Minding the Law's Business:

My apologies for the lengthy, unexplained time (nearly 2 months) between postings. Why the time-gap? Nothing sinister – first, I got married and simply wanted to enjoy uninterrupted time with my beautiful bride and our family; and, second, when I decided to get back to writing, I saw nothing happening currently that captured my interest within that area of the universe where law and business intersect that’s the singular focus of this blog and about which I haven’t written already, often more than once. I did have an interesting exchange with a former partner of mine who still practices law, in which he told me of a conversation that he had with someone seeking to engage a law firm for a project involving bank security and who’d approached a firm in The American Lawyer Top 200 about the possible engagement. It seems that the economics of the engagement according to the firm would be:

• $1,200/hour for the senior lawyer involved;

• “Only” $265/hour for first year lawyers if any were involved in the project; however, the lowest rate likely to be billed on the project for lawyers who actually would work on the project if the firm were engaged would be $375/hour for 2nd or 3rd year associates; and

• $2.00 per page for outgoing faxes ("only" $1.00 if it's a local call), plus $0.15/minute for all long distance telephone charges; $50.00 per hour for word processing ("document preparation" the firm apparently calls it); $50.00 per hour for secretarial overtime, plus a meal allowance charge if the matter requires a secretary to work overtime; Westlaw and Lexis-Nexis research at actual charges incurred, less a 15% discount (a bargain for an item that’s akin to charging the client the direct cost of maintaining a law library); and, photocopying charges.

As outrageous as I find those engagement economics to be from a business perspective, I’ve written a number of times already about the relationship between the cost of the services the potential client seeks to have performed for it by the firm and the value the client expects to be delivered to it by the firm, and I just couldn’t make myself write about it again.

In my initial posting, I established the focus of this blog on the intersection point between law and business when I said,

[L]aw firms are businesses and should be managed and operated as such through the use of the same tools, principles, concepts, and financial operating controls as are any other business . . .

I believe that there is no reason why law firms cannot improve their business performance and become an integral part of the value creation process for their clients through the use of common sense (unfortunately, not a trait found often in great quantities throughout the legal profession), some changes in or additions to law school curricula, and the employment of the same tools, principles, concepts, and financial operating controls as are commonly used by other businesses. I intend to use this blog as a vehicle to share my thoughts, ideas, insights (to the extent that I have any), and (of course) opinions about the business of practicing law and, hopefully, to stimulate a meaningful dialogue about how law firms actually can improve their performance as businesses and become an integral part of their clients’ value creation process.

For the most part, a review of the 50 some-odd postings I’ve published indicates I’ve adhered to that focus so far.

In prior postings, I also have mentioned my admiration for Warren Buffett. In 1956, Buffett formed an investment partnership for family and friends. After reminding partners in a letter in January 1969 that, “Price is what you pay, value is what you get,” in a May 29, 1969 letter to his partners, Buffett announced his retirement and his plan to liquidate the holdings of the Buffett Partnership despite the fact that the partnership over it’s life had achieved compounded annual returns of 29.5% vs. 7.4% for the Dow Jones over the same period. Said Buffett,

The investing environment I discussed at that time (and on which I have commented in various other letters) has generally become more negative and frustrating as time has passed. Maybe I am merely suffering from a lack of mental flexibility. . . .

I am not attuned to this market environment, and I don’t want to spoil a decent record by trying to play a game I don’t understand just so I can go out a hero.

Buffett obviously returned to investing later – although he still sits out markets with which he feels he is “not attuned.”

As has been captured in song from Pete Seeger to The Byrds, “Turn! Turn! Turn! To everything there is a season.” And, with the specialized focus that I’ve chosen for this blog, I guess it’s inevitable that from time to time, like Buffett with markets that change and lead him simply not to invest but rather to sit on the sidelines, I’ll experience periods where I find nothing that generates my enthusiasm for writing within the limits of this blog’s focus. Since I’m not into self-promotion, shilling products for sponsors, or gossip about what’s happening in the legal industry – or since “maybe I am merely suffering from a lack of mental flexibility” - when I find nothing happening currently that relates to a law firm’s management and operation as a business through the use of the same tools, principles, concepts, and financial operating controls as other businesses to which I believe I can contribute an additive insight or opinion and not merely repeat myself, I simply won’t publish a posting; instead, I’ll just sit on the sidelines. That doesn’t mean that I won’t publish postings on this blog again – it simply means I’m “not attuned to this market environment” and I won’t publish until I find something new within this blog’s focus where I believe I can contribute an insight or opinion. And, for those periods where I am “silent,” as Buffett in 1969 referred his partners to Bill Ruane who was setting up the Sequoia Fund as a place to invest their proceeds from the Buffett Partnership, I suggest that readers of this blog who don’t already do so read Bill Gratsch’s Blawg’s Blog – to me, the best blog focused on the legal industry.

When I’m not writing, I won’t be doing nothing - I’ll be spending my time and energy on change-driven opportunities to use not only specific industry knowledge but also all knowledge in new ways and with unprecedented speed that have been created by the blurring or elimination of the lines between industries and professions where moat-like limited access to knowledge and information and silo-like divisions of knowledge and information once existed. I believe the advances in technology and communication speed that underlie these opportunities likely will create vulnerabilities for the legal industry in particular and will increase both the speed and the volume of traffic through the “intersection point between law and business.”

So for now, Happy Holidays and au revoir!