MSBA Highlights of the Legal Profession

Maryland State Bar Association, Inc.

MSBA RESEARCH NOTES:

Legal Profession Trends Highlights FALL/WINTER 2018 | VOLUME 1, ISSUE 1

MSBA RESEARCH NOTES:

Legal Profession Trends Highlights FALL/WINTER 2018 | VOLUME 1, ISSUE 1

Informing our members and curating content to make efficient use of their time is an important role for the MSBA. We hope this MSBA Research product provides insightful data and trends as you consider the evolving nature of the legal profession.

MESSAGE FROM THE PRESIDENT

The MSBA is working to deliver more content that is relevant to its members , their careers, and their practices. The Legal Profession Tends Highlights is the latest example of the research and work the MSBA is doing.

For questions or suggestions for future MSBA Research topics, please email feedback@msba.org Criselle Anderson

Research Notes Editor Maryland State Bar Association

Victor L. Velazquez, CAE

Executive Director Maryland State Bar Association & Maryland Bar Foundation

Maryland Legal Profession Maryland Attorneys

by Gender

I M P O R TA N T N U M B E R S

FEMALE

37.4% MALE

62.5% (Source: MSBA Mid-Year Meeting Membership Presentation 2018)

10 Largest Maryland Firms (by number of Attorneys) 1.

2.

3.

4.

5.

6.

7.

attorneys in Maryland.

Miles & Stockbridge, PC Venable, LLP Maryland Legal Aid Whiteford, Taylor & Preston Shulman Rogers DLA Piper Baker, Donelson, Bearman, Caldwell & Berkowitz, PC 8. Offit Kurman, P.A. 9. Semmes, Bowen & Semmes 10. Goodell, Devries, Leech & Dann

(Source: Client Protection Fund of the Bar of Maryland - May 2018)

(Source: Daily Record MD’s Largest Law Firms 2018)

40,452 The amount of active O U T LO O K

Maryland Lawyer’s Confidence Index Survey QUE STION

I N DE X

-100 -80 -60 -40 -20 0

Our firm plans on hiring additional attorneys within the next 3 months

20

40

60

80 100

-42

Our firm anticipates an increase in billable hours over the next 3 months

2

Within the next 3 months, our firm plans to invest or expand in the following areas: Marketing

10

Within the next 3 months, our firm plans to invest or expand in the following areas: New Technology

13

Within the next 3 months, our firm plans to invest or expand in the following areas: Support Staff

-18

Within the next 3 months, our firm plans to invest or expand in the following areas: Infrastructure

-30 31

The overall state of the economy is good

R E S PO N S E S ( TOTA L = 4 6 7 )

(Source: https://thedailyrecord.com/maryland-lawyersconfidence-index-survey June 2018)

0 50 100 150 200 250 300 350 400 450 Disagree Strongly

Disagree Somewhat

Neutral

Agree Somewhat

Agree Strongly

CHALLENGES

M A RY L A N D T R E N D S

We asked an open-ended question in the survey conducted between April through May 2018 about current challenges facing attorneys in the MSBA. Here are a few that surfaced:

E- Filing MDEC (Maryland Electronic Courts) MDEC is currently operational in 20 of out 23 counties in Maryland. The MDEC launch for Baltimore County is anticipated February 2019.

• Incivility/lack of professionalism between attorneys and within profession • Stress/work-life balance • Financial concerns (student loans, decreasing income) • Time management • Client acquisition (Source: Maryland State Bar Association - Strategic Planning Survey - April-May 2018)

We also recognize the importance of work-life balance.

Our firm has a fully-paid, 12-week maternity leave policy with the ability to extend leave time on an individual basis.

We also have flexible work arrangements which have allowed our women attorneys to work non-traditional hours, from home or other remote locations. As a result, our firm has not experienced the high attrition rate among women which is prevalent across the profession.”

– Linda Woolf, Managing Partner at Goodell, DeVries, Leech & Dann LLP (Source: https://thedailyrecord.com/2018/04/12/female-managing-partners-qa/)

According to the the MD Courts website, Baltimore County will be the largest jurisdiction yet to implement MDEC, and the launch will include a pilot of electronic filing for landlordtenant cases.

(Source: https://mdcourts.gov/media/news/2018/pr20180416)

Uniform Bar Exam (UBE) The Uniform Bar Exam (UBE) is to be implemented in 2019, which will ideally increase the number of people sitting for the Maryland bar., Currently, twenty-eight jurisdictions administer the Uniform Bar Exam, which allows for increased mobility and job opportunities, since UBE scores in one jurisdiction are transferable to other jurisdictions that also administer the UBE. Each state sets its own passing rate, and determines how recently the test must have been taken.

The test consists of three sections: the Multistate Bar Examination (MBE), which includes 200 multiple choice questions; two Multistate Performance Test (MPT) tasks, which are 90-minute sections testing applied skills; and six Multistate Essay Examination (MEE) questions. In addition, ten jurisdictions, including Maryland, will administer sections on local state law.

“The Uniform Bar Examination, along with the Maryland law component, will assure that applicants possess the knowledge and skills necessary to practice law in Maryland, plus afford those who pass the exam the portability of transferring their results to other jurisdictions that have also adopted the Uniform Bar Examination,” said Mary Ellen Barbera, Chief Judge of the Maryland Court of Appeals.

(Source: http://www.nationaljurist.com/national-jurist-magazine/more-states-are-adopting-ubegiving-lawyers-greater-mobility, http://thedailyrecord.com/2017/11/20/court-of-appeals-ubeaddoption)

National Legal Profession I M P O R TA N T N U M B E R S

1,338,678 National population of practicing attorneys 0.2 % increase from 2017.

(Source: Resident Active Attorney Count by 2018, ABA)

The 10 Largest Firms in the Nation (By total Attorneys) 1

6

7

2 (6th largest law firm in Maryland)

8

3 9 4

5 10 (Sources: National Law Journal 500 June 2018 , *Daily Record MD’s Largest Law Firms 2018)

Population of the Legal Profession by State (Not association membership)

New York.......................177,035 California......................170,044 Texas...............................90,485 Florida............................78,244 Illinois.............................63,422 Dist. of Columbia........53,778 Pennsylvania...............50,112 Massachusetts ...........42,926 New Jersey...................41,021 Maryland.......................40,452 Ohio................................37,873 Michigan.......................35,362 Georgia..........................32,802 Washington..................26,057 Minnesota.....................25,252 Missouri.........................24,754 Virginia..........................24,208

North Carolina.............24,087 Connecticut..................21,341 Colorado.......................21,099 Louisiana.......................18,918 Tennessee.....................18,695 Indiana...........................15,826 Arizona..........................15,601 Wisconsin.....................15,539 Alabama........................14,822 Kentucky.......................13,540 Oregon...........................12,427 Oklahoma.....................11,695 South Carolina............10,445 Utah................................8,285 Kansas...........................8,131 Nevada..........................7,520 Iowa................................7,454

Arkansas.......................7,080 Mississippi....................7,007 Nebraska.......................5,565 New Mexico..................5,428 West Virginia...............4,849 Hawaii............................4,261 Rhode Island................4,154 Maine.............................3,988 Idaho..............................3,882 New Hampshire..........3,523 Montana........................3,179 Delaware.......................2,978 Alaska............................2,311 Vermont.........................2,227 South Dakota...............1,995 Wyoming.......................1,716 North Dakota...............1,694

Women in the Legal Profession FEMALE

36% MALE

64%

In private practice, women make up 22.7% of partners, 19% of equity partners, 25% of managing partners, 45% of associates, and 48.7% of summer associates.

In Corporations, woman make up 26.4% of Fortune 500 General Counsel, 23.8% of Fortune 501-1000.

(Source: A Current Glance at Women in the Law, Commission on Women in the Profession, ABA January 2018)

National Legal Profession

AC H I E V I N G LO N G -T E R M C A R E E R S F O R WO M E N I N L AW

American Bar Association launched a Presidential Initiative beginning in 2017 called “Achieving Long-term Careers for Women in Law.” “The need is pressing. Although women have been graduating from law school in roughly equal numbers to men for almost 30 years, their career paths over time are quite different. Some 20 years after graduating from law school — a time when lawyers should be in their most productive years — far too many women have not reached the same success as men, or have left the profession entirely. Thus, even though women comprise 45% of law firm associates, they account for only 19% of equity partners in private firms and that number has barely increased over the past 10 years. Similarly, in corporations, male Chief Legal Officers and General Counsels greatly outnumber women. “

The Goal of the Initiative: “As a profession, we lack broad-based, reliable information about the reasons why there is a marked gender gap. Of course, there are theories: some believe that women have a greater need for work/life balance, or have less focus on getting the business that big law expects of their partners, or lack senior role models, or are discouraged by bias or discrimination. In the past ten years, and with the encouragement of some vocal corporate clients, a number of firms have worked hard on changes in their policies in order to retain women lawyers. But the results have been much weaker than was expected or hoped for. The American Lawyer has predicted that at the current glacial rate of progress, we will not reach gender parity at senior levels of the profession until 2181.

This Initiative will provide critical data and proposed solutions to this urgent problem.”

Read more about the ABA Presidential Initiative.

(Source: https://www.americanbar.org/content/dam/aba/administrative/office_president/Initiative_Overview.authcheckdam.pdf)

N AT I O N A L L E G A L T R E N D S 1. E-Discovery 2. Artificial Intelligence (AI) 3. Law Firm Mergers 4. Solo Practitioner & Practice Trends 5. The Multigenerational Workforce 6. Social Networking 7. Legal Outsourcing

National Legal Profession E - D I S C OV E RY The growing “internet of things” has led to an increase in need for identifying potential sources of information, such as drones, DNA sensors, appliances, etc. This information overload caused more user-friendly e-discovery systems to be developed, focusing on increased systemization, efficiency, cost reduction, and the ability to perform discovery in-house.

(Source: https://www.jdsupra.com/legalnews/checklist-of-top-10-e-discovery-trends-98641)

Discovery Solutions for Small Matters tend to focus on searching, filtering, and exporting information.

Solutions for Large Matters usually Integrate AI, which learns as it processes massive amounts of data, increasing accuracy and efficiency, reducing time, and lowering costs.

Dtsearch: • Can search/filter several terabytes of data • Has over 25 full text and metadata search features, including forensics-oriented features

Disco: • Cloud platform allows high-speed collection, processing, searching, and review from anywhere 24/7 • “Deep learning” (chain of multiple machine learning models) examines order, structure, and meaning of words to determine if a given document is relevant for review • Amazon S3 acceleration powers Rapid Ingest File Transfer, allows uploads directly to DISCO from devices

(Source: http://www.dtsearch.com)

(Source: https://www.csdisco.com/technology)

Intella: • Has search/analysis tool with variety of filtering options • Process files into index for easy review which can then be exported into different file formats to integrate with other software easily • Visual analytics (Source: https://www.vound-software.com)

Pinpoint Labs: • Preserves/extracts data and metadata, which can be exported, OCR’d, and searched • Wildcard, proximity, boolean searching • Date restrictions, denisting, deduping (Source: http://www.pinpointlabs.com/productsservices)

Brainspace: • Groups documents into related clusters, integrates with most common e-discovery platforms • Detects duplicate and near-duplicate documents, automatically filters out boilerplate language, detects unique phrases, increasing accuracy & relevance, multi-lingual, “multi-brain” analysis • Visual Analysis: Transparent Concept Search — Any concept search turns into Boolean expression, removing guesswork and delivering versatile/defensible platform for attorneys (Source: http://cdn2.hubspot.net/hubfs/383652/discovery_for_government.pdf)

Relativity: • Creates legal hold notices from templates, automates communications, single audit trail • Analyzes and synthesizes data to quickly determine issues, size and scope of case, processes appropriate facts, allows real time monitoring & settings adjustment, interactive search panel • Fully integrated analytics eliminate irrelevant information, arranges documents, assisted review identifies documents, centralized case information allows transcripts to be dragged/ dropped into program to identify key parts and link documents (Source: https://www.relativity.com/ediscovery-software/)

A RT I F I C I A L I N T E L L I G E N C E The Legal Landscape Artificial Intelligence can be effectively used for: contract review/due diligence; predicting a court’s likely decision on a given case with 90% accuracy; E-discovery, IP Lawyers: monitoring digital platforms, valuing IP portfolios, budgeting/ analyzing trademark search results; Tracking billable hours, analyzing time spent on tasks/matters; Legal Analytics.

(Source: https://www.topbots.com/automating-the-law-a-landscape-of-legal-a-i-solutions)

Lawyer Attitudes Although there is high interest, (93% of surveyed attorneys believe it could reduce costs/increase efficiency) there is great reluctance to implement because attorneys are unwilling to switch reliance from “skepticism” & “precedent” to “algorithms”, “data”, “analytics”, they tend to favor status quo.

Legal AI overall value = $16 billion, compared with overall U.S. legal services market = $437 billion — and, lawyers want to practice law, not become newest case law by journeying out into unknown legal territory.

(Sources: https://www.law.com/nationallawjournal/2018/03/01/ai-finding-favor-in-legal-industry-butadoption-lags; https://www.law.com/nationallawjournal/2018/03/01/ai-finding-favor-in-legal-industry-butadoption-lags)

L AW F I R M M E R G E R S Trends 2017 had the highest recorded mergers in the 11 years that data has been collected, at 102 mergers.

80% were pickups of small firms between 2 and 20 lawyers, and there was an increase in crossborder mergers, with 2017 setting a new high of 15, compared to the previous record of 11 in 2016. So far, 2018 seems to be keeping relative pace with last year, with 20 mergers completed in 2018’s first quarter, compared with the 22 mergers in 2017’s.

(Source: https://www.law.com/americanlawyer/2018/03/30/report-finds-steady-pace-continuing-for-lawfirm-mergers/; https://biglawbusiness.com/2017-record-year-for-law-firm-mergers )

Despite its growing popularity, one third to one half of all mergers fail to meet expectations, due to cultural misalignments and personnel problems.

After completing conflict checks, firms usually look at practice economics and financials, but neglect the people aspect. Successful mergers depend on sound integrated business strategy that creates synergy and greater client value than either firm would generate alone.

(Source: https://www.olmsteadassoc.com/resource-center/should-you-merge-with-another-law-firm)

Factors Intensifying market competition is making sizeable law firms with hundreds of lawyers receptive to merger offers that they would never have considered a few years ago.

(Source: https://biglawbusiness.com/2018-could-be-the-year-of-the-mega-law-merger)

Other factors include; a desire to increase geographical reach; increase sector presence; and improve market position in a client-driven atmosphere.

(Source: https://www.lawcareers.net/Information/Features/13022018-Mergers-why-do-they-happen-andwhat-do-they-mean-for-lawyers)

Pros: • Can improve competitive position • Increase specialization/get additional expertise • Expand geographic locations • Add new practice areas • Increase/decrease client base • Improve/solidify client relations Cons: • Requires shifting focus from current individual firms to new, merged firm (re-alignment of goals/priorities) • May require added infrastructure, depending on size of merging firms • Must ensure personalities/philosophies/lifestyles of people mix well, & that partners like each other (Source: https://www.olmsteadassoc.com/resource-center/should-you-merge-with-another-law-firm/; http://www.smocksterling.com/law/pdf/the_seven_deadly_sins.pdf)

National Legal Profession S O LO P R AC T I T I O N E R S A N D P R AC T I C E T R E N D S Technology/Focus on the Future Top five technologies respondents felt had moderate to high impact on their practice: • Document management (90%) • Time and billing management (88%) • Financial management or ERP (enterprise resource planning) (73%) • Mobility and mobile apps (70%) • Business intelligence (70%) (Source: https://www.aderant.com/research/2018-business-of-law-survey)

Technologies to Drive Efficiency Firms mainly focused on eliminating process inefficiencies efforts include: • Automating routine tasks (64.2%) • Workflow automation (54%) • Analytics, data mining and business intelligence (46.7%) • Integration of systems (37.2%) • Mobile access to law firm systems (24.1%) • Internal collaborative tool for law firms (18.3%) (Source: https://www.aderant.com/research/2018-business-of-law-survey)

Marketing Trends • Investing in online presence • SEO (Search Engine Optimization) • Building your referral networks

(Source: https://www.lexology.com/blog/2017/09/16-lawyers-share-best-law-firm-marketing-tips)

Issues: • Attorneys work on average 2.6 billable hours/ day, and collect only 1.6 hours/day • 54% of attorneys actively advertise their practice, but 91% cannot calculate return on investment and 94% cannot calculate the cost of acquiring a new client • Late payments • Interruptions killing productivity • Acquiring new clients (Source: Clio’s 2017 Legal Trends Report)

Current Marketing Channels: • Email 37% • Print 34% • Facebook 26% • Yellowpages 18% • Avvo 18% • Direct mail 18% (Source: ABA Legal Technology Survey Report)

Cloud Considerations The drivers for cloud adoption are: • Provides better disaster recovery, 50.5% • Less costly than on-premise solutions, 39.1% • Augments business continuity, 29% • Cloud offers better security, 27.5% • Improving features and functionality, 25.4% • Centralized data improves collaboration, 23.9% (Source: https://www.aderant.com/research/2018-business-of-law-survey)

Succession planning One-third of ALM Intelligence Succession Planning 2017 survey respondents did not have any succession plans in place, and 40% of those said it is not an immediate concern. Outgoing partners are incentivised to hoard clients, knowledge, and opportunities, but this led to 52% of respondents losing an average of one-quarter of retirees’ book of business upon retirement. One-third were concerned that partners hoard work, 60% said senior partners stay on too long, 60% said that over half of firm leadership was above age 55, and 43% said they do not plan to form mentoring relationships with junior partners.

Successful succession planning includes establishing short term successors in case of immediate leadership crisis, and long term planning for when senior partners retire. The plan will look holistically for service continuity, not just focus on senior partners who may retire in the near future. It ensures a balance of both senior partners and junior associates, then establishes a process for transferring out senior partners and raising juniors up through the ranks.

MSBA held the Succession Planning Seminar in August 2018, the OnDemand option is available through our CLE catalog.

(Source: ALM Intelligence report: Securing the Future: Law Firm Succession Planning and the Challenges of Managing a Multigenerational Workforce)

Valuation Concerns The legal market is not a mature one, law firms have only been selling around 25 years, so there are not “accepted business customs,” in terms of valuing a practice.

(Source: https://www.royginsburg.com/blog/selling-your-practice/2015/10/07/a-better-way-to-value-alaw-practice)

There are, however, some common valuation methods: “Rules of Thumb” Revenues: 0.5 to 1.5 of average annual revenues • Does NOT consider how well firm is run/how much profit owner gets Multiple of net income: 2 to 3 times net earnings • Leaves out unique features that impact what buyer might actually pay for practice

Market Comparisons Compares a practice’s characteristics to another law practice sale of similar core features/financials that has recently closed.

CPA’s, practice brokers, other lawyers, lenders, and others who focus on legal marketplace, have unique knowledge and are great resources to determine value.

(Source: http://thelawpracticeexchange.com/valuation)

Key Value Drivers: • Financial performance • Practice structure/owner involvement • Growth potential • Client satisfaction • Management and personnel • Practice area • Brand identity • Client diversity • Size of practice • Geographic location • Repetitive client revenues (Source: http://thelawpracticeexchange.com/valuation)

Ethical Considerations: • Client rights/property/confidence • Communications, attorneys of record • Client funds/files • Conflicts of interest • Competency, misrepresentation by seller of purchaser qualifications • Errors of selling attorneys discovered by buying attorneys (Source: https://www.americanbar.org/newsletter/publications/gp_solo_magazine_home/gp_solo_ magazine_index/jf00cotterman.html)

National Legal Profession M U LT I G E N E R AT I O N A L

D I G I TA L M A R K E T I N G

WO R K F O R C E

AND SOCIAL MEDIA

A major challenge many law firms are facing is having up to four different generations all working in one office together; all with different cultures, expectations, and values. Lack of understanding among the different generations can cause interoffice conflicts.

Based on survey results from the 2017 ABA Legal Technology Survey

Baby Boomers (Born between 1946-1964) 75% of Baby Boomers expect a work-centered life.

Many put in 80+ hours per week, and think anyone doing less is lazy or not carrying weight at the office.

(Source: https://www.thebalancecareers.com/baby-boomers-2164681)

Generation X (Born between 1965 and 1980) Strongly value work/life balance and workplace flexibility, autonomy, and challenging assignments.

(Sources: https://www.thebalance.com/the-multigenerational-workforce-2164698; https://www. natlawreview.com/article/multigenerational-workforce-lessons-law-firm-management)

Millennials (Born between 1980 and 1995) 63% of millennials expect a work-centered life, with an increased focus on leisure and less focus on work ethic. They rarely work overtime, but have a better ability to multitask, network, and adapt to changing technology. They require more feedback, open communication, and structure.

(Source: https://www.natlawreview.com/article/multigenerational-workforce-lessons-law-firmmanagement)

Generation Z (Born after 1996) “Digital Natives” — lifestyles are more similar to Boomers due to the Great Recession.

They encourage/expect diversity, challenge the status quo, and value face-to-face interaction much more than Gen Xers and Millennials (Source: http://www.cnlegalnews.com/generation-z-new-challenges-in-a-multigenerational-law-firm)

84% of respondents whose firms have websites for 2017 31% respondents have stated their firms have a blog Respondents are asked in which of several social networks their firms maintain a presence.

Among the 77% of respondents who report that their firms maintain a presence in social networks, respondents are most likely to report that their firms’ presence in 2017.

• Avvo 20% • Facebook 39.6% • Google Plus 9.2% • LinkedIn 53% • Martindale 26.1% (Source: ABA Legal Technology Survey - Marketing & Communication Technology)

The internet accelerates the ability to build relationships and a good reputation. Attorneys should listen to online discussions/writings of their target audience and engage where they gather.

New Aggregators and Twitter are great tools to “listen” to what your target audience cares about.

Blogging is a good way to engage in conversation and allow your voice to be heard on these issues.

Finally, Facebook, LinkedIn, and Twitter can all be utilized to engage with individual people or groups and expand your network.

(Source: https://abovethelaw.com/2017/10/referrals-remain-leading-way-lawyers-get-clients-per-legaltrends-report/)

LEGAL OUTSOURCING Legal Process Outsourcing Legal Process Outsourcing sends work that is usually routine and/or replicable services that require only low level of expertise to more affordable, outside practitioners. It is practice and process focused, streamlining repetitive tasks for greater efficiency. Sometimes these practitioners are overseas, usually in countries whose legal system is also based on English or American Common Law. India is currently the largest legal process outsourcing location overseas.

Legal Service Outsourcing Legal Service Outsourcing sends out more sophisticated legal work, requiring more legal skill and training. There is less focus on process, and more on the actual product being produced, and it usually necessitates a greater emphasis on competent legal oversight, both by the outsourcing providers, and by the attorney hiring their services.

(Source: http://www.cognialaw.com/images/documents/20150922%20LPO%20vs%20LSO%20by%20 Aurea%20Westfehling.pdf)

Most Frequently Outsourced Tasks: • Administrative support: data extraction/entry, e-document management, secretarial services, billing services, paralegal services • Intellectual property: patent drafting/review, IP portfolio management, patent proofing/ docketing, cease/desist notices • Litigation support: discovery, compliance, database creation/maintenance • Legal research & analysis, statutory/caselaw, legal coding/indexing • Contracting support: due diligence and management

(Source: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/ussdt-corporate-legal-process-outsourcing.pdf)

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