TechnoLawyer: Law Office Management

Coming today to Fat Friday: Steven Levy discusses accounting considerations for locally installed software versus SaaS (software in the cloud), Harold Goldner explains how blogging has boosted his practice, John Starkweather discusses when to hire consultants and when to do it yourself, Thomas Hutto shares helpful information about Clio's data escrow policy, and Craig Bayer compares LogMeIn free to LogMeIn Rescue. Don't miss this issue.

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Coming today to BlawgWorld: Our editorial team has selected and linked to 85 articles from the past week worthy of your attention, including our Post of the Week. Here's a sample:

Listening to Podcasts at Double Speed

Just a Touch Away, the Elusive Tablet PC

Lawyer's Unemployment Benefits Yanked Over $1/Day From Blog

Boycott of Best Lawyers and US News Survey Is Growing

This issue also contains links to every article in the September/October 2009 issue of Law Practice. Don't miss this issue or future issues.

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Originally published on October 5, 2009 in our free BigLaw newsletter.

Phrases like "today's economy" and "cost cutting" have become cliches in the large firm world thanks to their prevalence. Law firms continue to defer the start dates of new associates, reduce salaries, eliminate lockstep salary increases, outsource secretarial and other support functions, etc. The lust for thrift cuts both ways. Clients, fed up with the high cost of legal services, seek to reduce their bloated bills. Many demand "alternative fee arrangements," suggesting to some that the billable hour is on its last legs.

But all of these cost-cutting measures present certain challenges. Associates, after all, remain a necessary component of legal services, and outsourcing can result in poor quality control. And, while alternative fee arrangements may pose a viable threat to the billable hour, reports of the latter's death are greatly exaggerated to use another cliche. How, then, can clients — and the law firms who love them — balance their needs in "today's economy"?

Legal Project Management to the Rescue?

One emerging trend is the movement toward efficiency (rather than hours-driven profit) and the bundling of legal services. The movement toward Legal Project Management (Discovery Management) serve as examples of how the provision of litigation services can streamline operations and reduce costs for all involved.

Steven Levy, until recently a Director at Microsoft and now a principal of Lexician, describes Legal Project Management in a recent post on his "No Secret" blog. "Legal Project Management ("LPM") is a new field," writes Levy, which "at least for firms serving corporate clients, is not about the practice of law per se, but about the mechanics of that practice. As such, it goes counter to almost all of what attorneys have learned at law school and in the practice of law since getting that precious JD

According to Levy, the traditional focus of law firms has been on "doing whatever it takes," "doing whatever the client asks," and billing for these functions on an hourly basis. In addition, he asserts, lawyers have tended to focus on their role as legal advisers, ignoring the necessity of project management and viewing their role as one restricted to solving their clients' "legal problems, not their business problems" But, Levy asserts, in an age in which many corporate clients find themselves "being pushed by the recession," firms need to respond. So, he says, "smart firms are turning to LPM," which envisions a "new approach" to the usual imperatives of client service.

Under the LPM model, Levy explains, the first discussion with the client should concern "what their goal is for this matter, what they and we need to do to be successful, and what they will spend to achieve that goal." The focus is still on doing "whatever it takes, but only if it moves the ball toward that goal." LPM contemplates billing models geared toward efficiency (not just racking up hours), project management techniques, and approaching the legal problems of any "business" client as a "business problem."

The Electronic Discovery Field Leads the Way

While LPM may seem somewhat abstract (Levy notes that he is reluctant to call it an "emerging field, but you have to first crack the eggshell before you can emerge"), other, more concrete, examples of this emerging trend exist. In the area of electronic discovery, for example, forward-thinking companies are focusing on a complete, "soup to nuts" approach to document review and production, designed to reduce costs by minimizing the number of vendors and streamlining the process of document review and production.

In the past, says Kristen Johnson Gluck, Director of Business Development at Excelerate Discovery, clients might use one vendor to process and analyze their electronically stored information, another to supply their review platform, and a separate staffing agency to provide temporary or contract reviewers.

But, Johnson Gluck explains, "this is not necessarily the most efficient way to manage a project. With each additional person, company, or vendor, the chances for miscommunication increase." And, she says, "clients are looking for a more efficient method. Companies that offer pull to production services can provide this by familiarizing themselves with the universe of data from the outset, staffing the project intelligently based on their estimate of the work involved, and providing a review platform tailored to the project."

Another added benefit? "The predictability of pricing when you have one vendor handle your document review and production from beginning to end," says Johnson Gluck. If you have an overview of — and are familiar with — your client's needs, you can provide a better estimate of costs. Because your approach is specifically tailored to those needs, you can offer much better value." The days of unbridled expenditures and spiraling costs are over, according to Johnson Gluck. "Nowadays," she asserts, "less is more."

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Coming today to Answers to Questions: Francis Jackson explains how his firm handles scanned documents, Craig Humphrey discusses 64-bit computing and some considerations before making the switch, and Bobby Abrams addresses software upgrade phobia among law firms. Don't miss this issue.

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Are Clients Missing the Wave Because Attorneys Don't Surf?

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This issue also contains links to every article in the October 2009 issue of Law Technology News. Don't miss this issue or future issues.

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Originally published on September 28, 2009 in our free SmallLaw newsletter.

On January 1st, I donned my Rosstradamus hat and robes, gazed into my crystal ball, and published 30+ legal technology predictions with a bent towards the solo and small firm world in which I spend much of my professional time. How have my prognostications played out after nearly nine months? Let's take a look at ten of them.

1. At Least 10% of the Amlaw 100 Law Firms Will Fold By The End of 2009

Fortunately for large firms, my prediction was somewhat overstated. Four significant firms failed: Thelen, Heller, Wolf & Thatcher, not the ten that I had predicted. However, the large firm landscape has clearly shifted, perhaps permanently (see #2 below). More than a few larger firms have delayed the start dates of new associates or announced moratoriums on new hiring. While all is not that well, I'm glad most of these firms avoided an apocalypse.

2. The Rise of BigSolos

I've received flack for coining this term, but I'm not sure what else to call them — emigrants, escapees, laid off, downsized lawyers from megafirms who decide to go the solo or small firm route.

My prediction was right on the money. More and more BigSolos continue to stake out their self-shingled territory. I'm working with several, helping them make the transition from mega-office to being on their own.

3. Software as a Service Makes Serious Inroads

Again, I was correct — just look at the continually growing success of SaaS practice management systems such as Clio and Rocket Matter, as well as billing management like Bill4Time and Web-based eDiscovery products. Expect the SaaS market to heat up, especially for smaller and more frugal firms throughout the next several years to come.

4. Twittering Will Eclipse Blawging for Small Firm Marketing

Whether it's Twitter, Facebook, or LinkedIn, social media use for business development has exploded. Who would have expected blawging to feel almost passe in comparison?

5. Windows Vista Will Quietly Disappear From the Scene

Windows 7 will be released in October. No one will mourn the death of Vista. It deserves to die.

6. Netbooks Will Replace Ultralight Laptops in Small Firms

Netbooks have indeed virtually destroyed the pricey ultralight laptop marketplace. I see more and more small firm lawyers using netbooks with port replicators as desktop replacements. Running 3-4 major apps with 2 GB of RAM seems to work surprisingly well — and the pricing is spot on for these troubled economic times.

7. Practice Management Systems Move Past 10-20% Adoption

This was more a hope than prediction. There is definitely a renaissance period underway for all practice management systems, whether newer generation SaaS tools (see #3 above), or more traditional locally installed systems (especially STI's PracticeMaster as it continues its Tabs3-fueled rise in market share and reputation). More small law firms than ever now see the light, acknowledging that not having a practice management system is tantamount to … well, insanity.

8. More Firms Will Get a Clue About Data Backup and Learn That Online Backup Alone Is Not Adequate

Sadly, I think we've made little progress in this regard. Online backup systems have matured, not in a necessarily positive way. Maturity can mean outsourcing of tech support offshore, creating nightmarish situations in which backups don't work reliably, and worse, restores don't occur. My revised prediction — backups will come full circle to local, full system backups but with smarter devices that simultaneously replicate and mirror data offsite.

9. Virtual Law Practice Will Rise in Popularity, Especially Among Solos

I couldn't have been more accurate as more and more small firm lawyers share office space, take advantage of executive suites offered by Regus and others, or set up a home office. It's all about cutting costs to maintain, or ideally, maximize profits. Expect more of the same for small firms that often just don't have any real need for traditional office space.

10. Interest in CLE on Legal Technology Will Increase

Speaking from my own experience, I see larger and larger turnouts at practice management and legal technology-oriented CLE programs. Polling of attendees shows, admittedly anecdotally, that the majority of audience members work in firms with fewer than 20 lawyers.

It seems that small firm lawyers are taking the time to bone up on smarter ways to run their practices, as opposed to just cramming on substantive CLE. Most attendees seem driven by a desire to minimize non-billable administrative time, and maximize billable/salable time.

Not Too Shabby

Overall, my nine month old predictions fared well. Let's hope for continued progress among all solos and small law firms as we head into 2010.

Written by Ross Kodner of MicroLaw.

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Originally published on September 29, 2009 in our free BigLaw newsletter.

From layoffs to salary freezes to dissolutions to deferrals, the landscape of large firms has changed significantly over the past year. While many large firms struggled in the downturn, Above the Law, the legal blog that reports the bad (and sometimes good) news to the associate masses, has positively thrived, with 8,000,000 page views and over half a million unique visitors every month.

Large firm veteran Elie Mystal has served as Above the Law's editor for more than a year. Given his unique vantage point, we recently cornered him for an interview.

Do you think firms have cut associate jobs to maintain profits per partner (PPP)?

Yes, of course. Is that necessarily a bad thing? Law firms are for-profit businesses, and if associates didn't know that in 2007, they know that now.

The firms need to attract partners able to bring in business, and partners who bring in business want to make as much money as possible. By maintaining a profitable partnership, firms are, in a sense, saving more associate jobs in the long run. When a group of partners bolts because PPP is too low, that can kill a firm's business. So there are sound business reasons to maintain PPP beyond the greedy love of succulent money. However, some firms and partnerships have enough solidarity to take small reduction in their PPPs to save associate and staff jobs, and those firms should be applauded.

Bankruptcy is a hot practice area right now, for obvious reasons. Are there other departments that you think are and will continue to be "safe"?

If I knew that, I'd be Biff from "Back to the Future." Many of the old rules have been broken. We always thought that litigation was countercyclical and that IP was indestructible, but that's not the case anymore. So who can say what will truly come back fastest. It seems that any practice area that deals with government regulation will be important. The safe bet practice areas are ones that help clients navigate the new regulatory scheme.

Before 2008, "work/life balance" and "lifestyle" were selling points for firms. Does "work/life balance" exist anymore?

The balance of power has shifted and firm managers know it. Now is not the time when associates should complain of cancelled vacations or lack of quality time with the kids. Will the "lifestyle" concept return? Absolutely. Once the economy turns, associates will wonder how reasonable it is to bill 3,200 hours a year and remain a functioning member of society. Right now, "lifestyle" means "having a job." Jones Day touts that the fact that they haven't had layoffs — that's their definition of lifestyle. When people don't expect to be fired on a daily basis, we'll get back to some of these other lifestyle concerns.

Fox News and MSNBC interviewed you about trends in law firms and law schools. Is there a question about the legal field that you weren't asked by those outlets, but wish you had been while you had such a large audience?

The media has focused on the layoffs and the unemployed graduates, and pays little attention to the role of the law schools. How are we preparing young lawyers? What skills are law schools teaching to make them competent?

First year attorneys show up at work and they have no idea how to actually practice law. Law school needs to be completely reformed. We need something akin to a medical school residency, in which law students can practice law under the tutelage of practitioners. Every lawyer should be able to handle a case or a deal upon graduation, or law schools aren't doing their job. They shoulder some of the responsibility for large firm layoffs. If schools prepared students to hit the ground running, firms may not have had to lay off so many first- and second-years.

Has Above the Law's reporting changed the way law firms handle their internal affairs?

That's what the firms tell us. Our goal isn't to change the ways that they do businesses. Our goal is to bring transparency to the profession, and I think we're doing that. Law firms no longer try to hide the ball from their own people. Of course, a minority of firms still try to conceal information from their own people and from the legal community at large.

For example, one firm sent an email to its associates announcing layoffs. You couldn't forward the email, copy it, download it, print it or print screen, so our tipster ingeniously took a camera phone picture of his computer screen and sent us the JPG. The point is, if it's firm news someone can hear or see, it's going to make its way to Above the Law.

The vast majority of firms are trying to find ways to work with media outlets and work with their own people so that information is presented correctly when it inevitably becomes public. We know of instances in which firms send internal email written by press people, not partners, and I think that's the right way to do it, from a PR perspective.

Over 5,000 large firm attorneys have been laid off since January 1, 2008. Do you think most of them will eventually rejoin the large firm world? If not, will they seek other positions within the law or do you see a forced exodus from the legal profession?

That's a lot to contemplate. If you primarily focus on the associates let go, many of them will find their way back in to big law — if they want to. That being said, "want to" is a high bar. They can't sit on the couch playing Xbox for the next few months and expect that employers will come knocking on the door. They have to be proactive in their job search and in filling their resumes with relevant experience during their time off. But if they liked their job, they were good at it, and they want back in, jobs will exist.

That being said, many associates don't want back in if that would entail working in a secondary market or for a less prestigious firm. Others will discover that there's more to life than being a large firm lawyer and will pursue other careers. Many associates have been on partner track their entire lives and now that they've been kicked off, they may find that it's a great time to stand in the terminal and see that there are many other trains available. To quote Yoda, "You must unlearn what you have learned."

I don't see a "forced exodus" from the profession, however. Laid-off attorneys may not want to return to the firm, but they'll be reluctant to lose the investment of their JDs. Many of them may go in-house or to government jobs.

One thing is for sure — there is a class of young associates, recent graduates and law students who have been laid off or blocked from firm jobs before they even had a chance to build their skill sets. They are not in a good position.

In 2008 and 2009, large firms froze and even slashed salaries. Will starting salaries fall below current levels?

The vast majority of top firms are still at $160,000 and the salary cuts that happened were at firms that weren't at that level to begin with and probably should never have been there, anyway. I don't think the Cravath's and Skadden's will come down from $160,000. They'll try to hold the line there, and bonuses will continue to be low. Last year's bonus was $17,500 at top-shelf firms, and bonuses will decrease this year. Perhaps in 2010 bonuses will rise to 2008 levels, but bonuses won't go back up to 2007 levels until the next decade.

Do you think all the bad news — the layoffs, salary cuts, deferred offers, etc. — will have a chilling effect on the number of law school applications over the next few years?

God I hope so. There would be nothing better for the legal profession and for society at large if there were fewer lawyers. Unfortunately, I think the concept of going to school for three years, not worrying about finding a job, and emerging with a prestigious degree remains enticing. So no, there won't be a chilling effect. I don't know what one would have to do to slow the influx of new law students, as universities have already raised tuitions and people still enroll. That's another reason why we won't have real structural changes to the large firm business model — because the pressure from below won't stop. We can't turn off the spigot.

At the height of the recession, pundits warned that the good old days had ended forever. As the economy has turned around, that sentiment seems to have lessened. In a few years' time, will we return to business as usual?

One of the things that we report on ATL that has the potential to have a long term effect is outsourcing. About a year ago, the ABA changed its rules to allow American legal work to be done off-shore. At some point, hours-intensive legal work that used to be done by juniors will go to India and that will be a game-changer.

Of all the law firms we cover every day — two, three, maybe four have failed. I'm not saying that firms aren't still hurting, but if you look at it from the perspective of December 2008 or March 2009, people thought it was the beginning of the end of big law. When Thelen collapsed, there was a sense that other firms would follow suit, but for the most part, firms have hung on without fundamentally changing their business plans. And if it's not completely broken, they won't fix it.

Have we seen structural damage to the model of top-end lawyers working for Fortune 500 clients? It doesn't look like it. Will we see structural changes to the big law business model? That's an open question. I think big law will go back to the way it was once the clients go back to the way they were. If clients have learned a lasting lesson, then no — the profession won't rebound to its previous heights.

How to Receive BigLaw
Many large firms have good reputations for their work and bad reputations as places to work. Why? Published first via email newsletter and later here on our blog, BigLaw goes deep undercover inside some of the country's biggest law firms. But we don't just dish up the dirt. We also mine it for best and worst practices and other nuggets of knowledge. The BigLaw newsletter is free so don't miss the next issue. Please subscribe now.

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The Lawyerification of Litigation Support

70 Sizzling Smartphone Apps for Lawyers

Don't Criticize or Blame Others Until You Look in the Mirror

Where to Focus With Social Networking

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Techno-Savvy Law Firm Shares Secrets for Success

How to Get That Power Outlet at the Airport

O'Melveny & Myers' New Strategy for the New Legal World

Avvo and TechnoLawyer Exchange Blows Over Lawyer Reviews

This issue also contains links to every article in the September 2009 issue of Law Practice Today. Don't miss this issue or future issues.

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Originally published on September 14, 2009 in our free SmallLaw newsletter.

Some of you might remember The Perils of Solo Practice, my SmallLaw column about the departure of my long-time Associate Attorney and the harsh realities of practicing alone for the first time in 10 years. The piece chronicled the disappointment and frustration I felt running through over a dozen subpar employees over the next 18 months while fending off stomach-churning instability and fighting to regain focus.

At the end of the piece I concluded that despite the problems inherent in growth and even working with a partner, remaining solo was a losing proposition. Being solo runs headlong into human limitations like sleep (not enough), work (too much), and money (not nearly enough). Not exactly a controversial conclusion. Except that it was, judging by reactions in TechnoLawyer's Fat Friday newsletter, on the ABA's Solo Sez bulletin board, posts on Twitter and around the blawgosphere, and personal messages emailed directly to me.

The Controversy

Many comments took issue with the observation that, as a solo, I felt overworked, underpaid, and continuously exhausted — something I wagered that other solos were going through as well. A number of messages theorized that I was projecting, because I was lazy and unprepared myself. Others insisted the piece was a spoof. But the majority of comments had little to do with the article. Instead they described fulfilling solo practices and comfortable lifestyles. Apparently being solo was the most preferable way to practice, if only I understood.

A House Divided

At first I was surprised by these reactions. But after looking more carefully I realized that the responses pretty much broke down along generational lines among Baby Boomers, Gen-X, and Gen-Y much the same way that the profession has resolved itself over the last decade into distinct camps. The overall picture looks like this:

Age Group: Boomers
% of Lawyers: Highest
Key Technology: Email, BlackBerry
Key Online App: AOL
Status: Highest
Collaboration: Lowest

Age Group: Gen-X
% of Lawyers: Middle
Key Technology: Web 2.0 (SaaS)
Key Online App: Blogs
Status: Middle
Collaboration: Middle

Age Group: Gen-Y
% of Lawyers: Lowest
Key Technology: Social Networks
Key Online App: Facebook
Status: Lowest
Collaboration: Highest

Gen-X lawyers, by and large, agreed with my conclusions. Some offered to help. Some were gratified to know they were not alone. Ultimately their comments reflected the same frustration that I felt.

Gen-Y lawyers had no opinion, or at least they didn't share any. Of course many law school graduates didn't pass the bar until last month and older members of the group were probably too busy looking in vain for work.

Boomers however, led the charge against the article. One well-known blogger called it "completely useless." High praise indeed.

Statistically, most sole practitioners are Boomers and most Boomers are sole practitioners. So why did my piece strike such a nerve? Boomer sole practitioners should agree with me. Could it be that despite riding the profession's economic peak in the 80's and 90's, dominating the bench, ruling the lives of law students and associates, deciding what is legal and ethical, and setting the cultural agenda for decades, Boomers are insecure and defensive? That would explain a lot …

What It Might Mean

Look at it this way, a 50-ish sole practitioner or small firm attorney has made their mark, bought their home, taken their vacations, raised their kids, and established stable relationships with clients. They've outlasted the skeptics, learned the tricks of the trade, and have become comfortable with themselves. In short, Boomers are at the peak of their careers and may even have crossed the threshold into retirement. Who could complain about being his or her own boss under those circumstances? And who in that group would have the least bit of empathy for someone still trying to get the balance right?

By contrast however, if you entered the profession in the 90's or later you've never known true income security, have no idea what the future holds, haven't had time to think of retirement, and may have been wiped out financially twice by now — the first time in stocks and the second time in real estate. Not only that, but a student-loan nut the size of a mortgage shadows your every move. For members of Gen-X it's fair to say the profession hasn't been what it was cracked up to be.

Finally, I'm not sure it even makes sense to talk about Gen-Y sole practitioners because for the most part they've simply left the profession or hung out a shingle under protest. They are terrified of going solo, but with jobs scarce and the Internet commoditizing law practice, what choice do they have? The End of Lawyers indeed — thank you very much Richard Susskind.

I'm Sorry … So Sorry

Granted, when I'm under pressure this column can sound a little strident. Since I was feeling pressed earlier this year when I wrote my controversial piece, it was bound to come off as aggressive. And I'm not afraid to say I'm sorry to everyone who thought it was an insult to their cushy way of life.

I apologize for publicly revealing the truth. But it was the truth after all. It wasn't an exaggeration and the points made in the piece remain valid. Want proof? Today I again employ an Associate Attorney, a Paralegal, and an Office Manager. My Associate is great at keeping the small stuff from overwhelming me, my Paralegal works wonders with billing, and my Office Manager keeps the whole setup humming so I can write these little vignettes. In short, everybody's happy. Who says that practicing solo is the way to go? Not me.

Written by Mazyar M. Hedayat of M. Hedayat & Associates, P.C.

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