the 21st century law firm

The 21The 21stst Century Law Firm Century Law Firm

Presenter:Presenter:

William A. Price, Esq.William A. Price, Esq.

www.growthlaw.comwww.growthlaw.com

What we’ll cover today …What we’ll cover today …

I.I. Legal Employment And Establishments: Legal Employment And Establishments: Nationwide and Illinois DataNationwide and Illinois Data

II.II. Ethics And Technology ForecastsEthics And Technology Forecasts

III.III. Law Practice Technologies: Law Practice Technologies: Practical And Ethical Methods?Practical And Ethical Methods?

IV.IV. Law Business Models: Law Business Models: Practical and Ethical Growth?Practical and Ethical Growth?

V.V. Plan the next steps for Plan the next steps for youryour law practice law practice

I. Legal Employment and I. Legal Employment and EstablishmentsEstablishments

Nationwide and Illinois DataNationwide and Illinois Data

New York TimesNew York Times, January 8, 2010:, January 8, 2010:

“Is law school a losing “Is law school a losing game?”game?”

Since 2008, some 15,000 attorney Since 2008, some 15,000 attorney and legal-staff jobs at large firms and legal-staff jobs at large firms

have vanished, according to a have vanished, according to a Northwestern Law study. Northwestern Law study.

National Employment Projections, National Employment Projections,

2008-20182008-2018

• Lawyers Lawyers 2008 360.2k 2008 360.2k 2018 410.5k, up 13.96%2018 410.5k, up 13.96%

• All professional/technical All professional/technical 2008 369.9k 2008 369.9k 2018 424.8k, up 14.83%2018 424.8k, up 14.83%

• All wage/salaried workers, all All wage/salaried workers, all industries: industries: 2008 560.6k, 2008 560.6k, 2018 649.4k, up 15.83%2018 649.4k, up 15.83%

Source: US Dept. of LaborSource: US Dept. of LaborNote: only firms > 50 employeesNote: only firms > 50 employees

Significance of NWU StudySignificance of NWU Study

• NWU Estimate shows NWU Estimate shows 15,000 large firm jobs lost 2008-15,000 large firm jobs lost 2008-20102010

• 2008 DoL projections predicted2008 DoL projections predicted10,600 jobs increase during that 10,600 jobs increase during that periodperiod

Even using pre-2008 trends, Even using pre-2008 trends, law jobs were growing more law jobs were growing more slowly than other professionsslowly than other professions

• Lawyers Lawyers 2008 360.2k 2008 360.2k 2018 410.5k, up 13.96%2018 410.5k, up 13.96%

• Accounting, payroll, & tax services Accounting, payroll, & tax services 2008 1.2k 2008 1.2k 2018 1.3k, up 14.03%2018 1.3k, up 14.03%

• Architectural, engineering, & related Architectural, engineering, & related services services 2008 0.6k 2008 0.6k 2018 0.7k, up 24.02%2018 0.7k, up 24.02%

• Management, scientific & technical Management, scientific & technical consulting consulting 2008 3.5k 2008 3.5k 2018 6.5k, up 85.95% 2018 6.5k, up 85.95%

Illinois Lawyers 1998-2008Illinois Lawyers 1998-2008

• Establishments with employees up Establishments with employees up 3%, 3%, from 7600 to 7800from 7600 to 7800

• Non-employer establishments up Non-employer establishments up 14%, from 10,400 to 11,80014%, from 10,400 to 11,800

Source: BLS, County Bus. Patterns, IRSSource: BLS, County Bus. Patterns, IRS

Illinois Lawyer Income, 1998-Illinois Lawyer Income, 1998-20082008

• Law firm payrolls up 82%,Law firm payrolls up 82%,

from $2.9 million to $5.4 millionfrom $2.9 million to $5.4 million

• Nonemployer income up 39%Nonemployer income up 39%

from 528,000 to 735,000from 528,000 to 735,000


1998-2008: IL lawyers vs 1998-2008: IL lawyers vs total other IL professionstotal other IL professions

• Lawyer Establishments: Lawyer Establishments: up 3% employer, 14% soloup 3% employer, 14% solo

• All professional, technical: All professional, technical: up 15% employer, 19% soloup 15% employer, 19% solo

Source: BLS, County Bus. Patterns, Source: BLS, County Bus. Patterns, IRSIRS

1998-2008 growth: IL law firms 1998-2008 growth: IL law firms vs vs other IL professions by groupsother IL professions by groups

• Lawyer Establishments Lawyer Establishments up 3% employer, 14% soloup 3% employer, 14% solo

• CPAs CPAs up 5% employer, down 4% soloup 5% employer, down 4% solo

• Architects Architects up 10% employer, down 8% soloup 10% employer, down 8% solo

• Engineers Engineers down 2% employer, down 9% solodown 2% employer, down 9% solo

• Managementt ConsultingManagementt Consultingup 90% employer, up 56% soloup 90% employer, up 56% solo


1998-2008: IL law firm 1998-2008: IL law firm income growth vs other income growth vs other professions professions

• Employer payrolls up 82%, Employer payrolls up 82%, nonemployer up 39%nonemployer up 39%

• All professional, tech employer All professional, tech employer payrolls up 70%, nonemployer payrolls up 70%, nonemployer up 42%up 42%


1998-2008 incomes : IL law 1998-2008 incomes : IL law firms vs. other IL professionsfirms vs. other IL professions

• Law FirmsLaw Firmsemployer payrolls up 82%, solos up 39%employer payrolls up 82%, solos up 39%

• CPAs CPAs employer payrolls up 47%, solos up 37%employer payrolls up 47%, solos up 37%

• Architects Architects employer payrolls up 59%, solos up 8%employer payrolls up 59%, solos up 8%

• Engineers Engineers employer payrolls up 64%, solos up 28%employer payrolls up 64%, solos up 28%

• Management consultantsManagement consultantsemployer payrolls up 71%, solos up 58%employer payrolls up 71%, solos up 58%


1998-2008 IL Law Firm # 1998-2008 IL Law Firm #

growthgrowth • Solos Solos

1998 10.39K 1998 10.39K 1.8k, up 14%1.8k, up 14%

All employers, All employers, 1998-2008: 1998-2008:

# of firms up 3%# of firms up 3%• 1-4 employees 1-4 employees

5.5k 19985.5k 19985.6k 2008, up 2%5.6k 2008, up 2%

• 5-9 employees5-9 employees1.1k 19981.1k 19981.2 k 2008, up 5%1.2 k 2008, up 5%

• 10-19 employees 10-19 employees 532 1998532 1998558 2008, up 5%558 2008, up 5%

• 20-49 employees 20-49 employees 277 1998277 1998287 1998, up 3% 287 1998, up 3%

• 50-99 employees 50-99 employees from 55 to 73 firms, up 25%from 55 to 73 firms, up 25%



• 500-999 employees 500-999 employees same at 5 firms 1998 and same at 5 firms 1998 and 20082008

• More than 1000 employeesMore than 1000 employees0 1998, 3 20080 1998, 3 2008

(Source: BLS, IRS)(Source: BLS, IRS)

Illinois Lawyer Illinois Lawyer Hiring/SeparationsHiring/Separations

• Average hiring per quarter Average hiring per quarter 1999: 5.6k, 2009: 4.2k, down 26% 1999: 5.6k, 2009: 4.2k, down 26%

• Q4 hiring Q4 hiring 3,263 in 2008 vs. 3,223 in 2009, 3,263 in 2008 vs. 3,223 in 2009, down 1%down 1%

• Average separations/quarter Average separations/quarter 6.2 k in 2009, 6.6k in 2009, down 5%6.2 k in 2009, 6.6k in 2009, down 5%

• Average lawyer employment in IL Average lawyer employment in IL 51,561 in 1999, 55,066 in 2009, up 51,561 in 1999, 55,066 in 2009, up 7%7%

Source: Local Employment Dynamics, Census.govSource: Local Employment Dynamics, Census.gov

NWU study in an Illinois NWU study in an Illinois contextcontext

• Illinois lawyer employment overall, Illinois lawyer employment overall, 2008: 57k vs 360.2k nationwide: 16%2008: 57k vs 360.2k nationwide: 16%

• Illinois lawyer hiring in 2009 Illinois lawyer hiring in 2009 averaged 4.2 k/Q, or 16.9k/yr, averaged 4.2 k/Q, or 16.9k/yr, 33.8k over 2 yrs33.8k over 2 yrs

• 15k jobs lost nationwide in the NWU 15k jobs lost nationwide in the NWU study study (2.4k in Illinois, @1.2k/year, (2.4k in Illinois, @1.2k/year, if IL percentage of all national jobs if IL percentage of all national jobs applies) applies)

• Est. big firm loss, therefore: Est. big firm loss, therefore: 7% of IL hiring total7% of IL hiring total

Conclusions: IL Law Firm Conclusions: IL Law Firm PatternsPatterns

• Solo law firms growing Solo law firms growing more than 4 times the rate more than 4 times the rate of growth in employer firmsof growth in employer firms

• Solo income growing at about Solo income growing at about 1/2 the rate of employer firms1/2 the rate of employer firms

• Concentration of employment Concentration of employment by firm growing, especially in by firm growing, especially in >1000 and 50-99 employee >1000 and 50-99 employee firmsfirms

IL Law Firms vs Other IL Law Firms vs Other Professions: ConclusionsProfessions: Conclusions

• EmployerEmployer law firm law firm payroll incomepayroll income up up fasterfaster than other professions, than other professions, solossolos slowerslower

• EmployerEmployer law firm law firm establishment #sestablishment #s up up much slowermuch slower than management consultants, than management consultants, much slowermuch slower than other professions (combined), than other professions (combined), and and slowerslower than all other except engineering than all other except engineering employer establishmentsemployer establishments

• SoloSolo law firm law firm establishment #sestablishment #s up up slightlyslightly slowerslower than the average for all professions than the average for all professions

II. Ethics And Technology II. Ethics And Technology ForecastsForecasts

Cycle of Ethics RevisionsCycle of Ethics Revisions

• Code of Judicial Conduct: Code of Judicial Conduct: 1986-87 (Sample); 1986-87 (Sample); Amended 1992-93, 2002Amended 1992-93, 2002

• ARDC: 1973 (Sample), 1983, ARDC: 1973 (Sample), 1983, 1999, 20051999, 2005

• Code of Professional Code of Professional Responsibility: Responsibility: New Code 2010New Code 2010

With new technologies, With new technologies, what will change?what will change?

• What judicial, ARDC, What judicial, ARDC, professional ethics rules must professional ethics rules must consider technology changes consider technology changes expected by 2015, 2020, 2040 expected by 2015, 2020, 2040 and beyond?and beyond?

• What difference will technology What difference will technology changes make in law practices changes make in law practices by 2015, 2020, 2040 and by 2015, 2020, 2040 and beyond?beyond?

Technology Forecasts: Technology Forecasts: who/howwho/how

• Source: World Futures Society Source: World Futures Society

• Method: compiled forecasts from Method: compiled forecasts from chief scientist, NASA Langley; chief scientist, NASA Langley; Futurizon GMBH; a George Futurizon GMBH; a George Washington University professor; Washington University professor; Professional Pilot Professional Pilot publisher; a senior publisher; a senior DoD researcher; staff of Forecasting DoD researcher; staff of Forecasting International; and the founder of the International; and the founder of the Arlington InstituteArlington Institute

Technology Forecasts, 2010-Technology Forecasts, 2010-20142014

• Computers will process as fast as the Computers will process as fast as the human brainhuman brain

• Security, law, technology forecasts:Security, law, technology forecasts:- People’s courts on Internet for minor disputes 2012- Virtual reality routinely used in courtrooms for evidence presentation 2013- ID cards replaced by biometric scanning 2014

Possible Changes, 2010-2014:Possible Changes, 2010-2014: Judicial, ARDC, Ethics Judicial, ARDC, Ethics

• Database AI’s for increased judicial Database AI’s for increased judicial expertise/VR in evidence: expertise/VR in evidence: “judicial notice” rules need change?“judicial notice” rules need change?

• Internet “People’s Courts”: Internet “People’s Courts”: multijurisdictional arbitration act rules multijurisdictional arbitration act rules needed? ARDC/UPL definition of “law needed? ARDC/UPL definition of “law practice” to include these?practice” to include these?

• Biometric card prevents Skokie nonlawyer Biometric card prevents Skokie nonlawyer practice: practice: can we finally get one court can we finally get one court access card all over IL, and fly w/o intrusive access card all over IL, and fly w/o intrusive scanning as officers of the court? scanning as officers of the court?

Law Practice Changes, 2010-Law Practice Changes, 2010-20142014

• ““Big Firm”Big Firm” must include VR/AI must include VR/AI creation & comment creation & comment capabilities: capabilities: sources for solo/small to be the sources for solo/small to be the bar associations/selected bar associations/selected vendors?vendors?


• Internet “peoples courts”: Internet “peoples courts”: Will this mean nonlawyer judges?Will this mean nonlawyer judges?Nonlawyer advocates? Nonlawyer advocates? Where is UPL then?Where is UPL then? Effects on dealing with Effects on dealing with nonlawyers, legal assistant, client nonlawyers, legal assistant, client control rules…?control rules…?


• Biometrics:Biometrics: Can these be hacked? Can these be hacked? Duplicated? Duplicated? Effects on respect for privacy Effects on respect for privacy rights rules? rights rules? On discovery and lawyer On discovery and lawyer communications rules?communications rules?

Technology Forecasts 2015-Technology Forecasts 2015-20192019

• By 2015:25% of TV celebrities are synthetic:Self-diagnostic, self-repairing robotsHouses built by robotsSelf-monitoring infrastructuresRobots for almost any job in homes and hospitals

• By 2017:Some implants start to be seen as status symbols

• By 2018:All computing technology imitates processes of human brainReservations required for some key roads

Possible Changes 2015-2019 Possible Changes 2015-2019 Judicial, ARDC, EthicsJudicial, ARDC, Ethics

• With human brain speed computers, VR With human brain speed computers, VR courtroom displays, and some AI, when courtroom displays, and some AI, when will we have the first computers will we have the first computers applying for admission to the bar? To applying for admission to the bar? To the bench?the bench?

• Will non-implanted lawyers be able to Will non-implanted lawyers be able to compete? To require implants be turned compete? To require implants be turned off for jurors/other counsel?off for jurors/other counsel?

• Do your designers create conflicts of Do your designers create conflicts of interest for the implanted lawyer?interest for the implanted lawyer?

Possible Law Practice Changes, Possible Law Practice Changes,

2015-20192015-2019

• Will robotic/sensor input data Will robotic/sensor input data availability allow better planning, or availability allow better planning, or just mean perfect evidence of just mean perfect evidence of construction delay damages and construction delay damages and medical malpractice?medical malpractice?

• If infrastructure agencies ignore If infrastructure agencies ignore monitoring signals, can the monitoring signals, can the infrastructure’s beneficiaries sue?infrastructure’s beneficiaries sue?

• If all roads are private, how will public If all roads are private, how will public interest lawyers afford to get to court?interest lawyers afford to get to court?

Technology Forecasts 2020-Technology Forecasts 2020-20242024

• By 2020:Machine knowledge exceeds human knowledge; Library of Congress contents available in sugar- cube sized device; Small animals with artificial brains; Electronic life-form given basic rights

• By 2021:Desktop computer as fast as human brain

• By 2023: Experience-recording technology

Possible Changes 2020-2024:Possible Changes 2020-2024:Judicial, ARDC, Ethics Judicial, ARDC, Ethics

• Artificial persons and enhanced Artificial persons and enhanced pets full citizens? Judges and pets full citizens? Judges and Lawyers?Lawyers?

• Conflicts of interest by species, Conflicts of interest by species, programming/data sets?programming/data sets?

• Any privacy left? Client Any privacy left? Client confidentiality?confidentiality?


• Universal data access at all times Universal data access at all times a client expectationa client expectation

• Solo/small firms at greater Solo/small firms at greater disadvantage vs IT-enhanced disadvantage vs IT-enhanced humans, canine paralegals … humans, canine paralegals … “neutral” eagles for day judges, “neutral” eagles for day judges, owls for night court?owls for night court?

• Experience recordings as Experience recordings as evidence: replay and data sorting evidence: replay and data sorting to be done how? DSM to to be done how? DSM to disqualify?disqualify?

Forecasts, 2025-2040 plusForecasts, 2025-2040 plus

• 2025: Life extension at one year per year

• 2032: Robots are physically and mentally superior to humans

• 2035: Robots completely replace humans in workforce

• 2040: Teleportation of a human being

• 2040: Asteroid diversion technology used as weapon

Possible Changes, 2025-2040 Possible Changes, 2025-2040 Plus: Judicial, ARDC, EthicsPlus: Judicial, ARDC, Ethics

• Multiplanetary bar?Multiplanetary bar?• Alternative judicial processes: accept Alternative judicial processes: accept

robotic/AI result or take species-specific robotic/AI result or take species-specific court(s)/adjudicators?court(s)/adjudicators?

• Robot/human law partnerships?Robot/human law partnerships?• Robot clients? Data communications Robot clients? Data communications

ethics and legal/robot legal marketing?ethics and legal/robot legal marketing?• Reporting of high speed process Reporting of high speed process

misconduct? (See recent SEC hearings misconduct? (See recent SEC hearings on mini-crash.)on mini-crash.)

Possible Law Practice Changes, Possible Law Practice Changes,

2025-2040 Plus2025-2040 Plus

• Robots may be “better”, but Robots may be “better”, but will they be ethical? Only if will they be ethical? Only if they are programmed to be. they are programmed to be. (Good luck!) (Good luck!)

• Teleportation eliminates Teleportation eliminates VR/phone tag/other inefficient VR/phone tag/other inefficient distance communications: distance communications: FTF meetings are back!FTF meetings are back!

• If the asteroids fly, we’re toast. If the asteroids fly, we’re toast.

III. Law Practice III. Law Practice Technologies: Practical And Technologies: Practical And Ethical Methods?Ethical Methods?

Trend I: The Real Time Trend I: The Real Time EnterpriseEnterprise

• LPM systems mean instant LPM systems mean instant supervisor/firm/client(?)/court(supervisor/firm/client(?)/court(?) access to all hours, ?) access to all hours, documents, discovery, billable documents, discovery, billable time per person/project, time per person/project, research products, comparable research products, comparable projects for other clients? Or at projects for other clients? Or at least for this one?least for this one?

Ethics rules to checkEthics rules to check

• 1.1 Competence1.1 Competence

• 1.2 Scope of Representation and 1.2 Scope of Representation and Authority of Client and LawyerAuthority of Client and Lawyer

• 1.6 Confidentiality of Information1.6 Confidentiality of Information

• 1.9 Duties to former clients1.9 Duties to former clients

• 5.1, 5.2, responsibilities of 5.1, 5.2, responsibilities of supervisory, subordinate lawyerssupervisory, subordinate lawyers

Real Time Enterprise Real Time Enterprise OpportunitiesOpportunities

• Adjust billing rates/billers based Adjust billing rates/billers based on changed projects/staffing on changed projects/staffing needs (e.g. outsourced doc needs (e.g. outsourced doc review vs trial attorneys costs)review vs trial attorneys costs)

• Frequent bills improve cash flowFrequent bills improve cash flow

• Capture LPM data to project Capture LPM data to project costs/do value-based billing costs/do value-based billing bids/alt. feesbids/alt. fees

““There’s An App For That”: There’s An App For That”: Document Assembly EthicsDocument Assembly Ethics

• Check rules on initiation of Check rules on initiation of representation, vs. “just” publishing representation, vs. “just” publishing formsforms

• Attorney function in forms review, Attorney function in forms review, check scope of representation rules, check scope of representation rules, facilitation of UPL rulesfacilitation of UPL rules

• ““Document prep” services cases Document prep” services cases applied to programming houses/law applied to programming houses/law firm affiliated services?firm affiliated services?

• Publisher UPL? Il lawyer UPL to Publisher UPL? Il lawyer UPL to publish/prepare for other jurisdictions?publish/prepare for other jurisdictions?

Document Assembly Document Assembly OpportunitiesOpportunities

““Blue Flag Regulatory”: Linklaters Blue Flag Regulatory”: Linklaters service for bank compliance service for bank compliance documentationdocumentation

Opportunity: Sarbanes-Oxley Opportunity: Sarbanes-Oxley Compliance?Compliance?

Initial forms for simple divorce, Initial forms for simple divorce, incorporation/entity formation and incorporation/entity formation and registration, small claims, etc...registration, small claims, etc...

Opportunity: Flat Fee services, Opportunity: Flat Fee services, simple cases?simple cases?

Technology Trend: Technology Trend: Mobile EverythingMobile Everything

• Ethics rules on confidentiality of Ethics rules on confidentiality of communicationscommunications

• Ethics rules on fees: what Ethics rules on fees: what additional costs can be captured, additional costs can be captured, which not?which not?

• Multi-jurisdictional practice Multi-jurisdictional practice services provision (MacDonald’s services provision (MacDonald’s orders example)orders example)

• Supervision rules/responsibilities Supervision rules/responsibilities re time outside the office?re time outside the office?

Mobile OpportunitiesMobile Opportunities

• Client interaction 24/7, everywhereClient interaction 24/7, everywhere• Data capture, so no phone or other time Data capture, so no phone or other time

is lost for project budgets or time billingis lost for project budgets or time billing• Meeting setup, other convenience appsMeeting setup, other convenience apps• Client/project site focus for location of allClient/project site focus for location of all• Video and audio conferencing instead of Video and audio conferencing instead of

FTF for firm, associations, clients, FTF for firm, associations, clients, witnesses, outside serviceswitnesses, outside services

• Phone camera document/receipt scanningPhone camera document/receipt scanning

Social MediaSocial Media

• Ethics: Communication with Ethics: Communication with prospective clients rules 7.1, 7.2, prospective clients rules 7.1, 7.2, 7.37.3

• Ethics: Firm names and Ethics: Firm names and letterheads vs screen name and letterheads vs screen name and avatarsavatars

• Ethics: multidisciplinary practice Ethics: multidisciplinary practice and referrals rules vs “friending” and referrals rules vs “friending” and “contacts networks” ID of and “contacts networks” ID of selected other professionalsselected other professionals

Social Media OpportunitiesSocial Media Opportunities

• Asynchronous law reform/bar Asynchronous law reform/bar meetingsmeetings

• Communities of interest for expertise, Communities of interest for expertise, forms, advice exchange among forms, advice exchange among interested lawyers and other (?M&A? interested lawyers and other (?M&A? Environmental?) professionalsEnvironmental?) professionals

• Prospective client communications Prospective client communications through Q&A/white papers: safer, through Q&A/white papers: safer, since public information?since public information?

• Outbound expertise by Twitter, social Outbound expertise by Twitter, social sites, blog: define and inform your sites, blog: define and inform your maximum possible information/maximum possible information/communication neighborhood? communication neighborhood?

IV. Law Business Models:IV. Law Business Models:Practical and Ethical Practical and Ethical

Growth?Growth?

2020 Legal Transformation Study

Study Co-Sponsors• Partner level– Encore• Premium level– Altman Weil, Inc.– Jomati Consultants, LLP• Supporting– Bridgeway– DuPont Legal– Deloitte Financial Advisory Services, LLP– Eversheds– Intellevate– Meritas– Solomon Page Group LLC

Study MethodologyStudy Methodology

• Interviews with multiple Interviews with multiple stakeholders, including stakeholders, including esp. major clientsesp. major clients

• Identification of forces, Identification of forces, trends, and resulting trends, and resulting possible scenariospossible scenarios

Change: Slow or FastChange: Slow or Fast

• Lawyers Lawyers slowslow to change to change

• Clients, communities, Clients, communities, industries served industries served changing changing fastfast

Game Changers: Disruptive Game Changers: Disruptive EventsEvents

• EnronEnron

• Sarbanes-OxleySarbanes-Oxley

• 9/119/11

• Credit Crunch/Economic Credit Crunch/Economic SlowdownSlowdown

• Next?Next?

Trends IdentifiedTrends Identified

1. Unbundled, outsourced and bifurcated legal services

2. Increased application of technology3. Expanded globalization of legal practice4. Heightened demand for legal work from

economic and regulatory forces5. Standardized legal information6. Deepened interest in work/life balance

issues7. Increased Internet-based service

delivery

Trends IdentifiedTrends Identified

8. Heightened demand for specialized experts

9. Enhanced role of non-lawyer business managers in law firms and legal departments

10. Increased authority of corporate management in legal purchasing decisions

11. Shifted focus to process orientation

Major UncertaintiesMajor Uncertainties

1. What purchase and delivery models will develop for legal services?

2. What type of regulatory and compliance environment will exist?

3. What will the global economy look like?4. To what extent will non-attorney legal

service competition move upstream?5. Will the legal profession become

deregulated?6. Will the industry face a skill shortage?

Major UncertaintiesMajor Uncertainties

7. How much will third parties focus on cost?

8. How much of a role will privacy and data security issues play in litigation?

9. Which litigation model will prevail globally?

10. Will non-governmental organizations shape and influence regulatory regimes?

11. How much will smart technologies that mimic attorney tasks penetrate the legal services market?

Scenario A: Mega ManiaScenario A: Mega Mania

• Middle size law firms forced to consolidate or join very integrated networks to offer the bench strength and international coverage sought by their clients.

• Aggregators have reduced costs by leveraging outsourcing and using local expertise to offer lower cost for volume work.

• The complexity and intensity of various regulatory environments has increased the ability of law firms to demonstrate value, thus conserving their margins.

• Continued high margins and potential for international development have made law an attractive profession.

• Technology is limited to workflow, process and data management; has not delivered for critical analysis.

Scenario B – Expertopia

• Regulatory driven world

• Clients are the center of the value chain

• High stakes litigation

• Expertise is at a premium

• Numerous niche players/ breakup of large providers

Scenario C: The E-marketplaceScenario C: The E-marketplace

• Major economic downturn leading to deregulation and harmonization to spur growth

• Flurry of new providers

• Online selection/satisfaction tools

• Commoditization of many services

Scenario D: Techno-LawScenario D: Techno-Law

• Customers have demanded that technology be interoperable for cost purposes.

• Technology providers and content providers (legal publishers) have collaborated to create expert systems.

• Senior lawyers with high expertise move to create technology companies that provide these expert systems.

• Neural network AI systems are a reality.• Political harmony, the UN is working and emerging

markets are being supported.• Peaceful relationship with China.• Global sourcing is the norm.• Technology enables aggregators to work and access

any local resources.• Large integrators have entered the market for

aggregating and managing legal services.

Another Study/Take On This Another Study/Take On This Topic: EversheadsTopic: Eversheads

• Company: UK based, but 400 or Company: UK based, but 400 or more US client companiesmore US client companies

• Focuses on clients (esp. general Focuses on clients (esp. general counsel) as center of probable counsel) as center of probable practice patternspractice patterns

• 130 General Counsel/80 law firm 130 General Counsel/80 law firm partners interviewed for their partners interviewed for their 2010 update2010 update

Major Trends IdentifiedMajor Trends Identified

• GlobalizationGlobalization

• Professionalization of Professionalization of General Counsel officesGeneral Counsel offices

• TechnologyTechnology

• Change in regulation of Change in regulation of legal serviceslegal services

GlobalizationGlobalization

• Major international firms Major international firms merge with US mega-firmsmerge with US mega-firms

• Offshored provision of all routine Offshored provision of all routine services at minimum costservices at minimum cost

• Clients operate across all Clients operate across all possible jurisdictions: major possible jurisdictions: major firms, firms, specialists must do so as wellspecialists must do so as well

Results of GC, Tech TrendsResults of GC, Tech Trends

• Clients demand alternative Clients demand alternative billing billing to cut costs/share risksto cut costs/share risks

• Hourly fee “almost dead.”Hourly fee “almost dead.”

• 39% of law firms investing to 39% of law firms investing to standardize legal processes, to standardize legal processes, to communicate more effectively, communicate more effectively, and cut costs of service deliveryand cut costs of service delivery

Firm Structure ChangesFirm Structure Changes

• ““Lean” international firm Lean” international firm structuresstructures

• Partnership model less and less Partnership model less and less popularpopular

• Client loyalty to firms reducedClient loyalty to firms reduced• Mid-sized firm growth Mid-sized firm growth

opportunitiesopportunities• ““Value resourcing” and Value resourcing” and

unbundled services to least cost unbundled services to least cost sub-provider, not just “value sub-provider, not just “value billing” through current legal billing” through current legal service providersservice providers

Hildebrandt Baker Robbins Hildebrandt Baker Robbins

2010 Law Department Survey2010 Law Department Survey

• More than 60% of law dep’ts slash More than 60% of law dep’ts slash outside counsel spending: in-house outside counsel spending: in-house up slightly (Ave. red’n 5% in US)up slightly (Ave. red’n 5% in US)

• Total legal spending decrease 1% Total legal spending decrease 1% in US, 2% worldwidein US, 2% worldwide

• Median legal spend/big corp $24 Median legal spend/big corp $24 million US, $34 million worldwidemillion US, $34 million worldwide

Hildebrandt study, continued: Hildebrandt study, continued: Increased demand fieldsIncreased demand fields

• RegulatoryRegulatory

• Employment/Labor Employment/Labor RelationsRelations

• Government RelationsGovernment Relations

• InternationalInternational

V. Next Steps: V. Next Steps: Your Law Firm Business PlanYour Law Firm Business Plan

Big Law Firms A Target Market?Big Law Firms A Target Market?

• Firms may become project Firms may become project aggregators, not providers aggregators, not providers of all law staff/other project of all law staff/other project providersproviders

Law Practice vs Business Data Law Practice vs Business Data ManagementManagement

• Law: one-off documents, Law: one-off documents, FTF/telephone information intakeFTF/telephone information intake

• Insurance, government, other major Insurance, government, other major data aggregators: online forms; data aggregators: online forms; barcoding to track files and barcoding to track files and documents, document assembly, documents, document assembly, and financials inputs on data and financials inputs on data systems; records portability and systems; records portability and transparency across institutional transparency across institutional wallswalls

Financial RealitiesFinancial Realities

• Insolvent customers don’t pay bills: Insolvent customers don’t pay bills: look carefully at foreclosure clients, look carefully at foreclosure clients, commercial real estate, state of commercial real estate, state of Illinois, localities (?) as a/p credit risksIllinois, localities (?) as a/p credit risks

• Payroll: you pay people whether or Payroll: you pay people whether or not they bring in any moneynot they bring in any money

• Real estate is expensive for a firm: Real estate is expensive for a firm: client site or home offices/presence is client site or home offices/presence is notnot

Data Systems EfficienciesData Systems Efficiencies

• One lawyer in Boston plus her One lawyer in Boston plus her paralegal produce all forms for paralegal produce all forms for MacDonald’s franchisee loans: MacDonald’s franchisee loans: banks fill in the databanks fill in the data

• Prepaid Legal, Inc., has one law Prepaid Legal, Inc., has one law firm per state, with automated firm per state, with automated document production and document production and paraprofessionals/secretaries paraprofessionals/secretaries for intakefor intake

Associations as Market MakersAssociations as Market Makers

• Florida Bar sections highlight Florida Bar sections highlight members, laud them as best in members, laud them as best in their specialtiestheir specialties

• Kane County Bar makes all Kane County Bar makes all member fields of practice, member fields of practice, websites visible on Web search – websites visible on Web search – not through an additional referral not through an additional referral service expense not transparent service expense not transparent to web browsersto web browsers

Associations as market makersAssociations as market makers

• CBA referral service: peer review CBA referral service: peer review on intake, higher volume/referred on intake, higher volume/referred attorneys by subject area than attorneys by subject area than ISBA or DCBAISBA or DCBA

• Naperville Chamber organized Naperville Chamber organized around noncompeting referral around noncompeting referral assistance peer groupsassistance peer groups

• Corporate counsel could network Corporate counsel could network with local counsel to outsource workwith local counsel to outsource work

General Business Plan General Business Plan QuestionsQuestions

• What can I/we do What can I/we do faster/better/cheaper (or more faster/better/cheaper (or more profitably) than anyone else?profitably) than anyone else?

• Who around the world could use Who around the world could use my/our services?my/our services?

• Who are my high profit client Who are my high profit client types, and how can I/we types, and how can I/we communicate communicate with them?with them?

• What technologies will change What technologies will change how I/we need to practice or can how I/we need to practice or can give me/us an edge?give me/us an edge?

A classic Gahan Wilson cartoonA classic Gahan Wilson cartoon shows Brontosaurus at shows Brontosaurus at

podiumpodium

Caption reads:Caption reads:““Gentlemen, I have some bad news: Gentlemen, I have some bad news:

The Ice Age is coming, The Ice Age is coming, the mammals are taking over, the mammals are taking over,

and we all have brains the size of and we all have brains the size of walnuts.”walnuts.”

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