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The Legal Profession's Last Mile Problem, August 2017

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The legal profession's last mile problem is not technological. Rather, it is the lack of business models that reliably reward increases in legal productivity. This slide deck contains several figures that correspondence to a series of articles published on Law.com. For additional information, see http://www.legalevolution.org/2017/08/honest-informed-conversations-019/.

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The Legal Profession's Last Mile Problem, August 2017

  1. 1. The Legal Profession’s ”Last Mile” Problem William D. Henderson Editor, Legal Evolution Professor, Indiana Univ. Maurer School of Law
  2. 2. Current Solutions: 1. Plain old telephone systems (POTS) 2. Integrated Services Digital Network (ISDN) 3. Digital Subscriber Line (DSL) 4. Cable / Cable Modem (coaxial cable) 5. Wireless (cellular & satellite) 6. Optical fiber Source: TechTarget, “Last Mile Technology” “Last Mile” Local Exchange Core NetworkStreet Cabinet Copper sub-loop Fibre Telecommunications
  3. 3. doubles lawyer productivity 20 in 10 Box © Legal Evolution PBC
  4. 4. 20 in 10 Data, Process, Technology © Legal Evolution PBC $5 million 12 months to build
  5. 5. 20 in 10 © Legal Evolution PBC “How will we price the work?”
  6. 6. 3 Options Option 1. Client pays for 10 hours. No increase in hourly rates. Option 2. Client pays for 10 hours. Firm doubles rate ($400 to $800/hr) Option 3. Share the benefits: a. Firm / client split 50/50. b. Firm gets more a lot more volume Complex Technical Sales
  7. 7. “Last Mile” for Legal Profession is not technological We lack Business Models that reliably reward higher lawyer productivity © Legal Evolution PBC
  8. 8. Acme Inc. • $2 Billion global widget company • Revenues increase 5% per year • $10 million legal budget • Budget increases 5% per year • 10,000 units of legal complexity • Now pays $1,000 per unit © Legal Evolution PBC
  9. 9. $1,000 To Resolve … Legal Complexity 1 unit © Legal Evolution PBC
  10. 10. Regulatory Complexity
  11. 11. Tax Complexity
  12. 12. Acme Inc. • $2 Billion global widget company • Revenues increase 5% per year • $10 million legal budget • Budget increases 5% per year • 10,000 units of legal complexity • Now pays $1,000 per unit • Complexity increases 10% per year © Legal Evolution PBC
  13. 13. 10,000 11,000 12,000 13,000 14,000 15,000 16,000 $10,000,000 $11,000,000 $12,000,000 $13,000,000 $14,000,000 $15,000,000 $16,000,000 2017 2018 2019 2020 2021 UnitsofComplexity LegalBudget Forecast of Acme's Legal Budget and Legal Complexity 2017 to 2021 Legal Dept's Budget © Legal Evolution PBC 5% growth
  14. 14. 10,000 11,000 12,000 13,000 14,000 15,000 16,000 $10,000,000 $11,000,000 $12,000,000 $13,000,000 $14,000,000 $15,000,000 $16,000,000 2017 2018 2019 2020 2021 UnitsofComplexity LegalBudget Forecast of Acme's Legal Budget and Legal Complexity 2017 to 2021 Legal Dept's Budget Cost @ $1000 per unit of complexity 10% growth © Legal Evolution PBC 5% growth
  15. 15. Two ways to frame solution: A) Lower hourly rates B) More complexity managed per hour © Legal Evolution PBC
  16. 16. $1,000 $955 $911 $870 $830 $0 $200 $400 $600 $800 $1,000 $1,200 2017 2018 2019 2020 2021 Cost per Unit of Complexity needed to Stay within Budget © Legal Evolution PBC
  17. 17. $1,000 $955 $911 $870 $830 $0 $200 $400 $600 $800 $1,000 $1,200 2017 2018 2019 2020 2021 Cost per Unit of Complexity needed to Stay within Budget © Legal Evolution PBC 20 in 10
  18. 18. $100 To Resolve … Legal Complexity 1 unit © Legal Evolution PBC $830
  19. 19. 27% 46% 203% -25% 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% % Change in Number of Employed Lawyers by Practice Setting, 1997 to 2016 Law Firms Government In-House ©️Legal Evolution PBC
  20. 20. honest & informed informed but not fully honest honest but not fully informed neither fully informed nor fully honest 1 2 3 4 ©️Legal Evolution PBC
  21. 21. Project Life Cycle Concept Definition Planning Execution Closeout EFFORT EXPENDED IN PLANNING Adapted from James P. Lewis, Fundamentals of Project Management (3nd ed. 2007) Effort Time
  22. 22. Project Life Cycle Pain Time Adapted from James P. Lewis, Fundamentals of Project Management (3nd ed. 2007) planned project unplanned project planned pain apex unplanned pain apex
  23. 23. 3 Options Option 1. Client pays for 10 hours. No increase in hourly rates. Option 2. Client pays for 10 hours. Firm doubles rate ($400 to $800/hr) Option 3. Share the benefits: a. Firm / client split 50/50. Or b. Firm gets more a lot more volume An honest, sophisticated dialogue on value
  24. 24. Thank You @wihender bill@legalevolution.org

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