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A Client-Centered Approach to Save Big Law from the Robot Apocalypse

July 1, 2015, 3:02 PM

Editor’s Note: The author of this post is the chief marketing officer at Haynes and Boone. This is the final installment of a two-part series .

By Murray Coffey, Chief Marketing Officer, Haynes and Boone LLP

“There’s going to be a vicious battle for (legal) talent in about five or ten years. It’s going to be rough,” I said.

“You’re right. When you couple that with the failure of development in terms of transition, mentoring, and everything else you really have a huge problem,” replied Steven Harper, Author ofThe Lawyer Bubble.

So how did we get to this place?

According to this recent Planet Money post , it looks like lawyers will keep their jobs after the upcoming robot apocalypse. However, for the very same reasons, large law firms may not fare as well.

It is clear that some of the more mechanical legal services such as simple wills, articles of incorporation, etc. will be provided, in part or in whole, by self-service systems leveraging artificial intelligence with limited human intervention. But much of the more sophisticated work that top-tier corporate lawyers engage in, such as negotiation, issue spotting and business dispute resolution will still require professionals with superior intellectual discipline, non-linear thinking and the ability to pair instinct with experience to craft novel solutions to new problems.

Conventional thinking tells us that we have a surplus of attorneys, so there should be plenty of supply to meet all the demand. And with the recent financial crisis, the large law firms were subject to the same market forces as the rest of the economy. Layoffs, mergers, dissolutions and greatly reduced entry-level hiring took hold as the legal profession retrenched in ways it had never done before. And within this not-so-creative destruction, the seeds of a future crisis were sown.

Today, the absolute number of people applying to law school is declining. Where law schools were once considered a profit center for educational institutions, today we are seeing the shuttering of some institutions, layoffs in the professorial ranks and a general souring on the law as an option for some of the brightest and most creative minds to find a professional home. Some law schools have even begun to lower or partially waive the LSAT scores as part of the requirements for entry.

Where law schools were once considered a profit center for educational institutions, today we are seeing the shuttering of some institutions, layoffs in the professorial ranks and a general souring on the law

At the same time, the baby boomer generation, which makes up the majority of the senior partner ranks at most law firms, is leaving the profession in droves through retirement and other more permanent forms of attrition . Paradoxically, there is also a group of late career baby boomer partners holding on to equity stakes in their firms, hoarding clients and work and creating long term issues for their firms in terms of movement of younger lawyers into equity positions and client transition planning.

In what feels like a bit of three-dimensional chess in terms of competition, the profession is encountering a number of competitors virtually unknown a decade ago, including alternative legal service providers, consulting and accounting practices, and even a growing number of in-house counsel keeping lucrative high margin work within the law department.

How then, is a firm supposed to thrive when competition is fierce, the only value you offer the clients is leaving the firm quickly and the pool of next gen superstars is getting shallow?

Chief among many things firms need to consider is just what kind of institution they have developed. Steven Harper has looked at law firm culture across a wide variety of firms and has some fairly direct thoughts about the kinds of cultures that exist in many firms and why these may ultimately lead to significantly lower revenues and possible failure.

Harper shared the following thought, “Culture is the way you think about your work, the people with whom you work and ultimately yourself.”

He continued, “Culture can be good or bad. If you have a firm where the culture is simply all about maximizing short term profits, there are people who are drawn to that culture, they relish it, they bathe themselves in it, they love it and they love it as a focus of the mission and good for them I would have to say.”

Ultimately, Harper thinks this is not a sustainable model for attracting and keeping the talent clients need. “But I would also go on to say that most lawyers want more than that,” he explained. “That’s why they went to law school instead of business school.”

Harper targeted exactly what law firms need to have from their professionals at every level of the firm to deliver optimal client service and to ultimately thrive: “You want people highly motivated with a genuine enthusiasm.”

Per Harper, there is a well-documented tie-in between enthusiasm and revenue. He said, “There have been studies done that demonstrated that enthusiasm translates into highly motivated workers and translates into hundreds of millions dollars every year in economic benefit to the economy.”

And yet, many firms seem to create an environment designed to discourage enthusiasm, “If you think you’re going to do better by squeezing every last billable hour out of somebody you’re just wrong.”

Harper who has taught a class for the last nine years at Northwestern University to undergrad pre-law students calledAmerican Lawyers – Demystifying the profession,works with and teaches the next generation of what may be the legal professions best and brightest and he knows what will capture their spirit and motivate them to perform at their very best, “You’re going to do better by getting them motivated and enthusiastic so that they want to do the best job they can. They want to be invested in what they do. They want to be enthusiastic; they want to get up in the morning and say I’m excited to be going to work.”

Harper, always a realist, concluded, “That doesn’t mean it will happen every morning. There’s a reason they call it work, as you well know.”

Interestingly, Harper does not think the current firm model of non-equity track positions for lawyers in large firms is a solution and in fact, is often little more than a means of keeping the partnership ranks limited, “I think by and large those kinds of labels are just excuses not to ask people into the partnership and to keep attorneys from advancing into equity partnerships. Those are highly self-interested categories created by the people that run firms as a way to say look, we are giving you choices.”

He believes that, over time, this approach will deplete the firm of the very people it needs to keep to maintain its integrity going forward. “The problem with creating something that is a permanent non-equity track, a niche for people in terms of the institution, is whether you like it or not, you are going to create a blockage for the talented lawyers you want advancing into the equity partnership and take over some day. I’ve talked to young lawyers in my firm (Kirkland & Ellis) when I was still there. When they were young associates, they have loved to have some certainty. I would be happy to be a permanently this or that and never become an equity partner, but make decent money for the next 10-12 years,” he said.

Harper concluded, “Well they sing a different tune when ten or eleven years have passed and they’re seeing equity partners around them who don’t look or do anything better than what they do.”

“The problem with creating something that is a permanent non-equity track, a niche for people in terms of the institution, is whether you like it or not, you are going to create a blockage for the talented lawyers you want advancing

Part of the problem from Harper’s perspective stems for the ways firms are trying to manage themselves: “We have imported all sorts of business school and MBA types of concepts, thoughts and metrics. It’s like giving a loaded gun to a child – to arm lawyers with this stuff.”

He is also quick to point out that the business of the firm cannot be neglected, but rather the business decisions need to be made in the long-term best interests of the clients which, in the end, will create a thriving firm that provides an environment for long-term success of the younger and more senior attorneys alike. This approach is more like the guild model in which the senior partners invested in the development of the younger lawyers.

The trial bar legend and Harper’s former mentor, Fred Bartlitt , once told him, “I’m capped so the only way I can make any more money is by making you a better lawyer. So I have to make you a better lawyer and then the pie grows and everybody is better off;” an efficient aligning of incentives.

Time and again, Harper posits the merits of a client-centered approach as the only way firms will successfully compete both for clients and the very best lawyer to serve those clients. “For an awful lot of talented lawyers who are going to be looking for more than that (more money), they are going to be attracted to models that have an interest in clients,” said Harper.

At first blush, it might seem that he is advocating that the profession turn back the hands of time. But on closer review, and with the benefit of some generous discussion, what one is struck by is that Harper is something of a gifted futurist.

What I think Harper is telling us, is that the profession must progress, that the tools and disciplined business approaches firms are taking can help build and support successful and diverse law practices if we remember that the priorities are, in this order, (1) the clients’ best interest, (2) creation of a culture built on investment in the professionals serving the clients, and (3) the partners’ compensation.

If that’s correct, the third point will take care of itself if the partners successfully tend to the first two points. And yes, Harper the contrarian remains optimistic, “There’s nothing inevitable about where the profession is at this point. In fact, some of the worst trends are relatively new.”

And maybe, if what Harper is hearing, (or not hearing,) the profession is, in its intentional and typically resolute manner, listening, “It’s been a little surprising but I started my blog almost four to five years ago and no one has ever taken up the other side of my argument. I get hundreds of messages that say you are writing and saying what everyone else is thinking. Keep it up. I hope you get somewhere with it.”