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Why change is worth it even when it is difficult, some solid article links and why you should be careful chasing small dogs!
Happy Friday and Labor Day weekend! Enjoy the last days of summer and good luck getting kids back to school (if they aren't there already).
In this edition we consider the challenges of changing legal workflows and leveraging tech in transactional practice groups. Article links include a thought provoking interview regarding fixed fees, the new ABA guidance on using AI tools and several other great reads.
Hopefully you find it useful and fun. Please feel free to share with anyone that may be interested and have a great weekend!
Matt Basile
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🏆Why Change is Worth It, Even if it is Hard
Change in law firms is really hard. It is often even harder in transactional practices, where paralegals and administrative assistants perform many of the tasks that can be automated by technology, but do not bill any time. In a large law firm (and often in smaller firms too), this resource is viewed as "free" in the sense that it is part of existing firm overhead. Saving money here has almost no impact on individual partner and associate income. 💰
When times are good and deal flow is high, you hire more people. When things are slow, you can get by with fewer people.
Often reasons not to improve efficiency by leveraging technology go something like this:
🤼 We don't really need document automation. "John the Legal Admin" does all the preparation of first drafts and he doesn't bill and time, so it works well.
❓ We don't need to automate signature packages or assembly of documents, because our folks are really good with Adobe and we have a great process in place to do it manually that has worked for years.
💪 Our muscle memory is in place to do things manually and it just works.
😲 My practice is too complicated and most of my drafting is bespoke and impossible to automate.
Although the status quo works fine in many cases and firms can remain profitable in the short run, there are long term sacrifices by not investing in changing process and leveraging technology:
🚅 Speed to Closing - Relying on an individual to do a task that takes multiple hours, instead of hitting a button to perform the task is going to delay overall transaction velocity. The faster you close, the more deals you can close and the more fees you can collect.
📈 Scalability - When things get busy (as they can very quickly in a transactional practice), you need to hire more people, but there isn't always time to train them, and quality of work product doesn't always scale. By improving process and leveraging tech you can be ready to grow and take deals when your competitors are turning them down.
✅ Accuracy / Consistency - By automating manual processes you can improve accuracy and consistency of execution and reduce careless errors that even the best attorneys, paralegals and admin make from time to time.
😎 Employee Happiness / Talent Retention - No one wants to do miserable and boring tasks. Many admins and paralegals are very good and can do higher value parts of the deal, but are stuck on administrative tasks. Even worse they might leave when they realize other firms leverage technology to work smarter.
The very real challenges of innovation in the law firm model present a huge opportunity for law firms and alternative legal service providers that are willing to fully embrace change and lean on technology to do more, faster, with less.
It takes a long time to build the foundation of automation and examine manual workflows that have been in place for decades. Those who start now will be in a great position in 5 years because it will be too late for others to change and catch up.🤘🚀🚀
Articles and News
💰 Flat Rate M&A Legal Fees
This is a very interesting interview with Conrad Everhard from Flatiron Law Group. Flatiron offers a fixed fee model for M&A transactions and is challenging the traditional law firm economic model. Some great takeaways and things to think about. He notes that he is "not losing any sleep over big law evolving - that is an ocean liner." Totally agree that there is a big opportunity for firms to implement alternative fee structures to find a way to pass along time savings from technology on billable work to the client. It will be interesting to see how this space develops.
🌎The Future of Legal Work
This comprehensive report from Deloitte examines the impact of AI on the future of legal work. Although it concludes that Generative AI will have a transformative, far-reaching effect on legal departments, it points out that right now most legal teams have not started to widely incorporate tools into their workflows. Definitely think that the external legal market will be disrupted by those embracing Generative AI to gain a competitive advantage.
🏨 AI and Commercial Real Estate Transactions
Good to see this article from Sheppard Mullin considering the use cases for AI in commercial real estate transactions. It will be interesting to see how quickly legal teams adapt AI tools into their workflows. I think the best applications of AI are going to be the ones that augment the review of due diligence items and that aid in drafting / negotiation.
🚀 DealTechno Acquisition
Congrats to Rob Johnson and DealTechno team on the acquisition by BriefBox! If you are looking for top notch legal tech or other legal talent definitely reach out to Rob and team.
👴 ABA Guidance on Generative AI Tools
The ABA recently issued Formal Opinion 512 to offer guidance for attorneys on the proper use of AI tools. Of note, it points out that Gen AI tools may allow lawyers to render services more efficiently, lawyers who bill clients at hourly rate can only “bill for their actual time.” Even in flat fee or contingent arrangements, it may be “unreasonable” to charge the same fee when using the Gen AI tool than when not using it if the Gen AI tool allows the lawyer to complete the task must more quickly. This creates a major economic disincentive for adoption by lawyers on the billable model and maybe presents an opportunity to shift long term to alternative fee models.
🐩 Be Careful Chasing Small Dogs When Over 40 Years Old
A few weeks ago my kids let out my mother-in-law's small dog and a 40 minute chase ensued that brought traffic to a standstill on a busy road and prompted strangers to get out of their cars to help. Unfortunately it ended with me sustaining a severe back injury grabbing the 6 pound dog. I'm not as young as I once was and need to be more careful with these types of pursuits!
The injury resulted in a shot and some steroid treatments and I could not jump or do my normal exercises for a couple of weeks. I had been doing pretty much the same HIT workout every day for years and now had to stop. A couple days into hobbling around I decided to start swimming. I used to be a lifeguard but I stopped swimming as exercise as an adult because it seemed boring and pools were hard to find in NYC.
Now a few weeks later I am swimming a few times a week and enjoy it again. What is even better is the kids enjoy swimming laps with me, so now I can work out with them instead of breaking away to exercise.
Sometimes when you are in a rut with work or in daily life, you need an extreme stress or failure to push you to try something totally new out of necessity. Often this major new project or pivot in approach can result in great innovations or ideas, a new habit or a different way of working that is transformative.
Midjourney generated image below of the chase. I had a little too much fun making this one...
