Altman Weil gave a pointed warning to law firms Wednesday: beef up your legal operations or you’ll pay for it down the road.
Some firms are ahead of the curve.
They have already launched innovative programs designed to make them more efficient. They use technology. They apply data to decision-making. And they can show clients they are delivering legal services effectively and efficiently.
But because 2018 was such a great year for the legal industry, Altman Weil found that many law firms have been stalling in their push to innovate legal services. Firms who don’t invest in legal operations—which includes legal practice managers, pricing executives and business development professionals will be punished by the large swath of clients calling for more efficient legal services, Altman said.
Kevin Bielawski, director of legal project management & strategic pricing at Husch Blackwell, thinks it’s “fabulous” that other firms are stalling in their legal ops development.
“I love to hear that my competition is relaxing on the innovation front and legal operations front,” said Bielawski. “We know it’s a huge differentiator … and we’re plowing ahead.”
Husch said it has invested a lot of money into its legal ops department, employing six full-time staffers in an industry where zero is standard, and the gamble seems to be paying off. For the last two years, the firm has been named the Association of Corporate Counsel Value Champions for ”implementing an innovative program designed to improve efficiencies in the delivery of legal services.”
For 2017, the firm won for its work with Express Scripts, cutting the time spent per litigation matter by 39% even as the number of matters rose by 35%. In 2018, the firm won for its work with Monsanto Co., employing a novel model for handling toxic tort litigation. The proprietary system assessed risk and probable outcomes to help track channel resources appropriately, resulting in a reduction of Monsanto’s active litigation by 53%.
Outcomes like these are what Bielawski and his team bring to the table, he said, and clients love them.
“Many of the in-house legal groups struggle to show value to their higher-ups, and legal ops can give an opportunity to show efficiency in a data-driven way,” he said.
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To Angela Hickey, CEO of the Chicago-based law firm Levenfeld Pearlstein, bringing in legal ops staff and a robust C-suite is a no-brainer. For over two decades Hickey—who holds an MBA and CPA certification (but not a J.D.)—has been running the show at her firm.
“Business people are trained to incorporate risks. Lawyers are generally trained to minimize risk and see everything that can go wrong, to follow tested and proven tracks,” Hickey said. “But we’re in a new territory and the rules have changed.”
Hickey compares law firms to hospitals. Both feature highly educated and entrepreneurial professionals who run their own practices. Why is it that C-suites and operations departments are the norm in health care systems, she asks, but not law firms?
“Lots of doctors practice medicine and they hate being involved in bureaucracy,” she said. “They got into medicine because they want to help people and practice. Isn’t that why lawyers get into law? Our entire democracy is based on the rule of law. It’s so valuable to everything we do. It’s also a business that we want to run effectively.”
Other firms are taking notice as well. While Greenberg Traurig has had a legal ops department for a decade now, the firm has recently established an innovation client services team, staffed with 40 attorneys, staffers and project managers. The group is led by M&A shareholder Tom Romer and director Jon Grant.
The team has rolled out several technological systems for clients, including a case-management tool to track pending immigration visas, a database and data analytics model that scores arbitrators based on potential outcomes, an M&A pricing and complexity-analysis template, and a document management system.
“There’s a great return on investment when you’re making your internal teams and client interactions more effective,” said Romer. ”For clients, efficiency is the name of the game.”
Carlton Fields hired Peter Hitson as its director of legal project and practice management in 2018. That year, the firm reported the highest profits per partner among the Florida-based Am Law 200. Barnes & Thornburg, Baker McKenzie and Proskauer Rose have also hired legal operations executives.
Despite the strides, legal operations are still not the norm among law firms. Bielawski said he’s not surprised.
Attorneys and law firms are notoriously resistant to change, he said, and much of the old guard is still fixated on antiquated measures of success, such as revenue.
He posed this scenario: If a legal ops team reduces a client’s litigation spending from $5 million to $4 million, many attorneys question whether that’s a good thing. But that thinking ignores the higher profit margins and long-term relationships that this sort of efficiency can provide.
“There are still some resistors in my firm, I can’t deny that,” he said.” But as you have successes, you start to turn flip the resistors.”