Here are a few recommended downloads:

1. Malcolm Gladwell, author (30 minutes): Gladwell explores why we can’t trust people’s opinions — because we don’t have the language to express our feelings. His examples include the story of New Coke and how Coke’s market research misled them, and the development of Herman-Miller’s Aeron chair, the best-selling chair in the history of office chairs, which succeeded in spite of research that suggested it would fail.

2. Steve Wozniak, co-founder Apple (two parts, 1 hour 40 minutes): Listen as “The Woz” talks about his journey to Apple.

3. Clayton Christensen, Harvard Business School (1 hour 49 minutes): Through his recent research, Professor Christensen has developed a set of theories to help guide managers as they seek to answer seven critical questions when trying to build new growth businesses, again and again.

Enjoy!

Perhaps it’s an ethical issue, because lawyers think that by involving outsiders in their law firm decisions, they are somehow handing over control of their practice to outsiders and non-lawyers.  But law firms bring in outside consultants all the time to recommend business and marketing strategies, assist them with public relations, and conduct leadership training.  Assuming that the advisory board is just that — an advisory board and not a management board — then it seems the law firms are not running into ethical issues.

Maybe it’s a perception issue, where law firms believe that if they establish a formal advisory board, they will somehow be perceived by the marketplace and other law firms as weak, struggling or in need of assistance.

Most likely, law firms don’t establish advisory boards because it breaks with tradition.  And that’s precisely why the legal profession will struggle in the coming years.  It’s time to reach out.

Consider these four factors:

1.  Billing rates at many law firms have been steadily climbing over the last several years, and client protests over the fee increases have been climbing in a similar fashion.

2.  Gen-X and Gen-Y lawyers tend to have fewer allegiances to their firms, are looking to have more control over their lives, and are often entrepreneurial.

3.  Partnership tracks are extending, fewer lawyers are becoming partners, and even fewer are becoming equity partners at their firms.

4.  Technology has made practicing law affordable and efficient, and with nothing more than a laptop, a word processor, Internet access, and a cell phone, any lawyer can research statutes and cases, communicate with clients, negotiate deals and file pleadings from nearly anywhere.

Taken together, these factors have the potential of creating “the perfect storm” — an environment where clients encourage their lawyers to leave larger law firms to establish solo or small firms with lower rates and lower overhead.  The math is simple: a junior partner making $350,000 a year, working 2,400 hours and billing $425 an hour can reduce her rate 30% to $300 per hour, bill 1,200 hours per year, and make $360,000, less expenses (which can be $25,000 or less, depending on if she sets up a home office, what kind of marketing she does, and insurance premiums).  In essence, she bills half of what she did at her prior firm but makes nearly the same amount of money.

That’s the thinking behind posts such as these, taken from a Greedy Associates message board where lawyers are discussing the new associate salary increases:

First Post:

Beware clients: the prices are about to go up big time at VE,Fish and others. And to you mid-level partners and associates, you are about to be squeazed. Pay attention to what happens now; it happened at VE about four years ago and it will happen again. The senior guys get theirs, the new assoceates to three years theirs and those in the middle will get screwed. In fact they want you to leave because you are too expensive for what you do. The pressure on the younger lawyers will go up, even if you don’t have the work (see Baker Botts) and the client, within 6 months will see huge increases in bills. My suggestions… move your business to more reasonble firms.

Response:

It is exactly this dynamic that I hope to take advantage of. All of the big firms will be raising their rates, but I will not benefit proportionately. I think the time is ripe for senior associates and junior partners to strike out on our own because we can charge less while making quite a bit more than we could at the firm. Of course, the selling point to clients is that they will still be getting the same high-quality work from the same familiar faces.

Before, the risk of starting a small firm wasn’t quite worth the potential reward. The new market dynamics have changed that and I’m sure many in my position at big firm offices in Texas are having similar discussions. We’ll see more than a few spinoffs over the next 6 months I bet.

So are we about to enter into a new age of legal entrepreneurship, where young lawyers leave their large firms en masse to embark on their quest for riches?  That’s unlikely. Clients will still require the services of large firms for complex and bet-the-company deals and litigation, and those large firms will fight hard to encourage their best and brightest to stay put.  But for less complex, routine and general advice matters, clients may think differently and begin looking for alternatives to large and midsize firms.  If enough clients push their day-to-day lawyers to move into a lower-cost model, we might see a marked increase in the number of solo and small firm practicioners, which would certainly create a different dynamic in the legal market.  It would also have a direct economic impact on existing midsize and small firms, since the competition in that space would increase substantially.

As the Greedy Associates commenter observes, the next six months will be telling.  Maybe it be “business-as-usual,” where clients simply accept higher outside counsel fees as a cost of doing business.  Maybe clients will resist fee increases, supporting the lawyers that take the plunge into smaller, less-expensive firms.  Regardless of what happens, however, one thing is certain: the economics of legal business just got a little more complicated.

Other Resources:

• Dennis Kennedy’s August 17, 2005 blog entry discussing a survey that indicates 93% of big firm lawyers would not leave their law practice to go solo.  [Ed. note: It would be interesting to see the survey methodology, respondent information and dataset.  If most of the respondents were partners over age 45 making $500,000+, it would come as no surprise that they don't want to go solo.]
• Story from the Honolulu Star-Bulletin about a 47-year-old senior partner that jumped from a large firm into a solo practice.

1. Consumer analysis – who needs your services and why?
2. Market analysis – what’s your niche and what factors are most important?
3. Competitive analysis – who’s your competition, and what are your strengths and weaknesses?
4. Distribution analysis – how do you sell your services?
5. Marketing mix – how do you combine price, product (i.e., your legal services), place (i.e., your sales methods) and promotion?

The order of these five stages is flexible and can be arranged and rearranged based on your style and how quickly you can gather certain information.  Also, this isn’t a one-time, linear process where you step from one stage to another in consecutive order, never looking back.  Information you get from one stage might require you to back up and revisit earlier stages, and you might be involved in working on two, three, four or all five stages simulateously.

As you implement marketing efforts based on the information you gather, you should constantly monitor and evaluate the results.  You should also frequently revist each stage to see if you need to tweak — or radically alter! — your efforts.  Consumers, markets, competitors and distribution methods are constantly changing, and just because something was true a year ago does not necessarily make it true today.  By monitoring and evaluating in this manner, you can identify trends and threats early enough to proactively focus your efforts and strategies to best position yourself in the market.

Related resources:

• The Law Business Tutorials Page
• Marketing Fact Sheet (pdf) (alternate version)
• Harvard Business School Marketing Summary (doc)

David recently launched a podcast series called Lessons I’ve Learned that covers topics such as Understanding Relationships and Transactions, Listening to Clients, How to Give Advice, Growing a Relationship, and Attracting New Clients.  The podcasts are filled with useful ideas and lessons applicable to lawyers.  Highly recommended!

This 50-page publication is packed full of useful nuggets including, among other things, tips on client communications, marketing, billing, technology and leadership issues.

From the PracticePro website:

The legal services marketplace is now more competitive then ever, and the competitors are not just other lawyers. Clients have become more demanding and questioning about the legal services they receive. Technology has profoundly changed how lawyers do their work and serve clients. And, many common legal services have become commodities – with commodity pricing to match. This booklet reviews how you and your firm can meet the challenge of providing superlative client services. It reviews how you can communicate better with your clients, evolve your practice and clientele, improve your marketing, break the habit of the billable hour, and make greater use of technology.

Download it here: managing a better professional services firm Booklet

(Hat tip to Jim Calloway for finding it.)

The past year saw a continuing interest by law firms in “outsourcing” as a means of controlling costs. In some firms, this has taken the form of “in-house outsourcing” through the relocation of various back office and support services to lower cost locations. (Good examples are the operational support center created by Orrick, Herrington & Sutcliffe in Wheeling, West Virginia, and the global operations center established by Baker & McKenzie in the Philippines.) In other cases, firms have outsourced functions to external vendors, sometimes domestically but often off-shore. Although some firms have expressed reservations about outsourcing to off-shore locations, we believe that, overall, outsourcing will continue to grow as an attractive method for law firm cost containment. The cost savings are simply too compelling to be ignored. Moreover, we have now begun to see some examples of firms externally outsourcing limited types of legal research and analysis – a development that goes well beyond outsourcing of back office or support services. Clearly, outsourcing is a trend to watch for the future.

I highly recommend reading the entire advisory: Hildebrandt International – 2006 Client Advisory

Despite the privacy concerns raised by the site (for a sampling of these concerns, see here, here, here, and here), Facebook and sites like it are gradually becoming part of many students’ lives. Educators are having to come to grips with how to handle it — do they (a) ban the site, (b) monitor the site, (c) ignore the site, or (d) educate their students on the risks associated with the site?

The University of New Mexico chose to do (a) in October 2005. The University of Santa Barbara claims to do (b). Most colleges and univerisities do (c), simply because they don’t know about the site or don’t have the resources to care. A few schools, including the University of Toledo, are considering how to best do (d), educating users about Facebook and similar sites.

Facebook and other sites like it highlight a cultural shift taking place in the rising generation. A 44-year-old mother might be aghast at the prospect of posting her innermost thoughts for the world to see on MySpace or Xanga, but her 14-year-old daughter looks forward to spending a couple hours on those sites each night, reading her friends’ entries and adding her own. It’s a generational thing, plain and simple.

This new openness certainly has its dangers, but they are dangers that can be overcome. Just as children are taught safety practices such as locking the door and leaving the phone unanswered when they are home alone, they can also be taught safe information sharing practices. Community sites such as Facebook, MySpace and Xanga can also help with this process, giving users the ability to easily make posts and profiles private, semi-public or public. Ultimately, however, the responsiblity is on parents to learn about the dangers and discuss them with their children. Easy? No way. Vital? Absolutely.

Fortunately for Harvard students and employees, the iCommons Poll Tool was shut down immediately after they learned of the problem. Unfortunately, that is not the only vulnerability in the Harvard systems. The Crimson reporters detail several other security holes in various network services and websites related to the University. For example:

[A]nyone on campus can delete or register a Harvard network connection just knowing an individual’s ID and last name. This would permit someone to illegally share files traceable to another person’s identity.A last name and ID are also the keys to choosing course sections and accessing the Student Employment Office’s jobs database. Only an ID is required to access the Office of Career Services’ MonsterTrak job listings database.

With a Harvard ID and birthday–obtainable by undergraduates through an online facebook, and more widely through websites like anybirthday.com–a user can post or download resumes on someone else’s eRecruiting account or access the online UHS health insurance waiver form. Individuals can also activate an e-mail address for someone who is eligible for a Faculty of Arts and Sciences account but has not requested one.

The article ends with a reminder that any system not protected by PIN numbers likely has similar security holes. (My prediction of the obvious: many Harvard students and employees will receive an email this week regarding the University’s “updated security” and instructions on the new login procedures.)

While I don’t agree with the practice of publishing flaws before they can be addressed by the responsible party, I must admit the reporters did an admirable job of checking the Harvard systems. System administrators at other universities should take note, since copycat articles are bound to appear on other campuses over the next few weeks. Maybe it’s time to accelerate that university PIN rollout after all . . . .

UPDATE: The Harvard Crimson published a follow-up report on Monday stating that PharamCare shut down access for Harvard students and employees, and University spokesperson Joe Wrinn announced that Harvard is conducting an audit of all websites that do not require a PIN or other secure authentication. The report notes, however, that as of Monday morning several security holes still exist, and that “anyone who knows a student ID and last name can still delete or register a Harvard network connection under another identity, section someone else for courses, or access the Student Employment Office’s job database.”

Professor Brian Collins, head of the information systems department at Cranfield University, comments:

Web users who use Wi-Fi networks should be on their guard against this type of cyber crime . . . . Given the spread and popularity of wireless, users need to be wary of using their Wi-Fi enabled laptops or other portable devices to conduct financial transactions or anything of a sensitive or personal nature, for fear of disclosing this information to an unauthorized third party.

Glenn Fleishman of Wi-Fi Networking News also has good advice for users, including: (1) use SSL or other encryption when sending passwords over a wireless network, (2) when FTPing, use Secure FTP (SSH over FTP), which is an encrypted form of FTP, (3) use a VPN, and (4) log in over 802.1X.

Glenn’s prediction is that we will soon see a dramatic acceleration in authentication and encryption that will bypass the utility of Evil Twins. I hope he’s right.