reinventing - canadian bar association · 4 reinventing professional services on december 5, 2007,...

REINVENTING

BUILDING Your BUSINESSin the DIGITAL MARKETPLACE

ARI KAPLAN

vii

Contents

Introduction: The Rise of the White Collar Hustler and Your Path to Practical Innovation xi

Getting Started xiii

What’s in This Book xvii

Chapter 1: Finding Your Way in a More Informal, Instant World 1 Create Opportunity by Becoming a Visible Enthusiastic Expert 5

Increase Your Visibility and Realize Your Potential 6

Enthusiasm Is the Hallmark of the Modern Hustler 11

Expertise Is Easier to Convey Than Ever Before 14

Chapter 2: Innovators Adapt, and You Should Too 17 Set Goals for Social Media 19

Begin Cultivating Offl ine Relationships Online 21

Embrace Transparency Because Everybody Knows Everything Anyway 24

Grass Roots Medicine 26

Chapter 3: Recognize the Resiliency Revolution and Join It to Grow Your Practice 33

Seize Opportunity Whenever Possible 35

Flexible Fees Make Cost Conversations More Cheerful 36

Alignment Is the Answer to Better Client Relationships 39

Technology Offers Better Communication All Around 43

Chapter 4: Students Have Everything to Gain from the White Collar Hustle 47 Busting Myths About Networking 50

Be Disciplined and Accountable 51

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Share Your Successes and Your Failures 54

Be Prolifi c and Fast 55

Be a Resource, Focus on Others 56

Follow Up 58

Chapter 5: Know Your Clients and Patients Because They Expect You To 61 Accountants and Technology Are a Good Match 63

Leverage a Variety of Tools to Promote Your Practice 65

Answer the Question the Client Should Have Asked 66

Merge Talents Wherever Possible 70

Chapter 6: Putting Your Practice through a Wind Tunnel Will Blow You Away 73

Even Small Elements of Ineffi ciency Can Have a Large Impact on the Bottom Line 75

Defi ne Your Value Proposition to Focus Your Future 78

Finding True Worth Is Wiser Than You Realize 80

Become a Chameleon to Kick Start Your Initiatives 81

Chapter 7: It’s a Small Street, So Befriend Your Neighbors 89 Know Yourself to Better Understand Others 91

From SWOT to Sales Is a Path to Prosperity 93

Change But Don’t Change Who You Are 95

Tie Profi ts to Success to Build Trust and Motivate 97

Trust and Respect Now Matter More Than Ever 99

Chapter 8: Networking Is Dead; Long Live Networking 101 Go Where Your Audience Goes 102

Use Tools that Your Audience Uses 103

Find a Geek to Help You Get LinkedIn 104

Integrate Your Efforts to Save Time and Sanity 105

Explore Facebook for Fun and Professional Potential 107

How to Decide Whether You Should Blog 107

Spend Time with Your Audience and the Members Will Spend Time with You 110

Chapter 9: Proactive Professionals Pay Attention to Progress 111 Sales and Marketing Have Evolved So You Should Too 116

Medical Records Are Right on the Money 119

viii Contents

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Contents ix

Chapter 10: When You’re Allergic to Wool, Wear Cotton or Suffer for Your Entire Career 125

Passion, Time, and Luck—Plus Relationships 127

The “Yes” Business 129

Make Every Client a Secret Shopper 131

Global Roots in Virtual Spaces 132

Set Expectations 133

The Art of the Referral 135

Chapter 11: Meet Your Clients and Patients Directly 141 An Accelerant of Change 145

Displacement Anxiety 149

Chapter 12: Mailing Lists, the Media, and Making Mistakes 153 Become an Umbrella Salesman 154

Benefi ts, Business Development, and Beyond 158

Meeting the Media 159

Make Mini Muffi ns with the Media 160

Being the Media 164

You, Too, Can YouTube 165

Chapter 13: Forget Technology, Remember Others to Build True Relationships 169

Use Technology to Say Thanks and More 174

Pay Attention to the Pitfalls of Participation 176

Confi dentiality Is Critical, So Know When to Keep Quiet 177

Be Careful Creating Professional Relationships Online 179

Advantages of the Cautious Approach 180

Chapter 14: The Foundation for Follow-Up Is Easy to Establish 183 Timing Your Tidings to Connect with Colleagues 185

Hosting Events Is for Everyone 188

Thoughtful Follow-Up Is Favorable 189

Writing and Its Spinoffs as Marketing Are Remarkably Effective 190

Conclusion: Cultivating Community 195

Resources 199

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x Contents

Acknowledgments 205

About the Author 207

Index 209

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1

1C H A P T E R

Finding Your Way in a More Informal, Instant World

The new formula for prosperity among most professionals is to become a visible enthusiastic expert. This chapter will discuss how increasing his or her visibility can help a professional realize business-development potential, why modern hustlers are known for their enthusiasm, and the relative ease with which one can show-case expertise in a digital marketplace.

■ ■ ■

Important changes in marketing are already taking place. In fact, we are in a new era that values momentum over perfection.

For decades, personal marketing was time consuming and challenging because nothing could be released into the public domain until it was perfect. There was no tolerance for mistakes or inconsistencies.

Today, we are in the environment of perpetual beta, where tech-nology has created a climate of perfect imperfection. The culture is more accepting of shortcomings. In fact, there is a certain authen-ticity in being almost cool. It is more relatable. It conveys sincerity. It builds trust.

There is also a certain freedom in not worrying about fl awless-ness and instead concentrating on commencement. Professionals are now liberated to start more initiatives just like the entrepreneurs they admire. They simply need to look to themselves for ideas.

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2 Reinventing Professional Services

“I think personal responsibility and accountability is the answer,” says Nancy Fox. “We are our own mirrors for everything else.”

When that mirror is unclear, there are so many more voices available today to provide another perspective. The conversation is taking place. There is a choice of when, how, and even if you will participate.

Mark Britton and his team are pushing professionals to progress whether they like it or not. He once took his four- and six-year-old sons skiing down the backside of the 11,166-foot Lone Peak, pur-portedly some of the most diffi cult terrain in Big Sky, Montana. It was a challenge (for all three of them), but the sons, now a few years older, are virtual experts. Soon after their trip, Britton founded Avvo, an online service for fi nding and rating doctors and lawyers. Avvo has become one of the most popular ratings services and is proverbially taking both professions on a similar adventure down the digital slope of Web 2.0 interactivity.

No stranger to industry transformations, Britton was the fi rst general counsel of Internet-based travel reservation web site Expedia.com, and helped take the company public in 1999. In the spring of 2004, he moved to Italy to serve as an adjunct professor of fi nance for Gonzaga University in Florence, where he conceived of a service to replace the phone book. He notes that lawyers and doctors spend more than $1 billion and more than $500 million, respectively, per year on advertising in the telephone directory. “Anytime the Yellow Pages is a primary resource for consumers, something is broken,” he says.

Avvo represents the rise of community interaction between con-sumers and professionals. In addition, “There is a broader under-standing and acceptance of ratings systems if you are a professional interested in transparency,” he says. People have been rating books, movies, food, and other items for years. Their opinions have helped shape future generations of those items and producers continue to pay close attention to the feedback of their customers.

Today, most service providers, from dry cleaners to doc-tors, realize that customers/patients/clients will offer feedback. Professionals want them to share that feedback responsibly and based on honest data. “Word of mouth is valuable, but when choos-ing a doctor or lawyer, it is also helpful to have someone increase your comfort level that the professional can handle the matter well,” Britton says.

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Finding Your Way in a More Informal, Instant World 3

Despite the availability of free information to answer compli-cated questions, consumers still need professional advice. One might be able to draft a contract or design minor architectural changes to a small room at home, but once there are variables to that initial effort, an individual will want a trusted resource. Specialization of those resources has resulted in an unchallenged reverence, but not all professionals are created equal. Modern transparency tells a more detailed story, to which each professional is permitted to contribute.

Restaurants, for example, operate in volumes that are much greater than doctors or lawyers. As a result, there are fewer over-all people with experience, coupled with the notion that they are less likely to discuss their ophthalmologist than their local baker. “People are interested in offering commentary, and in that way Avvo has stoked the conversation,” says Britton. In addition, Google is fostering a culture of professional open awareness. Most public records include at least minimal details about the backgrounds of one practitioner over another.

The increased digitization of documents is leading to one uni-versal truth: your background will be publicly available. Choose to shape that public impression because once it is out there, prospec-tive clients will judge your achievements. “Anything that we fi nd value in will be rated,” predicts Britton. “In fact, the more money and emotion that are involved, the greater the likelihood that if it is not being rated today, it will be rated shortly,” he adds.

As a culture, investment in the Internet continues, and it is, therefore, becoming more valuable. As a consequence, the Internet is becoming a greater part of life. “It is not your choice not to par-ticipate anymore,” cautions Britton. “Your life is on parade in the ether and it is only going to increase.”

There is a dramatic convergence occurring where the public and private aspects of an individual are developing into a single personality. There is no longer an easy distinction between one’s professional profi le and his or her personal background. People who started tweeting for business inevitably use it for personal use (even if just to wish a professional contact a happy birthday). And, that is, of course, the point.

The goal is to develop relationships over contacts. To produce substance, as well as exude style. My United States Supreme Court gift shop tie reminds me of this balance every time I look at it.

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On December 5, 2007, I had the privilege of covering the oral arguments in the consolidated Guantanamo Bay detainee cases of Boumediene v. Bush and Al Odah v. United States at the Supreme Court as part of the offi cial press corps. I arrived at the steps of the grand courthouse at 2 A.M. on a 20-degree almost-winter morning to experience the pre-rock concert-like atmosphere with more than 50 other people in the line hoping to secure a seat in the public gallery. Although my editor assured me that I would receive a press pass, I did not want to take any chances. I also wanted to really appreciate the magnitude of the case at issue.

To collect footage in advance of the event for a documentary project on which I was working, I brought my tripod and video camera in a backpack. I started interviewing people waiting in line who were kind enough to leave the comfort of their sleeping bags to share their reasons for risking frostbite at the foot of the famous steps to listen to a court case. It was inspiring. I was a hard-core investigative journalist—in my own mind, at least. Ari Kaplan, Supreme Court reporter. I envisioned the Academy Award for the footage, the Pulitzer Prize for the commentary. It would be a pro-fessional milestone.

There was just one tiny miscalculation.Before I left for the trip, my wife, the smartest person I know,

suggested I wear a suit. I vehemently resisted, noting that I was a one-man camera crew and needed the freedom to practice my craft. I did not need a suit, I was a journalist! She wisely persuaded me to at least take a pair of slacks and a collared shirt.

At about 6 A.M., it started snowing. By 8 A.M., I was the fi rst in line outside the public affairs offi ce to obtain my press pass. A few minutes later, standing before the public affairs offi cer in my slacks, hardtop Adidas sneakers (I did not bring shoes either), and layers of frostbite-fi ghting thermal wear, I realized that there was a prob-lem. I was not wearing a tie—an apparent prerequisite for a male journalist to sit in the press gallery (I ignored the hardtop sneakers, correctly fi guring that no one would notice).

One of the reporters joked that former Chief Justice Warren Burger used to personally ask reporters improperly dressed to leave their seats after the justices took the bench. So I ran to the gift shop and bought a $40 blue striped silk tie adorned with the scales of justice. I could almost hear my wife laughing as I was running.

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The press offi cer approved of my outfi t and assigned me to seat E-1, next to Pulitzer Prize-winning reporter Charlie Savage of the New York Times, then covering the event for the Boston Globe. One of the court’s massive interior columns blocked part of my view, which was lucky because Chief Justice Roberts did not have a good line of sight to my souvenir tie, which now hangs proudly in my closet (though sadly gets little use).

The tie reminds me of the balance between style, substance, and tradition. It highlights that professional services do differ from other consumer-oriented industries in certain ways. There are pro-tocols and practices that were once unique to lawyers or doctors or accountants. Today, however, the universal benefi t of raising your visibility, even in a limited fashion, is more compelling than certain nuances that may or may not exist.

Create Opportunity by Becoming a Visible Enthusiastic Expert

I was attending an annual industry conference and a person with whom I was not familiar waved at me from a distance as we approached one another. He smiled as our paths crossed and we made momentary small talk. He thanked me for my recent advice and asked me to continue sending him my newsletter. I really did not know him, but he was well aware of my work and passion for sharing practical guidance with my audience.

It is easier to learn about that audience and tailor information for its members than it has ever been. As people select experts, they are no longer looking only for those who are well-educated and capable—that much is assumed. They want to see public validation of their work in the professional community. As a result, profes-sionals who can showcase their talent directly to their target audi-ence are perceived as more visible and, therefore, become more marketable.

The success strategy for licensed professionals has always involved hard work, long hours, extensive resumes and long-term client relationships. The nature of those relationships, however, has changed as the pool of potential opportunities has shifted. Technology now permits access to more people in diverse areas who have traditionally been diffi cult to reach.

The increased number of choices and the prevalence of tools that enable potential clients and customers to do some of the work

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themselves is causing commoditization. Taxes can be fi led online, simple illnesses can be diagnosed via medical web sites, basic room additions can be designed with self-service CAAD (computer-aided architectural design) programs, and, of course, a variety of legal documents can be drafted for free. People are now much freer to eliminate or reduce the need for licensed resources that once held a monopoly on trusted information. This shift requires those experts to convey basic knowledge, but in a way that tailors their understanding to the issues with which their existing or future clients are struggling. They are required to routinely engage in conversation on issues about which their clients or patients have acquired some knowledge and may have preexisting ideas.

Increase Your Visibility and Realize Your Potential

As a child, Chris Reimer worked for his grandfather, an entrepre-neur who started a company manufacturing windows in 1949. “Being around that type of environment gave me the fi rst taste of entrepre-neurial work,” he says. After graduating from Marquette University in Milwaukee with an accounting degree, he became a certifi ed public accountant (CPA) and held a variety of fi nance-related roles, including one as the chief fi nancial offi cer of a small business in St. Louis. Like many professionals, “I always made a good living, but can’t say that I identifi ed with what I was doing,” he recalls.

After eliminating the idea of starting a mobile shredding busi-ness because of its prohibitive start-up costs, he considered devel-oping a line of humorous t-shirts, similar to the popular items sold on SnorgTees.com or BustedTees.com. He thought that he would enjoy the exercise of designing the shirts and that he could run the business out of his home as it would be completely online. “For a year, I dreamed about ways that it would explode on impact,” recalls Reimer of his new company, Rizzo Tees LLC.

Of course, as is common with start ups, by the time the site—RizzoTees.com—went live on October 30, 2008, he had no money left for marketing or advertising. So, fi ve days later, Reimer registered for an account on Twitter and began telling people about his shirts.

“I was not an early Twitter adopter, but Twitter was a perfect fi t for me,” he says. Although he started growing t-shirt revenues from his Twitter audience, his presence as a social media authority was rising even more quickly. “As my personal brand grew, it started

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pulling me away from accounting,” he recalls. “I was increasingly disenchanted with my day job because I was enjoying Rizzo Tees so much,” he adds.

As the shirts continued selling through Twitter and later Facebook, Reimer began discussing social media more publicly, but he was still trying to maintain a separate existence from his tra-ditional job. “The idea of making funny t-shirts and being a social media devotee did not mix with the role of a chief fi nancial offi cer,” he notes. “I wanted to keep that job and did not want anyone to ask any questions.”

By 2010, his audience members encouraged him to engage in social media consulting full time. He even considered creating Rizzo Media Works to perform advertising and digital marketing. “That business plan was not pleasing to my wife because there was no guarantee of income,” he jokes, but the CEO of Scorch Agency soon offered him the opportunity to become the company’s Chief Marketing Offi cer. “That was my dream fulfi lled and Rizzo Tees ended up being the springboard.” In early 2011, he accepted a new position as Vice President of Social Media with Falk Harrison, a St. Louis-based brand communications agency.

Some professionals are comfortable experimenting with public forms of social media, but many fear the potential consequences of engagement. As a result, they pay no attention to the conversa-tion and fail to participate in any meaningful way. Reimer decided to simply begin by listening, which is often how natural discussions occur. The individual, who is unfamiliar with a particular topic or those speaking, simply stands by to learn more about the context of the discussion before providing additional commentary. In Twitter parlance, Reimer began by “following” the “tweets” of certain indi-viduals and organizations.

“When you meet people in person, typically someone has to make the fi rst move,” he says. “There is no such thing on Twitter.” You simply click “follow” on their Twitter page and you are now privy to everything they say—voila! People actually appreciate when you follow them. “You are spending a little bit of your social cur-rency when you follow and you get some in return,” adds Reimer, who started following more people and they began following him in return. Of course, he made some mistakes along the way; he admits that his auto-response thanking people for following him turned out to be a nuisance, which he quickly removed.

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In a technological environment, people tend to be more for-giving in marketing. They are used to hiccups. Cell phones drop calls often enough that people understand when you lose the sig-nal. Everyone with a computer has rebooted at some point in his or her life. And, of course, there are countless examples of viruses invading someone’s phone book and spamming everyone he or she knows. Minor mistakes are part of progress.

I launched a webinar series called 30-Minute Thursdays in October of 2009. The webinars have offered creative ideas to hun-dreds of professionals nationwide. My fi rst presentation, Five Easy Ways to Create Opportunities in a Down Market, was a great success both in terms of the high rate of attendance and the number of people who followed up with my sponsor. So, when planning for the sec-ond date, Five Ways to Use the Holiday Season to Raise Your Profi le, I felt confi dent that I had mastered the webinar model.

Unfortunately, I had essentially double-booked myself during the second program. I was scheduled to speak live in Philadelphia at 2:30 P.M. ET and my webinar was scheduled for 1 P.M. No problem. I secured wireless Internet access and found an empty ballroom in the basement of the hotel where I was presenting. Subscribers started logging into the session before 1 P.M. and I began promptly. It was about 20 minutes after I started delivering my presentation that I noticed the “START WEBINAR” button at the top of the page.

Your life is on parade in the ether and it is only going to increase.

Mark Britton, founder, CEO, and president of Seattle-based Avvo

I pushed the button, heard the announcement that “the webi-nar is now beginning,” and faced the reality that I had been talk-ing to myself for quite some time. It was a dramatic public error. I immediately ended the webinar and within minutes, I sent an e-mail acknowledging the mistake. The number of kind responses from the attendees assured me that all was not lost and they indeed returned for the make-up session. I have a feeling they called in just for the adventure. Some even sent humorous reminders to press the “start” button.

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Anyone who tries to leave his or her comfort zone falters at some point in a marketing or networking endeavor. That does not mean, however, that the effort is wasted. When you ask someone to meet and they decline, you have still set the foundation for a follow-up request. When you engage in social media and do not feel like you are reaching a substantial audience or effi ciently utilizing your time, you are, at a minimum, listening to a conversation that will help you direct your efforts in the future. It is about communicat-ing your message and letting that message refl ect your character.

Reimer started to contribute to the conversation by sharing news links. Period. Only after his listeners began to reciprocate did he start mentioning his passion for t-shirts, red wine, and the National Basketball Association (NBA). “You are letting people get to know you,” he advises. But he set boundaries because as tens of thousands of people started following him, he realized that they were not all friends. As such, he has chosen not to reveal any family-related information.

That said, “What I did with Twitter is to be an open book of transparency and let people know who I am,” he recalls. And, of course, that simple act of engagement produced results. “I realized that it helped sell t-shirts because people are more apt to buy prod-ucts from those they know, like, and trust.”

As one of the most traditional principles in business, there is nothing exciting about the “know, like, and trust” formula. When you combine it with the “visible enthusiastic expert” concept, you begin to realize that you can empower yourself and your practice to build professional relationships that are more likely to yield the outcome toward which you are working.

As the Vice President of Social Media with Falk Harrison, Reimer encourages professionals to blog, but goes beyond that tra-ditional advice. Understanding that many experts support personal charitable endeavors, he suggests, for example, recording par-ticipation in such efforts using a Flip video recorder and sharing clips online to refl ect the character of the organization. A blog is just one potential distribution source. The video can be uploaded to a YouTube account (which can be created upon simple regis-tration at the site) or sharing the link to the video with followers on Twitter.

Google will also index any keywords associated with the video and enrich its search results to refl ect your dynamic use of content.

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“Most people have the same web site with the same outbound mes-sage, headshots, and contact page,” highlights Reimer. “There is generally no compelling message that entices people to spend more time on their site,” he adds. Those who veer ever so slightly from this mold can distinguish themselves from their peers.

For generations, licensed professionals grew business by demon-strating their knowledge and cultivating referrals. Today, they must use their basic knowledge to establish relationships and, therefore, need to consider giving it away for free. It is unnatural, but increas-ingly effective. “Even if you share a little bit for free, when you do it in a more authentic way, people will trust you and see your value,” says Reimer, who offers the example of a friend who is a health insurance broker in St. Louis.

Reimer advised him to generate inbound marketing leads by demonstrating his expertise instead of making routine cold calls. He suggested that he create a portal to showcase his expertise in various ways, including on a blog. He compared it to a printed newsletter that his audience can share more easily. That said, “Even an e-mail is not quite as sharable as a re-tweet or pressing a Facebook ‘like’ button.”

He never started the blog.Coincidentally, another contact of his mentioned that she had

found her health insurance broker by entering a variety of search terms into Google. Her efforts led her to an individual’s blog hosted by Blogger, Google’s completely free tool that offers basic features to enable writers to begin experimenting with the medium. Reimer visited the site and noted that despite his opinion that the blog con-tained basic information and was not well designed, it was better than anything else his colleague found online. It gave that broker a visibility advantage. The broker did not cold call this particular prospect, but she felt as if she knew him anyway. “The bullhorn was turned around,” says Reimer.

Reimer himself once had a trademark problem with one of his Rizzo Tees T-shirts. After receiving a cease-and-desist letter, he noted his concern on Twitter. A random attorney in Indiana was “listening” and contacted him. He offered to assist on a fl at-fee basis and very quickly retained a new client. Instead of a giant bullhorn, the lawyer in Indiana used a similarly sized eavesdropping tool to successfully raise his visibility.

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Even if you share a little bit for free, when you do it in a more authentic way, people will trust you and see your value.

Chris Reimer, Vice President of Social Media with Falk Harrison, a St. Louis brand communications agency

Enthusiasm Is the Hallmark of the Modern Hustler

In the same way that Chris Reimer was able to fi nd a career, or in many ways create a career that showcased his passion, professionals today must do the very same thing. They must fi nd what it is about their work that captures the essence of that excitement.

Only the renowned experts in a particular fi eld can engage cli-ents and attract referral sources merely by being the singular expert on that topic. The market is so competitive that people often view their counselors in one area or another as fungible. They believe that there are likely to be multiple individuals or organizations that can successfully navigate a particular issue.

For example, there are fi rst-rate hospitals around the world that can often handle a complex health matter, even one that has a signifi cant idiosyncrasy. There are now hospital advertisements on television, the Internet, and even highway billboards. From fertility clinics to cancer centers, medical institutions are vying for patients.

Law fi rms are increasingly trying to fi gure out the formula for not only attracting a premium corporate client, but maintaining that relationship over the long term. They are willing to bill differ-ently, change staffi ng patterns, and cede control to their clients or a client’s outside advisors in an effort to demonstrate their commit-ment to effi ciency.

All of these initiatives spotlight the level of interest an individual or an organization has in collaborating with a potential client, but what highlights the necessary level of enthusiasm is the individual story. That provides the essence of why a customer would choose one practitioner over another practitioner with similar skills.

It is often said in veterinary circles “People don’t care how much you know, until they know how much you care,” reports Graham Milligan, the Director of Clinical Services Division at the Royal Veterinary College at the University of London, in Hatfi eld,

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England. He notes that while pet owners rarely question the techni-cal ability of a veterinarian, they are very sensitive to the profession-al’s demeanor.

Traditional veterinary instruction focused on rote memorization of factual information. Yet the client often determines the nature of the treatment. “The emphasis on preventive measures is becoming more important on small animal work,” Milligan says, highlight-ing that weight management, older pet clinics, and puppy training, among others factors, are increasingly popular.

In addition, he advises that pet owners most often select their vet based on location, unless they receive a personal recommen-dation from another pet owner (even a stranger they might meet in the park). As such, it is even more critical for animal doctors to demonstrate their caring nature to clients than it is for most other professionals. “Vets who care more differentiate themselves, but they generally make pretty poor marketers,” says Milligan. “That is not what motivates them and it is not why they went to veterinary school,” he adds. While that fact is probably true of most profes-sionals, the new reality is that professional services fi rms are like many other businesses.

It is often said in veterinary circles: “People don’t care how much you know, until they know how much you care.”

Graham Milligan, the Director of Clinical Services Division at the Royal Veterinary College at the University of London, in Hatfi eld, England

Ultimately, it is not just because a medical facility cured a patient or that a law fi rm won a case, it is that its human talent is so excited about the success of the patient or client that the facility or fi rm wants to tell as many people about the journey, rather than solely the destination.

Today, in order to convey the level of enthusiasm that potential business associates require to consider a professional’s work, there needs to be a unique level of interaction. And that interaction must convey the human aspect of the relationship. It must provide insight into who you are, as much as what you can do. If traditional business is transacted between parties that know, like, and trust one

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another, there is a remarkable opportunity to develop that familiar-ity and sincerity in a richer way. A great personal story doesn’t hurt.

Tejas Kapadia is a New Jersey lawyer. He was always interested in charitable giving and believed that businesses should give directly to the communities in which they generate their revenues. His brother, Hemish Kapadia, a New Jersey accountant and a bone mar-row donor, agreed.

Raised by parents who grew up in India, the duo hoped to open a small business in Mumbai and then donate a percentage of their profi ts to support local charitable endeavors. Recognizing the increased interest in fast food there (Pizza Hut and Subway are among a number of restaurants with a presence throughout the city), they focused on the donut market. They moved across the world in October of 2006 and self-funded the opening of the American Donut Shoppe in the food court of an urban shopping mall in March, 2007. After more than four years, the business has fi ve locations through-out Mumbai.

“It has been an adventure since doing business in India has almost nothing to do with legal practice in New Jersey,” says Tejas Kapadia.

Neither brother is particularly passionate about donuts, yet both are excited about their charitable goals—to support local educa-tion and bone marrow programs—that the donut business can help them achieve. “Donuts are simply a product that I felt that we could make with some degree of quality without using chefs,” he said.

Ironically, the Kapadia brothers originally anticipated training employees to make the donuts, but to improve effi ciency they ulti-mately imported a donut-making machine from the United States. Even in an endeavor where contributing to the local economy is a primary concern of the business, effi ciency remains paramount.

To continue to grow, the duo expects to add India-based part-ners and eventually franchise the business throughout the country. Once they confi rm those plans, Tejas Kapadia will return to a gen-eral legal practice back in New Jersey, though he likely will spend a lot of time counseling start-ups, particularly since he has lived the experience his future clients will face.

Kapadia not only built a franchise, but actually created a market for something that did not exist. In fact, many people confused his donuts for an Indian look-alike called a Medu Vada, which is a deep-fried and spicy treat. At about $1 each, the donuts are increasing in

C01.indd 13C01.indd 13 5/5/11 7:18:48 PM5/5/11 7:18:48 PM


popularity, and their mini-donuts, at about 50 cents each, are also gaining market share. The American Donut Shoppe has grown from a retail outfi t into an offi ce and wedding catering business as well.

Kapadia highlights that “In the last 5 years, the entire culture of India seems like it is going through a transition.” He cites the rising number of shopping malls and western infl uences. The American Donut Shoppe is experimenting in a client-centered shift in taste the same way that professionals throughout the United States are adapting their businesses to a client-focused method of communi-cating. They too are reversing the bullhorn, but not without learn-ing a few lessons along the way. “To pull something like this off, you need a large degree of patience and willingness to sacrifi ce your time,” says Kapadia.

Expertise Is Easier to Convey Than Ever Before

In addition to visibility and enthusiasm, one needs demonstrable expertise. Reimer fi gured out how to raise his visibility in a genu-ine way, while Kapadia has leveraged his enthusiasm to bring about positive change in a shifting cultural landscape.

In the modern technological environment, however, demonstrat-ing expertise is often the easiest of the three factors. Reimer took time to raise his visibility and Kapadia has sacrifi ced a great deal to showcase his enthusiasm (though there are easier ways to do so).

Expertise is often considered elusive. It evokes images of a wall fi lled with framed certifi cates and plaques interspersed with shelves featuring medals and gifts of gratitude. Experts themselves are bespectacled, with salt-and-pepper hair standing in front of a book-case lined with scholarly material. That, in many ways, is traditional, long-form expertise. In a nontraditional era, however, expertise is not just experiential but referential.

One is able to easily convey expertise by associating with other experts and by demonstrating an understanding of key issues. It worked for the health insurance broker, and continues to be an effective technique.

I once wrote a guest blog post for the local section of the New York Times and mentioned Fashion’s Night Out, an event created to promote excitement for fashion during the recession. The interna-tional event encourages various stores to hold shopping celebra-tions. The article was not necessarily about the occasion, it simply

C01.indd 14C01.indd 14 5/5/11 7:18:48 PM5/5/11 7:18:48 PM


used the occasion as a lead-in to the story about a local business. The very next day, I received an e-mail from the public relations fi rm representing an area department store asking if I would be interested in other fashion-related resources. The person who con-tacted me perceived me as an expert in fashion after reading my blog post.

If an accountant, doctor, or lawyer wanted to convey his or her expertise in a particular subject, but did not have the time to write a detailed article with 300 footnotes and teams of research assis-tants, or even publish a shorter article in a newspaper, there is an alternative.

He or she could draft a short, two-to-three-paragraph descrip-tion of an issue and interview one or two experts on the matter. He or she could then share that content as a guest contributor for an infl uential blog or online publication. That effort will enable one to spotlight expertise as well as provide an opportunity to meet other experts in the fi eld.

Hayes Hunt is a Philadelphia-based partner with Cozen O’Connor, a law fi rm with 550 attorneys in 24 offi ces. He repre-sents individuals, corporations, and executives in criminal and civil litigation, ranging from health care and tax fraud to profes-sional licensing and federal investigations. Hunt is a former pub-lic defender and is the director for the fi rm’s Prisoner Civil Rights Panel Program for the United States District Court for the Eastern District of Pennsylvania. He also created the Cozen O’Connor Trial Academy and the Cozen O’Connor Deposition Program.

Add to that background his recognition as a “Pennsylvania Super Lawyer” in 2010, a Legal Intelligencer “Lawyer on the Fast Track,” in 2007, and a Pennsylvania “Rising Star” by Law & Politics in 2005 and 2006. Hayes is a bona fi de expert, yet he still struggles with how to most effectively convey that expertise.

He once spent a lot of his marketing efforts presenting continu-ing legal education programs to other lawyers and business profes-sionals about white-collar criminal defense and trial advocacy. “But I got zero work from it because people were not picking up the phone to call me for work related to that,” Hunt recalls. He was also told to write long articles in his areas of practice; that was similarly unsuccessful.

After a law fi rm coach suggested that the partners begin to care-fully experiment with LinkedIn, Facebook, and Twitter, he was still

C01.indd 15C01.indd 15 5/5/11 7:18:48 PM5/5/11 7:18:48 PM


suspicious, but knew that he needed to market more aggressively. “I always viewed that type of brief communication as non-professional speak using emoticons and abbreviations,” he says. “I saw it as a social mechanism for dating or communication as opposed to a pro-fessional way of marketing to clients and referral sources,” he adds.

Then he started to share links to articles that he had read with contacts and began to change his attitude about what he consid-ered unconventional forms of marketing. He created a LinkedIn account and reached out to a few contacts. Within a few months, he accumulated almost 500. He shares the posts he writes for his blog, From the Sidebar, with those LinkedIn connections, among others. They combine his personality with his practical perspectives on the law. He described the online journal as a collection of practical tips about trials and litigation.

Hunt questions whether professionals tend to rely too much on their fi rm’s name and less on their own promotional prowess. “How we market ourselves tends to get lost,” he says. Admitting that his fi rst blog post was very intimidating and a mental hurdle, he enjoys the interaction with his readers. “I view the practice of law as prob-lem solving, which is why I love it,” he notes. “The dialogue helps me learn and become a better lawyer.”

RECAP

Raising your visibility allows your audience to get to know you. As they do so, they will come to appreciate your perspective. Make it easier for them by reversing the bullhorn so that your audience members can address you in the same way that you speak to them. Twitter is an interesting example of this practice.Enthusiasm requires a unique level of interaction, as well as a compelling personal story. Profi ciency and demeanor are often infl uenced by a profes-sional’s overall level of excitement.Practically demonstrate your expertise by blogging or guest blogging.

•

•

•

C01.indd 16C01.indd 16 5/5/11 7:18:49 PM5/5/11 7:18:49 PM

All contents subject to strict confidentiality treatment under applicable non-disclosure agreement.

A Conversation with the Legal Community’s Thought Leaders on the Front Lines of an Industry in Transition By Ari Kaplan, Principal of Ari Kaplan Advisors

the evolution of the legal profession

DiscoverReady.com

white paper


white paper: evolution of the legal profession 1

Over the past 50 years the legal industry has experienced an unprecedented shift from a tightly knit profession into a global enterprise driven by the traditional business motivations of growth and profit. The current economic downturn has caused the industry to reexamine the way lawyers practice, law schools educate and clients relate to their counsel.

This report is the first in a series that combines insights from a cross-section of the legal community, ranging from the deans of law schools and prominent practitioners, to in-house counsel, law professors and other industry experts, to examine whether the profession is experiencing a short term blip or if it is in the middle of a paradigm shift that will materially change the way law is practiced.



background

highlights from the interviews include:

In the fall of 2009, large law firms across the country began offering new hires up to $80,000 to defer their start date for one year. In addition, some offered student loan payments and health insurance as part of the package.1 That move was not surprising given that the legal industry suffered an unprecedented contraction in 2009 with over 12,000 layoffs at 138 large law firms.2 The surprise is that despite the elimination of 4,633 attorney positions, The New York Times reported on January 9, 2010 that “the recession and the resulting shortage of good jobs have spurred a jump in applications to law schools.”3

The enthusiasm for law school notwithstanding, the economy is forcing law firms to reevaluate the business model under which most institutions have been operating since their creation generations ago. Due to similar economic pressure, corporate clients are engaging in fewer strategic transactions and are forcing their lawyers to consider price reductions and alternative fee arrangements on those matters they are pursuing.4 This confluence of considerations is shifting the balance of power and forging a new model in the delivery of legal services.

For instance, in 2008, the 100 largest U.S. law firms by revenue earned approximately $7 billion from alternative fee arrangements.5 The ABA Journal reported that Arent Fox, Akin Gump Strauss Hauer & Feld, and Skadden, Arps, Slate, Meagher & Flom were among the large firms that derived a portion of their revenue from unconventional billing.6

“ The model and structure that law firms have been working on for 20–30 years was always a bad business model; however, it survived until now because there was so much commerce going on.”

lynn mestel, mestel & co.

“ The days of clients accepting the traditional model of billable hours and costs over which they have no control is over.”

jay shepherd, shepherd law group

“ GCs have been unhappy for sometime, they just haven’t had the bargaining power; the shift in the market has given them more bargaining power.”

professor gillian hadfield, university of southern california law school

“ Lawyers need to stop thinking about what they do as separate from what their clients do.”

patrick lamb, valorem law group

“ It boils down to initiative and innovation.”

professor william henderson, indiana university maurer school of law

“ We are seeing more women in the practice and at higher levels, as well as in the judiciary.”

hon. shira scheindlin, southern district of new york

“ Lawyers who are successful by monetary standards are not successful because of their skills; they have to solve their client’s problem and create trust with them.”

dean david van zandt, northwestern university school of law

“ If you are going to prepare law students for the real world, there has to be more focus on actual practice and more integration on law and business.”

richard fields, juridica capital management (u.s.) inc.

“ You must be entrepreneurial.” james blank, kaye scholer llp



In 2010, Crowell & Moring’s chairman, Kent Gardiner, credited greater use of flexible fee arrangements with helping the firm develop additional business in 2009’s challenging market.7 “By relying more heavily on alternative billing arrangements than we ever have before, we were able to bring in a lot more work,” he said.8

In addition to being lower and non-traditionally charged, those fees are also the subjects of greater transparency. The Wall Street Journal reported in January of 2010 that clients of Foley & Lardner, for example, have web-based access to the amount of attorney time and costs incurred on a particular matter.9

To provide perspective on the changing face of the legal profession and to properly characterize the transformation of the practice to a business, DiscoverReady LLC and Ari Kaplan Advisors engaged the community in a conversation about the past, present and future of the law. The participants identified various causes of the change and offered a number of potential solutions.

the participants

The researcher contacted 30 individuals for their unique perspectives and to discuss issues related to changes in the legal profession in telephone interviews ranging from 25 to 45 minutes between November 18, 2009 and December 14, 2009.10

One is a United States District Judge, two are the general counsel of a Fortune 500 company, one is the general counsel of a company in bankruptcy, three are senior in-house counsel at Fortune 500 companies, five are partners at AmLaw 100 law firms, three are responsible for career services at ABA-accredited law schools, one is a second-year law student, three are law school deans, three are law professors, one is a consultant, two are chief executive officers, four are founders of successful small law firms and one is responsible for law school admissions. Twenty-two are male and eight are female.

suzanna adelizi, director

Office of Career Services Chapman University School of Law

beth anisman, consultant

B&Co. (former Global Chief Administrative Officer for Legal, Compliance and Audit of Lehman Brothers)

james blank, partner

Kaye Scholer LLP

david boies, partner

Boies, Schiller & Flexner LLP

larry bortstein, partner

Bortstein & Irvine LLC (former Global Head of Technology Law at Lehman Brothers)

michael j. callahan

Executive Vice President, General Counsel & Secretary Yahoo! Inc.



jeffrey w. carr

Vice President, General Counsel and Secretary

FMC Technologies

ruther carter, law student

Arizona State University O’Connor School of Law

bruce elvin

Associate Dean and Director, Career & Professional Development Center

Duke University School of Law

richard fields, ceo

Juridica Capital Management (U.S.) Inc.

professor gillian hadfield

University of Southern California Law School

michael hausfeld, partner

Hausfeld LLP

professor william henderson

Indiana University Maurer School of Law

patrick lamb, founder

Valorem Law Group LLC

dean richard matasar

New York Law School

c. parkhill mays, jr., (founding)partner

Holland & Knight LLP

sean mcsweeney

Senior Vice President & Deputy General Counsel

Liberty Mutual Group, Inc.

lynn mestel, founder

Mestel & Co.

vincent miraglia

Chief Counsel for Employment Litigation & Electronic Discovery International Paper Company

robert owen, partner

Fulbright & Jaworski

charles roboski

Assistant Dean of Admissions and Financial Aid

Michigan State University College of Law

hon. shira a. scheindlin

U.S. District Court for the Southern District of New York

jay shepherd, founder

Shepherd Law Group

john snellings, partner

Nixon Peabody LLP

martha solinger

Co-General Counsel

Lehman Brothers Holdings

dean david van zandt

Northwestern University School of Law



frank vecella

Associate General Counsel – Litigation

Ericsson Inc.

mark weber

Assistant Dean for Career Services

Harvard Law School

dean patricia white

University of Miami School of Law

david b. wilkins

Professor of Law & Director of the Program on the Legal Profession Harvard Law School



the future of the profession is secure

While there are many issues about which practitioners should be concerned, the respondents were generally optimistic about the future of the profession.

Renowned trial lawyer David Boies, founder of Boies, Schiller & Flexner, for example, has four children that graduated from law school (three of whom are still practicing). “I do believe that law continues to be a great profession because it offers an opportunity to do things that are challenging and also to do good for society,” he said.

Harvard Law School professor David Wilkins noted that the American Bar Foundation and the NALP Foundation for Law Career Research and Education jointly published a study in which over 70% of lawyers reported being moderately or very satisfied with their career decision.11 “Satisfaction is a blunt instrument, but the portrait of widespread misery is wildly exaggerated,” said Wilkins, who is the Director of Harvard’s Program on the Legal Profession.

overview of findings: the future of the profession is secure

➜ 13 of the 15 active practitioners interviewed use alternative billing, including fixed fee arrangements. Over 75% had heard of instances where a corporate client will not pay for first-year work done on their cases.

➜ 92% feel that client expectations have changed.

➜ 62% agreed that the accelerated growth in law firms and the rise in legal fees led in whole or in part to the current state of the market.

➜ 70% agreed that while the economy has always had an impact on the practice of law, the current shift is different. 74% believe the shift will be permanent.



how has the legal profession evolved?

The concept of evolution summons images of glacial transformations over long periods of time. Ironically, it is speed that has impacted the modern legal epoch of the past generation. A substantial number of the respondents noted that technology and the increased pace it enabled over the past two decades dramatically changed the field forever. The tempo of legal practice has directly affected collegiality, client service, training, loyalty, longevity and growth.

“Today, communication is instantaneous, which requires people to respond more quickly and the pace is much more accelerated,” noted Boies. “The requirement to make an immediate decision and multitask is at a whole new level,” added Anisman.

The legal profession was once a very local profession, recalled Lynn Mestel, founder of both Mestel & Co. and Hire Counsel. “It was very difficult 22 years ago for a New York firm to open a Washington, DC office and monitor that office,” she said. “Today, it does not matter where you are sitting, which enables all law firms to expand nationally, if not globally,” added Mestel, who assisted in the mergers of Dewey & LeBoeuf, Katten Muchin Rosenman LLP, O’Sullivan, and others.

culture

Due to the faster pace and business-oriented nature, the collegiality amongst attorneys has unintentionally dissipated, reported Sean McSweeney, Senior Vice President & Deputy General Counsel for Liberty Mutual Group, Inc., who emphasized that accessibility through remote technology has impacted work-life balance. Northwestern University School of Law Dean Van Zandt was more direct: “I think most people would say today that becoming a partner is almost like a curse because everything is much more bottom line.”

That bottom line has increased lawyer mobility for two reasons.

First, Kaye Scholer partner James Blank noted, “all firms are looking at profits per partner, whereas it used to be more of a partnership made up of individuals who were more loyal to their institution.” And, said Boies, “the emphasis on compensation also motivates people to leave firms when they see better chances elsewhere.”

Second, from the general counsel’s perspective, Michael Callahan, Executive Vice President, General Counsel & Secretary for Yahoo! Inc., indicated, “law firms have to adjust their practices to the reality that clients are no longer definitely tied to a firm, but rather to the lawyers they have come to trust and rely on.”

In addition, there are fewer opportunities to spend time with experienced lawyers and osmotically learn from them, said Martha Solinger, Co-General Counsel for Lehman Brothers Holdings, highlighting that law firms were once richer teaching environments. “The training system is different because the pressure on lawyers to get clients and bill time has ratcheted up.”

Also, as the salaries of young lawyers rose, the pressure to obtain immediate value from students increased, noted University of Miami Law School Dean Patricia White. “The life of the young associate changed and the number of hours required went up,” she added.



To reinvigorate a culture of loyalty and longevity, “it is also important that we return to the roots of the practice of law as a calling and as a profession in which people are devoted to their clients, their clients’ interests and are respectful of the law,” recommended Boies.

value & efficiency

Returning to the roots of the practice will require a renewed focus on value and alignment of interests. “In some ways, we have a business that is masquerading as a profession,” said Jeffrey Carr, Vice President, General Counsel and Secretary for FMC Technologies.

Indiana University Maurer School of Law Professor Bill Henderson explained that since 2001, there has been a continuous demand for corporate legal services with the legal industry growing at a faster pace than the population. That demand for corporate legal services and the increase in transnational transactions allowed law schools and law firms to grow, but he said the big growth spurt has passed. “Legal spend is just another cost and GCs are pitting firms against one another to drive the cost of legal services down.”

It is much more business oriented, noted Carr, named a ‘Legal Rebel’ by the ABA Journal in 2009, who commented that clients are focused today on the worth of legal services as opposed to litigating on principle, with more sensitivity to value and fungibility. “Today the price of admission to do work is no longer quality — that is presumed — it is much more about — can you give value to me as opposed to are you a great lawyer?”

Despite that critical consideration, Anisman said that law firms and corporations are still not focusing enough attention on creating efficiencies in internal processes, or sharing information and best practices across departments, offices and regions. This is critical given that “innovations have commoditized legal work and made online products for things that would be routinely drafted from scratch,” said Mestel.

Ultimately, “in most transactions, the client really does not want the perfect job,” said Van Zandt. “The lawyer has to understand how to provide real value as opposed to a perfect job,” he added.

That interest in problem solving and value is a trend that is recharacterizing legal services and the longevity of one’s career in the law. Given the financial pressure, “firms can be less tolerant of a lack of productivity,” said Boies, noting that while firms used to be very slow to dismiss partners, there is now a greater incentive to weed people out for underperformance.

“Legal spend is just another cost and GCs are pitting firms against one another to drive the cost of legal services down.”

“You just don’t need the bodies and man hours to get answers any more,” said Blank. “E-Discovery tools have eliminated the need to have junior associates review boxes of documents.”

yes

no

23

4

27

85%

15%

100%

have you heard of instances where a corporate client will not pay for first year work done on their cases?

total



Also, “you just don’t need the bodies and man hours to get answers any more,” said Blank. “E-Discovery tools have eliminated the need to have junior associates review boxes of documents, which is why you are seeing thousands of junior associates laid off,” he added, highlighting that clients are no longer willing to pay for junior associates to review documents that technology can evaluate with equal success.

In fact, 85% of the respondents had heard of instances where a corporate client would not pay for first year work on their projects. Part of the reason for that accord is the acceptance that outsourcing is a positive trend and helps to create value. “You will see a lot more firms and companies using outsourcing companies to do work more efficiently,” predicted Van Zandt. “Having a big firm associate do it is less efficient than having an organized outsourcing firm do it,” he added.

client expectations

The law was once viewed as a secret science, like monkhood or mysticism, shrouded by secrecy and uncertainty, recalled Carr. There is increasing acceptance that the law is a competitive business similar to other professional services, e.g., finance and engineering. In-house attorneys are in a position of control and some bring suspicion to the relationship, he said cautioning that some in-house attorneys believe that their outside lawyers are charging too much, inflating their bills or failing to explain all of the known potential disadvantages.

In fact, efficiency is increasingly prized alongside skill and success. “Clients have an expectation that their attorneys proactively will look for ways to be efficient and offer those options in terms of day-to-day workflow,” said Blank, noting that some want the lawyer pitching for a matter to be ready to propose alternative billing or fee arrangements without needing to be asked.

According to Henderson, in the mid-1970s, it was not as common for corporate clients to have large in-house legal offices, which currently resemble full-scale law firms. Today, “many people have gone in-house to get closer to the business action, so you have a client base that is more experienced and educated and naturally will expect more out of their firms,” said Callahan. After all, companies are measured by output, quality, price and value. In-house lawyers expect that of their outside providers as well.

“You will see a lot more firms and companies using outsourcing companies to do work more efficiently.”

yes

no

total

23

2

25

92%

8%

100%

have client expectations changed?

“Clients have an expectation that their attorneys proactively will look for ways to be efficient and offer those options in terms of day-to-day workflow.”



Frank Vecella, Associate General Counsel for Litigation at Ericsson Inc., views his relationship with outside counsel as a partnership, but highlighted that “many in-house attorneys probably focus more on the cost component than the quality of the representation, which is unfortunate.” Solinger noted that modern practice requires a combination of skill, service and substance. “I want the best judgment provided efficiently, creative lawyering and responsiveness.” She attributes this movement to the fact that there are more clients setting those same expectations at the same time.

Ultimately, the expectation is that “clients are not going to incur willingly the same billing practices as in the past,” said Michael Hausfeld, the acclaimed founder of Hausfeld LLP. “They also want to understand what can be resolved when, as opposed to engaging in protracted litigation,” he added.

alternative billing

Closely tied to the tandem issues of efficiency and client expectations is the concern about billing. According to Fulbright & Jaworski’s 6th Annual Litigation Trends Report published in 2009, 48% of the 408 predominantly U.S.-based and U.K.-based in-house lawyers surveyed use alternative fee arrangements.12 40% of those organizations estimated that 10-25% of their outside counsel fees could be attributed to alternative fees.13 And, half of those organizations use fixed fees.14

Similar to the findings in the Fulbright report, an overwhelming number of respondents actively engaged in practice operate under some type of alternative billing arrangement with at least one client. The reaction, however, was more mixed than the statistics reveal, both from the perspective of in-house and outside lawyers. And, the death of the billable hour seems to have been exaggerated.

“The days of clients accepting the traditional model of billable hours and costs over which they have no control is over,” Shepherd Law Group founder Jay Shepherd said, highlighting that client service will continue to improve as alternative fee structures develop. He admitted, however, that the billable hour still reigns supreme.

Carr uses a well-regarded performance-based system that provides outside law firms with an incentive to resolve a matter efficiently using targets and multipliers. The company and the firm agree at the outset on a billing system, which could be hourly, fixed fee, project-based or retainer driven. The company pays 80 cents on the dollar and holds back 20. At end of engagement — or matter — the company provides the firm with a “report card,” which details its performance in six areas. If it earns a 3.0, it receives 100% of the holdback and if it gets a 1.0, it can expect

none of the holdback. Firms that perform at an exceptional level rating a 5.0 receive their 20%, plus an additional 20%. Last year, Carr paid on average 107% of most law firm invoices.

yes

no

total

11

2

13

85%

15%

100%

do you use alternative billing?

“The days of clients accepting the traditional model of billable hours and costs over which they have no control is over.”



yes

no

total

“It is about delivering exceptional service in a cost effective manner,” said Larry Bortstein, the former Global Head of Technology Law at Lehman Brothers and founder of Bortstein & Irvine. A few respondents noted, however, that while corporations are demanding alternative billing plans, the capital structures of law firms are not designed to deal with that demand.

Blended Rates are Less Attractive

Fixed fees and blended rates are particularly popular in law firms; however, “in doing the math, the blended rate doesn’t seem to be something good for the client because it always seems to come out to more than it otherwise should be,” Blank said. Vecella also noted that his team experimented with blended rates on one matter, but he realized that junior attorneys for whom the blended rate was the normal rate were doing most of the work, which was actually a disadvantage. McSweeney’s team uses volume discounts, graduated (tiered) volume discounts and contingency fees in plaintiff matters.

Despite the popularity of creative billing arrangements, “it is a very hard thing to structure,” said Solinger. C. Parkhill Mays, Jr., a partner with Holland & Knight, concurred. “Most clients insist on alternative billing, but I don’t see those arrangements as being very successful since lawyers are trying to maximize revenue and clients are trying to fix them,” said Mays, who was an attorney with Holland, Bevis, Smith & Kobler before it merged in 1968 to form Holland & Knight.

Callahan echoes that difficulty from an in-house perspective. “It is not the majority of what we do and a lot of projects don’t lend themselves to it,” he said. He has generally used alternative fee structures on projects where they don’t have the in-house expertise, as well as for appeals and certain matters where the company consistently returns to a firm for similar advice.

Ultimately, the trend is moving toward lawyers assuming more of the risk. “Our view is that we need to have ‘skin in the game’ so that we do better economically than if we fail at meeting certain objectives, and we are paid for results regardless of how much time is spent,” said Patrick Lamb, ABA Legal Rebel and founder of the Valorem Law Group. “When you have some scale in the market, you can negotiate relationships that work for you,” added Callahan.

11

2

13

85%

15%

100%

do you use fixed fee billing?



the economy

Despite the fact that 62% of the participants agreed that the accelerated growth and rise in legal fees caused, at least in part, the current legal market contraction, this was a strongly debated issue.

“The legal fees are a symptom not a cause; it is the regulatory structure, who becomes a lawyer, and how we train them,” said University of Southern California law professor Gillian Hadfield. Judge Scheindlin added that “the state of the market is a function of the economy in a larger sense; in part, it has no effect, but, in part, [billing] rates were crazy.”

From a practical standpoint, “there is a lot more going on there aside from the economy,” said McSweeney. “Bodily injury initiatives, tort reform, and safer cars have reduced case counts, which has been a trend for several years,” he added.

Most agreed that the cause stems from a combination of complex factors that include the state of the legal industry prior to the collapse of the global economy and 70% highlighted that the current shift is different. “We are here because of the economic

downturn, so law firms are responding and sometimes the change is going to require downsizing, rate reductions and lower salaries,” said Mark Weber, Assistant Dean for Career Services at Harvard Law School.

yes

no

total

19

8

27

70%

30%

100%

the economy has always had an effect on the practice of law. is the current shift different?

yes

no

total

16

10

26

62%

38%

100%

did the accelerated growth and rise in legal fees lead to the current state of the market?

“The state of the market is a function of the economy in a larger sense; in part, it has no effect, but, in part, [billing] rates were crazy.”



de-emphasize billable hoursTracking your time and billing by the hour gets in the way of improving the work-life balance of lawyers, noted Shepherd. “You have to treat lawyers like the knowledge workers that they are,” he said. “Knowledge workers don’t track their work on a timesheet,” he added.

In order to maximize their value, lawyers need to focus on prior work product and experience as opposed to solely billing hours. This will, however, only happen when we focus on changing the compensation system, says Carr. “We have gone past the tipping point. It is an industry in change and that genie can’t be put back in the bottle right now,” he concluded.

Anisman described the billing method as an ‘anti-efficiency measure’ because “the hourly billing rate system breeds its own incentives for people to be inefficient.”

The problem is institutional. Law firms need to restructure themselves in ways that will in the end benefit everyone with less leverage, more attention to outcome and less focus on time spent,” said Robert Owen, a partner with Fulbright & Jaworski and the head of the firm’s litigation group in New York, who would like to see a return to value billing. “Billable hours are a loose way of measuring value,” said Owen, who is part of the core team that conceived of and has administered Fulbright’s Annual Litigation Trends Survey since its inception in 2004.

restructure & deregulate

White predicted that there will be many different models for delivering legal services. The Legal Services Act, for example, is going to revolutionize the practice of law in the United Kingdom, she said.

In addition, massive deregulation is necessary, noted Hadfield, highlighting that since the system is regulated and structured by lawyers, there are constraints on who can invest in law firms, who can own a law firm, who can partner with lawyers and where one can provide legal services. “Geographical balkanization across state lines, where only bar-trained individuals with a JD locally licensed can practice cuts off tremendous levels of innovation,” she said. “We need to add more innovation and fewer restrictions on solving legal problems.”

Henderson suggested implementing long-term time horizons with an investment in research and development. He too encourages collaboration with non-lawyers, including IT and business professionals. “Diverse team-based approaches produce innovation,” he said.

Innovating while lifting those restrictions could lead to new educational designations, said Wilkins. “There are lots of proposals on the table for new kinds of degrees that combine law, business, competitive strategy, and public policy in ways that fit the way legal problems are occurring,” he added.

solutions

“You have to treat lawyers like the knowledge workers that they are.”

“Diverse team-based approaches produce innovation.”



prepare students for the business of legal practiceJuridica Capital Management’s CEO, Richard Fields, urged law schools to prepare young lawyers for the business of law and there was agreement such a shift would occur. “There is no room for the law teaching profession to be unresponsive, both for students at the top of their class and even more true in smaller firms where clients cannot afford to have a lawyer learn on the job,” said New York Law School Dean Richard Matasar, recognizing that students need more practical experience to meet upgraded expectations in the current environment. “We have to conceive of an accelerated service model as one for the benefit of the student,” he added.

Mestel similarly noted the importance of providing law students with a fundamental education in areas that are related to the practice of law, but are not necessarily required for a law degree.

“There has always been a certain tension between law schools that adhere to the Socratic method and those that are teaching practical law,” she said. “I believe that every law student today should get a small course in management, how to work in teams, how to build a business, including guidance on business planning,

setting objectives and strategies and how to market your law firm and your skills,” she added.

The respondents consistently described a profession in which new lawyers are unfamiliar with how the business side of legal practice operates. Calling it a ‘DNA gap,’ Hadfield noted “there are a greater variety of courses being offered now, but the vast majority of what we teach in law school is done on the same model of what was taught in 1870. Lawyers just do not understand how business works and law schools are not doing a great job of closing that gap.”

Once the new needs of the profession are met, it will positively impact client service, efficiency and an entire generation of practitioners. “I am hopeful that the economic pressure that the profession is feeling now will be a catalyst for positive change and will make a real difference in the way law serves society,” Fields added.

“Lawyers just do not understand how business works and law schools are not doing a great job of closing that gap.”



the next step in the evolution

Whether they have benefited the legal profession or not, 74% of the participants agreed that the changes will be permanent. Actually, “it is quite likely that we will look back on this period as one of less dramatic change than the period that is coming,” said Wilkins. “Many of the restrictions on the practice, like lawyer-only ownership, are likely to change,” he added, suggesting the prospect of publicly-traded law firms as in the U.K. and Australia.

With respect to the transformation of the industry, Bortstein said, “it is more expensive to tear down the Empire State Building and build a new one than to just build a new one.” Given the difficulty of large established institutions to reorganize quickly, he predicts the growth of alternative providers and the rise of legal process outsourcing. Miraglia expects these organizations and traditional law firms to compete in a new paradigm. “Law firms will have to learn that in order to keep business, they will have to think of new ways of providing it,” noted Miraglia.

That said, “the nature of law practice is varied and most firms do not have the same problems,” highlighted Bruce Elvin, Associate Dean and Director of the Career & Professional Development Center at Duke University School of Law. “I don’t think that all firms would agree that there is a problem or would agree that the answer is the same,” he added advising that the relationship is still about helping clients solve their problems, achieve their goals and meet their needs. Since it is a business about trusted associations, “to the extent that clients and their outside lawyers can communicate better or have stronger personal relationships, that would probably enhance all elements of the practice,” he said.

While many believe that some of the changes will have a lasting impact, the extent of that permanence was questionable. “When times are tough, everyone has to tighten their belt, but as soon as the economy picks up again, many people will tend to go back to their old habits,” said Vecella. “It will be temporary like real estate,” predicted Solinger. “There will be retrenchment, then slow growth, and then it will get better” she added noting that this is not going to change the world for all time.

yes

no

total

198

27

70%30%

100%

will the change(s) be permanent?

“It is quite likely that we will look back on this period as one of less dramatic change than the period that is coming.”



endnotes 1 Elizabeth Wurtzel, Tough Times for Big

Law, The Wall Street Journal (December 15, 2009).

2 Debra Cassens Weiss, BigLaw Laid Off More than 12,000 People in 2009, the Worst Year Ever, ABA Journal (January 4, 2010).

3 Rebecca R. Ruiz, Recession Spurs Interest in Graduate, Law Schools, The New York Times (January 9, 2010).

4 Debra Cassens Weiss, Citigroup GC Has No Sympathy for Law Firms Seeking Premium Fees, ABA Journal (September 28, 2009).

5 LegalBizDev Survey of Alternative Fees at 2, (January 2010), http://www.nylj.com/nylawyer/adgifs/decisions/ 021110surveysummary.pdf; See, Nate Raymond, Hey, We Were a ‘Success’... Now, Pay Up, Duane Reade!, New York Law Journal (February 12, 2010).

6 Debra Cassens Weiss, Citigroup GC Has No Sympathy for Law Firms Seeking Premium Fees, ABA Journal (September 28, 2009).

7 Jeff Jeffrey, Alternative Billing Boosts Robust 2009 Figures at Crowell & Moring, National Law Journal (February 24, 2010).

8 Id.

9 Nathan Koppel, Using Web Tools to Control Legal Bills — Big Law Firms Turn to Technology to Provide Clients With Real-Time Expenses, Automate Tasks, The Wall Street Journal (January 5, 2010).

10 The researcher conducted two interviews outside of this date range. He completed one on October 21, 2009 and the other on January 11, 2010.

11 Robert L. Nelson, Ronit Dinovitzer, After the JD II: Second Results from a National Study of Legal Careers, American Bar Foundation and The NALP Foundation for Law Career Research and Education (2009).

12 Fulbright & Jaworski LLP, 6th Annual Litigation Trends Report at 5 (2009).

13 Id.

14Id.



about ari kaplanAri Kaplan is the author of the Amazon.com bestseller “The Opportunity Maker: Strategies for Inspiring Your Legal Career Through Creative Networking and Business Development” (Thomson-West, 2008), which the New York Law Journal called “a must-have treasure box of marketing ideas.” He practiced law with large firms in New York City for nearly nine years and has been recognized in The Wall Street Journal Law Blog, the Houston Chronicle, the Miami Herald, the New York Post, the ABA Journal, Above the Law, the National Jurist, the Chicago Lawyer, the California Recorder, and other publications.

As the principal of Ari Kaplan Advisors, he addresses professionals internationally about self-marketing, business development, getting published and dynamic networking. He has published over 200 articles, served as a legal commentator for CNET Radio and has been interviewed on CNN. He received Apex Awards in 2007 and 2008 for feature writing and was named a

“Law Star” by LawCrossing.

He has spoken at law firms, law schools and bar associations nationwide, including as a keynote speaker at the National Association of Law Placement’s Professional Development Institute, the Louisiana State Bar Association’s Solo & Small Firm Conference, and the International Litigation Support Leaders Conference, among others. He is the keynote speaker for the 2010 ABA Tech Show.

Kaplan serves as a law-related ghostwriter for a number of companies, firms and individuals in the legal industry preparing their white papers, client alerts, and customer research. He holds the number one Google ranking for ‘legal technology ghostwriter’.

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