Do or Die: Outside Law-Firm Rosters Shrink as Client Spending Grows

Lest any of us get too comfortable in our swivel chairs, a new report from Michael B. Rynowecer, president of the BTI Consulting Group, indicates that in 2018 – despite spending more on outside legal counsel than ever before – clients are using fewer outside firms than ever.

In a September issue of The Mad Clientist –the blog of BTI — Rynowecer reported that his company’s survey of more than 350 law-firm clients showed that “22% to 30% of clients are cutting, or about to cut, their law firm rosters. This sets a new record and is double the prior average of 13% of clients looking to cut back at any one point.”

The clients BTI surveyed attributed the cutbacks to unsatisfactory work and poor service on the part of firms, combined with the increasing complexity of legal work. “For clients, fewer law firms translates into better risk management,” Rynowecer says. He predicts that clients’ primary and secondary firms will benefit the most from the shift to smaller rosters, although these firms too will need to demonstrate their ongoing value. “Fringe players” are the ones most likely to be shown the door.

These clients are planning reductions from hundreds or dozens of firms to fewer than ten. – Michael B. Rynowecer

Collaboration within firms and client service will be key to success in the new, more streamlined future, Rynowecer suggests. His blog includes valuable pointers for firms keen to remain in the good graces of their clients.

His tips may also serve as inspiration for firms looking to supplant existing firms on those same rosters, where there may indeed be opportunity: BTI found that only about a third of clients recommended their current firms to others.

Does the shift to smaller rosters present an opportunity or a death knell? It seems that at least in part, it may be up to law firms to determine their own fates.

I am always interested in hearing your thoughts on any matter related to the law, either in the comments section below or directly via email.

Competition Likely Cause of Unprecedented Merger Frenzy

U.S. law-firm mergers to the end of the third quarter of 2018 reached levels unseen in the first three quarters of any year for more than a decade, according to an article published last week at The number of mergers recorded by Fairfax Associates between January 1 and the end of September of this year stood at 56, up six from the same period in 2017. Twenty of them were completed in the third quarter alone.

Fairfax Associates’ principal Kirsten Stark attributes the increase to law firms’ competition for market share. “This is a reflection of firms facing an intensifying competition for work, an intensifying competition for clients,” Stark told Brenda Sapino Jeffreys, senior reporter with ALM. “In their view, they will be more competitive if they have broader talent, better talent, and mergers are how to get there.”

For specifics on the mergers – 80% of which involved “smaller firms with five to 25 lawyers” – and Stark’s predictions for the future, check out Sapino Jeffreys’s article, originally published in The American Lawyer. It is rich in detail.

In the meantime, I welcome your thoughts on this or any other matter related to the law, either in the comments section below or directly via email.

Artificial Intelligence: A Primer for Lawyers

For those who may be apprehensive about so much as clicking on a post relating to artificial intelligence (AI) as it applies to legal practice, I highly recommend a recent article in The Artificial Lawyer by Product Manager David Kleiman of Bloomberg Law.

Kleiman points out that anyone who has ever used Google has already entered the world of AI, and that customized AI is the next logical step in the evolution of legal practice. “AI can help lawyers make informed, data-driven decisions and improve their efficiency,” he says.

He goes on to point out that for many, “[W]hat can be overwhelming and scary is the jargon and varying definitions of AI that have permeated the legal industry.” The purpose of his article is to demystify the terminology and address other barriers that can stand in the way of individual lawyers approaching and using AI to improve their legal practice.

Kleiman stresses that human intervention and supervision is necessary to the effective use of AI, and it is from this perspective that he guides the reader through the intricacies of how machine learning is most efficiently deployed in the legal setting. While his examples are naturally based on features offered by Bloomberg Law, the principles apply to other platforms.

Let me know how far your law firm has moved toward adopting artificial intelligence into legal practice. I am always interested in hearing your thoughts on any matter related to the law, either in the comments section below or directly via email..

Big Four Accounting Firms Continue Their Advance into Legal Arena

A month ago we reported on the expansion of EY into the legal field through its acquisition of the U.K.’s Riverview Law. Now we learn that PwC U.K. has joined forces with immigration law specialists Fragomen of New York City – giving PwC “a major foothold in the U.S. market,” according to a report in The American Lawyer. Fragomen has offices in 16 major U.S. cities and 25 offices outside the U.S., while PwC offers immigration services in 170 countries.

Describing the alliance as “one of the most significant examples to date of the Big Four joining forces with a law firm,” The American Lawyer article points out that in addition to positioning the two companies to maximize their appeal to companies around the world, “the relationship will also enable shared clients to draw on PwC’s complementary services in tax, Social Security and global mobility consulting.”

In recent years, each of the Big Four accounting firms has taken significant steps to strengthen its ability to offer legal as well as accounting services, particularly in the U.S. and the U.K. One report from The American Lawyer shows that independent firms should be more concerned about this encroachment than Big Law needs to be, warning that “The Big Four are slowly moving beyond tax-related legal activities, eyeing a range of practices that could include employment, immigration, international arbitration, cybersecurity and data privacy, and even private equity.”

What steps is your firm taking to address the potential erosion of services that law firms traditionally offer? I welcome your thoughts on this or any other matter related to the law, either in the comments below or directly via email.



U.S. Law Firms Mark Best First-Half Revenue Growth in Ten Years

Citi Private Bank reports in The American Lawyer that the first half of 2018 was better financially, in particular for small- and large-sized law firms, than was the first half of 2017. In fact, overall revenue growth across the industry in the U.S. contributed to the strongest first half since 2007.

Citi Private Bank’s Law Firm Group, which produces the semi-annual “Law Firm Leaders Confidence Index,” surveyed 186 small-, medium- and large-sized law firms; they concluded that 2018’s first-half growth could be attributed to “a pickup in demand and solid rate increases, together with moderate expense growth…”.

In their article for The American Lawyer,  John Wilmouth and Gretta Rusanow of Citi Private Bank indicated that the positive trend is likely to continue at least through the balance of the year. They point out, however, that the positive results apply primarily to international or global firms and small boutique or niche firms, rather than to those closer to the middle.

“[AmLaw] Second Hundred firms continued to struggle,” they write, “as they have since the beginning of last year. Revenue was up only 1.3 percent, as a decline in demand tempered an increase in lawyer billing rates. …  [T] his was the only segment for which expense growth exceeded revenue growth.” Boutique or niche firms, by contrast, “actually posted slightly stronger revenue growth (6.9 percent) than Am Law 50 firms.”

The report offers an intriguing look into details of trends in various areas of law-firm operation, including consumer demand, length of collection cycle, number of lawyers, number of salaried vs. equity partners, expense growth and inventory, as well as financial data.

I would be very interested to hear your comments on the Citi Private Bank study – or any other matter relating to the law. Leave your comments below, or contact me directly via email.


Pull up a Chair: The Virtual Lunch Meeting

In an interesting fusion of technology and food, a company called eatNgage is offering users the opportunity to participate in virtual lunch meetings with groups of staff, clients, colleagues or others.

The rationale? People are more likely to look forward to, and show up for, a meeting that involves a meal than one that takes place during traditional working hours. eatNgage reports that to date, those who have used their service have an average of three times better attendance than they previously experienced.

We partner with many restaurants and users can order food through our platform. We also replaced the pricing with a ‘budget bar’ that the host can set. People joining meetings can order food without worrying about costs, creating a more carefree, friendly meeting environment. – Rachel Yelin, VP of product development, eatNgage

Based in Huston, TX, eatNgage can be used to host small gatherings as well as ones involving many attendees and different organizations. The service was created when eatNgage combined its lunch meeting platform with Zoom, which specializes in video conferencing, using Zoom’s application programming interface (API).

The company cleverly offers to tell you more about its platform… over a virtual lunch.

Let me know your thoughts on this or any other matter related to the law, either in the comments below or directly via email.

Find Previously Inaccessible Treasure Using Litigation Data

Much news about legal technology focuses on the latest invention or development. In several areas of practice, however, we have already reached a point where enough data is available to significantly improve our work: all we need to do is to find it, and to use it.

One area that is rich for mining is in the field of litigation. Nicole Black points out in an article in the ABA Journal that with existing software, “The foundational technologies needed to support machine learning have made advanced data analytics and sophisticated language processing possible on a scale never before seen.”

Black says that “These capabilities are particularly useful in the litigation arena. Court data and filings provide a wealth of information about judges, their rulings, the litigants, their attorneys, expert witnesses and more. [L]itigation analytics software […] accesses and harnesses relevant data sets and then makes sense of them and provides the user with the information needed to make informed decisions about the course of a litigation matter.”

Black points out that one of the problems associated with the current abundance of data is the issue of “garbage in; garbage out,” and that several companies including Thomson Reuters (for which Black works), Bloomberg Law and LexisNexis are moving into the business of sorting the useful data from the junk. Specialized computer programs from these and other sources offer insights into a range of litigation-related areas, such as details about judges’ past decisions, analyses of specific cases, and many others.

Black provides a thorough overview of the litigation data-analysis services now available so that readers can consider which may be of use to them, and she points out that several companies offer free trials of their technology. With this kind of software now available to lawyers in many locations around the world, those who take advantage of it are likely to see bottom-line improvements for both their clients and their firms.

I invite you to share your thoughts on this or any other matter related to the law, either in the comments section below, or directly via email.



World’s Wealthiest Man, Jeff Bezos, Says Customers Today Are “Divinely Discontent”

I read with great interest Jeff Bezos’s 2017 letter to Amazon shareholders. I believe we can learn a great deal from a man whose company annually ranks number one on several distinguished surveys of customer and employee satisfaction.

Bezos’s theories and suggestions – which he  confesses he has gained not only through Amazon’s successes, but also through “billions of dollars worth of failures” –  are relevant (and timely) not only in the retail industry, but also to those of us who are working to offer professional services to highly demanding clients. Furthermore, what he has to say about running a company is of value not only at the scale at which he works (Amazon employed 560,000 people in 2017!), but also to those looking to improve the smallest enterprise on the planet.

Let me pique your interest with a couple of quotes from the letter:

  • “One thing I love about customers is that they are divinely discontent. Their expectations are never static – they go up. It’s human nature.”
  • “You cannot rest on your laurels in this world. Customers won’t have it.”

Bezos believes that customer satisfaction requires a multi-faceted approach, of which a key element is the creation of a culture of high standards (“widely deployed and at all levels of detail,” he says). He then explores the question of whether high standards are “intrinsic or teachable” and whether they are “general or domain-specific,” and discusses other factors that need to be considered in their creation and deployment.

Along the way Bezos poses such intriguing questions as “How long does it take to learn to do a perfect free-standing handstand?” and “How can a six-page memo be more effective than a PowerPoint presentation?” The answers to these questions will likely surprise you, as may one of his conclusions:

“… finally, high standards are fun! Once you’ve tasted high standards, there’s no going back.”

Let me know your thoughts on this or any other matter related to the law, either in the comments below or directly via email.


EY, Proving Itself to Be a Leading Disruptor of Legal Services, Acquires and Expands Riverview Law Globally

Following the acquisition of Riverview Law by EY, a new entity named EY Riverview will expand the accountancy firm’s legal-services reach into the global marketplace. Riverview Law’s growth could lead to an increase in staff from its current 120 to as many as 3,000, to be located at offices around the world.

In case you missed this remarkable announcement: Riverview Law is a UK firm widely recognized for its innovative approach to legal practice, including such initiatives as fixed-price-managed services for in-house teams, and the use of virtual assistants. (The technology Riverview Law developed to facilitate clients’ legal work, known as Kim Technologies, was not part of the acquisition, although EY has signed a ten-year contract to use it.) EY – once known as Ernst & Young – is, of course, one of the largest accounting companies in the world.

On August 7, LegalFutures published EY’s announcement, along with a statement by EY global law leader Cornelius Grossmann, who said, “This acquisition underlines the position of EY as a leading disruptor of legal services; it will provide a springboard for current EY legal managed services offerings and bolster the capabilities that we can help deliver for EY clients.”

LegalFutures writer Neil Rose reported that the collaborative purchase of Riverview Law by a group of seven of EY’s EU offices means that the reach of the new legal-services entity will not be restricted to one country; in fact, it has a particular eye on gaining a foothold in the U.S..

A followup article on August 14, LegalFutures quoted Chris Price – currently EY’s global head of alliances – tax, who will become CEO of EY Riverview – as saying that “EY Law was not looking to compete with the likes of Slaughter and May or Freshfields for the so-called ‘bet the farm’ work – they meet ‘a particular client need brilliantly well.’ Rather, EY Law’s mandate is to integrate legal with other services offered by the wider firm and target client need that is currently not being met – such as a managed legal service.”

Price seemed unperturbed by the backlash from lawyers who are concerned about EY’s new capacity to compete with them. “Long may this view continue,” Mr. Price told Rose. “Our read of the market is that clients want something different. As long as [those lawyers] fail to see the future and react to it, they’ll be creating a market for us.”

I invite you to share your thoughts on this or any other matter related to the law, either in the comments section below, or directly via email.


How Will US Law Firms Compete with International Firms Offering Equity Outside the Legal Profession?

Two recent, related articles announce the details of a $21m investment by growth equity investor Highland Europe in INCOPRO, a leading machine-learning brand and intellectual property protection business that was co-founded by the UK law firm Wiggin. INCOPRO will use the investment for “the development of its Talisman online brand protection technology to help businesses safeguard their brands from counterfeit and piracy threats online” and to expand its operations in China, the US and Europe.

The announcement raises interesting questions regarding how US law firms will maintain their competitive edge on the international stage.

These are the articles:

UK Law Firm Wiggin raises $21m Investment for its AI-driven AP tool (from The Artificial Lawyer)

INCOPRO Raises $21m from Highland Europe to Scale Its Online Brand IP Protection Platform (media release) And here are the questions:

  • How can US firms compete with international firms that can raise money through offering equity?
  • How long will it be before US firms will look for clever ways around US restrictions?

Let me know your thoughts on this or any other matter related to the law, either in the comments below or directly via email.