THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Monday, July 4, 1994 TAG: 9407050268
SECTION: BUSINESS WEEKLY PAGE: 8 EDITION: FINAL
TYPE: Cover Story
LENGTH: Long : 164 lines
Supply and demand doesn't sound like a principle that applies to practicing law. But, like other professions, if the bottom line doesn't end in profit, there won't be any practicing. And changes in technology and client needs are changing The Firm.
Law firms, at least most full-service firms, are behaving more like businesses and corporations these days than silky courtroom litigators. The change goes beyond such legal-office trends as automation, fee-based billing and new ranks of office administrators in the CEO model. Nationwide, and in Hampton Roads, lawyers are changing the way they think.
``Good law firms are getting more like businesses,'' said Guy Tower, a lawyer with the Norfolk-based firm of Kaufman & Canoles. ``That is, they are paying more attention to what clients think they need and less to what the lawyers think they ought to have.''
True to their profession, law firms have begun their metamorphosis with a good deal of argument and dissent. A few holdouts at Kaufman & Canoles refuse to have a computer terminal on their desk. And at the College of William and Mary's law school, the business of practicing law is downplayed in favor of a heavy focus on professional ethics.
Yet aside from a few old-fashioned senior partners, many lawyers, administrators, consultants and professors agree the legal profession has entered a new era. According to those interviewed and numerous trade publications, business development is a new standard of success at full-service law firms.
They are looking more closely at such traditional business concerns as automation, marketing, customer service, tracking expenses, cutting labor costs, centralizing management, competitive pricing and the all-important bottom line. Firms are exploring the concept of one-stop shopping for legal, accounting and brokerage services and even the notion of training lawyer-mediators who routinely leave the courthouse to find solutions.
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The first rule of the marketplace - supply and demand - is particularly applicable to the legal field. The supply of lawyers is ample, the demands for their services changing. Essentially, even the biggest corporations are demanding the best advice at the cheapest price.
Though some lawyers privately describe firms in Hampton Roads as ``middle of the road'' or a bit ``behind the times,'' firms here have been exposed to technological advancements and the latest administrative efficiencies. They have been vulnerable, as well, to the financial concerns of clients suffering the recent recession.
It is a time of new relationships between attorney and client.
Consider the old days. A businessman interviews with a lawyer. A few weeks later the client gets some follow-up documents in the mail. The client sought the best person for the job, probably relying on word of mouth or choosing the most venerable firm in the city. The lawyer's advice was usually sound, and the fee was something like $150 a hour.
Today, the same client may meet with a lawyer and find the resulting paperwork waiting when he returned to his office via a fax machine. On complicated matters, lawyer and client would coordinate their actions, perhaps negotiating a fee.
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The changes began about 10 years ago, when computer use took root in the legal profession. At the time, senior associates often had as many as five secretaries to handle clerical and administrative tasks.
Most lawyers now have computers on their desks, and often two to four lawyers share one secretary. Sets of documents, with fill-in blanks or other methods of manipulation, are kept ready at the touch of a computer button.
Litigators carry notebook computers with full-text indexes of depositions. Outside networks such as the National Information Infrastructure and Internet, the network of networks, allow the smallest firms to tap resources previously available only to the largest, most prestigious ones.
Lawyers use the Internet for file transfers, electronic mail, news, government information and updates on the industries and concerns of their clients. In addition, Lexis Counsel Connect, an electronic communication and information service of American Lawyer Media L.P., provides document exchange, discussion, news, expert commentary, scholarly analysis and access to data.
Also available are firmwide and regional information networks allowing electronic mail between professionals.
According to a recent study by the Chicago-Kent College of Law Center for Law and Computers, 76 percent of the lawyers in more than 150 of the country's largest firms have computers in their offices. That compares with just 7 percent in 1986.
They use computers on an array of legal specialties: tax, litigation, corporate, real estate and trust/estate, to name a few.
Computer use by Hampton Roads' lawyers seems to mirror the national average, local lawyers speculate.
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Though many lawyers applaud the new technology as a handy tool kit, the biggest fans of automation are office managers.
Generally called legal administrators, they are a new breed with control over more than just the bookkeeping department. They employ technology and management policies aimed at firming up the bottom line.
These administrators tend not to come from legal backgrounds. One of the first in this area, legal administrator Beth James of the Virginia Beach firm Clark & Stant, holds a master's degree in business administration.
In 1975 James was one of three legal administrators employed by local firms. Today, she has more than 40 counterparts.
Some legal administrators are retired military officers with management backgrounds. At Kaufman & Canoles, John Lynn fulfills the role of legal administrator. He had been a partner with the Big Six accounting firm Price Waterhouse.
``Nearly every firm of 10 or more lawyers has a legal administrator,'' Lynn said. ``That reflects the understanding of the lawyers that they needed to do this to remain competitive and provide good service, and that they can hire the talent rather than do it themselves.''
Firms are hiring administrators, rather than keeping solely to a tradition of committee management by partners, Lynn said. That is causing law firm operations to resemble those of the business clients they serve.
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Legal administrators are not the only ones concerned with the firm's financial success and the way it markets itself. New associates in some firms are now being graded on whether they bring in business and how they cater to clients. They can no longer make it just on their legal brilliance.
This upsets some who teach jurisprudence. Fredric I. Lederer, a professor at the College of William and Mary's Marshall-Wythe School of Law, said he is biased against law firms overly concerned with expansion and expanding incomes, though he recognizes ``the sad truth'' that a bankrupt lawyer can't help anyone.
``We are interested in professionalism at William and Mary,'' he said. ``A lawyer is very important and very special.''
Lawyers may have begun to use business jargon and pay more attention to income - ``preferably large incomes,'' he said. But they are set apart from the business world by a specific code of ethics.
The Virginia Bar Association has been wrestling with law firms acting like profit-driven businesses, as has the American Bar Association, a non-binding advisory group. So far, however, codes of behavior haven't changed much.
``We are addressing how we can deal with the professional ethics of being both a businessperson and a professional,'' Lederer said. ``It's a question, really, of, `What is a lawyer?' ''
Lawyers disagree on which ethics are outdated, said Tower of Kaufman & Canoles, as law firms seek to provide ``seamless service'' to clients by expanding, specializing and even considering non-legal subsidiaries for consulting firms and securities brokerages.
``It is a trend that goes beyond and rises above - or some would say falls below - the short-term economic recession,'' Tower said. ``There is a continuing requirement from business that lawyers be part of the team, with knowledge of their business and the legal issues involved. We need to be driven by our client's needs.'' t MEMO: Related story on page 15.
ILLUSTRATION: Color photo by Martin Smith-Rodden
Good law firms are getting more like businesses, says Guy Tower, a
lawyer with Norfolk-based Kaufman & Canoles, the region's largest
firm. That is, they are paying more attention to what clients think
they need and less to what the lawyers think they ought to have. ...
We need to be driven by our clients' needs.
Color photos by Motoya Nakamura
Beth James, as legal administrator for Clark & Stant, is in charge
of managing the Virginia Beach firm efficiently and profitably. In
1975, James was one of three legal administrators in the area.
Today, she says, she has more than 40 local counterparts, most of
whom do not come from legal backgrounds.
The College of William and Mary, Williamsburg, has the world's most
technologically advanced courtroom, says Professor Fredric Lederer
at the college's Marshall-Wythe School of Law. On the monitor is
Jonni R. Lyman of W&M's legal-skills program.
KEYWORDS: LAW FIRMS LAWYERS by CNB