Driving Change at the Coal Face of Law

Driving Change at the Coal Face of Law

Presented by:Sally R. Gonzalez

[email protected]

Today’s Topics

• Law Firm of Future – What’s driving change?

• Lawyer personality traits – Help or Hindrance?

• How to promote disruptive change?

• What technology innovations should we be monitoring? – Future technology trends from ILTA’s Legal Technology

Future Horizons Study

Today’s Pressures on Profitability

• Demand for legal services remains flat, 5 years after the financial crisis– Large law firms competing for shrinking pool of high-end work– Firms have to take work from others to maintain/grow revenue

• Revenue growth remains sharply constrained– Pre-2008: Double digit growth– 2013: Revenue grew 2.5% (Citi Private Bank Survey of 180 firms)

• Stratification of firms continues to widen– 50-top grossing US firms materially outperformed others in profitability (Citi

Survey)– Global firms with strong international presence showed the biggest revenue

gains (Citi Survey)– 2013 Revenue growth ranged from +20% to -21% (Wells Fargo Private Bank)

• Firms that aggressively managed expenses and pruned unproductive partners are doing better than others

Source: …Big Law Firms Have a Big Revenue Problem; Wall Street Journal; February 25, 2014

The New Normal is Here to Stay

• “Well, in our country,” said Alice, still panting a little, “you’d generally get to somewhere else – if you run very fast for a long time, as we’ve been doing.”

• “A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that.”

Lewis Carroll, Through the Looking Glass and What Alice Found There

What Does the GC want? Value…

• “What corporate clients want and need: value driven, high quality legal services that deliver solutions for a reasonable cost and develop lawyers as counselors (not just content-providers), advocates (not just process-doers) and professional partners.”

Source: The ACC Value Challenge Project

What Does the GC Want? A Partner…

• Top 3 ways for GC to deliver value today: reduce time, risk and cost

• Achieving best legal outcome less important today than 5 years ago

42%

30%

45%43%

Now Five years ago

Source: Deloitte Touche Tohmatsu60%

50%

40%

30%

20%

10%

0

56%

Top three ways in which corporate legal teams demonstrate value

Achievin

g timely

resolution of

legal p

roblems

Reducing l

egal ri

sk

Achievin

g cost

effective

resolution

of lega

l problems

Achievin

g best

legal o

utcome

Reducing e

xternal

legal e

xpenditu

re

Building i

nternal lega

l

experti

se of orga

nisation

60%

54% 54%

49%

44%48%

55%

Source: Deloitte Global Corporate Counsel Report 2012

Law Firm of the Future

• Size will matter – both bigger and smaller• Location will matter – serving global clients and emerging nations• Expertise remains key, service delivery models will morph• Competitors will change

– In-house law departments– Dynamic virtual law firms (e.g. Axiom)– Alliances (e.g., LexMundi)– Specialist service providers for disaggregated services– Non-legal professional service organizations

• Project Management and Process Improvement will become embedded

• Innovation will be a differentiator

Law Firms Respond – Legal Project Management

• “Doing things right”• Training lawyers in project

management• Increasing formality

around pricing up-front and managing to budget over time

• Formalizing methodologies and tools for matter management

BESPOKEIN-HOUSE

SOLUTIONS

Law Firms Respond – Legal Process Improvement

• “Doing the right things”• Streamlining legal processes• Resourcing strategically

– Assigning work to the lowest-cost, qualified resource

– Out-tasking as appropriate• Building bespoke technology

platforms and resources– Delivering information just-

in-time in context with task (“path finders”)

Production Plan Takt Demand Capacity Planning

Value Steam Map Time Study Inventory Turns Spaghetti Diagram

Process Cycle Setup Reduction Part Stratification TOC

5$ Line Balacing Kanban Pull A Single Place Flow $MED Time & Motion Study Work Cells

TPM Visual Control Standard Work Takt Boards 5-Minute

Briefing

Project Selection Project Charter $IPOC Process Mapping

C&A M&A Potential

Capability Pareto

Fish bone Multi-vari Hypothesis

Testing FMEA Pareto DOE $PC FMEA

ANOVA DOE R3M

$PC Control

Plan Process

Audit

Law Firms Respond – Innovate

• Develop broad, yet specialized services to support global clients

• Improve existing services to achieve profitability objectives• Create new services and service models to buffer revenue

streams from downward pressures on legal spend– Non-legal professional services – Ancillary business units

Today’s Topics






What’s Unique About Lawyer Personalities?

• Measuring Lawyer Personalities with the Caliper Profile– Measures 18 separate and distinct personality traits– Administered to more than 2 million college-educated

subjects over past 40 years – well validated instrument– Administered to more than 4500 lawyers over past 10

years by Dr. Larry Richards – Results: Lawyers vary substantially from the norm on

6 of the 18 traits• Reflects US-based lawyer population; culture session may

reveal differences in Asia-based lawyers

Skepticism

100

90

80

70

60

50

40

30

20

10

0

50

90

Lawyers General Public

Symptoms of highly skeptical people? Pervasive questioning of facts and authority, sometimes cynical, judgmental, argumentative, and self protecting.

50

89

Autonomy

100

90

80

70

60

50

40

30

20

10

0

Resistance to being managed, dislike being told what to do, prize independence.


50

82

Abstract Reasoning

100

90

80

70

60

50

40

30

20

10

0

Ability to detect and theorize fact patterns and cause/effect relationships, that are not readily apparent, and which may or may not be relevant.


50

71

Urgency

100

90

80

70

60

50

40

30

20

10

0

Symptoms? Impatience, a need to get things done, and a sense of immediacy.


50

30

Personal Resilience

100

90

80

70

60

50

40

30

20

10

0

Symptoms of low resilience? Defensive, resist accepting feedback, and hypersensitive to criticism.


50

12

Sociability

100

90

80

70

60

50

40

30

20

10

0

Desire to connect with people, comfort in initiating new relationships with others, having emotional conversation with others.


Does This Make Sense Now?

Implications:Project Management is a Challenge

• Lawyers are not naturally team oriented–High Skepticism and Autonomy combined with low

Sociability and Resilience undermine team behaviors–Compensation system is competitive (in U.S.)–Lawyers are tough-minded and tolerant of conflict—so

they get stuck in “Storming” phase of team formation–Teamwork is unfamiliar — not generally used in law

school• Urgency works against planning and managing to plan• Typical lawyer does not have personality traits needed for

effective project management

Implications:Process Improvement and Innovation are a Challenge

• High skepticism and autonomy can kill new ideas, especially other’s ideas, at inception

• High abstract reasoning promotes analysis paralysis rather than crisp decision making

• Urgency works against reflection for process improvement• Low resilience undermines investments in R&D

– Works against innovator’s mantra of “Fail quick and fast”

Today’s Topics






Thesis

• Project Management, Process Improvement and Innovation are disruptive changes in a law firm

• Business Services leaders and teams are well positioned to pioneer disruptive change BUT also need to avoid arrows in their backs

• Promoting disruptive change benefits from a “Diffusion of Innovations” method

About Diffusion of Innovation (DOI)

• DOI seeks to explain how innovations are adopted within a population– Innovation = an idea, behavior, or object perceived as new by

its audience• Provides 3 insights into social change process; tested in more

than 6000 research studies and field tests and among most reliable in social sciences1. Qualities that make an innovation spread2. Importance of peer-to-peer conversations and networks3. Understanding needs of different user segments

• Standard text: Diffusion of Innovations, Everett M. Rogers, Fifth Edition 2003; Free Press, New York

1. Qualities That Make Innovation SpreadQuality Description

Relative Advantage

How much better is the innovation that what is currently available? How is the improvement quantified?

Compatibility How well does the innovation fit with the values, past experience, and needs of potential adopters?

Simplicity and Ease of Use

How easy or hard is it to understand and use the innovation?

Trialability How easy or hard is it to experiment with the innovation on a limited basis?

Observable Results

How easy or hard is it to observe the results of the innovation?

You should measure any innovation against these 5 factors to assess how difficult adoption is likely to be.

2. Peer-to-Peer Conversations are Critical

• Marketing may spread information about an innovation BUT CONVERSATIONS SPREAD ADOPTION– Face-to-face– Social Media

• Why?– Adoption involves management of risk and uncertainty

(two things lawyers struggle with)– Only people we know and trust can give us credible

reassurances that our attempts to change will be successful

3. Understanding Needs of User Segments

These are the user segments in any adoption population.

Remember…

• Persuasion does not make innovation spread• Innovation spreads as new thing become easier, simpler,

quicker, cheaper, and more advantageous• Each individual combines multiple user segments

– May innovate in one area and be a laggard in others• During an innovation project:

– Analyze and categorize your user population– Know which segment you are working with; design

your activities and pitch your communications accordingly

Circling Back to LPM and LPI

• Will a simple training approach address the full range of innovation segments in your organization?

• Does a more pervasive Lean Sigma approach fit better?• What role does an After Action Review fill?• Is a multifaceted approach necessary to satisfy a broad

range of needs in the full population?

Project Management

Process Improvement

Diffusion of Innovation

Circling Back to Innovation

• For internal innovation, what organizational structures or institutional approaches might be used to:– Ferret out the bright ideas of the innovators?– Apply diffusion of innovation concepts to promote

adoption the innovation?• If you are trying to introduce an innovation originating

outside the organization, how should you leverage diffusion of innovation concepts to achieve your goal?

Today’s Topics






Objectives of ILTA Legal Technology Future Horizons Project

• Identify key business, legal and IT trends and developments

• Build timeline of emerging technologies and IT developments with high potential legal impact

• Explore IT’s transformative role in future legal business models and service differentiation

• Highlight strategic imperatives for effective use and management of legal IT

• Conducted January – December 2013

• Publication – March 2014

• 6 Sponsors

• Combined desk research, interviews with managing partners, CIO’s, vendors, futurists and technologists, global surveys on the business applications of IT (499 responses) and emerging technologies (223 responses)

• Key findings are presented on the following pages including the highest ranked responses in the surveys

Financial Innovation is the New Normale.g. Assets ‘Usership’ vs. Ownership

Rapid Execution e.g. Superfast ConstructionArk Hotel - Dongting Lake – China – 15 days

http://www.dailymail.co.uk/news/article-2083883/Ark-Hotel-construction-Chinese-built-30-storey-hotel-scratch-15-days.html

“How long do I need to wait to get your due diligence results?”

http://www.dailymail.co.uk/news/article-2083883/Ark-Hotel-construction-Chinese-built-30-storey-hotel-scratch-15-days.html

Our Technologies are Evolving From Desktop to Mobile ...

...to Wearable...

...to Embedded...

…and totally Connected via ‘The Internet of Everything’

“What happens when the smartest thing in the room is the room itself?”Madeleine Albright

Speech / gesture / image recognition, integrated analytics, knowledge management, image / video / voice mining, client self-service, intelligent documents, expertise systems, collaboration,

secure email, virtual assistants, intelligent agents and collective intelligence

Artificial Intelligence is Going Mainstream

88%AI advisers /

helper apps will structure legal documents and check content generated by

lawyers

Questions?

Appendix

-- Working With the User Segments --Innovators (2.5%)

Characteristics• Love to try and talk about new

things• Don’t expect new things to be

easy or perfect• Known by majority as

“outliers” or “crackpots”

How to Work With Them• Find them and engage them• Provide support and publicity

for their ideas• Invite them to be partners in

designing your project

-- Working With the User Segments --Early Adopters (13.5%)

Characteristics• Don’t need much persuading• Leap in once benefits start to

become clear• Quick to connect innovation to

their personal needs• Love having advantage over

their peers; will invest time/money to get it

• Like to talk about success

How to Work With Them• Offer strong, face-to-face

support during trial period• Reward egos with recognition• Leverage as peer educators• Maintain relationships

-- Working With the User Segments --Early Majority (34%)

Characteristics• Moderately progressive

pragmatists• Won’t act without solid proof of

benefits• Cost sensitive and risk averse• Wary of fads; want “industry

standard,” and “endorsed by normal folks (like me)”

• Want simple, proven, better ways to do what they do; ways that take no time to learn and create no disruption

How to Work With Them• Stimulate interest with prizes or

competitions• Share endorsements from

credible, respected, similar people

• Redesign for ease and simplicity• Simplify instructions & education• Provide strong support

-- Working With the User Segments --Late Majority (34%)

Characteristics• Conservative pragmatists• Hate risk and uncomfortable

with innovation• Fear not fitting in; will follow

mainstream fashions and established standards

• Influenced by fears and opinions of laggards

How to Work With Them• Promote social norms rather

than just benefits of innovation• Share endorsements from

other conservative folks like them that innovation is normal and indispensable

• Emphasize risks of being left behind

• Defuse criticism from laggards

-- Working With the User Segments --Laggards (16%)

Characteristics• Hold out to the bitter end• See high risk in adopting the

innovation• Spend time thinking up

arguments against the innovation and are vocal about concerns

How to Work With Them• Provide high levels of personal

control over when, where, how, and whether they adopt the innovation

• Promote familiarity with other successful innovations

• Promote success of laggards who do adopt innovation

Always be mindful:• They might be right; they might be innovators of

ideas so new they challenge your paradigms• They can undermine progress with late majorities,

so don’t ignore them

Driving Change at the Coal Face of Law

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