Thursday, May 3, 2007

Law firms starting to feel the heat of tech fires

This is a great article from Ralph Baxter, Chairman and Chief Executive Officer of Orrick, Herrington & Sutcliffe LLP. It's the rallying cry of a site called LegalOnRamp, devoted to using technology to help law firms deliver work more efficiently and save themselves and clients money.

A freezing rain was falling one March afternoon in Tarrytown, New York, and I was thinking about frogs.

I was not alone. I was sitting in a room full of my management colleagues from Orrick and two Harvard professors, and we were all thinking about frogs.

The frogs were a well-known metaphor used by Harvard Business School professor Thomas DeLong to illustrate a paradox in the business world-namely, the difference between a company's survival instincts in the face of dramatic, immediate threats and its ability to recognize the need to adapt to perils which are subtle and will take some time to play out.

Frogs, like businesses, are not very tolerant of abrupt changes in their environment; they are, however, extremely adaptable to slow environmental change. Scientists have found (please don't try this at home) that if you drop frogs in boiling water, they leap out immediately but that if you put them in lukewarm water and slowly heat the water to boiling, the frogs will stay put , eventually succumbing to the scalding water.

Market pressures in recent years have turned up the heat quickly on most businesses, triggering a general leap to action. Meanwhile, the water has been getting warmer for law firms, too, but at a more gradual rate. As a result, law firms have been much slower than other businesses to recognize and adapt to changing market conditions. The question is, how much longer can law firms cling to "business as usual" before their frogs are boiled to death (or their geese are cooked) ?

Law firms have always lagged behind the business world, but as I mentioned at the Law Firm Leaders Forum, I expect law firms to change more in the next five years than they have in the last 30 years.

There are many good reasons why law firms haven't changed much over the past 50 years, but all those reasons " boil down " to the simple fact that they have not had to. Certainly, there has been increasing pressure on the law firm business mode. But the truth is many law firms are continuing to succeed doing things the way they always have. If our frog metaphor is apt, the apparent resilience of the law firm business model is both a blessing and a curse.

Businesses outside of law (i.e., our clients) have had to be increasingly nimble and creative to remain competitive in their industries. They learned years ago how to respond to market forces most law firms inadequately address today, for example:

  • developing new services and pricing structures to meet their clients' evolving needs and to differentiate themselves in the marketplace

  • globalizing operations to meet clients' needs and to take advantage of new market opportunities

  • using technology to drive efficiencies and improve service

  • finding ways to deliver more value to clients

  • embracing new recruiting, training and personnel development techniques to adapt to the ever-changing world and workforce

Law firms would do well to take a few lessons from their clients and open a dialogue to identify the big issues and collaborate on solutions and new ways of doing business together. Lawyers are often uncomfortable when they don't have the "answers." But as our frog example shows, there are worse things than a little discomfort.

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