Hiring good lawyers can be difficult.

To get the right legal advice, you need to find a legal team with the right experience in the right industries within the right jurisdictions.  But also, a firm that has a solid track record, can deliver good value, and provide excellent customer service.

In today’s market, the only way to find the right advice is through networking and relationships.  This is especially true for corporate legal departments.  

But what if it does not have to be that way?  What if all the data is aggregated for you? 

Then, all you have to do is put in your criteria, create a short list, and find the right legal team.  Just like Airbnb, but on a bit-more-complex corporate scale.

Procuring legal advice through a centralized industry intelligence platform is just one of the ways the legal profession is changing. 

To talk about the long term trends, the opportunities, and how one firm is working to build the law firm of the future, I sat down with David Cunnigham, Chief Innovation Officer at Reed Smith.  

David Cunnigham is the Chief Innovation Officer (CINO) at Reed Smith, where he is responsible for building and executing the firm’s innovation strategy.  This includes creating a global network that will help achieve a smarter, faster, and better law firm.  

Over the last 20 years, David has helped more than 200 law firms improve – both with growing revenue and cutting costs.  He is at his best when he is leveraging data and analytics to drive real business impact.  He is also the founder of a business performance metrics benchmarking clearinghouse that has the potential to alter the industry.

What follows below is a condensed and lightly edited version of our interview.

David, thank you for joining us today.  If it is okay with you, let’s start with data.  How is data impacting the legal industry?  

David Cunningham:  Mustafa, thank you for having me.  It’s good to be here.

As to your question, data is fundamentally changing the way our industry works.

It is impacting the entire supply chain – what our customers want or need, who they partner with, how projects (what we call matters) are allocated across law firms, who does what type of work, and for how much.

It is impacting everything.  

Can you give me an example?  Lets take your customers.  Who are they?  And how is data changing their wants and needs?  What are they expecting from law firms now?

DC:  At Reed Smith, we usually work with the legal departments of large companies, private equity, and high net worth individuals. 

Of the three, legal departments make up the biggest source of our work, and they are becoming more and more mature and demanding in how they make buying decisions.

For example, it used to be that work was won based exclusively on the relationships between the lawyers and heads of legal departments.  These relationships and the trust they build over time still matter.  But, in addition, our customers want to see data to help them with buying decisions.  Who are the best lawyers for the job?  Who has the most expertise in this type of work?  Does the firm build a diverse workforce?  What are the results and value of their work?

In fact, in many situations, data is so granular that our customers can search for lawyers who have had experience with a certain matter or judge and see how successful they were in that scenario.  

It does not stop there.  In a big matter, clients use data to break the work down and determine who actually should be doing each type of work.  So, legal departments will perform certain work themselves (some departments have hundreds of lawyers), and award other work to big law firms, specialist vendors for ediscovery, and smaller or regional firms with very specific niches.  

Overall, our clients use a lot of data to figure out who to buy from and how they can keep their costs down.   

Got it.  Is this the reason why you are seeing such a rise of alternative law firms?  Forgive me if I am not using the right terms, but since clients are using data to make buying decisions, and can be more picky, can they now farm out work to others who are not lawyers?

DC:  Yes, that’s right. 

Our clients can disaggregate work, and not all work has to be done by lawyers.  New types of service firms – which we usually call a “law company,” instead of a “law firm,” because they are a corporation rather than a partnership – have grown quite substantially.  

These companies don’t have to be a law firm to do a lot of the work.  They can hire lawyers and ediscovery people, and they can charge lower rates for some types of work.  

A lot of it has to do with the way law firms are structured.  In the U.S., the American Bar Association limits the owners of a law firm to lawyers, so they can’t accept private equity or go public.  This means that they can’t invest and scale as fast as the law companies,  because the law companies can get external funding.  This is changing in some states, but it hasn’t yet substantially impacted the market. 

Although these law companies have taken on billions of dollars in work, that still only represent a small percentage of the entire  legal market.  But, they forced the industry to react. 

Some law firms have now formed partnerships with law companies, some have internal divisions that perform similar services, and a few have created a successful law company as a separate but embedded business entity, as Reed Smith did with Gravity Stack.  Our approach is meant to help address the breadth of what clients need, while keeping work fit to the right cost resources, and not forcing clients to manage matters across several companies.

It’s amazing how data can have such an outsized impact on the entire industry.  Let’s zoom out 5 to 10 years from now.  What is in store for your industry?

DC:  Well, if we take the above trends to their natural conclusion, I can see a future where legal work is sourced using a more centralized set of data and/or service.  Like an Airbnb-style flip of the market, but in slow motion.

Think about it.  Fifteen years ago, if you wanted to stay in a bed and breakfast, you would have to visit dozens of different websites, read their marketing material, and pick the best one without much context.  Airbnb came along and flipped the market.  They said no, just come to one site, we have all the data and information you need to make informed decisions.

The same transition is already underway in the legal market, but in very early stages.  Instead of shopping for individual firms via their websites and RFP responses, you flip that and use more centralized search insights.  Legal is too big and complex for a single service to a sole provider, so there will always be choices.  These capabilities already exist in smaller forms, but we are so early, that big parties and big money haven’t made their moves yet.  

These evolutions will be disruptive.  But to an innovator, they are an opportunity to help build a firm that will get the maximum benefit from that very different future. 
   

Wow! That would be awesome.  I am assuming that, in this scenario, you can probably drill down to the most granular level, allowing legal departments to not only find the best lawyers but also at the best price?

DC:  Yes, although it is also much more complex, because legal services are not simply commodity products.  We need to understand scope, complexity, priority, speed, parties involved, outcomes, satisfaction, reputation, similar deals or transactions, and many other factors.  But these are all part of the data analysis that is underway every day.  Creating greater access and insights with this industry information would be a big change.  

We have so much data in our industry, but it’s hidden within firms, often in silos.  By creating centralized intelligence sources, we can bring it all together and improve, not just transparency, but value.

Let’s switch gears for a minute and tell me, how are you responding to the industry changes?  How are you planning to use data?  

DC: This is where I spend most of my time.  

For innovation, we have 99 initiatives.  Many of them have to do with getting insights from our data to our lawyers.  And if you break them down further, they all fall under four major categories as a balanced scorecard.  

On the top, is our focus on the customers’ perspective.  We need to understand them, their industry, and their strategic business risk issues.  But we also want to put ourselves in their shoes to understand their objectives and how they measure our performance.  Basically, we need to know how to make our customers successful and always be able to tune ourselves to get A’s on their report cards.

On the right is all about how we run a growing, profitable business.  Think of this as how we improve win rates, get bigger deals, grow with our existing clients, increase profitability, and scale the pipeline.  It’s basically the quality and fit of the demand coming in.  

On the bottom is really about supply and building great talent, which is not just about hiring, it’s about our entire talent lifecycle.  This includes integration of new talent, predictive modeling for the allocation of work, impacting diversity and inclusion, matching recruiting and learning to our incoming work, and engaging our talent in process changes over time. 

As I mentioned earlier, we have a lot of focus on blending traditional and “alternative” (i.e., non-partner track) resources on teams.

And, on the left is our focus on process disruption.  We’ve recently created an Innovation Lab, which is a virtual space for discovering, incubating, and accelerating creative ideas at the firm and alongside clients.  The head of our Lab has a PhD in Anthropology, which reflects our desire to study ourselves, ask what the customer is trying to accomplish, and be willing to think of new ways to provide the results.     

That is a large portfolio.

DC:  Yes.  It keeps us very busy.

One more thing to add.  All of these innovation initiatives are matched up to the firm’s strategic balanced scorecard.  We want to make sure that every initiative has an impact on the firm’s most important metrics.  

It almost looks like you are building a platform for the law firm of the future.  

DC:  That’s right.  It really is.

Any particular initiative that you would like to highlight?  One or two that could completely change the way the firm operates?

DC:  We have quite a few initiatives that are just focused on running a better business.  These include solutions for automating our business processes, making it easier for our teams to collaborate, and creating a knowledge sharing environment.  These are not necessarily game-changing solutions, but ones that make it easier for our lawyers to focus on their work, which is a real asset to helping them be successful.  Fewer interruptions and less time searching for things is gold for a busy partner.  

One initiative that I do think could be a game-changer for our firm is the personalization of insights.  For example, one of our key personas is the “partner who is a leader.”  The goal is to provide them with insights, not dashboards, about their industry, practice, or firm that is relevant to their leadership role.  We want them to have actionable information about client needs, hiring decisions, cross-selling opportunities, and other leadership guidance.  

Really, the ultimate goal is to connect all of these systems.  We have systems for HR, recruiting, accounting, matter management, analytics, and more.  There is data in all of them, and the plan is to bring them to our leaders in more personalized ways.  

Another game changing aspect in several of our initiatives is that we’re thinking from our clients’ perspectives.  If we know the metrics by which they hold us accountable, then we can both focus on achieving them.  

Agree.  There is a lot of good data locked within these information silos.  To be able to break down the walls, connect them, and then turn them into actionable insights would be fantastic.

DC:  Absolutely.  

And, since we are focused on big companies and our employees, we know them very well.  We don’t have to guess their attributes via cookies.  Lawyers even track their time in six-minute increments!  We mine time entries, documents, public filings, court data, global research databases, and matrices of relationships.  Legal is a uniquely well-documented industry.  So, we know the clients our lawyers manage, their experience over their career, and what information they need to absorb.  

This allows us to work through a roadmap of algorithms.  We have indexes for client health, client risk, and the warmth of relationships.  We’re getting more predictive in how we propose the right legal teams for key matters, how we price our work, and which partners to hire from other firms.  But, it’s still early days.  

It sounds awesome.  And I wish you the best of luck.  Also, if you are open to it, I would love to have you come back and share with us the results and impact of all your initiatives.  
DC:  First of all, thanks for having me.  This was a lot of fun.  And yes, it would be great to come back as a guest.