Law Firms Are Ostriches, Says Georgetown Law Report

Ostrich ManThe just-released 2016 Report of the State of the Legal Profession from the Georgetown Law Center for the Study of the Legal Profession has some damning words for our supposedly best and brightest. Drawing a comparison to how Kodak went from market domination to crash after missing the market shift from film to digital, the report offers this tasty tidbit:

“The current challenge in the legal market is not that firms are unaware of the threat posed to their current business model. . .Instead, the challenge is that firms are choosing not
to act in response to the threat, even though they are fully aware of its ramifications. . . many law firm partners believe they have an economic model that has served them very well over the years. . .They are consequently reluctant to adopt any changes that could put that traditional business model at risk.

My observation: that’s only half the reason. The other half is that they don’t know what the &$@#* to change it to.

Read the full report HERE.

Fixing the Race to Make Partner

footraceMore firms are having problems finding and retaining good associates. One Atlanta firm, Fisher & Phillips, has gotten proactive about saving their considerable investment in their associates. They have created a new program that lays out the criteria for making partner early in the life of an associate – mainly originating work – then giving them the tools and training to meet those criteria.

“We’re trying to set them up to succeed,” Managing Partner Bert Brannen said In the Atlanta Daily Report story. “It’s a very intentional way to guide people through the evolution from summer clerk to fully functioning first year partner with more business than they can service on their own.”

Attorneys Master Class offers a similar program to its firms. Read about it HERE.

Here Comes the Revolution – How to Hold On to Your Team Stars

Seven people have passed the exam to be the nation’s first “legal technicians” in Washington state. A quote from the ABA Journal article by Debra Cassens Weiss:

“Washington is the first state with a program to allow limited license legal technicians (LLLT’s)  to help litigants prepare legal documents and provide advice on legal procedures without a lawyer’s supervision.”

And a second story, this time from the ABA itself: Legal technicians may partly own law firms in this state; is ban to nonlawyer ownership crumbling?

The short answer is a resounding YES. The dreaded “ABS” (alternative business structures) which allow non-attorney ownership of law firms, which is already in place in Australia, Great Britain and is coming soon in Canada, has now been breached in Washington State, sans blessing from the ABA.

And if your reaction is “it’ll never catch on,” you’re dead wrong. Oregon is close to following suit. California and New York are considering. Florida is taking a look.

A recent article in the New Jersey Law Journal titled The New World of Outside Investment in Law Firms” has an enlightening comment about the traditional resistance to change – the “law is a profession, not a business” argument:

“There is a hoary battle cry we always hear when having these discussions: “practicing law is a profession, not a business.” That started in the late 19th century when lawyers began to establish a professional identity and adopted the Victorian scheme of professionalism from England. At its core was the tension between the ascendant commercial classes and those who considered themselves better than merchants and above the fray. Many of them practiced law as a gentlemanly profession, but relied on their family money to pay the bills. Few of us today have trust funds. If we don’t bill, we don’t eat. That sounds pretty commercial to me.”

The article also discusses a seminal event – the first law firm in Britain to do an IPO. Well worth reading.

The licensed legal technician trend, like the “nurse practitioner” and “physician assistant” waves that are sweeping the medical profession, is coming to a state near you. And it will affect you in the following ways:

First – unless you’re willing to lose that outstanding paralegal, be prepared to re-think and re-structure how your practice works to keep them – and their revenues – inside the firm. Don’t worry about losing your under-performers. They’ll stay as long as you let them collect a paycheck.

Second – get ready to completely re-imagine and re-design your operations, marketing, client relationships and fees – before your competitors do – to take full advantage of this new category of legal service professionals. Because the toughest of those competitors will. You can implement a good part of this re-design right now on a practical level, before the revolution comes to your town. Frankly, much of the legal profession has been doing this for decades – we’ve just disguised it well.

Third – Get used to not supervising the person who used to be your paralegal. It will be a separate profession with its own standards and procedures. Although in Washington State it is still entwined with the Bar, the state Supreme Court actually created a separate LLLT Board to oversee it. Soon that board will operate in parallel with, and not beneath, the State Bar. Watch for the emergence of a parallel “bar.”

Fourth – expect to find yourself directly competing with one or more LLLT’s. They no longer have to work under the supervision of an attorney. They can – and will – open their own firms. But they will not be admitted to represent clients in court (yet).

Fifth – if you have one or more outstanding paralegals, be prepared to enter into new relationships with them. Many of the best will want to be partners with you – or if not with you, then with another attorney – likely your direct competitor.

Sixth – like it or not, your world is about to change. Read CNN’s commentary The Fall and Rise of Lawyers.

And finally, if you’re worried about your future direction and could use some help drawing a roadmap to your future, call or text me – 407-830-9810 – or shoot me an email – dustin@attorneysmasterclass.com.

 

What if Your Employees Owned Part of Your Firm?

What if your employees sat next to you in shareholder meetings, voting on business decisions about the firm?

big-wave

It’s coming. 

The latest iteration of “alternative business structures” – ABS’s – now permitted in the United Kingdom and Australia, and soon in Canada – is one that will frighten many attorneys: employee ownership of law firms (or the ABS that contains them).

According to the newsletter from LegalFutures.co.uk:

A groundbreaking alternative business structure that last year embraced employee ownership has seen the valuation of its shares rise 15% over the past 12 months. Staff at Triton Global each received a free initial tranche of 145 shares in the company, worth about £500, and nearly two-thirds have since invested further to the collective tune of £58,000. Triton is a multi-disciplinary insurance business combining legal advice, claims administration and loss adjusting. It has 140 staff across five offices in the UK, and a further 35 in seven offices overseas. 

And by the way, guess who’s forging ahead fastest with ABS’s there? The Chartered Accountants, who have thus far authorized 48 – in the last six months alone.

Until the mid-80’s, accountants in the U.S. were among the most conservative of all professions. By ethical rule, it was unethical to give someone a business card unless they specifically asked. Then in the late 80’s the profession went through a re-invention which re-imagined the profession as financial and management advisors to businesses, and spurred the foundation of dozens of consulting firms which collectively took billions out of the pockets of the legal profession.

Will they do it again? Will the leaders of the legal profession – the rule-makers at the national and state level – wait until the accountants skim the cream before surrendering to the inevitable? The profession’s leadership should be fighting hard to evolve the profession in the U.S. like it is evolving in Canada and the rest of the British Empire.

The Big  wave of change is coming. As they say, we can be on it – or under it.

Are You An Excitement Addict? What Is It Costing You?

The wonderful Susan Carter Liebel just posted a great article on the Solo Practice University site about entrepreneurial addiction – people who are serial entrepreneurs and love the creation process better than the implementation process, and get bored with established routine. Such entrepreneurs, inside or outside of the legal profession, are the life blood of a vibrant country.

I want to shine the spotlight on another, more troubling addiction that seems to be rampant in the legal profession. Excitement. It’s an addiction that typically takes a toll on the attorney’s practice, clients, family, and eventually themselves.

And make no mistake, it’s a true, medically-defined addiction. The more accurate term is “adrenaline addiction” because of the fight or flight hormone produced that is designed to speed us up when danger approaches.

A caveat here. A good, committed attorney will usually experience a consistent amount of stress in their daily practice. Being able to function well in stressful situations is a valuable trait. But for some, the stress either accelerates because of lack of understanding of how to manage and grow a practice, or sometimes because, in a real sense, they crave more of it.

The adrenaline-addicted attorney lives constantly on the edge. Always late for meetings and appointments, drives fast everywhere, never has enough time to do any forward planning to avoid the next crisis or to stay out of chaos, so chaos continues to reign. They are often at odds with judges and opposing counsel. They almost invariably have high staff turnover. They drink copious amounts of coffee or caffeine drinks. They cannot be separated from their mobile devices or their e-mail – 24 hours a day.

And tellingly, they also often have high receivables, because they often have poor judgment on client intake, are short on client responsiveness, and never find enough time to follow up on receivables. As a result, difficult, no-pay clients occupy significant time in their practice and their finances, creating yet more chaos. And in another sense, clients who are uncooperative are another chance for exciting conflict.

For the adrenaline addict, order, predictability, and procedural days are not exciting, but chaos and crisis are. Being late for appointments, arriving at the last minute in court, verbal jousting with frustrated clients and opposing counsel are. Even having high receivables is exciting in a negative way. After all, stress is the first cousin to excitement.

Many attorneys who profess frustration and stress about their practice are, unknowingly, excitement addicts.

Some are naturals. A common cause is growing up in an alcoholic family, where constant volatility and unpredictability created an atmosphere of fear and excitement, and a need to be hypervigilant.

And some were simply trained by the legal profession to be so. How does that occur? They may have begun their careers in firms where the workload was so overwhelming that they were always behind, and the management so overbearing that they were always under fire. In this atmosphere, young attorneys come to believe that high stress and constant crisis are normal components of a successful practice. And when they open their own firms or move to a less demanding and stressful position, they unconsciously go about creating the familiar – even though unpleasant – atmosphere.

How does the adrenaline addict feed their addiction? By –
Taking in difficult clients that, at some level they know will be a collections challenge.
Taking too many clients, so that they will always be overworked and under organized.
Not investing sufficient time with cases to strategize, schedule, get the work done, and build strong client relationships.
Not having sufficient support team, or even worse, not effectively utilizing their support team.
Viewing every encounter, from client to opposing counsel to judge, as opponents to be outsmarted and vanquished, rather than collaborators in the legal process.
Drinking 3 or more caffeinated drinks daily
Frequent offensive driving behavior, such as tailgating, speeding or road rage
Constant scheduling of appointments, meetings and events with little down time in-between, and always on-the-go
Frequently causing drama between him or herself and others, or knowingly putting him or herself into stressful situations

And the result?
For the practice –
• An attorney and staff who work long hours inefficiently and at a high level of stress
High staff turnover
High client dissatisfaction and resulting high receivables
Periodic grievances and even occasional malpractice suits
Damaged professional reputation
Financial struggles

For the attorney’s personal life –
Relationship turmoil, alienated children and family
Broken promises
Potential or actual health problems
• Lots of high-risk sports and activities
Other addictions, such as alcohol, gambling
Overspending, credit card debt, impulse buying, financial problems
Lots of toys quickly discarded

If you see a bit of yourself in any of this and want to make it different (and there’s the rub – it’s a hugely difficult addiction to give up), I’ve provided some useful reading below. And I’d be happy to chat about how I might help you change that behavior into others that promote a healthy practice and a healthier life. Give me a call at 407-830-9810.

Some useful reading:
Can You Be Addicted To Entrepreneurship? – Solo Practice University
The ACOA Laundry List of Traits, Trait 8 – Excitement
The Painful Reality of Adrenaline Addiction
How to Overcome Adrenaline Addiction: Tips From A Former Addict
Adrenaline Self Test
Are You Addicted to Your Own Stress?
ADDICTED TO ADRENALINE?