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Alternatives To “Big Law” For Recent Grads & “Out Of The Box” Law Firm Strategies

The good news is, this week Forbes reports, citing the U.S. Bureau of Labor Statistics, that the U.S. Economy added 203,000 jobs in November, bringing unemployment down to a shockingly low 7 percent.

In addition to a lower unemployment rate, this week, the labor force participation rate was stronger, up to 63 percent from 62.8 percent last month, reports the same statistics.

So, in sum, the government is back in business and—better yet—reporting optimistic numbers for our employment outlook.

What’s the bad news?

The bad news is, employment for lawyers is still low. It has been difficult for the legal industry to efficiently match demand for low-cost legal services with the overabundant supply of highly educated (and thus enormously-expensive) legal professionals.

Law firms are still struggling to find the right combination of partners and associates.

And, the new generation of graduates is unlikely to see a return of the old BigLaw system offering stable, well-paying jobs. Of the 2012 law school graduates in private practice, just under half—43 percent—landed jobs at firms with between two and 10 layers, according to the National Association for Law Placement, as reported by the Wall Street Journal.

“Looking for other ways to practice law successfully is something people ought to be focusing on more,” said New York City Bar President, Carey R. Dunne, a former prosecutor and partner at law firm Davis Polk & Wardwell LLP, to the WSJ.

According to Mr. Dunne, the pool of well-paid jobs at big law firms is shrinking as clients push back on price and lower-cost alternatives, like outsourcing to foreign or in-house counsel.

Luckily, new programs are cropping up to solve this crisis.

The New York Bar Association is trying out a variety of alternatives to law firm placement for recent grads, such as placing novice lawyers in apprenticeships with big banks or other employers. They are also starting a new law firm that will test whether young attorneys can make a decent living while helping Americans who can’t doll out market rate.

Brooklyn Law School, in another attempt to match legal supply with demand, is launching a program that will place students in government and nonprofit organizations, which then hire them for at least one year after graduation, reports the WSJ.

Finally, Cisco Systems Inc. is planning to team up with the University of Colorado Law School on a program where students will be paid to work full time in the company’s legal department for around seven months, take classes to make up missed course work, and then receive a semester in free tuition.

“My goal is to develop a significant number of companies and law firms that are willing to take two or three students per year and do this, and create a really robust national program,” said Cisco’s general counsel, Mark Chandler, to the WSJ.

“I’m hoping that this is just one idea of many that will blossom.”

And, with the right education or private partnerships, your law firm can also create innovative training programs for their young associates.

It take a lot of effort to step outside that box, but—once you’re there—a world of opportunity (and efficiency) awaits.

-WB 

Still need some creative inspiration? Read C4CM’s guide on Creating The Flexible Workplace.

You’ll find tips and tricks on how to:

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  • Improved staff retention and recruitment efforts
  • Maximized employee productivity and performance
  • Improved quality and effectiveness of employee  work and personal lives
  • Decreased health care utilization costs
  • Reduced organizational facilities’ costs
  • Enhanced reputation as an employer of choice

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The Debate On Discounting: Why Your Law Firm Should Care More About Value, Not Price

With the emergence of online shopping has come the advent of online savings codes.  In fact, in the UK, nearly 10 million consumers used an online savings code in the past year, according to Nielsen and This Is Money.

A myriad start-up websites, like Groupon, have also cropped up to show us the way toward increased savings. These websites offer vouchers and coupons for cheaper services and products to consumers, while making money in affiliate marketing schemes on the side.

It seems nothing is full-price anymore. Except, perhaps, law services.

Discounting within the field of law is, for some reason, frowned upon.

There’s no “black Friday” for attorneys fees or coupons for half-price on your next court case.

Lawyers are concerned that price equals value—that clients will believe the quality of services rendered were as low as the bill for them. Lawyers are also concerned that clients will become accustomed discounting and will eventually refuse to pay full-price for attorney’s fees or choose alternative representation in the event these fees rise.

As a result, discounting is strategy for attracting new clients or retaining old ones in a competitive market. In the recession, with an overabundance of attorneys, this type of corporate strategy of price differentiation was key.

Luckily for lawyers, however, times are looking up and fees are going up with them.

“The end of 2012 saw increased optimism among law firm managing partners, whose renewed faith in the overall economy mirrored gains in their confidence in business conditions for the legal profession,” The AmLaw Daily concludes from the latest Law Watch Managing Partner Confidence Index survey.

According to the survey, confidence in the broader economic, and particularly in business conditions for the legal profession, jumped 18 points in the last quarter of 2012. Although confidence in discounting rates was poor, an improvement in the demand for legal services will go a long way in abolishing this fee-reduction trend.

“A lot of the discounting pressure that we’ve seen over the course of a number of years now, postrecession, has been driven by the fact that there’s not enough legal work to go around,” explains Citi senior client adviser Gretta Rusanow to The AmLaw Daily.

“So, where firms have excess capacity, they are more inclined to discount their fees in an effort to keep their lawyers busy.”

Nevertheless, increased confidence in the market is a good sign for lawyers.

In the end, discounting won’t be necessary as long as your firm can offer clients:

1. Evidence of the value

Have a new client one-page summary sheet that lists your firm’s case wins, satisfied client testimonials, and the profiles of your qualified employees. Provide a short cost-benefit analysis that shows your fees are appropriate, as well as important to stave off the possibility of higher costs in the future.

2. Consistency in work product

Consistency equates to quality. Provide regular case matter updates, personal and electronic communication, and billing. Clients are less upset by invoices that they are already expecting.

3. Confidence

Increased confidence about the market or the future of the field of law is good news on the whole. But, retaining confidence in the high quality of your practice will also help your firm retain its clients. Discounting is a legitimate corporate strategy. But, does your firm care more about its price than its value?

The economy is uncertain. But, with comprehensive and confident work on a client’s case, your performance doesn’t have to be. Discounting or no discounting, a law firm’s value and ability to attract clients is created by a rock-solid reputation, time-proven results, and high human capital—not simply the price tag.

-WB

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On The Rise: What The Luxury Goods Industry Can Teach Law Firms About Mobile Recruiting

“Nordstrom has a waiting list for a Chanel sequined tweed coat with a $9,010 price. Neiman Marcus has sold out in almost every size of Christian Louboutin “Bianca” platform pumps, at $775 a pair. Mercedes-Benz said it sold more cars last month in the United States than it had in any July in five years,” according to last summer’s NY Times.

A recession usually marks the decline of luxury good sales. Individuals spend less on unnecessary clothing, vehicles, and vacations to save more on immediate needs, like mortgages, credit card debt, food, and childcare.

Yet, this generation’s recession has noticed a marked revival in sales of late, a good sign for luxury goods dealers.

If high-end markets, forecasted to be last in line for recovery, are gaining ground, then why are markets for immediate need—such as legal aid or the job search industry—struggling so far behind?

Economists believe it’s statistically simple to predict the fickle whims of consumers. And, for law, they’ll site oversupply of providers with under-demand for services as the reason behind a slump in the legal field.

But, perhaps oversaturation of the market is not to blame. Is it possible that luxury industries have a secret economic tool, innovation, or know-how that’s missing or hidden from deeper-rooted corporations?

Doubtful.

It’s more likely that luxury industries—understanding the difference between essential and optional—embrace technology, specifically smart phones and mobile apps, not as luxury items at all; but, instead, as valuable and necessary retail, sales, and marketing norms.

Tablets, e-devices, and other gadgetry are not news, they’re professional needs.

As such, people around the world are searching job vacancies via LinkedIn, locating food delivery via the Seamless app, and finding friends through Meetup Groups and social media.

And, as of today, your law firm clients are booking hotels via Ritz-Carlton’s recently-released mobile app. According to Boston.com’s article about the app’s debut,

“In addition to the reservations system and hotel room look-up, the Ritz-Carlton app includes personal tips from President & COO Herve Humler that identify the “hidden gems” guests shouldn’t miss when they check in (think: a Viennese crystal chandelier in Doha and a secret garden in Sanya).”

Of course, computer programming allows any service to be customizable with the drop of a line of code. Ritz Carlton’s app is no exception.

“Additionally, the app will offer personalized suggestions to guests based on location and duration of stay,” writes Melanie Nayer of Boston.com.

What does all this mean for law firm management?

Well, for research lab Potentialpark, it means law firms should start seriously considering mobile recruiting.

By this time, law firms should have a web site, blog, and possibly even a mobile app to advertise its expertise and expert lawyers.

Unfortunately for legal recruiters, however, a study by Potentialpark (via Mashable) discovered that while a healthy 19 percent of job seekers use their mobile devices for career-related purposes (and more than 50 percent could imagine doing so), only 7 percent of employers have a mobile version of their career website and only 3 percent have a mobile job app.

So, your future legal recruits want to use their mobile phones to look for jobs, receive job alerts, check their job status, and get tips for the application process.

And, although they can check-in to their flight on a smartphone to attend an interview, they can’t actually find your job openings mobile-y.

Right now, one in five job seekers makes use of their mobile phone to head hunt. In the future, these numbers will only increase; which is why hotels, like the Ritz-Carlton, have harnessed mobile recruiting power. But, the question is, why haven’t you?

-WB

For more information about mobile recruiting and developing an online, anywhere, anytime talent sourcing strategy, attend The Center For Competitive Management’s audio course on May 22, 2012.

You will learn:

  • The definition of mobile recruitment and how can it be used effectively
  • Why mobile recruitment is such a competitive advantage
  • How to choose a mobile strategy that makes sense for your company

By the end of this comprehensive program, you’ll also know more about:

  • Common terms defined including; mobile web, native apps, QR Codes, SMS and other mobile recruitment innovations.
  • How social and mobile meld and how to leverage your current social presence for mobile recruitment.
  • How GPS and location based services can help you create a more local mobile experience for prospective employees.
  • How video can enhance recruitment success
  • What next? An overview of the latest mobile applications and technologies

Image courtesy of iStockphoto, Neustockimages

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Highly-Regulated U.S. Law Industry Reminds U.K. Firms To Keep Out: New York State Bar Rules On Ethics

Formal publications and informal publications, like this law blog, spend a predominant amount of time advocating for legal service innovation.

Clifford Winston, Robert W. Crandall, and Vikram Maheshri of the Brookings Institute suggest in their publication, First Thing We Do, Let’s Deregulate All the Lawyers. The authors claim entry barriers and restrictions combined with government-induced demand for lawyers drives up the prices for legal services, which then draws significant social costs, hampers innovation, misallocates the nation’s labor resources, and creates socially perverse incentives.

Winston and Crandall also contributed an op-ed to the Wall Street Journal calling for the immediate deregulation of the legal industry. They wrote:

“The reality is that many more people could offer various forms of legal services today at far lower prices if the American Bar Association (ABA) did not artificially restrict the number of lawyers through its accreditation of law schools—most states require individuals to graduate from such a school to take their bar exam—and by inducing states to bar legal services by non-lawyer-owned entities. It would be better to deregulate the provision of legal services. This would lower prices for clients and lead to more jobs.”

Amid countless lawsuits accusing law schools of misrepresenting employment statistics and a boom in online legal services, law school graduates are desperately seeking jobs, and clients seeking affordable counsel.

Both the Cato Institute and OpenMarket.org agree with the WSJ that deregulation is necessary.

“People can represent themselves in small-claims courts, which have simplified procedures, but in many states, such courts can hear only the tiniest legal claims, like those seeking less than $5,000,” states OpenMarket.org (via ATL).

“Every other U.S. industry that has been deregulated, from trucking to telephones, has lowered prices for consumers without sacrificing quality,” continue Winston and Crandall.

Foreign countries have also deregulated the law industry. Consider, for example, the U.K.

Law firms there can receive external investment—even through an IPO—and non-law firms can offer legal services without special legal accreditation.

The Legal Services Act, which passed in October, provides for new ownership structures in the U.S., but to date, no major U.K. law firm has taken advantage of it (via WSJ).

And, according to the Wall Street Journal and a recent ethics opinion by the New York State Bar, perhaps U.K. firms should continue to stay off U.S.-regulated soil. Here’s why.

The New York State Bar, which is the largest in the country with 77,000 members, recently ruled that New York lawyers can’t practice law in the state if they are part of U.K. law firm with non-lawyer owners.

“The committee considered this scenario: Lawyers licensed to practice in New York enter a business relationship with a U.K. firm that has non-lawyer owners and managers. The New York lawyers establish a New York office for the firm and represent New York clients. They don’t share confidential information with the non-lawyers and they abide by U.K. rules,” writes the WSJ Law Blog.

The New York State Bar ruled that the above scenario violates ethics rule that forbids a lawyer from practicing law for profit with an entity that includes a non-lawyer owner.

Although The American Bar Association is considering a tweak to its ethics rules, there is no end in sight. Despite the dire economic climate for lawyers, the U.S. is hesitant to propose any innovation that would deregulate the law industry.

FT has more on the ethics opinion here.

What’s the solution? To garner more business overseas and to exit this financial crisis, will U.S. states be forced to deregulate their law industry?

In today’s globalized world, a combination U.S.-U.K. law firm shows signs of potential success. But, for the moment, it looks like U.S. law firms will have to go it alone.

-WB

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Remembering Columbus Day: Why Foreign Exchange And Outsourcing Legal Services Comes At A Cost

Can you imagine being on Christopher Columbus’s boat when he discovered the New World? To eat corn, potatoes, beans, hot peppers, tomatoes, avocados, cocoa, and turkeys for the first time?

Columbus Day is a federal holiday celebrating the discovery of the Americas by Christopher Columbus on October 12, 1492. But, it’s also a critical moment in history for free and open international trade.

Today, it’s often forgotten how the simple exchange of goods and services is responsible for supporting the U.S. economy.

In the case of law, outsourcing legal services to India has been a popular win-win solution allowing American legal services providers to lower costs and their Indian counterparts to reap a portion of the industry’s revenue. By 2014, India’s legal outsourcing firms are expected to surpass $1 billion, which is an increase of 38 percent from 2008, Valuenotes, consulting firm in Pune, India, estimates (via NYT).

Needless to say, both sides profit monetarily from this arrangement.

Nevertheless, just like small pox in the New World, sometimes the benefits of trade have drawbacks, as well.

Take, for example, a decision by the 2nd U.S. Circuit Court of Appeals against the company Glenwood, who operates a Connecticut-based medical billing business. Glenwood outsourced its operations to India, but instead of lowering costs and increasing revenue, the company alleges three former Indian employees used proprietary trade information to start competing companies in India and California (via Law.com).

To make matters worse, according to the suit, these new companies now serve some of Glenwood’s former clients (via Law.com).

However, the Court of Appeals ruled that the three alleged offenders in India could not be brought to court in Connecticut because the companies do not provide services for clients in the state. In sum, the court made it clear that U.S. law does not apply to business disputes overseas.

“In the face of an increasingly interconnected global economy and unbelievable advances in technology, the U.S. courts are going to resist any trend that leads to universal jurisdiction over commercial disputes,” said Attorney W. Glen Pierson, a partner at Wallingford-based Loughlin Fitzgerald, about the suit, according to Law.com.

“It’s unfair for any party that outsources to get the benefits of outsourcing while avoiding the risk of having to litigate whatever claims they may have overseas.”

Indian law already forbids foreign lawyers from practicing on Indian soil. So, if there’s further risk in terms of intellectual-property theft or increased competition by bringing your business abroad, suddenly the advantages to outsourcing legal services comes into question.

In a recession, firms nationwide are looking to cut costs, but is outsourcing to India worth the risk of client poaching?

In every decision about money, there are always hidden social and economic consequences to consider. Does the cost of hiring a few additional paralegals or an attorney outweigh the cost of losing a client, for example?

When managing a law firm, success is not always measured by the bottom line. Keeping services local or in-house can sometimes be an appropriate method for protecting your firm’s confidential information and legal strategies.

-WB

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Legal Services Outsourcing & Indian Openness

Corporate America has been outsourcing work to India for decades. The legal industry quickly followed suit.

Not only does sending work abroad cut down on labor costs, but it also keeps business open 24 hours.

By the end of 2009, the number of legal outsourcing companies in India exploded from 40 (in 2005) to 140, according to Valuenotes (via NYT), a consulting firm in Pune, India. By 2014, India’s legal outsourcing firms are expected to surpass $1 billion, which is an increase of 38 percent from 2008, Valuenotes estimates (via NYT).

Still, U.S. and U.K. firms outsourcing to India have faced serious barriers in the past. The biggest hitch to outsourcing legal services? Indian law restricts foreign firms from opening offices or practicing law in the country (via WSJ Law Blog).

However, the Wall Street Journal Law Blog reports that these roadblocks are gradually crumbling. India’s Law Minister Salman Khurshid and the U.K.’s Secretary of State for Justice Kenneth Clarke have recently agreed to work on an arrangement in which India would premit U.K. law firms to enter the Indian legal market, the Hindustan Times reports (via WSJ Law Blog).

In turn, the British would agree to accomodate more Indian firms in the U.K., according to the same article. While the U.S. has not yet entered the discussion, open dialogue is definitely a change toward the better in terms of international legal cooperation.

“We understand the U.K. firms want to open offices in India for non-litigation purposes—mainly drafting of business contracts, deeds, agreements and other similar works,” said Ashok Parija to the WSJ Law Blog, the chairman of the Indian body that regulates the legal profession. “We will negotiate with our UK counterparts to work out a principle of reciprocity, which will benefit both sides.”

In hard economic times, the ability to generate doc review overseas, for example, or the drafting of simple legal documents will be key to many struggling firms.

Companies are already making use of innovative tools to lower legal fees, such as “reverse auctions“, to outsource high-volume and routine work, such as tax filings and intellectual-property transactions, to the lowest bidder.

Given the freedom to outsource more business to India, law firms should be able to lower their expenses and, in turn, attract an increased number of these cost-cutting clients.

“We will continue to go to big firms for the lawyers they have who are experts in subject matter, world-class thought leaders and the best litigators and regulatory lawyers around the world—and we will pay a lot of money for those lawyers,” Janine Dascenzo, associate general counsel at General Electric, said about outsourcing legal services abroad (NYT).

At the same time, Dascenzo agrees, “You don’t need a $500-an-hour associate to do things like document review and basic due diligence.”

Unsurprisingly, in the field of law, there’s no comparison to a recession when it comes to opening borders, lowering barriers, and practicing complete free market economics.

-WB

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What’s In A Number? The U.S. Census Poverty Report & How Game Theory Is Replacing Lawyers

Economists use complex computer models to predict upswings and downturns in the global economy, and as a basis for problem-solving when it comes to crises and joblessness.

Via similar predictive technology, on Tuesday, the government released data that confirmed how dire the economic situation continues to be.

According to a poverty report by the U.S. Census Bureau, last year’s poverty rate of 15.1 percent was the highest level reached in America in 17 years.  Approximately 46 million people were classified as poor in 2010, with the median annual income dropping by more than two percent to $49,445.

The key factor attributed to the economic decline was a continued lack of jobs (we’re not surprised, either). You’d think the nation’s best minds and technology could uncover numbers and trends that are a little less obvious.

And they can.

Less noticeable, behind the scenes, some sectors are, in fact, experiencing some growth. In comes, the technology sector.

The problem is, innovation in technology may actually help to continue joblessness in America. Here’s why.

Take, for instance, an invention by Bruce Bueno de Mesquita. He created a computer software that simulates what economists call “Game Theory.” Game theory predicts how events will unfold by using the presumption that individuals or companies act in their perceived best interest.

Bueno de Mesquita runs a consulting agency that uses this system of game theory-based numerical modeling, and he’s quite successful at it.

“Most decision-making advice is political, in the broadest sense of the word—how best to outfox a trial prosecutor, sway a jury, win support from shareholders or woo alienated voters by shuffling a political coalition and making legislative concessions,” The Economist reports on Bueno de Mesquita’s practice.

Although a consulting agency would need to provide costly training and expertise to operate these computer programs, the software can solve problems at far higher speeds and efficiency than the average human being.

In the field of law, you can only begin to imagine the immediate and concrete applications of this.

“’[Mediation and negotiation] software is now emerging.’ Barry O’Neill, a game theorist at the University of California, Los Angeles, describes how it can facilitate divorce settlements,” writes The Economist.

“’A husband and wife are each given a number of points which they secretly allocate to household assets they desire. The wife may inform the software that her valuation of the family car is, say, 15 points. If the husband puts the car’s value at 10 points, he cannot later claim that he deserves more compensation for not getting the car than she would be entitled to.’”

What’s clear is that the economy is in poor sorts, and economists are working toward solutions to end poverty via better technology, innovation, and efficiency.

What’s not so predictable, however, is the discovery that improving technology and its resourcefulness—particularly for legal services—may work to reduce the number of lawyers and professionals, not increase it.

So, are avatar lawyers really too space age for today, or are they rapidly becoming a reality?

-WB

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