Above image generated by using Dall-E artificial intelligence Although vast amounts of students graduate each year from law schools and universities, the talent pool for top law firms remains limited. Most graduates have no interest in working in Big Law, and of those who do, a number does not meet the quality criteria. As a rule of thumb less than 10% of all law graduates falls within the Big Law target group for recruitment. It seems that with Gen-Z this number is declining. This means that in most jurisdictions, there is more demand than there are talented graduates entering the market. Hence the ‘war for talent’. Law firms go through great lengths trying to identify top talent early on and spending substantial budgets (including offering salaries up to $190.000) luring them to their firm. Look at the ‘Careers’ sections of the websites and one could be inclined to believe that joining a top-law firm equals working in paradise. There is just so much emphasis on individual career paths, mentoring, diversity, personal development and super interesting work, that it is easy to forget that in reality it is just hard work, like it was pointed out in a presentation that transpired from Paul Hastings: It is hard work Although the prevailing sentiment after publication of this slide was outrage and denial, I don’t see much wrong with it. Anyone pursuing a career at the top end of the legal market can only succeed by putting in a lot of effort. If you cannot stand the heat, get out of the kitchen. Having said that, this does not mean unfair and unhealthy working conditions. In February 2021 trainees at Goldman Sachs humbly requested management to be allowed to work slightly less than the about 100 working hours a week against an average of 5 hours of sleep: Fortunately, working conditions in law firms are nowhere near those at Goldman Sachs. However increasingly young lawyers are quitting the industry because of Uncaring Leaders, Unsustainable Performance Expectations and Lack of Career Development (McKinsey: Great Attrition, Great Attraction survey 2021) Generation Z Young lawyers entering the legal profession today are mostly born after 1997, the year that marks the beginning of Generation-Z. The first started during the Pandemic when there was hardly anyone in the office and at the same time workload was very high. Law firms, like other industries, seem to be confused and spooked by this new generation which is believed to have different priorities-in-life and no ‘old-school work ethos’. While it remains questionable if this is a fair characterization, many law firms struggle with how to ‘manage’ these young professionals. It is hard to count the huge number of reports, articles, conferences and workshops that have been devoted to Gen Z in the legal industry alone. This can probably be traced back to the perceived gap in the mindset and values of the partners – Baby Boomers and Generation X – and those of the new recruits. The former claim they had to work hard for their achievements, the latter were allegedly born with a silver spoon in their mount. Although this characterization is largely a caricature, Gen Z is different in at least one crucial aspect: young people resent being ‘just a cog in the billing machine’. For them the purpose of life is not helping the partners make millions. They are in it for themselves, not for the partners. Law firms are increasingly aware of this, hence the wordings on the career sections of their websites: “we value you as a person”, “we will invest in your personal growth and development” Preferring Profit over People During the Pandemic, profits soared across the legal industry. Demand was plentiful and costs were low. For most law firms 2020 and 2021 have been the best years on record. Last year, 2022, could not have been more different. The world entered in a global economic crisis. Inflation became high and money tight. At the same time costs substantially increased. All this impacted partner profits and that is where problems arise. Unlike other entrepreneurs and businesses, partners in law firms have for decades only experienced a steady growth in profit. To the extent that even slowing growth would lead to ‘panic’. A decrease in profit, in the minds of many partners, would be totally unacceptable. Now this is the reality for the first time. Welcome to the world I’d say. For a growing number of law firms, the prospect of slightly lower partner profits, compared to the year before - but still above 2019 - became unbearable. To ‘rescue’ the profits, law firms have started to layoff junior associates. The trend is to quietly make cuts through the review process. This year’s "aggressive" performance reviews* are resulting in an increasingly blurry line between layoffs and review-time cuts. On social media associates are buzzing with chatter about layoffs and cuts at many firms. No need explaining that for Gen Z social media carries more weight than law firms’ website ‘career’ pages. The Profit is in the People I have said it before and I will say it again: for a law firm people are the most important asset. The business of law is people’s business before anything else. No law firm can gain an advantage over the competition based on legal knowledge. It is the non-legal skills and attributes that make the difference. The law firm that is the best in attracting, retaining and developing talent is the one that is going to win. The knee jerk reaction to cull talent to save the profit might turn out to be a costly mistake. These firms might save some pennies on the short term, but they will suffer reputational damage for the years to come. There is a ‘war for talent’ and Gen Z does not want to be just a cog in the partners’ money machine. There is no better way to highlight that is ultimately what they are as by firing them at the first signs of headwind. Layoffs are short sighted and selfish. The same thing happened after the 2008 Banking Crisis and it became something those firms bitterly regretted. When the economy picked-up they found themselves understaffed and unable to attract new talent in a buoyant market. The difference is that at that time it were the Millennials, who tend to be more forgiving than Generation Z… Invest in talent development For commercial companies it is normal that revenue and profitability show variations over the years. Even Goldman Sachs has good years and bad years. Law firms partners must understand and accept that the legal industry cannot remain an exception and that sometimes a decline in profit is just a consequence of the economic reality. Like other entrepreneurs and businesses, law firm partners are well advised to focus on cumulative profit over the years. In today’s economy it is probably smarter to invest in talent, even though it impacts this year’s profit. Those law firms that retain their talent and invest in developing legal and non-legal skills will be tomorrow’s winners. Taken over a number of years these firms will have a better average profitability. TGO Consulting has developed a methodology that helps law firms with setting up a sustainable talent development program for all lawyers, juniors and partners alike. *Note: Structural periodical performance reviews are essential and should be standard practice at any law firm. The purpose of such reviews is to provide the associates with open, honest and constructive feedback, aimed to learn and improve. Feedback should never come as a surprise or ‘out of the blue’. Associates should get sufficient time and coaching.

There is a new hype: ChatGPT version 3.5. First launched 30 November 2022 this publicly available natural language processing tool immediately caught the attention of the media and the public. It allows to have high quality human like conversations with a chatbot, which I must admit is pretty cool. Up till then, conversations with chatbots were invariably cumbersome, frustrating and stupid. Natural Language Processing consists of two main elements: the language + the content. ChatGPT is impressively good when it comes to the language. The algorithm has been trained to predict which words are most likely to be used and in what order. The language and grammar of the tool could indeed be mistaken for real. This as such is a major technological achievement. The second element is the content. This is where things get a bit obscure. Even though ChatGPT responds like a human, unlike a real person it does not have any knowledge or understanding. ChatGPT sources its information on the internet, and that spells trouble. ChatGPT runs a high likelihood of producing bullshit in a very convincing and coherent manner. ChatGPT will always sound plausible, but could be totally wrong. So, while the Natural Language Processing part is groundbreaking, the content part is far from perfect. Training AI is not straightforward Algorithms need to be trained with vast amounts of data. The quality of these datasets will have a huge impact on the end product. It is tempting to use the internet as a source, but that invariably is a bad idea. In December 2022 Melissa Heikkilä (she/her) published an article in MIT Technology Review. She tried viral AI avatar app Lensa to make an avatar of herself. For her male colleagues at MIT the app generated realistic and flattering avatars —think astronauts, warriors, and electronic music album covers. However for Melissa, being a woman, Lensa created tons of nudes. Out of 100 avatars she generated, 16 were topless, and another 14 had her in extremely skimpy clothes and overtly sexualized poses. Only after she told the algorithm she was a male, Lensa produced flattering avatars like it had done for her colleagues. This is a great example of how the data used to train the algorithms affect the results later on. Lensa relies on a free-to-use machine learning model called Stable Diffusion, which was trained on billions of image-and-text combinations scraped from the internet. One just need to look at Instagram to recognize that women often place ‘sexy’ images of themselves. The internet is not a good source to train AI on. This is as true for Lensa as it is for ChatGPT (or any other tool). ChatGPT in the legal industry Lawyers use and process language a lot. Perhaps with the exception of writers, journalists and academics, no profession has language at the core like the legal profession. With that in mind the question arises if ChatGPT will disrupt the legal industry? Personally I think it will not. Let me explain: 1. Where will the content come from? Obviously lawyers at a law firm will not use Google as a source, so in order to use ChatGTP or a derivative, law firms need to feed it with their own datasets. These datasets need to be clean, meaning that every bit of data needs to be vetted before. Data must also be updated on a permanent basis. For many law firms this will be a hurdle they cannot take. 2. Will there be a return on the investment? Purchasing the AI tool and preparing the dataset will require a substantial investment. Further licensing fees and maintenance will add to the cost. Such an investment will only make sense if it will help the law firm to make more money. The question is will it? In this context I would like to point you towards an analysis by Lexoo which was recently shared by its CEO Daniel van Binsbergen. Lexoo analyzed how AI and Machine Learning could speed up contact review. It started with the assumption that such tools could save 50% of a lawyer’s time. It turned out to be 5% in reality! So AI/Machine learning would have very little real-world impact. Side note: this is why inhouse teams that have adopted machine learning have not magically freed up 50% of their time… Even in the unlikely event that the employment of ChatGPT would lead to substantial time savings for lawyers, this still wouldn’t mean there is a business model. If lawyers spend less billable time, this needs to be compensated for by higher rates or more work volume, otherwise it will be a lossmaking operation. The third option would be to employ fewer lawyers, but that would assume the ‘idle time’ could be pinpointed to one or more individuals, which will not be the case. 3. The Technology Paradox Once technology is introduced to simplify our lives, we humans get less experience. Today we have to drive our own cars. In the future there might be fully autonomous cars that do the driving for us. This will make us less experienced as drivers, so when something goes wrong, it will go dramatically wrong because the human lacks the experience to intervene. The legal profession runs the same risk. The present generation of lawyers already has the experience and will probably save little or no time using a ChatGPT based tool. The future generation of lawyers using such a tool will have less experience and will likely struggle to assess the results and identify issues, omissions or mistakes produced by the tool. Parting Shot While lawyers and the legal industry are well advised to remain open to change and new (technological) developments – maybe even more so than today – technology by itself is highly unlikely to fundamentally disrupt the legal industry. Its impact will always be marginal. The legal profession is first and foremost a human profession. Law firms are well advised to prioritize training and development opportunities for lawyers and partners over investment in technology. We do not need faster lawyers, we need ‘better humans’.

Recently I had the privilege of participating in an event that gathered over a hundred law firm leaders from Europe and beyond. Over speakers dinner, the night before, and the event itself I caught up with many old friends and made a number of great new acquaintances. It is a stark reminder of the importance and value of meeting in person! For the closing keynote, the organizers had managed to engage a well known and highly regarded corporate leadership expert, who had just served a term leading an esteemed global executive search partnership. One will be hard pressed to find more knowledge and experience as it comes to what it takes to be a successful corporate leader in 2023 and beyond. As you know back in 2020, based on research and experience, TGO Consulting defined 7 Core Competences© needed to excel at the top of the legal market. These seven dimensions are: 1. Understanding the Business Keeping up with economic news and business-related news on a daily basis. Showing an interest in and understanding of how companies make money. Having an understanding of how lawyers could help companies to be more profitable. 2. Creativity As a lawyer, being able to think out of the box. The ability to find multiple solutions for a problem. Regularly teaming up with others to get new insights. 3. Practice Development Ability to build a good reputation and develop a relevant business network. Being proactive in maintaining relationships with clients, potential clients and market influencers. Identifying opportunities in an early stage and acting upon that. 4. Practice Management Being able to manage multiple complex matters at the same time without chaos or stress. Being able to communicate timely, clearly and specifically when cooperating with others. Planning capability: being able to realistically estimate how long tasks will take and knowing inter-dependencies between certain tasks. 5. Emotional Intelligence Having a well-developed understanding of other peoples’ drivers, values and emotions. Effective communication of one’s emotions. The ability to build rapport with other people. 6. Integrity Recognizing the importance of permanently calibrating one’s own moral compass. Openly and pro-actively discussing moral dilemmas with others. Putting decency before profit or personal ‘temptations’. 7. Presence/Confidence Not being guided by the fear of failing or being made fun of. Easily mingling with new people in unfamiliar situations. Being self-assured and not immediately giving in when faced with opposition. The keynote speaker stressed the importance of 'listening' and in one-on-one discussions over dinner and during coffee breaks some argued that ‘the willingness and ability to listen’ perhaps should be added to the 7-Core Dimensions©. So, could ‘listening’ be the 8th dimension? It is complicated and all but straight forward, but on balance I do not think ‘listening’ should be considered one of the core dimensions. Please allow me to explain: Not Listening is Dangerous and Foolish I assume that all of you are familiar with the saying “the writing on the wall”. It’s origins trace back to the book of Daniel in the Christian bible. It depicts clear signs that something (bad) is about to happen. Yet in today’s world all too often corporate (and government) leaders are completely missing the writing on the wall. For leaders not listening can be dangerous and foolish. As a leader, do you know what the associates are thinking? What about staff, the partners, the clients? Being leaders and lawyers, all too often we assume we know. We prefer to talk about generation Z, rather than with generation Z. Listening requires an open mind, a general interest and a healthy dose of curiosity. Does the CEO of the airline listen to its passengers? Are they aware that first class passengers expect unlimited free fast internet for the duration of the flight? Is the CEO of the bank aware how frustrating it is for clients being forced to have conversations with a ‘dumb’ chatbot and not a real person? Last week I read an interview with the CEO of one of the large oil majors who could not understand why brilliant young talent no longer wanted to pursue a career in Big Oil... Leaders that do not listen, will miss the writing on the wall Too Much Listening is a Bad Thing Now that you know that the ability and willingness to listen is crucial for any leader, I must caution that too much listening will be harmful. Confused? Bear with me: Quite often what you hear is ‘bullshit’ (excusez le mot). It was Henry Ford who said “If I had asked people what they wanted, they would have said faster horses.” There is no doubt in my mind that he was right. I have been involved in close to a hundred client surveys and client panels over the years, and consistently part of what was said was useless. In general it is wise to be extremely cautious and not take everything you hear too literally. Leaders must not only have the ability to listen, but also apply a healthy dose of common sense when doing so. You will be surprised how often so called experts have it wrong. When IBM unveiled the first computers, experts said that we would probably only ever need a handful of such machines in the world. When Steve Job introduced the iPhone, Microsoft CEO Steve Balmer was convinced that only very few consumers would want to use such a device. When a friend on mine, who owns a hugely profitable global business asked the banks to help finance the development of a new type of machinery, all banks refused as they did not see a future for such (massive) machine. My friend ended up financing out of his own pockets and now has an immensely profitable worldwide monopoly, being the only company with such a machine. Leaders must know when NOT to listen and swim against the current. Listening creates expectations. If you ask for input and opinions, people will expect that their views are taken into account when it comes to taking a decision. If it then turns out the decision is not in line with their opinion or advise, they will be disappointed and potentially angry. This happens when the government decides to build a nuclear reactor next to where you live. It also happens if you ask your lawyers about work from home while not having a fixed desk at the office in order to manage office space more efficiently and cost effectively. Without effort I could go on producing more arguments limiting the usefulness of listening. Having said that, remember that at the same time I fully and wholeheartedly subscribe to the importance of listening: you most certainly do not want to miss the writing on the wall! In the end, more important than listening itself, leaders must have the ability to act in the interest of the firm. That is why listening is not one of the core dimensions, but still an effective leader can not do without. Ultimately leadership is stewardship. Leaders have an unwritten obligation to leave the firm (or company) better than they found it. On this and other leadership topics, TGO Consulting offers bespoke workshops at our Off-Site Retreat in Sweden. If you are interested in growing as a leader, please inquire for available dates.

TGO Consulting Reputation Index TGO Consulting has developed a unique method to visually show the reputation strength of the leading law firms in a country. The reputation is calculated on a mix of external data and TGO Consulting's own assessment. We employ a balanced scorecard that does not favor large size law firms of well known brands. A countries leading boutique firms are equally represented. Clients' feedback weights heavy in the method that we use. ​ ​

Succession planning Inevitably at some point partners have to leave the partnership. It takes time to prepare both the successor and the client for a smooth transition of the practice. We at TGO Consulting help our clients identifying talent in an early stage and help prepare to take over a practice. We equally assist the partner who is about to retire in how to gradually transfer the relationship. ​ As it comes to succession law firms tend to focus on client relations that need to be secured for the firm after the partner has left. Equally important however is the aspect of reputation in the market. It takes many years to be recognized as a leading individual in a certain practice area. A firm might well lose its market reputation once a prominent partner leaves. Strategic early stage planning is the only way to avoid this. ​ There is a natural tension between maintaining a strong personal performance and starting to transfer clients to younger partners at the right time. It may take several years to transfer a client but more than often a partner will wait until the last day. At TGO Consulting we offer retirement-related assistance. We know how strongly partners feel about their clients and we also recognize the pressure on performance while acknowledging the interests of the firm. We have successfully helped law firms to mitigate these effects, working with partners and clients in helping to secure the relationship for the future after the partner has left. We also have a wealth of experience on how to keep the experience and network of partners for the firm. ​ ​

what we do TGO Consulting are award winning business consultants focusing on the legal sector. We have a strong client base spanning most of Asia, Europe and the Americas. Our approach is fact based and result driven. We help our clients to maintain or improve their profitability. We work on the basis of a Financial Business Analysis© for which we have developed our own unique standardized model. This FBA© will highlight low hanging fruit and provide a benchmark against the market. Having decades of experience in the legal industry, we know the dynamics of partner groups inside out. During the process this will help overcome resistance and create buy-in. "everything must change for things to remain the same" - Guiseppe Tomasi di Lampedusa - Preferring Profits over People ChatGPT in the legal industry Are You Listening? articles of interest about us If it comes to serving a global client base and experience in working in different jurisdictions across the world, TGO Consulting is second to none. While understanding your home market and culture, we bring a wealth of experience in best market practice around the world. We know the legal industry inside out, past, present and future. We know your competitors and we know your clients. we strongly focus on enhancing our clients’ profitability the power of truly offering global best practice our new book Right now the world is facing unprecedented challenges. The business of law no exception. A New Dawn helps lawyers navigate the crisis. Practical and easy to read, just what you need today. a new concept There is no linear relation between time and value. We created the Creation-Production-Divide Concept©, a revolutionary new way to explain where the value is. This concept will fundamentally change the business of law. we strongly believe being a lawyer is about human skills a human-centric approach Being lawyers ourselves and having gained almost two decades of experience in private practice and in-house, we understand the dynamics of the partner group like few others. Although we always focus on our clients’ financial performance, we are strongly aware that the business of law is a human business before anything else. Understanding peoples’ drivers and behaviours is key to achieving lasting results. power curve Succession remains a sensitive and complex topic. The TGO power curve© analysis immediately shows succession and leadership vulnerabilities in the firm. This is just one of our data-based models in use. in the press 1/1 Interview on legal technology in La Gazette du Palais 未来十年，律师事务所的五大趋势 Article on the future of the legal profession Feature article in ACC Docket on how to prioritize for inhouse lawyers