New Paradigms and Old Lessons for Cyberlawyers Norman K. Clark Lisa M. Walker Johnson Walker Clark LLC
the future is here, but many of us don’t know it Technology has been a fundamental component of the practice of law for a quarter-century; but most law firms have failed to understand how it is fundamentally changing – indeed, already has fundamentally changed – the practice of law. No one can deny that the business of practicing law will probably be much more difficult ten years from now than it is even today; and that the seismic changes that technology has introduced into the business world will contribute to that challenge: operationally, ethically, financially, and strategically. Law firms will have to continue to evolve. Not all will be able to do so. The ever-faster pace of change has blurred the perceptions of law firm owners, leaders, and managers, much like trying to study a high-speed train passing close by at 300 k.p.h. As we and our Walker Clark colleagues have helped law firms "look over their strategic horizons" and identify the changes that they will have to make, we have validated several important points that typical "law firm of the future" discussions usually overlook: First of all, the future is already here. The forces that will shape your professional future are already present in today's legal markets. The problem is that many law firms can't see them. The legal profession – especially law firms –is in the middle of multiple paradigm shifts. Even the most successful law firms often can't see these forces because they do not understand the force and effect of paradigms in the practice of law. The legal profession is a forest of paradigms, and many lawyers can spend a whole career in the practice of law
® ©2017, Walker Clark LLC. Members of the Jamaican Bar Association may reproduce this document and redistribute it and use it in their own organizations, provided that its contents are not altered and that authorship is properly attributed.
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New Paradigms and Old Lessons for Cyberlawyers without ever noticing them. As a result, most lawyers never realize that many of these paradigms, such as traditional concepts of law firm partnerships and irretrievable price sensitivity, have shifted – not until they feel the tremors of declining financial performance, and sometimes even not then. Just thinking about the future is not enough. Law firms must start moving now toward the future that they want. "Wait and see" might seem prudent in the face of bewildering change. Maybe it is better, one wants to think, to wait until everything gets sorted out, until some of the dust settles. That might appeal to the risk-adverse orientation that most lawyers take when advising their clients; but it inevitably leaves a law firm with fewer options and a higher risk for bad decisions and ineffective responses. You can and should build your own future. In addition to investing time and intellectual energy in trying to anticipate and understand the future, there is an equally important need for law firm leaders and planners to understand what they need to do to become whatever "law firm of the future" that they want to be.
Before we get too hard on ourselves… This difficulty in perceiving, much less understanding, the future as being a part of today’s realities is understandable. Most lawyers can listen with great interest as pundits and gurus talk about the future of the legal profession; and they can take on board, at a theoretical level at least, their exciting and sometimes scary messages. But many of them still don't know what to do tomorrow morning to start moving toward that future. Part of this problem comes from one’s training as a lawyer, with its emphasis on precedent and aligning known facts within predefined intellectual frameworks (a.k.a. "the law"). Part of it might be due to the profession’s caution about risk, which usually is a mandatory part of sound legal advice. This is why two of the biggest challenges for the Walker Clark "futures practice" are to break down the paradigms that prevent our clients from seeing the future -- and sometimes even today -clearly, and to stimulate genuinely innovative responses to its implications for their practice of law.
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New Paradigms and Old Lessons for Cyberlawyers
understanding paradigms Why is it that lawyers and law firms are so often surprised? Why do so many law firms always seem to be playing “catch up” with their clients and the business world in general? Undoubtedly one of the biggest obstacles to law firms’ ability to respond to change is the effect of the paradigms that have governed the way that they conceptualize and understand the practice of law. The word paradigm originates with the Greek παράδειγμα, which means an example, model, or pattern. Paradigms are mental assumptions that we make, based on our experiences in the world, which not only govern our actions in certain situations, but can also shape the way that we perceive them. A paradigm can even cause us to fail to perceive things that we otherwise see clearly. For example: We will never get lawyers to use computers. Law firm websites are just another form of advertising. The hourly rate is the most profitable fee structure for law firms. Word processing and document assembly will hurt professional quality. Most clients prefer face-to-face contact. The traditional law firm is the best structure for delivering quality legal services. Clients like to see artwork and expensively-furnished law offices, because it shows them that we are successful. Lawyers and accountants can never be partners in a professional services firm. A computer will never replace a lawyer. Social media are a waste of time for law firms.
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New Paradigms and Old Lessons for Cyberlawyers There are three specific principles of paradigms that have been particularly troublesome for law firms, as well as other businesses, industries, and professions: Paradigm shifts usually begin outside one’s profession, not among ourselves. Sometimes the best ideas come from what might appear to be the most unlikely sources. This is why most proponents of a new paradigm are initally viewed as disloyal or worse within their own organizations. Paradigm shifts begin before they are noticed or needed. Firms that notice and respond to paradigm shifts first can achieve substantial competitive advantages. When a paradigm shifts, everything resets to zero. Past success does not ensure future survival. Ask the Swiss watchmakers, Blockbuster video, or Commodore Computer for more details. Even to perceive the future of the legal profession, much less actually to understand it, we must be willing to escape many of the paradigms that have shaped the practice of law for centuries, and which can prevent us from seeing new realities. As futurist Joel Barker has said, "The role of leadership is to find, recognize, and secure the future." Most of what passes for "innovation" in the legal profession is little more than adjustments to the status quo. These quick fixes might work well for a while, but they usually do not respond to the basic changes in client expectations and the nature of the competition, which are shaping the future. In an era of shifting paradigms and growing intolerance by clients of fake innovation in law firms, it is natural to look for and cling to so-called "best practices" or academic models for strategic planning. Although there is much to be learned from the business world outside the legal profession, as well as the academic perspectives, each law firm is a unique system. These intellectual frameworks can be very useful and sometimes lead to important insights; but the most effective responses to the challenges of the future usually are the ones that honestly and squarely address the economics, professional culture, and competitive context of each law firm.
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Ask your clients for help. Are you or your law firm having difficulty dealing with the challenges of an uncertain future? Are your attempts at innovation turning out to be nothing more than rearranging the deck chairs on the Titanic? A good first step could be to use one or more focus groups to involve your clients actively in the early stages of your planning to become a "law firm of the future." In a fast-changing and increasingly competitive legal profession, change without client input is folly. Not to involve clients in a serious, significant way is to guess at the future, not to plan for it. Client expectations are already shaping the future of law firms of all sizes, all practice specialties, and everywhere in the world. In interviews and focus groups with law firms’ clients, we have noticed how technology has produced important – and, for some law firms, life-threatening – changes in client expectations of legal services and their evaluation of the value that they receive for the fees they pay. For example: Technology has removed client ignorance as a profit center for law firms. Clients are no longer willing to pay for basic information, or to perform basic functions, that are now available on-line. Technology has made “DIY law” a practical substitute for traditional legal services delivered by law firms. Clients now go to law firm websites for the same reasons that they visit other sites: for news and information that are specifically relevant to their businesses, investments, and legal issues. Clients ascribe very high value to client portals, on-line deal rooms, and other internetdelivered services. Above all, clients expect increased speed with higher quality and at lower cost. Traditionally, the legal profession offered clients a choice: Select any two of the following, and we will deliver them: fast delivery, high quality, or low cost. Thus, the traditional propositions to the client were: You can have it fast and high quality, but not at low cost; or
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New Paradigms and Old Lessons for Cyberlawyers You can have high quality and low cost, but it will not be fast; or You can have low cost and fast delivery, but don’t count on it being high quality. Due principally to technological advances in the production and delivery of goods and services in almost every other aspect of their personal and commercial lives, clients now expect all three: low cost, high quality, delivered as fast as they want it. Even among law firms that understand this paradigm shift in client expectations, many do not know how to meet all three expectations simultaneously. A well-designed, professionally facilitated focus group of a firm's best clients can be an excellent start to a better understanding of what their law firm must do to "find, recognize, and secure" its unique future. Clients are usually the first to spot changing paradigms for legal services, because they are experiencing similar paradigm shifts themselves. They see the world with different eyes. To paraphrase the Scottish poet Robert Burns, they can give us the gift "to see ourselves as others see us." As law firm clients become more and more sophisticated, and must themselves innovate in order to remain competitive, they are usually better able to distinguish true innovation in legal services from changes that never really get beyond the slogan stage. Only a client can intelligently discuss the implications of change for their special, and sometimes unique, relationship with his or her law firm. The ability of a law firm to meet that client's unique set of needs and expectations are what will shape his or her future decisions about which lawyer or law firm, from among the many excellent competitors in the market, to select for his or her most important legal matters. Using client focus groups at the start of the planning process to find and recognize the future of the law firm, is something of a paradigm shift itself. Traditionally, most law firms would work hard on a new strategic plan, often without any meaningful client input at all. Then, only as the final step, would roll it out to their clients, usually as a finished – and unfortunately too often, an irrelevant – product. A well-designed, professionally facilitated focus group can eliminate that risk. To be sure, it is not the only way to bring client views into the planning process; but it is especially effective when trying to understand the future of the firm and its legal markets more than five years from now.
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Are you ready to be “artificially” intelligent? Will the law firm of the future be a computer? No. But artificial intelligence will be as much a part of the "law firm of the future" as desks and paper have been for the past 200 years. It also can be part of the "law firm of today." The World Economic Forum recently published an important article on the impact of automation on jobs. It has important implications for law firms, especially small ones. One. That's how many careers automation has eliminated in the last 60 years by Sarah Kessler 1 points out that only one of the 270 detailed occupations listed in the 1950 U.S. Census has since been eliminated by automation: elevator operator. Nonetheless, a recent McKinsey study 2 indicated that automation could replace up to 35% of professional services jobs. Walker Clark's analysis of opportunities for sustainable improvements in profitability in law firms strongly suggests four important forecasts concerning the impact of artificial intelligence: Firms should look at artificial intelligence as a tool to improve productivity, not just to lower cost. As with traditional approaches to work process reengineering in law firms, the principal effects that artificial intelligence will have on the profitability of law firms will come
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Sarah Kessler, “One. That’s how many careers automation has eliminated in the last 60 years,” (World Economic Forum, 27 March 2017), https://www.weforum.org/agenda/2017/03/automation-has-totallyeliminated-just-one-career-in-the-last-60-years
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James Manyika, et.al., “Harnessing automation for a future that works,” (McKinsey Global Institute, January 2017), http://www.mckinsey.com/global-themes/digital-disruption/harnessing-automation-fora-future-that-works
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New Paradigms and Old Lessons for Cyberlawyers from greater fee earner productivity, especially for partners and other senior lawyers, more so than from reduced costs. Most jobs in law firms will not be eliminated, but they will be transformed. Law firms that assume that artificial intelligence will eliminate some clerical and administrative jobs are, at best, only half correct. Many of the functions now performed by junior associates, trainees, and paralegals, such as research, preliminary analysis of a matter, and document preparation, will be substantially reduced almost to the point of elimination. Computers will not replace these junior fee earners, but they could reduce the number that a law firm will need to maintain a profitable work-flow leverage. To get the best benefits from artificial intelligence, law firms must rethink their assumptions about how they manage the preparation and delivery of legal services to clients. Automating an inefficient, marginally profitable work process does not make it better, only faster. This is why it usually is better first to examine and understand fully the current levels of, and weaknesses in, the profitability of the firm’s practice groups and client services. In other words, fix the problems in the existing processes before applying the technology. Don’t expect the technology to solve the problems by itself. The total return on investment, both tangible and intangible, in artificial intelligence might be highest for small and mid-size firms, because of its ability to help these firms remain competitive and profitable, especially in the retail sector of the legal services industry and in price-sensitive practice areas. The most important thing is to start now to consider how artificial intelligence and other improvements in information technology and communications can transform the law firm of today. If you wait for the "law firm of the future" to arrive, it will be too late ever to catch up.
The enduring value of good old resilience Legal markets worldwide are undergoing, and will continue to experience, dramatic changes. Law firms that are alert and nimble are the ones that are most likely to survive, as successful business and professional institutions did in the years before the internet and instantaneous global communications. The only difference is that they will have to do it faster than ever before (and with high quality and at low cost).
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New Paradigms and Old Lessons for Cyberlawyers The survival skills that will be needed are not new: Law firms must become more capable of changing, not just once, but again and again. Law firm leaders have to be able to give people the right guidance so they can and will adapt and innovate, so the necessary changes will be successful. To consistently deliver high quality and extraordinary value will require internal capabilities and resources aligned with new business realities. The better a law firm can handle change, the more freedom it will have to respond to these new realities in its client base and in its competitive environment. Law firms must adopt a longer-term investment mentality, rather than solely a short-term focus on money in the partners’ pockets at the end of the year.
Is your law firm trudging silently into oblivion? Does the culture of traditional law firms make them incapable of changing, as many observers suggest? What are the qualities and characteristics we can observe in those law firms that are trudging silently into oblivion, compared to those who are turning their lives around? Just as banks did prior to the 1980s, many "traditional law firms" hold onto delusional notions that clients will simply keep coming to them for their needs because of their name and past glory. Their leaders are committed to maintaining the status quo and waiting for a return to the "good old days" when they took growth and revenue for granted. Resilient law firms are ones that figure out how to be nimble. They learn how to examine openly the complex conditions around them, both internally and externally. They develop clear priorities and actions only when armed with a thorough knowledge of their clients, their competition, the economic realities of their practices, and a sound grasp of their internal culture, its assets, and capabilities. Being resilient sounds relatively straightforward. So, why don't more law firms act on these common-sense practices? Why is the prognosis for so many law firms so bleak?
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New Paradigms and Old Lessons for Cyberlawyers playing a poor hand well A noted Scottish author, Robert Louis Stevenson, wrote "Life is not so much a matter of holding good cards, but sometimes of playing a poor hand well." The firms that will thrive in the 21st century are not necessarily the firms who have "held good cards" in the past. They are the firms that already know how to "reframe" the risks and adversities of today in new ways so they can play their hands well. How are they doing that? 1.
Raise the bar for leadership. No more "shooting the messenger!" Quality practices do not thrive in professional work places that discourage innovation. Nor do they prosper when partners fail to seek out diverse viewpoints and new ideas. There is an adage, "Old dogs can't learn new tricks." While we don't subscribe to this limitation on older partners' capabilities for learning new skills of business acumen, emotional intelligence, and managing change, they do need to make a decision according to another old adage, "Lead, follow or get out of the way." When law firm leaders can't give their people the right guidance, change will fail. Alternatively, if the next generation of leaders in law firms fail to "lean in," 3 change also will fail. Being able to select and develop lawyers, the future leaders of the firm, requires more than administering a personality test to determine eligibility. Nor should the professional selection and development of lawyers be delegated to talent management staff. If they are going to be "change ready," law firms need qualities in their lawyers and leaders that go beyond traditional skills sets.
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Sheryl Sandberg, Lean In (Alfred A. Knopf, 2013)
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New Paradigms and Old Lessons for Cyberlawyers What evidence do the partners have in answering these types of questions about lawyers whom they are considering for selection or promotion? -
How have individuals overcome adversity in their own lives?
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What has been their typical reaction to negative stress or adversity?
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To what extent do they attempt to confront sensitive issues or emotional challenges; or are they more likely to respond passively to problem situations and the need for change?
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What is their approach to getting things done and solving problems and what skills do they demonstrate in doing so?
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To what extent do they anticipate obstacles or roadblocks, and help others to do so?
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How sound is their judgment in evaluating and responding to professional and client service risks?
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To what extent have they learned from their mistakes?
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How well can they assess their own strengths and limitations? Are they able to see themselves as others see them?
These are all indicators or clues about whether lawyers have the resilience, self-awareness, self-confidence, optimism, and skills to manage their own performance and work together with others in the firm to make changes successful – not just once, but time and time again. 2.
Get back to basics. At every level in the firm, members pay attention to the basics. This includes everything from revising strategic priorities, confirming the fundamental purpose of the law firm's services, and updating partnership agreements to developing core business values and skills, writing realistic business plans, analyzing, and responding to client feedback, clarifying evolving performance expectations and managing underperformance. The day-to-day
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New Paradigms and Old Lessons for Cyberlawyers discipline of observing the basics provides the stability and flexibility needed to react swiftly to changing dynamics. 3.
Analyze the external environment as closely as the internal one. To be resilient, a law firm must be aware. This requires closer attention to the economic, political, and social trends that are changing clients' businesses and, with them, their needs for legal services. One can always respond better to challenges that are anticipated, or at least foreseen as possibilities, than to outright surprises. Too many traditional law firms are being surprised.
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Integrate strategic goals and professional performance expectations with business and competitive realities. Planning and performance take into account the changing realities of the economic environment in which the firms practice. Law firms that continue to follow a "do it yourself" approach, conjuring up strategic plans and performance goals internally, without any relevant external input, become more and more isolated from reality. Ignorance of the changing realities is bad enough. Being aware of them but denying that these forces somehow will affect your competitors but not harm a "fine old legal institution like ours" is like signing your own death warrant.
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Anticipate changes. Seek out new information from many sources. This includes: -
Listening to the younger lawyers and lawyers with diverse views;
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Generating client feedback and market intelligence; and
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Aggressively linking external economic conditions and internal profitability data to business planning.
Resilient law firms test their own assumptions and take nothing for granted. If partners wait for the consequences of not acting, it will be too late to act.
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New Paradigms and Old Lessons for Cyberlawyers 6.
Provide firm members with experiences of significant and meaningful change. Previous positive experience with implementing change builds confidence, skills and trust. Firm members may still find they get frustrated or even overwhelmed by new expectations, but they rebound more quickly, which increases the odds of successful change in the firm. When team members have mastered a new process for sharing client information, for example, they can build on this network of relationships and information for the next change requirement. Resilient law firms also have learned that partners reward committed and innovative efforts, even if the net results fall short of the immediate target. They know that attempts at continuous improvement are almost always better than behaviors like finger pointing, running for cover, or "hiding below the radar" when things go wrong.
a bright future for law firms that are willing to change We are not among those who are touting the impending death of the traditional law firm (in some cases, we suspect, only to drum up business for themselves as saviours or undertakers). Our practical observations as we have advised law firms and corporate legal departments over the past 25 years convince us that the law firm remains an evolving business institution that has shown considerable imagination, creativity, and resilience in response to the changing needs and expectations of its clients. Law firms have the capability to continue to evolve in response to changing environments. The question for their lawyers is whether they will look at the comet blazing across the twilight skies as a call to change or, like the dinosaurs, they will continue trudging on, telling themselves that none of it will affect them.
about the authors Norman Clark and Lisa M. Walker Johnson are founding principals of the international legal management consulting firm of Walker Clark LLC. They can be contacted at norman.clark@walkerclark.com and lisa.walkerjohnson@walkerclark.com, respectively, or at +1.305.432.9860. With their colleagues, they have advised lawyers, law firms, in-house corporate and government legal departments, and law societies and bar associations in more than 65 countries worldwide.
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