Legal OnRamp News

Our Curious AttitudeToward "Selling"

I read with interest the comments on my confrere Pat Lamb’s recent post "Lawyers Are Not Special".

What struck me in particular was a deep aversion among many commenters to “selling.” I’m not sure where that aversion comes from, but seems to be rooted in a Death of a Salesman-esque view of sales as fundamentally manipulative, obsequious and deceitful, where somehow the salespeople win the business but lose their dignity, and the customer (or client) is tricked into buying something they don’t really want.

Having spent most of my career in the business-to-business commercial world, this view of sales bears no resemblance to what I’ve seen. In an environment where customers (clients) are sophisticated, salespeople can’t win anything for themselves unless they can deliver a win for the customer. The best summary of what professional sales looks like comes from a recent book I would emphatically endorse for all lawyers, called The Challenger Sale (full disclosure: the authors are affiliated with a company that has invested in Legal OnRamp).

Building on organizational behavior and economic learning from the last 20 years and some specific research by them, The Challenger Sale folks view the world of selling thusly:

• Organizations are generally decision-averse and have many cognitive biases (see e.g.Daniel Kahneman's research) and will default to no-decision or a consensus, not especially helpful decision. This is especially true since the financial meltdown, where economic uncertainty, job risk and product complexity make organizations even more decision-averse.
• The job of the salesperson is to overcome that inertia by (a) teaching the customer about a business opportunity (enabled by the salesperson’s product or service, of course) that they didn’t know about and (b) coordinating the decision-makers and influencers in the organization to support and implement the decision.
• There are five sales profiles–relationship builders, lone wolves, problem-solvers, hard workers and challengers–but only challengers consistently out-perform the others in today’s complex and conflicted markets, because they teach the customer something they didn’t already know (which must ab initio be true) and enable them to achieve an otherwise difficult-to-achieve result.

This sounds to me like a pretty worthy description of a sales role. It’s also one that is quite similar to what the most effective lawyers do, whether they are persuading clients to take actions in their long-term interest, or persuading the client that the particular lawyer is the best one to help them.

At the root of the challenger approach is the requirement that the salesperson understand four things:

•     What the customer needs;
•     What the customer’s alternatives are;
•     What the customer’s constraints are in getting to their needs; and
•     How the salesperson’s product is best suited to help that customer address their needs.

This is all very much a “skating to where the puck is going to be” approach, neither “selling used cars” nor simply reacting, toady-like, to customer demands. What I read Pat as saying is that a lot of lawyers miss the first three of these bullets, and so think they’re “special” because they believe they should have commercial success based on good service alone. What’s always been striking to me is how much the law school (and law firm) model makes three huge assumptions (i.e., fallacies) that I’ve never found to be true:

• First, legal reasoning without understanding the client’s context will be persuasive (call it the Legal Reasoning Fallacy);
• Second, if a lawyer can persuade the leader of an organization than an action makes sense, that the leader can/will simply cause the organization overall to take that action (call it the Fallacy of the Unitary Organization); and
• Finally, that the alternative to a particular lawyer is no lawyer and legal catastrophe, as opposed to another lawyer who may be more effective and a range of possible outcomes, some of which might be better than the first lawyer (call it the Fallacy of the Unitary Lawyer).

All the people who have created successful law firms have been skilled at “sales,” and all the people who win trials, succeed at deal-making or persuade clients to do smart things are good at sales. So it may be time for us to update our mental models. It’s too bad we don’t have a find-and-replace feature in our brain, the way we do on Microsoft Word; but if we did, maybe we could find “sales = manipulation” and replace it with “sales = persuading the client both to do the right thing and that I and my firm are the best people to help them accomplish that.”

A (Don't Be) Dewey Dozen: Use This Checklist to Make Sure Your Firm Isn't Dewey

 In 1984 and again in 1987, I worked hard to get Gary Hart elected president.

Suffice to say I wasn’t happy about the way that experience ended, and for a long time thereafter whenever someone saw the Hart reference on my resumé they would give me a sideways glance and an awkward chuckle.

I suspect that for the next decade, anyone who has “Dewey & LeBoeuf” on his or her resumé will likewise get a sideways glance and an awkward chuckle.

My further guess is that at least 10 Am Law 250 firms will fail between now and the end of 2013, for reasons more or less identical to Dewey’s. So here’s a checklist of 12 questions so to make sure you’re not one of them:

1. Does the firm trust its leadership? It is unlikely the people running a law firm will be the perfect mix of George Washington, Steve Jobs and Hillary Clinton, but at minimum they must be viewed as competent, trustworthy and doing their best to put the long-term interests of the firm first.

2. Is the firm sufficiently liquid? There should be at least 4-6 months of expenses in cash or cash equivalents in the bank throughout the year. Borrowing should be minimal (and never used to hide financial shortfalls—there will be a perfect correlation between debt and firm failure) and partners should have enough of their net worth tied up in the firm that its collapse would cause them some pain. Yes, I understand that shoring up the balance sheet will mean less distributable cash this year.

3. Can everyone articulate the strategy and value proposition? If the firm’s strategy is “be a leading global firm for demanding clients’ bet-the-company needs and maintain the highest standards of client service and ethics”—well, pretty hard to call that a strategy. A strategy should be clear and distinct—“be the leading energy finance firm in Asia and Latin America, representing governments and lenders, as measured by ...” That implies that strategy largely resides at the practice group level, which would be fine. A strategy that is vague, amorphous and the same as every other firm is not a strategy.

4. Do mergers and acquisitions advance the strategy? Whether it’s merging with another firm or bringing in a lateral partner, law firms are constantly engaged in some form of M&A. When I was running M&A for my old company, our one-question test was" “What do we say to our top 20 customers the morning after the deal is announced explaining how they are better off?” The answer “now you can buy the same thing from us” is not adequate. You have to be able to explain how what you can deliver is better by combining lawyers in the same firm. The client could always hire the other lawyer(s) from the other firm without you merging with them. Then after merging, make sure you deliver on that promise, which leads to …

5. Are clients firm clients or individual-lawyer clients? If clients are viewed primarily as clients of individual lawyers, then what’s the institutional value of the firm to the client, and where are the scale economies to compensate for the costs and hassles of being part of a big firm? Sadly, many lawyers will take away from Dewey’s demise that they should act to preserve client mobility in case they need to head for the next set of lifeboats, which will all but ensure that those lifeboats will be launched again.

6. Does management render unto Caesar? Lawyers use logic and reason to argue indeterminate facts, and they do it well. One day you might convince me that Obamacare is permitted under the commerce clause, and the next day you might convince me that is it prohibited. But numbers are pretty determinate. There’s no way you can persuade me that a $75 million obligation is not a $75 million obligation, or $780 million in revenues is $915 million, or that combining a $200 million firm and an $600 million dollar firm to create a $700 million firm is growing. Managing professional firms will always require balancing between professional and commercial norms, but at minimum firms need to recognize that there are some inarguable facts. As my old boss Sen. Daniel P. Moynihan said: “Everyone is entitled to his own opinion, but not his own facts."

7. Does compensation make enough sense that it can be defended? Many of the smartest people I know, like Bruce MacEwen and Ed Reeser, have written that a 20-1 compensation ratios between partners—as was the case at Dewey, MacEwen notes—make cultural glue impossible. I respect that argument, but the fact is there are lots of high-performing organizations (Broadway shows, Internet start-ups) with large disparities in compensation. But those disparities are well-understood, and they are accepted when things are working. If the law firm thinks paying one partner 20 times more than another makes sense, it has to be fairly transparent and consistent about it. Certainly you can’t act like all partners are created equal, and then treat some as more equal than others. And obviously if the people in the executive committee pay themselves unfairly, it will be a problem.

8. Does the firm understand what clients think—part 1? Lawyer professional norms resist the notion of client feedback, but the No. 1 predictor of future success and improving performance is client feedback. Sophisticated clients like Pfizer and FMC Technologies give systematic feedback to outside lawyers to help them improve performance and provide an early warning system of issues.

9. Does the firm understand what clients think—part 2? The best way to understand what clients think is by what they do. Here’s another simple test imported from my old company. “For our top 20 clients, is our share of their total spending growing or shrinking?” From 1992-2007, the law market boomed and firms grew along with it. But even as they grew revenues from clients, they didn’t realize those clients were moving more work in-house or to other firms. If the client likes you enough that your share of their work is growing, you are in good shape; if it’s not, you can always come up with a rationalization. But whatever your rationalization, it hides an inconvenient truth. “But,” my lawyer friends will reply, “how could we find out whether our share of spending is growing?” Just ask—that’s half the battle, anyway.

10. Does the firm listen to critics? Everybody I knew recognized months ago that Dewey was in trouble, and many of them published their analyses. Yet apparently most folks at Dewey had no idea. Check out the “recruiters ate my firm-work” interviewby departed Dewey partner Stuart Saft on Bloomberg News (assuming it is an actual interview and not a Jon Stewart parody). So people outside Dewey had a better understanding of what was going to happen than people supposedly in leadership positions in the firm? If that’s the default position, then whenever a firm gets criticized (or challenged) by external voices, they better have the ability to listen and respond thoughtfully, not just hire spinmeisters to attack the critics.

11. Does the firm believe value can be improved? My own experience is that you can almost always improve the quality and reduce the costs of legal work. I recognize this isn’t everybody’s experience. But if you assume it is impossible to do better, you assuredly won’t. Given continued flat growth in the legal market, firms need to find ways to compete more effectively and should start the conversation with the assumption that any work can be delivered at least 20 percent better. More often than they expect, they will find a way.

12. Does the firm experiment with at least 5 percent of the work? Given increased pressure on value and price, firms should target at least 5 percent of their work as an “innovation laboratory” and look for ways to deliver work at least 20 percent better. Not every experiment will work, but many will, and every experiment will lead to learning. As the saying goes, you don’t have to outrun the bear—you just have to outrun the other campers. Firms don’t have to be perfect, they just have to outperform the competition. Look at the recent essay by Seyfarth Shaw chairman J. Stephen Poor.

Like Inspector Louis Renault in Casablanca, some folks were “shocked, shocked” at the collapse of Dewey. But now there’s no more room for denial. If your firm can answer yes to eight or nine of the questions above, all will be well. If you can’t, there’s probably a 30 percent or higher chance of failure in the next 20 months, and when it happens folks will point to some exigency or another, but in reality it will be simply a failure of leadership. None of this is anything other than common sense—but every day we see more evidence how far folks can deviate from common sense.

Practice Groups Leading the Way?

Practice Group Leaders: Masters of the Legal Renaissance?

Before I left my job as general counsel at a software company, I was offered the chance to become general manager of a product group.

Unlike my previous role, the GM job didn’t report to the CEO, but in corporate terms it was still viewed as more important than a “staff” job, because you were responsible for overall profit and loss; product definition and pricing; composition and compensation of your group; and for ensuring service delivery (in a complex software product, there is always a lot of service). My pay would be tied to the financial performance of the group, and while I wouldn’t control the sales organization, a big part of the job was to train and influence sales staff to be more effective in selling your products and to talk directly to customers. I would have to decide how much to invest now to expand sales in the future, but I would primarily be held accountable for this year’s performance.

What the GM no longer did was the traditional role of “middle management,” i.e., to serve as the channel of information from the CEO down through the rest of the company and back up to the CEO, because email (and now Web-based collaboration systems) provide that basic information exchange; and goal-setting, compensation and management information systems provide the basic structure. Instead, the GM’s job was to try to help everyone in the group perform to the peak of their abilities, in large part by ensuring that individual incentives were aligned with collective (hopefully long-term) performance.

After I spent some time away from law, I did some consulting with a law firm and encountered what was (for me) the newly instituted role of “practice group leader” in the large law firm. Naturally, I assumed it was like a GM role, so I asked a series of questions:

Is the PGL’s compensation tied to group financial performance, especially profitability of the group? “No.”

Can the PGL hire and fire members of the team? “Not partners.”

Does the PGL get to decide what "products" the group offers? “Only by influence.”

Does the PGL have real-time information (a dashboard) about the key drivers of the group’s performance, such as client satisfaction, profitability, scope of business? “No, just billings and realization data.”

Does the PGL spend a lot of time talking to clients to understand what they want and how to institutionalize practice group-level value? “I’m not sure the other partners would welcome a partner talking to their clients.”

So what does the PGL do? “Well, they still worry about their own practice. They can cajole partners sometimes to do things. They keep up morale.”

This definition of a practice group leader is more akin to an administration head, like the chair of a department in a university, where everyone has authority and therefore no one had authority. It struck me as emblematic of the usual “platonic” style of management in law, in the sense of adopting a shadow version of something that was being done among clients without importing the substance, of getting big without getting especially serious about what it would require to be big and effective.

But in fairness, there is a reason historically for the weak role of the PGL, just as there is in the university setting. Unlike my old company, which truly has a “product,” in law firms the individual lawyer (partner) is the product, who for a variety of reasons has limited incentive to coordinate deeply with other partners for the creation of a practice group-level product. As long as business was good, the lawyer was the product, the lawyers wanted autonomy, and the competition was doing the same thing, defaulting to the administrative PGL model made sense.

Last week I had the pleasure of speaking to a group of PGLs at a workshop led by my friend, Canadian legal consultant Patrick McKenna. They acknowledged the vague nature of the job (few if any had a job description or compensation tied in a clear way to performance). I jokingly called the PGL a “JOIS” (Job Of Indeterminate Scope). Many agreed with my suggestion that the most common reason folks took on PGL roles was defensive, to prevent someone else from doing damage in the role.

But far more important was their determination to make the PGL job more real. If you look at all the New Normal themes in law today—value, aligned fee structures, project management, talent development, use of technology, innovation—they all can be delivered most effectively through better practice group management. In fact, given the fractious nature of many firms’ decision-making, it probably makes much more sense for firms to institutionalize innovation and change at the level of the one (willing) practice group and then see how they can be generalized throughout the firm.

Many firms operate under the illusion that management is unnecessary, even anathema, in law. But in fact every successful law firm is the legacy of an effective leader (and manager) who may have had sufficient authority that they could shape the firm. Think Larry Sonsini,David Boies, Fred Bartlit, Steve Susman or Richard Testa. The tricky part comes when the effective founder/leader hands off to a second or third generation of leadership, who lacks both their authority and their “magic.” That’s when the PGL structure needs to come in play, to provide leadership closer to the coalface. The bad news is that few if any PGLs will have clear leadership and role models within their firm to ensure their success; the good news is that the federated nature of a firm (like a university) means there is nothing in the firm to prevent their success, if they’re willing to get out and do and learn. Many firms will end up like Kodak, but any PGL who wants to get things done, can.

Last night, I got to hear Anthony Marx, the new head of the New York Public Library, give a very visionary talk about his plans for the library in the digital age. Unlike the heads of many traditional institutions who bemoan the implications of the New Normal, Marx was very fired up, describing his plans to expand access to information to traditionally underserved groups.

According to Marx, “technology is not a threat. It is the greatest tool we’ve ever had to expand our reach … we’re on the verge of a new renaissance for libraries.”

So will the New Normal be a renaissance or Armageddon for law firms? It’s all in the hands of the PGLs.

A View from AALS - What Change Looks Like

When historians of the 31st Century convene to consider this question:
How did America manage (or fail) to renew itself at the beginning of the 21st Century to continue its remarkable period of economic, political and cultural leadership?

They will consider themselves quite lucky if they have comprehensive access to the proceedings of the Association of American Law Schools annual meeting last week in Washington, D.C.

The AALS meeting, at which I had the opportunity to speak, presented in very clear terms the central question of our time:

Will smart and privileged people be able to pull together to effectively manage structural change, or will they use their skill to protect their privileges, even if it's clearly against their long-term self interest?

The backdrop of the meeting was set by two articles:

David Segal’s piece in the New York Times on the problems of newly minted lawyers and the frustration with the cost of lawyers; and my friend Bill Henderson’s cover story in the ABA Journal on the law school financing bubble.

Neither critique requires us to throw out the (law school) baby with the bathwater. They both simply point out an unhealthy level of disconnect and a need for reform.

When an industry like law, which enjoys a protected market structure, has been aggressively boosting prices for a generation, it is legitimate to call into question the rising costs. Arguments about cost are an indication of overall problems with the health of a system, and they should lead those who care about the system to ask some searching questions about what is and isn’t working.

My talk—available at Legal OnRamp—was my usual mix of change, technology and economics, suggesting that law school (because it has to) will become more change-oriented, client-engaged, technology enabled, metrics-focused and efficient. To see more concrete suggestions, check out the work of my co-panelist and New Normal contributor Susan Hackett.

There are two models of how change happens:

1. Deliberative change, which is our default mode as lawyers, where a formal decision-making body convenes to adopt new rules according to explicit processes (think Constitutional Convention), and the change is implemented more or less at once.
2. Distributed change (also known as technology adoption life cycle or tipping point), where different actors embrace change in different ways and at different times, but in a fashion that is mutually influencing. (Here’s a cartoon showing the distributed model.)

In the distributed model, we can identify five phenotypes of change reactors, who were all very much in evidence at AALS: •Innovators, who do new things because they like doing new things.

•Early adopters, who want competitive advantage over others.
•Pragmatists, who want to stick with the herd.
•Conservatives, who want to hold on.
•Laggards, who simply say “no way.”

So what were they all saying at AALS? Let’s take them in the opposite order.

Laggards: “don’t throw the baby out with the bathwater” (laggards love strawmen) and “why should I bother? I have tenure.”

Conservatives: “I’ve heard all this before. Nothing will change.”

Pragmatists: “I get it, tell me what to do, what is [School XYZ] doing?”

Early adopters: “Here’s the four initiatives we’ve launched. Will you come speak to our law school? What do you see that’s working?”

Innovators: “I am really depressed. No one is doing enough. My idea is the best one, everyone should adopt it.”

Beyond my general thesis, I certainly don’t predict the exact form or timing of change, although I have suggested some ideas in prior musings. But I will suggest to you that this is precisely where you’d expect a group of folks to be in the midst of a distributed change. Law professors (and lawyers generally) are clever people who can find ways to question innovations they don’t understand and conflate their self-interest with the public interest. So there will be plenty of folks questioning change at this stage. Law professors (and lawyers generally) are also capable and well-intentioned people who will respond to changing resources and incentives in a rational way. And the truly clever law professors (and lawyers) will develop powerful innovations that others will embrace.

If I can get a bit Hegelian on you, the key indicator of the correlation of forces for me was that most of the folks who approached me after my talk were early adopters, and indeed mostly deans. Because the deans have no choice but to confront (and so see fairly clearly) the mix of forces driving change. And when Rick Matasar, viewed as a leading innovator among deans, gave a luncheon keynote summarizing the state of change, the former dean of Georgetown Law, Judith Areen, who was putatively set up to provide a counterpoint to Rick’s change-ist approach, replied in essence: “Well … yeah, you’re right, but it isn’t easy.”

What you didn’t see at AALS, and you don’t see anywhere, is someone willing to stand up and comprehensively expound that “it ain’t broke, so there’s no need to fix it.” And while you can’t fault anyone for their natural tendency to fall somewhere on the spectrum of adoption, you can fault folks for their unwillingness to deal with information that challenges their preconceptions.

For the profession generally, and for each of us individually as the alum or other stakeholder of a particular school, it’s quite reasonable to ask the question of your school:

Given that many signs suggest significant change may be imminent, how "change-ready" are we? And how closely are we listening for further signs of change so that we are able to succeed if things do change fairly quickly?

As someone wrote me, “My two impressions of the meeting were: First, the amount of time spent talking about change compared to last year's meeting was startling. Second, there are lots of ideas floating around, and there is not yet a broad consensus on what the right measures are (more adjuncts, more externships, etc.)."

Lots of folks (adhering to a deliberative mindset) come to a meeting like AALS looking for an “official decision on change” and come away frustrated. But the distributive-ists realize that every time ideas get shared and trends get reinforced, everybody moves a little further around the curve. Even when there's no official decision, just a series of individual actors responding to different incentives, at some point—say in five to eight years—the battle will be over without a shot having ever been fired.

How Client Complexity Will Drive Change

 Imagine you are Sally, the General Counsel of Acme Global Bio-Sciences, a $30 billion revenue biotech company headquartered in San Francisco, sitting in CEO Ken’s executive staff meeting a few weeks before the end of the quarter.

• Ken mentions the threat of a proxy challenge for the upcoming annual meeting; Sally explains the relevant Dodd-Frank changes.
• Ken asks Andrea, head of sales, about next year’s outlook. Andrea looks at Sally, because given adverse effects in Phase III trials for a much-touted new drug, there may be delay in the launch as they sort out possible risks.
• Chief financial officer Chris wants to know whether the litigation reserve for a mass tort defense is adequate; Sally’s not sure, because a judge in Arkansas just issued an order than Acme can’t present a defense because of possible spoliation.
• Arnold, head of business development, discusses whether to go forward with the acquisition of a generic drugmaker in Thailand. Due diligence has uncovered that the Thai minister of health is a minority stockholder, creating Foreign Corrupt Practices Act problems.
• Ken wraps up by saying that he has been invited back to Stanford Business School to give a 3-year update on his “innovation 2014 Plan” and he’s worried that Acme has lost its "innovative edge.”

You get the idea. It’s all pretty complicated, like a giant issue-spotter final, but where the goal is to eliminate issues, not discuss them. Ken, Chris, Andrea and Arnold each have zero interest in legal complexity—not because they are unethical, but because their experience is that legal rules are ambiguous, and the facts needed to support crisp legal conclusions are unclear. They are also impatient, because each operates from systems and data that describes fairly precisely what’s going on in their environment (e.g., Andrea uses Salesforce software to track her forecast, connecting thousands of salespeople around the world), whereas law often seems quite mushy. They usually only ask three questions:

• "What did we do about X before?"
• "What did Amalgamated Pharma do about Y?"
• “Skip on the ‘one hand or the other': What would you do in my position?”

In fact, Sally can’t recall a single time where she prepared a memo (or had a firm prepare a memo) summarizing the legal pros and cons of an issue and then an Acme executive decided what course of action to take and imposed that decision throughout Acme.

And guess what. It’s only going to get more complicated (Last week I mentioned an excellent report from the General Counsel Roundtable—OnRamp has a business relationship with GCR—that identifies these trends.):

• Instead of Acme’s legal issues being primarily U.S.-based, they’ll be more and more global—all of Acme’s projected growth will come from China, India, Brazil, Russia and Turkey, each of which, in nearly every way, views Acme’s legal activity quite differently.

• Dealing with California versus Tennessee or Washington versus Brussels was tough enough, but now there are even more lawmakers with strong incentives to assert different requirements against Acme, each of whom is convinced about their cultural and ethical superiority.

• Acme’s 29,000 employees in 62 countries are generating tons of information by email, cellphone, social media, etc., some of which will certainly contradict the official position that Acme takes on every matter, opening up avenues for investigation, litigation and liability.

• New competitors are emerging, so instead of being an 18 percent net profit company with a rising stock price and a reasonable margin for error, Acme is now an 11 percent net profit company with fewer resources and restive shareholders.

“So what?” you say. “Isn’t that why Sally is getting paid the big bucks?” To which the answer is “yes, but …”

Everyone else in Ken’s executive team meeting has systems, tools and processes to help them manage the complexity in their function. All the lawmakers, law schools, and the law firms in Sally’s world are really, really interested in the deep complexity and intellectual elegance of their area, but no one other than Sally and her team is focused on end-end complexity of the whole system. This is kind of ironic, because the legal system holds Acme to an end-end standard. Whether it's knowing about conflicting patents from the beginning of researching a molecule to adverse effects on patients 20 years later, to handling patient data, Acme’s legal duties are systemic and end-end.

To deal with systemic complexity, Sally has to:

•Make things simpler.
•Make things cheaper.

And when’s the last time you heard folks in law talk about making things simpler or cheaper?

Sally is left with no choice but to employ the language of business processes (which many lawyers will call “jargon”—see the excellent previous New Normal post from Roya Behniaon “agile law”), the tools of technology (that lawyers sometimes call “fads” – see another very good piece from Microsoft Corp. executive Brian Zeve on the cloud and law) and the techniques of cost reduction (which many lawyers will call “commoditization” or “unprofessional”). Not because these are perfect tools, but because they are tools the world offers for dealing with complexity and cost. Law has been reluctant to bring those tools to the table.

What Sally and her colleagues really want are law schools and law firms to help provide solutions that manage end-end complexity so Acme can be the best company it can be in a very complex world, a/k/a the New Normal.

Ten Ways for Lawyers to Find Their Inner Steve Jobs

 I just read the new Walter Isaacson biography of Steve Jobs.  http://www.amazon.com/Steve-Jobs-Walter-Isaacson/dp/1451648537   It is certainly a great book about a fascinating life, and for a Boomer like me, a bit of a jarring experience to encounter a full-on biography of a near contemporary.  Much has already been written about Jobs and the book, but since he is perhaps the exemplar of the New Normal, I thought it might be useful to summarize some thoughts on what we as lawyers might want to draw from his life.  For those who don’t want to work through the whole book, there’s an excellent article in Time that covers the major point,http://www.time.com/time/business/article/0,8599,2096251,00.html  and a typically insightful review from Malcolm Gladwell in the New Yorker http://www.newyorker.com/reporting/2011/11/14/111114fa_fact_gladwell?currentPage=1

1.       Innovation is possible.  Jobs’ compelling strength was his insistence on the possibility of innovation, whether it was stronger glass for the face of the iPhone, a touchscreen that delayed the project for six months, or licensing music from the record companies for iTunes even after they had stonewalled other digital services - all situations where “everybody knew” what he wanted was impossible.  When presented with an idea outside their experience, lawyers all-too-often say “this is impossible,” which shuts down the discussion and is often wrong.  In talking to a GC today, she described the initial reaction of her legal team to an idea of streamlining their work “it’s too big, it’s too hard, just let us do our jobs.”
2.       Innovation is not a theory – it takes execution.  Most of the compelling innovation Jobs brought to market took longer than expected and encountered multiple setbacks along the way. I can’t tell you how many times I hear lawyers say “we tried that once and it didn’t work.”  Anything innovative requires persistence, experimentation, course correction, and yes, tolerance for failure.   Innovation  requires character on the part of the innovator and leadership on the part of the organization to support that persistence.   I met Ralph Baxter from Orrick seven years ago when he started his Global Operations Center in Wheeling, WV, and I noted that Pillsbury announced a few weeks ago that they were following suit in Nashville, even after most firms had sneered at Orrick’s initiative at the outset.

3.       Great profits follow great products and services.  Although Apple is now the most valuable company in the world, Isaacson reports that Jobs said he always focused on the products, and assumed the revenues and profits would follow.  At a conference last week discussing innovative approaches to knowledge management, the first question from many folks was not “how can we do that to deliver better value to clients?”, but “why would we do that if we’re not going to make more money?”
4.       A unified vision is better than a committee.  Jobs’ other great strength was his willingness to drive his vision, and insist that everyone around him adhere to it. He was occasionally wrong, and frequently obnoxious, but a remarkable percentage of the time he was right.  He didn’t seek permission from others, hire consultants or try to drive consensus, so his decision-making was usually quick and generally had accountability.  How often does law firm management (except for firms like Bartlit Beck that are led by the founder) adhere to a clear vision? A unified vision allowed Jobs to manage risk effectively because he understood what was at stake and how to improve his chances.  So when he said choosing touchscreen technology over the stylus was “bet the company,” it wasn’t a euphemism to mean he was insensitive to cost, it was an accurate description of the consequences of his choice and a call to arms for his team to deliver.     

5.       It pays to be fully invested in your job.  One thing you couldn’t question about Steve Jobs was his commitment to his company and his role.  He was “all-in.”  That level of commitment had lots of downside for Apple employees and his family, but overall made him much more effective at his job and allowed him to fully realize his potential.  Many lawyers, particularly some young lawyers, view their job as a way station to something else. It shows, and limits what they or their clients will ever get out of the experience.    

6.       The point of corporate governance is to drive stockholder value – it’s not an end itself.  There is no doubt that Jobs’ behavior around the option dating when he brought new executives into Apple in 1997 after the NeXT acquisition was problematic.  And according to Issacson, he generally didn’t want a board that would challenge him.  (Although he did apparently use the board in the most useful way – to kick around ideas and strategies that he was considering.) Yet despite what folks like ISS and the proponents of Sarbanes-Oxley claim, there’s little evidence that more corporate governance means better run companies, and the most successful companies of the last decade – Apple and Google – don’t follow many corporate governance norms.   Given a choice between an activist board and a successful stock – it’s pretty clear what investors prefer.

7.       Simplicity is better.  There’s a great story I remember from the time about the negotiations between NeXT and IBM about IBM’s licensing NeXT’s operating system (a redolent situation for Jobs because of the history between Microsoft, IBM and Apple).  After NeXT received a hundred-page plus contract from IBM, Jobs slammed it on the table and said “come back with a 2-3 page contract…you don’t get it.”  As Jeff Carr wrote in an AbaJournal column comment last week,   “I yearn for simplification.”  http://www.abajournal.com/legalrebels/article/getting_lawyers_to_solve_simple_problems_together  There’s no evidence that lawyers’ inclination toward complexity does anything to reduce risk (remember of course that despite their “caution” IBM had managed to negotiate a deal with Microsoft that essentially allocated all the profits in the PC industry from IBM to Microsoft). Jobs was always trying to simplify products by reducing features, simplify the company by eliminating products, and simplify the user’s experience.   How many lawyers have ever asked a client to read a contract, or what they do with the contract once it’s done?  How many eschew adding that extra environmental rep to the software company M&A agreement, or the extra risk factor to the prospectus?

8.       The boundary between disciplines is where the richness is.  Isaacson’s other main thesis was that although Job had no training as an engineer; his ability to operate at the boundary of the humanities and technology was his great strength.  Lawyers have traditionally operated at the boundary of law and clients’ areas of interest; the best ones don’t refer to “widgets,” but develop a deep understanding about clients’ world that allows them to operate in that cross-disciplinary space.

9.       It’s hard to get organizations or people to work together.  Jobs eschewed organizational or functional divisions.  That meant he kept a lot of power in his hands, and could certainly be imperious.  But it also meant he circumvented the widely chronicled “Innovators Dilemma” that hamstrings most large organizations and prevents them from effectively using their scale or responding to change.  Sony, once among Jobs’ most admired companies, bought CBS Records so they could link consumer devices and music, but Apple did a better job getting music in their system than Sony did.  How many large law firms, with 20 practice groups, work effectively across those practice groups for the benefit of clients?   When Jobs was sick with cancer, he had to summon all the different specialists from Stanford to his house to insist on a coordinated course of treatment, because they were each optimizing for their discreet part of the problem, but none were looking at the patient as a whole.  How many lawyers within a firm, or across firms, coordinate their work on behalf of a client?

10.    “Don’t get trapped by dogma.” This was Job’s credo, as presented in his now iconic 2005 Stanford Commencement address.  As he put it in an interview I heard last week, “once you realize that everything around you is just stuff that got set up by people who are no smarter than you are, it’s very liberating.”   At a challenging time for America and the world, we lawyers can move past dogma to find our “Inner Steve Jobs.”

Original article was posted at ABA Journal on November 8, 2011
http://www.abajournal.com/legalrebels/article/10_ways_for_lawyers_to_find_their_inner_steve_jobs/?t=1320772251

Crown Jewels and Streetlights

 I was in London last week for KM Legal 2011, a conference on Knowledge Management. It had been a good day, so I was walking back to my hotel with a little spring in my step. On a quiet street, a disheveled man came out of an alley and asked me for “spare change.” Since I had a bunch of U.K. coins and I didn’t want to take them back to the U.S. or even figure out what they were worth, I handed him the contents of my pocket.

Unfortunately, being a bit inebriated, he stumbled and dropped the coins near the alley. Then he crawled toward a bright streetlight in search of his new funds.

Thinking I was being helpful, I said that he had dropped the coins by the alley, not by the light, but he replied:

“Yeah, I know, but the light is better over here.”

I was reminded of this classic tale (not my actual experience) the next day when I presented, along with an in-house lawyer from British Telecom and others, on why firms were sharing more and more knowledge in order to collaborate with clients. Among the obvious reasons were demonstrating experience, getting business, training their younger folks, delivering service more efficiently, and catalyzing the firm’s own efforts to be organized.

But one audience member inevitably asked the question: “Why should we give our crown jewels to clients?”

The questioner is someone I know to be a very sophisticated fellow, and I was pretty sure he asked the question mostly as a strawman because he hears it from partners in the firm. But perhaps it is worth recounting again why firms benefit from collaborating with clients:

1) Probably, most of what firms think of as crown jewels aren’t. In a Google-y and EDGAR-y world, most legal information is somewhere in the public domain. Law is itself in the public domain. Most complex transaction materials end up on EDGAR; most complex litigation materials are in public court filings. Historically, the “technology” of walking down the hall was pretty good, so if something existed but was a little hard to find, you had a better shot of finding it in your firm. But being hard to find doesn’t make something a crown jewel, and new technologies are turning the world inside out, making it easier to find stuff via browser than shoe leather. As Peter Krakaur from Orrick, Herrington & Sutcliffe presented at the conference, new search and indexing technologies like KIIAC can allow anyone to retrieve all Cravath deals off EDGAR, and show which provisions were more common when Cravath was representing a buyer or a seller. In fact, using these approaches, someone outside a large firm in half a day can probably organize that firm’s “crown jewels” better than they are currently organized inside the firm.

2) The largest firm-client relationships are highly competitive. A major firm may have a $20 million relationship with an important client, but that client probably spends $280 million with other firms, not to mention what they spend in-house. On any given day, the client is looking for expertise than is probably not unique to your firm, but exists in at least several of the firms in their panel. The true “crown jewels” are whatever asset causes that client to pick you, not something kept locked away.

3) Sharing knowledge enables collaboration, which is only sensible when clients are highly sophisticated and seeking value. Duncan Ogilvy, a partner at U.K. firm Mills & Reeve, had a great example of how his firm was collaborating with a major client (the National Health Service) to streamline service, reduce costs, and improve client satisfaction.

Notwithstanding the "crown jewels" question, the London firms are actually way ahead of the U.S. firms in managing and sharing know-how. They have historically invested in their know-how to ensure harmonized practice. The U.K. is accelerating in legal innovation because of the Legal Services Act (which allows outside ownership of law firms and the creation of multidisciplinary firms that combine law practice with nonlegal services), and the global nature of the large firms forces them to make investments to better connect offices.

The great irony of “crown jewels” thinking is that most firms spent a lot of money and marketing and business development efforts where “the light is better.” They respond to requests for proposal, they write stuff that may never get read, they try to figure out search engine optimization on Google, and they call reporters constantly trying to get their lawyers profiled. But far more business is up for grabs within existing clients than will ever be available from new clients, and the most effective way to get that business is not to act like the firm’s expertise (usually acquired at some client’s expense) is a crown jewel to be hoarded; but rather to connect with clients and cause them to want to work more with the firm