Yesterday I noted Blockbuster’s unsurprising Chapter 11 filing, and pointed out some comparisons to our industry.
In response, a colleague reminded me of the recent US News interview with Indiana U. law professor William Henderson about the future of law. In it, he notes the same issue from a slightly different perspective:
Successful [BigLaw firms will] figure out how to innovate. If you want to innovate, you’ve got to dump the billable hour and figure out a long-term time horizon. You can’t innovate when you’ve got to hit this year’s numbers…. Your most successful people are still prospering under the old model, and you need their buy-in to switch to a new model. While it’s still successful for them and will be for the next five to 10 years of their careers, the firm itself can’t rely on that rainmaker model…. We’ve had so much success under this billable-hour model that we’ve been very reluctant to change. What’s the line I’ve heard here? “Nothing fails like success.”
As was the case with Blockbuster, he’s arguing that it’s hard to get out in front of a changing business environment while you’re successful. It’s the same problem Clayton Christensen poses in The Innovator’s Dilemma.
While I don’t believe Legal Project Management is the solution in itself, it is part of the solution — especially for firms that need to stay profitable through any upcoming transition in the industry. Clearly the #1 issue is the cultural or organizational mind-shift, as I argue in my book Legal Project Management. However, once firms grasp not just the challenge but the opportunity it offers, boosting both effectiveness and efficiency in the work they do looks increasingly attractive — and such a boost is what Legal Project Management offers.
I’m noting a greater uptake, by the way, in firms below, say, the AmLaw 50. They’re hungry, they’re looking for ways to increase their opportunities and thus their long-term profitability, and they’re out to eat the AmLaw 50′s lunch! They may not get the whole lunch, but it wouldn’t surprise me to see them nibble away at the good stuff, the meat in the sandwich and the dessert on the side. Enough nibbling, and what remains is filling-but-not-nutritious-or-tasty bread covered in mustard and mayonnaise.
In other words, they want to take over not so much the bread-and-butter work as the highly profitable work.
And that’s about as far as I can push this food metaphor, especially since I’m writing this article just before lunch.
While I don’t see the so-called second-tier (second financial tier, not necessarily second quality tier) totally upending the top tier Neflix-to-Blockbuster style, I do think they’ll eat into top-tier profitability as they expand their own profit streams. As Hamilton says, it’s easily a five to ten year shift, not something that will be a fait accompli by next summer. But remember Mr. Hemingway’s analysis of the rate of change: “Slowly. Then all at once.”