Vaporware Know-how Received’t Conceal Your Agency’s Enterprise Mannequin Issues

Vaporware Know-how Received’t Conceal Your Agency’s Enterprise Mannequin Issues

Vaporware Know-how Received’t Conceal Your Agency’s Enterprise Mannequin IssuesAs somebody who’s served as a authorized CTO for nearly 10 years now, I’ve seen plenty of authorized know-how come and go; a few of it phenomenally helpful, a few of it not value its price of adoption or implementation. Authorized tech is a superb trade with a number of nice developments, but additionally plenty of Rube Goldberg machines. It takes some hands-on expertise to know the distinction.

One factor I’ve seen through the years is the tendency for a lot of regulation corporations, particularly Biglaw, to hope that know-how — both its precise use, or (extra typically) a PR marketing campaign pretending that it’s getting used — will distract shoppers from deeper and extra elementary issues with the agency’s enterprise mannequin.

I divide the forms of innovation in regulation, together with know-how, into two broad classes: additive innovation and subtractive innovation.

The primary means attempting to do extra with extra. In different phrases, hoping that some magical software or new course of can simply be layered onto the present mannequin and remedy your issues. Purchase that shiny new software program, and hopefully it’ll save your legal professionals a while, and shoppers might be pleased with the added worth.

The latter means doing extra with much less. That is more durable to implement, clearly, as a result of it means making cuts. It means assessing all the prices of a regulation agency’s enterprise mannequin, and actually asking your self: is X or Y actually wanted to do what shoppers are actually paying me to do?

Additive “innovation” lends itself to a lot sexier PR. However in my expertise working inside the rising ecosystem of elite lean boutique regulation corporations, subtractive innovation extra typically produces the outcomes that shoppers really need: materially decrease charges with out decrease high quality.

Basically for lots of shoppers complaining concerning the authorized trade, “the charges are too rattling excessive.” In case your magical software program that shaves off perhaps 35% of billable time, whereas typically including inflexibility into your processes, isn’t shifting the needle on that downside, you’ve achieved little or no.

If the actual downside is solely that the charges are too rattling excessive, the apparent subsequent query is why, in actual fact, are they so excessive? The proportion of the speed really paid to the lawyer doing the work is commonly a small fraction of the general value. There are a variety of attainable responses to this query.

First, too excessive for whom? Very costly giant corporations serve a wide range of numerous shoppers. Not all of these shoppers complain the identical concerning the charges. It is vitally attainable — in actual fact, that is my opinion on the matter — that a lot of Biglaw has overshot the wants of, and subsequently develop into overpriced for, many however not all of its shoppers.

Talking just for the shoppers that basically, actually suppose the charges are too rattling excessive, probably the most materials causes that come to thoughts are:

  1. extraordinarily costly places of work designed to sign “Ferrari tier” branding;
  2. too many disjointed practices underneath one roof that make it unimaginable to optimize for effectivity on a narrower, extra aligned “menu” of practices; and – time to actually carry among the spice…
  3. fairness companions with extraordinarily excessive earnings per associate expectations that, whereas virtually definitely good and very exhausting working, merely aren’t wanted to ship the companies that non-Ferrari shoppers really need.

The subtractive innovation of newer, leaner regulation agency fashions executes on the above actuality. Shoppers aren’t that impressed in case you take a $1,000-per-hour lawyer and undertake some shiny software program to shave 3% of their time. Take that very same lawyer, and make their charge $550 or $600, with out altering her compensation, and now you’ll have their consideration.

Know-how completely performs a task on this new form of authorized innovation, however that position is way more within the background. It’s not about asking legal professionals to automate every part possible, even when shoppers typically desire flexibility. It’s additionally not about forcing all legal professionals to work with a venture supervisor, assistant venture supervisor, billing specialist, various billing coordinator, and God is aware of who else 24/7.

All my love and respect to the software program distributors and new nonlawyer authorized professionals serving to the $1,000- to $2,000-per-hour legal professionals attempt to make their charges extra palatable to shoppers. You’re preventing struggle.

However a few of us have a special tackle the matter. The actual difficulty for a lot of shoppers is, very merely, the charges are too rattling excessive. Subtractive innovation is how we will decrease them, with out decreasing the compensation of the legal professionals really delivering the products on a day-to-day foundation.

I say all of this to not poo-poo these attempting to make Biglaw extra environment friendly, together with with new know-how. Moderately, typically there’s worth in “zooming out” and searching on the larger image. Entrepreneurial legal professionals immediately have a large open discipline to attempt new enterprise fashions for profitably delivering the companies that even many high-end shoppers demand. As they discover these fashions, they need to remember that asking “What can I purchase?” is commonly the fallacious query. Typically the appropriate query is: “What can I lower?”


José Ancer is a Associate and Chief Know-how Officer at Optimum Counsel LLP, an elite, tech-enabled boutique regulation agency serving venture-backed startups and growth-stage firms for company & securities and M&A regulation. He continuously writes on his Startup and VC Regulation weblog, Silicon Hills Lawyer, which is adopted internationally by entrepreneurs, enterprise capitalists, legal professionals, and regulation colleges. Comply with him on Twitter @ancerj.