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April 2015
ALERTLawyers
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Table of Contents
Embracing the Product Imperative: Why and How Law Firms Should Consider the “Product” Approach
Law Firm Ownership and Lawyer Independence
What is the Real ROI of Law Firm Advertising?
Tech Central: Legal Tech Round-Up
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April 2015
ALERTLawyers
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Embracing the Product Imperative:Why and How Law Firms Should Consider the “Product” Approach
Page 2
Gerry Riskin, B.Com., LL.B., P. Admin, is a founding partner of Edge International.
How often do we hear commands like “innovate or die” outside of the legal industry?
Product companies and even other professional services firms are asked – perhaps even required – to “innovate,” largely in deference to the healthy paranoia they recognize drives all great businesses to higher levels of success. The legal industry, however, is in the very early stages of experimenting with innovation. Professional services firms in general hate to invest ahead of revenue as compared with their product company brethren. And to the extent that real innovation necessitates what are viewed to be distracting allocations of capital, law firms have been loath to do much of it.
We can also point to the DNA of lawyers themselves: they are risk-averse and typically want to see proof of concept before experimenting with any new business practices. Given the unique realities and history of the legal business, why is it now that we are seeing firms experiment with their business and operating practices? More importantly, how can late adopter firms do their own form of innovation without operating on the bleeding edge?
Law firms currently are innovating across multiple dimensions of their business: product, internal processes, incentive structures, communication, etc. The below example areas are but a few faces of noteworthy law-firm innovation.
Practice group organization/positioning/definition
Law firms excel at projecting a marketplace identity that reflects their internal managerial priorities, rather than the external realities of the markets and businesses they want to serve. Do businesses really think of themselves as “anti-trust businesses” or “complex commercial litigation businesses”? Of course not. As a general proposition, companies want to work with lawyers who are business peers as much as legal specialists. A law firm’s organizational chart should reflect this intersection. Firms that present an array of cross-disciplinary capability focused on
particular industry sub-sectors resonate in the marketplace. A great example is the website description of the Duane Morris “Franchise & Distribution Law Practice,” which states loud and clear, “If you’re a business with any kind of complex supply or distribution chain, we ‘get’ you.” Duane Morris has put together a cross-disciplinary team to focus on this business demographic, including anti-trust, RE, corporate, and other regulatory practitioners.
Cross-disciplinary products/capabilities
While there is nothing really groundbreaking in firms that hold out an integrated cross-practice capability to the market, there is relatively little promotion of cross-disciplinary capabilities between law firms and other business services providers/consultants. Law firms should look for opportunities to partner with industry-specific resources in executive recruiting, strategy consulting, accounting, commercial insurance broking, lending, and other areas. Firms might consider doing business with these providers by creating jointly developed and integrated “products” and assessments, and teaming up on some promotional activity to establish relationships with prospect businesses.
April 2015
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Embracing the Product Imperative:Why and How Law Firms Should Consider the “Product” Approach
Page 3
Become a front-end resource
Why should strategy consultants, risk management consultants, commercial insurance brokers, investment bankers, and other business advisers have a monopoly on the C-Suite’s ear during the corporate planning process? Business people believe that legal issues are but symptoms of underlying (and more important) business issues. In many respects, legal issues don’t have freestanding importance to many clients. Lawyers should try to spend more time understanding the core activities of a business across all functional pieces of the business; i.e., ask for and review the business plans for each of these functional areas. Exhibiting an interest in this information is “attention-getting” in and of itself, but law firms can do much more here in the form of risk prevention measures, compliance regimes, audit processes, and training. Another great example of a law firm focusing on the “business front end” is the M&A practitioner who becomes the quarterback of a post-acquisition integration process once the client has closed on a business acquisition. Normally, the lawyer would leave the closing table and move on to the next dragon, thereby leaving the client to rely on the Bains and Accentures of the world to quarterback the post-acquisition integration process. This is a real opportunity for the lawyer to lead and maintain client relevance.
One word: products
Many of the world’s most sophisticated non-law firm providers of professional services develop and promote productized versions of their wisdom to their market. Few could argue about the situation-specific, complex, and sophisticated nature of McKinsey’s work with Global 1000 executive management, yet even McKinsey markets some products to its prospect population.
Like other high-level business services providers, law firms should embrace the product imperative for a number of reasons, namely:
▪ Pricing usually takes the form of a single one-time fee; clients appreciate the certainty.
▪ Products represent reusable knowledge in the minds of clients. If a law firm is willing to move away from the open-ended billable hour to support a fixed-price product, then it must be very facile with the legal substance and confident in its own understanding of the scope of this project.
▪ There may be no better way to signal a firm’s expertise in a particular area than by creating a product that speaks to such area. The existence of a product is a form of self-validating (and perhaps transcendent) expertise in an area.
▪ Products speak to the presumed needs of a particular market, and therefore express a deeper understanding of discrete industries and company types.
So, product up!
Gerry Riskin, B.Com., LL.B., P. Admin, is a founding partner of Edge International, a former managing partner, a best-selling author, a Fellow of the College of Law in London, and a Visiting Professor at the University of Pretoria in South Africa, serving law firms on six continents. Contact Gerry at [email protected] or by phone at 1.202.957.6717.
April 2015
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Law Firm Ownership and Lawyer Independence
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Jordan Furlong is a partner with the global consulting firm Edge International.
The spectre of “non-lawyers” owning equity in law firms has led some practitioners to express grave concerns about the survival of our ethical standards, and about the wisdom of allowing “non-lawyers” to deliver legal services at all. Before we can dive too deeply into these questions, we need to step back and look at the bigger picture.
Generations ago, lawyers were granted the privilege (not the right) of self-regulation. Using the powers assigned to us through that privilege, we developed, published, and strictly enforce (on ourselves) several behavioural codes that we refer to collectively as “legal ethics.” (For clarity, “ethics” here refers to explicit normative standards of conduct, rather than the more colloquial sense of “moral behaviour.”) Among the standards we enforce through ethical codes are:
▪ Service above all to the courts and the rule of law. ▪ Complete confidentiality of client information. ▪ Loyalty to client interests, as expressed through
conflicts rules. ▪ Independence of our counsel from outside influence.
These rules are meant to guarantee to clients and to society generally that we serve the greater good and advance the interests of our clients without partiality. They are part of the quid pro quo of self-governance: we hold ourselves to very high standards so that no one else feels compelled to step in and hold us to theirs. Nobody, in the continuing debate over liberalization of law firm ownership rules, contends that these standards and goals are obsolete or unnecessary. (Indeed, in the multi-player market coming our way, our ethical standards will nicely double as a competitive advantage.) Lawyers tend to raise two ethical objections to the changes in legal regulation that have occurred in Australia and Great Britain, and that have been proposed in the CBA’s Futures Report. The first
is that non-lawyers are not bound by lawyers’ ethical standards, and therefore the risk is too great that their clients’ interests will not be protected and may even be abused. The second is that allowing non-lawyers to own equity in law firms fatally compromises our duty of loyalty to the courts and to our clients because lawyers will be bound by an additional, higher duty to advance the interests of these non-lawyer shareholders. Let’s look at these objections in turn.
1. “Non-lawyer” unfitness
There is, to begin with, a strong case to be made that non-lawyers are fully capable of conducting themselves with the integrity and impartiality we expect from lawyers, not least because exploiting or abusing one’s customers is a terrible way to run a business and a good way to wind up in jail. I have written before about the specious and self-serving nature of the non-lawyer category into which lawyers place everyone in the world except us. But let’s assume, just for argument’s sake, that non-lawyers will pose a genuine risk to their clients’ and customers’ interests.
It is not entirely clear to me why this would be something that should concern the legal profession. Those who hire non-lawyers, in the multi-participant legal market of the near future, are not our clients, and we owe them no professional duties. Nor are we their parents or guardians. They will have made a choice to hire someone who is not a lawyer, and they can reap both the rewards and consequences of that choice. Fundamentally, it’s none of our business.
April 2015
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Law Firm Ownership and Lawyer Independence
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Lawyers have been granted the privilege of regulating ourselves. Nobody, however, has ever granted us the privilege or assigned us the duty to regulate anyone else. (With two exceptions: independent paralegals in Ontario and limited license legal technicians in Washington State.) In almost all cases, law societies, state bars, and other regulatory bodies are not directed in their founding documents to “protect the public.” They are directed to “govern the legal profession in the public interest.” Those are two different mandates. If someone wants to hire a non-lawyer, and the non-lawyer accepts the engagement, it seems to me that it’s their business, not ours.
2. Corruption of lawyer ethics
This objection, on its face at least, has more merit. It is reasonable to be concerned that the presence of non-lawyers in the ownership structure of law firms could pose a threat to our duties to clients and our independence from outside interests. Even a small risk in this area should be taken seriously because of the enormous importance of lawyer independence to our professional existence and to the rule of law. But simply because this risk is real and serious does not automatically mean that identifying it is enough to end the discussion. If it is a risk, let’s look at whether and how it can be managed.
We should isolate, for this discussion, the operation of in-house or public sector law departments, which very clearly are owned and operated by non-lawyers. We are concerned here with the private bar, providing services to lay clients for whom we assume (though not always correctly) a low level of sophistication. The principles at play in these workplaces are not fully applicable to this conversation, although it is at least helpful to note that the mere presence of non-lawyers in the ownership and financial structure of their clients has not been fatal to the independence of these
lawyers. Non-lawyer status is not an airborne disease.As it happens, we have an example of a large, multinational law firm with non-lawyer equity owners: Slater & Gordon. In the firm’s initial public offering prospectus, among the “risks” disclosed to potential share-buyers was their tertiary position in the firm’s loyalties: the courts first, clients second, shareholders third. Those who buy stock in Slater & Gordon acknowledge and accept that. Unlike other businesses, where “shareholder value” is (perversely, in my opinion) the only objective, investing in a law firm means accepting a much-reduced level of influence and importance.I am not aware of any ethical difficulties Slater & Gordon has experienced, or any accusations – made by clients or judges – that public ownership of the firm has corrupted its lawyers’ professional duties or harmed its clients’ interests. The emergence or revelation of such problems or accusations could indeed pose a serious challenge to advocates of non-lawyer ownership. But the absence of such problems or accusations, over a period of several years, in two different countries, ought to be a factor in the discussion as well.
It seems to me that, whether a law firm is owned by lawyers, non-lawyers, or martians, the lawyers in the firm still operate under the auspices of lawyer regulation. (Under “entity-based” regulation, which is already in place in Australia and the UK and appears to be coming to Nova Scotia, the firm itself will be bound as well.) If a regulated lawyer breaks a professional standard, for whatever reason, she will be investigated and punished. Whether her cheques are signed by the managing partner lawyer or by a corporate payroll employee, she is still on the hook for what she does and doesn’t do to advance her clients’ interests and serve the rule of law. There will be no exception granted to a law firm owned in whole or in part by non-lawyers. If anything, I expect that ethical scrutiny of such a firm would be several degrees more intense than for lawyer-owned firms.
Jordan Furlong is a partner with the global consulting firm Edge International.
April 2015
ALERTLawyers
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Law Firm Ownership and Lawyer Independence
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Now, it might be objected that the influence of a non-lawyer equity owner would be more subtle and pervasive than that. The non-lawyer would not directly order a lawyer to drop a case or reveal a client confidence on the record. Instead, he would influence, by his very presence and through various innocuous but well-timed remarks, that perhaps the firm should pursue a different course or be more open about a client’s position. I have two responses to this objection.
First, if we are now guarding against invisible, inaudible, and theoretical risks to lawyer independence – “this might happen and there would be no way to prove that it didn’t” – then we can concede that the clear and present danger of this risk is not readily apparent. We are now moving out of the zone of probability, which is a fair and legitimate battleground, to one of possibility, which is unanswerable: no one can ever prove that something undetectable will never happen. Secondly, the assumption at the heart of this objection is the same as the one above: that non-lawyers are less trustworthy, less honourable, and more mercenary than lawyers are – and conversely, that lawyers have more integrity, character, and selflessness than non-lawyers do. I don’t find this line of reasoning especially sound or especially attractive.
As I have already noted, I am not dismissing out of hand the risks posed by regulatory overhaul to lawyer independence. The concern is legitimate, and the stakes for the legal profession are high. The case for either side of the debate is not so obvious that further discussion is unnecessary. We should continue to engage on these issues, but let’s engage on probabilities, not possibilities; evidence, not worries; what we know and can reasonably anticipate, not what we fear. The right answer is out there. Let’s go find it.
Jordan Furlong is a lawyer, strategic consultant and analyst who forecasts the impact of the changing legal market on lawyers, law firms and legal organizations. Based in Ottawa, Jordan is a partner with the global consulting firm Edge International. Contact Jordan at [email protected], by phone at 1.613.729.7171, or visit his blog at www.Law21.ca.
April 2015
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What is the Real ROI of Law Firm Advertising?
Page 7
Joi Scardo is a Senior Marketing Strategist at Jaffe, a full-service PR and marketing agency for the legal industry.
But it is also time for change in the way legal services are marketed. Legal marketing – like so much within the legal industry – has been the victim of law firms’ unwillingness to change, hesitancy to be at the forefront of employing new or different marketing tactics, tendency to be late adopters of technology, and budgets that continue to lag behind marketing expenditures in other industries, including other professional services.
Legal marketers have done an outstanding job, particularly when one considers the restraints under and cultures in which they operate. But they may further handicap themselves by not using marketing processes deemed standard operating procedures in nearly every other industry, whether B2B or B2C.
Nowhere is this more true than in law firm advertising.
What drives most law firm ads?
The fact of the matter is that legal advertising often is driven by ego and internal politics. When these are your motivating factors, ads are created – or at least rewritten and approved – in an internal vacuum, one in which strategy is overshadowed by attempts to pacify a certain practice group or a particular office, regardless of the actual business potential of the practice group’s services or the office’s location.
Given the bite that advertising takes out of any law firm’s marketing budget, we all should be concerned about finding ways to measure its ROI. Yet, year after year, firms continue to spend money on advertising with very little, if any, information about its effectiveness
beyond the anecdotal. Perhaps a client sees an ad in print or online, or hears about the firm’s sponsorship of NPR and comments to his or her attorney. Or maybe the lawyers across the street will see that full-page graphic in the latest issue of the National Law Journal.
But marketers aren’t – or at least shouldn’t be – interested in merely the anecdotal. We want to know whether the campaign moved the needle. Did it reach the right people? Did it cause them to take the desired action?
Advertising is expensive, and evaluation of the ROI is far from an exact science. Even for organizations recognized as global leaders in the discipline, ROI is often elusive. This is particularly true in marketing legal services. (When was the last time you saw a discount code offered for mentioning a lawyer advertisement?) What’s more, lawyers do not want to attribute the acquisition of a new client or the expansion of an existing client to anything other than their own rainmaking prowess.
How to measure legal ad ROI
With our industry awakening to the new reality of doing business, perhaps now is the time for law firm marketers to push the envelope by adopting and adapting more of the best practices long used by marketers in other industries.
Here are four suggestions for achieving an initial level of ROI measurement for the more elusive ROI animal: print advertising.
There continues to be a lot of discussion about changes facing the legal industry, many of which are long overdue, but perhaps not welcome. Not only are clients putting pressure on lawyers to find suitable alternatives to the billable hour, but they are also seeking changes in how services are managed, delivered and benchmarked, including pushing for implementation of performance metrics.
April 2015
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What is the Real ROI of Law Firm Advertising?
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1. Examine revenue If your law firm print advertisement highlights one practice or office, compare the revenue of the practice or office before and after the campaign. While fluctuations in revenue cannot be attributed solely to the ad, seeing no increase over a prolonged period of time may provide the impetus to refocus.
2. Designate a unique “advertisement only” phone number Set up a specific phone number, and list it in the firm’s print advertisements. When dialed, the number should ring through to the same receptionist as the standard number for the firm or office so the caller does not experience a difference in connecting with the firm. For each call received on the designated line, have the receptionist go to the firm’s website and complete the “Contact Us” form for that caller. By tracking the volume of calls to the number, you can measure the first level of response to the ad. Consider also using a call analytics system (such as If By Phone) to further track which print ads drive telephone leads.
3. Use the “Contact Us” form on your website If viewers of the advertisement are moved to visit the firm’s website rather than call, provide a way for them to indicate how they learned of the firm. If your advertisements are limited to a few publications, consider listing these as a tick box or drop-down menu associated with the “How did you hear about us?” question. By adding this referral source field, the receptionist can also use the web form to capture leads through the designated phone number. This approach ensures that these leads automatically find their way into the firm’s customer relationship management system and are tracked in Google Analytics.
4. Harness the power of the QR code QR codes (those grid images of black square dots on a white background) have come a long way and provide another way to track response to a print campaign, providing a connection from print to digital. QR codes offer GPS tracking, email notifications, custom designs and detailed analytics. Drill even further into the specifics of lead generation by using a different QR code for each of the various publications in which a print ad appears.
How are you measuring your firm’s legal marketing ROI? It is worth the time and effort to evaluate this question.
Joi Scardo is a Senior Marketing Strategist at Jaffe, a full-service PR and marketing agency for the legal industry. “What is the Real ROI of Law Firm Advertising” appeared as a post in the Jaffe blog at jaffepr.com in February 2015. Joi can be reached at 1.850.830.2356 or by email to [email protected].
April 2015
ALERTLawyers
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Tech Central: Legal Tech Round-Up
Page 9
We once again take a look at some recent legal tech issues.
Serving court documents via Facebook?
We have seen technology and social media cause headaches in the courtroom, with jurors using their phones, tablets and laptops to research and comment on ongoing trials. So it might be somewhat refreshing to see the courts using social media in a constructive way for a change.
A New York judge recently permitted a woman to serve divorce papers on her husband by sending electronic copies via private message to the man’s Facebook account. The husband had no fixed address, no place of employment, and had refused to co-operate with her efforts to serve him, though he had continued to keep in touch with her periodically on Facebook. In these unique circumstances, the social networking site was an appropriate – and necessary – source of service “by alternate means.” The judge also required the woman and her attorney to call and text message the husband to further inform him of the Facebook summons. If the husband fails to respond, the judge may grant a default divorce judgment.
Though such a novel tactic has obvious limitations, it is yet another example of the ever-evolving impact of technology on the practice of law.
Killer robots: ethics and liability
On a slightly more serious note, The Globe and Mail ran a piece recently examining the legal effects of the recent advancements in robotic warfare technologies and drone use. These technologies have long allowed for remote-controlled attacks, with a human guiding a
robot or drone from a safe distance. But advancements in AI could herald a new generation of autonomous devices, with the ability to attack and kill independently of human guidance and control. An international coalition of roboticists, academics and human rights activists called the Campaign to Stop Killer Robots is pressuring governments and the United Nations to preemptively ban such fully autonomous weapons.
Military applications are one thing, but consider the use of these technologies domestically by police and security forces. Are we nearing a real-life RoboCop or Terminator age? And the legal discussion could extend even to commercial products like those autonomous robots that vacuum your floors, cut your grass, or drive your car. What happens when one of those malfunctions and causes injury – or even death – to an owner or guest? Where will the liability rest? These will be interesting and tricky issues for governments and courts, with heavy regulation being a likely result.
practicePRO legal tech resources
As technology continues to provide benefits for, and impose demands on, the legal profession, lawyers can feel the strain of needing to keep up with the ever-changing trends. Consider visiting LawPRO’s Technology page (practicepro.ca/technology), where there is a wealth of links to helpful resources. Perhaps most useful are the model technology use policies (electronic document handling, social media, backup practices, etc.). Browse the articles and books on legal technology, and the list of “practical tips” for lawyers (preventing identity theft and online fraud, protecting client data, docketing tips, password protection, etc.).
