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Richard G. Stock*

This article was previously published in CBA National, January 2005.

It has been 10 years since I formally retired in 2015. But of course, nobody retires any longer. I still stay busy occasionally giving advice to lawyers about how they can best capitalize on the business opportunities that their professional relationships and their highly-leveraged environments provide. For 20 years before that, my group advised law firms and their key clients on business strategy and performance opportunities.

Some things never change. Trust and personal relationships are still a key factor in understanding why some lawyers are in high demand, particularly for complex, challenging work. But many other aspects of the law firm model have long since disappeared. To begin, the legal-business advisory services are no longer tracked and billed by the hour. Instead, the firm and the client agree upon a fixed amount reflecting the “value proposition” for the work. Corporate and institutional clients learned how to do this by about 2010. They shared their techniques at conferences, in roundtables, and through precedent clearinghouses.

Then, a few firms decided they would make it possible for all of their clients – anybody who was buying 10 or more hours of service – to construct their own fee estimate. On-line technology and basic guidelines allowed clients to describe their issues and customize a pricing arrangement that suited their circumstances. At the beginning there was some concern that competitive bidding would be the order of the day. But in the end, the lawyers that won the day were those who had experience in accurately estimating the scope of work and succeeded in delivering the service and results. These individuals proved to be in great demand and had to sub-contract large amounts of their work to lawyers and technical staff in other parts of the world. There were some concerns over quality assurance and service standards. But soon, programs and standards became highly systematic and paid great dividends.

A few other important changes took place, but these only became commonplace by 2015. When I retired, the cost of legal services had escalated to such a degree that law firms had to review their legal business model – especially the cost of doing business. Smaller and mid-sized firms around the world were able to attract and pay for top legal talent because they reduced the cost of operations by about 30%. They replaced what were known as secretarial and clerical staff with outsourced technical teams that found, organized, and delivered the client and legal information the lawyer needed to address the legal business matter. This left very little need to maintain support staff at the work place. Many clients reduced their costs by relying on outsourced services themselves before instructing counsel.

Clients stopped visiting the lawyer at the place of work some 20 years ago. It was too awkward for everyone. Law firms began to discourage such visits when they found they could reduce about 10% from their legal fees by replacing physical meeting space with electronic and client-based meetings. Still, lawyers have always enjoyed spending time together. As professionals, they learned from each other, but the apprenticeship method proved to be fairly inefficient for sharing and growing intellectual capital. Eventually, learning brokers evolved. The CLE sections of law societies and the for-profit providers like Insight and Canadian Institute merged and were bought out by a division of Thomson-American Express Learning Systems. They customized programs for individuals, groups, and clients to develop knowledge, skills and attributes for lawyers and their clients.

Today’s new lawyers seem to have plans for the future. But they also have great mobility because they are able to practice without restrictions across North America and with very few restrictions in Europe and Asia. Law firms have converted their ownership structures to introduce an endless array of equity positions and profit-sharing arrangements suited to their business strategy. You must give careful thought to your own career and financial objectives and then seek advice on where and how much to invest.

As new lawyers, you need not spend a lot of time thinking about how law firms used to carry on business. Better to quickly master the relationships and the economics. Adaptability and effectiveness are the only keys to survival in this environment.

* Richard G. Stock, MA, FCIS, CAdm, CMC, is a partner with Catalyst Consulting. The firm has been designated the Preferred Supplier for Legal Services Consulting by the Canadian Corporate Counsel Association. Richard can be contacted at (416) 367-4447 or through the website at http://www.catalystlegal.com.