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What’s Next for the Middle Kingdom? A Response to "Growth is Dead: Part 11" by Adam Smith, Esq.

This morning, I read Growth is Dead: Part 11-Granting Your Wish, the latest installment of Bruce MacEwan's thoughtful and provocative series on the future of law. In it, Bruce posits models for the future of law at both ends of the spectrum. As for the middle, he isn’t so sure.

Assuming Bruce is right, the highest-end firms will survive provided they successfully adopt the Wachtell model (which I assume, for these purposes, is the winner). It won’t be easy, and a lot of them will fail to make the structural changes necessary to make it work. As for the more routine, commoditized legal services at the other end of the spectrum, we only have to look at the explosion of LPOs and other low-cost, high volume providers to see what's coming.

Where, then, does that leave the rest?

I don’t think there will be one right model for the middle, but I believe what the rest must do to survive is pretty obvious. Even so, thriving in the crowded middle kingdom will require drastic changes in attitude, culture and approach that may be just as disruptive as adopting the Wachtell model. Firms will have to look carefully at why, how and what they do. They’ll have to engage in meaningful introspection but, most importantly, they’ll have to accept the inevitability of change and then actually do something about it.

This is what it’s going to take to thrive in the middle kingdom:

Accept that client satisfaction is the dominant factor that determines a firm’s fate and drives profitability and success.

Cut costs, reduce turn-around times and free up human, technological and financial resources for other value-adding legal services. Success will lie in finding efficiencies that can be passed on to clients as reduced fees and improved, client-oriented service. Through efficiency, firms can remain profitable and still satisfy client demand for faster, better-priced legal services.

Really understand clients. As we have said elsewhere, lawyers need to invest time, on their own dime, to develop a profound understanding of each client’s business. Knowing the industry is simply not good enough. To properly serve the interests of their clients, lawyers in the middle kingdom must know what keeps their clients awake at night and why.

Rethink billing practices. Firms will have to change how they bill and what they bill for. Successful firms will charge only for added value and not the rest. Yes, that means no longer recovering overhead expenses from clients, or using internal services (like copies) as profit centers, or charging clients for training juniors. Internal efficiency is critical to staying profitable in this environment.

See value from the client’s point of view. Changing billing models can only happen if lawyers accept that value can only be determined from the client’s perspective. They’ll have to abandon the illusion that lawyers alone know what their services are worth. Successful firms will understand that satisfied clients will reward them for value, and value them for service.

So, while I can’t predict one unified model for the middle-ground firm of the future, whatever it is, I believe it must incorporate these sorts of changes.

One firm I know is already looking ahead and making serious, innovative decisions about it’s own future--and it’s doing so based on an extensive analysis of its clients’ actual needs. Hunoval Law Firm, with offices in North and South Carolina, Virginia and West Virginia, has been using Lean Six Sigma in various parts of the firm for a while now. Just today, founding partner Matt Hunoval announced a partnership with UNC Charlotte’s Center for Lean Logistics and Engineered Systems to train all of its lawyers and staff in Lean Six Sigma.

Matt recognized the potential--for his firm and its clients--that comes from increasing internal efficiency. The firm actively seeks out the root causes and associated costs of waste, and works to error proof legal and business processes to benefit the firm and its clients. Matt’s goal: develop a culture of efficiency and improvement throughout the firm, and certify everyone (lawyers, administrators and support staff) to the level of Lean Six Sigma Green Belt by mid-2014.

Hunoval is using Lean Six Sigma, something we obviously believe in at Gimbal. But regardless of how you get there, efficiency is the key to improving client satisfaction, to doing more with less. It’s the only way to thrive in the middle kingdom.

What do you think?

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