Rearranging the Deck Chairs on the Titanic, LLP: Improved Practice Management and Legal Tech to Stay Afloat

8 min read

Our guest writer and retired lawyer, Murray Gottheil, shares his insights on improving legal practice performance and the benefits of legal tech.

I spent thirty-five years at one law firm. At the time I thought that was a good thing. Looking back, I am not so sure. 

Times are different now. Lawyers change firms more frequently. Maybe that is better. Frankly, I really don’t know, but I suspect that today’s young lawyers are on to something.  

What I do know is that law firms must respond to this new reality. That requires change, and law firm Partners generally find change to be distasteful.   

If change is unattractive, all that is left are the following three options: (1) finding ways to make their existing model more attractive; (2) recruiting people who will put up with the old model; or (3) lamenting the good old days when lawyers were willing to sacrifice their health and families for their career.  

Law firms have been trying all three of these approaches. They have not been working.  

The typical response of law firms to this dilemma has been twofold: (1) turn the problem over to the marketing department to promote some cosmetic changes; and (2) pay young lawyers more money to keep them doing things the way that they have always been done.  

This also has not been working. 

So, what should law firms be doing rather than rearranging the deck chairs? 

A New Approach to Legal Practice Management 

Much has been written about how law firms should improve the quality of life for their Associates and staff so that they will want to stay where they are.  That is all-important and I have little to add to the barrels of ink and billions of pixels which have been devoted to the topic. Unfortunately, many of the proposed solutions come with an unacceptable, unthinkable, tragic flaw, which is the possibility that they may reduce short-term ‘per partner’ profits. Law Partners may get dragged there eventually, but only kicking and screaming.  

May I suggest an alternative approach? 

First, law firms have to stop fighting and start implementing all of those good ideas for making Associates and staff happy that everyone and their uncle have been writing about.  They should move the job of making the firm attractive to Associates and staff from the Marketing Department to Operations.  

Second, firms need to accept that Associates and staff will be coming and going, and plan for it, using legal tech.  

Here is what this involves:

#1 – Documenting thought processes for analyzing and resolving legal issues so that they can easily be taught to newcomers.  

Law firms need to start thinking like franchisors. The entire franchise industry is built on the notion that very talented people can develop a method of doing business and then document it so thoroughly that it can be taught to people who are not quite as intelligent, experienced, or entrepreneurial, allowing them to operate their business by following the system.  

Law firms need to believe that it is possible to break down the thought process for addressing legal issues into components that can form part of a system which can be understood, documented, and taught.  

I suspect that when they are finished rolling their eyes at this idea, many lawyers would say that it is fine and good to strive to accomplish this for certain areas of practice which are routine, but that it would be impossible to do so for legal matters which require creativity and strategic thought.  To this I would say the following:  

1. Even if it is true that this way of doing business will only work for simpler legal matters, I see precious little evidence that law firms are doing a great job of implementing these principles for those matters. Perhaps they should get started there and then see how far they can take it.  
2. I am not convinced that much of what we call “strategic” and “creative” cannot be distilled into principles that can be taught. I know that during my career I imparted that type of thinking to a number of more junior lawyers. What I did not do is write it all down in an organized manner and hand it to junior lawyers to read and learn from. I certainly did not use modern database and indexing software to organize it all or interactive software programs to teach it.  
3. It is common in the franchise industry to have professional trainers teach the system to the new franchisees. Would it be that crazy to import this model into the legal industry? 

How far this type of approach can be taken remains to be seen, but it is clear that if Associates are going to be coming and going, a sophisticated approach to training newcomers in how to practice law effectively would be helpful, and that technology can help organize and retrieve data and present training materials. 

#2 – Developing comprehensive knowledge management systems to capture the intellectual capital of the firm members, and an incentive system that results in the system actually being used consistently. 

In theory, knowledge management systems should be easy to implement. Take a good database and a logical indexing system and you are just about there.  What could be easier?  Just about anything, really.  

There is a well-known book titled, “Herding Cats: A Handbook for Managing Partners and Practice Group Leaders” by Patrick McKenna and Gerald Riskin, which deals with the management of professional firms. As its title suggests, the nature of professionals is such that it is difficult to get them all to head in the same direction.  

When it comes to knowledge management systems, there are a lot of cats and a great deal of herding to be done. It may be that it has been done successfully in some law firms, but I personally have seen little evidence of that.  

What are some of the challenges? Here are a few of the obvious ones: 

1. Lawyers have well-developed egos. If you have three partners working in a particular practice group, you can be fairly certain that you will have three sets of ideas as to what constitutes the best way of doing things. Perhaps compromises can be made and a single manner of doing things can be developed, but that will require a great investment of non-billable time. There are challenges in having lawyers do that consistently. 
2. If the knowledge management system is developed without the buy-in of all of the Partners, some will simply not use it.
3. As lawyers work, they develop, improve, and expand their systems and documents and modify them to reflect changing laws. While they are working on a case or a transaction, they typically will not find the time to incorporate their improvements into the knowledge management system. When the case is won or lost or the transaction is completed, they are on to the next one. Since typically they are busy putting out fires and nobody is paying them to update the knowledge management system, they do not get around to doing that. 
4. Some Partners will think that it is not in their personal interest to convert their personal knowledge into firm knowledge, so they simply will not do it. 

The bottom line is that what is needed is a cultural change in law firms. We need firms where the partners are on the same page concerning the need to work as a team and use legal technology to build and constantly update knowledge management systems. The reality is that it is difficult to implement this type of change in established firms, especially those with older partners who are not technologically savvy. So, perhaps the future belongs to the smaller, younger, technologically savvy, and more entrepreneurial firms. 

#3 – Investing in Document Automation 

It is an inconvenient truth that the days that clients were happy to pay lawyers big dollars to draft documents are coming to an end. 

Today, clients can get their documents from the internet. The quality may be poor, but many will use them anyway. Those who will not use them will nonetheless have their perception of value influenced by the price for which documents are available on the internet. Take something simple, like incorporating a company, for example. If the client can get it done for $300.00 online, they may be willing to pay a lawyer $600.00 to do it, but it is difficult to convince them that it is worth $1,500.00.

It may in fact be valuable to have it done correctly. The lawyer’s service may include advice which is not available over the internet. But nonetheless, the client’s understanding of value will be affected by their perception that the same service is available online at a fifth of the price. 

Similarly, the client who needs a non-disclosure agreement and can download a sample for free online may be unwilling to pay a lawyer $800.00 to prepare a sophisticated document which is tailored to the client’s situation. 

Lawyers who want to compete in this environment have to reduce their cost of preparing documents.  Increasingly, legal tech is available to do that. 

In summary, lawyers have to be open to new directions in which to steer their firms.  Or they could just continue to wait until they hit the iceberg. Hell knows that many of them are steaming right toward it.