And also me. Here’s one of my prognostications for 2014:

Wallbillich also suggests that technology could impact continuing legal education, extending its focus beyond “what the law is” to “how lawyers should work. Forward-thinking lawyers who want a competitive edge need to develop better business-related skills.” He says that “a two-day conference held in a resort” isn’t always the best way to introduce and reinforce new skills. “I expect that we will see more learning options for lawyers that will be delivered through desktop or mobile applications, on-demand when and where the lawyer needs them.”

Hmmmm…

A special tip of the cap to David for including yours truly. If you’d like to learn more from him, check out his latest book on Amazon; it is available as a complementary Kindle download today and tomorrow.

It’s a great book; I bought it at full retail in hard copy when published. No batteries required and the 27 bright lawyers David interviews really light up the pages.

I opted for two minutes, suggesting that the sometimes pejorative term BigLaw really doesn’t do high-end corporate legal services justice. I noted that there is really no homogeneous “BigLaw Industry” per se; you have to look at what clients given firms are successfully targeting and servicing. Each “BigClient” faces its own challenges, and a law firm that helps a client compete and win will do well. Many others may continue to be profitable, but will struggle as those profits inevitably decline. Sadly, some firms won’t make it in their current form.

I had a few examples of the reality facing several companies in the “BigClient” category, but the conversation ended there (it was off the meter!).

Just such an example jumped out when I read the morning news last Friday. I saw the earnings announcement by Wells Fargo: second-quarter profits up 19 percent, beating analysts’ estimates. But there was more to this story, and a headline later that day by Bloomberg captured perfectly the BigClient world:

There is a reason Wells Fargo has has been a leader for years. They invest money opportunistically, but they always watch the cost side of the ledger. As an analyst quoted by Bloomberg noted:

“Expenses are probably between $500 million and $1 billion too high,” Marty Mosby, an analyst at Guggenheim Securities LLC, said in an interview before results were disclosed. “That’s a cushion they are whittling down.”

Now do you think legal expenses, particularly for outside services, are part of hitting this nine- or ten-figure cost reduction target?

Before his abrupt exit from HP, Mark Hurd gave this insightful quote to the New York Times in 2006:

Costs and growth are different sides of the same coin. […] We will spend money to save money and save money to spend money. We will never be done looking at our cost structure.

So what seems normal now really isn’t totally new, is it?

The key takeaway for me: the best companies of the BigClient bunch are more focused than ever on costs. Even with a nascent signs of economic recovery. That mindset is a big reason why they became market leaders in the first place.

Cutting costs during a Great Recession is hard, but it’s almost a reflexive process. Controlling costs when not in urgent crisis-mode requires great management and even better employees.

To meet this challenge, maybe “BetterLaw” is a more productive focus for lawyers and clients alike.

Personal data privacy is an interesting issue for lawyers. For some, it’s part of their corporate practice. For most, it’s a confusing technological jumble, something they want to trust to someone else.

Interestingly, it was in the context of how the Obama administration was proposing a data privacy “bill of rights.” There wasn’t a lot of debate about this last year; perhaps the issue didn’t gain traction in an election year.

But it is now.

Putting aside political issues, in-house counsel and their key outside advisors will certainly be more involved with privacy issues this year. Here are a few that could appear at the top of the list:

1. Who is watching the watchers? A perennial risk issue for in-house counsel is the very IT department relied on to track, collect, and present potential risk inflection points. One of the most insidious parts of the Snowden case is that he was part of an IT group tasked with monitoring network use and security. And he apparently used a thumb drive! Whatever you think about what he did, he has put many people under a microscope; 99.99%+ of whom are professional and trustworthy. (But there are allegedly 1.4 million people with a Top Secret security clearance!)

2. Lawyers are put in a secrecy bind. Companies that receive secret orders from the FISA court cannot legally disclose them. Google has led the charge to obtain permission to disclose more information about these orders and their responses. Observers have noted that it is not in the global business interests of U.S.-based tech companies to operate under this cloud (broad government-mandated data collection) when they are trying to market that cloud (trust us virtually with your data).

3. Lawyers may not be in the loop. There is a report from Bloomberg this morning that some data-sharing “interactions” between the government and tech companies may be conducted on a “need to know” basis. It’s not clear that this would always involve company lawyers.

4. For all the focus on government data collection; watch the private sector. When President Obama first commented briefly on the Snowden disclosures (but before Snowden outed himself), he really didn’t (couldn’t?) say much at all. He did refer to the legality of government programs, and the challenges in balancing privacy and national security. He also noted that private companies collect a lot of data too, which sort of starts a shift in focus to what private companies do with customer data. If the public really understood how their purchase patterns and Internet usage was being monitored and aggregated, it might provoke more of an outcry.

5. Lawyers may not be the answer; some will certainly be asking the questions. One person who will likely have a big part in this unfolding story is James Comey. Reports say he is likely to be nominated as the new FBI director. He is a former Deputy Attorney General; and also later a General Counsel. He almost resigned his position in the Justice Department over some strong-arm tactics intended to certify certain surveillance activities as legal under the nascent Patriot Act. If you want to understand his resume, you can find it online. If you want to see one major reason for his nomination, you can watch it here:

I hope Mr. Comey gets the call and answers it.

We were taught early in the first year of law school the lesson in the cartoon below. A modern corollary to that rule for lawyers might be “ignorance of data privacy is not an option.” Both for our clients, our law practices or businesses, and even ourselves.

Late last week, multiple media sources revealed that Bloomberg news reporters had accessed information about customer usage of the Bloomberg financial terminal. The New York Times covers it this morning here; earlier reporting is summarized by Buzzfeed here.

One of the first Bloomberg customers to complain was Goldman Sachs; one assumes that this would get some attention from management at Bloomberg given their corporate use of the terminal.

Apparently a Bloomberg reporter contacted Goldman about the employment status of an employee, because the reporter noted that this employee hadn’t logged on to their terminal for some time.

Last Friday, Bloomberg CEO Daniel Doctoroff posted a first draft of an apology on the corporate blog:

A Bloomberg client recently raised a concern that Bloomberg News reporters had access to limited customer relationship management data through their use of the Bloomberg Terminal. Although we have long made limited customer relationship data available to our journalists, we realize this was a mistake.

Mistake? At least one important customer apparently saw it as something more.

Then early this morning, the editor-in-chief of Bloomberg News, Matthew Winkler, published a slightly longer explanation, which included this:

The recent complaints go to practices that are almost as old as Bloomberg News. Since the 1990s, some reporters have used the terminal to obtain, as the Washington Post reported, “mundane” facts such as log-on information. There was good reason for this, as our reporters used to go to clients in the early days of the company and ask them what topics they wanted to see covered.

Mundane? What was possibly mundane in the 1990s is apparently different now.

Bloomberg News is really an awesome operation. Their iPhone app, with its integrated video and audio content, is way beyond what others offer right now in terms of global coverage and quality.

In-house counsel can watch this story to see what Bloomberg’s crisis management playbook says, and watch in play out in real time.

There may be more twists and turns to this story. One question some law firms and corporate legal departments may have is this: Did reporter access to selected customer use information extend to the Bloomberg Law product?

We are in the early stages of the digital era as far as privacy and appropriate data use are concerned. This is a really hard issue for lawyers since it has a technological nexus and is difficult to research and understand, let alone monitor in real time.

A common tactic in compliance training is to suggest front-line personnel imagine “reading about the company doing X on the front page of the New York Times” before doing it.

I guess that is no longer a hypothetical scenario for Bloomberg.

(Updated 2:05 pm EDT on 13 May 2013).

So law firm goes into damage control mode, declines to comment to press, and sends memo to staff. Press gets memo:

Wait a minute. Isn’t the point of discovery to find documents and use them to your advantage?

The DLA Piper “That’s Team DLA” lawsuit been covered by Inside Counsel, Thomson Reuters, and even the Op-Ed page of the New York Times. The Op-Ed tries to link this dust-up to the entire billable hour regime.

Wow.

Years ago I asked a very savvy partner at a prosperous law firm whether he had ever sued a client over an unpaid bill. The response was something like this:

No. I can’t say I never would. But it would have to be a large bill, a great result, and a clear winner. And of course a client that I didn’t care about losing.

The intransigent client’s unpaid bill from DLA Piper was reportedly $675,000. To put this in perspective, DLA Piper revenues for 2012 were $2.44 billion (source). I think that works out to about 0.027%.

Some in-house lawyers have put this entire matter in perspective, seeing it as larger than any one firm with a dispute with a single client.

A final explanation in the “not-to-be-commented-upon” internal DLA Piper memo was that the emails were nothing more than:

“…an unfortunate attempt at humor by three former lawyers of the firm.”

Many April Fool “jokes” are unfortunate attempts at humor.

I have to believe many partners at DLA Piper think that the press generated by this collection lawsuit has not been funny. In the least.

As a life-long resident of the greater Detroit area, I agree that all those designations may be true. But they don’t tell the full story. I don’t see Detroit just as a current laggard. I also see Detroit as a potential leader. And lawyers are on the case.

The quick-rinse bankruptcies of GM and Chrysler were seen at the time as a virtual death knell for the US auto industry. Flash forward a few years, and GM and Chrysler are wildly profitable. Some of the high-end European automakers are starting to see what real worldwide competition is like while facing a horrible economic state and the mess that is the European Union (as a financial system).

Lawyers made the automaker bankruptcies happen. And one lawyer, involved in that, may be part of something more.

Detroit as a city had a lawyer as mayor (Dennis Archer, a former Michigan Supreme Court Justice) some years ago; he basically saw what was on the horizon (and the reality of an intransigent City Council) and took his formidable talents to the private sector. His successor, Kwame Kilpatrick, was a lawyer, until he resigned in disgrace and lost his ticket a few years ago. Yesterday we learned that a federal jury considered Mr. Kilpatrick a criminal, and their verdicts in the morning resulted in Mr. Kilpatrick to being remanded to the custody of federal marshals in the afternoon to await sentencing. It was a big win for US Attorney Barbara McQuade and her team (lawyers all, with AUSAs Mark Chutkow and Michael Bullotta on point).

But into the void of failed leadership rides someone new. That would be Michigan Governor Rick Snyder. He is–wait for it–also a lawyer (University of Michigan JD/MDA). He spent years in the private sector before running for governor. He is just about the least political politician you will ever meet. Under Michigan law, cities failing economically are reviewed by the state, and an Emergency Financial Manager (EFM) can be appointed. A hearing on such a financial emergency for Detroit will be held in Lansing today. All signs point to clear distress in Detroit; although, incredibly, some on the City Council disagree.

So who would Governor Snyder appoint as the Detroit EFM? Well, someone brave for starters. Press reports this morning mention one Kevyn Orr, a partner at Jones Day. Mr. Orr and his firm represented Chrysler in the bankruptcy mentioned above. I hope, if asked, Mr. Orr or someone of his pedigree accepts the challenge.

I have a hunch I’m not alone in thinking that there would be no more challenging public position in America than the Detroit EFM.

And the “Detroit as Leader” part? I see the challenges facing Detroit (financially and otherwise) to be present in many large urban centers and states around the country. Maybe not as urgent, maybe not in the same magnitude. Detroit is a sort of “leading indicator.” And if the Detroit EFM recommends to Governor Snyder that a Chapter 9 is required, it will be one for the record books (and the legal treatises).

Business Blogging 101 says you don’t stray into politics. That’s not really the focus here today. In much of what ails Detroit, there are serious legal challenges involved in fixing the results of 50 years of mostly failed leadership (and complex demographic trends).

Thankfully, there are some lawyers with courage who are willing to take the case.

(Downtown Detroit from Belle Isle; not today, maybe someday. Source)

We often know what really happened, but accept the duty to read between the lines like rookie CIA analysts deciphering Pravda editorials during the Cold War.

So when Groupon CEO Andrew Mason departed today, he did so with an amazing memo to staff. Here is the opening paragraph to the “People of Groupon,” via press reports:

After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today. If you’re wondering why… you haven’t been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that’s hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.

I don’t expect to ever see a memo like this again. And that’s too bad.

CNN is reporting a severance package valued at $378.36 (this is corrected thanks to reader Jonathan’s comment, below). Looks like honesty in severance as well.

The fact that you have a conference that goes for nearly three full days is a testament to (a) its staying power, and (b) that a lot of people want to go to New York on an expense account.

Many of the prime movers in the legal technology space use the conference as an opportunity to release new products and initiatives (Thomson Reuters is an example). When you peruse the conference agenda and the exhibitors list, you see that it’s really a who’s who of legal technology.

And you also have companies active just outside the exhibit hall, as we know that there’s often more interesting and open conversations there about what’s going on out in the field.

But just as BigLaw is facing challenges from competition, so is BigTech (legal and otherwise). And that’s not just me speculating. There’s a recent interview and an imminent product launch that serve to remind everyone that no company is immune from the forces of change.

First, the interview. It’s here, and features Marc Andreessen, current uber-VC, and founder of Netscape (the first mainstream web browser). Mr. Andreessen gets why consumers are driving the pace of change in technology (hardware and software) and how this is affecting the enterprise. What used to be trickle-down (enterprise to consumer) is now moving the other way, from the consumer “grassroots”:

And the reason is because – the reason fundamentally is because now that you have got these things, you have — now that you have a computer in everybody’s hand, all of a sudden all these barriers — it used to be these barriers to market entry were so big, it used to be there just weren’t that many early adopters in the world. To bring out a new technology for consumers first, you just had a very long road to go down to try to find people who actually would pay money for something.

And now all of a sudden you have got this global market of all these early adopters that have smartphones connected to the Internet, and they can just pick up their things and run with them.

And of course consumers can make buying decisions much more quickly than businesses can, because for the consumer, they either like it or they don’t, whereas businesses have to go through these long and involved processes.

That last part will resonate with anyone trying to sell technology into the legal enterprise (law firms or legal departments). To call the sales cycle long is to make a glacier seem like a racetrack.

The interview is extensive, but it is a rare privilege to peer inside the active mind of a technology first-mover. Mr. Andreessen notes that the fascination with consumer markets over the enterprise is cyclical, and that, today, all business is hard:

There are no easy businesses in the world other than maybe Google, but other than that, there is no easy business anywhere in the world. So what happens is Wall Street gets enamored by the businesses that look like they are easy, until it turns out that they are not, and then Wall Street gets disillusioned and freaked out, and then rotates into the businesses that they think are going to be easy, and then they get endless disappointment. It’s like a seventh or eighth marriage at some point.

At some point the problem isn’t with your seventh wife. At some point the problem is with you.

I think we would all agree that the law business today isn’t easy. (I’ll leave the marriage part to TMZ).

And now a brief look at Exhibit B. To see another example of how business isn’t easy and how consumers play a big hand in it, we need only to look just down the street from LegalTech. To something that’s starting literally as I hit “publish” on this.

Today Research in Motion will announce its new BlackBerry 10 (handsets and operating system). If you show me a lawyer who never used a BlackBerry, I’ll show you someone who still has his first Etch-a-Sketch. In fact, I’d wager that at LegalTech there still are a number of BlackBerry users in attendance, hoping against hope that the new versions (including one with a keyboard!) are good enough to stave off the tractor-beam pull of Apple’s iPhone.

But BlackBerry hasn’t released a new handset in 18 months, which is like a decade in tech:

RIM’s market share has eroded substantially since it last released a new phone in August 2011. Apple and Android accounted for an estimated 87.1% of global smartphone shipments in 2012, up from about 68.1% in 2011, according to research firm IDC. RIM’s share, meanwhile, fell to 4.7% last year from 10.3% in 2011, according to IDC.

[Source]

For the longest time, BlackBerry relied on its dominance in the enterprise market and would dismiss “consumer” products as not fit for corporate use, not secure, and not whatever else they could throw up against the wall.

For the sake of competition, I hope the BlackBerry 10 lives up to the pre-launch hype. One lesson for people involved in legal technology is this: if a powerful company (RIM) and a pervasive product/software combo (BlackBerry) can stumble mightily, then there is hope for all of us who want to compete, and trepidation for those of us facing competition.

[Quick update @ 10:45 am EST: the company’s now “Blackberry” so long RIM; and here’s the two new handsets]:

For now, back to the exhibit hall! There are bags and pens and notepads for everyone!!

This is the definition of discount typically at issue in the corporate legal space:

A reduction made from the gross amount or value of something: as from a regular or list price.

Aha! There’s that pesky “value” word. Just when we thought we were making progress. Note the concept of “regular or list price.” High-end law firms employing top-shelf lawyers would argue that nothing they do is “regular” and “list price” is their our invoice says it is, and not a penny less. “We’re like Apple in legal” they say.*

Really? For every matter you work on? For all 1,000+ lawyers?

But today I want to look at a different sense of discounting, something more like this:

To leave out of account: disregard; to minimize the importance of.

Outside counsel and In-house counsel approach this sense of discounting from different perspectives. Today a look at outside counsel; in a few days, I’ll return the favor to in-house counsel.

Lawyers in larger law firms discount; here’s a broad brush approach to four discrete groups:

1. Managing Partners: They can discount how much pressure competition is placing on firm clients, and how this affects the procurement of legal services. Some partners with key client relationships tell me that the response they get from managing partners or firm CFOs on discounts (yes those discounts) or AFAs is “We’re better, sell harder. I did.” Perhaps, maybe ten plus years ago, which in the dog years that frame legal change is more like 30.

2. Key Client Partners. This group is the point of the spear in enterprise legal these days. They find the clients and mind the clients. Some may be discount the reality that most GCs can get service X from firm Y or Z (and soon many others). They can also discount the fact that some services that experienced monthly demand may become more episodic. GCs who pay top dollar for all services all the time are known as “ex-GCs” in the industry.

3. Subject-Matter Expert Partners. These partners used to be seen as the real core of larger law firms. Their value was forged in a crucible that mixed the ore of high-end knowledge with the heat of consistent deals, cases or controversies. Alas, what this group sometimes discounts is the fact that when you are seen as a mile deep and an inch wide, it doesn’t take much to knock you out of the game.

4. Hail-Fellow, Well-Met Associates. They are hoping to get to (3) soon, and maybe (2) someday. Or land a gig in-house. There is a lot of virtual ink spilled on the plight of law students these days, and what the future means for them. It’s fair to look closer at law firm associates, since the firm probably doesn’t need more of those in group (3) generally, and jumping the shark to group (2) directly is really hard early in a career. Group (3) can hoard work and not want to train “cheaper rivals;” group (2) wants to grant them some client contact, but will be in hot water with group (1) if anything goes wrong.

So the take-away is this: before you look at a discount in terms of price, consider what you yourself may be discounting in terms of your honest view of the enterprise legal market today. Where do you fit in? Where is your firm or practice specialty headed? What are your competitors doing? (If you think you don’t have competition, it’s OK, but only if your name is Martin Lipton).

Price discounts are a lagging indicator of many decisions that happened much earlier. Next time, a look at what in-house counsel are discounting, and how this factors into what law firms are (or should be) doing.

____________________________________

* NB on Apple: Yes Apple doesn’t discount its latest products and premium prices them to boot. But buried in the latest earnings release was information that Apple’s most supply-constrained product was the two-plus years old iPhone 4. It’s “free” on a two year contract. So a message to all big-time law firms that think discounts are for lesser legal lights: sure, don’t discount. Just be really really confident that your service design and delivery is better than Apple is with its products. And even if you are, somewhere there is a looming Samsung to your Apple.