Attorneys and law firms find themselves grappling with a number of big issues that promise to change the way they do business and how their clients consume legal services.

Among the issues are:

• Law firm structures that result in a lack of promotion opportunities for mid-level lawyers and discourage business development.
• The two-headed monster of technology. Lawyers must not only make sure they understand basic technology, but also incorporate new approaches like e-discovery and workflow solutions that can accomplish some tasks faster and at lower cost than traditional methods.

While these challenges are significant, many observers are optimistic that as these changes occur, the legal landscape will stabilize and offer a better value proposition resulting in stronger relationships for both attorneys and their clients.

Let’s take an in-depth look at the areas mentioned above.

Technology

Technology-based changes are lowering costs to clients when software solutions such as electronic discovery or workflow solutions replace billed human hours. . Not only is e-Discovery a less expensive approach to finding information for trial, but it is faster, too.  The other game-changer is workflow productivity software that for many tasks that eat up a lot of human time. Platforms such as Asana, Stack, and Doodle are perfect for project collaboration among a team. Law firms that embrace these changes within their offices can compete effectively with larger law firm competitors and non-legal contractors, especially those who offer e-Discovery as a stand-alone product.

The good news is that younger attorneys are technology “natives” who are familiar with current software and hardware and are not intimidated by the new approaches.  Their influence—to help firms put technology in place efficiently serves clients—can’t be felt too soon.

Probably more important in the long-term is the recent modification of the American Bar Association Rules of Professional Conduct, as well as the California State Bar Rules of Professional Responsibility which now mandates that lawyers understand and maintain competency in legal technology.

“For the first time, the Model Rules included a magical word: technology,” said Andrew Perlman, dean at Suffolk University Law School who also served as chief reporter for the ABA Commission on Ethics 20/20. He was quoted in the July edition of the ABA Journal. “It was the first time that there was any acknowledgement that a lawyer’s ethical responsibilities may, in some way, relate to technology.”

The June issue of Inside Counsel magazine reported that in a survey of 22 federal district court and magistrate judges regarding eDiscovery issues, judges observed that “too many attorneys have not gained the knowledge they need to effectively represent their clients,” and that lack of understanding about the subject causes lawyers to neglect their eDiscovery responsibilities.

Partnership structures

Large law firms, particularly, are examining how many lawyers they have and their responsibilities. Some firms have two kinds of partner – equity and non-equity. The equity partners own part of the firm and are responsible for developing new business, along with their legal duties. Non-equity partners handle legal work and develop relationships with specific clients, but do no business development. As legal work consolidated following the 2008 recession, firms are finding that the non-equity partners are earning excellent salaries but not contributing enough to revenue and profit. Law partnership restructuring was discussed at this summer’s Big Law Summit in New York.

The issues of technology and partnership are intertwined. As firms are forced by client expectations to invest heavily into new legal technology to lower client costs as well as protect client data from being hacked, many firms are now examining the difficult task of restructuring, to help pay for these necessary technology upgrades. Some firms are considering going back to the older model of a modified lockstep partnership requiring non-equity partners to buy into the business to help finance technological changes.

Altman Weil conducted a survey that demonstrated the interest. The survey found that the managers of many firms believe they can increase profits by restructuring and that, in a related matter, a majority of firms lack clear succession planning.

Kent Zimmermann, a law firm consultant, confirmed in an article published in Bloomberg BNA that the effect of partnership structure is being considered more often.

“Many firms that want to enhance their financial performance and their cultures are taking a hard look at their income partner pool and deciding to what extent they want to shrink that pool,” he said. “Some are deciding to tighten up what it takes to get into that pool in the first place, and to remain in that pool.”

Although changes come slowly, demands of the economy and clients are clearly causing lawyers to rethink the ways they have traditionally done business.

“I see innovative law firms taking a smart, strategic approach to growth – a balanced approach, said John Remsen Jr., president and CEO of the Managing Partner Forum, which with Thomson Reuters questioned lawyers about the future of the business.

“They’re focused on identifying new areas where they can add value to their clients, while at the same time, investing in their infrastructure with the aim of increasing productivity and efficiency, and reducing costs.”