When I attended law school, laws and legal case law were still only available on paper. I remember receiving an envelope with a bundle of single pages that needed to be inserted and exchanged in my bundle of legislation on a monthly basis. This was an ever-repeating tedious task all law students back then had to commit to. Only in my final year MS-DOS computer training became part of the curriculum. All this is set some three decades ago, and much has changed since.
Back then, knowledge of the law was virtually inaccessible for anyone except for those who had gone through law school. Lawyers had a monopoly for even the most basic legal questions. Today this obviously is no longer the case. Due to a process of digitalization of legislation and case law, access to legal knowledge is no longer limited to those who hold a university degree and have access to the books. Unprecedented progress in search technology and information available online has opened the legal knowledge to the masses. Today anyone, even my mother, can find basic answers to the most common legal questions. While the world has changed, the way in which we educate and train young lawyers has not. This is an issue we need to discuss.
As I have outlined in previous articles and in my most recent book ‘Data & Dialogue, a relationship redefined’ the process of what a lawyer does consists of two distinct elements. We call this the Creation-Production-Divide-Concept©. Creation contains all elements that are uniquely connected with the individual skills of the lawyer. These are the things that have most value to the client and are also the elements that distinguish effectively one lawyer from the other. Elements like, the knowledge of best market practice, strategic skills, the ability to find creative and innovative solutions, negotiating skills and communication skills are all part of Creation.
Production contains all the actions and processes needed to produce the actual legal output. Production is document review, drafting the agreements, doing mark-ups, discovery, due diligence, and so on. These necessary processes have very little added value to the clients and are not very distinguishable between one law firm and the other. This is the prime area where technology will increasingly be used to augment lawyers. Production needs to be done as efficient as possible as it is considered a ‘necessary evil’ that does not add any substantial value.
Once you learn to understand the Creation-Production-Divide-Concept©, you will start to realize that Creation is the key to delivering value to clients and to setting yourself apart from other lawyers in the market. We at TGO Consulting operate in the top segment of the legal market and the future for our clients definitively will be in delivering Creation, not Production. This might be slightly different for mid-market law firms now, but also this segment will need to shift its focus.
So why is this such a big issue? Well, the fact is that today almost every law firm heavily relies on the revenue generated by Production. The majority of law firms, even in our segment of the market, employ a small army of associates that almost exclusively focus on production. Associates review documents, draft agreements, perform due diligence, and so on. I would be fair to state that the revenue derived from Production is what keeps firms afloat today, but will it also in the future? Probably not.
High end law firms will be the first that need to shift their business model towards Creation. The issue is, that this will require an overhaul of the business model. Firms need to change the leveraged model, need to introduce value pricing and need to invest in technology to help deliver the final output. This transformation will take several years to successfully be implemented. In future business models, associates will no longer spend most of their time performing tasks that, from the clients’ perspective have low value. Technology will help them do the tedious boring work much faster. While almost every law firm is spending time and effort on innovation and legal technology, almost none invest in human beings. Their lawyers might be working with AI, learn to code or dive into blockchain, they are not challenged to develop their personal skills.
I would advise all law firms in the top segment of their market to start developing their young lawyers’ human skills in order to prepare them for a future in which the Creation abilities of a lawyer are far more important than the ability to perform repetitive low value tasks. This is a departure from where we are today, where many law firms occupy their young lawyers with basic (stupid) low value work. As some of you may know, we have at one of our clients (an elite law firm with an international footprint) done a very interesting experiment: 50% of their new recruits was put to work in the traditional way, doing basic legal work. The other 50% also did this basic work, but only half the time. The other half of the time they accompanied partners to high level meetings with clients. Obviously, this time was not charged for. They just had to sit, listen, observe and learn. Afterwards they discussed with partners their observations. Data showed that in year one, the traditional group of new associates brought more revenue to the firm, which is logical as they made twice the number of billable hours. After one and a half year both groups were equal and after three years the ‘experimental’ group outperformed their traditionally trained peers by more than 25%. Exposure to client dynamics has led to a greater ability to deliver value, to have less write offs and to charge more.
The whole point of this real-life example is to show that it pays off for lawyers to invest in human skills. Training young lawyers how to create value to clients through Creation can be done in many ways. The one way that surely is not going to work is to keep them busy with basic Production stuff. Even if you would lose some revenue on the short term, you will create a multitude in revenue on the longer term. Creation is for lawyers; Production will be to a great extent for machines.