Status QuoSome Bar Associations are behind the times. And some are challenged by the dual and potentially conflicting roles they play: one, to self-regulate the practice of law in order to protect consumers; and two, to protect the guild of lawyers from competition. A recent Texas State Bar ethics ruling demands a reaction because not only does it fail to protect consumers, it creates additional barriers for advancing the profession.

The ruling states that a Texas law firm may not use “officer” or “principal” in job titles for non-lawyer employees in the firm, as doing so may suggest that these employees exert control or influence over the work of the lawyers, which is a violation of the rules of professional conduct. Additionally, the ruling states that bonus compensation for such non-lawyers can’t be formulaically based on the firm’s financial performance, as this would constitute unauthorized fee-sharing with non-lawyers. The ruling purports to protect the consumers of legal services, presumably under the premise that non-lawyers are simply not qualified to influence the delivery of legal services and any such interference constitutes a prima facie case of wrongdoing. (See what I did there, pretending to speak like a lawyer?!)

In my role as sitting President of the Legal Marketing Association, and on behalf of our 3,600+ members, I collaborated with the leaders of other legal associations to draft a response urging the Texas Bar to reconsider its stance. These association leaders are well-credentialed professionals who are dedicated to improving the operations of law firms, big and small, and yes, improving the delivery of legal services. And one could argue that by specifically excluding such voices, the legal profession is holding itself back. You should read our letter. It’s reasonable and articulate and provides good food for thought.

But speaking individually as a former CEO, I’ll be a bit bolder. The Texas ethics commission ruling is ridiculous and unsound. It reflects the worst of the closed-minded lawyer mindset: a belief that lawyers alone can define “quality” in the delivery of legal services. I can assure you, most CEOs spend very little time ruminating about the state of their suppliers’ industries or professions, unless some impending disruption in these fields will impair our business performance. And lawyers are doing just that. So, wearing my CEO hat, here’s my reaction:

Business clients are unhappy. Lawyers in the mid-size and big firms that serve us often do a terrible job of communicating. They fail to properly manage expectations by limiting the client’s surprise. They tend to treat each matter as if it’s unique and infinitely variable, yet at the same time expect us to believe their experience in a given field is meaningful. They believe in charging higher fees based on the length of time they’ve practiced, even when they are unable or unwilling to demonstrate this experience by using matter budgets or project plans. And their fees are typically established irrespective of the value I place on the services rendered, and what alternatives exist for me obtain these same services elsewhere, assuming that the seniority of the lawyer and the time necessary to deliver the work are the primary drivers of value.  They claim that non-lawyers in a law firm, or worse, non-lawyers providing legal services outside the structure of a law firm, e.g., an LPO, must be incapable of providing quality legal services, even when these alternative providers can unassailably demonstrate higher quality at a lower cost.

Does the Texas ruling really protect the consumer? There are different consumers of legal services. As a seasoned corporate executive, mindful of my corporation’s risk tolerance and business objectives, and well-trained as a steward of my corporation’s hard-earned capital, I don’t need as much hand holding. I have long experience managing complex M&A transactions, launching new products requiring IP protection, managing layoffs and plant closures, negotiating labor contracts, and being deposed in contracts disputes. I want the Bar to protect me by ensuring my lawyers are competent in business issues. I can find a thousand lawyers who can conduct legal research, identify precedents, and draft a memo telling why taking some action carries risk. I find far fewer lawyers who think like me and understand the business impact of my legal issues.

And if these so-called protections are not, in fact, in the interests of consumers, might they instead serve to protect the interests of lawyers? It’s a curious industry that establishes its own operating rules, self-regulates its members’ conduct, decides for itself what competition it will allow, and purposely addresses these issues without the input (or interference?) of anyone outside the profession.  I’m not suggesting that there’s a vast conspiracy with nefarious purposes, but I am suggesting that human nature operating within such a closed system is bound to create confusion between “what’s right” and “what’s right for us.” From my perspective, the Texas Bar ruling has a lot to do with protecting lawyers from adopting modern, sound business practices, as if somehow doing so is inconsistent with practicing law.

If a senior business person in a law firm can help the lawyer-leaders understand how to budget, how to profit from efficiency, how to embrace continuous improvement, how to lower fees while improving quality, how to better communicate with unhappy clients, and more, then not only should that businessperson be given a title befitting that knowledge, he or she should be given a compensation package commensurate with that experience, experience that is highly prized in the business arena. And if growing the firm’s profits is a consequence of improving client satisfaction, then reward that businessperson in some way commensurate with his or her impact on business performance. If you’re unable to distinguish between a non-lawyer who improves firm operations and client-focus, and one who is engaged in the unauthorized practice of law, I question your competence as a lawyer.

If I can’t trust you to understand simple business mechanics — the issues I deal with all day, every day — and if I can’t trust you to recognize your own deficiencies and fill these gaps with competent professionals — and instead you harangue those who speak truth to power and sit smugly in an alternate reality where partners cannot be wrong — and if I can’t trust your pals in the Bar to protect me from your deficiencies — and instead they issue rulings designed to forbid competent professionals from meeting my needs — then I can’t possibly trust you to give me sound legal advice. THIS is why law firms are suffering, not because demand for legal services is down, or because bean counters value price over quality.

Suppliers non-strategic legal

By the way, let’s banish the “non-lawyer” label as unnecessarily non-descriptive and non-productive, prone to nonsense. Defining something by what it’s not isn’t all that helpful, is it? Or keep it, if it makes lawyers feel better. No one really cares. But understand that corporate executives don’t spend much time drawing such distinctions of pedigree and titles within their vendor organizations, so partners should feel free to proudly carry the label of “vendor” or “supplier.” We care mostly about rising legal costs and declining value, not labels.

If the Bar wants to focus on truth-in-labeling, can we look into :

  • Firm leaders who haven’t received a single day of formal management training yet carry the label of practice group leader, or managing partner?
  • Non-equity partners who are merely highly-compensated employees, not equity shareholders in a partnership?
  • Can we look into Marketing Partners who have never taken a marketing course, Technology Partners who have no technology training, Finance Partners with no finance or accounting degree?
  • Can we look into pitches and proposals that compile disparate experience in creative ways, purporting to reflect deep subject matter experience but instead reflect the common but misguided notion that “We’re smart lawyers. If we win the work we can figure out how to do it later?”
  • Can we look into lawyers’ over-reliance on hourly billing rate cards to convey the price of legal services, when in fact rates are but one element of the formula for the overall cost?
  • Can we look into published billing rates that reflect an inflated price as compared to actual receivables that perpetually reflect a much lower realized price?
  • Can we look at inconsistent discounting and write-down policies in use in firms that bear no relation to “key client” programs?

There’s a lot wrong with the modern law firm business. It takes smart people with relevant experience to solve these problems. Forbidding competent professionals to lend their experience isn’t productive. Insisting that a law degree is the only distinction necessary to decide what is and what is not “good” for clients is myopic. I call on the Texas Bar to review and revise its ruling to reflect the cold truth that protecting the status quo is not what clients want. Progress waits for no one, and the Bar Associations and incumbent leaders of the profession can wring their hands and lament the intrusion of economic forces, or they can collectively step up to reshape the profession. Relevance is recoverable. Roles as trusted strategic advisors are there for the taking. Your move, lawyers.

 

Timothy B. Corcoran is the 2014 President of the Legal Marketing Association and an elected Fellow of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments, and legal service providers on how to profit in a time of great change.  To inquire about his services, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

Print Friendly

Law Firms Getting Schooled

May 7, 2014

Law firm partners have a curious approach to addressing client needs.  Imagine a crowded subway car in which a General Counsel is sitting comfortably while a Biglaw partner stands next to him. When the train lurches, the partner inadvertently stomps on the GC’s foot. “Ouch,” exclaims the GC, “You’re standing on my foot.” The partner’s […]

Print Friendly
Read the full article →

What’s next for law firm leaders?

April 24, 2014

MimesisLaw: “Senior Privilege: How Some Law Firms Stifle Rainmaker Development” I met with Lee Pacchia on Mimesis Law‘s “Business of Law” web TV program to discuss, among other topics, my recent post in which I described how some law firms are stifling the growth of future rainmakers.  I made a few bold comments, many of […]

Print Friendly
Read the full article →

Ceding the Stage – Lessons in Leadership

April 9, 2014

I’ve been engaged in a lively discussion with other legal marketers in which two topics I love, basketball and leadership, have come together nicely.  You don’t have to be a basketball fan, or even a sports fan, to benefit from the leadership lessons that are often played out, literally, on the courts and fields for […]

Print Friendly
Read the full article →

The Changing Definition of Value: What Matters Most to In-House Counsel

February 26, 2014

The rules have changed. Law firm partners worldwide reached professional maturity in a much simpler world: One delivered a quality work product and everything else fell into place. Clients were satisfied, lawyers were engaged in thought-provoking work, associates received good training and generous, albeit hard-earned, revenues and profits ensued. This worked. Until it didn’t. As […]

Print Friendly
Read the full article →

Evolve or Perish: Leading your firm in an increasingly competitive market

February 21, 2014

I am pleased to have been invited to deliver the keynote address at the upcoming MPF 2014 Leadership Conference, to be held in Atlanta on May 8.  My remarks will focus less on the challenges posed by the economic and structural disruptions facing the legal profession and more on the compelling opportunities such changes present. […]

Print Friendly
Read the full article →

When and Why Clients Hire Consultants

January 23, 2014

A number of good friends, respected professionals in different fields, have recently joined the ranks of consultants and each has asked in their own way for my advice on how to sell their services.  There are as many opinions about this as there are consultants. So rather than tell them how to sell, I’ll offer […]

Print Friendly
Read the full article →

Recruiting and Staffing Law Firm Pricing and Project Management Roles

January 17, 2014

Please join me and top recruiter Steve Nelson of the McCormick Group as we present our second webinar in a series on identifying and hiring the right talent for your pricing and project management roles: Putting All the Pieces Together. We’ll focus primarily on law firm roles but the discussion will also be relevant to […]

Print Friendly
Read the full article →

OnRamp Fellowship Launches

January 15, 2014

My friend, fellow Fellow of the College of Law Practice Management and occasional collaborator, Caren Ulrich Stacy, has launched a new initiative – the OnRamp Fellowship – with the goal of increasing gender diversity in law firms.  The Fellowship is a re-entry platform that matches women lawyers returning to the profession with law firms for […]

Print Friendly
Read the full article →

A Look Ahead for the Legal Marketing Association in 2014

December 13, 2013

In a few short weeks I take the helm as President of the 3,400+ member strong Legal Marketing Association. I could not be more proud to have been elected to lead LMA, a family in which I have been actively involved for nearly 18 years. Just as each of my esteemed predecessors has faced a […]

Print Friendly
Read the full article →