Wednesday, December 15, 2010

Mentorship, Leadership, Validation and the Ad Hoc Firm

The vision of the ad hoc law firm can be compelling:  agile assemblages of just the right talent, just in time, to efficiently meet a clients needs.  In this running commentary on the prospects for the ad hoc law firm (or any industry, really), I'd like to touch briefly on three topics:

1.  Mentorship:  As Richard Susskind points out, one of the roles for the "large" law firm is essentially that of a teaching hospital--a place where junior lawyers with only academic experience are put through the paces and given real world training.  How does the need for this kind of training meet with the needs of the ad hoc firm?  It seems to me that it's a huge opportunity:  to the extent more seasoned lawyers are willing and skilled at mentorship, they can offer this as part (or all) of the compensation of junior lawyers on their teams--and also offer the prospect of developing relationships that will lead to employment in future ad hoc assemblages.  Especially in today's job market, law students are scrambling for choice unpaid internships, and increasingly licensed attorneys are doing the same.  Even senior attorneys might jump for the training opportunity of a high profile case (i.e. appeal to the US Supreme Court).  While at first the need for training, development and advancement may seem like a challenge to the ad hoc firm model, I think it should instead be seen as an opportunity--albeit not one that is currently embraced by the law school placement office or "accepted" career path expectations of most graduates.

2.  Leadership/Project Management:  Similarly, project management and leadership is a key part of ad hoc law firm operations.  Of course, this is very true of litigation or deals in monolithic firms as well, though it's often not recognized as such and very rarely trained or adequately staffed.  In the transactional world it's quite common to hear of "quarterbacking the deal," and litigation management is increasingly an appreciated talent, but these are usually afterthoughts when it comes to attorney training (both in law school and in professional development).  Should project management be outsourced to PM specialists?  Or attorneys with additional specialized training?  Where is the "break even" point when considering how much attention to pay to project management on small cases, or whether to have a PM specialist?  What about classical leadership training--something I've always valued most about my experience as a military officer where I was in charge of nearly 30 people at age 22.  Lawyers rarely have much experience as leaders, let alone any formal training in leadership, yet it is clearly an important skill in even moderately complex litigation, and will become even more important as the potential of the ad hoc law firm process is increasingly realized.

3.  Validation/Metrics:  Jonathan Soroko's insightful comment in my last entry highlights the importance of knowing what you're getting when putting together ad hoc talent.  In many cases we can do this based on past experience working with people--but that ignores the initial hurdle in setting up such an ad hoc system, as well as the ongoing inefficiency of evaluating potential new talent.  What kind of validation system or metric for performance, potential, and value should be used when assembling a team?  Some initial thoughts are the Ebay buyer/seller rating system, or some kind of review-based metric (one example, though certainly imperfect, is the AVVO lawyer rating system).  John Robb has also been posting very interesting thoughts on "meta currencies"--social networking valuation algorithms that can compute the value of input to the social network from all contributors--another potential.  While I'd prefer such systems to be transparent, I can also envision the potential market for proprietary rating systems--possibly even that facilitate the assemblage of an ad hoc firm, and/or stand behind the performance of their members based on their ratings...

Wednesday, December 08, 2010

The Nature of the (Law) Firm

John Robb has a thought provoking comment on Ronald Coase's classic paper The Nature of the Firm.  Robb points out:

Coase asked the question:  if markets are extremely efficient (as maintained by many), why isn't everything built/done using contract labor?  
The reason he found is that when trying to get something complex done, market prices don't capture many of the costs involved.  
For example:  It costs money/time to find the right people, to negotiate for their labor, to find/acquire the right investors, to establish the right processes, to set up the organizational control systems, etc  In short, because it's expensive to do this, entrepreneurs typically create a company so that they only have to go through this process once.
Is this still true today?
Robb thinks this no longer necessarily holds true today, thanks to largely online, open-source markets that can dramatically increase the efficiency of building what I've been calling "ad hoc firms."

This trend and potential also applies to law firms.  Traditionally--and lawyers generally not known for their innovation in terms of their own business structures--law firms are classical "firms" precisely for the reasons highlighted by Coase:  there is substantial cost involved in assembling the right team to optimally serve a client.  That inefficiency, however, is melting away for those prepared to capitalize on the potential of new marketplace formats for labor and services.

Just as Coase pointed out, if there were no costs involved in assembling the right team, then all legal services would be delivered by tailored and just-in-time assemblages, or "ad hoc firms."  In fact, if there were no costs involved in creating such assemblages, it's quite clear that ad hoc firms could deliver superior knowledge, talent, service and value than traditional firm models.  I'm not sure whether we've already crossed the threshold where the value derived outweighs the cost of the ad hoc firm model, the obvious desire of traditional firms to keep their heads firmly planted in the sand notwithstanding.  What I am confident in is that we're rapidly moving in that direction, and that both legal service providers and consumers need to position themselves for the day when that line is undeniably crossed.  And, because of the widespread reticence to even acknowledge this dynamic let alone do something about it, there is tremendous potential for those individuals positioning themselves for that future today.