De-Constructing Legal Services

Last Fall, I read an article about the General Counsel for Kia who creates tests for his external legal counsel. The tests have nothing to do with law and everything to do with process. In one test, external counsel should have taken 20 minutes to complete a mundane task using an excel spreadsheet. The average time taken by Kia’s nine outside law firms? Five hours. Simon Fodden also has a great piece on this, here.

There are many takeaways from this, but an important one is that its shows that lawyers are not always the most efficient personnel to undertake tasks in a law office – and of course reinforces that billing by the hour penalizes efficiency. Yet, many lawyers insist on doing far too much on a file, perhaps out of habit, perhaps out of confusion, or perhaps out of a need to make monthly hours targets.

To further my point, a law clerk friend of mine interviewed with a firm some time ago. She had a great deal of experience and could handle very significant files with little supervision. At her interview she was asked about her skills and what she did at her old firm. When she replied that she often drafted documents or handled certain matters, the interviewer’s response was always the same, “At our firm, lawyers do that.” Clearly this was a firm that had not sorted out its talent mix. Or perhaps it was the fact that many of this firm’s files were eligible for Legal Aid and Legal Aid pays a higher hourly rate to lawyers than to clerks.

Both of these short stories reinforce in my mind that successful law firms of the 21st century will be those who focus on the simple concept,“the lower my costs, the more I keep,” and manage their firms for profit not revenue, as Stephen Mayson often says.

In other words, successful law firms of the 21st Century will be those who re-jig their staffing models to ensure that work is done by the lowest cost, yet appropriately skilled, provider – or the work is done by technology. In the case of my friend the law clerk, that firm could have benefited from using her to do the work that lawyers were currently doing – giving the firm’s lawyers a more supervisory or “last pass” function on those files; similar to how a dental hygienist works with a dentist.

Of course Legal Aid is only enabling inefficiency by paying by the hour – but that is another story…..

And what is the proper response to the Kia tests? First, firms need to invest in better training for lawyers who choose to do “process” work, or pass that work to lower cost providers – either within or outside the firm.

With each passing year lawyers are faced with more situations that cry out for de-construction of files – forcing them to separate “process” from “lawyering”; and forcing them to acknowledge that the bulk of what needs to be done in a client file does not require a law school education.

The profession is beginning to evolve from being one populated by fully hands-on lawyers, to a profession of lawyer-managers or lawyer-consultants who add value by not only providing high-end legal thinking, but also by managing different talent pools to create the proper solution.

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Comments

  1. Your argument is very convincing for firms with sophisticated and demanding clients like the General Counsel of Kia, or Maria Fernandez of Kowtor Industries. The billion dollar question is: how many clients are actually anything like that? To the extent that a firm’s clients are actually unsophisticated, mystified by law, and deferential, I think the argument becomes questionable.

  2. Fair question.

    Those types of clients are also unable to differentiate law firms based solely on quality. How does that kind of client understand that your firm is “better” than another?

    The way to differentiate your law firm is to show that your process is different, better and presumably less expensive – that becomes competitive advantage.

    All clients will understand law firms that are as concerned about efficiency and process as they are.

  3. If a client receives his/her first interim bill and discovers that the lawyer is filling out forms and billing for such services it won’t be long before that practice is put to rest. Clients are discerning and don’t have a bottomless pit of money at home to draw from. If the lawyer continues to make this part of his work, then it may be time to go somewhere more efficient.

  4. The problem for me is that the word “client” is still being used imprecisely, to refer to a very specific kind of sophisticated and well-informed client. I think this is leading to questionable conclusions about (i) the extent to which lawyers are being pressured by their clients, and (ii) the extent to which market forces will produce efficient lawyering.

    Some clients, for example, are people who have been charged with crimes, denied bail, and assigned legal aid-funded lawyers. These clients are very unlikely to care about “efficiency and process” in their lawyer’s offices. They simply want their freedom. They will not switch counsel just because their lawyers have inefficient work practices.

    You may say that this is a very special kind of client — stressed, desperate, and not paying their own lawyer bills. But I would ask in response whether the client who closely and intelligently scrutinizes the firm’s internal work practices is not also a unique and unrepresentative type of client. Clients are spread along a spectrum in terms of their willingness and ability to push back against lawyers’ inefficiencies. Perhaps the imprisoned accused person is on the left extremity of the spectrum, and Kia or Kowtor are on the right extremity of the spectrum.

    I think that most natural person clients of family lawyers, criminal lawyers, immigration lawyers, etc. are well to the left of the spectrum’s centre. I would guess that many corporate clients, especially small ones, are also on the left side of the spectrum. The most sophisticated clients are big corporations and governments, but it’s worth remembering that decision-makers within these clients, like the accused imprisoned person with a legal aid certificate, are not spending their own money when they deal with their lawyers. They are spending shareholders’ or taxpayers’ money. How parsimonious they are with that money, and how much value they demand in exchange for it, will depend on a variety of factors.

    Why does this matter? Because if we overestimate the sophistication of clients, and underestimate the extent of their trust in and dependence on their lawyers, we may be left waiting for a revolution in lawyer efficiency which simply will not happen by itself.