Tuesday, December 15, 2009

Mega-Firm - Hogan Lovells

The mega-merger of Lovells and Hogan is almost complete. Today was the final voting day for each firm’s partners on whether to proceed or not. Come May 1, 2010 there will be a new “global” firm of 2500 lawyers and combined revenues of just under $2 billion. That is a mega-firm to be certain.

Now I am not privy to any details of this deal nor I am even in the same universe as these two firms. However, I am both an active participant and observer of the legal industry and come from a perspective gained from over ten years being immersed in it. So when I look at this merger the one question I have: truly the only one that matters I argue, is, what is the reason for this merger?

No doubt I would get many answers from those polled inside the two firms and I would hear things like, “it makes sense,” “it is either grow or die,” “our clients are global so we need to be,” “we need to create critical mass in certain international market,” and “the timing is right for a strategic risk.” These all may be fine reasons and they may actually be part of the overall reason. But I would like to know if anyone asked the question, is this merger good for our clients? If so, for which ones and if not, for which ones? Fair enough this is not one question but it is one theme –it is client focused.

I am sure the firms would state that they have asked. In fact Warren Gorrell of Hogan stated that “[w]e have got a lot of positive feedback” from clients. That may be true but what was the negative feedback and were clients either for or against it or were many clients conflicted – they see value but also see potential issues. What will the two firms do to address these issues? It has been witnessed time and time again with large law firm mergers that the “be bigger” approach will eclipse the finer points of client centric service –with focus on scale and volume there is a lack of organization around what serves clients best versus what serves the firm. Further, as has been documented and mentioned countless times, law firms are not managed well, certainly when compared to other services organizations and businesses. Yet there seems to be this proclivity to keep getting bigger. If you cannot manage what you have well what makes you think you can manage something larger?

Further rapid expansion comes the economic pressure to make the merger work is enormous. Certainly in the formidable years of the merged firm there is considerable overlap of services and costs existing within the former firm’s operations. With such a focus on new business I hope there is an equal amount if not more on retaining and serving the existing clients.

My point here is not to bash law firms and certainly not to bash Hogan or Lovells. My point is this – if a client’s billing gradually lowers from say $3 million to $500,000 what will the firm see as the reason, if they see it at all. In a smaller firm, that $2.5 million loss will have a much greater impact than in a larger $2 billion firm. Will there be less attention paid or if attention is paid will the tendency be to attribute it to a down cycle in the client’s legal matters or some other client business issue. Will a mega-firm have the sensitivity to ask the client why? The better question is to ask that client what percentage of their legal work is the firm getting. And who would ask? What happens to the relationship partner the client once had prior to the merger once he or she is shifted to become a transitional partner who will need to focus on the integration issues of the firm? Does the client get shifted to another partner, get less time of their original partner, or some other alternative? As the saying goes, clients hire lawyers not law firms. How do two merging firms reconcile this notion?

David Harris managing partner for Lovell’s stated in Legal Week that “[t]his proposition is unique – we will be able to attract new business going forward. We will have scale and a profile that will be much more powerful.” Powerful for who - the firms, the partners, or the clients? Lawyers using terms like “powerful” typically make me nervous. It makes me wonder just what end they are trying to serve – their own or their clients’.

The smart mergers will serve client interests first. The mega mishaps will not. So perhaps the real question is which type will this merger be?

Tuesday, December 8, 2009

Caveat to "The Future of Law is Process"

I am posting here a new discussion occurring on LegalOnRamp (LOR). Ron Friedman at prismlegal.com posted his recent blog “The Future of Law is Process” on the LOR discussion forum. I posted the below comment.

See Ron’s original blog here where he discusses how “process” is key to the continuing change occurring in the legal profession. I do not disagree but added the caveat below.

I agree with Ron that the future is process. But let us not reinvent the wheel in legal – there are countless methods, processes and measurements already developed and proven in other industries. We should look to borrow and repurpose what is out there before we create and birth our own. Actually I just finished watching Paul Lippe talk at the Supernova conference last week in San Francisco (via Ustream recorded video) and he recalled the difference between creating new knowledge and uncovering knowledge that already exists. Because someone did not know something existed prior they may perceive it as new when they think of it or create it - but in fact it did exist prior. The best analogy is Columbus “discovering” America. The continent had existed prior and so had the inhabitants but since the “western world” had not sailed beyond the edge of the Earth and seen the “new” land previously everyone perceived this “discovery” as new. Yet the inhabitants (human and animal) had been there for millions of years.

LPOs are not bringing anything “earth shattering” to the legal profession. Rather what they are doing is bringing a concept of process-focus and orientation to the performance of legal tasks. These concepts have been around for years in other industries – just now are they cracking into the legal profession. To many folks outside of the law, LPOs may not seem to be unique or special in anyway. In fact when talking to CIOs – a group who has been immersed in outsourcing for decades – LPOs represent nothing new or novel other than the fact that they are doing work typically done by legal professionals in their own companies or its firms - but the model, work methods, technology and organizational characteristics are familiar.

LPOs are helping the legal profession sail over the edge of the Earth to discover “new” ways of doing things. Let us all hope for more fair winds for a long time.

Wednesday, December 2, 2009

Special Masters & Mediator Opportunities

There are two great opportunities to gain insight into special master and mediation techniques coming up in January 2010. The first is at the CPR Annual Meeting in NY on January 14-15. CPR is the International Institute for Conflict Prevention and Resolution. Notice the “Prevention” aspect of this title – resolution is often discussed but prevention remains a topic that receives little to no attention within the practitioner arena. Running concurrently with this event which features such folks as Richard Susskind, Ken Fienberg, Paul Lippe and Jeff Carr is a training course for mediation – the CPR Basic Mediator Training. The Training starts a day before the conference and into the first day. But those that sign up for the training will be able to attend any session of the conference that the training does not overlap – mainly Friday’s programs.

The second opportunity on this front is the upcoming Sedona Conference Ediscovery Dispute Resolution for Special Masters & Mediators on January 28 – 29 in Phoenix. NOTE: this is currently a filled conference but there may be a chance of getting a spot by signing up for the wait list. This program features some of Sedona’s most prominent regulars – most notably the Judges Facciola, Rothstein, and Scheindlin. This focus is specifically on training and learning about disputes involving the preservation, collection, review, management, and evaluation of ESI.

In case you want to learn more about the use of Special Masters within the ESI domain I suggest hearing over to Ralph Losey’s post earlier this year where he discussed this very topic. His post was a detailed overview and summary of the Scheindlin/Redgrave Cardozo Law Review article on the same topic.