Driving Change at the Coal Face of Law

Driving Change at the Coal Face of Law

Driving Change at the Coal Face of Law Presented by: Sally R. Gonzalez [email protected] Todays Topics Law Firm of Future Whats driving change? Lawyer personality traits Help or Hindrance? How to promote disruptive change? What technology innovations should we be monitoring? Future technology trends from ILTAs Legal Technology Future Horizons Study Todays Pressures on Profitability Demand for legal services remains flat, 5 years after the financial crisis Large law firms competing for shrinking pool of high-end work Firms have to take work from others to maintain/grow revenue Revenue growth remains sharply constrained Pre-2008: Double digit growth 2013: Revenue grew 2.5% (Citi Private Bank Survey of 180 firms)

Stratification of firms continues to widen 50-top grossing US firms materially outperformed others in profitability (Citi Survey) Global firms with strong international presence showed the biggest revenue gains (Citi Survey) 2013 Revenue growth ranged from +20% to -21% (Wells Fargo Private Bank) Firms that aggressively managed expenses and pruned unproductive partners are doing better than others Source: Big Law Firms Have a Big Revenue Problem; Wall Street Journal; February 25, 2014 The New Normal is Here to Stay Well, in our country, said Alice, still panting a little, youd generally get to somewhere else if you run very fast for a long time, as weve been doing. A slow sort of country! said the Queen. Now, here, you see, it takes all the running you can do, to

keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that. Lewis Carroll, Through the Looking Glass and What Alice Found There What Does the GC want? Value What corporate clients want and need: value driven, high quality legal services that deliver solutions for a reasonable cost and develop lawyers as counselors (not just content-providers), advocates (not just Project Source: The ACC Value Challenge process-doers) and professional partners.

What Does the GC Want? A Partner Top 3 ways for GC to deliver value today: reduce time, risk and cost Achieving best legal outcome less important today than 5 years ago Top three ways in which corporate legal teams demonstrate value Now 60% Source: Deloitte Touche Tohmatsu 60% 56% 50% Five years ago

55% 54% 54% 49% 40% 48% 45% 44% 43% 42% 30% 30% 20%

10% Ac le hie ga vi l o ng ut be co st m e Re le duc ga in le g xp ex en ter di na tu l re ex Bu

pe ild rti in se g i of nte or rn ga al ni le sa ga tio l n co st eff e of ctiv le e r ga e l p sol ro uti

bl o em n s le ga lr isk Ac hi ev in g Re du cin g Ac

hi ev in g ti m el y le res ga ol l p uti ro on bl o em f s 0 Source: Deloitte Global Corporate Counsel Report 2012

Law Firm of the Future Size will matter both bigger and smaller Location will matter serving global clients and emerging nations Expertise remains key, service delivery models will morph Competitors will change In-house law departments Dynamic virtual law firms (e.g. Axiom) Alliances (e.g., LexMundi) Specialist service providers for disaggregated services Non-legal professional service organizations Project Management and Process Improvement will become embedded Innovation will be a differentiator Law Firms Respond

Legal Project Management Doing things right Training lawyers in project management Increasing formality around pricing up-front and managing to budget over time Formalizing methodologies and tools for matter management BESPOKE IN-HOUSE SOLUTIONS Law Firms Respond Legal Process Improvement

Production Plan Takt Demand Capacity Planning TPM Visual Control Standard Work

Takt Boards 5-Minute Briefing Project Selection Project Charter $IPOC Process Mapping $PC Control Plan Process Audit

FMEA ANOVA DOE R3M Me a su Value Steam Map Time Study Inventory Turns

Spaghetti Diagram re C&A M&A Potential Capability Pareto Fish bone Multi-vari Hypothesis Testing FMEA Pareto DOE $PC 5$

Line Balacing Kanban Pull A Single Place Flow $MED Time & Motion Study Work Cells Improvement Process Cycle Setup Reduction Part Stratification TOC sis

De e if n Ana ly trol Con Doing the right things Streamlining legal processes Resourcing strategically Assigning work to the lowestcost, qualified resource Out-tasking as appropriate Building bespoke technology platforms and resources Delivering information justin-time in context with task

(path finders) Law Firms Respond Innovate Develop broad, yet specialized services to support global clients Improve existing services to achieve profitability objectives Create new services and service models to buffer revenue streams from downward pressures on legal spend Non-legal professional services Ancillary business units Todays Topics Law Firm of Future Whats driving change? Lawyer personality traits Help or Hindrance? How to promote disruptive change? What technology innovations should we be monitoring? Future technology trends from ILTAs Legal Technology Future Horizons Study

Whats Unique About Lawyer Personalities? Measuring Lawyer Personalities with the Caliper Profile Measures 18 separate and distinct personality traits Administered to more than 2 million college-educated subjects over past 40 years well validated instrument Administered to more than 4500 lawyers over past 10 years by Dr. Larry Richards Results: Lawyers vary substantially from the norm on 6 of the 18 traits Reflects US-based lawyer population; culture session may reveal differences in Asia-based lawyers Skepticism Symptoms of highly skeptical people? Pervasive questioning of facts and authority, sometimes cynical, judgmental, argumentative, and self protecting. 100 90

80 90 70 60 50 50 40 30 20 10 0 Lawyers General Public

Autonomy Resistance to being managed, dislike being told what to do, prize independence. 100 90 80 89 70 60 50 50 40 30 20

10 0 Lawyers General Public Abstract Reasoning Ability to detect and theorize fact patterns and cause/effect relationships, that are not readily apparent, and which may or may not be relevant. 100 90 80 70 82

60 50 50 40 30 20 10 0 Lawyers General Public Urgency Symptoms? Impatience, a need to get things done, and a sense of immediacy.

100 90 80 70 60 71 50 50 40 30 20 10 0 Lawyers

General Public Personal Resilience Symptoms of low resilience? Defensive, resist accepting feedback, and hypersensitive to criticism. 100 90 80 70 60 50 50 40

30 20 30 10 0 Lawyers General Public Sociability Desire to connect with people, comfort in initiating new relationships with others, having emotional conversation with others. 100 90

80 70 60 50 50 40 30 20 10 0 12 Lawyers General Public Does This Make Sense Now?

Implications: Project Management is a Challenge Lawyers are not naturally team oriented High Skepticism and Autonomy combined with low Sociability and Resilience undermine team behaviors Compensation system is competitive (in U.S.) Lawyers are tough-minded and tolerant of conflictso they get stuck in Storming phase of team formation Teamwork is unfamiliar not generally used in law school Urgency works against planning and managing to plan Typical lawyer does not have personality traits needed for effective project management Implications: Process Improvement and Innovation are a Challenge High skepticism and autonomy can kill new ideas, especially others ideas, at inception High abstract reasoning promotes analysis paralysis rather than crisp decision making

Urgency works against reflection for process improvement Low resilience undermines investments in R&D Works against innovators mantra of Fail quick and fast Todays Topics Law Firm of Future Whats driving change? Lawyer personality traits Help or Hindrance? How to promote disruptive change? What technology innovations should we be monitoring? Future technology trends from ILTAs Legal Technology Future Horizons Study Thesis Project Management, Process Improvement and Innovation are disruptive changes in a law firm Business Services leaders and teams are well positioned to pioneer disruptive change BUT

also need to avoid arrows in their backs Promoting disruptive change benefits from a Diffusion of Innovations method About Diffusion of Innovation (DOI) DOI seeks to explain how innovations are adopted within a population Innovation = an idea, behavior, or object perceived as new by its audience Provides 3 insights into social change process; tested in more than 6000 research studies and field tests and among most reliable in social sciences 1. Qualities that make an innovation spread 2. Importance of peer-to-peer conversations and networks 3. Understanding needs of different user segments Standard text: Diffusion of Innovations, Everett M. Rogers, Fifth Edition 2003; Free Press, New York

1. Qualities That Make Innovation Spread Quality Description Relative How much better is the innovation that what is currently Advantage available? How is the improvement quantified? Compatibility How well does the innovation fit with the values, past experience, and needs of potential adopters? Simplicity How easy or hard is it to understand and use the and Ease of innovation? Use Trialability How easy or hard is it to experiment with the innovation on a limited basis? Observable How easy or hard is it to observe the results of the Results

innovation? You should measure any innovation against these 5 factors to assess how difficult adoption is likely to be. 2. Peer-to-Peer Conversations are Critical Marketing may spread information about an innovation BUT CONVERSATIONS SPREAD ADOPTION Face-to-face Social Media Why? Adoption involves management of risk and uncertainty (two things lawyers struggle with) Only people we know and trust can give us credible reassurances that our attempts to change will be successful 3. Understanding Needs of User Segments These are the user segments in any adoption population.

Remember Persuasion does not make innovation spread Innovation spreads as new thing become easier, simpler, quicker, cheaper, and more advantageous Each individual combines multiple user segments May innovate in one area and be a laggard in others During an innovation project: Analyze and categorize your user population Know which segment you are working with; design your activities and pitch your communications accordingly Circling Back to LPM and LPI Will a simple training approach address the full range of innovation segments in your organization? Does a more pervasive Lean Sigma approach fit better? What role does an After Action Review fill? Is a multifaceted approach necessary to satisfy a broad range of needs in the full population? Project

Management Process Improvement Diffusion of Innovation Circling Back to Innovation For internal innovation, what organizational structures or institutional approaches might be used to: Ferret out the bright ideas of the innovators? Apply diffusion of innovation concepts to promote adoption the innovation? If you are trying to introduce an innovation originating outside the organization, how should you leverage diffusion of innovation concepts to achieve your goal? Todays Topics Law Firm of Future Whats driving change? Lawyer personality traits Help or Hindrance?

How to promote disruptive change? What technology innovations should we be monitoring? Future technology trends from ILTAs Legal Technology Future Horizons Study Objectives of ILTA Legal Technology Future Horizons Project Identify key business, legal and IT trends and developments Build timeline of emerging technologies and IT developments with high potential legal impact Explore ITs transformative role in future legal business models and service differentiation

Highlight strategic imperatives for effective use and management of legal IT Conducted January December 2013 Publication March 2014 6 Sponsors

Combined desk research, interviews with managing partners, CIOs, vendors, futurists and technologists, global surveys on the business applications of IT (499 responses) and emerging technologies (223 responses) Key findings are presented on the following pages including the highest ranked responses in the surveys Financial Innovation is the New Normal e.g. Assets Usership vs. Ownership Rapid Execution e.g. Superfast Construction Ark Hotel - Dongting Lake China 15 days How long do I need to wait to get your due diligence results? http://www.dailymail.co.uk/news/article-2083883/Ark-Hotel-construction-Chinese-built-30-storey-hotel-scratch-15-days.html Our Technologies are Evolving

From Desktop to Mobile ... ...to Wearable... ...to Embedded... and totally Connected via The Internet of Everything What happens when the smartest thing in the room is the room itself? Madeleine Albright Artificial Intelligence is Going Mainstream 88% AI advisers / helper apps will structure legal documents and check content

generated by lawyers Speech / gesture / image recognition, integrated analytics, knowledge management, image / video / voice mining, client self-service, intelligent documents, expertise systems, collaboration, secure email, virtual assistants, intelligent agents and collective intelligence Questions? Appendix -- Working With the User Segments -Innovators (2.5%) Characteristics Love to try and talk about new things Dont expect new things to be easy or perfect Known by majority as outliers or crackpots

How to Work With Them Find them and engage them Provide support and publicity for their ideas Invite them to be partners in designing your project -- Working With the User Segments -Early Adopters (13.5%) Characteristics Dont need much persuading Leap in once benefits start to become clear Quick to connect innovation to

their personal needs Love having advantage over their peers; will invest time/money to get it Like to talk about success How to Work With Them Offer strong, face-to-face support during trial period Reward egos with recognition Leverage as peer educators Maintain relationships -- Working With the User Segments -Early Majority (34%)

Characteristics Moderately progressive pragmatists Wont act without solid proof of benefits Cost sensitive and risk averse Wary of fads; want industry standard, and endorsed by normal folks (like me) Want simple, proven, better ways to do what they do; ways that take no time to learn and create no disruption

How to Work With Them Stimulate interest with prizes or competitions Share endorsements from credible, respected, similar people Redesign for ease and simplicity Simplify instructions & education Provide strong support -- Working With the User Segments -Late Majority (34%)

Characteristics Conservative pragmatists Hate risk and uncomfortable with innovation Fear not fitting in; will follow mainstream fashions and established standards Influenced by fears and opinions of laggards

How to Work With Them Promote social norms rather than just benefits of innovation Share endorsements from other conservative folks like them that innovation is normal and indispensable Emphasize risks of being left behind Defuse criticism from laggards -- Working With the User Segments -Laggards (16%) Characteristics Hold out to the bitter end See high risk in adopting the innovation Spend time thinking up arguments against the innovation and are vocal about concerns

How to Work With Them Provide high levels of personal control over when, where, how, and whether they adopt the innovation Promote familiarity with other successful innovations Promote success of laggards who do adopt innovation Always be mindful: They might be right; they might be innovators of ideas so new they challenge your paradigms They can undermine progress with late majorities, so dont ignore them

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