How much more of this can large firms take?

In one weekend I heard this from a successful entrepreneur and from a General Electric senior counsel: big firms are arrogant,   overpriced, and we will not play with them anymore.

One of my close friends has been very successful in overseas finance over the last 3 years.  Recently, he began several new ventures and approached big law firms for advice and assistance. My friend, let’s call him Arthur as he’s very private, asked the lawyer from the BF to review some paperwork for a real estate venture. From experience as a hands-on, high IQ personality, Arthur knew that he could do it himself. But it would take him too long when he had other priorities to attend with his new ventures.

The lawyer from the BF firm told Arthur he would have to retain the firm for $10,000 before he could take on the project and help him.  Arthur was livid and tried explaining to the BF lawyer that this was an easily contained project of reading and advice which should not cost more than $2,000!  The BF lawyer stood his ground and quickly lost Arthur as a client.  Not only did he lose Arthur as client for that firm, but for all BFs.

Arthur soon after found a former BF lawyer, who not only turned the work around in only 2 days, but for $600!!!  Which leads me to my next story….

My wife is attending an employment law seminar in Miami and heard a senior counsel from GE talk about hiring law firms. I used to be GE legal and from experience GE only used established BFs.  I can only guess that 3 years later, and a recession (GE Capital’s losses are not helping), that GE has now reconsidered. According to this source, GE is now retaining boutique firms, as well as former BF solos and outsourcing discovery operations to India.

Both stories end with people who have the capital and need to retain BFs, that choose not to deal with the bureaucracy, expense and in some cases the perceived arrogance of BFs.  I still believe that BFs will have a role, but some will have to redefine what a BF is.  In many cases, they may benefit from building new ventures and building those brands rather than resuscitating the old one.  Yup, say goodbye to some of our cherished Dudley Fudleys and Moore!

Solos and small firms (SSFs), while a viable service option for less complex tasks, cannot scale up to compete with BF’s massive infrastructure and pedigree stables of talent. Only when SSFs organize themselves into L-VEN’s (legal virtual enterprise networks), will they achieve what was never possible before – scale and autonomy.

SSFs will need to build networks of trust amongst themselves to scale up. When they do, they will have dealt the final blow, the one from which nothing can save the rapid decline of BFs.

Game over!

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Virtual Legal Offices (VLOs) and why wings on a car don’t make an airplane!

It is great to see so many of us as lawyers now delivering all of our services as VLOs, from a laptop, and many more evolving from hybrid versions. The technological leap of emancipating ourselves from traffic congested commutes, expensive office rents (any rent is expensive if it is not returning to you more than 100% of the investment in it), parking, and the unnecessary use if natural resources like paper, gas, electricity.

VLOs can be so much more than your legal office from home or your laptop. The very nature of technology today, and soon to come, will actually make that business model obsolete. Most of us are still thinking of VLOs in a linear fashion: we moved out from an office with paper files and standalone servers to SaaS applications in the cloud, or to a laptop, or to remote servers that run our data. It’s the same business model but with virtual computer technology. That’s why I refer to this definition of VLOs as putting wings on a car and calling it an airplane.

As VLOS we have an opportunity today for a larger definition. Think of “larger definitions” as saying “more opportunity to make more money and do more of what you like.”  Sounds better, no?

For example: a big law firm is a form of organization that pools together the talent and knowledge of hundreds of lawyers in one marketplace. Like a mall, the buyer gets to visit one place that can handle all or most of the client’s needs. Brilliant, and still fun to visit! Except that it is today a less efficient mode of organizing. First, a big firm is committed to its exclusive talent (this is decreasing) and expensive proprietary infrastructure, including expensive leases. Second, anyone that can adjust and access talent much faster and much better talent will always be more efficient and more effective. Big law firms know this. That’s partly why in 2009 the ABA passed a rule lowering the ethical hurdles to lateral hiring. In fact, big law often sees the future before the rest of our industry, but they simply can’t adjust fast enough because of size and bureaucracy.  Like a 16^th galleon, they can see land ahead, but it takes a lot of sailors to hoist the sails and tack that big ship into the wind.

This is where VLOs can define and design themselves to compete. As a VLO you can move fast, but you don’t have scale, nor do you have trust with the best clients. But if you organize and build relationships of trust with other talent you can build scale and trust with clients previously not accessible to you.

There is another benefit to a VLO many are only now experiencing. You don’t have to be limited to any area of law you don’t want to do. You also don’t have to manage yourself as a business, if you don’t know how. You don’t have to do anything you’re not passionate about. This can only happen if and when VLOs build trust and then build scale with each other.

Hundreds of us are already exploring the VLO’s potential in thousands of conversations in social media. Those conversations are defining trust and building the formless platform for VLOs to increase scale.  Right now it has little direction. It’s like ants looking for a drop of honey. We know it’s here somewhere but no one knows exactly where.  So we exchange thousands of bits of info on social media trying to tract it down. In the end, even that is a limited example because there is not one drop of honey but an entire ocean of it!

The door is open. If we organize we can build a vast, high tech space ship instead of dreaming about flying in our grandfather’s Chitty Chitty Bang Bang.

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Are Public Law Firms coming? Vast, open networks without borders and without jurisdiction.

Imagine when all the Saas and Iaas and Paas needed to practice law are free or almost free.  Aren’t we almost there already??  As a lawyer you no longer need to memorize anything or keep a KM database at your firm.  It’s all available for free or at a minimal cost in the cloud and on your mobile device. Legislation has inflated such that we all consult our mobile devices on every action we take.  Is that legal? Is this legal?  But clients will still need professional legal assistance in resolving disputes, managing contractual relationships, transactions, etc., and navigating all the new laws.  Imagine also the global harmonization of laws and the inevitable competition of lawyers on a global scale.

What then?  What will you do? How will you compete?

Two extreme scenarios could run parallel.

1. Massive global law firms (GLFs) assisting large corporations and governments will consolidate into proprietary “elite silos” numbering 10,000s of lawyers.  They will be distributed, but centrally controlled, and highly political.  Compensation will be astronomical and highly competitive.
2. Many solo and small firms (SSFs), in the 100,000s of lawyers, will organize by necessity into “public law firms”: vast, open networks without borders and without jurisdiction.  PLFs will be completely dynamic in size and direction. They are decentralized except that some may share infrastructure and platforms. The members come and go as they please.  PLF members work the hours they want to, from any location and their only limitations on choice of practice coming from peer reviews. PLFs are intimate networks in which members must earn and build trust to be selected to participate in publicly announced projects.  Anyone can announce a project and build a team, from which professional project and team leaders will evolve.  Earning is varied depending upon who wants to play with you and the market value of your contribution.

I’ve only touched upon the infinite variables of a Public Law Firm as an idea.  What do you imagine your future as a lawyer will look like?

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OBA debuts at Virtual Firm discussion on Twitter: What is the future of the law firm?

Yesterday, around lunch time, I took part in a twitter discussion on virtual law firms or organizations (VLOs) versus Big Law firms. It was hosted by Larry Bodine, one of the best known names in legal marketing since the late 90s. The twitter handle was  #MHVT.  It reminded me 90’s AOL chat rooms, where everyone is talking at the same time.  It is not easy to follow the threads as the tweets come fast and furious! But I was determined that #The Online Bar (our twitter handle) be present for anything to do with VLOs and big firms!

One participant of note was William Eilers who wrote in his blog about the discussion.  He does a good job of summarizing some of the themes covered.  What is clear from yesterday is that no one really knows what is going on. This reminds me of that story of the four blind men washing an elephant:  Each one thinks the elephant is either the trunk, or the tusks, or the tail, or the huge leathery chest!

Almost everyone in the discussion was focused on what they are seeing right now – a fabulously informative stream of present sense impression.  It was truly informative but it’s also what I meant in the title that most are still shooting at the bird. If you spend time and effort doing what’s already being done (aiming at the clay bird in skeet shooting) you will miss the bird – totally!  You have to aim ahead of the bird.

For example, one question that intrigued me from @lawbill was, “what is a firm?”  Most are earnestly trying to shoot at the bird, or trying to put wings on car so that it flies. You can’t fly into space in a car with wings and a rocket attached. You need to invent a totally new structure.  Same with a law firm, if you look at technology and where it’s going.  It’s overwhelming to consider the possibilities for what firms will look like in 5-10 years.

Maybe, what we were doing yesterday on twitter is one future of the firm.

Another possibility is what I call the “public law firm” (PLF).  A law firm, if you can still call it a firm, which is a meritocracy, totally open and without borders or jurisdiction.  I’ll talk more about this tomorrow.…

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