Legal Tech Evolution: Discomfort and Lasting Relationships

by | Oct 5, 2015

Legal Tech Evolution Discomfort and Lasting Relationships

If law firms aren’t evolving at a suitable pace, then perhaps corporate counsel should engage in introspective thinking.  That’s according to D. Casey Flaherty, a former in-house counsel, turned consultant, who made a mark on the industry with the creation of the Legal Technology Audit.

His commentary is timely given much of the conversation at the recent ILTA conference (ILTACON) centered on rethinking the business of law – especially in light of current competitive forces at work and the role technology should have in the evolution.

At least one session debated the strategic value of IT in law firms, which is fitting for a conference agenda built around legal technology. However, a contrarian view, along with the vigor and merits of arguments on both sides livened this particular session.

In essence, one side argued IT is strategic – try running a global law business without email, CRM, eBilling or matter management, for example.  The other side argued IT is not strategic – sure applications are business critical but that doesn’t mean these are “strategic.”  A law firm couldn’t function without an office, desks or electricity either…and no one is debating the strategic value of electricity.

Given Mr. Flaherty’s legal tech evangelism and reputation in the industry – he was the keynote speaker at the 2015 LexisNexis® CounselLink® User Conference – we caught up with him and posed that question along with a few others.  

1. At one session at the recent ILTA conference (ILTACON), there was some debate over whether or not IT is strategic for a law firm. You’ve written a vast body of work about legal technology for both inside and outside counsel – what is your perspective?

“While I don’t want to get into a Clintonian linguistic quagmire, it depends on what the definition of “strategic” is. My impression from the linked article is that we are talking about whether IT infrastructure is a factor for clients to consider in retention and realization decisions. In that sense, I agree with both positions.

I agree that it should be a differentiator. Various aspects of IT are focal points in my Service Delivery Review. Once a (i) sophisticated consumer of legal services has screened for quality and (ii) pricing has converged, the mechanisms by which services are delivered should matter. In fact, if pricing is based on the billable hour, service delivery probably trumps rates in order of importance. Moreover, whether it is flat fees or the billable rate, once the relationship is established and people/price in place, process offers the levers to drive continuous improvement.

That said, I agree that IT and other indicia of legal service delivery are not usually treated as a differentiator by clients. [I’m speaking in generalities throughout. Any categorical statement I make can easily be refuted by reference to exceptions, including my collaborators like Connie Brenton at NetApp and Vince Cordo at Shell.] Most clients are still looking primarily at people—legal remains relationship driven. Some, especially those who have transitioned to AFA’s, have gotten more systematic about price. Passing few are at the point where process enters their decision-making calculus.”

2. In a post for 3 Geeks and a Law Blog, you wrote, “just as law firms can do better at delivering legal services, law departments can do better at sharing information and integrating their law firms into the client’s legal supply chain.” What advice would you have for law firms to nudging that along?

“For the most part, I put the responsibility on clients. Legal has been a buyers’ market for quite some time. Deficiencies are for buyers to remedy through the power of the purse. To the extent the market is not changing, clients have themselves to blame.

Firms, however, can still initiate structured dialogue. They don’t. Neither side likes uncomfortable conversations. Yet the ability to have uncomfortable conversations and address the root cause of the discomfort is an important element of lasting relationships. Firms can’t force clients to care. But firms can, at least, gauge their client’s interest in having the conversation.

Most firms never ask their clients, “how are we doing?” Even fewer firms explain to their clients, “if you did X differently, we could provide you better service.” Instead, we discuss the merits of the matter, complain about the other side, argue over invoices, and talk about our kids. The firm’s delivery of legal services is not discussed unless they screw up in some major way. The way the client can help the firm better deliver legal services is even more taboo because the customer is always right, even when they’re wrong. It’s understandable. But it’s still unhealthy.”

Also see these related posts:
Metrics Strengthen Inside and Outside Counsel Relationships
Defining Legal Operations and Assessing Maturity
Good People, Bad Process:  Building a Legal Operations Team

3. In a piece for InsideCounsel, you and co-author Connie Brenton, say “law firms rarely get credit for innovation” and the reason boils down to “clients aren’t asking for it.”  For those law firms that are – or aspire to – what tangible steps can firms take to get credit for innovating?

“Again, firms can’t force clients to care, but they can initiate the conversation. If the client is actually interested, numbers will help immensely. Measurements should precede the intervention/innovation. Measurements should follow the intervention/innovation. Indeed, metrics should be built directly into the process improvement initiative. We did X. The positive results of X are… As Deming said, “In God we trust, all others bring data.”

But I also understand why firms don’t do it. There is a worldview that considers any performance improvement an indictment of what came before. Telling a client that the firm will be 10% more efficient in the future can easily be interpreted as a confession that the firm has been at least 10% inefficient for the duration of the relationship. I don’t think that is the right way of looking at it. A commitment to continuous improvement is part of a commitment to excellence. But just because I think that is the wrong way to look at it does not mean firms are unreasonable in fearing that clients will look at it that way.”

4. Are there other reasons for law firm innovation?

“There are lots of reasons for law firm innovation. Some people are intrinsically motivated to innovate. A few of them hold positions of power in law firms. There are also ways to make money from innovation that do not come from traditional client relationship channels (e.g., packaged products).

And there are pain points felt within the law firm that are hidden from client view. Innovation is often an effort to alleviate pain. Clients are not the sole source of pain and misery for law firms. Lawyers, however, tend to have a very high pain threshold. The lawyers I know work incredibly hard. They sacrifice sleep, health, food, and family on the altar of getting the work done. Some lawyers even take a perverse pride in their late nights and work-filled weekends. This view of suffering as the price of salvation dampens efforts to alleviate suffering. It also means that people are so insanely busy that they don’t have time to implement innovations, which save time in the long run but demand an investment of time on the front end.”

* * *

Casey Flaherty is the principal of Procertas, which aims to align the modern law department with the businesses they serve. He can be found on LinkedIn and Twitter: @DCaseyF.

If you’ve enjoyed this post, you might also like:
7 Ways to Prove the Value of the Legal Department

Photo credit:  Flickr, Angelo Amboldi, Self power (CC BY-ND 2.0)

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