At the Washington College of Law Annual Fellows Meeting and 2010 Futures Conference at American University, several presentations made on various challenges confronting the legal sector are worth noting. 


Developments in the Global Market


Peter Zeughauser, Chairman of the Zeughauser Group, predicted that "demand for legal services long term will grow" and that the U.S. will be a magnet for litigation involving global companies.  In his opinion, U.S. law firms should focus business development on the 1% of U.S. companies (2,270 entities) that are multinational companies, representing 48% of exports, 37% of imports and 74% of R&D.


He noted that China and India will eclipse the G-6 very quickly and American law firms should be focused on developing their practices there instead of in Europe.  In his opinion, if there were a Global 20 law firms, five Chinese law firms would be on that list today. One of them, also mentioned by other panelists, would be King & Wood, which has over 800 attorneys in 16 offices, including Palo Alto and New York. 

Zeughauser stated that there is a dearth of legal talent in the Emerging Markets – BRIC Countries (Brazil, Russia, India and China) and in the N11 countries (Indonesia, Philippines, Bangladesh, Egypt, Korea, Nigeria, Turkey, Vietnam, Iran, Mexico and Pakistan). To meet that challenge, a few Chinese law firms are presently recruiting U.S. law school professors to train their lawyers. 


Zeughauser also mentioned, as we have recently pointed out (see our entries "The Arrival of Outside Investment?" and "Reducing Regulation as a Productivity Prod"), that India will be a difficult market for American law firms to penetrate under current laws.  India extends reciprocity to  lawyers from countries that allow Indian lawyers to practice there. But because there is no national bar admission here– admittance to practice law is determined state by state–U.S. attorneys may be the only attorneys in the world unable to practice in India. Panelist Will Hornsby, Counsel of the American Bar Association’s Division of Legal Services, contended that a U.S. national bar would be unconstitutional, with the ABA taking the position that Congress can’t regulate the practice of law under separation of powers. It has since been reported that ABA president Steve Zack requested President Obama address this issue during his trip to India this fall, but evidently nothing positive developed. 


Talent Management is King


Talent management was discussed as a key driver for law firm success and several presenters commented on various issues relating to legal talent.


American Lawyer Media’s Aric Editor-in-Chief Aric Press took the position that law firms do not take recruiting and retaining talent as seriously as their clients do.  


Caren Ulrich Stacy reported on working on research that would identify the best predictors of success for attorneys in law firms. Her new company, Lawyer Metrics, recently  founded with Indiana University of Law professor Bill Henderson and others, hopes to identify traits that firms can assess for purposes of selection and development. 


Patrick Lamb, founder of the Valorem Law Group, suggested that firms create attorney positions that are long term and provide career satisfaction even if they do not become partners.  Lamb also noted that just because partners have ownership rights, they shouldn’t necessarily also possess management rights. 


Profile Search Group’s Ken O’Brien (to whom we extend credit for a succinct summary of the conference) noted that often firms have only themselves to blame for disastrous outcomes in hiring lateral.  Many firms have reduced their investment in professional development during the recession, significantly cutting their PD staff and/or budgets. Firms often fail to conduct comprehensive due diligence of incoming lateral partner candidates and do not have a robust lateral integration program that monitors the lateral’s business plan and actual business intake. In addition, firms often fail to track the cross-selling opportunities that the lateral’s proponents promised to deliver. His experience also supports the position that focused professional development programs will help firms develop alternative staffing models which yield competitive financial results. 


Mark Robertson, past chairman of the ABA’s Law Practice Management Section, made the point that attorneys need to develop project management skills to help understand costs, provide accurate estimates and deliver more value in a timely manner at lower cost.   


Simon Chester, former president of the College, an English solicitor and partner in the 500 attorney Canadian firm of Heenan Blaikie, noted that General Counsel are moving more to the center of company management and the Trusted Advisor role is moving inside the corporate law departments, which may require General Counsel to strengthen their management systems and management teams.  


Outside Investment in Law Firms


This continues to be a topic of discussion, as we have noted often.  Australia has permitted outside investment in law firms since 2007. The law firm of Slater & Gordon is listed on the Australian Stock Exchange and has tallied up significant financial gains.The Legal Services Act which becomes effective in 2011 permits British law firms to go public. It also allows U.K. firms to sell ownership in the firms to private investors and merge with other non-law firm entities. Lyceum Capital, a London-based investment firm, has already raised $500 million to target opportunities in legal services.


In the U.S., the Washington DC bar now allows attorneys and non-attorneys to join together in law practice partnerships, but so far other major jurisdictions have not followed suit.  The big question is what impact outside investment will have on how law firms are governed and managed. What managment role will outside investors insist on?


InnovAction Award


Every year the College sponsors the InnovAction Award intended to identify innovation and ingenuity in law practice management. Pro Bono Net, a national nonprofit organization working to increase access to justice through innovative uses of technology and increased volunteer lawyer participation, was the 2010 InnovAction Award recipient for their product, Law Help Interactive, which provides a national infrastructure for online document assembly and helps tens of thousands of low-income people each year complete needed legal forms. 


In closing, Aric Press noted that firms in the recently released AmLaw 200 survey were asked if they anticipated a fundamental shift in the legal services industry. The overwhelming response was “YES.”  Then when asked if they anticipated their firm changing its strategy, those same respondents overwhelming responded “NO.” 


And therein lies the rub.


Seize the competitive advantage by refining your firm’s strategy.