I must declare an interest at the outset of this review of ‘The Great Legal Reformation: Notes from the Field’ by Mitch Kowalski. That is that me and my law firm, Inksters, feature in Chapter 10 of the book. I attended the book launch in Toronto in October 2017.
However, as a solicitor with an acute interest in law firm structure and management I found the book fascinating and full of secret sauce (more on that later). I trust my review will be taken as being an objective one given the Inksters’ chapter is just one out of 12.
In the preface to the book, Mitch tells his readers that “we are now at the tipping point of change in legal services”. This is the beginning of what Mitch calls the Great Legal Reformation and his book “shares the stories of interesting and instructive adaptations to the Great Legal Reformation, so as to provide guidance and inspiration to those coming next”.
In Australia we hear that Slater and Gordon’s goal is to be “the most technologically-enabled legal services business in the world.” They “focus first on creating the best business process and workflow” and “then build IT around that process.” Although in my experience the IT exists for you to feed into it your processes and workflows for the IT to then really work for you. Maybe that is what Slater and Gordon meant. I don’t think bespoke IT solutions are necessary for most legal functions and I have previously discussed that when looking at the demise of Clearspire.
Use of staff other than lawyers to work on aspects of files, a “balanced scorecard” approach to reward, providing individual lawyers with opportunities to pursue their own business plans and cross-selling techniques that really work were all aspects of Slater and Gordon highlighted by Mitch.
The benefits of a corporate (non-partnership) model was neatly summed up by the CEO of Slater and Gordon, Andrew Grech, who said to Mitch:-
In a partnership, partners often see the world only through the lens of their own personal interests. As a result, their decision making is often coloured by personal interests. Operating as a corporation makes an enormous difference to our culture. It’s much easier to embed values in a corporate environment than in a partnership which many lawyers see as nothing more than a cooperative venture where office expenses and staff are shared.
This indeed is a theme that runs through the book with most of the firms featured by Mitch as part of the Great Legal Reformation not having adopted the traditional partnership model. To do so would clearly not be to reform but to conform. Those that had retained the traditional partnership model had no doubt done so due to the regulatory restrictions affecting them in their own particular jurisdictions. Their stories though show reformation in other ways where regulation did not restrict them.
Mitch discusses Slater and Gordon’s “disastrous £675 million acquisition of the professional services division of Quindell PLC in 2015” and other events that have made life rather problematic for them. However, Mitch points out that “despite the storm, Slaters is still operating”. He does not believe that a traditional law firm would have survived such a storm.
Indeed it was highlighted at the Legal Futures Innovation Conference in London in November 2017 that Slater and Gordon has “been refinanced, and within two to three years it could be back in rude health as a dominant player in the market.”
The group separated its UK operations and subsidiaries from the Australian branch of Slater and Gordon. The UK operations were transferred to a new UK holding company enabling both businesses to focus independently on recovering from the mishandled venture with Quindell PLC.
Fast forward to 6 March 2018 and shares in the Australian operation had surged 148% over the previous week. They were trading at $4.50, up from $1.81 on 27 February.
Although as pointed out in Markets & Money “to get back to their peak — $785 per share in April 2015 — there’s still a long way to go.”
Staying in Australia Mitch looks at Salvos Legal Limited and Salvos Legal Humanitarian Limited. Both wholly owned by the Salvation Army. The first company is a traditional commercial law firm whose profits fund the other company that provides free legal assistance to those who could not otherwise obtain such assistance. Mitch’s account of the set up and what led to it is fascinating. That this model has not been emulated elsewhere is surprising.
From Australia to England where Mitch visits the offices of Riverview Law in the Wirral. Riverview we learn has “the DNA of a professional outsourcer, not that of a law firm”. The firm’s founder, Karl Chapman, went on to explain to Mitch that Riverview is “capital-driven, not income-driven”. He elaborated:
We’re interested in long term sustainability to get that capital back. This drives very different behaviour in terms of how we reward our people and how we invest in technology. It also helps us create a team ethic, rather than an individual ethic.
As Mitch points out this is unusual. The norm is for law firms to maximise income each year and then distribute nearly all of it. This “incents short-term behaviour at the expense of long-term benefits.” However, this long term approach is one that reoccurs in other law firms studied within The Great Legal Reformation. It is clearly an important aspect of many NewLaw firms.
Mitch provides interesting detail of how Riverview is investing heavily in technology that is client-centric not firm-centric. Karl Chapman tells Mitch they are “only at 50 percent of the journey”. I can’t wait to see what develops at Riverview by the time they finish their journey.
Staying in England Mitch has coffee with Alex Hamilton of Radiant Law. Mitch describes Radiant as “a smaller version of Riverview Law that was also developing software and workflow to improve service.” Alex, like Karl Chapman, takes a long term approach and continually re-invests in the business. Indeed Alex reveals that “to date, we’ve never taken any money out of the business”.
Mitch sees Radiant as a good example of how a relatively small-sized operation started by a small group of lawyers with big ideas, can be successful in the Great Legal Reformation. Legal services is not just for large players and not all good ideas require massive scale and massive amounts of money. Indeed I know that all too well from my own journey in forming and growing Inksters.
Still in England Mitch makes his way to Maidstone to visit Geoff Wild at Kent County Legal Services (then soon to be Invicta Law). Mitch does say that “a visit to an in-house municipal legal team may seem an odd choice for a book about legal innovation. After all, it’s easy to dismiss government legal teams as the place where lawyers go when they want a less-stressed, cozy lifestyle.”
Indeed, I too know some of those lawyers. But Geoff Wild wanted to shake that image up and shake it he certainly did at Kent County Council. He decided to “borrow all the best bits from the private sector and, with a great big hypodermic needle, inject them into the public service and create the best of both worlds”.
As a result he has created a private law firm owned by Kent County Council providing legal services to that Council and many others. This returns a profit to Kent County Council which is something unheard of in the public sector.
Technology, as in many of the other examples in the book, is an important factor at Invicta with Geoff telling Mitch it will not be “a legal business that happens to use technology. Instead, it will be a digital business that happens to do law.”
In Part 2 of the book Mitch takes us to the USA to look at law firms where process is all important.
First of these is Hunoval Law in Charlotte, North Carolina who embraced Lean Six Sigma to “do the right things [and only the right things] (Lean), and [to do] those things right (Six Sigma).” This saw staff being sent on intensive training and returning to the office to implement better processes for the work they do. It differentiated the firm from others and brought in new work as a result.
Mitch asked the firm’s founder, Matt Hunoval, why other law firm’s haven’t copied him. He responded “There’s no motivation to create transformational change at traditional law firms, especially older ones. Even if they understood what we’re doing, they wouldn’t do it.” Matt expands on this with an amusing analogy concerning what happens after you purchase an exercise regime advertised on late-night TV.
Next stop for Mitch was Chicago for more Lean Six Sigma with Seyfarth Shaw. This chapter is a case study on how a large law firm made itself process driven. Something that, for a big law firm, is acknowledged as being “a long trek”. A great example of using Lean Six Sigma to improve trademark application workflow is given.
Seyfarth Shaw’s use of legal technologists who are not traditional IT support thinkers is highlighted. This includes them having a data solutions architect. They have even spun out a standalone entity, Seyfarth Lean Consulting, to advise companies (not law firms) seeking ways to make themselves more operationally effective.
Whilst in Chicago Mitch visited the Valorem Law Group where pricing is the thing. Valorem is recognised as a leader of value pricing in a litigation practice. This, Mitch points out, is “something that many litigators across the world dismiss as impossible.” Founder of Valorem, Patrick Lamb, gave his view on pricing and lawyers to Mitch:-
I also don’t believe that lawyers should be guaranteed a profit on every hour they work, and I certainly don’t believe they’re entitled to a 40 per cent profit year in year out. I believe that lawyers should have the price pressure of being more efficient and they should deliver outcomes more efficiently. There will always be cases where you screw up the pricing and not make much money – deal with it! Every business faces this.
Part 3 of the book is “a potpourri of alternative trailblazers in vignette form”. It starts by looking at what Mitch refers to as “plug and play platforms”.
First up is England’s gunnercooke: “a firm born out of frustration with a model that no longer seemed fit for purpose.” The gunnercooke model has all their lawyers being independent contractors. All the lawyers need to do is the fee earning and project delivery. The firm takes care of everything else. Mitch observes that “in a very short time span, the firm had become a notable competitor in the English legal market by shedding itself of overhead, bureaucracy, and politics of the old guard, making it nimble, attentive, and accessible.”
The second ‘plug and play platform’ that Mitch looks at is my own law firm, Inksters, in Scotland. After drawing comparisons between me and Elvis Costello, Mitch looks at our model, similar in many ways to gunnercooke, our use of technology and legal process engineering, similar to Hunoval Law and Seyfarth Shaw.
Like many of the law firms Mitch looks at in his book he notes the investment for the long term and the forsaking of short term gain. Something that sets the law firms of the Great Legal Reformation apart from most traditional legal practices.
Mitch then continues his tour of alternative trailblazers with a look at two ‘nomadic’ law firms.
First is Obelisk: “a support offering for global clients.” They “take people who want to work in a different way and pool their availability at scale to create a seamless process for the client.” They have 1,200 lawyers operating globally.
The second ‘nomadic’ law firm Mitch considers is Lawyers on Demand (LOD) which boasts 6,000 lawyers with offices in Australia, Melbourne, Singapore, Hong Kong, New York and London.
Mitch is of the view that the market for ‘nomadic lawyers’ will only continue to grow. He thinks that “it feeds on a millennial generation demanding more control over their careers, a profession that thoughtlessly sidelines scores of talented lawyers, and a marketplace that no longer views nomadic lawyers with suspicion – all with a low capital cost to entry.”
Mitch Kowalski rounds things up with a final chapter on what it all means. In the book the term ‘secret sauce’ is used more than once. This book and Mitch’s conclusions will give you a taste of that secret sauce and how you might apply that to your law firm if you want to join the Great Legal Reformation and perhaps avoid extinction.
On that point this latest book by Mitch is an excellent companion piece to his first book: ‘Avoiding Extinction: Reimagining Legal Services for the 21st Century’. In that first book he hypothesized over what he thought the law firm of the future would/should look like. Now in ‘The Great Legal Reformation – Notes from the Field’ he provides an informative and unmissable account on how legal service provision has actually been reimagined to date in the 21st Century. If you are a legal service provider you cannot afford not to read Mitch’s ‘Notes from the Field’.
Buying the Book: You can order Mitch Kowalski’s book ‘The Great Legal Reformation: Notes from the Field’ in the UK via Amazon in Canada via Amazon and in the USA via Amazon and no doubt wherever you are via your local Amazon. In Toronto it is available for purchase at Ben Macnally Books.