Credit: Institute for the Future of Law Practice

A handful of farsighted legal employers are seeking to build a better talent pipeline. You’re invited to join them.


Practicing lawyers have long complained about the content of legal education – too much theory, not enough practical skills. If you’re one of those lawyers, do you also believe in the power of markets to improve the value of goods and services? If so, what market signal are legal employers sending to legal education?

As someone who has studied this market for more than 15 years, here is my paraphrase: “We want to hire smart, hardworking, and diverse law graduates, ideally from highly ranked national law schools or those at the top of their class at regional law schools.”

This describes how the majority of law firms, federal judges, and prestigious public interest employers sort through resumes. This is an observation, not a judgment. Information costs are high. Even for pedigree skeptics — and there are quite a few in the legal profession — the road of least resistance is to favor candidates with strong academic markers.

This leaves legal education in a bind – if we build it, you won’t come. Instead, legal education expends enormous energy, and a lot of scholarship dollars, to move up in a rankings competition where quality is determined primarily by pre-law credentials. Indeed, over the last 20 years, there has been a consistent .90+ correlation between schools’ median LSAT scores and their U.S. News rank. This is an input-driven market that does not materially reward improvements in legal education. How do we fix that?

Call to Action

If you are legal employer, here is a simple, low-risk way to send a powerful signal to law schools: Hire an IFLP intern.

IFLP (pronounced “I-flip”) is the Institute for the Future of Law Practice, a nonprofit created by innovative legal departments, law firms, legal service companies and law schools seeking to build a better talent pipeline. IFLP’s core initiative is a 3-week skills boot camp for law students followed by internships (10-week) and field placements (7-months) with IFLP employers. In 2018, 40+ students from five law schools participated in the program. In 2019, we hope to expand to 90+ students from 15 law schools. See 2019 IFLP Curriculum and Internship Program. The long-term goal is to make future IFLP curriculum and internships available to all interested law schools and law students.

This will happen if legal employers send a clear market signal.

If your organization hires an IFLP intern, you are supporting the creation of a curriculum that maps onto the demands of modern law practice:

  • Basic accounting, finance, and industry analysis. According the After the JD Project, law graduates two and seven years into practice report lack of business training as the most significant shortcoming of their legal education.
  • Introduction to legal operations (data, process, technology, design). Legal budgets are not keeping up with the growth in legal complexity. The emerging field of legal operations is dealing with this challenge head-on. The profession needs more operationally aware lawyers.
  • Real-world case studies and simulations. Knowledge can be taught in a classroom, but skill acquisition requires practice within a relevant context. IFLP designs experiential modules so that students can efficiently acquire both knowledge and skills.
  • Teamwork, communication, collaboration, feedback, leadership. Sophisticated law practice has become a team sport. This is reflected throughout IFLP’s curriculum.

If you hire an IFLP intern, you’ll get the benefit of a well-trained law student who takes work off your plate. Your lawyers and professional staff will also react with curiosity rather than defensiveness to the skills and know-how of IFLP interns. This can soften the soil for future change initiatives; it also reflects how a truly effective talent pipeline can deliver second-order benefits to all stakeholders.

If your organization becomes an IFLP employer, you are helping to align the interests of legal education with the long-term needs of clients. Indeed, this is part of being self-regulated profession. IFLP is just trying to make this easier.

IFLP Wave One Launch

If you’d like to learn more about IFLP, please consider attending (or sending someone from your organization to attend) IFLP’s Wave One Launch, which takes place on Wednesday, Sept.12 in Chicago (in Loop) from 5:30 to 7:30 pm. Registration details here.

During the 60-minute program, IFLP instructors from legal departments will discuss their talent needs. Speakers include:

You’ll also learn about the history of IFLP (our initial pilot was in 2014), hear from past and current students, learn how clients and law firms have used internships to create win-win benefits, and obtain information on the supervised internship program (no supervision, just results) in conjunction with Elevate Services. Again, see 2019 IFLP Internship Program.

Industry pioneers behind this effort include IFLP founding sponsors Chapman and CutlerElevate, and Cisco, as well as IFLP employers Archer Daniels Midland (ADM), Auto-Owners InsuranceBryan Cave Leighton PaisnerFenwick & WestHermes LawHonigmanNeota LogicOrrickRelativitySeyfarth ShawThompson HineUnivarColorado LawIndiana University Maurer School of LawNorthwestern University Pritzker School of Law, and Osgoode Hall Law School. In Canada, IFLP industry pioneers include BlakesBennett JonesKiraMcCarthy Tetrault, and Olser.

Thank you for reading. Now let’s increase the market signal to legal education. For additional information, please reach our to IFLP Program Director, Lisa Colpoys at lcolpoys@futurelawpractice.org.


Originally published on LinkedIn on August 23, 2018.  Republished here to help spread the word. wdh.


What’s next? See Legal Evolution’s 2018-19 publication schedule (065)


We lack the experience and vocabulary to describe what is happening in the entry-level legal job market.


Below are four charts that provide context to NALP’s recently released Class of 2017 data. But first, here are some key highlights from NALP’s press release and Selected Findings:

  • Overall employment: 88.6%, up from 87.5% in 2016.
  • Bar passage req’d jobs: 71.8%, up from 67.7%
  • Private practice jobs: 54.4%, up 1.5%
  • Median salary:  $70,000, up $5,000
  • Law firm median: $117,000, up $13,000
  • Hiring in 500+ lawyer firms: 4,606, up 368 jobs

These favorable statistics account for the press release headline “Class of 2017 Notched Best Employment Outcomes Since Recession.”  Similar headlines followed in the legal press.  See, e.g., “Median salaries for new law grads jump to $70K as BigLaw boosts hiring of newbie lawyers,” ABA Journal, Aug. 2, 2018; “Job Market for Law Grads ‘Surprisingly Strong,’ NALP Finds,” Law.com, Aug. 1, 2018; “Law grad salaries rise as big firms up their hiring,” Nat’l Jurist, Aug 3, 2018.

A simple, positive story, right?  The NALP materials contain other other facts, figures, and observations that reveal a much more complex market.  However, they can’t be reduced to pithy takeaways that are both accurate and helpful. To truly understand these data, we have to invest quite a bit of additional time and effort.

The four charts below are designed to partially bridge this gap. (Charts can be downloaded on Slideshare.)


Chart 1. Jobs in private practice continue to decline

Drawing upon the NALP press release and select findings, the news reports cited above all emphasize the increase in BigLaw hiring. In Chart 1, the supporting data are inside the orange circle.

Yet, when the Class of 2017 is viewed in a longitudinal context, the most striking feature is the continued decline in the total number of private practice jobs. Granted, jobs are down, at least in part, because the supply of entry-level talent is down.  Some employers hire more when talent is plentiful and cheap. However, it is not accurate to say that law firm hiring has rebounded from the recession. The recession was 10 years ago, yet the number of private practice jobs is lower now than at any time since the beginning of the recession.

Those of us in legal education need to understand why this is happening. See Post 057 (solving difficult problems require accurate understanding of root causes).


Chart 2. “Good news” is produced by fewer grads

As shown in Chart 2, over the last seven years, law school has become a lot less attractive to prospective law students. The class of 2017 had 34,922 graduates, which is the lowest level since 1982.

The higher employment rates for the Class of 2017 are due to smaller classes rather than an increase in the total number of jobs.  The complexity of this job market can be seen in the first paragraph of the Commentary and Analysis written by NALP’s executive director, Jim Leipold:

[Good news:] The employment outcomes findings for members of the Class of 2017 are surprisingly strong. Most notable is a bar passage required employment rate that jumped more than four percentage points from the previous year, and a private practice employment rate that has now increased for six years in a row. [Complexity:] Undergirding the strength of the employment outcomes, however, is a smaller class and not more jobs. For the fourth year in a row the employment rate has been shaped by a smaller number of jobs and a smaller graduating class size. The employment rate has risen because the falloff in the size of the graduating class has been larger than the falloff in the number of jobs secured. Notably, like the two classes that preceded it, this class secured fewer private practice jobs than any class since 1996.

This is important information, but what exactly are we supposed to do with it? It’s great that a higher proportion of students are getting better employment outcomes. But does the continued slide in law firm jobs require some type of collective action or response?  If so, who would make this call and what would they advise?  Unfortunately, we have no ready answers.  This is our conundrum.  Cf. Post 056 (discussing likelihood that law is entering a period when we will need lawyer-leaders to handle very difficult organizational and industry-wide problems).

Based on fall enrollments in 2015-17, we can forecast with reasonable accuracy the graduating classes in 2018-2020. All of them are likely to be smaller than 2017.  Thus, in terms of employment rates, we can expect three more years of “good news.”  We should use that time wisely.


Chart 3.  Relationship between law school debt and lawyer salaries

Chart 3 shows the relationship between law school debt and starting salaries, which are useful proxies for cost and perceptions of future earning potential. Since 2010, average student debt has rapidly outpaced entry-level salaries. This divergence is the simplest explanation for the massive drop-off in law school enrollment.

Fortunately, we are finally at a point where debt loads are headed downward while median salaries are tilting upward. The remaining gap, however, remains very large compared to the early to mid-2000s. Until these lines are brought closer together, those of us in legal education are going to struggle to grow our enrollment. This is very hard work, as it requires increasing the value of legal education — in the eyes of students and employers — without increasing our base costs.  In short, this is a design problem. A good number of law faculty understand this; hence the growing emphasis on innovation. See, e.g., Law School Innovation Index.


Chart 4. BigLaw will not save us

One of the NALP findings latched onto by the legal press was the increase in hiring among 500+ lawyer firms — up 368 jobs, or 8.6% from the prior year.  However, the data in Chart 4 suggest that BigLaw is unlikely to power a recovery for law schools.  Although the number of lawyers working in 500+ lawyer firms has increased significantly over the last 11 years (+36%), associates appear to be waning in importance. We see this through the shrinking proportion new-hires within large law firms.  Why is this happening?

A partial answer is that firms are finding it harder to sustain organic growth. See, e.g., Georgetown Law, “2018 Report on the State of the Legal Market” at 14 (“Since 2008, the overall growth trend for demand for law firm services has (with certain spikes and dips) been essentially flat to negative in every year.”); MacEwen, “It’s [not] The Economy. Stupid,” Adam Smith Esq., Aug. 5, 2018 (showing large drop-off in annual revenue growth after 2008). Because many lawyers and firm managers associate size with safety, growth through mergers and lateral partner hiring has become a dominant strategy.  The idea is to focus on groups of lawyers who can pay their own way in the current fiscal year.

One of the primary consequences of this strategy is that firms are relying less on associates and more on staff attorneys, counsel, and non-equity partners. See Henderson & Parker, “The Diamond Law Firm: A New Model or the Pyramid Unraveling?,” Lawyer Metrics Industry Report No. 1 (2013). First-year associates require higher salaries; more training and supervision; engender greater client pushback; and often leave before the firm recovers recruitment costs. Thus, large firms are finding ways to get by with fewer of them.

The orange trendline in Chart 4 also reveals another factor that is likely impacting entry-level hiring in the 500+ lawyer category: the number of 500+ lawyer firms is increasing.  In 2010, there were 76 firms with 500+ lawyers. By 2016, the number increased to 87.  A year later, it jumped to 91. Indeed, in 2007,  65.5% of the lawyers in the AmLaw 200 worked in 500+ lawyer firms; by 2017, this percentage increased to 75.5%.

Are the largest firms hiring more entry-level lawyers? Or are the mega-firms just taking up a larger share of the total corporate market? The latter trend would explain why entry-level hiring in 500+ lawyer firms is up while the total number of private practice jobs is at a 22-year low.


Conclusion

For many of us working in the legal field, we treat the NALP data as something we passively consume. Every year we do so without much thought or effort.  This is a conditioned response based on several decades of uninterrupted prosperity. In our experience, things have always worked out, so we can count on that pattern to continue.

Yet, the practice of law is changing in very significant ways, primarily because clients are changing how they buy legal services. There will be no shortage of opportunities for lawyers, legal educators, and recent law grads who get out into the field and obtain insight into what these clients really need. Those insights will tell us what to do.

(Charts can be downloaded on Slideshare.)



The Difficult Problem Framework is a simple tool that requires continuous learning and objectivity. Part II of a two-part series.


The framework above was developed to solve very difficult problems related to organizational change, particularly those now facing the legal field. I realize the framework looks laughably simple. That said, it’s harder to apply than you might think.

Part I (056) summarized my Deliberative Leadership course at Indiana Law, which gave me the opportunity to learn about and reflect on these topics.  In Part II, I explain Difficult Problem Framework (DPF), starting first with the basic mechanics of how it works and then providing examples drawn from Deliberative Leadership and other materials.

One caveat: Initially, this post will seem more focused on decision-making than leadership.  The goal, however, is effective leadership that has a chance at solving difficult problems. As you will see, the leadership part is already within our grasp. Effectiveness, however, requires more of a set-up.

Box 1: accurate assessments and root causes

Box 1 is the space where someone — a leader / innovator / change agent — seeks to understand a difficult problem and identify its root causes. Thus, Box 1 is primarily about fact-gathering and reasoning. To do it right, we observe the problem, locate relevant data and research, ask questions, listen, reflect over a period of days/weeks/months/years, write out our analysis in a clear and ordered way, and remain on the lookout for disconfirming evidence that reveals faulty assumptions or conclusions. In this respect, feedback loops are especially valuable. Cf. Chris Arygris, “Teaching Smart People How to Learn,” Harv. Bus. Rev., May-June 1991 (discussing double-loop learning).

Box 1 has two potential failure points. First, our assessment of the present is inaccurate due to insufficient fact-gathering, faulty unstated assumptions, lack of rigor, or something else (1A failure). Second, after constructing what we believe is an accurate analysis, we never leave Box 1, as we believe the hard part, or important part, is done (1B failure).

Readers may laugh when I say that Box 1 activities are similar to writing a peer-reviewed academic article. As we all know, however, academic journals are filled with symposia articles on problems that remain unsolved. Obviously, something is missing. That’s a 1B failure, the most common type for those of us in the academic crowd.

In contrast, practicing lawyers band together into firms that place a heavy emphasis on revenue generation. This leaves little time to read, reflect, and understand difficult problems that are one or more steps removed from the immediate demands of client work.  Despite being liberated from timesheets, in-house lawyers are not much better. In both contexts, daily responsibilities thwart deep systems thinking. This dynamic keeps the entire profession stuck in a rut of 1A failure, as we are trying to solve our most systemic problems with after-hours resources.

The image below captures our dilemma (H/T Casey Flaherty).

 Box 2: change strategy

Box 2 is about effective change strategy. Here, the operant conditioning of law school gets in the way, as we spend most of our time learning how to construct arguments that could prevail in a court of law. If we do it well, our reward is law review membership and a high-paying job. Yet, it’s also a problem-solving approach based purely on legal authority.  That’s a big limitation.

Even if a client’s life or business problem might turn on question of law, most clients can’t afford to engage the wheels of justice. And even they can, few leave the courthouse feeling good about the experience. Thus, lawyers with large practices eventually build out a toolbox of nonlegal skills. In fact, Shultz & Zedeck documented 26 different tools. See “Identification, Development, and Validation of Predictors for Successful Lawyering,” LSAC Final Report, Sept. 2008.

If we move on to organizational problems — e.g., law firms, law schools, legal departments, court systems or regulators struggling to adapt to changing time — and we are paying any attention at all, we soon observe that stakeholders are seldom won over by reasoned arguments. In fact, they may not even show up for the meeting. If they do, their head may be elsewhere. For those who show up and listen, they’ll likely want to modify our ideas with some of their own. Suffice it to say, no one leaves these meetings with a quorum for change.

Several years ago, I learned this lesson the hard way, as I was part of a team building and selling evidence-based tools to lawyers. See Post 004 (discussing Lawyer Metrics); Post 016 (same). Straightforward presentation of data, even when connected to bottomline results, is not effective to win over a group of well-credentialed professionals. Cf. Daniel Kahneman, Thinking, Fast & Slow 227-29 (2011) (discussing hostility to algorithms, particularly when they demystify professional judgement). These experiences eventually drove me to diffusion theory and the insight that innovation adoption occurs through a social system where innovators and early adopters go first. When these two groups benefit, the rest of the social system follows. See Post 004 (presenting theory); Post 007 (providing detail).

Diffusion theory, however, is but one of many theories and frameworks that can improve our odds of desirable change. I’ll give a few examples below, many of which are not only connected with leadership, but also meaning, purpose and fairness. But for now, the core point is that Box 2 requires us to continuously learn new ideas and reflect on how they might connect to our difficult problems. This is no less time-consuming than the Box 1 analysis.

Difficult problems and decisionmaking

To summarize: We can only solve a difficult problem if we can accurately assess its root causes. This requires a major investment of time and resources to get right (Box 1). Thereafter, we need to formulate an effective change strategy that goes well beyond explaining/publishing our analysis (Box 2). The purpose of the DPF is to keep these two activities separate and analytically distinct.


Correct root causes + right change strategy = chance at success

Going a bit deeper, solving difficult problems is a thinking person’s game where the biggest risk factors are (a) self-deception that causes us to underinvest in learning, fact-gathering and reflection, and (b) bias and distortion in how we evaluate information. Through work ethic and mental training, we can mitigate these risk factors, but never completely. On this score, I’d recommend four “applied” resources: Charlie Munger, 24 Cause of Human Misjudgment (1995) (75-minute audio); Daniel Kahneman, Thinking, Fast & Slow (2011); Randall Kiser, How Leading Lawyers Think (2011); Ray Dalio, Principles: Life and Work (2017).

Let’s now move from the abstract to the concrete.

Box 1: what are my assumptions?

The example below is based on an assignment in Week 1 of my Deliberative Leadership class.

Imagine you are an executive at General Motors in 1984. For reasons of cost and quality, the company has been losing marketshare to the Japanese. You’ve given this a lot of thought and concluded that the root cause of GM’s woes is an old, expensive and undisciplined workforce protected by overly generous union contracts.  Until that gets solved, the company cannot effectively compete with companies like Toyota, GM’s most formidable Japanese competitor.

This problem set is based on New United Motor Manufacturing, Inc. (NUMMI), which was a joint venture between GM and Toyota launched in the mid-1980s at an old GM auto plant in Fremont, California. Basically, this came about because Toyota was making great inroads in the U.S. market. To preempt a protectionist backlash, Toyota needed a plan to shift some of its production to the U.S. and learn how to adapted to U.S. workers. For GM, it was an opportunity to learn Toyota’s lean production methods, which combined world-class quality with world-class efficiency. This story is expertly told in a 1-hour podcast produced by This American Life. See NUMMI 2015, episode 561 (July 17, 2015).

The first part of the episode details the problems that existed at the GM Fremont plant prior to its closure in 1983 — pretty much non-stop drinking, drug use, absenteeism, and antagonism toward management.  According to Bruce Lee, who ran the western region for the UAW, “It was considered the worst workforce in the automobile industry in the United States. And it was a reputation that was well earned. Everything was a fight. They spent more time on grievances and on things like that than they did on producing cars. They had strikes all the time. It was just chaos constantly.”

In negotiating the re-opening of the Fremont for the NUMMI joint-venture, the UAW demanded that GM and Toyota rehire a substantial portion of the old Fremont facility workforce (it would turn out to be 85%).  Remarkably, Toyota was willing to go along.  According to NPR automotive correspondent, Frank Langfitt, ” Toyota execs believed their system would turn bad workers into good ones.”

The rest of the episode tells the story of how, under the Toyota production system, the Fremont facility went on produce world-class quality on par with the rest of the Toyota system.  What changed everything was the inclusion of workers in a team-based process of continuous improvement. For the first time on their careers, these old, tired workers were asked for their ideas on how the cars could be made better and more efficiently.


1A Failure

NUMMI is a vivid example of a 1A failure. The root cause of the problem was not the people; it was the system. For me, this lesson hit close to home because during the early 1980s, I was a college student living in Cleveland, Ohio. Pretty much the entire region blamed the workers and union for the decline of the industry.

The lessons of NUMMI are supported by others materials assigned during Weeks 1 and 2, such as Batman, This American Life, Episode 544 (Jan. 9, 2015) (expectations in our head have a profound effect on the physical and social world); Viktor Frankl, Why Believe in Others, Ted.com (video) (Jewish-Austrian neurologist who survived Nazi concentration camp and wrote Man’s Search for Meaning exhorting group of Americans to elevate their expectations of others and thus enable them to reach their full potential); Carl F. Braun, Management and Leadership (1948) (leader of C.F. Braun & Co., an international engineering and construction company, outlining the principles of human respect, dignity, and collaboration that underlie the company’s financial and technical success).

As these excerpts suggest, perhaps the root causes of organizational and institutional malaise are not exclusively gaps in logic or analytical rigor. Rather, a major root cause could be lack of clarity around purpose and, until that gets resolved, worry over status, hierarchy, and security.

Box 2: the missing link

I’ll admit that it wasn’t until that fourth year of Deliberative Leadership that I realized that there was a second box.  The turning point was this spring when Alli Gerkman, Director of Educating Tomorrow’s Lawyers, visited by class.  One of her selected readings was an article on an internal study by Google’s People Analytics group, dubbed Project Aristotle, that attempted to identify the attributes of high performing teams. See Charles Duhigg, “What Google Learned From Its Quest to Build the Perfect Team,” N.Y. Times Magazine, Feb. 25, 2016.

Google had long observed wide variations in team performance.  If it could isolate the factors consistently associated with high performance, perhaps they could be scaled across the entire organization.  Yet there were many false starts. In particular, Project Aristotle invested a lot of time and resources looking at how team compositions based on personality, skills or background affected team performance.  “No matter how researchers arranged the data,” wrote Duhigg, “it was almost impossible to find patterns — or any evidence that the composition of a team made any difference.”

Eventually this led the Aristotle team to the social science on group norms. One line of this research suggested that norms within groups may produce a “collective IQ” that is distinct from the intelligence of any single team member.  This hypothesis proved to be the missing link in Google’s research.

So, what is the cultural factor that explains high-performing teams at Google?  Psychological safety.


“Google’s data indicated that psychological safety, more than anything else, was critical to making a team work.”

According to Professor Amy Edmondson of Harvard Business School, who conducted much of the group norm research relied upon by Project Aristotle, psychological safety is a ‘‘shared belief held by members of a team that the team is safe for interpersonal risk-taking. … [and] a sense of confidence that the team will not embarrass, reject or punish someone for speaking up.” Edmundson, “Psychological Safety and Learning Behavior in Work Teams”, 44 Admin. Sci. Quarterly 350-383 (Dec. 1999). From the outside, a psychologically safe group might appear free-flowing and chaotic. Yet, because of group norms, the members are very good at allocating airtime equally and truly listening to one another.

This past spring, I gave two talks on leadership, one to group of young lawyers and another to a group of students from several law schools. In both talks, I explained the Google research, presented the definition of psychological safety, and asked audience members to anonymously complete a notecard that said whether their workplace or law school was psychologically safe (“yes”, “no”, “something in between”).  I then collected passed along the basket of notecards, letting each person draw a random card. Finally, I polled the results by having audience members raise their hands.  In both cases, less than 1/3 reported feeling psychologically safe. That’s a problem.

Connecting it together

For all four years of Deliberative Leadership, I have assigned a well-known article on authentic leadership. See Bill George, et al., “Discovering Your Authentic Leadership,” Harv. Bus. Rev. (Feb. 2007).  It’s an attractive thesis — that the most effective leaders “demonstrate a passion for their purpose, practice their values consistently, and lead with their hearts as well as their heads.”  Yet, the Google article got me to think that perhaps the authentic leader’s effectiveness flows from the group norms they foster, especially psychological safety.

One of the repeat readings in my class (picked by more than one guest lawyer) is True North: Discover Your Authentic Leadership, which is basically the book version of the HBR article.  It’s primary author is Bill George, former CEO of Medtronics who now teaches at Harvard Business School.  True North was picked again this year, in close proximity to Alli’s article. Thus, I took the opportunity to to better understand the book’s methodology.

Below is a graph from True North that, the authors claim, fits the pattern of many of the 125 leaders in the study.

Often, according to the authors, authentic leaders are forged during a period of extreme hardship. Through the “crucible,” leaders finally develop the courage and confidence to live by their own values.  Perhaps one way to establish a psychologically safe workplace is for the boss to explain difficult decisions in the context of their own learning, including painful failures and setbacks.  I’ve had my own crucible moments in life. At age 55, I can say that crucibles really do burn away our allegiance to things that are stupid and really don’t matter.

In terms of Box 2 change strategy, the Google research and Bill George’s authentic leadership are connected together with the work of Chris Arygris, the late, great HBS professor who focused on organizational behavior, organizational learning, and change management. In a 1991 article in the Harvard Business Review that was later republished as a HBR Classic, see “Teaching Smart People How to Learn,” Arygris discusses his work with elite management consultants. The primary theme is engrained defensive reasoning that keeps very smart professionals from learning why many of their engagements continually fall short of desired results for them and their clients.  Arygris reports many heroic efforts to change this dynamic that all end in failure.

Arygris then relates the story of a CEO of a large organizational-development firm who was so disgusted with the pattern that instead of preparing for an upcoming meeting, he decided to script out the failure in advance.  He divided his work into two columns. On the right side, he wrote out the likely dialogue that would take place.  On the left side, he wrote the thoughts and feelings that he would likely have during the meeting “but that he wouldn’t express for fear they would derail the discussion.”  Then, instead of having the meeting, he used the time to analyze the scenario with his direct reports.

What happened next was an honest dialogue in which the CEO became privy to the honest but unspoken views of his entire team. Then they could finally hear him with a new set of ears. Finally, real progress could occur.

Below is a stylized version of Aygris’s recommended approach, which I use in my Deliberative Leadership class:

This is a potentially useful Box 2 tool. Do you have the courage to give it a try?

As legal organizations and institutions struggle mightily to adapt to rapidly changing times, there is renewed and growing interest in the topic of leadership. I am confident great things are going to happen as a result.

What’s next? See Legal Services Landscape Report (058)


This is a two-part series on leadership.  For lawyers and legal educators, the big test is now.


The first time I heard “smooth seas make poor sailors” was from Fred Bartlit, one of the founding partners of Bartlit Beck.  I thought Fred was providing a guidance on how to become a great trial lawyer, i.e., through experience.  But Fred corrected me and said he was making a larger point.  Fred had been a U.S. Army Ranger and had led a platoon of soldiers in the early days of Vietnam.  He was talking about the value of perspective, emotional control, making choices with consequences, and filtering out noise. His Army experience had given Fred a very valuable general tool that could be applied to anything, including a career in law.

That conversation took place a decade ago when the legal profession and legal education were still riding high.  After the financial crisis in 2008-09, bleak job numbers and high debt loads gave rise to the scam blog movement followed by relentless negative coverage in the New York Times and Wall Street Journal.  With so much bad press and a weak entry-level job market, applications went into a free-fall. In the fall of 2012, Brian Tamanaha published Failing Law Schoolsfollowed by Steve Harper’s The Lawyer Bubble in the spring of 2013.

Law professors and law school deans were unprepared for the depth and magnitude of the change. Moreover, there was evidence that things might get worst, as lawyers were now discussing the likelihood of a permanent market shift in how law was being practiced. Through decades of prosperity and growth, we had been conditioned to believe that an endurable normal would eventually return.  But what if that wasn’t true? How would we know? Could the old guard be counted upon to make the call? If not, what then?

These questions were very much on my mind. Thus, in the fall of 2014, I convened a small, diverse group of Indiana Law alumni to discuss the topic of leadership. There was broad consensus that the legal profession/industry was entering a period of transformation and that these challenges were a microcosm of broader issues affecting our social, economic, and political institutions. I repeated the quote I heard from Bartlit and asked, “Where will the leaders come from?”

I also asked the group for their help in creating a course on leadership at Indiana Law. Everyone agreed to pitch in, but they scuttled the proposed name. “How about ‘Deliberative Leadership?,'” offered one seasoned alum who was CEO of a large company. “Before anyone agrees to lead,” he explained, “they should reflect on leadership in a deep and deliberate way.”  That seemed like advice designed to win over a group of lawyers. And it did.

You know more about leadership than you think

During the course of those meetings with alumni, I conducted an exercise that mimicked the only formal leadership training I ever had. The exercise asks two sets of questions:

  1. Identify a person who has had a major positive influence on your life. What did you learn from them? How did you learn it (e.g., through words or behaviors or some combination)?
  2. Identify a leader from your past who you decided to follow. Why did you decide to follow them? What were their sources of authority (based on job title, work experience, moral character)?

The purpose of this exercise is to surface the fact that we already possess keen insights on leadership by virtue of our life experience.  In modern times, leaders don’t have power or influence without the benefit of followers. Thus, who have we decided to follow? Invariably, the answer has a strong overlap with who has had a positive influence on our lives.

As an acknowledgement of the alumni who participated in my working group, I wrote up the results and shared it with them. See Summary of Leadership Exercise Conducted with Indiana Law Alumni, Indianapolis, IN, Oct. 23, 2014. I continue to use this exercise. And each year, I get essentially the same results.

Deliberative Leadership at Indiana Law

After I wrote up a detailed course proposal, I submitted it to the Indiana Law’s Educational Policy Committee.  On the eve the committee vote, I asked my colleague, the committee chair, if he thought the course was a good idea. He said, “Over at the business school, they have faculty who are experts on this topic.” After a slight pause that gently pointed to my lack of qualifications, my colleague commented on the thoroughness of the proposal and the customary deference given to tenured faculty. “Let’s see how it goes.”

One element of a high quality course is the quality of teaching.  A second, more subtle element is course design — i.e., how the classroom is run and the mechanisms for student learning.  In this case, I believed it was crucial to avoid the familiar role of professor as subject matter expert.  I didn’t know very much about leadership, and my students knew it.  But I had sincere curiosity and a few ideas on how to make the class work courtesy of the alumni working group and a few other resources.

Designing the course

Consulting with practicing lawyers, including former students, in your course design can be both a rewarding and humbling experience.

Perhaps the most humbling was an observation make by a former student who was the youngest member of the alumni group. She had just started a clerkship on the Indiana Supreme Court.  Prior to law school, she was a grade school teacher through Teach for America.  In reviewing my detailed course proposal, my former student remarked, “have your thought about learning objectives?”  After I wrote them up, she edited them, making them active and specific.

Another source of valuable input came from a former student who was still at the law school during his summer bar prep. Over lunch with a group of fellow grads, I explained that I was worried that students in my new class would sit back and become spectators. That very act, I said, would undermine the entire endeavor.

My former student replied, “why don’t you use a Harkness diagram.”  Having no idea what he was talking about it, he told the story of how, as a poor kid from Chicago, he ended up at the elite Phillip Exeter Academy in New Hampshire.  He also explained that most of the pedagogy at Exeter requires students to “lead the class.” The instructor’s role is to formulate the reading assignments and track the discussion as it takes place around a oval-shaped Harkness table.  Below is an example of a Harkness diagram:

In tracking the class discussion, the balance of airtime is immediately apparent. My student told me that the Exeter format had forced him into critical thinking at a very young age and that nothing in his law school experience had come close to a similar level of classroom engagement.  Suffice it to say, I adopted the method.

Students in charge

As I continued to ruminate on how to design this new leadership class, I was struck by my student’s comment that students at Exeter “lead the class.” This echoed one of the observations in the Carnegie Foundation’s Educating Lawyers report that law school stunts student development by elongating the process of passive classroom learning and delaying the act of applying the knowledge in context.

Reflecting upon these insights, I decided that a cornerstone of Deliberative Leadership would be student-led classes.  Students would be divided into five teams of four.  After the first two weeks, which I would lead (and fully exhaust my then-limited knowledge of leadership), the student teams would be in charge. Each team would be responsible for two classes. One based on readings selected by lawyers I would invite to class.  And a second based on a topic and readings selected by each team.

This course design has many benefits and very few downsides. Among the benefits is the use of crowdsourcing to identify leadership materials worthy of inclusion in class.  Thanks in substantial part to the many lawyers who have been invited to class, I have built up quite a library of articles on leadership and, much to my surprise, a handful of especially valuable resources on followership. (Gary LeClair of Post 053 was a guest in 2015. His handwritten annotations on a followership article left a big impression on students.  In 2018, an alum of the 2015 class returned and quoted LeClair: “Don’t manage your time; manage your energy.”)

A second benefit of the student-led crowdsourcing method is the opportunity to observe patterns. When the same resources get selected over multiple years, or when the same themes get drawn from disparate readings, some of the best working tools are revealed.

A third benefit is to get inside the heads of my students, who are now typically more than a quarter century my junior. Over the years, topics selected multiple times include overcoming fear (invariably one of the best classes), stress management, creativity and innovation, diversity in the profession, work-life balance, saying no, and the impact of the billable hour culture. How can I influence what I don’t understand?  When I want to learn about my students — a very powerful future demographic — all I need to do is show up and listen.

Assessment

This post is not long enough to fully explain the course’s assessment system. If you’re curious, see Deliberative Leadership syllabus.  However, there is one fairly unusual assessment method that consistently advances the course’s learning objectives.

The class meets once a week for two hours over the course of a 13-week semester.  Starting with Class 1, I circulate a half-sheet assessment rubric that is loosely based on the “hotwash” debriefing method I learned from Jeff Carr, a well-known general counsel who no shortage of opinions on leadership (albeit backed up by a track record of impressive department results). The rubric is pictured to the right [click to enlarge].

For the first two weeks, the student are grading me, albeit with useful formative feedback that I can reflect on and apply in the future. The complete feedback is collated and posted for everyone to see.  Starting in week 3, students are assessing the class organized by the student teams. This is designed to feed the “double-loop learning” method pioneered by Chris Arygris and Donald Schon.  Double-loop learning is the road to practice mastery. And, as I demonstrate to my students, it can be retooled for leadership.

It is somewhat comical and sobering to see the initial reluctance of students to read and digest feedback on how peers perceive them and others. Students are reluctant because processing feedback is difficult emotional labor. It can also be rationalized away as a “soft skill” that can be put off to a day that never comes.  Yet all day long, the perceptions of others is what determines our fate, including our fitness to lead.  Through this iterative process, I am trying to show my students that their future success is largely within their own control.  The major limitation is not intelligence, which they in abundance.  It’s a willingness to continuously observe and learn. Cf. Kiser, How Leading Lawyers Think ch. 8 (2011) (discussion of “perpetual learning,” often through feedback loops, as key to trial lawyers who consistently outperform their peers).

Call to Action speeches

The last week of class, students are required to deliver five-minute “call to action” speeches on any topic of their choosing.  The speech has to be written out in advance.  Five minutes is roughly 750 words.

This is a course requirement that almost didn’t make the cut, as some of the younger members of the alumni group voiced concern that a speech in front of peers would be a source of major student stress.  Yet, that objection was shot down by a mid-career female partner at a large law firm who remarked, “Last week, I had to give a speech to my fellow partners on the need of the firm to put substantial resources into its diversity efforts. I can tell you, I wish someone back in law school had forced me to give a call to action speech.”

In the four years I have been teaching Deliberative Leadership, one of the most startling aspects has been the evolution of each class into a community of professionals who have learned to respect and trust one another, even when they differ widely on important issues. Prior to the class, the students tend to have opinions of one another, albeit developed from a distance. But after listening to their peers over the course of 12 weeks, they learn that their fellow students are much deeper and more interesting than they ever imagined.  Thus, during the Call to Action speeches, the room is filled with energy, as students root for each other.

Although it was not my intention, Deliberative Leadership may have become one of the few law school classes where someone’s earnest pre-law personal statement can be taken out and re-read as something real, vital, and important. Occasionally I get lucky. That was the case here.

Part II

Through four years of Deliberative Leadership combined with additional life experience, I have developed a framework to aid leaders in solving very difficult problems — the kind that now confront legal education and the legal profession.  I will discuss that framework next week in Part II.

What’s next? See Studying leadership before the big test, Part II (057)

Legal education is in the early stages of remodelling and renovation. Thus, we are living through a period of messiness. Evidence of this is a virtual Symposium at PrawfsBlawg, a forum of law professors for law professors.  The symposium is called “The Futures of Legal Education.”  The organizer is Dan Rodriguez, dean of Northwestern Law and a legal educator with an excellent track record of leadership.  Dan was inspired by an epic five-part series on legal education by Pitt Law Professor Mike Madison at Madisonian (Part I here).

There is no way to summarize or boil down the conversation except to say (1) all the contributors are legal educators, and (2) the desire to do good is pervasive and sincere.  Design thinkers might counsel us to try rapid prototyping, but in the legal academy, our go-to move is a symposium.  Fortunately, several of the posts reveal real progress at home institutions.

There is not a lot overlap between the readership of Legal Evolution and PrawfBlawg.  Thus, I am republishing my contribution here, in part because it explains the paucity of recent Legal Evolution posts (which will soon change), and in part because because my post reflects a Legal Evolution perspective.  I hope you enjoy it.


“Every good idea sooner or later degenerates into hard work.”

This quote comes from writer Calvin Trillin, but I first heard it from NYLS Dean Rick Matasar over a decade ago as he shared some realism regarding innovation, in legal education or elsewhere.

I wanted to participate in this forum earlier, but alas, I was stuck doing hard work that followed a good idea.  A handful of innovators, including myself, have created a new nonprofit called the Institute for the Future of Legal Practice (IFLP, called “i-flip”).  Details online here.  I have been matching IFLP law students with summer employers. Unless this gets done well and quickly, the IFLP idea will fail.  So writing about the future of legal education had to wait.

I’ve been reading all the symposium posts and wholly appreciate the growing intellectual ferment.  Legal education is going to transform itself. I’m confident we’re in the early days of something great.

To help the cause, I would like to share a story about another idea that degenerated into nearly a decade of hard work.  The idea came from the initial publication of NALP’s bi-modal distribution, which revealed some very peculiar features about the market for entry-level legal talent.  We can argue over how we define legal ability or potential, but there’s little doubt it’s normally distributed.  Therefore, as noted by Harvard economist Greg Mankiw, labor markets should not have two distinct modes.

That insight led to the creation of Lawyer Metrics (now LawyerMetrix, owned by AccessLex Institute), an applied research company that, among other things, sought to bring analytics and measurement to legal hiring.  Of course, to make the idea work, we needed clients.  In the early days, I was very fortunate to be placed in front of the Chair of an AmLaw 50 law firm. To prepare, I circulated a four-page, single-spaced Moneyball memo.  I also created a PowerPoint.  Because I had sailed through tenure at Indiana on the strength of my empirical work on law firms, I was confident I could impress.

Yet, the meeting did not go well.  The Chair was certainly receptive, but she found my approach “too academic,” both orally and in writing. God love her, she was kind enough to tell me so.  If I wanted to do business with her firm, it was entirely up to me to close a very large communication gap, as she had other tough business problems to solve.  Suffice it to say, you don’t get too many one-hour meetings with law firm chairs. That was beginning of a steady diet of humble pie.

Around that same time, Marjorie Shultz and Sheldon Zedeck used gold-standard IO psychology methods to empirically derive 26 lawyer effectiveness factors.  See LSAC Final Report. One of the key takeaways was that academic predictors (LSAT, UGPA, 1st year grades) were correlated with only a handful of the effectiveness factors, with some of the relationships being negative (e.g., UGPA and practical judgment; LSAT and business development).  In contrast, a handful of well-validated assessments (e.g., Hogan Personality InventoryHogan Development Surveybiodata instruments) had much better correlations with lawyer effectiveness, and all of them were positive.

The Shultz-Zedeck findings strongly supported the business premise for Lawyer Metrics, which I documented in a lengthy 2008 memo.  But that is not the point of this story. If I scored myself on the effectiveness factors, I came up short.  For Lawyer Metrics to have any chance of surviving, I had to develop skills that were far beyond what tenure required.  Acquiring those skills (more specifically, attempting to acquire them) was the hardest and best thing I have ever done. However, on the front end of the “good” idea, I saw none of it coming.

I am not going to risk obliqueness here.  The narrative on legal education won’t materially change until one or more markets get moved.  And there is an ocean of distance between a good idea to better legal education and one’s ability to plan, finance, and execute that idea in a way that redistributes things that law schools care about (e.g., jobs for students, applications, philanthropic dollars, prestige, etc.).  What are the odds of that happening if we approach these challenges in our familiar academic way?

In Post 37, the wonderful and thoughtful Mike Madison asks the question, “How do we bring non-academics [legal tech, legal practitioners, access to justice advocates] meaningfully into the dialogue?”

My answer is simple.  We don’t. This is because academic dialogue is not what is needed.  Instead, we leave the building and visit these legal industry stakeholders in their natural environment.  We bring sandwiches.  We observe what is happening.  And we ask thoughtful and respectful questions, so we can come closer to seeing the world through their eyes.  Then we go back home and build prototypes that fit this new world.  Then we repeat.

This journey starts very messy. That is more than okay. What I am offering is a friendly admonition that our symposium won’t have an impact unless it degenerates into hard work – work likely beyond our current academic skill set, though hard work can fix that too.

Many thanks to Dan, Mike, the PrawfsBlawg editors, and the many contributors for a thoughtful month of dialogue.

What’s next? See My long history of law firm scorecards (047)

I am pleased to introduce readers to the Institute for the Future of Law Practice (IFLP), a new nonprofit collaboration between law schools, law firms, corporate legal departments, NewLaw service providers, and legal technology companies.  Details of this new venture can be found online at www.futurelawpractice.org.

Per the picture above, IFLP (“i-flip”) will be hosting training bootcamps in May 2018 in Chicago (at Northwestern Law) and Boulder (at Colorado Law). The bootcamps are designed to prep law students for sophisticated legal and business work settings. Each student admitted to the program is paired with a legal employer for either a 10-week summer internship or a 7-month field placement. All internships and field placements are paid. The IFLP program currently includes four law schools — Northwestern, Colorado, Indiana, and Osgoode Hall (Toronto) — though the plan is to build an infrastructure that will support and serve a significantly larger number of law students, law schools, and legal employers.

Rather than summarize the contents of the IFLP website, I am going to use this post to answer four questions:

  1. What problem is IFLP trying to solve?
  2. How will IFLP be successful?
  3. Where did IFLP come from?
  4. How can industry stakeholders become involved?

1. What problem is IFLP trying to solve?

Legal education and the legal profession are at an inflection point where traditional models of education and practice no longer fit the shifting needs of the market. The biggest driver of change is increased complexity. Historically, the legal profession has dealt with complexity through specialization and division of labor.  However, the legal profession is now at a point where its members need to learn new tools and methodologies that were not, and are not, part of traditional legal education.

Unfortunately, law schools are unable to make this transition on their own. This is because (a) the shift in practice requires an integration of law with problem-solving methods that are not legal in nature (e.g., data, process, project management, technology, and team-based collaboration); and (b) the state of the art for these new approaches to practice are currently being developed in the field by practitioners and other allied professionals.

IFLP can help fill this void by identifying industry-leading practitioners and distilling their know-how and experience into an organized body of knowledge that can be taught to law students and mid-career legal professionals.

2. How will IFLP be successful?

IFLP will be successful if it can create training and internship programs that serve law students (through high-quality employment) and legal employers (through a rich pool of applicants with an expanded set of skills and knowledge). In its simplest form, our goal is to use education to build demand for new and better pathways to sophisticated modern practice.  The larger the demand, the clearer the signal to legal education on how to retool to meet the needs of a changing market.

IFLP is fortunate to have an anchor set of legal employers who want to create a talent pipeline that combines traditional training in substantive law with foundational training in data, process, technology, and business  (T-shaped lawyers). Further, as we develop IFLP curricula and training modules, these resources can be used to cost-effectively upgrade the skills of mid-career professionals.

IFLP is designed to be an intermediary organization that coordinates the interests of law schools and legal employers. We want to improve the content and quality of legal training in ways that widen the pathway to practice.  Under the best case scenario, students, law schools, and legal employers will converge on an industry standard that better serves the interests of all stakeholders. A half century ago, organizations like NALP, LSAC, and NCBE sprang up to fill an important industry gap. Similarly, in 2018, IFLP fills a pressing industry void.

3. Where did IFLP come from?

The founders of IFLP were inspired by their experience with the Tech Lawyer Accelerator (TLA) program at Colorado Law.  Since 2014, approximately 80 students (most from Colorado Law, some from Indiana Law) have participated in a 3½ week bootcamp at the end of their 1L or 2L year. The TLA focused on technology, process, and business skills, with students spending the balance of their summers in 10-week paid internships. In some cases, the internships were extended to seven months (the summer and fall of students’ 3L year). Colorado Law’s TLA is the foundation for the first iteration of IFLP. For additional background on the TLA, see Post 018 (summarizing topics covered in the 2017 TLA).

During four years of operation, TLA has garnered very favorable feedback from students and employers. But more significantly, we received “pull” from several employers to expand the program’s breadth and capacity.  In response to this pull, a small group of us conducted a needs analysis during the fall of 2017. This involved the formation of several exploratory committees drawn from our professional networks. One committee focused on law schools; a second on legal employers; and a third on the viability of an ongoing nonprofit business model.

Based on the feedback we received, in late 2017, we made the decision to go forward with the creation of IFLP.  As we embark upon this journey, we are very grateful for the support of our volunteer board.

4. How can industry stakeholders become involved?

IFLP is not an exclusive club.  However, to be successful, we have to meet a market test. This means offering an educational product that is valuable to students and employers while also generating revenues in excess of operating costs.  In our first iteration, we are limiting participation to a small number of schools. We need to work through the myriad of issues associated with cross-school collaboration. This is complex and requires us to go slow.  The goal, however, is to create a foundation that can support future growth.

At present, we are most in need of legal employers. If your organization wants to co-create a world-class educational program that can fill your need for world-class talent, please contact us.  We are also in need of industry sponsors who are willing to subsidize IFLP in its early days.  We are fortunate to have a handful of benefactors who are getting us off the ground.  The payoff is affiliation with a promising nonprofit working to align the interests of industry stakeholders. Announcement of our full roster of participating organizations and sponsors will occur later this spring.

For law schools and law faculty, we encourage you to visit the programs in Boulder and Chicago.  We value your input and are willing to share what we are learning.  With success, we will be able to expand to include more member schools.  If you are interested in getting involved, please contact us at this link.

What’s next? Lucy Bassli shares her thought process behind her major career move (044)

If a successful large law firm faced an Innovator’s Dilemma, what would it look like?

On the one hand, the firm has a wonderful set of endowments: (1) longstanding and lucrative relationships with industry-leading clients; (2) a business that requires very little operating capital yet generates significant cash and profits; and (3) an established brand that makes it the safe choice against upstart new entrants.  On the other hand, when the traditional service offerings hit a plateau that is likely permanent, the firm struggles to use its superior endowments to reinvent itself in a way that locks in another generation of prosperity. The graphic above depicts the problem.

Many law firm leaders understand the innovator’s dilemma and worry about the timing and execution of reinvention. Thus, at numerous firms, there are internal innovators, or “intrapreneurs,” who are running carefully vetted projects designed to deliver tangible benefits to their firms. In its idealized form, this strategy raises awareness through small wins, which, in turn, create buy-in and momentum for more ambitious change.

We were fortunate to have three law firm intrapreneurs as guest lecturers during Week 5 of “How Innovation Diffuses in the Legal Industry“:


For a summary of Week 2 guest lectures (Pangea3, Practical Law Company, Hotshot), see Post 032. For week 3 (consultative sales at Thomson Reuters), see Post 034. For Week 4 (a deep dive into Axiom), see Post 036.


To set reader expectations, there was a lot to cover in this class. With three great guests, we ran out of time to probe each story with equal depth.  Also, for the purposes of publication, I need to disentangle the principles and lessons of intrapreneurship from the organizations where our guests have worked. The risk is that a discussion of context will be construed as criticism, and criticism was far from the spirit of our discussion.

To resolve this tension, I use the two problem statements below to meld together common themes. After that are specific highlights of each speaker’s remarks.

Problem statement from within the law firm

When we apply innovator’s dilemma and intrapreneurship concepts to law firms, the underlying subtext is that highly educated and successful partners are, as a group, ill-equipped to adapt to a changing legal market.  Assuming this problem statement is true — and I believe it is — why would it be true?

The problem is certainly not lack of creativity.  Within their substantive specialties, lawyers routinely come up with ingenious solutions.  Rather, the challenge is a confluence of experience, perspective, and incentives that create a powerful mental frame that is very difficult for long-time insiders to overcome.

Specifically, for several generations, lawyers in corporate law firms have carried on their craft within a simple business model that required very little time or attention to maintain. In most cases, if lawyers just focused intensively on their clients’ problems, the economic results got progressively better. This was (and is) powerful operant conditioning. As a result, for many law firm partners, the macro-trends of the legal industry are abstractions that carry very little weight.  The only market that matters is the tiny slice each particular partner serves.

Unfortunately, in very few instances are clients speaking with one voice.  In fact, voices vary by adopter type. See Post 013 (providing examples of two major corporate clients expressing completely opposite views on the need for change). Innovator and early adopter clients are drawn to new ways of legal problem-solving, though they’re in the minority.  Similarly, some early majority clients are pushed toward innovation because they can no longer afford solutions provided by traditional law firms, see Posts 032 and 036 (2008 recession led to surge in adoption for Pangea3 and Axiom).  But a sizable portion of the legal market is content with brand firms billing by the hour. If “my clients” feel differently next year or the year after, we can deal with it then.  This narrow client-centric approach is strongly reinforced by most law firm compensation systems.

The above description explains the paradox of the highly successful law firm unable to play its superior hand.  Thus, the innovator’s dilemma is a real strategy dilemma for virtually all large law firms.

Problem statement from the client side

Although clients don’t speak with one voice, the environment they are operating within is becoming more complex, global, and regulated.  This, in turn, is changing the structure of the corporate legal services market — i.e., the macro-level trends that many partners wave away as irrelevant to their practice.

Arguably, the biggest change is growth of corporate legal departments.  For at least the last 20 years, corporate clients have adapted by growing their in-house legal departments and insourcing more repetitive or lower-stakes work that formerly went to law firms. See Post 003 (showing 1997 to 2016 employment trends for lawyers working in government, in-house, and private law firms).

With more and more legal departments becoming the equivalent of large law firms embedded inside corporations, we’ve witnessed the rise of the legal operations movement (CLOC and ACC Legal Ops) and the rise of the “Type 6” client. See Post 005 (presenting a typology of law firm clients).

Legal operations as a profession and field is coming into being because many large corporate clients need more sophisticated methods and systems for managing legal cost and legal risk.  The ascendency of this role is strong evidence that the business-as-usual law firm billable hour model is on a slow but permanent decline, at least for operational “run-the-company” work that accounts for the majority of the corporate legal services market. See Post 034 (discussing trend through the lens of Axiom); Post 010 (discussing trend through the lens of the managed services industry).

The graphic below depicts the market transformation.

In general, legal complexity increases with economic growth.  For about 100 years, we’ve coped with this problem through division of labor and specialization.  This approach created the large law firm. In more recent decades, as the growth-complexity line has steepened, law firms reaped higher profits.

Yet, we have reached a point where division of labor and specialization are no longer a match for the geometric growth of legal complexity. Although clients and law firms experience this pressure as a cost problem, the root cause is lack of productivity gains.  See Post 001 (discussing systemic problems created by lagging legal productivity). To meet this productivity imperative, the legal industry is starting to migrate to new methods of legal problem-solving that are based on data, process, and technology. Indeed, these pressures are why NewLaw exists, financed in large part by venture capitalists and private equity.


NB: All the analysis and charts above frame a structural problem from the perspective of organizational clients. For this group of clients, the problem of lagging productivity is leading to market-based responses, albeit slowly. For individual clients in the PeopleLaw sector (roughly one-quarter of the legal market and shrinking), lagging legal productivity manifests itself through self-representation or people failing to seek any type of legal-based solution. See The Decline of the PeopleLaw Sector 037. In short, these are two distinct problem sets.


So the question is very simple: for large corporate clients, who is going to create the new paradigm? There are three contenders:

  • Legal departments through more legal operations and in-sourcing;
  • Law firms by skillfully playing their superior hand; or
  • NewLaw, which has data, process, and technology as its core competency but has the challenge of being new and unfamiliar.

The answer is likely to be some combination of all three. Yet, it is also likely that many law firms will fall victim to the innovator’s dilemma and be among the losers.

The challenge for law firms is that the business opportunities of a structural market shift require partners to make business judgments about macro-trends at the same time they are under pressure to acquire, bill, and collect hundreds of thousands of dollars or more in legal fees for the current fiscal year.  Unfortunately, this problem can’t be fixed by changing a comp system to reward a long-term focus, as those with a short-term focus are free to leave and take their clients with them.

Kubicki: Intrapreneurship inside a law firm

Among my three guest lecturers, Josh Kubicki has given the most thought to intrapreneurship as an applied discipline. See, e.g., Kubicki, The Intrapreneur’s Dilemma, Medium, Aug. 20, 2014.  During his guest lecture, Josh asked us to envision a simple corporate pyramid that consists of the CEO (at the top), the C-Suite (layer 2), vice-presidents (layer 3), directors (layer 4), managers (layer 5), and line workers (base of the pyramid). “Obviously, we know who’s in charge.”

“Law Firms,” noted Josh, “are much flatter.” He then picked up a grease marker to draw a stylized law firm org chart.

At the top of the pyramid, which may not be a pyramid at all, are partners who are also owners. Although partners are not the CEO, they do tend to act as CEOs of their own practice, particularly if they keep a lot of other lawyers busy.  However, increasing performance and enterprise value of the firm require collaboration across the partner / owner / CEO class.

To do this well, the law firm intrapreneur has to find ways to break down the partitions between partners — the blue lines above — without engendering fear or resistance.  Further, the intrapreneur has to do it with little or no formal authority.  “No matter what your title is, the intrapreneur is part of the professional staff paid for by revenue-generating lawyers.  So the only tool you have is your ability to make someone’s life better in a relatively simple and low-cost way.”

This reality is why Josh relies heavily on design thinking in all his change initiatives.  Josh drew the diagram below, which he called “the trifecta.”

Innovations start as an idea in an innovator’s head.  Once we move to implementation within an organization, however, we move into people’s daily experience — busy people whose job it is to serve others. Even if an innovation will, in theory, make the organization better off, implementation will fail if individual stakeholders have a negative experience that makes their job harder. Thus, successful innovation (Phase I Initiation + Phase II Implementation, see Post 015) is actually a series of properly designed sub-innovations.

A successful sub-innovation requires making the complex very simple, culturally compatible, and highly advantageous to the end-user, ideally with a very fast return-on-investment. Cf. Post 008 (presenting the key factors in Rogers rate of adoption model). If the coordinated sub-innovations all result in a good individual experience, the larger innovation has a chance of being successful. Seen through Josh’s eyes, the effectiveness of the law firm intraprenuer is less about individual brilliance than empathy, listening skills, patience, and budget, as doing this type of work “is very labor intensive.”

The intrapreneur’s intellectual gift is that, for a variety of reasons, they are not stuck inside the frame of the traditional model, often because of some prior life experience that gives them an outsider’s view. (For one of Kubicki’s transformative life experiences, which he discussed in class, read his Intrapreneur’s Dilemma.)  Yet, Josh was emphatic that humility is the single most important attribute for intrapreneur effectiveness. “If something works, congratulate the adopter for their insight and move on.”

Josh described some of the wins of his team but it would be counterproductive to publish them on the web, as Josh believes the credit goes to the entire Seyfarth Shaw organization.

Eric Wood: making partner as a technology innovator

One of the reasons I am carefully chronicling my class is that I want to create a contemporaneous record of how the legal profession navigated the shift from a world of lawyer specialization to one based on multidisciplinary collaboration.  I am confident that Eric Wood’s story is going to be replicated by hundreds of young lawyers who begin their careers at law firms. Yet, Eric was the first to blaze this trail.

Eric is the Practice Innovations and Technology Partner at Chapman and Cutler.  The key word here is partner.  Eric is a 2008 graduate of the University of Chicago Law School.  After a stint at Cleary Gottlieb in NYC doing capital markets work, Eric moved back to Chicago and joined Chapman as a banking and financial services associate.  However, several years ago, Eric quit doing client billable work and instead focused all of his attention on technology-based initiatives.  During this time, his formal title remained associate. And earlier this year, he was promoted to partner.

Practice Innovations and Technology Partner is a new role within a law firm. During his portion of the class, Eric described his work as primarily “R&D” that fell into three major buckets:

  1. Writing code to build legal expert systems and automate the drafting of documentation for a wide range of legal matters.  Often this includes the design of web interfaces so the systems are relatively intuitive for the lawyers, clients, and other personnel who use them.
  2. Designing new technology products and managing their development, release, and maintenance. Often this involves finding ways to scale innovations across multiple practice groups, including via the development of new staffing models.
  3. Other knowledge management and technology projects, such as building transactional metadata databases and data visualizations, evaluating vendor products, and researching technological developments that might affect transactional practice (e.g., blockchains and crypto currencies).

Eric has no formal training in a technical field.  His undergraduate training is in political science and environmental studies.  Instead, he attributes the initial development of his technical abilities in computer coding and database structures to a desire to impress his friends with fantasy basketball data visualizations. That hobby required a lot of scraping of data from websites followed by computational analysis.

Yet, Eric’s work in the legal field enabled him to see cross-over applications. Prior to law school, as an AmeriCorps volunteer with Wyoming Legal Services, he helped build web content to reach the agency’s far-flung clientele. “We had to scale seven lawyers for the entire state, and it was obvious that only technology could do that.”  Likewise, many late nights as a NYC transactional associate gave Eric many ideas for how to automate unpleasant, time-consuming grunt work.

In 2013, as Eric continued to improve his technical skills, he decided it was time to find a outlet in the legaltech world.  However, during this time period, the firm’s Chief Executive Partner, Tim Mohan, began bringing in outside speakers to explain how the traditional practice of law was on the brink of a major shift.  So Eric requested a meeting with Mohan to explain some of this ideas.

Mohan immediately embraced what he heard and Eric stopped doing billable. Now do the math — taking Eric off the billable track is roughly a million-dollar decision ($500/hour x 2,000 per year).  Yet, what is the price of failing to reinvent?

Relatively quickly, the decision proved to be a wise one.  For example, one of Eric’s projects was the automation of closing document sets for finance transactions.  The market no longer pays full price for the organization, indexing, and tabbing of the full deal documentation, yet this work still needs to be done and delivered to the client in a polished, professional, and timely manner.  “What used to take weeks now takes a minute.”  At roughly $500 in staff time (with wide variations based on the size and complexity of the deal) x 3,000 closings per year, this single project is saving the firm roughly $1.5 million in labor that can be allocated to other value-add projects. And that is just one example.

With the encouragement of the firm’s leadership, Eric regularly gives internal demos that have generated significant curiosity and broad buy-in among partners.  Eric notes that these internal sales were often predicated on the quality advantages of technology — of increasing transparency of changes to complex forms and reducing opportunities for error. Yet, the economics are also very attractive.  Chapman and Cutler is a highly specialized financial services firms that does approximately 40% of its work on a fixed-fee basis.  In this context, technology and process enable the firm to continue to charge less than many rival firms while protecting or improving its margins. This is exactly how innovation is supposed to function.

In addition to Eric, other transactional lawyers at Chapman have begun to invest in technical skills, with several automating significant portions of their practice. Part of this transition is made possible by an accounting system that treats “productive” hours related to firm innovation the same as client billable work. Eric gave the example of one  associate who has logged hundreds of productive hours over the past few years working on projects with Eric and his team. In short, Chapman is building more internal capacity.

This is a remarkable story. But can it be replicated by other other law firms?

I think the answer is “not easily.”  First, a firm needs someone like Eric Wood who possesses both deep legal domain knowledge and strong technical skills. Second, the stars have to align so that a leader like Tim Mohan can enable such a person to focus full-time on innovation and execution. In competitive markets, half-time efforts seldom win.  Third, it undoubtedly helped that Chapman and Cutler is a “small” large firm (~230 lawyers) that is focused on a single industry. This makes it culturally and logistically easier to implement change.

Beckett’s business mindset

As noted in Legal Evolution’s foundational posts, innovation is strongly influenced by connections between different social systems. Being on the edge of two or three systems is more valuable than being in the center of one. This is because multiple perspectives enable a person to transcend the dominant local frame and see problems with fresh eyes.

In addition to knowledge of law, all of our guest lecturers possessed a second or third frame for viewing the world. However, the most pronounced example was Jim Beckett, who acquired his legal frame after working five years in sales and distribution in the food industry, helping to grow market share for companies like Frito-Lay and Haagen Dazs.  During this time, Jim was following the advice of his father, who was impressed with Jim’s people skills and aptitude for business. Ironically, Jim’s father was a lawyer, working in-house at KFC.

Then, several years into Jim’s business career, his father had second thoughts.  “Jim,” his father said, “Law doesn’t have enough people who truly understand how businesses work.  If you get a law degree, you’ll go a long way.”  So, as an older student, Jim returned to Indiana University to go to law school.

Jim shared that law school was very difficult for him because the level of abstraction was so far removed from the practical problem-solving he was used to. It wasn’t until he was a law firm associate that we was able to meld the two perspectives.

The business frame, however, remained the dominant perspective.  For example, Jim discussed how he got his first in-house job at Brown & Williamson (a large tobacco company that later become part of RJ Reynolds). “I was the only lawyer they interviewed who could discuss the business issues that were at the core of the company’s legal work.” Further, rather than pursue upward mobility in the legal department, Jim asked to move to the business side, eventually running an RJ Reynolds operating unit in Puerto Rico.

Jim’s multiple perspectives in law and business was one of the reasons that John Crockett, chairman of Frost Brown Todd, recruited Jim to return to Louisville to run business development for the firm. Roughly 10 years earlier, Jim and John had worked together at the firm as billing lawyers. Jim was hired despite his warning that long-term success was going to require significant change, which would make some of Jim’s efforts controversial.

While the firm implemented many client-centric initiatives, Jim eventually became convinced that he could do more good by helping clients focus their purchasing power. Thus, in the summer of 2016, Jim left Frost Brown Todd to become the CEO of Qualmet, a technology company that provides legal departments with a scorecarding methodology that collects, organizes, analyzes, and shares feedback with their outside service providers.

During his lecture, Jim spoke with passion about what happens when lawyers get in full alignment with clients. “All lawyers want to do a great job. Unfortunately, very few are getting the information they need to take their practice to the next level.”  Jim believes that structured metrics and dialogue will enable clients and law firms to smoothly transition into the world of data, process, and technology.  Jim see this as not as a question of “how”, but “when.” Today’s CEOs expect their GCs, CLOs and in-house teams to drive business value that aligns with their respective company goals and objectives. Jim wants to bridge the “value” gap and sees 360 performance management as a critical piece to accelerate alignment. “Value creation is no commodity,” Jim observed, “So all stakeholders will benefit when performance is properly measured.”

Qualmet’s scorecarding methodology is closely related to Dan Currell’s post on the necessity of active outside counsel management. Convergence alone can’t deliver the desired results. See Post 031.  Thus, scorecarding will be the topic of a future post.

What’s next?  See “The Lawyer Theory of Value” by Casey Flaherty (040)

Week 3 of my “How Innovation Diffuses in the Legal Industry” class focused on the crucial role of consultative sales and established distribution channels in the diffusion of innovation.  The success was entirely due to our guest lecturers from Thomson Reuters, pictured above.

The value of this class, however, will not make sense without first providing some real-world context. So let’s start there, circling back to diffusion theory and how Borstein, Thorkildsen, and Stroka are, in fact, “change agents” as defined in Post 020.


For the Week 2 wrap-up, see Post 032.


 February 2014: Meet-up of legal start-up entrepreneurs

At a meetup of legal start-up entrepreneurs convened in the shadow of ALM’s 2014 LegalTech show, David Perla, Josh Kubicki, and Rob Saccone dispensed advice to the standing-room only crowd.

One comment I never forgot came from David Perla [Week 2 guest lecturer], who scoffed at the notion that Thomson Reuters, Lexis, Wolters-Kluwer and other serial acquirers were not a significant part of the innovation ecosystem. Perla stated emphatically that some of the smartest business people in the legal industry worked inside Thomson Reuters. “They definitely have some brilliant people that understand how business works; how people make decisions; how to lever off brands and established customer bases to build up dominant businesses.”

Perla, who was long gone from Thomson Reuters by then, was warning the audience not to get arrogant, overestimating our own creativity and underestimating the acquirers’.  As the co-founder and active operator of a legal industry start-up, see Post 004, I had, by February 2014, consumed enough humble pie to not want any additional helpings.  I didn’t understand Perla’s observations at a deep level, but I stored them away in my mind for possible future use.

March 2016: Chicago Legal Innovation & Technology Meetup

Fast forward to the spring of 2016, where Dan Linna, Dan Katz and others are running another iteration of the Chicago Legal Innovation & Technology Meetup (this one in the shadow of the ABA TECHSHOW).  I’m on a panel with Joe Borstein, who is running sales for Thomson Reuters legal managed services unit (formerly known as Pangea3).  I remember saying to myself, “This Borstein has better intel on the legal start-up market than anyone I’ve ever met. And where in the world did he come up with these slides? They’re gold.”  In addition to being funny, Joe also had a knack for simplifying the complex. People liked listening to him.

July 2017: Chicago/Milwaukee Regional Meeting of CLOC

Fast forward again to July of 2017. I’m attending the Chicago/Milwaukee regional meeting of CLOC. Paul Stroka, Director of Legal Solutions at Thomson Reuters, was paying for lunch and arranged for some educational programming, including an overview of emerging legal technology from his colleague, Rebecca Thorkildsen.

Two things stuck in my mind from that meeting:

  1. Paul Stroka had a wonderful light touch, doing whatever he could to facilitate a higher-value meeting for CLOC members, never once engaging in anything that felt like a sale pitch.
  2. Paul’s colleague, Rebecca Thorkildsen, was the single most knowledgeable person on legal technology that I had ever met, providing useful framework after useful framework for understanding the bewildering arraying of technology that was now coming into the marketplace.

And then the lightbulb goes off — “This is what Perla was talking about. These are extremely knowledgeable professionals who are growing business units at Thomson Reuters.”  Thus, before the meeting ended, I asked Paul and Rebecca to come to my “How Innovation Diffuses in the Legal Industry” class at Northwestern Law in the fall, and, if possible, include Joe Borstein.

Consultative Sales — what it is and when and why it works

In the anecdotes shared above, the common theme is consultative sales.  Borstein, Stroka, and Thorkildsen are subject matter experts who are sincerely focused on listening, educating, building relationships, and problem solving.  This is a relatively expensive “long-game” approach. Yet, its underwriter is Thomson Reuters, a legal information giant that deeply understands the economics of sales and distribution through decades of selling books, practice guides, and online subscription services.

To boil it all down, consultative sales works best when (a) prospective clients are struggling to understand their own business challenges, often due to significant or rapid industry changes, and (b) your products provide the best solutions to a reasonable subset of those challenges.  Although your educational and problem solving efforts will sometimes point prospective clients toward another vendor, they are sure to come back to you when they need your specific product. Moreover, they will refer you and your product/service to their industry peers.

It should be obvious that this wonderful long-view approach is unavailable to fledgling legal start-ups who need sales and reference clients before they run out of cash.  In many respects, today’s legal industry is similar to the automotive industry circa 1905:  There are hundreds of small car builders who rightly believe that cars are the future — it’s just not going to be their car.  This is because the industry inevitably must consolidate into a smaller number of dominant companies that can simultaneously focus on both quality and cost while building a sales and distribution network that can handle the complexities of warranties, service, parts, and repairs, etc.

As Thomson Reuters knows as well as Ford or General Motors or Chrysler did back in the day, in addition to projecting stability to your client base because of your size and client base, there are tremendous economies of scale to selling.  That is why Thomson Reuters can afford to field an A-team of seasoned lawyers (Borstein and Stroka) and MBA consultants (Thorkildsen) to educate the market.

Example of educating the client

I specifically asked the Thomson Reuters crew to walk the class through materials they use when interacting with prospective clients.  Below are three key slides presented by Rebecca that beautifully illustrate the value and power of consultative sales, particularly in a crowded and confusing marketplace like legal circa 2017.  Note the three slides below have a contract/transaction focus. The next section touches on litigation.

Here’s the basic set-up: Imagine you are a legal operations professional working in the legal department of a large global company.  The goal of the company is to grow and prosper economically — and for 365 days a year, that requires the company to form and execute contracts.  Obviously, because of the scale of the business, those contracts become an enormous management challenge.

In 98% of all cases, the legal department lacks the time (and often business training) to understand their challenges within a broader system framework.  Note how Slide 1 divides the world into legal and business drivers (left side) and provides an lifecycle framework for overall contract management (right side).

The purpose of Slide 1 is to help the client identify, organize, and ultimately prioritize their internal pain points.  The legal professionals, after all, want to impose order on their massive workload and feel like they are delivering consistent value and quality to their business unit.  It is a good sign when a prospective client asks for your slide deck, as it means you’ve connected with a real problem.

Again, if you are a legal department operations professional, you are constantly being pitched by a bewildering array of technology vendors. Invariably they ask themselves, “What do all these company do?  And how do they relate to one another?”  Slide 2 places the vendors into categories based on functions and features.  With this one slide, you know where to focus your time.

What is remarkable about Slide 2 is that Thomson Reuters products are mixed in with competitors but not in a way that makes them identifiable.  Let the customer react and talk and, over time, a large number of good fits will be revealed.

Slide 3 uses a similar approach.  However, now it’s organized in a way that maps onto the department’s legal functions and workflow.

If Rebecca Thorkildsen spent an hour or two with you, sharing company materials and helping connect your problems to potential solutions, most professionals will reciprocate by buying from Thorkildsen’s company when the need and product(s) are a strong match.  Why? Because the problems never end and they want access to her expertise in the future. That’s the Thomson Reuters’ long game.

The careers of two ex-litigators tell an important story

While Thorkildsen has a tremendous command of legal technology, particularly in the contracting space, Joe Borstein and Paul Stroka shared some personal experiences from their time as lawyers that were (a) useful in understanding the arc of the broader legal market, and (b) the personality and mindset of someone who is likely to be good at consultative sales.

Borstein told the story of cutting his teeth as a litigation associate at a major law firm where he was put in charge of managing a team of several dozen professionals on a massive document review for a bet-the-company case.  Although the work was generating tens of millions of fees for the firm each year for several consecutive years, the process was highly inefficient and plagued with quality control issues. “From the inside, it was obvious that the system was broken.  Friends of mine at other firms were drafting business plans for new ventures. There was no way the status quo was going to last.”

Then came 2008, which had a massive effect on the client-law firm relationship.  If you recall from Post 032 (featuring Pangea3 co-founder David Perla), the financial crisis was Pangea3’s breakout moment. By the time Borstein joined in early 2011, the company had a marquee list of large corporate clients.  Although the entire sales team had, by then, written off law firm customers as a “hopeless cause,”  Borstein persuaded Perla to let him try.  “I was convinced there had to be people who had my experience — who were worried about quality, meeting deadlines, and damaging the firm’s reputation.  Further, it wasn’t the right kind of work for brilliant people from great law schools.”

Much to the surprise of his peers, Borstein’s approach ended up cracking the code for law firms.  “It’s still a tougher sale,” said Borstein, “but law firms are now an established part of our client base, and it’s growing.”

Like Borstein, Paul Stroka’s experience inside BigLaw made him skeptical of the business. “As an entry-level associate benefiting from the salary wars of the mid-2000s, I couldn’t understand why my salary kept going up even though I didn’t know anything useful yet.”  As he switched firms and focused on labor & employment litigation, he was troubled that success as a partner looked like having a base of clients who got sued a lot with cases that lasted a long time. “Litigation is usually a miserable experience for clients on both a cost and emotional level,” recalled Stroka. In his ninth year of practice, Stroka concluded that “I needed to be in a place where I was working to make some of those problems go away.”

At the time, Pangea3 didn’t have an open sales position. But Borstein was impressed by the persistence of a Chicago litigator who keep messaging him on LinkedIn and requesting a meeting.  Eventually Borstein flew Stroka to New York City to see if opportunity might be knocking. “It is very hard to find people who are good at this job,” said Borstein. “We make rain by listening to problems and finding good fits.  Paul has that very rare skill set.” Interestingly, Stroka commented that he has become a much better problem solver since joining Thomson Reuters, because that has become the primary focus of his job.

I pressed Borstein on the rainmaking point. He explained that outstanding BigLaw rainmakers use this same problem solving sales approach. However, they are constrained because the clients end up wanting them to also do the work. “In these big cases, the big-producing partners are pulling all-nighters with the associates. Law is the only business where the salesperson actually has to do the work. That is an enormous constraint of their model.”

An “ugly” but important slide

My original impressions of Borstein, Stroka, and Thorkildsen were strongly reinforced by their visit to my class. They have a tremendous grasp of the market, owing in part to their lengthy legal industry work experience, but more importantly because of the time they devote to visiting clients, reviewing data, reading industry press, and connecting with others in the industry.  This enables them to produce work product that dramatically simplifies a very complex and rapidly changing industry.

A good example is Slide 4 below, which Borstein described as “ugly but profound.”

Slide 4’s key takeaway is that the historical bi-lateral relationship between law firm and client is now being supplanted by a collaboration among multiple parties.  Obviously, Thomson Reuters has positioned itself as a technology and alternative legal service provider (ALSP), see Post 010 (discussing the rise of managed services), but that doesn’t make the graphic any less useful for understanding industry change. And note, Thomson Reuters senior leadership likely saw this more than a decade ago.

There are legions of high-IQ people in law, but the vast majority of them are very busy trying to hit this year’s revenue targets, leaving precious little white space for fact-gathering and reflection. This dynamic gives a company like Thomson Reuters an enormous advantage in seeing and understanding the big picture.

Borstein and Stroka commented that what has happened in the litigation realm over the last decade — with, for example, predictive coding, legal process outsourcing, and the rise of managed services — is about to happen in the transactional realm.  That’s too big a topic to cover here. If you want the same education, invite them in for talk.

Thorskildsen is a lawyer, right?

It’s time to wrap this post up and connect it to diffusion theory.

Rebecca Thorkildsen is often asked where she went to law school.  She replies, “I didn’t go to law school.  I have an MBA.” Fortunately, when that question gets asks, it is usually because Thorkildsen has impressed someone with her command of complex, law-related materials or her excellent, organized communication style.  During class, Borstein observed that it shouldn’t matter whether a professional working with lawyers has a law degree, “but often it still does.”

Thorkildsen explained that after graduating from business school in 1995, she joined Arthur Andersen as a consultant. “One of my first assignments was to help implement an email system inside a law firm. The next assignment was with a corporate legal department.  In the consulting world, that can quickly turn you into an industry specialist.”  Thorkildsen subsequently joined Baker Robbins, a technology consulting firm focused on legal clients, which became part of Thomson Reuters in 2000.

The connection to diffusion theory

As noted in foundational posts 020 (on change agents and opinion leaders) and 024 (crossing the chasm), consultative salespeople are often the key change agents within an industry.  In most cases, two personal attributes are threshold requirements for effectiveness: (a) cultural similarity with clients (referred to as homophily) and (b) credibility in the eyes of clients.  The observations and experience shared by the Thomson Reuters team certainly corroborate the theory.

Yet, this insight has deeper significance for the legal industry.  Specifically, it suggests that crucial non-legal innovations related to legal productivity, such as data, process, and technology, will tend to diffuse faster when the communication channels are lawyer-to-lawyer, even when the underlying content is entirely non-legal. Some might call this snobbery or prejudice, but according to diffusion theory, it’s just a recurring feature of any social system, including law.

Finally, below is a diagram from Post 020 that ticks off the factors that enable a change agent to be more effective at accelerating innovation adoption. Isn’t it obvious that the consultative salespeople at Thomson Reuter hit them all?

For additional analysis for these seven factors, see Post 020.

What’s next?  See Mark Chandler Speech from January 2007 (035)

As the above syllabus excerpt suggests, there is now a law school course on how innovation diffuses in the legal industry.  This new ground is being tilled at Northwestern Pritzker School of Law, where I am visiting this fall.  It is one of the few courses at Northwestern Law that enrolls both JD and Masters of Science in Law (MSL) students.  This enrollment is ideal, as the diverse educational backgrounds and professional experiences of the MSL students are a terrific complement to the 2L and 3L students who have already internalized a surprisingly large amount of legal culture.

The class started last Monday (10/16) and runs for eight classes.  As diffusion theory is part of an applied research tradition, see Post 004, we spent exactly one class on the underlying theory and the legal industry before moving to examples.

The examples are supplied by legal innovator and early adopter guest lecturers.  For Week 2 (10/23), we had the pleasure of hosting David Perla, co-founder and former co-CEO of Pangea3, and Ian Nelson, who was part of the original US sales team of Practical Law Company (PLC) and more recently co-founder of Hotshot, a tremendously innovative e-learning company focused on legal professional development.

NewLaw and legaltech start-ups are now widely covered by the legal press. But that was hardly the case during the booming mid-2000s when all the focus was on soaring BigLaw profits and salaries.  I wanted to start our guest speaker series with David and Ian because during this hey day period, both quit top-of-the-food-chain jobs to pursue obscure and speculative business opportunities (David in 2004 and Ian in 2006).  At the time, the future we are now living in was far from obvious.  Yet, when their respective companies sold to Thomson Reuters a few years later at valuations and multiples on-par with highly successful Silicon Valley start-ups, it became clear that NewLaw and legaltech were sectors with enormous opportunity for the innovative and ambitious.

Perla’s story

Over the years, I have heard several renditions of Pangea3 founder stories.  But Monday’s edition provided a new twist, as David focused on the preeminent importance of professional relationships and how, in hindsight, the long game is the only game that really matters.

David went through a long litany of examples of how a decade’s worth of professional contacts accumulated since law school (by both he and Pangea3 co-founder Sanjay Kamlani) were crucial to opening doors or indirectly supporting the fledgling start-up.  From getting free access to 1,200 Indian lawyer resumes from Monster.com so the duo could stand-up a work team in India over the course of a few days (David had just quit the GC position at Monster to launch Pangea3); to several months of office space at Katten Muchin so Pangea3 could signal a midtown Manhattan address (David was a former Katten associate); to an initial investment by a prominent Indian-American lawyer who had credibility in both US and India venture capital and legal circles, thus greasing the skids for everything that followed (this came through Sanjay’s tenure at PWC and OfficeTiger, a first-generation business process outsourcer in India), each story illustrated the tremendous importance of relationships. Cf. Post 020 (discussing crucial role played by “weak-tie” relationships in the diffusion of innovation).

The most surprising and powerful story was David’s family connection to the head of litigation of a major global bank.  The family friend took David’s call, but said at the outset,  “I am happy to help you in any way I can through mentoring and coaching, etc., but I’m never going to send any documents to India.”  David replied, “I understand.  Is it okay if I check in with you every six months?” The head of litigation said “Sure.”  David foreshadowed that this connection would turn out to be key to the ultimate success of Pangea3.

In the meantime, David and his colleagues were trying to crack the code of the large global banks.  One of their prospective customers broke the disappointing news that “we innovate in our trading strategies, but not in operations or sourcing. For that stuff, we’re a second mover. So if you want us to hire you, go get [list of global banks] as one of your customers. Then we can talk.”

Fast forward a couple of years, the big break for Pangea3 was the turmoil in the financial services market in the fall of 2008 and the resulting global recession.  David fields a call from one of his board members, who buoys his spirits, “Doubledown on sales; recessions are good for outsourcing.”  Shortly thereafter, David takes a call from the family friend / head of litigation at the major global bank. “David, the General Counsel just informed us that our budget has been cut by 25%. I know I said never, but never just happened.  Can you be here this week for a meeting?”

That meeting resulted in Pangea3 landing its largest and highest-profile client, which in turn sped up the sales cycle for several other large banks waiting to go second. David acknowledged that he did not have the benefit of diffusion theory when he was building Pangea3.  Yet, on both the investor and customer side, he could see how certain key early adopters had the effect of making a wide array of disparate pieces fall into place.  David specifically referred to these people as “influencers.”  Cf. Post 020 (discussing how “opinion leaders” within a social system are “able to informally influence other individuals’ attitudes or overt behavior in a desired way with relative frequency”).

Nelson’s story

I first met Ian Nelson in the fall of 2008 at a legal innovation conference–in hindsight, the first of its kind–organized by USC law professor and economist Gillian Hadfield. By 2008, Ian had been working at PLC for two years, initially in content creation but then transitioning to a lead role in sales.  Although PLC had already become a dominant force in the UK, the US was a bigger market governed by different law.  Thus, for all practical purposes, Ian had joined a US-based start-up.

There are two reasons why the PLC model is highly relevant to anyone interested in legal innovation.  First, Thomson Reuters’ acquisition of PLC in 2013 remains the high-water mark for financial success among legal industry entrepreneurs.  See “Thomson Reuters buys Practical Law Company,” Telegraph, Jan. 23, 2013 (reporting the size of the deal between £200 and £300 million, all of it achieved without outside investment). Second, there remains a wide array of activities currently performed non-expertly by law firms and legal departments that could be turned into highly successful businesses by carefully applying the core logic of the PLC model. In fact, this logic is very much at work at Ian’s current company, Hotshot. Thus, let’s briefly review the PLC model.

Practical Law began life in 1990 as a trade journal focused on the UK legal market. Some of the most popular features were practice tips that pulled together and explained the technical aspects of new and emerging methods of finance.  This is not surprising because PLC’s two founders, Robert Dow and Chris Millerchip, began their careers as associates at Slaughter and May, a leading Magic Circle firm specializing in M&A and sophisticated corporate finance.  Quipped Millerchip, “We created the thing that we wanted when we were practicing.” Ross Todd, “Web Practice Tools for Transactional Lawyers,” Legaltech News, Jan. 23, 2009.

With the growth of the web, PLC’s offerings became simultaneously better and easy to access via an online subscription model.  Relatively quickly, firms were being placed in a competitive disadvantage if they lacked access to PLC work product, which included document templates, standard clauses, practice guides, and deal checklists. In theory, firms could create this content on their own.  Yet, the ability to scale across the entire corporate bar enabled PLC to deliver higher quality work product at a much lower per-unit cost. In effect, PLC had become a privately run shared service relied upon by the vast majority of top UK law firms. The economics of a shared services model make it virtually impossible to dislodge a well-run first mover — and PLC fit that description to a tee. Cf. Thiel, Zero to One 97-98 (2014) (“[M]oving first is a tactic, not a goal. …  It’s much better to be the last mover—that is, to make the last great development in a specific market”).

During his guest lecture, Ian recounted his early days as a NYC corporate associate when he first encountered some of the quality gaps later filled by PLC and now being targeted by Hotshot.  The first instance occurred within a few days of hiring when Ian was dispatched to a far-flung city for due diligence on a “reverse triangular merger.”  The supervising partner instructed Ian to review a large volume of contracts and flag anything that “looked weird.”

Despite his law review credentials, Ian had no idea what a reverse triangular merger was, much less the definition of weird. Thus, for the next 48 hours, Ian was thrown into a silent panic, fearing that his legal ineptitude would should be exposed to the world. Yet, what he soon discovered was that neither the partner (and apparently the client) cared about the inefficiency of the process, as Ian’s overinclusive approach to copying “weird” provisions for further study at the firm’s headquarters was all being billed by the hour. Had Ian had access to Hotshot, he would have had on-demand videos and practice guides enabling him to get the answers that the supervising partner lacked the time or interest to provide.

A second formative incident occurred a couple of years later when Ian headed to London to work on-site at a UK firm that was co-counsel on a major transaction. During a tour of the office, Ian was shown the cafeteria, the copy room, and the work area for the PSLs.  Ian asked, “What’s a PSL?”  He was flabbergasted to learn that in the UK it was common practice to have “Professional Support Lawyers” who were responsible for, among other things, organizing and cataloguing the firm’s work product so the very best precedent could be quickly located for use on future client matters.  Ian subsequently returned to the US and lobbied his firm for the creation of a similar role, as it would replace the then-common practice of firm-wide emails soliciting documents that could be used as a starting point for current client matters. Upon hearing these ideas, however, the partners shrugged with indifference.

Six years into corporate law practice, these were some of the formative experiences that caused Ian to respond to a job ad for PLC — experiences that really struck a chord with the students. At my request, Ian did a deep dive into Hotshot. However, Hotshot as a business and product offering warrants its own future post.

What diffusion theory insights did we learn?

As I reflect on Week 2, three themes stand out.

  1. There is no innovation without execution. It’s easy to discuss innovation as something conceptual, but until the early adopter end-user receives full value, innovators are just trafficking in ideas.  Although this terrain is covered in LE’s “Crossing the Chasm” and “Hype Cycle” series, see, e.g., Posts 024025, it was made more vivid by Perla’s description of solving funding and operational challenges while also hunting down the early adopter customers. Standing up a quality-first operation in India (the putative innovation) is extraordinarily complex, time consuming and costly. Although Pangea3 was able to hit its ambitious sales targets relatively early, the time span between a signed deal, doing the work, and getting paid — particularly when large corporate clients string out vendors for 45 to 90 days — resulted in a “near death” experience for Pangea3. Suffice it to say, there is enormous risk in translating an idea into an innovation that warrants diffusion. Innovator-leaders like David and Sanjay who can skillfully coordinate the technical talents of others are very rare and very valuable.
  2. There are usually several social systems that matter; not just one.  As I listened to David and Ian, it became obvious that several social systems were interacting with one another.  For example, David describes how inroads with the New York global banks had little to no impact with legal departments at large US tech companies.  In fact, it was an investment by famed Silicon Valley VC firm Sequoia Capital (on less favorable terms that other VC shops, though the discount was worth it) that opened doors with tech companies on the west coast and, in turn, reverberated throughout India, signaling to young Indian lawyers that Pangea3 was the firm to join.  In Ian’s case, the early adopters at Hotshot were all Silicon Valley-based law firms who saw real advantages to having better-trained associates who could actually understand and do the math in venture capital deals.  A credible roster of west coast-based AmLaw 200 firms were eventually enough to open doors on the east coast and in the midwest where the deal flow was more traditional M&A.  Cf. Post 004 (“Rogers’ core insight … is that the diffusion of innovation is a process that occurs through a social system“).
  3. Relative advantage, cultural compatibility, and trialability really matter.  Apparently, for a large global bank, the difference between “never” and “this week” is a 25% budget cut.  Thus, drawing upon the Post 008 rate of adoption model, Pangea3’s big break turned on a sudden shift in the “relative advantage” of legal process outsourcing. Likewise, regarding cultural compatibility, both David and Ian emphasized how their status as former BigLaw corporate lawyers, including knowledge of cultural norms related to speech, dress, and credentials, opened both minds and doors.  Finally, Ian gave examples of how trialability was key to making sales for PLC and Hotshot, while David discussed how small projects resulted in growing sales, including a mandate from a major client that Pangea3 would be used by all outside counsel for all large-scale document reviews.  Apparently, nothing is more convincing than tasting the soup.  If it tastes good, your early adopter customers will set off a chain reaction (within a firm or legal department, or among peer firms or legal departments) that will do the work of an army of salespeople. Cf. Post 025 (Geoffrey Moore noting that word-of-mouth marketing is essential to crossing the chasm).

Week 3 of How Innovation Diffuses in the Legal Industry features three highly accomplished Thomson Reuter professionals:

  • Joe Borstein, Global Director of TR’s Managed Legal Services (formerly Pangea3) and Innovation Columnist at Above the Law
  • Rebecca Thorkildsen, Global Director of Legal Solutions (a person with an amazingly broad and deep grasp of the rapidly expanding legal ecosystem)
  • Paul Stroka, Director of Legal Solutions (a very capable corporate lawyer who has a deep understanding of consultative sales — i.e., selling as a second-order effect of customer problem solving — which is the core skill of a change agent)

I’ll do my best to pass along what we learn.

What’s next?  See The 2017 Forum on Legal Evolution (033)

Legal Evolution PBC is pleased to announce our first public event.  On Tuesday, October 10, author and researcher Randy Kiser of DecisionSet® will give a lecture and Q&A session based on his recently published book, Soft Skills for the Effective Lawyer (Cambridge University Press 2017).

This event is graciously hosted by Chapman and Cutler LLP, 111 W. Monroe Street, Chicago, IL. The event will run from 6 to 7:15 pm in the building’s 8th floor auditorium (doors open at 5:30), followed by a reception at the firm. There is no charge for this event. However, advanced registration is required. You can register online here.



Why attend this event?

If you’re a lawyer or law student, the opening paragraphs from Kiser’s book, excerpted below, provide a powerful answer:

Anthony Sonnett, Ford Motor Company’s trial attorney, had nearly completed his cross-examination of Barry Wilson. After listening to Mr. Wilson describe how he showers, catheterizes, and frequently repositions his paralyzed wife, following an accident in which her Ford Explorer rolled over and fractured her spine, Mr. Sonnett posed his final question to Mr. Wilson: “The silver lining, to the extent that there could be one, it has brought you and Benetta [Mrs. Wilson] and the family closer together?” Mr. Wilson responded: “I think where we were together before, we are together after. I don’t think it’s done more for us. I think it’s — I don’t think it’s a benefit or a plus in any way. I am sorry, I don’t think I can see it that way.”

The jury returned a verdict against Ford for $4.6 million in economic losses, $105 million in noneconomic losses and $246 million in punitive damages. Reviewing the verdict on appeal, the California Court of Appeal honed in on Mr. Sonnett’s “silver lining question” and noted, “This question implied that the family should find a silver lining in what befell Mrs. Wilson. It may very well have been viewed as callous by the jury and might explain, in some manner, the actions of the jury in rendering a verdict so out of line with the amounts requested by the Wilsons’ own counsel.” The question, the court stated, “might well have inflamed the passions of the jury.” Concluding that the award against Ford was excessive, the court reduced the noneconomic damages award to $18 million and lowered the punitive damages award to $55 million.

The silver lining question, according to Adam Liptak, the Supreme Court correspondent of The New York Times, “was a legal classic that has echoed through the appeal of the case.” “The Wilsons’ case,” he opines, “suggests that a lot can turn on little things, including flat-footed lawyers and stupid questions.”

Attorneys can argue endlessly about the appropriateness and impact of the silver lining question. That argument obscures the fact that judgment calls like the silver lining question permeate a lawyer’s daily existence and are not resolvable by statutes, rules, regulations, appellate court opinions or practice guides. These judgment calls are invariably subjective and inherently dangerous; they tend to be more personal than rule-based, more intuitive than empirical. They require a broader set of skills than technical legal knowledge and analysis and necessarily implicate “soft skills” like sensitivity, discernment, empathy, perspective taking and foresight.

In making these judgment calls, whether cross-examining a witness or negotiating contract terms, attorneys rely heavily on their personal experiences and their sense for people. They ask themselves imponderable questions like: How am I coming across to everyone else in this room? Do they trust me? What do they expect of me? Have I realistically assessed this challenge? Am I adequately prepared? Is my sense of what is happening here affected by how I feel about something else today? What will I do if I fail here? This book is about these types of questions — how we pick the questions to ask ourselves about ourselves, how accurately we answer them and how we can improve the soft skills that are ignored in educational testing but turn out to be dispositive in life.

Over their fall break, current Indiana Law 2L and 3L students are eligible to enroll in Randy Kiser’s 1-credit course based on Softs Skills for the Effective Lawyer. We are very fortunate to have Chapman and Cutler LLP also host the class in their Chicago office. I am proud to have played a role in organizing the Kiser Soft Skills course and the Kiser public event.

More about Randy Kiser

Randy Kiser was a very successful practicing lawyer for 20 years before pursuing graduate studies in psychology and developing a second career as a researcher and consultant on lawyer decision making.  Although Kiser has no permanent academic affiliation, his work on the legal profession is among the most rigorous, engaging, and important currently being published, with wide-ranging implications for society, practicing lawyers, and legal education.

Kiser’s 2008 article “Let’s Not Make a Deal” in JELS (the leading peer-reviewed empirical journal on legal topics) documents the pervasiveness of errors among lawyers in the decision to reject a final settlement offer and proceed to trial. Although plaintiffs’ lawyers were twice as likely to make a mistake (determined by getting a judgment less than the final settlement offer), defense counsels’ errors were vastly more expensive for clients — the average costing $43,000 on the plaintiff side versus $1.1 million for the defense.  See 2008 NY Times article on Kiser’s research.

The message that comes through Kiser’s research is that all of these mistakes are fixable by becoming aware of a wide range of inherent human biases and taking appropriate corrective actions. Nonetheless we persist in our decision making ignorance, with clients suffering the economic consequences and lawyers wondering why their careers are stalling.  For the last several years, I have integrated portions of Randy’s seminal book, How Leading Lawyers Think (Springer 2011), into both my Deliberative Leadership and Legal Professions course at Indiana Law. The book does extensive qualitative research on plaintiff and defense counsel who consistently make wise evaluative judgments and thus obtain consistently better client results when going to trial.

You can learn more about Kiser at his DecisionSet® website.

What’s next? See “Crossing the Chasm” and the “Hype Cycle” (024)