainty. So it is far less certain how many clients and law firms will ultimately develop and use metrics like this.

Several recent posts by Paul Lippe have highlighted the problems currently being encountered by Dewey & LeBeouf. Already this year, more than 45 partners have abandoned the firm, and American Lawyer recently restated, rather dramatically, Dewey's revenue and profits per equity partner for 2010 and 2011.

it’s no longer a necessity just because of the recession. It’s now part of the normal process

Professor William Henderson of the Legal Whiteboard is bringing attention to the Bureau of Labor Statistics’ new numbers and projections for legal employment. Henderson is appropriately focused on what these statistics mean for law students and the legal academy. With 45,000 new lawyers entering the market each year and BLS predicting an addition of only 73,600 new positions over the next ten years, the time is ripe for the legal academy to do some soul searching.

You can highlight or you can do something else to add your own words, and the fact that I don’t know what it’s called should tell you exactly how much I use it. When you go down to a secondhand bookstore, you’ll find books with notes in the margins. Someone will underline or highlight a passage, and then what do they write in the margin? “Important exclamation point!” There are these stories of books passing from hand-to-hand with annotations in them. That sense of a book as a repository for collective conversational wisdom is wonderful, but I don’t actually see it reflected in annotation patterns. It’s certainly not reflected in my own annotation patterns.

The New York Bar has banned lawyers in the state from becoming an employee of a firm in which non-lawyers hold a stake, effectively preventing UK firms with New York bases from seeking external investment.

Image [cc] Flood
This three part series will examine the emerging trend for third party litigation funding. In this first segment, we describe what it is and why clients will find it interesting.

Baxter International, the global health care company based in Chicago, was feeling the economic pinch two years ago, and its legal department was looking for ways to cut costs. General counsel David Scharf found a unique answer: He turned several legal projects over to an innovative corporate lab at the University of Chicago Law School. And he's been delighted with the results.

While alternative business structures are gaining all the headlines right now, something perhaps even more fundamental is going on this year: the Legal Education and Training Review (LETR). Many know it's happening, but I suspect few quite understand how radically it could reshape the foundation of becoming a lawyer.

The definition of a revolution: it destroys the perfect and enables the impossible.

To improve their “share of wallet” within large companies, law firms will look for ways to improve their account management capabilities – including experimenting more and more with different billing arrangements. To do so they will need to equip partners with better insight into their clients’ businesses and the challenges they face, something few firms do enough of today. I have already seen some firms quietly improve their business development resources, and I expect others will have to follow suit, even if means spending a bit more, rather than less, to invest in things like business research and CRM tools. They will also need to educate partners on better ways to match legal problems with billing arrangements other than time and expenses, and prepare them to engage their clients in those conversations. Although many firms say that they are using alternative fee arrangements, only a handful have made the investment of time and resources to understand both in theory and in practice, how such arrangements work, for what kinds of work they are suitable, and what they must do differently in managing such matters. Those that have done so, however, have been able to engage clients much more directly in collaborative, creative negotiations about how to align incentives and how to work together to make good choices about how to staff matters, which rocks to look under, and how to make the myriad of choices required during the course of a transaction or dispute.

o-operative Legal Services’ (CLS) is launching a legal apprenticeship framework as part of its assault on the profession.

The new framework, which will sit within the Co-operative Group’s (Co-op) Apprenticeship Academy, will look to appoint up to 10 apprentices in 2012.

The move is aimed to help boost the number of Co-op apprentic

To assist students in choosing a career path, the school built and launched two proprietary online tools: a career and curriculum guide called SLSNavigator, and a social and professional networking site to facilitate mentoring called SLSConnect. These online devices work together. Navigator matches courses to practice areas and helps students navigate the more than 1,500 preapproved courses offered in the law school and throughout the university. If a student knows what he/she wants to do upon graduation, Navigator helps the student develop a curriculum for years 2 and 3. If not, it offers students a sense of what lawyers do and need to know to practice in a given field, thus helping them decide what their interests might be. SLSConnect then enables students to connect with alumni working in that particular field to get mentoring and career advice.

With so many variables floating through managers' minds, so little impetus from umpires to go after offenders, and so much to gain for a pitcher who does it just right, the conditions could be ripe for the spitball to return. Maybe like the knuckleball, it takes finding those one or two pitchers who still throw the pitch, then picking their brains for as long as they'll let you. Maybe it takes another pitcher like R.A. Dickey, someone who's been robbed of natural talent and velocity by injuries or fate, someone who needs to try something completely different to excel at his craft — but with the added jolt of fearless deviousness needed to throw an illegal pitch. With success at the highest levels and tens of millions of dollars on the line, and a rich history of deceit ranging from charming (hidden-ball tricks) to devastating (throwing World Series), a next-generation Gaylord Perry seems not only logical, but perhaps inevitable.

Over the past couple of years, there has been a huge increase in the number of workers who operate as some sort of independent, free-agent contractor or consultant. Though the numbers vary greatly, the consensus seems to be around 20 percent of the U.S. workforce, and growing (with some estimates up to 50 percent by 2020). Think about that, one in every five workers are currently unattached to any one company!

Taylor Wessing is set to offer legal process outsourcing (LPO) services to other law firms with plans to spin off its document review business now underway. The firm is currently appointing an adviser to look at a demerger of its New Street Solutions document review business to become an entirely separate entity.

NEW YORK, January 31, 2012 – Nixon Peabody LLP, a full-service international law firm, has established a preferred vendor relationship with Pangea3 – the worldwide leader in legal process outsourcing (LPO) services and a Thomson Reuters business – in response to client demand to reduce the risks, burdens and costs of electronic discovery (e-discovery) review.

At this year’s annual gathering of law professors and law school administrators, known as the AALS Conference, the subject of change hung over the event as perhaps never before. All of the bad publicity about legal education over the past few years has not gone unnoticed by the leaders in legal education.

Hill Dickinson and Kennedys have become the latest top 50 law firms to confirm plans to convert to an alternative business structure (ABS), as growing numbers of firms gear up for the "Tesco Law" revolution.

DAC Beachcroft and Withers, as well as Keoghs, are all actively considering an ABS conversion, which permits non-lawyer ownership of law firms through either external capital injections or a float and allows law firms to tag on non-legal services.

Grecia Delphi For fourteen centuries she had information that everyone wanted. So they traveled from all over the ancient world to seek her guidance. And they paid lots of money for the privilege. Who was she? Pythia, the priestess of Apollo and the oracle of Delphi. Thomas Sakoulas describes how she worked:

A newspaper, public radio station and university in Macon, Ga., are moving in together and sharing content, in a unique partnership aimed at strengthening local news reporting, thanks to a grant from the Knight Foundation being announced today.

To my mind, the second represents a far more fundamental challenge to the classic legal business model than the first, but I think the really interesting point is that it shows how no part of the profession is immune from the winds of change that are now blowing harder and harder through the market place.

Burford Capital, which describes itself as the ‘world’s largest dispute financier’, has today announced the purchase of Firstassist Legal Expenses Insurance, a leading ATE specialist, for £10m. The acquisition is subject to FSA approval.

Lawyers and students are educating themselves to cope with an increasingly complex legal and business environment

nspired by Apple, Coral emphasizes simplicity, elegance, and intuition. As I described in my prior posts, Clearspire practices virtually, so Coral is not just software, it is the office. To support remote work, Coral offers visual cues about colleagues’ availability.

Key to Clearspire’s business model is managing work chunks (tasks and projects). Coral helps firm lawyers do so with features built around “matter roadmaps", which break matters into phase, activity, and task. The firm identified and retained the services of 12 leading lawyers to build standard roadmaps, investing $1 million in the effort. These features support the firm’s focus on efficiency and aligning interests: each work chunk is priced and measured separately; if work comes in below budget, the client, the firm, and the lawyers share the savings evenly.

eth Godin, a marketing guru with a keen eye for change and its effect on the business world, hit the innovation nail on its head in his recent post, Form and Function. In it, Seth discussed how changes in form–from mail to email, books to ebooks or Visa to PayPal–necessarily affect underlying business models and functions.

He then makes a very astute observation regarding the faulty approach that most businesses take when considering the implementation of new technologies:

The question that gets asked about technology, the one that is almost always precisely the wrong question is, “How does this advance help our business?”

The correct question is, “how does this advance undermine our business model and require us/enable us to build a new one?”

A solicitor has launched a groundbreaking website that provides people charged with motoring offences a free online diagnosis of their case, backed up by the option of instructing a barrister to represent them at the hearing at the click of a button, Legal Futures can reveal.

He warned lawyers that “they are here to take your business” and that this would happen in the next 12 to 24 months.

ee, for example, the recent empirical study conducted with respect to the fair division process known as the Adjusted Winner system, which concluded that the system “substantially” and “eminently” improves upon traditional approaches to negotiation, Bloch, Katrin and Wagner, Ralf, ”Countering Negotiation Power Asymmetries with the Adjusted Winner Algorithm?” (March 7, 2011), available online via the Social Science Research Network: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1805025.) The authors of that study went on to suggest that “new negotiations training concepts—grasping mathematical structuring and modeling of negotiation situations and, thus, going beyond the widely accepted Harvard method—need to be developed and evaluated.”

See also, for example, Babcock and Landeo’s study suggesting that two parties on opposite sides of a claim for money would both be better off if, without having to secure the other party’s cooperation or consent, either party could access and use a mechanism that (1) would enable each party to commit to a confidential settlement proposal, and (2) would impose a settlement in the event that each party made a confidential proposal and those proposals matched or overlapped. Test subjects who were able to use such a mechanism achieved settlements 69% of the time (as opposed to a 49% rate for test subjects that were limited to using their “intellect” in traditional negotiations), settling at an earlier stage more than twice as often, and with litigation costs that were 37% lower. Babcock, Linda C., and Claudia M. Landeo (2004). “Settlement Escrows: A Study of a Bilateral Bargaining Game.” Journal of Economic Behavior and Organization, Vol. 53, No. 3, pp. 401-417. Moreover, studies suggest that, when such a mechanism is properly designed, it does more than simply increase and accelerate settlements and substantially reduce costs. It “generally leads to… payoffs that are more in line with the underlying merits of the case….” Gertner, Roger H., and Geoffrey P. Miller (1995). “Settlement Escrows.” Journal of Legal Studies, Vol. 24, Issue 1, pp. 87-122.

Top right: unique and valuable—this is where you make margin, money, and history.

vered this challenge in one of their ongoing pilot programs: They've designed a system for impoverished Kenyan citizens living in remote communities to bypass the typical two-day walk to a doctor by sending a patient's medical records and vitals to the doctor in less than 20 minutes.

Called Mashavu, the system is simple enough -- but there's just one issue. There are legal questions concerning nurses communicating with patients from province to province.

Although nurses provide only "feedback" and not diagnoses or medical advice, students want to make sure nurses aren't crossing any legal lines, said the program's director, Khanjan Mehta.

And that's where the new International Sustainable Development Projects Law Clinic at Dickinson comes in.

Designed as an interdisciplinary collaboration between Penn State's law school, its College of Engineering and Smeal College of Business, the clinic promises experiential learning through work with real humanitarian projects as part of a team for law students seeking international experience, said Jeff Erickson, professor at Penn State and the clin

When we discuss legal education reform, some of the more jaded members of our community often ask, “Why is this time any different?” They rattle off a list of dust-covered reports about proposed reforms for legal education, often dating back several decades, and wonder how we can be optimistic about the prospects for meaningful reform now.

There are multitudes of articles on alternative fee arrangements (AFAs) that speak to what they are, why they should be used, and who is using them, but not many speak to how they actually get done. This article will take an in-depth, practical look at the potential roles and responsibilities of an AFA manager (or equivalent) for a law firm, and will explore the various hands-on tasks related to AFAs.

It seems too early to say if Clearspire will successfully cross the chasm. If it does, then what? I can see multiple ramifications. Especially as other firms try to imitate the model, much of BigLaw could be at risk. I suspect at least 50 firms think they will survive as top 20 Blue Chip players. We can guess who some of the survivors will be, for example, Wachtell, Cravath, Davis Polk, Sullivan & Cromwell, Wilson Sonsini, and WilmerHale. But firms without secure and already-stellar market positions should worry about their futures.

What happens to the many firms excluded from the exalted few? I recently read the website of an AmLaw 100 firm that is probably on no one’s list of the exalted. Its lack of differentiation, boring content, and outright grammatical errors in “About Us” shocked me. I just do not see how such firms will survive if general counsels get over the notion that buying AmLaw 200 is always safe and smart.

I am not predicting demise or disaster, just suggesting that with some change in buyer attitude, Clearspire and other non-traditional providers that offer better value and clearer differentiation likely will gain substantial market share from incumbents.

Here at Northumbria Law School, we have a range of programmes and flexible modes of study to help you achieve your goal of becoming a successful legal professional.

We are a leading provider of the Graduate Diploma in Law (GDL) for non-law graduates looking to practise law and the Legal Practice Course (LPC) for aspiring solicitors. We are also one of only six institutions outside of London to provide the Bar Professional Training Course (BPTC) and we offer an unrivalled range of Masters programmes via a flexible distance learning mode of study, designed for busy professionals or those with personal commitments.

Our innovative LLB (Hons)/M Law Exempting programme allows students to achieve a Qualifying Law Degree, a Masters and exemption from the Legal Practice Course. We are the only University in the UK to run the LLB (Hons)/M Law Exempting (Bar Professional Training Course) programme, an integrated Masters degree incorporating the Bar Professional Training Course.

Established in 1997, ELT provides online training solutions to help employers manage their most important workplace compliance challenges, including sexual harassment training, , ethics training, code of conduct training, whistleblowing and retaliation training, anti-corruption training, EEO training, diversity training, union awareness training, and wage and hour training. Our state-of-the-art programs have been used by more than 5,000,000+ learners in 2,000+ leading organizations across the globe.
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The Oregon State Bar launched the New Lawyer Mentoring Program for incoming bar members in May of 2011. This mandatory program formalizes a process that for many decades took place organically, through connections forged at law firms and other close-knit bar communities. As our state bar has grown, the process of introducing new lawyers to the legal community, and guiding them through the transition to law practice, has grown more amorphous. The NLMP offers new bar members one-on-one guidance on elements of a highly competent practice, while promoting the professionalism, civility and collegiality that make Oregon among the best places in the country to practice law.

For his part, Schabas said the matter was already before the civil rules committee of the courts. He added that judges would welcome the law society’s amendments.

“When you’re dealing with judges who are alive to these rules and conscious of the fact that there is such an increase in the number of people who are appearing self-represented, they will be receptive to anything that will reduce that and they are not going to want to do anything that’s going to deter lawyers from coming forward and offering limited retainers,” he said.

For now, alternative fee arrangements (AFAs) remains concentrated in certain industry sectors (such as insurance and banking) and for certain types of work, such as credit recovery in which fixed fees are set by phase or by success, Stock explains. “The banks all do fixed fees for simpler stuff, like straightforward loan agreements.”

Katz is working on something he calls "quantitative legal prediction." Thousands of patent cases are filed every year in the United States. There's a good chance, then, that MicroWidget's case against you shares some similarities with a bunch of those other cases. What if you could analyze the key features of MicroWidget's claim, and then see how thousands of comparable cases fared? "Lawyers will be able to say to their clients, 'Here's what we think your chances are—and based on 10,000 cases that are just like yours, here's what the computer thinks your chances are,' " Katz explains.

So Kingsley, using his Contract Standards web service, analyzed a volume of NDA documents, and then boiled them down to their “standard” clauses. Then he was able to utilize Google docs in concert with his Contract analysis system (a.k.a. KIIAC) to establish a simple, easy-to-use NDA document generation service.

Amid a host of new market pressures, many firms are looking to make their pricing systems more sophisticated, and some have taken the bold step of appointing pricing specialists. We met one of them, and sought his and other experts’ views on how you can capture value with a more progressive pricing strategy.

Cheri Vaillancour, director of professional development at Fenwick & West, which replaced its lockstep promotion and compensation scheme with a more merit-based model last year, says that traditionally, "firms would wait to see what every other firm was doing, but now they are more focused on what works best for their specific situation."

But this isn't a completely settled issue.

Ray Gordon, the chairman of face2face solicitors, said he plans to build a national brand with 600 franchises across England and Wales, replicating quality and client care standards. With three or four more likely to open before Christmas, he added that he would be happy to have 50-100 franchises in place by mid-2013.

This study by Professor Mari Sako examines the disruptive forces at play in legal services outsourcing which are transforming legal practice and the power profile of general counsel across a range of sectors.

Professor Sako identifies two agents of change; firstly in a buyer’s market, the general counsel is able to exert greater power in relation to the external lawyer; and secondly, non-traditional suppliers are now able to provide legal support services from low cost locations. The study outlines how lawyers are responding to these issues by considering the following:

● the size and shape of legal departments in the past five years;
● the changing nature of relationship between in-house and external lawyers;
● the perspectives of general counsel on the disaggregation of legal work as a pre-requisite for implementing outsourcing and offshoring;
● the role of lawyers in a multi-sourcing world; and
● key issues for further consideration.

With the days of full distribution of profits to partners coming to an end, Mark Waddilove, a tax director at accountants Baker Tilly, and Jonathan Cheney, a managing associate at national law firm Addleshaw Goddard, explain how a corporate member of an LLP can mitigate the tax charges on retained profits

The relationship between large law firms and general counsel (GCs) is likely to evolve in three phases, with the “endgame” around five years away, Professor Richard Susskind has predicted.

The spiralling cost of legal services is prompting some leading general counsel (GCs) to consider a “production line” approach to handling legal work, with more companies looking to go offshore or in-house, according to new research from an Oxford professor.

"Where change is happening quickly, who best sees the openings, opportunity, and necessities of change? It's not always the CEO," Thomas Friedman tells Fast Company. Friedman, a New York Times columnist and best-selling author, co-wrote a new book, That Used To Be Us, which argues that empowering innovation from every worker must become a priority for employers, the military, schools, and policy makers, if America is to retain (regain?) its superior international standing. From the use of iPhones by bootcamp trainees to shopfloor innovation at DuPont, That Used To Be Us shows that the future of work is already upon us, presenting interviews with global influencers from every corner of society to paint a world blindsided by the need for creative production--and prescriptions on how to learn from those ahead of the curve.

wo former partners at Allen Matkins Leck Gamble Mallory & Natsis have launched their own firm in Los Angeles, prompted by an opportunity to provide flexible billing rates for clients.

Chris Safarian and Alex Choi, who left Allen Matkins last month after seven years at the firm, launched Safarian & Choi on Sept. 6. Safarian said he expects the firm to grow to as many as 15 attorneys during the next 24 months. The firm will focus on corporate and securities matters, litigation and ban

For virtually every law firm, the current economic climate means the challenges and opportunities our clients face are constantly in flux. With a full recovery continuing to elude us, it is both fair and fitting for companies to consider the question, "How has my law firm changed with the times?" Whether counseling a CEO, business owner or general counsel, we must strive to be nimble and evolve to meet the changing needs of our clients. This means constantly asking questions, understanding client concerns, looking for solutions and taking action. Although that might sound like a given to some, as I look around and speak with clients, colleagues and friends, it is clear that many law firms are unwilling (or unable) to change.

Each September, Inside Counsel published its “IC 10″, the annual winners of the magazine’s top 10 innovative law departments (The 2011 IC10 winners). By my read, not much serious innovation is taking place.

“OVERLAWYERED” is the name of a widely read blog on America’s legal system, and many Americans feel that way. Yet three economists think the country is actually plagued by too few lawyers, not too many. Clifford Winston and Robert Crandall of the Brookings Institution, a think-tank, and Vikram Maheshri of the University of Houston, published a book last month arguing that barriers to entry have kept the number of lawyers artificially low for decades. This—combined with an economy over-regulated by lawyers who go on to politics—results in an unearned premium on legal wages.

NEYER: One of the basic ideas in the book [...] is that’s it’s not about fat guys who hit home runs and draw walks. It’s about an intellectual idea, which is essentially: "If we weren’t already doing it this way, is this how we would do it?"

And the other thing that it’s about on a less fundamental level is finding inefficiencies in the market, which is probably what most people take away from it.

For the balance of the Am Law 85, the situation is much trickier. For the past decade, they have oriented their practices to the very high end, winnowing partners, paying top dollar for laterals, expanding in higher-cost markets. That strategy has now run its course, and the Am Law 85 will have to find a new one. Like Toyota, they’ll have to figure out how to be a profitable, high-quality, efficient producer in different market segments, not just Lexus. Of course, part of Toyota’s secret is its tight coupling with its suppliers and its Lean philosophy, which allow it and its business partners to learn together, and this is an approach firms would do well to embrace.

Wednesday's "[R]evolution: Industry Leaders Discuss Law2020 Hot Topics" presentation at the International Legal Technology Association conference was modeled on the provocative, short "Ted Talks." Each speaker was allocated nine minutes of air time to inspire or challenge the audience -- rants were encouraged and PowerPoints forbidden discouraged.

Much higher volume work is the bread and butter of solo and small firm practice. If these services are pulled away from the law firm, and delivered by non-lawyer entities, it will completely destabilize the economic model upon which solos and small law firm practice is built. I think that the economics of small firm practice is beginning to change in a fundamental ways. $150-$250 an hour billing rates are not a guaranteed “right”. They are, or were, a response to market dynamics. The market for legal services is changing.

Values
s there been a change in what consumers’ value in the products and services they buy? Has that change revealed a gap between what consumers want and what’s actually available?
Inertia

Generally, the more established people’s habits, the higher the inertia, meaning they’re less motivated to consider alternative choic