Disruption in Law: Why does it matter?

Disruptive-change-is-inevitable1The past two weeks have been remarkably energizing thanks to several new and older entrepreneur friends (not in age, but longevity). My long time friend and serial entrepreneur Phil Gibbs has formed The Disruption Lab “to provide an outsourced innovation lab for corporations aspiring to achieve extraordinary growth through continuous innovation.”

That’s where I met my new serial entrepreneurial friends, Peter Marcum and Jay Deragon. It can be said of all of them, “Hail fellows, well met!” Each is a marvel in his own right. Thanks for the great conversations!

The Disruption Lab meets twice monthly to explore and actualize innovation in business. Its members are all extremely accomplished and successful business leaders from most industries and a variety of professional backgrounds.  Their common trait? They are lifelong learners who cannot get enough information, knowledge and wisdom.  That’s why they gather and pay to belong. The value of belonging is much greater than the cost of membership.

In our meeting yesterday, the sharing of information and experiences all focused on the common traits of business disruption (as opposed to incremental improvement). Disruption is innovation that threatens the common business model of the business or industry segment it serves. Think Uber in personal transportation and even automobile ownership (why pay to own when you can pay less to ride?) Think Airbnb in business lodging and vacation rentals. contrarian_disruption

These are extreme examples of disruptive innovation. Would Uber have been created at Yellow Cab (or even General Motors) or would Airbnb resulted from innovation at Marriott?  Of course not, because they threaten the business models that have worked so well for so long.

Very few disruptive innovations came from within an established business entity. An example of the exception is the creation of the laptop from an IBM “skunk works” team who labored in obscurity and anonymity far removed from the remainder of the IBM computer culture. Why? They radically downsized the desktop industry.

Clayton Christensen first popularized this phenomenon in The Innovators Dilemma: The Revolutionary Book that Will Change the Way You Do Business (2011). (Christensen addressed the disruption of law at the Harvard Law School in 2014.)

At The Disruption Lab we have been exploring the common elements of disruption in any business sector.  Aided by work done by Peter Theil in Zero to One, Chris McChesney , Sean Covey, and Jim Huling, The 4 Disciplines of Execution: Achieving Your Wildly Important Goals and Salim Ismail and Michael S. Malone, Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it), Phil led a dynamic discussion regarding what are the common traits that lead to business disruption.

In short, and after extremely stimulating conversation, it appears that businesses or industry sectors that are ripe for disruption all display these common patterns:

  • Starts with a “job” being done well, which has become complex, difficult to access and expensive
  • As result the market is not well served
  • Disruptors employ an enabling technology
  • Resources utilized are owned by others
  • Disruption is simpler, more convenient and cheaper
  • Current providers ignore or dismiss, and when threatened seriously, seek regulatory protection.

Whether Airbnb, Uber, laptops or any other disruptive product or service, these characteristics in today’s digital economy prevail.

Some have grown tired of hearing how the concept of disruption can be applied to the legal industry and argue that it is like comparing apples to oranges.  I beg to differ.

Legal service delivery as an industry fits every common trait of ripeness for disruption to a “T”. Not in ten years or after the crop of Baby Boomers currently in charge of the legal industry retire, but now. (I know about Baby Boomers because I are one.)

Isn’t it true that the legal industry is:

  • Complex, expensive and difficult to access?

There is an enormous market served so expensively and with such complexity that it has become inaccessible for 80% to 90% of the population. (See below.) Even lawyers resist retaining other lawyers for their own legal needs because of unpredictable pricing and “black box” problem solving.

Most ethics complaints against lawyers are a variant of “she wouldn’t return my call”. Clients hate surprises in the handling of their problems. Legal billing has become another example of the adversarial system. Numerous business have thrived by reviewing legal bills and contesting inappropriate charges.

Attorneys are so cautious about billing for time worked due to obvious inefficiencies in providing services that 23% of time is “written off” (or “written down”) and never finds its way onto a client invoice. Of the time actually invoiced, 18% is never collected due to client objection or disapproval. Less than 75% of legal time actually worked is ever paid for! What other business can survive with that level of waste?

Lawyers rarely sue to enforce legal billing obligations because of the desire to keep the problem “out of the papers”. Lawyers who do sue to collect unpaid bills sometimes find themselves the target of counter suits and unfavorable publicity like that resulting when DLA Piper (then the world’s largest law firm) filed suit in 2013 against a client for unpaid legal fees amounting to over $675,000. A $22.5 million counter claim was filed by the client for billing fraud. The resulting litigation disclosed numerous emails among attorneys working for the client which suggested deliberate “churning of the bill” by unnecessary and expensive over billing.  The attorneys involved all left the firm and the suit was quickly and quietly settled. Enormous damage was done and legal services became trusted even less than before.

  • Under or poorly served market?

In the U.S., numerous surveys and studies reveal that 4 out of every 5 individuals and business entities will “go it alone” rather than have their legal needs met by a lawyer. In the U.K. the ratio is 9 out of 10.

Over 80% of divorce actions are handled without lawyers.  That amounts to an amazing amount of post-divorce issues in child support, visitation and taxation which never have the benefit of legal counsel. The indigent client population in criminal and civil matters cannot be served due to the paucity of legal aid and pro bono services. States like Tennessee have struggled hard to solve the “Access to Justice” issue and despite heroic efforts have moved the needle only slightly.

Some would say there are more lawyers than needed.  That would be true if they were serving the under served.  Instead, they are primarily focused on a shrinking share of the “top tier” legal work and cannot afford to provide services to the poorly served at rates the clients can afford.

  • Disruptors enabled by technology?

This is the characteristic that is only now showing up on the scene in law in a significant fashion.  E-discovery has been a forecaster of things to come. Previously, the high end review of documents related to litigation was done by lawyers and paralegals at a significant cost to the clients. This manual and expensive legal service has been replaced by the technology of information management which produced far superior results at vastly reduced prices.

As technology continues to be developed to provide other means of support to provide “better, faster, cheaper” legal services, the clients and those providing legal services will innovate the legal workplace.  This innovation is already reducing the cost and increasing the access to legal support by such companies (not law firms) like LexMachina (IP litigation), Clio (small firm finance and case management), NeotaLogic (decision tree legal decision making) and literally hundreds of e-discovery firms which are improving information management (not just litigation support) at an exponential rate.

It is not yet a tsunami, but the surf is retreating in advance of the coming disruption.

  • Resources utilized are owned by others?

Just as Uber uses independent drivers’ own cars and Aribnb uses property owners’ unused bedrooms, homes and vacation locations, legal disruption will be achieved by the use of resources not owned by the lawyers (law firms or legal departments).

Few law firms “own” an e-discovery capability.  It is rented by the legal department or law firm and owned by people and companies who don’t possess a law degree. E-discovery companies are like Uber drivers who contract their services on a wholesale basis as their time and capacity permit.

With the advent of cloud computing, even skeptical law firms realize that the security in the cloud is better than they can provide for confidential data they are responsible for.  Furthermore, it is far cheaper to use cloud services to store and manage digital data than to own it and maintain it behind an on premises firewall. Servers owned by others are now used by lawyers to host their highly valuable data.

As technology applications by legal start ups continue to augment the service lawyers provide, they will incur less overhead to do what was once done exclusively within the walls of the law firm or legal department.

Now that IBM’s Watson has turned its attention to legal services (like it already has done to medicine) the degree to which technology enabling will disrupt the law cannot be fully appreciated.

  • Simpler, more convenient and cheaper disruption?

Services which are less expensive for both the customer and the provider is the key to disruptive innovation. Uber drivers can drive nicer cars at less out of pocket cost because revenue offsets the expense of automobile ownership. Customers can get personal transportation on demand in a trustworthy and reliable vehicle with indemnified and background checked drivers all enabled by real time technology. Home and vacation property owners can benefit from Airbnb’s massive Internet reach and its technology model which provides the property owner with offsetting revenue and the customer with less expensive lodging.

In law, the key to better, faster, cheaper as with the other disruptive models is whether or not services can be delivered more profitably as well. Lawyers are beginning to understand that project management and process improvement methodologies like Lean and Agile can convert better, faster, cheaper into more profitable as well. Without greater control of a legal matter’s profitability, being better, faster, and cheaper only leads to bankruptcy.

Having moved from the “cost plus” model of legal billing of the past to “predictable pricing”, lawyers and clients will both benefit from better quality at less cost and higher profits only through maximizing the value of efficiency. The race to fixed fee revenue which is being insisted on by most corporate clients, requires lawyers to adopt the methods of project management and process improvement just like their corporate clients did decades ago.

This makes the delivery of legal services simpler, more convenient and cheaper (not to mention real time and transparent) while also generating greater profits for the legal service provider.

  • Current providers ignore or dismiss, and when threatened seriously, seek regulatory protection?

Perhaps the greatest indicator of the ripeness of law for disruption is the disdain most lawyers have for efficiency, technology, convenience and cost effectiveness (or value). These client serving attributes are exactly what drives the market to find alternatives to the current business model. The disdain, distrust or unfamiliarity with these values by incumbents in the industry is what leads to innovation from outside the industry.

As the 2015 Altman Weil Law Firms in Transition survey reveals, law firm leaders from firms of every size understand that the glory days of economic growth in legal service delivery will never return. However, they admit they are doing nothing about it and have no idea what to do.

This approaching tsunami takes the providers unaware as disruptors move into the market to provide legal services better, faster, cheaper and more profitably.

Today most lawyers rely on the “unauthorized practice of law” dogma to persuade themselves that their lair is safe from intruders. Ask the dentists in North Carolina how well that works. After attempting to ban technicians providing teeth whitening services from the “unauthorized practice of dentistry” the Federal Trade Commission argued and the United States Supreme Court held this year that when permission to perform services is doled out by license holders, the regulation of providers is inherently suspect and cannot be used to restrain trade because not in the consumer’s best interest.  Self interested restraint of trade regulations cannot survive that scrutiny. Are you listening lawyers?

A great audio interview (Are Robots Really Coming to Take our Jobs?) produced by the Harvard Business Review illustrates this phenomenon perfectly. Without using words like exponential, disruption or legal services, Boston School of Law Professor James Bessen, economist and former software executive, discusses the impact of innovation on the workplace and workers.  Whether digital or mechanical, innovations initially depress the wages and economic opportunities as “workers” (manual or knowledge worker) retool to become equipped to to serve the new economy. Ultimately, they are better served economically by a wide measure as a result of the “disruption”.

DIsruption thread that bindsSome economic forces are too great to be ignored, dismissed or regulated. An industry ripe for disruption will be disrupted. Tsunami’s cannot be stopped. The only thread that ultimately saves the industry is the thread of disruption.  All others have broken.

Calm in the Chaos: Learning to Sail in the Midst of All the “Noise”

San AndreasThe summer film viewing audience is enjoying the first wave of disaster films with many more yet to come. Whether watching California fall into the Pacific or inner space being claimed by private commercial interests intent on weaponizing the sky above us, we love to watch chaos being tamed by the brave, the bold and the brazen.

As entertaining as disaster movies can be, when chaos becomes reality, the fun is much less enticing.

Our son and his family are leaving the safe confines of the Tennessee hills and heading for San Andreas country. Further, Lance has disaster response and preparedness responsibilities in his new role as chief of the department of public safety for a university sitting squarely on the fault line. Proximity to the possibility of chaos can quickly lose its entertainment value.

In the world of legal innovation, the noise of change and uncertainty can seem every bit as chaotic as a blockbuster movie. Where are the Bradley Coopers or Dwayne Johnsons on the set to root for? What’s the plan to bring calm to the chaos?  Who is going to risk her life to save us?

The legal industry admittedly is in an era of often chaotic change. Law firm leaders acknowledge that the changes are permanent and the pressure for even greater change will not abate. The recent Alman Weil annual survey on Law Firms in Transition for 2015 reveals there will be no return to “the good ole days”.

However, the path to greater clarity and the security of a new status quo is not obvious. In fact, the volume of the noise grows greater each day as clients and law firm leaders seek the calm of a new order which is no where in view on the horizon.

Such is the path of change. Rarely, if ever, does the new order come into view until the shores of security we have left behind have become invisible in our rear view mirror. Before the new world takes shape, there are many nautical miles of endless waves, wind and cross currents to traverse. We should not be surprised.

Nor should we lose hope. The land we have lost was also once only a dream on the horizon, imagined more than real. How do we navigate the winds and the waves? “We learn to sail.”

sailing sunsetWhen you realize there is nothing firm on which to stand, but only shifting sand and sea and sky, the mature do not bemoan the lack of fixity. They learn to sail.

Sailing does not control the forces of nature, it harnesses them to propel your craft in the direction of travel you have chosen.

“That’s exactly the problem,” you say. “How can we know which direction to take?”

Complex system theory can improve our navigation skills. In my work with business leaders, biomedical ethicists and others who desire to navigate the winds of change, we often explore how complex adaptive systems effectively manage the chaos of change. Complex systems are interdependent organisms which adapt to change organically. Like flocks of starlings, slime mold or our human bodies, complex systems respond to change through intrinsic signals that highlight the paths which are in our ultimate best interest. Complex systems are not autocratic, they are the result of interdependent self-organized groups of individuals acting in their own collective best interests. They cannot be micromanaged.  They can only be influenced. What emerges are the “best practices” of the new order.

The legal service delivery industry is such a complex adaptive system. No one is in charge, but all can influence its path.

Take three minutes if you wish to be convinced that complexity does not have to be complicated. Eric Berlow is an ecologist with a compelling approach to solving complex problems.  It only requires that we identify the nodes of interdependent influence. Sound simple?  It is.

We each have a circle of influence with whom we have credibility. Engaging those with whom we have influence directly changes our circle of complex adaptive system input and leads to emerging behavior which helps define the new order.

It’s like learning to sail. Let’s get on with it. It’s time to weigh anchor.

Bitter Pill?: Lessons from Tylenol and Blue Bell

tylenol

blue bell ice creamListeria poisoning can lead to death, and it appears to have done just that with Blue Bell ice cream in Kansas and Texas last month. In terms of corporate crisis, it doesn’t get much more threatening than that. In the face of such an economic and public relations crisis, most companies go into lock down mode. Deny, deny, deny. Batten down the hatches and fight, fight, fight. That’s the common defensive strategy in consumer confidence challenges of this magnitude.

Instead, what did Blue Bell Dairies do? They recalled all products manufactured in all their plants and under all their labels. Immediately. No delay. No “You can’t prove it”. No awaiting the outcome of an “independent” inquiry by the company’s lawyers (with a clear bias in favor of their multi-million dollar a year fee generating client).

What’s wrong with Blue Bell? Did they not complete their MBA studies? Do they not listen to their lawyers? Protecting the corporate treasury from gold diggers is “de rigueur” in today’s executive suites. Taking responsibility is a choice only made when there are no others.

Ask GM. It can take 10 years or more to be held accountable. Profits and share value can withstand the headlines and investigative documentaries if the company just keeps a stiff upper lip. No self-respecting corporate executive or legal counsel simply walks to the plate and takes three strikes.

Many of us remember a similar corporate crisis in the old days. It was 1982 in Chicago. At the time, Tylenol was the most popular analgesic on the market enjoying a 37% share.

However, people began dying after taking Tylenol purchased in Chicago’s drug stores and grocery stores. In just a matter of a few days, 7 people had died and all had taken Tylenol manufactured in different facilities and purchased in different Chicago retail establishments.

The product liability movement was well established and liability for impurity in manufacturing, packaging and distribution could cause significant corporate financial loss. . . if ultimately found responsible for the defect.

Johnson & Johnson was Tylenol’s manufacturer. Rather than engage in a circle the wagon defensive battle, within only a week from the first death, Tylenol assumed responsibility to ease consumers’ minds.

Holding itself accountable (rather than forcing others to do so), Johnson & Johnson publicly announced a product recall. Pulling all Tylenol from all the shelves of all retail outlets and financially incentivizing its return, the company incurred $100 million in costs associated with the recall. In 1982, that was “real money”.

If Johnson & Johnson had held strong and not “crumbled”, the criminal investigation would have revealed the company was not responsible for any “product defect” at all. Although no one has yet been found responsible, it was clear that only a few bottles in Chicago had been contaminated by an individual motivated by a perverse interest in seeing strangers suffer and die.

Within one month of the recall, Johnson & Johnson invented a triple seal tamper proof packaging for its Tylenol product. That’s right millennials, it has not always been nearly impossible to open over the counter drug packaging.

When Tylenol was reintroduced with safer packaging and a financial incentive to purchase, it soon regained the number one ranking as the preferred analgesic on the market. The $100 million in expense was quickly recouped and within the year to follow Tylenol returned more dollars to the J&J account than it cost to weather the Tylenol poisoning scare.

Why? Assuming responsibility and holding yourself accountable is a credibility builder and trust enhancer.

In medicine, taking responsibility for “medical error” (even in the absence of fault) is proving to be a real “game changer” in reducing the costs of health care and improving patient satisfaction when things go badly. Check out the remarkable work being done at Vanderbilt University Medical Center and the University of Michigan Health Services organization for leading examples of what an apology culture can do to mitigate risk and improve health care.

It is not clear what Blue Bell’s recall will cost the company. In the same timeframe, Jeni’s Splendid Ice Cream also recalled 265 tons of its product for an unrelated listeria contamination in the same time frame at a cost of almost $3 million. Blue Bell’s cost, expense and lost revenue will be many times that amount.

However, if consumer response is anything similar to the Tylenol poisoning incident, Blue Bell and Jeni’s Ice Cream will enhance confidence and trust by stepping up to the responsibility plate and holding itself accountable. That’s a real home run.

Is there any other way to maintain a sustainable business and serve customers? Despite many other shortcuts, the right path is the one of personal responsibility and accountability.

Seismic Shifts Are No Tsunami: Yet!

earthquake zonesI have never lived in Southern California, but have visited often. More importantly, my son and family live there.  I don’t know if they are more aware than me of the latest tremor, but I suspect I’m more sensitive than they.  They have lived with the occasional rumble, shake and shift in the earth’s tectonic plates.  I’m petrified that each one is “the” precursor to the next “Big One”.

When you live in an earthquake zone, you become acclimated to each seismic shift as if it’s nothing unusual and a mere fact of living in your preferred geography. The fact remains, the “Big One” is still coming and it will be life changing when it occurs.

So it is in the legal services industry.  No tsunami has yet threatened our shores.  But it is on its way.

The signs are everywhere.

Did you notice that legal operations specialists have come into their own and are beginning to build careers in legal system engineering, operations management and process improvement? According to the ACC, these professionals are now “sexy” in sophisticated corporate legal departments. A new ACC member section speaks volumes about the value of “legal ops” professionals. Merely a seismic shift.

How about the growth of law school initiatives addressing the innovations in law among students and practitioners? I’m proud to be a part of the Vanderbilt Law School Program on Law & Innovation. “POLI” is one of numerous law school efforts intended to increase the relevance of legal education and help provide instruction to those in practice who are dealing with these mini-quakes.

At Vandy, I have been privileged to teach the second annual course in legal project management. I can assure you, the “next generation” of lawyers is on the scene and ready to move forward in a big way. Unwilling to remain stuck in the “waste” business model of hourly billing, these new lawyers are looking to innovate and serve clients efficiently, with higher quality and at less cost than my generation. Not one student in the Vanderbilt LPM class was interested in working in Big Law . . . for more than a few years. They are looking at technology, public service and entrepreneurial ways of serving clients, even if done for a profit motive. Was that a tremor?

As Prof. JB Ruhl, the director of POLI, observed, under the tutelage of Prof. Marc Jenkins this term Vanderbilt law students developed “legal expert applications designed to assist five different public interest legal services organizations in their work”. The result was a public demonstration of client focused problem solving which practicing lawyers were hungry to have implemented in their work.  Hats off to Marc, JB and Dean Chris Guthrie who is promoting a new form legal academy.  Who knew that law students could solve problems experienced lawyers were unable to?  Feel the earth shift?

And how do we even comprehend the rate of exponential change taking place in the global economy? As Peter Diamandis reminds us with amazing clarity, the near term future of economic opportunity can amount to as much as $19 trillion new revenue to be pumped into the world’s economy from over 50 billion Internet connected devices anticipating customer needs and pricing services in real time. A world of abundance, rather than scarcity?  That’s a major fault line.

On and on it goes. The pressure is building.  The tectonic plates are shifting. Should we run for cover?

Instead, how about joining the movement which is reshaping the law?

Ready to Tap an Untapped Market?: 7 Billion Clients Arriving Soon

7-Billion-People-6225Seven billion of anything is impossible for us to imagine.  As the graphic on the right indicates, to count to 7 billion out loud would only take 200 years!

Yet, current estimates of the earth’s population predicts that humans existing in 2020 will exceed this incomprehensible number. Even more unimaginable is that this global human hoard will be connected by the Internet. . . totally!

That degree of connectivity means that every living human being (regardless of gender, age or nationality) will possess an average of six Internet connected devices by 2020. From laptops, to smart phones, refrigerators, automobiles and even toothbrushes, the Internet of Things is a virtual reality. Marissa Mayer, CEO of Yahoo, made that prediction at the 2013 World Economic Forum in Davos, Switzerland.

In contrast to today, what is the impact of as many as 7.7 billion people all connected by Internet access? This is one way to look at it:

The implications of 7+ billion connected minds are staggering, and we need to be talking about it. Again, the Rising Billion represent tens of trillions of dollars flowing into the global economy. They will drive the need to “bank, the un-banked” (probably with some bitcoin derivative), create an innovation explosion, and drive a new wave of entrepreneurship and global competition.

That’s Peter Diamandis‘ observation in an email today which compares the 1.2 billion people on the Internet in 2010 and the 2.8 billion people connected today with the 7.7 billion people Internet connected by 2020. Between 2016 and 2020, there will be 3 to 5 billion more people buying, selling, creating legal rights and needing legal remedies than there are today. Not only will they need new forms of banking, they will need new means of protecting and advancing their legal interests.

Lawyers, are you listening?  Rather than bemoan the shrinking volume of litigation, let’s create new ways of settling disputes.

Online Dispute Resolution (ODR) advocates and practitioners have been advancing these conflict resolution measures for almost two decades. Check out Modria, FairOutcomes and CyberSettle. A bright Yale graduate, Camille Chambers, intends to enter law school this Fall (hopefully at Vanderbilt) to advance these innovative approaches to dispute resolution. She has many interested colleagues developing ODR solutions already busily engaged in doing so. (If you would like a copy of her excellent research that illustrates how inevitable ODR has become, let me know and I will gladly send it to you with her permission.)

We are in fact entering an era of abundance, rather than scarcity.  Erik Brynjolfsson and Andrew McAfee, scholars and researchers at MIT, make the compelling case that exponential technological growth is the hallmark of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. The “second machine age” arrived in 2006 according to Brynjolfsson and McAfee. From that point forward, technological progress (including the creation of the “Big Data” which is its progeny) began growing at an exponential pace. The unimaginable growth of access to knowledge, information and opportunity acquired through the “Internet of Things” translates into the “better, faster, cheaper” marketplace 7.7 billion people will be accessing by 2020.

Already in the U.S., four out of five individuals and businesses “go it alone” rather than seek legal counsel when they would benefit from doing so. In the U.K. it is estimated that 9 out of 10 people and businesses with legal needs go without having them met through the services of a lawyer.

The time to fret over the lack of growth in the legal service industry is now in our rear view mirror by over seven years. Clearly, we can no longer serve this burgeoning legal market in the “same old ways.”

It is simply not true that there is a shrinking legal services opportunity. To the contrary, it is growing exponentially

How will you serve the new market infusing an additional “tens of trillions of dollars” into a global economy fueled by the 3 to 5 billion new consumers joining the Internet ranks of people in need of legal services?

It is safe to say they will not be buying legal services in the “same old way” by lawyers glued to the traditional legal business model.

The time for innovation is here and the opportunities are enormous.

 

 

Leading Like Jazz: Lawyers as Collaborators

I jazz_leaderjust ran across a TedInstitute post thanks to a tweat by the Boston Consulting Group.  The question is, “How should leaders lead?”  Take one minute and 49 seconds to view the TedTalk.  It is a very simple and compelling analogy that has as much applicability to lawyers as CEO’s.

Today’s leaders must be much less like symphony conductors and more like jazz musicians. No one has the score anymore. Success in this dynamic era requires collaboration across many disciplines. Every member of the team must take turns leading the group in its performance in order to create excellent music.

I am only an aspiring musician (I know a few guitar chords and can sing a note or two).  But I know great music when I hear it.  Don’t we all? The musicianship of jazz musicians is far beyond my skill set.

However, I have a friend who is a 1L at Cumberland School of Law in Birmingham, Alabama.  Joy Baxter is not only a future lawyer of the NewLaw mold.  She is also a concert pianist and a guest soloist for the Nashville Symphony Orchestra.  Joy knows music and how to perform it. The awards on her wall prove it.

We recently spent a lovely two hours over coffee exploring her law school experience during her Spring break. She is the one who put me on to the jazz analogy. We were talking about trial. She is already enthralled with her experience in trial advocacy at Samford and has distinguished herself as a finalist (much to her surprise and delight).

I expressed my view of trial as much like a theatrical production.  The lawyer is like a director in a play who only has half the script and must prepare the actors carefully for their “hour upon the stage.”

As true as that may be, Joy pointed out that law might be better analogized to jazz. There is no single leader, but everyone leads.  There is no score, but all the performers know how to play their part. The outcome of the performance is unpredictable, but eagerly anticipated. Each musician plays on a foundation that allows improvisation within given norms. Innovation results from professional collaboration between experts in their craft.

The TedInstitute piece (if you haven’t viewed it yet, you really should) proposes that CEO’s must be much more like jazz musicians than symphony conductors.

Unfortunately, many lawyers consider themselves a “one man band” and variations on a theme are unwelcome.

Whether business or law, ours is an age crying for innovation. Only leading like jazz can create the environment in which virtuosos from many disciplines can combine to create “better, faster and cheaper” outcomes than any one of them could alone.

Tomorrow’s successful lawyers and law firms will combine the skills of the litigator with the dispute resolution specialist (mediators and trial attorneys can co-exist profitably!). Legal practice specialists will come to rely on and combine forces with software developers, project managers, system engineers, operations management specialists and numerous other disciplines to find the best solution to a client’s problem in the shortest amount of time and at the best price possible. These are the lawyers who will have more work, of higher quality and at greater financial return than those who long for the old days.

Let the jazz begin.

“Going Skunk”: Why Legal Innovation is so Difficult

babyskunksAs a follower of Peter Diamandis (@peterdiamandis), his most recent blog prompted some soul searching on my part regarding why innovation is so difficult to achieve in the legal profession.

Ironically, the topic of “skunking” was where this blog site left off last summer relating to the law school dilemma posed by reinventing the legal academy.

Since that last post, I have been fortunate to spend a good bit of time with a law school seeking to do just that.  Vanderbilt Law School has launched its Program on Law & Innovation (POLI) this term. As introduced, POLI recognizes:

The law, the legal services industry and legal education are all undergoing unprecedented transformations as a result of rapid social, economic and technological changes.

I am fortunate to serve as coordinator of the program and as a member of its affiliated faculty under the direction of Prof. JB Ruhl and Dean Chris Guthrie. It is our determined intent to prepare students and work with the legal profession and its clients to press for needed innovation in law.

This is why Peter Diamandis’ recent blog post was so intriguing. Innovation in the legal industry is a “hard slog”.  As Peter’s blog begins:

If you aren’t disrupting yourself, someone else is.

Many voices have grown weary of the disruption mantra first popularized by Prof. Clayton Christiansen at Harvard.  However, it is inescapable that few things in the digital age can maintain the status quo.  Global competition is pressing the limits of “better, faster cheaper” at a dizzying pace.

Of course, legal services cannot avoid these economic pressures being fueled by technology advances and new management methodologies. However, Peter’s analysis of disruptive innovation illustrates why lawyers are in such a bind when it comes to changing their own culture and business model.

Peter recounted how the US military responded to the deployment of German jet fighter planes toward the end of World War II, by designing, manufacturing and flying our own fighter jets (the P-80) in a mere 143 days! Kelly Johnson, head of Lockheed engineering was charged and succeeded at this impossible task. Although necessity is the mother of invention, such an engineering and manufacturing feat today is inconceivable.

How was the impossible achieved in 1943? In sum, Peter posits that there are four secrets to disruptive business and technology innovation:

Secret #1: Big Goals – Setting Moonshots

Secret #2: Extreme Isolation

Secret #3: Rapid Iteration – The Importance of Rapid Feedback Loops

Secret #4: Intrinsic Rewards

Although lawyers can set and achieve big goals (Secret #1), the manner by which we are accustomed to doing so runs directly counter to Secrets 2, 3 and 4. Just as importantly, the goals we set are measured by those already achieved rather than the impossible. Few lawyers set out to achieve outcomes having no precedent.  Instead, authority for change in law is cemented in the foundation of that which has gone before.  Shooting for the moon is unlikely for lawyers unless it has already been done.

Despite a tendency toward isolation (Secret #2) in our profession, lawyers tend to be isolated together and work in an ethos of conformity. Lawyers do not thrive in isolation, but in a pack. We are not likely to stick our heads out of the foxhole. We need the approval of our colleagues, our clients and our peers.  “Going skunk” as suggested by Peter is not in our DNA.  If not previously approved by the firm, the agency or the legal department, experimentation is unlikely.

Rapid iteration and feedback loops (Secret #3) presume the value of “failing small, failing fast and failing often.”  Failing to any degree is anathema to lawyers. Iterative improvement and publicizing our near misses sounds too much like professional error to lawyers. Anything that appears like legal malpractice is not a condition we can envision or tolerate. However, “failing” in the innovation sense is making small improvements and learning from the experience.

Finally, lawyers are not motivated to a great degree by intrinsic values (Secret #4).  We tend to measure success by the size of our bonus or profit sharing slice, the car we drive, the houses we own and the vacations we take. Doing work for the sake of seeing it done well and deriving emotional satisfaction from it is not something many lawyers have come to relish.

Of course, there are notable exceptions to each of these generalizations. We can only hope that the challenges our profession faces will bring out more pioneers and early adopters.  Many have begun to reshape the periphery of the law. RocketLawyer, LegalZoom, Axiom, RiverviewLaw and many others are challenging the status quo in significant ways.

However, in Clayton Christiansen’s terminology, most of us are laggards, or at best pragmatists.  We jump on board when it is beyond question that the ship won’t sink.

Although the core of our profession changes slowly, let us learn the value of asking the hard questions (why not?), engaging in constructive destruction and challenging the unchallengeable.

If we can do it more quickly maybe we won’t have to “go skunky”.

Law School Remediation: Bring on the Skunk Works

harvard lawHarvard Law School

Like any established and successful institution, the legal academy resists substantive change to the status quo. Law schools have enjoyed a remarkably profitable and high profile route to the pinnacle of professional academic achievement over the last several decades. Enrollment rosters soared, tuition skyrocketed and graduates enjoyed immediate and lucrative employment opportunities. The best and brightest undergraduates chose the law school professional education route over others. They did so because the rewards on the other side vastly outweighed the costs and the risks of undertaking the rigorous academic rituals of legal education. Law students incurred astronomical debt burdens because the payoff came almost automatically upon graduation.

How times have changed! Law schools like law firms and corporate legal departments now confront a radically different reality. As the Great Recession changed commerce, it also changed the legal service delivery model. As a direct result, the legal academy no longer enjoys the prospects of supernumerary status as the professional route of choice for the nation’s (and the world’s) brightest students. Maintaining high level candidate pools for incoming One L’s has become more challenging as the employment opportunities upon graduation and entry level compensation continue to shrink.

Moreover, the legal academy has been bruised and battered by the market it serves for failing to produce “practice ready” lawyers. Unlike medical schools and every other professional academy, law schools have maintained a high order disdain for practical education. As a result, many of the sophisticated purchasers of legal services (the 200 companies that purchase 80% of the global legal services) refuse to “pay for the education” of first and second year associates. Law firms, governmental and corporate legal departments are left to complete the legal education of “newbie lawyers” by providing on the job training without the capacity to charge billable hour rates to these savvy clients. (Far more erudite commentators than I have dissected these developments in numerous well stated commentaries. See: Bill Henderson, Harvard Law, Steven Harper, Richard Susskind, Lawrence Krieger, Larry Richard, Kennon Sheldon)

Nonetheless, the vicious cycle continues. Law schools retrench and resist change. Legal service providers and consumers decry the lack of relevant education provided to law students. Finger pointing and “it’s not my fault” rejoinders echo down the halls of law firms, law schools and corporate legal departments. Some suggest that as Rome burns, the leaders of law school reform are fiddling the future away.

It does not have to end this way.

First, it should come as no surprise that innovation from within any established (and highly successful) institution rarely happens. Telling the “millionaires” in a law firm or law school that their business model is broken has a snowball’s chance of surviving the intense fires of skeptical opposition these critics of innovation are sure to unleash. No one invested in the status quo can know what they don’t know. They should not be expected to know.

As Clayton Christiansen has developed so compellingly in The Innovator’s Dilemma, even incremental change (“sustainable change”) in an established institution can only proceed at a pace supported by the vested interests of the institution. The glacial pace of change required to maintain the trust of those whose livelihoods depend on staying the course cannot be quick, easy or anything other than limited by the habitual (precedent focused) minds of those in charge of the institution’s direction.

To the surprise of many, law school deans are not in charge of this process. Even the most innovative thinking law school dean cannot change course more rapidly than the faculty permits. Most law school faculties have final say over the direction, content and innovation of curriculum design. Substantive changes must be approved by the faculty. The deans of most law schools can only seek to influence the views of the faculty.

The problem with sustainable innovation is that more disruptive innovation driven by outside market forces can quickly overtake the speed with which the institution is able to change indigenously. Unable to withstand the overwhelming power of disruptive change, these institutions cease to have relevance and succumb to the new reality surrounding them.skunk works

For radical change (“disruptive innovation”) to occur in an institution which has enjoyed decades of success, the change typically takes place through the creation of “skunk works”. The term is derived from the Lockheed Martin Advanced Development Programs operations which created numerous innovative aircraft like the U2, the F-117, the Raptor and the F-35 (currently under development). The defining trait of the skunk works is “a group within an organization given a high degree of autonomy and unhampered by bureaucracy, tasked with working on advanced or secret projects.” (Wikipedia)

As Christiansen points out, change initiatives in long term successful institutions require independence of thought and experience that the institution does not possess. IBM has successfully reinvented itself several times by strategically creating independent operating units staffed with divergent professionals from outside the company. These “new thought” enterprises can experiment with new technologies and methods about which the established order is unaware or simply distrusts. Successful disruptive change can be initiated and its value demonstrated in relatively short order allowing the institution to learn what it does not know based on its experiential knowledge.

Surprisingly, the totality of law school curriculum and service offerings are not set in stone by American Bar Association mandates. The U.S. Department of Education has approved the Council and the Accreditation Committee of the ABA Section of Legal Education and Admissions to the Bar as the accreditation body for U.S. law schools. Law schools have fairly broad discretion to create alternative curricula offerings from what has been a traditional collection of largely required courses taught didactically by academic subject matter experts.

Basically just over one third of a law school curriculum’s course work is ABA Council mandated. The remaining two thirds of law school course offerings can be creatively designed to produce “practice ready” lawyers if the law school so desires and insure the critical theoretical bases of law are covered as well.

Resistance to practice ready academic training does not come from the law students, the client community or the law firms. Instead, the true law school stakeholders are all crying for more practical training of law students. To determine how to best meet the market demands of today, law schools can create experimental offerings to develop a more robustly practical legal training model without jettisoning the traditional canon of legal studies. Law school “skunk works” can provide sound pedagogical modeling of new ways of educating lawyers without either being constrained by or limited in experimentation to the prevailing view.

Flipped classrooms, hybrid course offerings, experiential learning, off campus clinics are all proving to be more effective tools for training students than didactic “talking head” lectures. Likewise, far more instructive methods of learning law and its practical skills exist than Prof. Kingsfield-style Socratic destruction and reconstruction of the student.

Law schools which choose to lead in the future education of Tomorrow’s Lawyers will be those that incorporate these and many additional techniques of learning into their curriculum. These are the law schools which the “best and the brightest” will choose and which will be financially supported by their alumni and the corporate client community. As some law schools retrench and stay the course, others will respond to this disruptive moment and generate appealing options for students who wish to pursue a legal career.

Many law schools are creating and nurturing legal academy skunk works. ReinventLaw at Michigan State University College of Law, Law without Walls at Miami Law, Suffolk Law School’s Institute on Law Practice Technology & Innovation are some of many examples of legal education innovation. Out of these initiatives are coming great students, great legal education and the New Normal of legal training. The new era of legal education will be increasingly multi-disciplinary, skills based and relevant to the practice of law. However, “traditional legal education” will be no less critical as a diverse faculty brings together the best in academic rigor and practical relevance. “Both/And” in legal education. What a concept.

Sustainable legal education is achievable. Bring on the skunk works!

BigLaw Embraces the New Normal

Navy fleet

The axiom is certainly true: the bigger you are, the more difficult it is to change. Some compare the change required of BigLaw to be less like turning an oil tanker to steam off in the opposite direction and more like changing the direction of an entire navy fleet. The analogy is apt. It is no easy task to change the course of numerous battleships containing thousands of sailors and untold tons of munitions and the machinery of national defense. The more moving parts there are and the greater the number of variables involved, the greater the planning and execution of the plan in real time is required to avoid collisions and keep everyone going in the right direction, at the right time and with the right resources as efficiently and economically as possible. Sounds like project management. Indeed, that is exactly how it’s done.

Some of the most complex transitions encountered in the logistics of changing organizational behavior do not have to be complicated. By planning at the task level, an amazing degree of complexity can be managed with what appears to be flawless perfection. Project management methodologies have been helping the military, construction, transportation and every area of human endeavor perform “better, faster, cheaper” for decades. For too long, lawyers have considered their work too complex, too variable and too subject to opposing forces to benefit from project management.

Pillsbury Winthrop Shaw and Pittman LLP (AmLaw 59 in 2014) is proving them wrong.

Pillsbury was not the first to consolidate back office functions in a backwater town like Nashville, Tennessee (cowboy boots, honkytonks and country music). Nor is Pillsbury’s announced initiative (See: http://bit.ly/S55cCN) seeking to recruit staff attorneys to its Nashville operations center a new idea. Other law firms have been “onshoring” legal services into staff attorney operations and consolidating administrative services long before Pillsbury.

It’s not the what, it’s the how.

When Pillsbury decided to consolidate administrative functions from across the country and around the world in Nashville, Tennessee, it set a very ambitious goal: do it in less than a year. Pillsbury’s first hire in Nashville in February 2012 was Kathleen Pearson (a dear friend and colleague from our days together in “almost BigLaw”). The goal was to make the operations center in Nashville fully functional by the Fall of 2012!

Pillsbury chose the right leader for this initiative. Kathleen is Yellow Belt Legal Lean Sigma certified and holds a Masters Degree in Law Firm Management. Pillsbury thought outside the box when it hired Kathleen to be its Director of Administration in the Nashville operation. The unusually diverse leadership at Pillsbury chose correctly. (Pillsbury has also chosen a “non-lawyer” to serve on its three person executive committee.) Working in collaboration this innovative leadership has accomplished an amazing transformation in a change resistant profession.

Kathleen is often a guest lecturer in courses I teach on legal project management. She tells how she began work in the legal industry as an administrative assistant, the lowest rung on the law firm totem pole. She was a “non-lawyer” with no clout or power. However, using the tools of project management and process improvement in her ever expanding realm of influence she has consistently made a difference. She and firms with whom she has worked have been professionally recognized for their innovation in improving the value proposition in legal services delivery.

At Pillsbury, over 200 positions had to be consolidated in a Greenfield location without disrupting the global administration of an AmLaw 100 law firm. E.g. Bills that don’t go out, don’t get paid.

Only 27 then current employees accepted the offer to relocate to Nashville. Over 130 new employees had to be hired to replace those who chose not to move. Almost 80% of the new hires had never worked in a law firm before!

No transition of this magnitude is accomplished without hiccups. However, in amazingly short order the new operations center now processes on a monthly basis: 12,000 pre-bills, 2,700 conflict checks, 1,400 document production requests, 3,500 help desk requests, and 250 marketing & business development projects (proposals, presentations, research, competitive intelligence).

How is this possible? Project management, process improvement and efficiency management methodologies (which businesses have been using for decades) are now being applied to the legal sector.

What’s the big deal about Pillsbury’s newly announced legal staffing department “onshored” to Nashville? In our little backwater town, global law is going to be practiced in a New Normal manner: better, faster, cheaper. The playing field just tilted in favor of efficiency, price predictability, enhanced quality and improved profitability.

Yes, even BigLaw can change in BigWays. The fleet is turning

Navy fleet changing course

Don’t take your eyes off Nashville.

D-Day: A Sober Reminder of What Was and What Might Be

DDay invasionOver the last few days, who hasn’t been mesmerized by the trauma, tragedy and triumph of the event 70 years ago that many say changed the course of history. Allied forces arrayed against the German occupying army deployed 150,000 soldiers, sailors, airmen and supply corps in the most dangerous, costly yet ultimately successful military invasion in history.  Nine months later the horrific World War II (“the war to end all wars”) had come to an end.  In no small part the peace was achieved in those horrible days of June 1944 in which 12,000 casualties were suffered on the 6th of June, 1944 alone. Fifty miles of Normandy shore were subjected to an all out assault by squadrons of Allied forces facing immeasurable risk and loss.

Listening to the survivors, the vanquished and the liberated over the last few days has caused us all to reexamine life, purpose, value and freedom and what it costs to protect and preserve these vital human desires. An incredible debt is owed to the Great Generation and what was achieved in those fateful days of June seventy years ago.

For students of war, it is also an awful yet victorious history lesson in the choices which must be made in the face of tyranny. The Normandy invasion was in the planning for over a year.  An elaborate combination of sheer force in numbers, clever deception, untold courage and strategic thinking occasioned this unimaginable military exercise.

A less than charitable term for military planning of this nature is “everybody go out for a pass”.  Victory will be achieved by the sheer force of numbers, at great cost, great loss and horrific consequence. When 150,000 troops are arrayed against 50,000 defenders, numerical superiority predicts the outcome.  That is little solace to the thousands of soldiers engaged in wave after wave of assault under unrelenting machine gun fire from the cliffs above the beach who died or were maimed in the attack while successive colleagues tamped over their broken and bleeding bodies to survive simply because machine gunners were forced to reload.

How life and liberty has changed in those seventy years. How military maneuvers have changed as well.

There are no more “everyone out for a pass” military actions.  Instead, with no less intensive planning than D-Day, today’s military exercises are executed to precision by advanced applications of methodologies like project management and process improvement.  Today’s war exercises are conducted under a “better, faster, cheaper” motif.  Loss of life and the cost of battle are remarkably less expensive than would be the case if the Normandy invasion remained the model for military action.  Instead, every person, armament and implement involved in war today is scheduled to arrive on time, on budget and with appropriate resources to successfully conduct the operation of war.

Most importantly, the thorough planning for war exercises today must immediately give way when the enemy starts shooting.  No plan can work in the face of life and death battle unless it can change in real time and communicate those changes simultaneously to soldiers whose lives depend on vital information and resources delivered at the right place and the right time.

Army_Triple_ConstraintThe classical project management model of the triple constraint of time, cost and quality of outcome is well known to project managers. It is the measure of how these three vital components of every project must be in equally increasing or decreasing proportion to each other in order to avoid catastrophe. As time increases, so must cost and quality or the project will fail. Automobile manufacturers understand this. Software developers do as well.  Every human endeavor on earth has come to understand this model.  In fact, the image to the left comes not from engineering, but is the core message in the US Army instruction to its troops.

Army_Logistician

 

When lawyers suggest that project management can never apply to the complexity of the work they do especially because they must face an enemy who is seeking to defeat them, I think of Normandy.  The everyone out for a pass strategy of planning worked on June 6, 1944 and the days following, but no more.

We can learn a great deal from the real warriors of today.  If project management methodologies can alter the way wars are fought, legal matters are of far less complexity and consequence.

Planning for what is expected in order to respond to the unexpected in real time with appropriate communication and strategic adjustment of resources and work effort wins wars. These skills are also capable of empowering greater victories in legal engagements of every kind.

Legal matters can benefit no less from the post D-Day improvement in the planning, budgeting execution, monitoring, controlling and process improvement of warfare.

Today’s lawyers can achieve phenomenal victories “better, faster and cheaper” than the last generation, as great as it was.

Maybe this generation will prove to be an even Greater Generation.