Tim Corcoran: how law firms can make profit during times of change

Can you tell us a bit about your recent talk at the CMO dinner?

The theme last night was how we can support our law firm leaders as they struggle with and embrace change. How do we introduce new ideas to support lawyers? It’s their business and we want them to succeed. So how can we be more proactive but gently start to push the lawyers if they’re not starting to see the future that is available? We can start tracking what works and what doesn’t work. We have, or should have, access to ROI [return on investment] data of all of the marketing efforts that generate the better returns. We can start to provide the decision support data to the lawyers, to say: “We’re not saying no; what we’re saying is there is a 10% probability that we’ll win if we pursue this approach, and there is an 88% probability we will win if we pursue an alternative approach”. It’s their decision. If we inform that decision, we’ve done our job.

How is the legal market changing in Australia and Asia?

It’s changing in the same way it’s changing everywhere else. The legal profession is undergoing a disruption, a commoditisation of some legal services. Industries have invested time and energy in process improvement and project management, and they’re re-engineering the way they deliver services. A law firm can look at something they’ve done a thousand times and find a more efficient way of delivering that service, do it at a lower price, so the client is happy and it actually generates more profit. Law firms are suddenly waking up to the notion that there’s profit in efficiency, and efficiency comes from people with expertise.

What effect will this have on the Australian law firms in relation to innovation and changing methods?

We need to better ‘productise’ our offerings – recognise that in every law firm we have offerings that are at the top of the market and others at the bottom. We need to start to not only market those services differently, but we need to deliver them differently. We just have to be honest about which of our services have to be marketed to differentiate on something other than price, because the price is going down. Maybe it’s our service posture, maybe it’s the way we communicate with our clients and so on. Other service providers are demonstrating that they are thought leaders – that no-one else can do this work. I’d market that very differently and I might market it to a different audience than these other commodity services. Rather than market everyone in the firm as if we’re all brilliant at everything we do, I’d divide and conquer – look at segmentation.

So better marketing is the key to maximising profit and navigating these changes?

Yes, if we can assist the lawyers with our business acumen and our marketing training, they can understand the differential pricing that we should offer for certain services or different ways to deliver these services and promote these services. Lawyers promote their credentials – they promote their high fees as a proxy for quality – but that’s a poor proxy for quality. As marketers we can start to understand that there are differences in the services we offer and promote that differentiation.

Is there a changing expectation of law firms?

I hope so, clients demand more of their law firms. What was once done by lawyers for hours we can now do in five minutes with technology. We’re de-mystifying and we’re commoditising access to the law. The interpretation and application of the law is still the province of smart lawyers, but accessing codes, legislation and regulations is easy now. That added value is an expectation, and I think those who are most concerned are those most senior lawyers that have made quite a bit of money. They’re expected to differentiate – to show their expertise rather than saying they’re good at everything.

How can firms change to meet these expectations?

They have to wake up. Law firms have been recession-proof, so lawyers have been conditioned over generations not to worry, until 10 years ago. There has to be a better understanding of economics and business discipline, so the C-level executives that work for these lawyers are becoming more and more important. I abhor the term ‘non-lawyer’ which is how many lawyers refer to the people that work for them. You’re not a ‘non-lawyer’ you’re a business professional, you’re a marketing professional, a finance professional. Those people are becoming more and more important, the expectations are changing, the law firms are starting to adapt. There are a lot of law firms thriving in this new marketplace.

There are three factors that law firms should be focused on: 

client satisfaction, the quality of their work product and their financial performance.

Has this affected the quality of work that lawyers are producing and the quality of work for lawyers?

Yes, there’s work product quality and quality of life. The work product quality is absolutely improving. There are three factors that law firms should be focused on: client satisfaction, the quality of their work product and their financial performance. The market is demanding efficiency, so law firms are realising that if they’re good at something they can be efficient, the price can be lower and the clients happier. The efficiency approach creates more consistency and creates better quality of work product. Through process improvement and project management they’re absolutely finding more consistent and higher-quality ways of delivering the work product, in less time, with higher profits, and that leads to better quality of life. I think it’s actually a fantastic time; the most adaptable survive.

Why are some lawyers resisting change?

Our lawyers have the opportunity to change but they don’t realise they have all the pieces at their disposal. They think somehow the market is doing something to them – but they are the market. They can change any time they want, and many are. There are always going to be pockets of complacency and apathy, but I think we should cater to those who want to adapt and ignore those who don’t. Adapting leads to thriving. I don’t think there’s ever been a better time to be working in a law firm than right now.

Will these changes to the legal market have any effect on the general public?

Absolutely. Clients are delighted with these changes. They’re getting more for less – they’re getting more quality, they’re getting more predictability in their budgets. There’s every reason to believe they’ll be happier and push for more change. That’s good for everyone. Again, the only ones who are dissatisfied are incumbent senior lawyers. I think there’s this mindset that lawyers don’t like change.

Clients are delighted with these changes. They’re getting more for less – 

they’re getting more quality, they’re getting more predictability in their budgets.

What are your thoughts on the introduction of Artificial Intelligence technology in law firms?

The use of AI technology is a way to accelerate business process improvement. Technology by itself is not a solution, but when you have a process improvement mindset you will end up needing and buying technology to implement new business processes. AI is fantastic. It’s doing very smart things in a lot of different areas of law, particularly where it’s just a high volume of routine repeatable steps. A computer could do that far faster than any human.

Do you think that AI technology could replace entry-level legal work?

There are certain things that a lawyer used to do manually and now technology has replaced it, but we’ll just adapt. We’ll train our lawyers through some other method. We don’t have to ignore the technology. This is where business process improvement and project management come into play. When a law firm says “We have a methodology for how we do this work”, that provides a very good training regimen. It’s far more effective than the old days. It’s a far better way to train – that’s the improvement – so it’s actually probably better for the young graduates. I’m glad that’s gone.

Do you think that AI technology has improved the quality of work for lawyers?

Certainly. The client won’t pay for unproductive work. If you embrace the technology that does a lot of work for you, it’s better for quality of life. Like any good business, if suddenly I have more time, I can do two things: I can reduce the size of my workforce, or I can redeploy that excess capacity to generate more work or think up creative new offerings or do a higher-quality job for work that we weren’t able to do before. Just because we’ve freed up time doesn’t necessarily mean we do have a better quality of life – it’s what we do with that freed up time.

What are your thoughts on technology like jurimetrics?

There’s a lot of technology that’s very interesting and I think one application of big data is to study repeatable patterns. There’s a lot of information at our fingertips about how courts act and judges act, about what types of tasks that we pursue in a matter might lead to more favourable outcomes. If we study those patterns we can figure out what’s more likely to give us a chance for success.

Millennials have figured out how to make money while you sleep – 

how to create a business model that doesn’t rely solely on more effort to generate more income.

What is the effect of the changing market on law graduates and people entering the law profession?

It’s good news. These changes tie well to the millennial mindset. Millennials don’t want to spend as much time as our predecessors working very hard for minimal rewards. Millennials have figured out how to make money while you sleep – how to create a business model that doesn’t rely solely on more effort to generate more income. That’s where efficiency comes in. The market is conducive to the younger mindset saying “We’d like to do things differently”. I think the challenge is that senior partners don’t necessarily agree with that, but if we wait long enough they won’t be around to bother us!

Some sources suggest that the changing market will make law clerks or recent graduates jobs redundant. Is this true?

There is pressure on the young lawyers from above and below. From below there are tools, there is technology, there are alternative approaches that clients will use to get legal work done. Maybe they’re offshoring or outsourcing, and what was traditionally the work of a young lawyer may be going to another lawyer overseas or a technology tool. In some ways that work may never come back, and we might say goodbye and not worry about it, except it provides a training ground. Law firms have to get over the notion that clients will subsidise training.

From above, it’s probably more insidious that partners are keeping work that they shouldn’t, work they would otherwise delegate. That is harmful to the business in both the short term and the long term, because when they do the work it doesn’t necessarily mean that it has higher value to the client.

Is there anything younger lawyers can do about this?

Anyone entering the workforce is a victim of their circumstances. There are a fantastic set of law schools all over the world that have really focused on innovation, and young lawyers are coming out with the incredible new skills. They don’t necessarily need to work in the biggest law firms; they can go and start their own law firm or create a new technology. Find a partner that’s progressive – that you can work with, that you’re willing to provide the training ground for – and if it’s not working, leave and find another partner to work with, or a different firm to work with. I think everyone should look for the environment in which they succeed.

Is there much work out there for new lawyers and law graduates?

For the traditional paths of becoming a senior partner in a big law firm there are fewer opportunities. That doesn’t mean there are fewer opportunities for those who are practising law. With access to new tools and technologies, there are more people who can become solos or small-firm practitioners, and they can provide access to justice to people that will pay per transaction. They would pay less, but there will be so many more clients you could have, and you could handle them efficiently with new tools. Someone’s hiring a lot of lawyers to do all that work because the clients are spending billions of dollars. Another alternative to practising law is to use your law degree to help run a business. Many people who go to law school would probably be quite comfortable in a business environment using that skill, and might even be more comfortable than actually practising law. If you want to interact with lawyers, you need to know how they think. You could be running a business, creating a technology, building an app – doing all this without practising law – but you’re working with the legal profession.

Has the changing market affected women in the legal industry?

Yes, there is a growing awareness that law firms need to have more flexible workforces. An example would be these outsourcing or offshoring organisations that have lawyers on a salary. That’s a great opportunity for people who don’t plan to become a partner in a big law firm. Companies are embracing flexible staffing, allowing people to work 40 or 20 hours a week. There’s also a realisation that skilled women lawyers who left the workforce to start a family have much to offer, and many are being called back and offered more flexible hours. Diversity is important, businesses are saying “We believe in diversity of our people in gender, religion, geography and sexual orientation because it creates a diversity of thought that helps us be adaptable, helps us be innovative as a business, helps us adapt to different cultures and helps us sell more”. It’s mandatory. When they start to work with big data, they realise there’s a correlation between a diverse workforce and earnings per share. It’s real, it’s happening, it’s fantastic.

Diversity is important, businesses are saying “We believe in diversity of our people in gender, religion, geography and sexual orientation because it creates a diversity of thought that helps us be adaptable, helps us be innovative as a business, helps us adapt to different cultures and helps us sell more”. It’s mandatory.