Wednesday, June 26, 2013

Weil Layoffs: More Firms to Follow?: Point - Counterpoint from Adam Smith, Esq. and American Lawyer

The web is awash with reaction to the dramatic news from Weil, Gotshal & Manges which includes not only staff and associate layoffs, but also dramatic cuts in partner compensation for selected partners. Is this a "one off" or the beginning of a trend? The pundits  and the partners disagree.

Will More Firms Follow? YES (Adam Smith Esq.)
Bruce McEwen is not surprised, but practically apologetic that he is responding to "breaking news."  In his blog post The Weil Layoffs. , he points to the fact that these law firm layoffs were so dramatic that they were reported above the fold in the Wall Street Journal Law Firm Slowdown Fuels Cuts at Weil Gotshal. and in the New York Times Dealbook, .Mass Layoffs at Top Flight Law Firm .  It was reported that 110 staff and 60 associates were laid off. MacEwen estimates that  7% of associates got pink slips and 10% of partners had their compensation cut. MacEwen estimates that there  may be cuts from $200,000-500,000 per affected partner.

Weil's Executive Partner Barry Wolf  in his announcement  indicated that the decisions came in reaction to secular, not cyclical, developments in the market for high-end legal services. “We believe that this not just a cycle but that the supply-demand balance is out of whack across the industry. If we thought this was a cycle and our business was going to pick up meaningfully next year, we would not be doing this.”

MacEwen 's Taxonomy of Overcapacity

MacEwen definitely believes that other firms will follow suit,but perhaps not immediately. He pokes fun at the law firm management trope of managing with the "who else has done it?" strategy.  

Law firms which have too many lawyers  fall into three rough categories:

•They could use some trimming but there’s been no sense of true urgency;

•They really need to do something like this but have been paralyzed by indecision and existential worries over what it would mean for their “culture;”

•They need someone to toss them a permissive lifeline and Mr. Wolf has just done them the favor.

But the bottom line for MacEwen is that there will be more firms following Weil's lead.


Will More Firms Follow? NO ( Amlaw Daily)

AmLaw Daily is offering hope that Weil may be an isolated event. Weil Peers See Layoffs as an Isolated Event..  Julie Triedman reports that she contacted a number of Weil's peer firms. Most partners who talked to ALM indicated that they were not planning any lawyer or staff layoffs. They also report that  "several firms tried to distance themselves from any potential layoffs in conversations with The Am Law Daily, pointing out that Weil's situation may be firm specific."

However the ALM story goes on to cite the Citibank Private Firm Survey and noted that law firms have on average excess lawyer capacity of 8-8.5 % over what they had in 2007. The math computes to lawyers at large firms working nearly 200 hours less per year than they were in 2007 across the elite firms.

One law firm leader who was interviewed indicated that Weil may be caught short if work picks up. But several partners indicated that Weil's situation is unique because of their heavy focus on bankruptcy work. As large bankruptcies are winding down, and the economy is improving Weil's major practice group has found itself  in a swoon. Some  firms suggested that they were weathering a slowdown in corporate and bankruptcy work better than Weil due to their greater geographic or practice diversity.Almost all firm leaders interviewed for the AmLaw story said they disagreed that the Weil move will trigger other such announcements.

Was Weil Insulated or Overconfident?

Was Weil riding  a bankruptcy bubble that insulated them from the worst of the recession that hammered most of the Amlaw 100 firms  5 years ago? Had their secure identity as an elite firm blinded them to the seismic changes in General Counsel attitudes toward procuring legal services?

There was an interesting quote from a Weil associate in the Wall Street Journal article. The associate suggested that Weil priced itself out of the Houston market because of its reputation for refusing to cut rates, with this colorful quote:  "This white-shoe insistence on not getting dirty has left us dinosaured out of the situation." 

 Weil Wasn't the Only Layoff Story This Week   It was reported that 17 partners are leaving Patton Boggs and Jones Day announced layoffs of 60 IT staff members.  The thing that is clear is that law firms are continuing to recalibrate both attorney and staff levels. The  economic earthquake of 2008 may have passed but the aftershocks will live on...being ready for upheaval and displacement may just be part of "the new normal."

Friday, June 14, 2013

Robert Lemmond Appointed President & CEO of Wolters Kluwer Law & Business. Promises “Customer First” Strategy.

 This week Wolters Kluwer Legal & Regulatory announced the appointment of Robert Lemmond as President & CEO of Wolters Kluwer Law & Business. Lemmond, joined Wolters Kluwer in 2011 as Vice President of the Law & Business Legal Markets Group. He previously held executive positions at several content and software companies including IHS, Primark, Disclosure, Northern Light. He replaces Mark Dorman.

Why this is good news for Wolters Kluwer
Robert Lemmond
Over the past decade I was slowly coming to the conclusion that WK  had seen its best days. They were destined to be bought or slowly fade away. They had good solid products but they seemed to be losing momentum. The Standard Federal Tax Reporter retained iconic status for tax lawyers. WKs suite of business titles were solid staples for securities, banking, trade and host of other practices. WK was one of the first major publishers to digitize their publications with the release of cd-roms in the early 1990s. They purchased Loislaw a low cost research alternative to Lexis and Westlaw in 2000. They owned a suite of esteemed treatises from Aspen Publishing. But the 2009 release of the Intelliconnect platform was a disappointment. Their biggest limitation was the absence of a full blown citator system to help lawyers verify that the cases they were citing had not been overturned. When Bloomberg Law was released in 2011, Greg Lambert in his 3 Geeks and a Law blog  pointed out that Blaw had stepped in and made the move everyone was waiting for Wolters Kluwer to make. WK owned lots of great pieces but couldn't seem to weave then into a whole.

 The Problem Wasn’t Just the Products Over the years I had found WK pricing and contracts to be stubbornly out of touch with the law firm demands for efficiency and cost control. They tied online contracts to the retention of print. The pricing structure was opaque. A law firm couldn’t cancel a print subscription even when it was no longer needed. There seemed to be no way to cut the WK spending short of cancelling everything and returning as a new customer.  It really got ugly following the 2007 financial crisis. Law firm attorney counts were falling and budgets were being slashed. Many publishers agreed to suspend or modify existing contracts as an investment in future "good will." Not Wolters Kluwer! They were spectacularly indifferent. An executive agreed to meet with me at  the annual AALL conference so I could plead my case in person. He reacted as if I was reading him a page from a phone directory. It was a brief, polite and yet pointless exercise. I walked away wondering if he had heard a word I had said.

Bob Likes to Listen Since Bob Lemmond arrived at WK in 2011 he has been on a mission to learn about customers. He likes to listen to customers! He created advisory councils of librarians and attorneys. He traveled around the country meeting with key customers. During a call this week, Lemmond said he is especially interested developing a close partnership with the librarian community because they have such deep research expertise and are focused on the quality of information.  In the past two years there has also been a steady stream of changes in the tone of client communications, the introduction of new products, innovative licensing schemes and new pricing models for products. Lemmond doesn't take credit for all the changes but the timing is curiously aligned.

 Recent WK Law & Business Initiatives Include:
  • Establishing Insight Leaders Councils  
  • Expanding the new RB Source platform which is more intuitive than Intelliconnect 
  • Releasing a series of practice dailies which are clearly positioned to compete with the Law360. 
  • Offering pioneering licensing models for the newsletters which allows lawyers to share content with clients and post certain content on the law firm website. 
  • Entering  a relationship with Thomson Reuters to distribute WK newsletters on the Westlaw platform 
  • Offering new pricing options which anticipate the ongoing shift from print to digital and which allows customers to permanently migrate lawyers off of print resources.

The War Between the SuperSystems For the past 2 years everyone has been watching the 3 way tug-of -war for market share between Blaw, Westlaw and Lexis. I suspect that WK is not going to jump into that end of the pool. During this week's call Lemmond indicated that there would be no major change in direction for WK. However, he was confident that the company had the right pieces in place to expand market share with practice focused workflow solutions which enhance productivity and provide expert guidance.

Budgets are still tight in law firms, so focusing on productivity enhancing expert systems instead of competing directly with the SuperSystems may provide the right lever for growth in the current market.

Keep the phoneline open. The next voice you hear may be Bob Lemmond calling.

___________________________
Related Posts:
News You Can Use: Wolters Kluwer Continues to Bring Sanity to Digital Licensing

Wolters Kluwer Launching Daily Reporting Suite Built for Collaboration and Copright Compliance

Nancy McKinstry, Wolters Kluwer CEO On Leadership Strategies and the Importance of Law Librarians In the New Information Environment.

Breaking News: Thomson Reuters and Wolters Kluwer Law & Business Joining Forces on Current Awareness


Monday, June 10, 2013

American Lawyer Media Releases White Paper on the New "Hot Job" -- Pricing Professionals in Law Firms.

American Lawyer Media Just released a special report on "Pricing Professionals" in Law Firms: Here for Good -- Pricing Professional in Law firms and This Impact on Clients and Firm Business.
In the five years since the collapse of Lehman Brothers, both law firms and clients have been whipsawed by the economy. Corporations have interposed Procurement Officers between General Counsels and even long time outside counsel. Law firms have sought the advice of a new breed of internal pricing professional to help the firms respond effectively to the Procurement driven demand for high quality legal work at the best price.  Lawyers went from a century of  using the reliable hourly billing rate to facing a complex array of alternative fee arrangements, involving, discounts, caps, project management and performance metrics.  ALM released a report on AFAs in May.

According to the Pricing  survey, most lawyers don't have a strong interest in mastering the mechanics of pricing out an RFP. Enter the pricing professional!

Toby Brown a pioneer in the pricing arena, summarizes the problem in the Foreword to the report. He points to the lack of  information as the greatest challenge to pricing. "Too many decisions are made in a vacuum, with only intuition and anecdotal stories for guidance."

It is rare that we get to trace the development of a new niche profession in law firm management from its inception.The report does not focus on how firms are actually setting the prices. It is an peek at a "work in progress." There is no wide consensus on how to define the functions of the pricing professional  or where  the function should reside in the law firm. But we rarely see the emergence of a completely new role which is both so widespread and about which there is so little consensus.

Organization
67% of responding firms indicated that they had a pricing officer. 50% of the respondents report that this function is less than 2 years old. There is no template here.  31% of the pricing officers report to "other " which means that pricing professionals appear all over the org chart. But 29% report to the CFO. 23% are part of the Knowledge Management department.
When pricing has its own department, it is relatively small . 44% have no direct reports. 22% have 1 report and 34% have 2-5 direct reports.
Pricing officers work most closely with lawyers and only 27% report working closely with clients. The report raises the question about whether this should be a more external client facing position.

 The Question of Authority. It is not clear how much authority the pricing officer has. Partners want to "own" their relationship with their clients. I imagine that the pricing officer may have an easier time influencing the pricing for a new client via an RFP process than intervening in between a partner and an existing client. But consider the challenge of intervening in the prized partner-client relationship either way! Partners need to believe that this new role will in the long run strengthen their client relationships, but that may take time.
Oddbits
  • 43% regard financial analysis as the most important skill of the pricing officer.
  • 55% the % of RFPs referred to the pricing officer
  • 68% the pricing officer doesn't have defined performance metrics
  • 30% of Pricing Officers has been at their firms 10 years or more. Which means that they have evolved from another role into this recently created position.
  • 58% of Firms with pricing officers have project management function within the pricing department. But only 7%of pricing officers are responsible for project management. 
  • 11% of firms give the pricing officer final authority in pricing a matter.
Pricing "Officer?"

I recently reviewed "chief "titles In the AmLaw 200  and didn't find one "Chief Pricing Officer" yet this report repeatedly refers to the "pricing officer."
I like the word "officer" it lends an air of gravitas to any position. So I have to hope what when the ALM releases  it's Annual library survey in July, librarians and information professionals will also be  granted the  "officer" honorific and be referred to as information and knowledge "officers," regardless of their actual titles.

Friday, June 7, 2013

Bye Bye Bender Online: LexisNexis Shifting Digital Treatises to Lexis Advance and eBook Platforms

Matthew Bender Online was one of the earliest digital successors to legal treatises on cd-rom. When it was released in the early 1990s, MBOnline offered an elegantly  simple interface and eliminated the technical  idiosyncrasies ( I almost wrote atrocities) of managing networked cd-roms. It allowed lawyers to have digital access to multi-volume treatises. But it was on a separate platform from LexisNexis and could be accessed without having to put in a client number. It could provide lawyers and law firms with a custom library of treatises. But according to Lexis executives, the platform hasn't really evolved in the past 2 decades.

The Letter is in the Mail. Over the coming weeks LexisNexis will begin notifying customers that Bender.com in person or by mail that the product will be phased out by the end of 2014. They stopped selling the product to large law firms 5 years ago. They are planning to help firms transition to the treatise platform on LexisAdvance or the LexisNexis eBooks platform.


According to Karin Lieber,  Vice President Large Law Segment at Lexis Nexis there are several reasons that Lexis Nexis has decided to phase out this product at this time. Bender Online is based on an old "flat file" technology and the product is no longer being enhanced. LexisNexis is focused on enhancing treatise research on Lexis Advance and on their Overdrive eBook platforms. Both platforms will offer enhanced functionality which is not available on the current MBOnline platform..Ebooks are navigable like a book but are also searchable, portable and can allow lawyers to highlight and annotate the book and link to primary sources with a login to LexisNexis.

Shabeer Khan, Director of Information Services at Kaye Scholer has had access to both the Bender.com and LexisNexis eBook library. When I asked him which platform was "better." he responded that the question of "better" doesn't apply. They are "different." and each has it's strength. Khan pointed out that there are advantages to interacting with a the eBook medium because it mimics the look and feel of an actual book. In addition, the Lexis eBook platform with uses the Overdrive system, offers more functionality and works on mobile devices. These features were never available on Bender.com.

What about eLibraries? Karin Lieber, assured me that LexisNexis will continue to support the eLibraries or Custom User Interface (CUI) Libraries which many large law firms have access to through their LexisNexis contract.. eLibraries are custom portal based libraries that allow anonymous authentication within the firm This means that lawyers have unlimited access without having the charge a client. The firms custom interface may provide access to treatises by jurisdiction, topic, or alphabetical list by title. A lawyer can search one title or all titles. Lexis Nexis is committed to supporting this platform for Lexis Nexis subscribers. But they are actively working to transition the elibraries from  Lexis.com to CUI libraries based in the Lexis Advance platform.

Matthew Bender print Not Impacted. Matthew Bender print titles will not be impacted by these developments. Well, that is what they said. I think the truth is that Matthew Bender treatises have already been impacted. Matthew Bender, founded in 1887 was a family owned company and one of the countries largest law book companies. It was sold to the Times Mirror Co. in 1963 and then sold to Lexis Nexis, a subsidiary of Reed Elsevier in 1998. In January 2013 it was reported that the company was laying off over 200 employees at their office in upstate New York. There is no question that law firm economics and advances in technology have in combination accelerated  an unprecedented decline in the demand for print treatises.
More to Come Lexis Nexis will be announcing a new set of eBook enhancements in July at the AALL conference.