AALL Spectrum

AALL Spectrum / November/December 2019 / Volume 24, No. 2

AALL Spectrum / Published by American Association of Law Libraries

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24 AALL SPECTRUM | WWW.AALLNET.ORG The Legal Landscape The gradual but unstoppable transfor- mation of the commercial legal mar- ketplace—including new client buying patterns, rapid technological advances, and a host of new providers embold- ened by regulatory liberalization—is creating a state of "climate change" in the market. This poses an immense challenge to law firms, which developed and flourished in last century's more sedate competitive climate and whose business model will now have to adapt in response to this change. Among the most important conse- quences of this legal climate change is a growing bifurcation of legal work into two broad categories: 3 "commodity" work (routine, repeat- able, straightforward, traditionally given to associates), and 3 "complex" work (intricate, challeng- ing, high-stakes, traditionally kept by partners). is, if they would perform commodity work efficiently and systematically, as it should be done. But law firms just aren't set up to do that, structurally or cultur- ally, and few are even trying. Where Do We Go From Here? As commodity work leaves firms and associate roles go with it, many firms will start to shrink down to a core group of partners and a few partner-track associates, all chasing a decreasing amount of complex client work. That's not a strategy for long-term sustainabil- ity and success, but it's the strategy most firms seem to be adopting, and there- fore, it's what law firm libraries and legal information professionals will have to deal with. How will law firms win the fierce competition for complex work? Constantly poaching big-name part- ners from rival firms is an expensive game that nobody wins, except for the migratory partners who command ever- higher revenue guarantees at each stop. Evidence shows that laterally acquired partners tend to stay for shorter periods and are more likely to leave their new firms than home-grown partners. And therein lies the problem for firms: If they want to pursue complex work, then they need to rely on experi- enced lawyers to do it. But experienced lawyers are an essentially mobile and unstable asset—they can (and fre- quently do) walk out the door anytime they feel like it. It's like building your house on shifting sands, when what you really want is a solid, stable foundation underneath you. The solution to this problem is for law firms to develop fixed capital assets—value-generating resources that won't demand higher compensation or desert the firm for a better offer down the road. These kinds of assets must be grounded in the key feature that law firms use to perform complex legal work: "advisory knowledge," insights that help solve the most challenging client issues and deliver the greatest amount of client value. The best and most experienced lawyers possess a great deal of advisory knowledge—but even the most brilliant Now, however, this law firm profitability secret is becoming a handicap. Commodity work is migrating from law firms and moving to more efficient and cost-appropriate platforms, including managed legal services companies and low-cost/ offshore centers. These two types of work have always existed in law firms, of course. But one of the profitability secrets of law firms is that they perform commodity work the same way they perform complex work: sequentially, laboriously, by-the-lawyer- hour. This is the key feature of the law firm leverage model: bill associates' on-the-job learning efforts on basic tasks and reap the resulting profits. Now, however, this law firm profit- ability secret is becoming a handicap. Commodity work is migrating from law firms and moving to more efficient and cost-appropriate platforms, including managed legal services companies and low-cost/offshore centers. These pro- viders are winning this work because they have designed systems and trained people to carry out these tasks faster, cheaper, and more efficiently than law firms can. Law firms could keep this work if they were to adjust their workflow, pric- ing, and profitability approaches; that

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