West Pub. Co. has announced the pre-release offering for my new book, Growing Your Law Practice in Tough Times.
I’m very excited about the new book … and encourage you to take advantage of West’s offer. You can also see the new offering at LawBiz.
Can you imagine that Twitter, WITHOUT any revenue stream, is valued at $1Billion! Wow. Not many employees and no revenue stream … and no prospects in sight to get revenue.
Just think what your law firm, with a decent revenue stream, might be worth? What is the difference? And why isn’t your firm worth $1B?
Richard Susskind has written a book suggesting that lawyers may become obsolete unless we make some dramatic changes.
I see nothing unusual about his conclusion … that legal work will be unbundled and that the work that is more mundane and routine will be systematized and perhaps even automated. Technology advances provide us with opportunities that didn’t exist before. We can, today, create better product for less money. Technology is only one aspect. Globalization is another. And this isn’t just for the large law firms. A client of mine, in Texas, opened an office in India for the specific purpose of document review and document production – it’s done for less money more quickly … And he can get a faster turnaround because of the time difference.
Law is slow coming to this process. My background is in manufacturing. I’ve owned and operated several companies. In order to retain prices, not to increase prices, we would do everything we could to automate. When automation, reducing the amount of labor costs, would go no further, we reduced the size of the container. For example, we would go from 32 oz to a 22 oz jar or a 10 gal. container to a 5 gal. container.
When we have time of challenge as we do now or changes in our economy and culture, we have the opportunity to innovate for improvements in products and services. We have the opportunity to create new demand. I see this beginning to happen in our parts of our economy. It will have to happen in the legal profession, nay the legal business (The Business of Law®), if we are to continue to serve our public as we know.
Our economy is in the doldrums … or better said, we’re experiencing a depression. Signs abound. From unemployment exceeding 10% and more in some areas, to now thousands of lawyers and staff terminated from the large firms. Who knows how many more there are in small firms …
One large firm managing partner cited an even more frightening fact: Many lawyers have been given generous severance packages in order to obtain liability waivers/releases and to keep the goodwill of those departing. In other words, they won’t feel the impact for 6 to 12 months after leaving. We will see a ripple effect. As bad as it is now, it will get worse …. Unless the federal government is able to pull the rabbit out of the hat.
Our country was built with credit. One of the major thrusts for the Obama administration is to get banks to start lending again. Banks didn’t do this with the first half of the major funding passed in the Bush administration. They horded the money to protect their own balance sheet. Will they do it with the second half, and with other bailout handouts?
Today, I had a conversation with a banker. He said that the federal regulators are requiring a higher capital input from the buyer than ever before. "In the old days" (not that long ago), one could buy a building for very little down payment (10%, e.g.), Today, loan to value ratio has to be 30% and in many cases 40 and 50% This is not the way to growth.
With this type of stagnation of credit, one can be assured that the prices for real estate will continue to slide downward with ever greater consequences. And with continued worsening of our finances, law firms and lawyers will be further impact. If we have too many lawyers today for the work available (as discussed in an earlier post), demand will continue to shrink, and additional law firm layoffs will result.
Aric Press, editor in chief of The American Lawyer, wrote in this month’s edition that “Next year’s Global 100 is apt to be a less pleasant experience (than this year’s law firm’s financial results). The best that law firms can hope for is that 2008 will mark the bottom, a dip in the otherwise inexorable rise of firm revenues and profits. A brief pause: Those are the optimists talking…. the work is down, collections are slower, hiring is off, and law firm leaders spend less of their time plotting global conquests and more trying to decide if anyone will notice that the quality of the paper in the Xerox machine has been taken down a grade…”
Alan Greenspan said recently that this crisis will not go away in the near future; it’s a longer term challenge. I’m old enough to have experienced a prior economic crisis (no John, not the Great Depression!), and it took a full generation to overcome. My fear is that it will take a full generation, or more, to overcome today’s crisis. Although the participants of the recently concluded ALM Law Firm Leaders conference seem to be more optimistic. I’m hoping they’re going to be proven correct.
I had the pleasure of talking with Paul Williams of Major, Lindsey & Africa. Paul focuses his energies on placing lawyers as General Counsel of major corporations. From his perspective, he suggests that General Counsel today receive more respect. Of course, GCs today have a much larger budget for legal fees than ever before. And many GCs come from the ranks of major law firms. Coming from the elite law firms and handling such large sums of money, one would expect private lawyers to give the corporate lawyers more respect. Also, in many cases, GCs are increasing the size of their legal departments as one way to control legal costs … they can “purchase” the legal talent at wholesale (as an employee of the legal department) rather than retail (law firm associate or partner).
Following are some of my thoughts and conclusions drawn from my conversation with Paul. Not wanting to attribute words or ideas to Paul that he may not have intended, I will accept responsibility for the following conclusions that I reached from our conversation:
A thought from Alan Weiss, consultant: “If Hollywood’s collective genius can create a $100 million film which flops at the box office, I don’t see reason to exactly beat yourself up if you choose a lousy vacation spot, cook a poor meal, or scratch the side of the car. Stuff happens. Get on with your life, and don’t let a momentary poor judgment create a lifelong depression.”
And in your law practice, the fact that you haven’t paid sufficient attention to “The Business of Law”® doesn’t’ mean you shouldn’t/can’t start now. Today is Labor Day, hopefully a day of rest for you … start tomorrow to work “on your business,” not just “in your business.” And build something of value (otherwise known as goodwill) that can be passed on to your family, your estate, when you’re ready to retire. You don’t have to just close the doors and walk away.
The rules of professional conduct, when billing by the hour, prevent a lawyer from billing two clients for the same minute. Thus, you cannot bill one client for travel time and another client for reviewing documents, etc., while en route on the plane. Or, you cannot bill one client for the time waiting in court until his/her case is called and bill another client for other work during that same time.
How about billing clients for time not spent at all doing their work? As a young lawyer, when advised by my mentor, to be liberal with my time sheets, I took this to mean "put my thumb on the scale" when weighing meat in the butcher store. The ABA Journal tells us about a lawyer who did something similar.
It’s time to stop focusing on real estate, construction, banks, mortgage companies and airlines, according to Larry Bodine. Go where the money is: energy, steel, industrial metals, coal companies and railroads. See the 10 Best Performing Industries on MarketWatch.com.
This reminds me of the book written by Harvey MacKay, Dig Your Well Before You’re Thirsty or the phrase "… fish where the bass are…"
In other words, provide services that your clients need … If your skills are no longer in hot demand, modify your practice area to adapt your skills to the needs of the clients. If you’re in the larger firms, and are practicing real estate law currently, you might be better advised to learn bankruptcy or workouts to adapt your current skills to the needs of the clients. If you’re in a small firm or sole practice, this might be more difficult to accomplish with less personal economic impact, but still possible.
The key is to either provide services the market needs … or to have the capital to sustain the wait until the market comes back to your skills.
In the op-ed of the Los Angeles Daily Journal, January 29, 2008, R. Konrad Moore suggests that public defenders who choose to strike betray the constitutional rights and liberty of their clients.
Shame on you for thinking that public defenders owe more to society than other lawyers, public officials or average citizen. Mr. Moore seems to believe that becoming a government employee, a public defender, means that one’s human and normal rights are checked at the door.
Yes, becoming a lawyer does mean that there are certain rights and responsibilities one takes on that are not required by others. However, I do not hear Mr. Moore suggesting that all lawyers owe a pro bono obligation to society, or that government officials are not entitled to seek increased compensation or that Corporate America has a social responsibility to its customers and a responsibility to its shareholders by keeping CEO compensation within reasonable boundaries or, for that matter, that the State Bar owes a duty to the public to require that all attorneys have malpractice insurance. And, I don’t hear that the State Bar owes a duty of any kind to its members, let alone obtaining a program of low cost malpractice insurance so that attorneys could then better protect the public they serve. That would be spreading responsibilities too far. He’s concerned only about limiting the compensation of public defenders.
Why then showed public defenders not be entitled to come together as any other group of employees in order to seek better conditions of work. Does Mr. Moore mean that the government can give any compensation, no matter how low, to public defenders and that the public defenders should be grateful to receive it? What about district attorneys? If they were to organize, as some have, does Mr. Moore likewise believe that there is a violation of the constitutional rights of citizens?
His argument is disingenuous and should be placed in its proper context. More to the point, why does Mr. Moore not argue that it is the responsibility of government and its citizens to make sure that defendants receive the best possible representation by compensating public defenders fairly and in accordance with compensation generally received in private law firms?