Is Pro Bono At Risk?

I recently had the good fortune to spend time with the Association of Pro Bono Counsel (APBCo), the organization whose members are charged with organizing and promoting pro bono efforts, primarily in large law firms.  At their day-long annual conference, my colleague Pam Woldow and I discussed the recent teeth-rattling changes taking place in the legal marketplace, and more specifically, what it means for pro bono efforts. First, let me say that after having spent countless hours over the years with legal marketers -- by and large a sunny, lively, high-energy and positive demographic -- I was pleasantly surprised to find pro bono counsel to be as lively and engaging, with a deep passion for pro bono and a deep belief that large law firms can be leaders of change.  I very much enjoyed the positive interaction and the focus on improvement during a time when sessions like this run the risk of turning to melancholy and frustration.

Speaking of risk, the fundamental question presented is whether pro bono is at risk.  Pro bono efforts, or offering free legal advice to those unable to pay, is an honorable practice well-suited to the community-minded attitude taken by so many large law firms.  But as recent events have unquestionably demonstrated, large law firms are businesses too.  And thus isn't the notion of deploying valuable and now limited resources, e.g., associates, to non-billable work a quaint notion at best, and irresponsible or even willful negligence?

In a word, no.

The traditional obstacles to promoting pro bono within a large law firm environment have usually focused more on practical matters rather than desire.  No matter how many words I write about the need to embrace better business practices, I hope I never see the day when lawyers stop acting out of a sense of duty to their community and profession and cease pro bono activities because it's not profitable.  Thankfully, large law firms by and large haven't taken this tone in the past, and I think with proper expectation setting, it won't be a problem in the future.

Associates on the partner track, or at least those hoping to maximize bonuses, struggle to maintain the proper balance between billable hours and other duties, such as professional development, pro bono and client development.  Through long effort, pro bono coordinators have succeeded in achieving parity between an hour spent on pro bono activities and an hour of billable client work.  In other words, within reason spending time on a pro bono case counts toward billable hour quotas.

The challenges now come from many fronts:  with a substantial increase in alternative fee arrangements, reward and recognition systems based on billable hours will need updating, and the pro bono lobby may not have as strong a voice as they did when times were flush.  The occasional partner who railed against the opportunity cost of diverting a valued associate away from client work may have an audience now, when associates are in shorter supply.

But these challenges also present opportunities.  Partners who have raised the opportunity cost argument tend to ignore the fact that defining a law firm's revenue potential under a billable hour model, e.g., the number of timekeepers multiplied by the billable hour rate multiplied by working hours available, imposes a greater opportunity cost than a law firm offering alternative fee arrangements.  Simple math suggests that if I can negotiate sufficient simultaneous alternative fee projects which generate fees regardless of the time invested, I have the potential to generate greater revenues than those with a self-imposed ceiling.  Furthermore, adopting tactics to improve efficiency so we can take on more alternative fee projects will lower our costs and improve profitability.  This isn't a rant against the billable hour (others are more eloquent on the topic than I) but an observation that a movement away from the billable hour doesn't necessarily lead to lower revenues and profits.

In fact, in light of the ACC/Serengeti survey released at the Association of Corporate Counsel's annual meeting, which declared that controlling outside counsel spend is the primary concern of in-house counsel, the reality is that moving away from the billable hour and toward more efficient operating models is now a requirement for all but a handful of firms.  And no, odds are that despite your innate pride in your firm, yours is not in that handful.

As clients demand efficiency, there are other downstream impacts.  For example, partners can't overstaff projects with associates-in-training, simultaneously delivering an education and generating fee income, compliments of the client.  This has led to an unprecedented number of associate layoffs, and a reversal of the impressive pay packages offered to Biglaw associates.  Equally impacted, but less newsworthy, is the loss of training opportnity for the associates who remain.  Will large law firms adopt the UK model, where an investment in PSLs (professional support lawyers) is far more common?  Will they return to the guild approach of apprenticeship?  Most firms will not make such revolutionary changes, at least not right away.

Cue pro bono, entering stage left.

In what other venue might an associate obtain an opportunity to cross-examine a hostile witness, learn how to navigate the endless bureauracy of a government agency, make decisions on the fly that, in some cases, have real life or death consequences?  The answer is, of course, pro bono.  To be clear, most pro bono work is less than glamorous, and you can only derive so much experience from helping a senior citizen file a social security disability claim.  But such as it is, this experience now has to come from somewhere.

As the business challenges of large law make headlines, some have predicted the end to the quality of life concern, or to the need for law firm diversity, or to the need for pro bono.  After all, with fewer associates we can only rely on those who are willing to pull all-nighters and stay on the treadmill that leads to the partner track, even if only a fraction will actually make partner.  And with clients focused on cost, won't the client be more interested in our fee than in how many women partners we have, or how many hours we devoted to pro bono last year?  Perhaps.  But I doubt it.  The lesson of recent events is that corporate counsel must accept that the legal function is like any other, and must adopt the practices of the other functions.  So if the corporation has a requirement for diversity in its suppliers, then despite the complications such a constraint imposes on the selection of outside counsel, the GC must find an outside law firm that has both the proper diversity footprint and an acceptable fee range.  Managing multiple and often competing constraints is what leaders of businesses do all day, every day.

So if pro bono, like diversity, will persist as a requirement in coming RFPs, why do so few law firms take the time to establish a well-oiled process for maintaining a record of pro bono achievement?  It's not an uncommon occurrence in law firms for the various functions to, shall we say, not get along famously.  Far too often, for example, the IT organization doesn't appreciate the marketing department acquiring new technology.  The Marketing department doesn't appreciate being asked to run events for the Diversity team.  The pro bono team promotes the firm's efforts without the assistance of the firm's public relations specialists, and so on.  This must end.  A holistic approach is needed.

My advice to pro bono counsel is to embrace the opportunity to help inform the conversation as compensation systems come under review in this alternative fee world.  Ensure that all marketers involved in responding to an RFP or otherwise promoting the firm's accomplishments have an up-to-the-minute scorecard of the firm's pro bono activities.  Ensure that the professional development team, what's left of them, has full insight into the sorts of experiences the associates are gaining in their pro bono efforts, which could perhaps become certified for professional development credit.  Engage the CFO in terms that she or he can understand about the quantitative impact of pro bono:  How many RFPs required a pro bono scorecard?  What was the value of these projects?  How well do pro bono-experienced associates perform in client satisfaction interviews (you do these, right?) as compared to associates who have no pro bono experience?  Which clients and targets, specifically, have a pro bono policy for their outside counsel suppliers, and which really mean it? If you're not sure, ask them.

I am a fan of pro bono and find it to be one of the most appealing aspects of the legal profession, and even as I counsel law firm leaders to become better business people, I do not want to see efforts like this fall to the wayside in a quest for profits.  I am now a fan of pro bono counsel, who have the passion, energy and desire to accomplish their mission in these challenging times.  If you don't know your pro bono coordinator in your firm, drop in and say hello.  I assure you, you'll be pleasantly surprised by how capable and willing they are to engage in the improvement of this profession.

Update: I just learned that this is National Pro Bono Celebration week.  Who knew?!  Several notable names in the legal community have spoken up in support of pro bono, even during these trying times.

No Sleep For You!

Legal tabloid Above the Law recently published an email from a Biglaw partner to all associates, admonishing them to check their email every hour unless "asleep, in court or in a tunnel."  The partner goes on to declare that "all of our clients expect you to be checking your emails often."  The back story is that a partner emailed a new associate a request to send a fax to "a relatively new client whom we were trying to impress" but the associate had left for the day and didn't attend to the task until returning in the morning.  The partner closes the lesson by reporting that "in this case it was no harm no foul, but I think we can all imagine scenarios when this could be a disaster." As the Association of Corporate Counsel annual conference winds down, and our RSS readers are deluged with reports of how in-house counsel demands are increasing, placing unprecedented pressure on outside counsel, it might be helpful to once again reiterate a fundamental truth in client service:  speed does not equal responsiveness.

Now I don't know the back story behind the back story.  Perhaps the client was in his office expecting a late night draft, but the "no harm no foul" comment suggests otherwise.  So let me superimpose my own experience and propose a likely fact pattern:  the partner believes that impressing a client requires speedy turnaround of work product, so he requested a late-night fax to the client's office which would greet him or her upon arrival in the morning, demonstrating the firm's round-the-clock responsiveness to his needs.  Trouble is, relying on a fax to send this message is a bit like sending the finest horseman to inform the townspeople of the latest Amber Alert.  Why not send an email if speed is your central concern?

But of more interest to me is the partner's assumption that speed is impressive.  Clients regularly complain about a law firm's lack of communication and responsiveness.  Translating this as a desire for speed is not uncommon.  However, what it often calls for is setting proper expectations, and then meeting (or exceeding) the expectations.  Given our presumed fact pattern above, if the client was advised that a draft memo would be on his or her desk at 9 AM the following morning, and it was, then the expectation was met.  Exceeding this expectation is admirable, but if the client wasn't in the office late at night to receive the fax then the impact of the speedy response is wasted.

Impressing a client is all about understanding his needs, setting proper expectations for what it takes -- how long, how much, how difficult -- to address these needs, then fulfilling the expectations you've established.  Obviously things change, and often in thorny deals and litigation time is of the essence.  So when lightning-fast speed is a need, build it into the expectations.  But be careful about demonstrating round-the-clock prowess to a client who is price-sensitive, because the first thought that will leap to mind may be, "We agreed on tomorrow morning.  I'm pleased that you sent a fax to my (empty) office 12 hours early, but I hope that any extra effort taken to beat the agreed-upon deadline won't be reflected on my invoice."

Clients can be confusing that way.  This is why we ask questions, set proper expectations and then use these as guidelines for delivering exceptional service.  Substituting our own definition of exceptional service is a short-cut that we sometimes can make only once in today's competitive market.

Demystifying Outsourcing for Corporate Counsel

I was recently asked to contribute an article on the topic of outsourcing to the corporate counsel section of the Philadelphia Legal Intelligencer, the oldest law journal in the United States.  Below is the published article copy, followed by additional commentary developed while conducting background research for the article.

The Legal Intelligencer

By Timothy B. Corcoran

September 23, 2009

Corporate law departments face an unprecedented level of pressure to reduce costs, to do more with less and to deliver a quality legal product to internal corporate clients. In days past, as the saying goes, the chief legal officer would offer executive management a choice: “We can do the work well, we can do it quickly or we can do it cheaply. Pick two.”

Today’s CEOs want it all, and who can blame them? Every business function faces a relentless drive to eliminate defects, improve production capacity and accelerate time to market. Law departments have been somewhat sheltered from these pressures, in part because of the unpredictable nature of legal issues, much to the chagrin of executive management. Adding to the tension is the trickle-down effect of an unprecedented growth rate in law firm revenues over the past 10 years, which, according to a recent study by the Corporate Executive Board, increased 75 percent while other supplier costs increased by an average of 25 percent.

But is it only about cost? Will executive management be satisfied if the CLO extracts substantial discounts from its primary law firm suppliers or migrates some work to lower-cost regional law firms? According to some business leaders, this will simply no longer suffice.

Imagine the boardroom presentation by the chief marketing officer in which he or she provides a two-year revenue outlook for multiple global product lines, reflecting varying levels of demand and market share. This is followed by the head of manufacturing, whose production forecast incorporates the probability of interruptions in raw material supplies, ranging from droughts in South America to pirates off the coast of Africa to labor unrest in Asia. The treasurer, in turn, presents a plan designed to hedge against the risk of currency fluctuations.

Then the chief financial officer presents an eight- to 10-year cash flow projection for a pending acquisition. Raise your hand if you would like to be the general counsel in this setting who admits that since few variables managed by the legal function can be predicted with any certainty, and because of increasing supplier costs, the legal department will be submitting a 20 percent budget increase over last year.

Small wonder, then, that the drive for improved metrics and efficiency has arrived in the law department with some fanfare, and not a moment too soon. One recent innovation available to the chief legal officer is outsourcing, or assigning work to specialist providers in the United States and abroad that offer non-traditional legal services.

But is this really so new? Hasn’t it been the case all along that the company, which manufacturers widgets or develops software or provides business services, has outsourced its legal needs to specialist providers, first within the legal department and then to outside law firms? The corporate legal function serves both an operational and strategic role, but there are few business owners who dream of a sizable and well-run legal department as a strategic asset in the same way that they dream of, say, a world-class sales force. So let’s acknowledge that we’ve already been engaged in outsourcing, and then let’s take a harder look at what new options are available.

First, it’s helpful to define terms. Outsourcing refers merely to the delegation of work to another organization, where it can presumably be carried out more efficiently. Offshoring typically takes place when the other organization is in another country. Insourcing involves delegating work to another specialized group within the same organization. The delegation of work to outside counsel is an example of outsourcing, as is the use of contract lawyers to handle overflow volume in document review. Hiring legal research experts in India is an example of offshoring, as is moving a customer service call center to Ireland or a graphics design team to the Philippines. And insourcing, of course, is exactly how most companies perceive the legal department — an internal organization with specialized skills.

Most companies, and indeed most law firms, have engaged in business process outsourcing, or BPO, for some time. Whether it’s operating the corporate cafeteria or the mailroom or hiring a third party to ship goods, organizations have learned that subject matter experts can generally take over these tasks with minimal fuss and at a lower cost.

Many law departments have found that hiring contract attorneys provides an excellent opportunity to test their appetites for outsourcing, before establishing any offshore relationships. Market research firm Gartner estimated the 2007 BPO market to be $173 billion. The potential for cost savings in the legal function is also enormous, in relative terms. In a recent move that raised eyebrows in the global legal market, Australian-English mining conglomerate Rio Tinto announced that it expects to save $25 million annually, or 20 percent of its legal budget, after hiring a legal process outsourcing, or LPO, firm to perform routine legal tasks.

Critics declare that legal matters are much more strategic in nature than administrative functions and can’t be easily delegated. After all, do you really want the company to rely on the lowest-cost provider when it comes to a “bet the company” transaction or litigation? But therein lies the issue at the heart of the matter. Chief legal officers have long known that even the most important legal issue facing the company is composed of multiple smaller components, many of which involve routine, commoditized tasks. Law firms are expensive suppliers in part because they tend to treat all aspects of an important transaction as high value and high cost. With some exceptions, most lawyers believe their particular area of expertise is a premium offering housed within a firm that provides other premium services. It’s other lawyers in other firms who provide commodity services.

The truth, as usual, lies somewhere in the middle. The legal profession is not typically viewed as progressive in its business practices. However, the overwhelming growth of LPO has raised a number of questions about the practicality and ethics of relying on outsiders to provide legal services. Isn’t it a disservice to the client, possibly even unethical, to rely on low-cost providers for important legal matters? Not so fast, according to the American Bar Association. In Formal Ethics Opinion 08-451, the ABA declared: “There is nothing unethical about a lawyer outsourcing legal and non-legal services, provided the outsourcing lawyer renders legal services to the client with the ‘legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.’”

So how does a chief legal officer ensure a quality work product from an outside provider? The following are a few suggestions:

• Test-drive the work product of an LPO provider on a single project before engaging them for the long term. Quality providers will invest in significant ongoing training for their workforce and should welcome the opportunity to demonstrate their quality.

• Develop objective measures of quality. This can be achieved by working with the LPO to develop a detailed model of operating procedures for the required work. Once these procedures are in place, it’s easy to establish a quality template that tracks deviations from the desired outcome.

• Institute standard project management techniques like those used every day in most organizations to manage technology initiatives and manufacturing operations.

• Manage LPO relationships with diligence. Don’t lose focus after the initial engagement discussions. Be aware that your LPO staffing team may change over time and insist on the same level of training for team members rotated in later to maintain consistent quality.

• Consider cultural implications. If you offshore, it’s important that your LPO liaison have solid English speaking skills as well as an understanding of the local culture. And conversely, you must communicate your own company’s culture and objectives.

In the end, outsourcing can generate far more than labor arbitrage. Ray Bayley, co-founder of Chicago-based NovusLaw, in an interview on the “Adam Smith, Esq.” blog, discarded that as the primary objective of LPO: “We’re not in the business of ‘lifting & shifting:’ Taking what’s done here and moving it to a cheaper jurisdiction in order to do it the same way. That’s a brute force approach that adds nothing to the quality, reliability, and repeatability of the work.” Instead, for example, a routine service like document review can be studied and modeled and the multiple variables influencing the cost can be identified and quantified, thus reducing the cost and adding efficiency and value.

What’s to prevent a legal department from embracing this sort of “Lean Six Sigma” approach to analyzing and improving its own legal services? Nothing at all. In fact, legal departments that adopt these techniques will be better positioned to identify, evaluate and select appropriate outsourcing providers. Among the hidden benefits to outsourcing is the familiarity the client generally gains regarding business process improvement techniques. Once ingrained into an organization’s operational mindset, it’s difficult to revert to a blissfully unaware state where efficiency and quality are abstract concepts.

It would be remiss to conclude without addressing the emotional response outsourcing and offshoring can sometimes generate. Whether from organized labor or politicians or trade groups, it’s not uncommon to hear opposition to outsourcing, particularly when it’s perceived as sending jobs overseas. The Economist recently declared offshoring to be a win-win phenomenon, at least on a macroeconomic scale. But the backlash has led to a reversal in some industries, such as the return of technology call centers that lowered costs but also lowered customer satisfaction rates. Many LPO providers offer services across the United States and in English-speaking countries to help mitigate these very concerns.

Human nature tends to question that with which we are unfamiliar. And to many, it’s an uncomfortable realization that some sophisticated legal processes can be analyzed, broken down into constituent parts, delegated to disparate providers and returned with higher quality, lower costs and greater predictability than we’ve been accustomed to. But with change comes opportunity. Imagine tomorrow’s boardroom presentation by the chief legal officer, who can now submit, with some certainty, the costs and implications of ongoing legal matters. Even better, imagine having the capacity to focus on matters of more critical long-range interest to the company, demonstrating that a well-run legal department is a significant strategic advantage. •

Copyright 2009. Incisive Media US Properties, LLC. All rights reserved.  The Legal Intelligencer

Click here to see the article on the Legal Intelligencer site.  (Subscription may be required.)

There are numerous sources to help understand the changing legal landscape, with more arriving each day.  I found a white paper “Future Law Office” distributed by Robert Half Legal, the legal professional placement division of Robert Half International, to be very informative.  While its position may be considered somewhat self-serving, the white paper describes the very real use of contract lawyers by in-house legal departments as a means of testing whether they can obtain quality legal work product through non-traditional means.  In fact, this has the same effect as the approach taken by many corporations who “test” potential new hires by first hiring them as a temporary employees.  And why not test the goods before purchase?  Rocky Dhir, President of Chicago-based Atlas Legal Research, invests a significant portion of his resources in training, so he encourages potential clients to take a test drive.  “Actually test the work product of any LPO provider before engaging them long-term.”  Selecting wisely is critical, because “picking the wrong firm can end up being more expensive.”

Suhasini Sakhare of Zeta Intelex recognizes the challenge in demonstrating quality in a profession that tends to not have objective measures of quality.  Her organization follows a rigorous process to ensure the highest-quality output, using as a foundation very detailed operating procedures based on the client’s needs.  These are often developed through repeated observation, as “most clients who should be intimately familiar with their own legal processes actually aren’t.”  Once these procedures are in place, it’s easy and intuitive to establish a quality template that tracks all deviations from the desired outcome.  It may come as a surprise to Biglaw partners, but not to many clients:  the quality of the legal work can actually be improved by outsourcing due to the intense focus and quality controls in place.  Of course Biglaw legal work product is routinely high quality, but absent objective measures of quality clients are no longer willing to pay high rates on reputation alone.

It’s not as challenging as one might think to implement quality control processes within a law firm.  This is project management 101, after all, and the techniques aren’t limited to managing technology initiatives and manufacturing operations.  Ron Friedmann, senior vice president of marketing for Integreon, ran practice support for a large law firm and was CIO of another.  In his view, “There are many parallels between managing projects and managing a company’s legal strategy.”  He elaborates, “Law departments can reduce costs by explicitly acting as general contractors to solve company legal problems. Like any GC (general contractor that is, not general counsel), a law department should consider what resources it employs full time and what it sub-contracts.”  I’d go even further and say that outside counsel can also act as project managers and even general contractors.  Why couldn’t a Biglaw relationship partner serve his clients needs by coordinating internal services with outsourced services on behalf of the client?  We do it already, quite regularly… local counsel, anyone?

Like any relationship, the connection between an outsource provider and an in-house legal department takes time and effort to maintain, even with good metrics and processes in place.  Stephen Seckler, a lawyer and consultant, advises IPEngine, an IP outsourcing firm with operations in India.  “It’s important that your liaison have solid English-speaking skills as well as an understanding of the local culture.”  John Roney, President of Applied Dynamic Solutions of New Jersey, has long experience with managing outsourced IT projects, and suggests the lessons are universal.  “Many projects get off to great starts but when the spotlight is off, there is often a break in the continuity of the team, and sometimes new team members don’t receive the same rigorous training.”  He also urges companies to treat the outsource vendor as a part of the team.  “This means attending staff meetings to understand the company’s culture and grasp the company’s objectives.”

We’ve focused primarily on the challenges facing corporate legal departments and Biglaw.  “Much of the LPO industry is geared to serve the needs of large corporate legal departments and large law firms, but there’s a lot more to it,”  declares Ed Scanlon, president of Total Attorneys, which provides contract lawyers and paraprofessionals to handle general legal work overflow and specialized services, such as bankruptcy case management, to small law firms.

The results so far suggest that non-traditional means of delivering legal services, via contract lawyers or outsourcing or offshoring, should be an essential aspect of a law department’s tool kit in the future.

Fungibility - An Organizational Malaise

I'm a longtime fan of Stanley Bing's irreverent take on business in his Fortune magazine column.  As with many columnists, he takes a slightly edgier tone on his accompanying Bing's Blog.  In a recent post Bing discussed the critical employee, the one with specialized knowledge, the one who is irreplaceable.  It called to mind the old joke:

A factory machine shop mechanic retires.  Some weeks later, the machines at the factory stopped working. No one can get the equipment running again, and the factory is losing hundreds of thousands of dollars every day. The factory manager call the retired mechanic back in as a last resort. The mechanic walks through the whole place then tells the factory manager, "It'll cost $50,050 to fix the problem." "Anything!" he cries. So the old mechanic walks onto the factory floor, approaches a complicated series of pipes and valves, and taps a stuck valve with a small hammer. All of the equipment instantly comes online and starts humming. The factory manager exclaims in surprise, "You're charging us $50,050 to tap a pipe?"  The old mechanic responds calmly, "No, I'm only charging you $50 to tap the pipe; the $50,000 is for knowing which pipe to tap."

Too often, we fall into the trap of believing that we alone know the right pipe to tap.  This malady applies to assembly line workers, secretaries, salespeople, corner office managers, executives and even to the CEO.  In my career I've encountered this multiple times.  There was the sales manager who bragged that he "closed every one of his sales team's deals personally" and the finance manager who proclaimed that "the revenue recognition model is so complex, no one else can run the reports."  I'm sure that they believed they were establishing job security.  After all, if no one else can do the job, then they should have jobs for life.

There was once an unwritten rule in sports: you never lose your starting position due to injury.  Then in the early 1990s, Joe Montana, the 4-time Super Bowl winner, was injured and his replacement, Steve Young, had successful starts and ultimately won the starting job even when Montana was healthy again.  Montana left in a fury and was never as dominant again; Young brought another Super Bowl win to the franchise over several successful seasons.  In sports as in business, the organization or the team is what's important.  If you are so critical to the team that we can't live without you, then the team's highest priority is to find a way to live without you.  Or, in other words, your irreplaceability makes you highly risky, and, therefore, replaceable.

This sounds counter-intuitive.  After all, why would we risk offending a star performer and potentially hasten his or her departure, just to ensure that we have someone ready to take his place?  It's all about reducing the organization's risk.  If I can't live without you, then I can't live with you.  If your knowledge is unique and specialized and mission critical, then my obligation as a business owner is to add redundancy.  In many cases we find that these star performers aren't as unique and specialized as they claim.  But in other cases, we find that they are as important as they say they are.  It doesn't matter.  The organization must reduce its risk by spreading that knowledge.

Like all aspects of organizational behavior, it's a balancing act.  Do some managers mistakenly assume that everyone is fungible, that no one has specialized knowledge?  Yes, it happens all the time.  An old employer of mine routinely re-assigns salespeople to new territories and product lines, without any apparent regard for the importance of the relationships the salespeople have established.  And many companies lose good people and solid performers during layoffs, because they try to spread the cuts evenly rather than measuring the relative contributions of those impacted.  But just as risky is allowing the organization's success to be funneled through one person.

In Bing's anecdote, one of these irreplaceable employees recognizes his importance and makes some outrageous demands.  His plan backfired, and his manager began planning for a different future:

“Otto has succeeded in doing one thing,” he said darkly. “He’s made it necessary for me to think about life without him. Once I started thinking that way, I realized it was possible. Now I’m thinking, what do I need this aggravation for… to pay this much for the job that cost me so much less last year? Sure, it’ll be hard to replace him. But nobody is irreplaceable. Sometimes I have to remember that.”

Good business owners don't allow themselves to be painted into a corner.  It's important to grow your people, to provide them training so that they become subject matter experts.  But at the point where this specialized knowledge becomes mission critical and no one else can perform the role, then it's time to share the knowledge.  Done right, the expert then moves up to bigger and better things.  Whether or not we actually have a plan in place to keep star performers moving up is a topic for another day.

Update: According to Bing, Otto ultimately received the raise he demanded.  I faced this same situation some years ago when I met a valued employee's aggressive demands.  I then spent the next year making him dispensable, and eventually he moved on.  While some thought it was retaliation, it actually resulted from his raising my awareness to the shocking fact that we couldn't operate without him.  Had he never made the outrageous demands, he might still be there today.

The ACC Challenge - What does it mean for law firm technologists?

I recently had the pleasure of speaking on a panel at the ILTA 2009 Conference in suburban Washington, DC.  ILTA is "the premier peer networking organization, providing information to members to maximize the value of technology in support of the legal profession."  The panel was organized by Bryan Cave partner John Alber, a longtime thought leader at the nexus of technology and the practice of law.  See here for some excellent examples of his mind at work.  I was joined by Connie Hoffman, CIO at Bryan Cave, a woman with a very distinguished career leading technology initiatives in the corporate sector, and Fred Krebs, the President of ACC, the Association of Corporate Counsel, which launched the initiative that formed the basis for our discussion.  Fred has led his organization for many years into the tough issues surrounding the in-house counsel and outside counsel relationship. The panel was attended primarily by law firm technologists, most in senior roles, along with a smattering of law firm leaders from varying firm sizes.  The purpose of the panel was, as described by the title, to describe the ACC Value Challenge and how it will impact law firm technologists. Or, more to the point, how law firm technologists can impact the ACC Value Challenge.  Regular readers will recognize the ACC Value Challenge right away.  ACC has put a voice and a framework around the need to improve the value proposition for long-suffering in-house counsel, that is, deriving quality work product at a fair price.  I say long-suffering partially tongue in cheek.  As I've written previously, any party who considers himself long-suffering at the hands of another is partly culpable for not changing his situation.  ACC recognized that in-house counsel lament how the balance of economic power in their relationship with outside counsel has long been dominated by the law firms, so they decided to stop complaining and do something about it.  Hear hear, I say.

I commenced my remarks with this Gary Larson "Far Side" comic.  I'd like to say that improving the dynamic between in-house and outside counsel, that improving efficiency, that deriving better value, is all about better use of technology tools.  But it's not.  Unlike the dog chieftain, it's not necessarily our time as technologists to save the day.  At least not primarily through the use of technology.

I strongly believe, through long trial and error in my own career, that real transformation comes from business process improvement, of which technology is and should be a vital component.

I won't replay the entire panel discussion here, but I have provided a link below to an excellent recap of the session.  I will, however, emphasize one of my closing points.  While technology may not be a miracle cure to help law departments and law firms improve efficiency and drive costs out of commodity services, the processes that good technologists utilize to implement technology are exactly the skills needed now.  Good technology implementations start with business process reviews, understanding what works, and what doesn't, what are the dependencies, where are the decision points, and so on.  Then there is a rigorous methodology to move from idea to implementation, with tracking and reporting along the way to measure progress, and post mortem analyses to identify opportunities for improvement.

In part due to the ACC Challenge, in part due to the efforts of the Legal Process Outsourcing (LPO) providers offering commodity legal services at a fraction of the rates charged by Biglaw, we will soon see more in-house counsel and outside counsel adopt project management techniques, allowing them to better deploy resources and reduce inefficiencies while continuing to deliver quality services.  Technologists are perfectly positioned to contribute to this transformation by modeling these behaviors that are so vital to the implementation of good technology solutions.  But be forewarned, a technologist braying that "technology is the answer" and ignoring business process improvement is as markedly out-of-step with the times as a Biglaw leader claiming that with the end of the recession will come a return to the rightful balance of power where law firms dictate the prices.  You know who you are... don't you?

For a much more robust recap of the ILTA session, see Susan Jacobsen's article here.  See also Fred's commentary here.