Jack Newton is the founder of Clio and a pioneer of cloud-based legal technology. Jack has spearheaded efforts to educate the legal community on the security­, ethics­ and privacy­ issues surrounding cloud computing, and has become a nationally recognized writer and speaker on these topics. Jack also co-­founded and is acting President of the Legal Cloud Computing Association (LCCA), a consortium of leading cloud computing providers with a mandate to help accelerate the adoption of cloud computing in the legal industry.

How satisfied are your clients? The data indicates most lawyers don’t know. When we surveyed nearly 2,000 lawyers in the U.S., we discovered 37 percent don’t collect client feedback at all — and for the firms that do, 42 percent collect feedback casually and informally in person, meaning they may only be hearing positive feedback affected by courtesy bias. The implication of this is that poor client satisfaction could be the most critical blind spot for today’s law firms.

Poor satisfaction is what ruins businesses. If your clients aren’t satisfied, there’s little chance they’ll hire you again or recommend you to someone else — and they may even deter others through word of mouth or negative online reviews. It’s a bad prospect for any law firm that wants to succeed.

On the other hand, the types of businesses that thrive in today’s digital economy are the ones obsessed with customer satisfaction. The internet has leveled the playing field, and your competitors are just a click away for your prospective clients; more than ever, your clients need to see a clear reason to hire you over another firm. Law firms that earn the satisfaction of their clients are the ones that see significant momentum in the future success and profitability of their business.

The State of Client Satisfaction in the Legal Industry

To better understand the state of legal services in the 21st century, we set out to assess client satisfaction on an industry-wide scale by using a metric known as a Net Promoter Score (NPS). Research has shown that NPS is one of the most reliable predictors for business growth, and it’s based on more than just satisfaction or loyalty — it’s based on the likelihood to recommend. Given that lawyers typically rely heavily on referrals, NPS should be considered especially salient for law firms.

How satisfied are your clients? The data indicates most lawyers don’t know. When we surveyed nearly 2,000 lawyers in the U.S., we discovered 37 percent don’t collect client feedback at all — and for the firms that do, 42 percent collect feedback casually and informally in person, meaning they may only be hearing positive feedback affected by courtesy bias. The implication of this is that poor client satisfaction could be the most critical blind spot for today’s law firms.

Poor satisfaction is what ruins businesses. If your clients aren’t satisfied, there’s little chance they’ll hire you again or recommend you to someone else — and they may even deter others through word of mouth or negative online reviews. It’s a bad prospect for any law firm that wants to succeed.

On the other hand, the types of businesses that thrive in today’s digital economy are the ones obsessed with customer satisfaction. The internet has leveled the playing field, and your competitors are just a click away for your prospective clients; more than ever, your clients need to see a clear reason to hire you over another firm. Law firms that earn the satisfaction of their clients are the ones that see significant momentum in the future success and profitability of their business.

The State of Client Satisfaction in the Legal Industry

To better understand the state of legal services in the 21st century, we set out to assess client satisfaction on an industry-wide scale by using a metric known as a Net Promoter Score (NPS). Research has shown that NPS is one of the most reliable predictors for business growth, and it’s based on more than just satisfaction or loyalty — it’s based on the likelihood to recommend. Given that lawyers typically rely heavily on referrals, NPS should be considered especially salient for law firms.

Calculating NPS starts with asking a cohort of clients a standardized question: On a scale of 0 to 10, how likely are you to recommend your lawyer to a friend or colleague? You then calculate the percentage of respondents who answered within the 0 to 6 range (known as “Detractors”) and subtract that from the percentage that responded with a 9 or 10 (known as “Promoters”). Those responding with 7 or 8 (known as “Passives”) neither subtract nor add to an NPS. What you’re left with is a minimum score of -100 (100% Detractors) and a maximum score of 100 (100% Promoters).

For perspective, some of the most successful businesses in the 21st century have achieved incredible growth based significantly on highly favorable NPS. These companies (and scores) include Amazon (62), Netflix (68), Apple (76), Starbucks (77), and Costco (79).^[1]

Where does NPS net out for the legal profession? After collecting data from a cohort of over 1,300 American consumers on their experiences working with a lawyer, we calculated a benchmark NPS of 25 for the legal profession as a whole. This is based on a breakdown of 48% Promoters, 30% Passives, and 23% Detractors. While nearly half of clients would highly recommend their lawyer, nearly a quarter of all clients would actually dissuade others from their lawyer.

While an NPS of 25 isn’t entirely bad, it’s nothing to celebrate. Other industry benchmarking studies put this number at the same level as airlines (26), banks (26), wireless carriers (25), and credit card companies (23)—none of which are known for exceptional service.^[2] The deeper implications imply that poor client satisfaction is hindering growth in the average law firm.

The Power of Satisfaction in Driving New Business

In speaking with countless lawyers and other legal professionals, one of the most common sentiments they share is that managing a business is incredibly difficult. Most wish it were easier.

One of the most difficult challenges for lawyers is generating business for their firm. Many see this as an uphill battle, where every step is a part of a grind that never gets easier. The problem with this mind frame is it fixates on effort as a burden. But effort is only one side of the equation, one that’s focused entirely on inputs. On the other side are your business outputs. Unlike inputs, which are a limited resource, the work put into maximizing outputs can have exponential returns. In other words, rather than putting more effort into your business, think about how to get more returns from the effort you already put in.

The business researcher and consultant Jim Collins has written and spoken prolifically about the concept of “the flywheel.” The idea behind the flywheel is that it takes a sustained and constant effort to build momentum; but once that wheel starts to turn, it serves as an energy store, and maintains much of its momentum even once force is no longer applied to it. The wheel wants to turn of its own volition, and any ongoing effort only speeds it up. The effect is a perpetual compounding of return-energy for every bit of continued effort.

The key to developing a flywheel effect for your business is to (1) understand what components will build momentum and then (2) aligning your efforts in the right direction.

Which brings us back to NPS. Client satisfaction, reputation, referrals, and repeat business are all components that build off each other to create momentum and drive law firm success. A positive client experience will drive more repeat business and referrals, which in turn will bring more clients to your firm, who in turn will drive more repeat business and referrals. Success begets more success. This is the client experience-driven flywheel in motion, and it's one of the most powerful growth levers law firms have at their disposal.

What contributes to positive client experiences? Our NPS research demonstrated a strong connection between NPS and factors that were intrinsically related to the ease (or difficulty) of working with a law firm: ease in understanding case expectations, bedside manner, and overall responsiveness to communications. Since the growth prospects of any law firm rely so heavily on client satisfaction (as measured by NPS), focusing on client experiences should be how lawyers think about their future success. 

Forecasting the Future of Success in the Legal Industry

The legal industry is transitioning in a way similar to any other during times of rapid technological change. The key to weathering these changes — and prospering through these times — is to recognize where problems lie and what efforts will have the most returns in solving them.

Today, technologies are unlocking new opportunities for lawyers to get more from their efforts. With these opportunities, lawyers have more options for how they structure and deliver legal services, and in how they design client experiences. Technology also has the potential to provide better data in understanding what’s working in today’s law firms and what needs improvement.

It’s an exciting time to be practicing law, but it’s also a time that will require firms to focus on client experience in order to be truly successful.

Rees W. Morrison is Guru for Online, Law-Related Surveys and was  a principal of Altman Weil, Inc. He has more than 25 years of experience advising law departments on cost control, department structure, process improvement, outside counsel management, performance benchmarking, and other key issues. He also specializes in data analytics for legal organizations.

   Before joining Altman Weil, Mr. Morrison consulted independently for five years and held partnerships at several legal consulting firms, including an earlier tenure at Altman Weil from 1998 to 2002.  He has had several in-house positions including Business Manager for Google’s law department and Consulting Assistant to the General Counsel of Merck. Earlier in his career he was vice president of two software firms, and an associate at Weil Gotshal & Manges and two other New York law firms.

   He has written extensively on law department management, including nearly two-hundred articles, six books, and a well-known blog on law department metrics. For two years he wrote a bi-weekly column, Morrison on Metrics, for InsideCounsel. Among his books are “Law Department Benchmarks: Myths Metrics and Management”; “Client Satisfaction for Law Departments”; and “Law Department Administrators: Lessons from Leaders.”
   He is a Certified Management Consultant (CMC), a member of Scribes (The American Society of Legal Writers), a fellow of the College of Law Practice Management, and has been on the Board of Advisors of legal publications Corporate Counselor, Law Department Management, and Metropolitan Corporate Counsel. A Life Fellow of the American Bar Foundation, he has participated in the ABA's Law Practice Management Section and ACC’s Law Department Management Committee. 

   Mr. Morrison graduated from Harvard College in 1974, earned his law degree from Columbia Law School (1978) where he was a law review editor, and received an LLM from New York University Law School (1984)

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Day after day, law firm partners and managers confront operational problems, think about them, and make choices about what to do or not to do. In other words, they decide something. They would make better decisions if they took into account the data available to them. If they collect metrics and weave them into their deliberations, the outcomes will be both sounder and easier to explain.

Two subtler and broader advantages from decision-making that incorporates numbers should be emphasized. First, it encourages a different way of thinking about decision-making than traditional approaches. Make it a practice throughout the firm to ground arguments in data and to present arguments buttressed with numbers, or else accept that a resolution rests on power, values, or ideology more than quantifiable evidence.  

Second, being mindful of data is being mindful of what you do. This is a deeper benefit arising from a law firm’s receptivity to data. A general awareness of metrics helps lawyers and others in law firms take stock of their processes, describe them and their output in more tangible, numerate terms (“15 10Ks reviewed this month” rather than “Lots of 10Ks”). They become more aware and reflective about what they are doing and how they might do better.

But let’s consider our claim — “data helps decision-making” — and ground it by walking through a scenario for a management decision. Assume that three partners want to figure out whether to hire another paralegal. Further, assume that the partners disagree. Their decision will improve if they marshal relevant data, analyze it effectively, and apply it to their discussion. How can numbers help them objectively think through the problem and potential solutions better than they would have without? Here are five ways.

1.   Sidestep Cognitive Fallacies. 

Data can counteract many of the cognitive biases that afflict decision-makers. Often we are unaware of the gremlins in our minds that attack what we believe to be our clear-headed, balanced evaluations. Consider four well-known cognitive fallacies and how data might correct for them:

Framing: An antidote to framing could be benchmark data on paralegals per lawyer in firms.

Salience: To blunt its potential impact, someone could gather articles that report average lawyer/paralegal ratios based on surveys of many companies.

Confirmation bias: Perhaps the partners’ practice group submitted the mixed evaluations on a survey of paralegals, which would be data that challenges a one-sided view.

Risk aversion: A risk-averse partner may argue for more paralegals because the group never wants to be over-extended; past data on large bumps in hours might dispel the concern.

2.      Uncover and Query Empirical Assumptions.

When people make decisions, they often neglect to articulate the factual assumptions on which they base them. Worse, they may not even realize that they have been motivated by unstated (and usually untested) beliefs about how common something is or how much there is of something measurable. For example, one partner might accept on faith that lawyers will delegate work to paralegals, while another could trust without verifying that it will be easy to find, hire, and retain capable paralegals. If underlying assumptions such as these are not identified and if there is no data either way, decisions will likely be weaker (and take longer).

3.     Disrupt Entrenched Convictions.

As data becomes available for decision-makers, they should incorporate it and change how they view the probability of being correct. In a Bayesian view (a fundamental technique of statistics), new data changes what are called priors and helps make predicted outcomes more accurate. New findings and facts should cause thoughtful people to recognize and reconsider their animating beliefs.

4.     Delay Premature Conclusions.

When making a decision, it is crucial not to seize upon the first plausible solution to the problem. Much better, instead, is to keep exploring alternative possibilities. Data helps stimulate new possibilities to address a problem or to encourage managers to think about the problem longer.

5.     Counter Peer Pressure.

In groups, solid data can serve as a talisman against the fancy (or loutish) talker, the zealot, or the high-ranking executive. A partner who disagrees with her colleague might be more inclined to back them if some metrics bolster the point.

This is not to claim that good data automatically means good decisions. It is to claim that operational data can frequently help steer managers to reach a sounder decision. To be sure, the toughest decisions tend not to have decisive metrics. But even the gnarliest decisions — those that entangle personalities, tradition, long-term visions, or fights over fundamental values — can benefit from whatever dollops of data are available.  

1.       What Data Do Law Firms Have That Can Contribute to Better Decisions?

Analytic tools require data, and law firms have data sets aplenty. From this author’s recent book, “Data Graphs for Legal Managers,”[1] the table below shows a wide array of firm data.

A.     Types of data law firms have.

Starting with such internal data, firms can mix in information from other sources, possibly within the firm or from data outside the firm. As for client information, supplemental information might include whether it is publicly traded, whether it has an in-house law department, its revenue, the number of employees, SIC codes, and more. For example, you might want to combine time and billing data or input information from your HR system. Years of experience or academic degrees of timekeepers could be mixed in from the firm’s HR database. 

B.     Repositories of data.

All this potentially useful data lives in paper files, people’s memory, time and billing software, customer relationships software (CRM), marketing records, personnel files, exhaust (data that is created by someone doing something else, like making phone calls or scheduling conference rooms), general ledgers, status reports, surveys, and counts of all kinds of events. A law firm that wants to capitalize on data needs to extract and store it in databases, spreadsheets, in the cloud, or wherever it can best make use of it.

C.      Data cleaning.

            A key part of data analytics is the unglamorous slog of grooming it for analysis.  Software can help users correct the data, such as when there are missing or highly unusual values, the latter being what data analysts call outliers.

Clean data also cannot have too many missing values or different styles in cells of the same column. If the fees column has cells with a dollar sign and other cells without the sign, for example, the software might stumble. If some cells in the spreadsheet show “NA” when data is not available, but others show “—“, you need to clean that. Clean data is also reasonably accurate data (it was not a data entry error that some associate billed 4,299 hours last year!) and not pockmarked with bizarre values.

Still, you can actually do useful analyses and, more fruitfully, make predictions with modest amounts of data. For example, with a spreadsheet having details on 50 or more closed cases or matters of a similar type, you can infer a great deal.

2.     What Are Potential Uses of Data Analytics by Law Firms?

Metrics and their exploration can benefit law firms everywhere that partners contemplate management decisions. The next section sketches several decisions that could benefit from data analysis and metrics.

A.     Increase Revenue.

The recent surge in law firms collecting, analyzing, and visualizing information aims —quite understandably — to increase firm revenue. Why, managing partners ask, should we invest the time and money to do predictive analytics (AKA machine learning) if we don’t expect to hear the cash register ring? That goal of increased fees (or improved profitability) makes sense. It also orients firms to focus analytic tools on substantive legal analyses. Much can be done to transform the straw of data into the gold of profitable clients, practice groups, or billing arrangements. Analyzing cost drivers of lawsuits to make more money on fixed-fee arrangements would be an example.

B.     Retain and Wisely Promote Associates. 

One benefit of data is when the firm is hiring lawyers. When firm ambassadors make their pitch to hire associates or lure lateral partners, they deserve to be able to describe the firm glowingly and convincingly. Solid, impressive numbers on growth, revenue, quality, and associates, not to mention clients, persuade recruits, especially when made clear with effective graphs. Or they will let machine-learning software loose to study who makes partner and why, or to tackle attrition in terms of which desirable associates are at risk of leaving the firm.

C.     Improve Firm Operations. 

A number of benefits of predictive data analytics should be recognized in the domain of law firm operational management. As much as managing partners want to grow or increase profitability and bring in more fees and add more lawyers, they may overlook or discount secondary uses of law firm data for running the firm as leaders focus almost exclusively on the short-term return on investment in business development.

Facilities. Another use of data arises frequently in infrastructure planning. Should we sublet additional space? Should we move to another location or open a branch office? Sometimes there are questions about installing a larger server or rewiring the existing offices. Answers to questions like these, and decisions made thereafter, are wiser when there is data available to support them. 

Proposals. Almost every Request for Proposal that a firm receives asks for data. The law department that issued the RFP wants to know about diversity, or about practice groups and their numbers of lawyers, or about the size of transactions handled recently. It is efficient to have the raw data already compiled and curated in a spreadsheet or database. 

Press Relations. When reporters call, the partner who responds will make points more tellingly if they can rapidly cite reliable facts about the firm or topic. “Almost 40 percent of our clients do business in more than 10 countries” impresses reporters far more than getting back two days later with “Lots of our clients are multinationals.” The first statement, with its impressive precision and prompt delivery, can only be made if the appropriate numbers have been tracked, analyzed, and made available. 

Vendors: Any time a law firm considers buying something, it will make sounder decisions if it precedes the decision with tallies and tracking. Do we need to buy more user seats under a software license? Have people made sufficient use of the expensive subscription? Research into these kinds of questions pays off; research should be captured as data for decisions.

Law firms focus on data associated either with client matters, or with the effective deployment of their own lawyers and staff. They won’t regard their spending on vendors as nearly as vital as matter productivity, investment, and outcomes.

3. What kinds of analytical tools are available?

Some partners in law firms may not be aware of the full panoply of data analytics that their firm might employ. Let’s briefly review eight different analyses that software can produce.

Descriptions and summaries of data.

At the most basic level, software can take data, such as the billable hours of lawyers, and describe with varying degrees of summarization the key numeric features of the data. Software can calculate the average billable hour, the median of the billable hours, or how dispersed it is (usually expressed as standard deviations). Software can pick out the lowest value and the highest, break them into groups (called quantiles), and tell us ranges. Contingency tables can also illuminate the data. Furthermore, software can depict those features of the data in graphics, such as histograms, density plots, scatterplots, and bar charts.

Correlations between variables in the data.

It may be useful for legal managers to see how one variable (an element of data tracked for every associate, client, lawyer, or whatever) moves up or down in relation to the average when another variable changes. Thus, for instance, the software can show the correlation between the number of matters worked on by a lawyer and billable hours reported. A correlation tells you whether there is an association between two variables, how strong it is, and in what direction the variables move. It is a positive correlation if both numbers move in the same direction (such as higher billable hours and higher bonuses); it is a negative correlation if the numbers move in the opposite direction (such as higher billable hours and lower psychological well-being).

Comparisons of averages and differences.

Several statistical tools can detect whether the difference between two or more numbers has significance mathematically. So, for example, there are many techniques to tell whether the average billable hours in a year between two offices of a law firm vary enough for managers to consider intervening and taking some action. These tools, such as ANOVA and the Student’s T-Test, help to determine whether variations are important enough to deserve discussion.

Measures of inequality.

Managers of lawyers may want to assess the quality of a set of numbers, such as bonus distributions. Along with the well-known Gini coefficient, several other measures allow software to put a number on inequality and even pinpoint where in the set of numbers the actual data diverges from theoretical equality. These analytics help managers explain their decisions and make better decisions in the first place, if equality is sought.

Understand influence of variables and make predictions.

A whole family of regression tools goes beyond correlations. If, for example, a firm wants to predict the estimated amount of fees to be paid to it during the coming year, it could run a linear regression. The software would then point out which of the variables was more influential in predicting total fees paid and how much of the total fee paid is accounted for by the variables. One of the best-known techniques is multiple linear regression. It makes some assumptions about the relationships between whatever value is being predicted and the variables that are associated with it (e.g., level of the person retaining the firm, presence of a law department, range of practice groups involved, and years as a client).  

The regression algorithms generate a “model.” Once you have a model, you can extract information from it. A model often takes in data and makes predictions regarding new cases, clients, or matters. Think of a model as the software learning on a “training set” of data that has been labeled, such as settled for less than $10,000 or not) and applying that learning to predict something (maybe total fees) for a new case or example. With multiple regression, naïve Bayes algorithm, or neural nets prediction is a common output. For example, given a few dozen instances of a type of lawsuit, any of those machine-learning algorithms could predict the likely cost of a new matter once sufficient information is available and tell you how probable that cost would be. 

As another example of machine learning, a regression model might explain and forecast how fees and hours devoted to five common litigation tasks are associated with outcomes and therefore can predict the likely outcomes for the next case that can identify the corresponding data. Moreover, the machine-learning software can tell you which of the five tasks underpin the strongest association with the outcomes as well as how confident you can be that your prediction is correct. 

Extracting insights from text.

Words in documents can be handled statistically by software as text mining. When a survey returns free-text comments, for example, software can pick out not only which terms are used most frequently, but also assess the sentiment (the positive or negative vibes of the comments). Even more powerful are the algorithms that can assemble words from the survey comments into topics. A person has to examine the words and identify the actual topic, but the laborious work of parsing all the documents and doing the math can be done quickly by the computer. If you want to show off, mention latent Dirichlet allocation (LDA) as your topic-modeling algorithm of choice! 

A second form of machine learning would be at work when text mining software takes thousands of emails, identifies patterns in words such as repetition or proximity to each other, or pores through email messages to tag possible indicators of insider trading.

Classification and clustering.

Whenever a law firm or law department has collected a set of data, it can use a range of software tools to cluster the observations. This means that the software brings together related clients, matters, or law firms based on the information available to it about them. Once the software has clustered the observations, managers can more easily detect patterns and understand similarities and differences. A chart known as a dendrogram can depict the clustering of data and how clusters relate to each other. Somewhat similarly, software can classify observations into similar groups. Both of these types of analytics help partners see patterns that they could not otherwise detect from a massive set of data.

Other models can also classify new observations into the most appropriately fitting group. With several types of algorithms, including K-Nearest Neighbor or Support Vector Machines, you can classify clients or other data. You would be able, for example, to identify publicly-traded clients or clients likely to reach a certain realization level. 

Other varieties of machine-learning software do not require labels. Their models cluster the data into groupings that will reveal something. For example, they might cluster a firm’s clients by profitability. The K-Means algorithm can do this, and with the Principal Components Analysis you can aggregate “variables” to find out which of them is more influential.

Machine learning.

At this time, the most sophisticated data analytics that can help partners resides in a branch of artificial intelligence known as machine learning. The term encompasses a range of methods by which software chews its way through mounds of data and detects patterns. In one broad category, supervised learning, someone has to classify enough of the instances so that the computer can figure out a pattern. In another category of machine learning, unsupervised, the computer “does its own thing,” so to speak. The output can be a classification, or a regression, or other kinds of results. These tools include neural nets, support vector machines, deep learning, and Bayesian tools, among many others. This field is currently a hot spring of innovation.

4.   What Do You Need to Do to Incorporate Data Analytics More into Your Deliberations?

A.       Your firm needs a partner who is influential and exudes enthusiasm to push the initiative.  Ideally, the champion will proselytize for data analytics and secure funding. Sad, but true; you will need to ante up to find out whether and how your firm can take advantage of machine learning. 

The champion ought to be persuasive, eager to learn something about new computational tools, and adept at conveying a vision of how the firm should take advantage of the evolving capabilities of data analytics for legal management.

The champion will need to handle objections skillfully. Data can actually be feared as conspiring against the humanistic values of the partnership. Many partners in law firms shy away from data analytics because the findings invite divisive comparisons. All data discriminates. Moreover, many partners don’t really want their clients thinking about performance metrics and costs.

At this early stage of law firms exploring predictive analytics, it is very important for someone influential to explain what the benefits are and how the firm can achieve those benefits. The domain of data, software, statistics, programming, and algorithms will be mostly unfamiliar within your firm, and explanations will be welcome. A partners’ off-site conference is a good opportunity to raise awareness and attract supporters.

If IT, a practice group, HR, marketing, and a champion all have roles in a machine learning initiative, it will likely either bog down or take far too much time and money. Each group has a different interest. Someone needs to coordinate meetings, decisions, and timelines.  That project management role might fall to a junior person, or the champion might take it on.

       B.      Programming and IT Support. 

Your firm will also need programming, perhaps from a consultant or an employee.  Programmers and consultants aren’t cheap, but they are crucial. Also crucial is that any coding be work for hire, heavily commented so that someone else can follow the steps and logic, and adhere to the tenets of reproducible research.

People who have not written code for a computer to run probably don’t realize how difficult it is to code well. It is challenging to get a computer to do what you want it to do. This hurdle becomes greater as the sophistication of the programming increases, and sophisticated programming is undoubtedly required to command machine-learning algorithms. 

Your firm will need to choose software that can carry out the analyses. Those algorithms exceed the capabilities of Excel, but many other choices exist. This author relies on the open-source R programming language, which has been optimized for statistical analyses and data visualization. Another open-source choice would be Python. Many commercial packages jostle in the market, including SPSS, Tableau, SAS, and Mathematica.

As with most change initiatives, your firm should start with a pilot study and learn from it before you roll out a more ambitious project. A practice group that wants to be able to predict results, costs, or duration of matters from a subset of its past matters would be a good choice. The HR group might also apply multiple regressions on data to reduce attrition or understand better who makes partner.

    C.      Subject Matter Expert.

Your firm will need a lawyer who not only supports the initiative but also qualifies as a “subject matter expert.” A SME can look at the data set and understand the relative importance of pieces of it, what’s missing or odd, and what the firm might learn from it. A SME can translate in-the-trenches reality to the champion and programmer. For instance, looking at a set of information about certain kinds of cases, a subject matter expert could point out that the tenure of the judge — senior, mid-career, newly appointed — seems likely to correlate with the decision. An SME might also say that the duration of a case is not particularly useful because there are long stretches where neither party takes any actions. Even more usefully, an SME could classify matters as successful, unclear, or unsuccessful so that the software can tease out patterns and influential variables. 

Appendix – Source articles

Portions of this chapter came from the articles cited below, albeit with significant re-arrangement and revisions.

Rees W. Morrison, Mind the Machines: Time to Explore the Potential of Machine Learning, InsideCounsel (Oct. 21, 2016).

Rees W. Morrison, The Math Behind AI, as Explained to Lawyers, InsideCounsel (Dec. 26, 2016).

Rees W. Morrison, Drawing ACES, LegalTech News, L12 (Feb. 2017).

Rees W. Morrison, Making the Machine-Learning Switch, 25 Met. Corp. Counsel 31 (Feb. 29, 2017).

Rees W. Morrison, With Data Analytics, It's Not Always ‘Follow the Money!’, LegalTech News (March 2017).                           

Rees W. Morrison, Fairness Calculations: Letting the Gini out of the Lamp, LegalTech News (Sept. 28, 2017).

Rees W. Morrison, The Power of LDA Algorithms and How They Help Text Mine Your Documents, LegalTech News (June 8, 2017). [Text mining]

Rees W. Morrison, ANOVA Apart: How to Tell If Your Firm Averages are Actually Significant, LegalTech News (Aug. 10, 2017). [ANOVA)

 Legal Operations Director with Nextlaw In-House Solutions and previously served as Prosperoware’s Lawyer in Residence. He has extensive experience in the strategic development, transformation, and direction of operations and technology in a variety of public and private organizations. He previously served as Chief Strategy Officer for a global consultancy and in senior executive roles for a top UK law firm, two AmLaw 200 law firms, and the largest municipal law office in the US. Ben has consulted on projects for multinational organizations including The Walt Disney Company and Chevron and previously practiced law in Chicago where, after clerking for the Federal District Court, he served as legal counsel for the Illinois Department of Professional Regulation. He is a regular speaker on such topics as Data Privacy and Security, Information Governance and Emerging Technologies, and Transformational Trends in Professional Services. He holds a BA in Economics from the University of Michigan and a JD from the University of Wisconsin.

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In the “good old days” of law practice, pricing was a simple concept. It was a sellers’ market, and law firms could name their price. Estimates were used for guidance at best. In fact, a colleague of mine, a former law firm managing partner, regales audiences with tales of how when he first entered practice, his mentor taught him a simple method for pricing work. It was less than exact: At the end of the matter, hold the file of paperwork in one hand and set your price based on the general weight of it (“That feels like it’s about $45,000’ worth of work”). Somehow, that used to be acceptable. Even for those firms that didn’t subscribe to the “weight = cost” formula, a simple ballpark figure quoted along with a minimum retainer accompanied by an hourly rate was commonplace. Firms even passed on a bevy of expenses on top of that formula, charging for faxes, photocopies, long-distance, and other creative concerns. In 2008, that all changed and has continued to evolve.

Firms today need to embrace the best practice of evaluating pricing before a matter is opened, as it allows the firm to have the appropriate enterprise controls. There are two elements to proper pricing of a matter: (1) determining scope (or budgeting) and (2) what pricing or fee type should be used with the matter. Firms are becoming better at the latter but are quite unskilled in the former. Both must be razor sharp and working in concert to form the bedrock of profitability in the new market for legal services.

Legal services has become a buyer’s market, which is why we must reshape profitability. Corporate clients expect the same quality of work but now delivered within price guidelines they set at the outset of a matter. When dealing with outside law firms, there’s no more “guesstimation” in legal billings, and there’s little room to negotiate. A firm’s value is found in the delivery of quality matters at the price and level of expertise they expect. The insertion of price and client-set budgets has upended the law firm business model.

The challenge for firms adjusting to this tectonic shift is that historically, there was little to no understanding of the true cost of delivery for their services, complicating the transition to delivering work — profitably — to budget. Firms must reengineer themselves, and quickly. Clients are aggressively interested in managing rates, are refusing to pay for firms’ inefficiencies, and simply need predictability so they can manage their own intensely scrutinized budgets. It doesn’t get much more essential, economically speaking, than understanding cost and creating the right processes around that cost to ensure the profitability of your business — and that’s what firms must do. 

Rates are a Profit Driver

Although this is obvious, the point still needs to be made: Billing rates remain the core pricing structure used in the legal industry, and the level of a firm’s rates is key in determining its level of profitability. As a rule of thumb, a one-point increase in rates leads to a two-point increase in profit. The reverse applies as well. In our experience, firms typically have a range of 1 – 3 percent increase in profit for each point of rate change. The range exists because it depends on the specific timekeepers involved, and the relationship between the billing rates and the timekeepers’ cost rates.

Discounts happen when clients tell us our prices are too high for particular pieces of work. Specifically, write-downs are reductions from a bill before it goes to the client, and write-offs are reductions requested by the client after they have seen the bill. Write-downs signal that the firm or a partner has decided that a particular effort had no value. Examples of write-downs include:

•        The work is out of scope, and the partner knows the client will not pay for it.

•        The associate was inefficient in their work.

•        The associate did not understand the assignment and did the wrong thing.

Write-downs become important as firms look for ways to lower the cost of delivering a service. By identifying recurring types of write-downs and eliminating the effort before the work is performed, a firm can lower the cost of the service.

Write-offs signal that the client did not see value in a particular effort. This may occur because the firm did not communicate the value of the effort properly, or it may just be that the work should not have been done. Note that, in some cases, write-offs are just good old-fashioned flaky clients who don’t pay their bills (a cost of doing business).

Citi Private Bank Law Firm Group recently reported revenue growth has fallen to 3.6 percent throughout 2017, down from 3.7 percent in 2016. Oddly, this is almost entirely in response to increased billing rates — an increase of 4 percent, to be exact. While the difference is marginal, when you consider that the 4 percent increase is much greater than normal, that demand has dropped by 0.2 percent, and that collection cycles are lengthening — it illustrates that raising rates is not a good long-term strategy.

            Firms need to adjust their pricing and pricing strategies in response to the market. The challenge is for firms to understand and adequately address the many moving parts of pricing in today’s market and reflect the actual cost of their matter delivery. This requires technology to harness data.

Beyond the Billable Hour

So, how do firms now need to price? First, there are two classifications of fee types: hourly and non-hourly. The hourly fee types are those that are still based on per-hour rates. Non-hourly fees have no billable rate and are set using many different criteria. The table below lists the most typical fee types.

The typical mix of firms’ arrangements as seen today:

·       20% Standard Rate

·       60% Unique client arrangement (rate plus outside counsel guidelines)

·       20% Non-standard fee types

As firms absorb how much they need to understand how to price, the value of their data has grown significantly, as has the value of correlating data from various systems and siloes of information within a firm. Since the fundamental question both clients and firms need to resolve is whether it is less costly to go to some form of non-hourly fee or absorb the inevitable discounting, write-downs, and write-offs, a firm’s ability to pull together its own information about the time, effort, staffing power, and ancillary costs (such as eDiscovery) of delivering a matter will inform its pricing.

This is best facilitated by software that reaches across departments and is capable of correlating and compiling data on what was required to prepare similar, previous matters, and the historic resolutions of matters in courts or arbitration, and it provides analyses of part discounts and write-downs. The collected data, properly analyzed, becomes a vital part of informing non-hourly pricing structures that focus on matter profitability. Modern systems can correlate massive volumes of data via warehouses and structured tables or cubes, and then leverage this data to calculate more accurate costs. These can then be modeled alongside appropriate matter staffing and margin to understand both delivery costs and expected matter profitability. These types of systems present a significant improvement over “weighing the file” or “back of the napkin” pricing, and are superior to even complex spreadsheet modeling as relied upon by many firms today that have yet to implement newer technologies.

Matter-Level Pricing and Scoping

The struggle of scope is the most difficult issue facing the industry. If the matter is not scoped correctly, the pricing is going to be wrong and jeopardize the partner’s ability to deliver the matter profitably. The reality is that partners or senior associates who are responsible for delivering matters are in the best position to scope them. 

As the work of pricing teams becomes more sophisticated and accurate, the need to further develop and standardize different pieces of a matter — phases or tasks — becomes important for allowing technology to refine the process. Clear and accurate categorization of the components of a matter to be delivered to a client will inform the pricing of future matters, and assist firms in presenting transparent, easily understood matter pricing to their clients.

Phase/Task Code

One of the messiest current data problems in the industry concerns inadequate phase and task codes. The first point of confusion is the meaning of a task code. A task code should be thought of as a sub-phase. It is not a task. The challenge is that many of the coding standards have not been updated since they were originally created in the 1990s. 

Their original purpose was for e-billing, rather than budget management. As clients began to use them in their budgeting and monitoring, they also began adding new task codes (e.g., first-level review in discovery) or rearranged existing codes. The worst outcome was that some firms used completely unique or one-time codes to act as substitutes for sub-matters, making standardization impossible.

Another core problem with phase and task codes is how firms implemented them in time entry. The result was a lack of accuracy. In any data look-up, you want to ideally limit available choices between four and 10 entries. In many cases, the firm would provide an extensive list of codes for a lawyer to select, and many times, the lawyer made the wrong choice. The result is that these nonstandard, haphazardly entered codes have created a mess, adding to the difficulty of understanding internal data and doing effective client value management.

As new standards have not developed, a best practice approach is to develop a list of phases. If the client uses a specific code set, you need to have the lawyers use the client’s code and otherwise use the firm’s code set. In U.S. litigation, leading firms are using eight to nine phases. For transactions, most firms use the new ABA Mergers & Acquisition Code Set for all transactions. Since most client code sets are more detailed, it is possible in most cases to map the client code back to the firm phases.

Modeling Margin

As firms continue to discover, based on annual declines in overall revenue per lawyer figures, matters can quickly become unprofitable when simple discounting is used — see the chart below.

Raising rates and discounting is not working over the long term. Firms have more recently instituted approval processes to make sure that work being undertaken is profitable. Such processes typically require modeling at the client or even matter level. Often, a highly discounted client rate will also require each individual matter to be modeled to ensure that it can be delivered profitably.

While firms may not necessarily share matter costing models with their partners, most finance teams will typically create them. The models determine the cost per hour to perform work and provide a simple mechanism for computing profit margin. The numerous different approaches to calculating cost models require their own separate white paper. Without such cost models, the only other mechanisms for measuring profitability are via combinations of realization/recovery and leverage/gearing. 

For new work, the modeling of a potential matter or client relationship can be based on either:

•     Hours and resources (person or class/level)

•     An amount with a ratio of staffing

•     Leveraging a priori matters as the starting point

•     Unit pricing/procedures

Guidelines for outside counsel add another layer to the modeling process. As clients focus on controlling costs, they may offer stipulations and conditions to firms seeking work, and these must be considered in evaluating the profitability of such a relationship. The reality is that most matters are still priced on an hourly basis, and the budget communicated to the client acts as a de facto fee cap. Factor in the customary practice of giving many clients significant discounts on their hourly rates, and it’s clear that firms have shifted the risk completely onto themselves. 

To survive in a market where previous billing and pricing models are now regarded as gentle suggestions at best, firms must harness their own data — and the technology that helps them to effectively reshape their pricing practices — or struggle to remain profitable in a new economic era.

Richard Tromans is the founder of TromansConsulting, which advises legal businesses on strategy and innovation, including advising on the adoption of AI systems. He also runs the site Artificial Lawyer, which is a site dedicated to new developments in legal AI and automation. He is based in London, U.K.[N.B. This report was first published in a different format and with other content via Thomson Reuters, and has been lightly edited.]

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Although several legal AI companies launched as early as 2010, the technology and how to make use of it has since 2016 become a headline issue for many law firms and large corporations.

This is not because the technology has radically changed between 2010 and now, but rather that the traditionally risk-averse and often conservative legal market
is now finally ready to adopt software solutions making use of natural language processing and machine learning.

This move toward AI adoption in part has been driven by increasing client pressure on law firms to be more efficient and a growing unwillingness to pay for what they regard as process level work. As clients demand fixed fees for large projects, law firms have little choice but to make use of technology to improve efficiency and protect margins. Clients are also increasingly asking law firms to show them proof that they are innovating and embracing the latest wave of legal tech to provide a better service and value proposition.

And, it is probably fair to say, that as more lawyers see rival firms adopting AI systems and clients welcoming such moves, then more firms will seek to embrace the same technology tools. No firm wants to allow a rival to get so far ahead in terms of using new technology that they begin to have too great a competitive advantage.

This report describes the current shape of legal AI and suggests some uses of AI, as well as some that may emerge. It should be seen as an initial starting place for those interested to learn more.

What is Legal AI?

“Legal AI” is the use of AI technologies, such as natural language processing (NLP) and machine learning (ML) in relation to legal tasks.

NLP is the use of a special type of software that is able to read “natural language,” i.e., normal text that we all use. As the law is in large part constructed from the written word, the power to read, at great speed, legal texts using NLP provides a considerable new capability to which lawyers and clients did not previously have access.

NLP, for example, could be used to read a contract and tell you what the key clauses were and if they differed from standard clauses you would normally expect in that type of contract. Or, it could be used to understand a user’s legal query and then search legal data to find not just any document that used certain key words, but rather return information that truly matched the concepts in the
user’s question.

While such sophistication is not infallible or as subtle as an experienced lawyer’s work, it can provide a junior lawyer or paralegal with some very compelling competition.

Machine learning refers to the ability for software to learn and to become more accurate in its outcomes. In the context of legal AI and reading text, this would mean having the ability, often with some human intervention, to improve its level of accuracy.

AI can be used within a law firm or by in-house lawyers. We should not be too proscriptive about how and where certain systems can be used, even if they are used by a certain customer group today.

Because AI applications are in effect “tools,” any lawyer could make use of the systems when and if there is a use case to do so. They are not specific to any one practice. The limits on AI’s use are often more about the imagination of the users than the technology itself. That is to say, NLP can be used in a wide variety of ways and become a useful tool in multiple legal tasks.

In fact, because non-lawyers also need to deal with legal issues such as agreeing to or referring to legal contracts, some legal AI “tools” are also designed to be utilised by non-lawyers. This is already becoming a growing segment of the legal AI market, for example, in relation to contract generation and completion.

In short, legal AI has a potential use wherever there are people who must deal with legal documents or address legal queries, especially where those legal needs are expressed through text, which AI experts refer to as “unstructured data.”

With regard to eDiscovery, some vendors in this space are making use of AI software, but not all. For this reason it isn’t listed as an AI group of its own. However, AI-driven eDiscovery is most similar to contract analysis.

Legal AI: A Beginner’s Guide

One can divide up the many applications of legal AI into roughly three main branches, though these will be, and to some extent already are, added to by new inventions. That said, an easy way to start is to focus on the following three groups of uses:

1. Contract review: Reading and analysing legal agreements, such as commercial contracts and leases, then extracting useful data from them, and/or checking them against rules/current law. In some cases this also means helping people to finalise contracts.

2. Legal data research: Legal research and litigation prediction systems, covering statute and case law as well as case outcomes, i.e., not specifically looking at contracts, but rather examining the data produced from the practice of law and from laws/regulations.

3. Intelligent interfaces: Interactive, web-based Q&A systems that clients can engage with via text input to gain legal information or that can guide lawyers/non-lawyers in completing basic legal documents and forms.

To some degree there can be some overlap between
these three. They could also be linked together in some applications that will emerge. But as far as the present day is concerned, the main vendors of legal AI appear to branch into these three general groups.

Legal AI

Contract Review

Contract review covers the reading via NLP of legal agreements, such as leases or due diligence documents.

What a user wants to look for, or what certain vendors tailor their systems to do, varies. But the fundamental process is the same in each case. There are many potential uses for such technology; some of the applications that law firms and/or vendors have already identified include:

.         Due diligence 

.         Lease review 

.         Compliance and risk review 

.         Sales/procurement contract review 

.         Employment contract review 

.         Financing/OTC derivative agreement review 

.         And, as noted, some types of eDiscovery.

            Natural language processing is many times faster than human lawyers at reading contracts, while accuracy levels in matters such as due diligence is generally higher than that achieved by human lawyers.

Legal AI: A Beginner’s Guide

Structure of Contract Analysis Market

Although there are hybrids in the AI contract review market, it can still be said to have two main product varieties:

Volume Contract Review

These are systems that are focused on analysing large numbers of documents. The objective is usually to seek out specific legal issues in contracts and leases. Sometimes this is to give an overall picture to the client of the legal status derived from the document group; in other cases the aim is to find anomalies (such as in due diligence) or to spot areas that need further legal attention (such as in compliance review).

Contract Assistance

These are systems that tend to be focused on smaller numbers of contracts, sometimes even single contracts. Some vendors aim such systems at non-lawyers who wish to understand what a contract contains (for example, a procurement executive who wants to know what is in the 50-page procurement contract on his desk). Some of the systems are also focused on the pre-signing phase and help the client to spot clauses the other party has included in a contract that they may need to reexamine, or where they may need to add in certain legal clauses to meet standard internal practices/rules for that type of contract. 

A Note on eDiscovery

People often ask whether AI contract review is the same as eDiscovery. The simple answer is that although some of the latest litigation eDiscovery platforms do seek to make use of NLP and machine learning to analyse documents, it is perhaps better to see such uses of AI techniques as operating with a parallel, but often quite different use case to contract review for due diligence or lease review, for example.

In fact, as most readers will appreciate, eDiscovery
is already a vast legal technology industry in its own right, with more than 200 vendors providing a wide range of technologies and methodologies.

Legal Data Research


AI systems can also be used in a broader support role beyond contract review.

These uses can be roughly divided into:

•        Knowledge systems: e.g., legal research along practice lines; and 


•        Predictive systems: e.g., case outcome prediction based on specific matters and/or litigation trends based on court outcomes. 


Knowledge Systems

An AI-driven knowledge system is a piece of software that taps data held or linked to a law firm or in-house team. Data could be expert opinions on legal matters by the partners of the firm; statements of fact about laws and regulation; relevant cases and commentary by judges; and any associated case notes or updates that the firm has created itself or is linked to.

In short, the system can do an “intelligent deep dive” into the material available, working in natural language (i.e., normal English, often in sentence form) to provide the answers you require.

What makes these research systems better than simply an enterprise search or a database trawl is that the system
is not only learning from the questions a lawyer is asking, but also seeking to infer the best responses from the data. It
is not just a key word search that brings back hundreds of documents; instead, the NLP seeks to isolate what the lawyer actually needs.

Such research alone clearly does not remove the need for detailed analysis by senior lawyers of the research that has been delivered. However, it may significantly speed up basic legal research conducted by junior lawyers who are working as part of a larger team. It may also be made more valuable when and if it links to other AI systems and document automation processes; for example, where a document may take note of certain key, though “vanilla” legal points that the firm wishes to add for the client’s benefit.

It may also reduce the need for lawyers working in PSL (professional support lawyer) roles, or at least those handling relatively straightforward research matters.

Predictive Systems

Predictive systems are a variation on the above knowledge systems and could arguably be called a subset of them, though they could also operate on a standalone basis. They are seen as primarily of use in pre-litigation planning.

AI-driven software can examine huge numbers of cases and all the publicly available court documents and rulings made by judges in the past up to the present day that are relevant to a case along, with many other types of useful public data.

Predictive Analysis

The main aim is to reduce the volume of manual research and provide lawyers and clients with actionable insight into previous cases, the actions of lawyers on similar matters, and — where possible — to gather evidence on the terms of likely success of a matter compared to previous similar matters, and/or give some indication of the damages that could be awarded by such a matter and/or other fee/value data.

Intelligent Interfaces

The third main branch of legal AI is the development of intelligent interfaces that can guide lawyers or clients to specific legal information, or to “triage” their legal needs. The aim of the technology here is not so much to conduct primary research or analysis, as the above applications do, but to help guide a user through to the right outcome.

Expert Systems

AI-enabled systems can help clients and lawyers to conduct rapid and routine legal tasks that require some “expert” information to complete.

In some cases they may be using NLP to understand queries a lawyer or client has typed into a dialogue box. Machine learning may also be used to help the system better provide the right answer that is tailored to the user’s needs.

That said, some expert system are not using AI technology, but rather conditional logic and/or word tagging to understand queries and respond to them. The reality is there is a grey area here that is still being explored by vendors. But even those not making use of AI systems look likely to move in that direction eventually.

These applications are often used when a person is guided through an “intelligent checklist” that allows them to gain the right knowledge, or in some cases to complete very simple legal documents, such as NDAs.

The software usually uses drop-down menus and check-boxes to move the user through a series of steps so that they can either be given the correct data they need, for example in response to a specific legal question, or be used to fill in the missing elements of a standard document.

They may be outward-facing for clients to use, or inward-facing, allowing lawyers to interrogate the expert system for their own specific needs and/or help them to complete a legal document.

Expert systems, whether outward-facing or inward-facing, are carefully designed to provide informational support to
a specific need, such as how to respond to a certain type of employment dispute, or to help add in data to a certain type of legal form.

Triage Services

The potential exists to use an outward-facing AI system to act as a triage service. At present, most law firms do not use these types of systems, though banks and other financial service companies are developing automated customer relations systems. A hypothetical example for a law firm is set out below:

Such triage/customer-directing interfaces already exist in a very basic way at some law firms — usually those that deal with the public and ask clients to write a short email to describe the matter. However, these could be far more effective and not just serve individual clients.

Rather than asking the client to do all the work, an AI system could be used to help guide clients to the right outcome
in terms of an advisory path and understand their queries using NLP. It could also make use of machine learning to steadily improve its responses to certain types of client query over time. The AI could also immediately link the information provided via the triage system to the firm’s own research into the types of case worth pursuing, as well as link to the firm’s CRM system.

Legal Bots

Many lawyers will be aware of “bots” or “chat bots,” though perhaps without considering how they could be used in
the legal space. Apple’s Siri is probably the best known “bot” — what one might call an AI-driven personal assistant. Essentially, this is an interactive interface that operates in natural language, whether written or spoken, with the latter clearly being far more complex.

At present there are “access to justice” legal bots that operate using written text, which help to give preliminary advice on matters such as criminal law to members of the public. Another example is a bot that guides members of the public through the process of completing a challenge to a parking ne.

However, these systems are, as yet, relatively narrow. That said, the market for legal bots is continually evolving, and there are already new bots surfacing that are capable of a far broader range of legal topics.  

Legal AI conclusion

This is a relatively short and succinct overview of legal AI, which is a market that is rapidly evolving.

Nearly every week a new legal tech start-up launches an application that makes use of NLP and machine learning techniques, and so the picture inevitably is more complex than the simplified version set out here. But, we all have to start somewhere, and getting to know some of the key strands of legal AI is probably a good way to begin to structure one’s thoughts.

We have now moved past what was a period of speculation, and into a period of factual and real-world uses of legal AI systems.

The shape of the legal AI market will no doubt also be quite different by 2018. More AI companies will emerge that may bring together several of the strands set out above. Others may perhaps merge together, or invent entirely new ways of using NLP and machine learning in the legal sector. It is truly a dynamic area and therefore all the more necessary to stay up to date with.

One thing is certain: We have now moved past what was a period of speculation and into a period of factual and real-world uses of legal AI systems. The number of vendors will increase; the number of law firms, in-house teams and non-lawyers using these AI systems will grow. Eventually legal AI will become a key element of the legal sector that many thousands of people rely upon and use every day, just as many other technologies have done so before.

I am responsible for leading Morae’s law department strategy and technology consulting including the spend management business. I bring over 25 years of experience providing impactful strategy and technology consulting to law departments of global companies, law firms and government agencies. I am an accomplished professional offering a unique combination of leadership, sales, team building, solution design, process improvement, and legal and technology experience. I have extensive experience interacting with Fortune 100 General Counsels and other Legal Leaders on procurement strategies, legal service delivery models, operational improvement, cost reduction, organizational design, change management and technology innovation.

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There is a vast array of legal technology available today, ranging from core products like matter management/e-billing systems to highly sophisticated analytics reporting tools and collaborative portals that allow for the communication of information inside and outside an organization. Within the past few years legal technology has continued to evolve, with more options for platforms such as enterprise legal management (ELM) software, more systems being based in the cloud, and the development of specialized rapid deployment tools that can address specific “fill the gap” needs. For each technology tool there is also a variety of vendors, and every vendor’s product has its strengths and weaknesses. With all of these options, identifying the right technology and justifying its expense can be a challenge. A systematic approach to technology planning — understanding the available options, identifying what is actually needed, and evaluating the proposed system’s cost effectiveness and return on investment (ROI) — will help avoid expensive mistakes and lead to the selection of the right technology to yield the most effective long-term benefits.

Technology Benefits

The right technology offers a number of benefits. First and foremost, it helps law departments and law firms meet their clients’ evolving needs and expectations. Today’s clients expect their in-house counsel to have business acumen in addition to legal proficiency, and to provide legal services in an efficient, cost-effective manner. In turn, law departments impose similar expectations on their law firms, with a heightened emphasis on value, efficiency, and cost effectiveness of the services provided, in addition to the actual results. Technology can help law departments and law firms operate more efficiently and cost effectively. Beyond basic functions such as tracking and organizing work and cost, the emphasis of the newest technology is on enabling the efficient execution of work by legal professionals. Technology can improve communication, both internally and between inside and outside counsel. It can assist in benchmarking and provide information for advocacy regarding achieved results. Through the opportunities it offers for consistency and timeliness, it can reduce risk. Finally, it allows counsel to be more proactive, facilitating the collection of information to make better-informed decisions, allowing counsel to answer business questions on a timely basis and to communicate insights based on the most current information.

Technology Options

Organizations’ technology maturity varies widely, from having no technology or using it on an ad hoc basis, to some processes and tools that facilitate repeatable functions, all the way to fully mature programs in which technology facilitates the improvement of processes through qualitative feedback. Where an organization falls on the technology maturity spectrum may depend on its size, the nature of its business, or a variety of other factors.

Law Departments

As a best practice, law departments should begin with the core systems that facilitate the department’s ability to track and provide legal services, and are the foundations for other, more sophisticated technologies. Below is an illustration of a mature law department’s technology infrastructure, based on a “matter-centric” design in which all systems are linked by a common matter identifier (for example, a “matter number.”)

Core Systems

Law department core technologies are generally thought to be matter management/e-billing systems, document management systems, or intellectual property (IP) management systems if the department has an IP portfolio.

Systems Supporting Legal Services and Company Functions

Ideally, a department’s core technologies can integrate with other technology used by the department such as management reporting systems; systems supporting specific legal services (for example, e-discovery and legal holds, the latter being a process in which information is preserved in anticipation of litigation) or company functions in which the law department is a stakeholder (records and information management, contract management, etc.); and systems that support operations, including enterprise-wide technologies.

Legal Holds and E-Discovery Systems

Organizations must choose which, if any, e-discovery functions to perform in-house versus those they wish to outsource. The most commonly in-sourced e-discovery functions include legal holds and collection. Most organizations outsource the traditionally commoditized e-discovery functions of processing, hosting, review/managed review, and production.

Legal Hold Systems

Effective management of legal holds increasingly requires the use of technology. The most widely recognized benefit of legal hold systems is that they automate the tracking of custodian acknowledgements/responses to legal holds and the necessary follow-up procedures (e.g., automated resends, manager escalation, and periodic reminders). Their reporting capabilities help demonstrate defensibility of the organization’s legal hold process. Legal hold systems commonly integrate with matter management systems to readily share important matter information, avoiding the need to re-key the same information multiple times or manage it in disparate systems. Legal hold systems can also integrate with HR systems, IT inventories, and RIM (records and information management) systems, aiding in custodian and data source identification, and thereby improving scoping efforts. All organizations must have a sound legal hold process, and those with a moderate amount of litigation should consider investing in legal hold systems.

Collections Technology

Organizations are increasingly building dedicated in-house teams equipped with a toolbox of collection technologies ranging from IT backup software to highly specialized stand-alone and network tools. Organizations should exercise caution when in-sourcing collection, however, because it can be complex, and the process must be forensically sound and legally defensible. In many instances, companies continue to look to external assistance for highly contentious matters or when expert-level forensics, analysis, and/or testimony may be needed.

Records and Information Management Systems

RIM systems assist in the indexing, storage, retrieval, and disposition of records. Some track and control documents, folders, and/or boxes from creation to final disposition, and can automate records retention schedules. RIM systems can be integrated with enterprise content management (ECM) systems and litigation hold systems.

Contract Management Systems

Today’s contract management systems span the entire contract lifecycle. Many contract lifecycle management (CLM) systems include functionalities that track approvals and other steps in the process, send email reminders to the parties involved, and have built-in redundancies that allow for escalation or sidestepping in certain circumstances, facilitating better management of the approval process. These systems now often provide for electronic signature. New tools are available, some embedded in traditional CLM platforms and others that are add-ons, which can automate aspects of contract generation and greatly expedite time to market, ensuring compliance for internal or external requirements. Some of the newest tools are custom-designed and incorporate logic components so that they can be used on more sophisticated contracts that may previously not have lent themselves to more basic template-based technology. These new tools are simple to use, powerfully dynamic, and can be client-facing, allowing self-service. The technology currently available helps speed time to market and manage contract obligations, both of which enhance the organization’s revenue capture.

            Law Firms

Law firms’ core technology includes the systems that allow firms to conduct their business on a day-to-day basis. This core technology includes time and billing systems; financial management systems; financial analytics/business systems, and document management systems. Most firms have cost recovery systems (connected with copiers, phone calls, etc.), although those may be becoming antiquated as more clients disallow those expenses. File management systems were essential in the past, but they are now evolving to more sophisticated records management systems. HR systems are also useful. Depending on the size and market position of the firm, customer relationship management (CRM) systems may be important.

Beyond these core systems, many law firms find case management, project management, and budgeting technology useful, as corporate clients in particular become more insistent that their outside counsel have these capabilities. Workflow management technology serves a similar function. Knowledge management systems are becoming common as well in order to keep better track of the firm’s work product and research.

Communications within and outside of law firms are evolving, and firms’ technology has evolved as well, including email, cell phone communications, shared platforms such as Microsoft SharePoint, video conferencing, messaging, and more. These technology developments create new challenges with respect to maintaining privilege and confidentiality along with data privacy and security.

Finally, depending on a law firm’s philosophy about e-discovery (meaning whether it wants to provide direct e-discovery services to its clients), it may have various types of e-discovery and litigation support technology. Almost all firms that serve corporations have a document review tool of some type.

Assessing the Organization’s Technology Needs

Before diving into new technology, it is important to assess the organization’s needs; the law department’s or law firm’s business objectives and process requirements should drive technology solutions, rather than the technology itself. Acquiring technology before assessing the real need can result in disappointment and failure to gain the anticipated return on investment. There are a number of triggers that may indicate the potential need to acquire or refresh technology, ranging from lack of the basics to gaps in the performance of existing technology, such as the need for better financial reporting; better project management tracking; better risk or compliance management; or consistent use of existing technology. There could be a specific client request or need to be addressed, such as specific compliance areas. When the time comes to make that assessment, the following questions can help:

What is the business need for the technology?

Business needs should be the lens through which to examine technology. For purposes of the assessment, business needs should include the strategic objectives the law department or law firm wants to achieve. Potential objectives might include exceptional client satisfaction, improved cost management, enhanced revenue, improved teamwork, or increased productivity, to provide some examples. For these objectives, what are the essential functions and what are the essential processes for these functions?

It is important to take into consideration future expectations such as the law department’s and organization’s current size, expected growth, anticipated spending, and other factors.

What technologies are currently in place, and what is the age and current usage of existing technologies?

Does the department or firm have the core technologies in place? Are they performing all the needed functions, or should they be updated? At a minimum, most law departments and law firms should have the core technologies identified above.

If the technology is seriously dated, it may lack new, cutting-edge functionality that could significantly improve productivity, such as Outlook integration or portals for collaboration between law departments and their outside counsel. If people are not using a certain technology, it is an indication that it may not be doing what it is supposed to do or is considered an administrative burden, and the return on investment is not being maximized or has been diluted over time.

What are the perceived opportunities for improvement?

Are there existing problems that technology could alleviate or opportunities it could facilitate? For example, could a law department increase collaboration and communication, and eliminate silos by putting in a new matter management platform, or begin to do a better job managing compliance risks by installing an enterprise governance, risk management, and compliance (GRC) system? Does a law firm’s knowledge management system do the best job of preserving existing knowledge and making it more universally available?

What are the relevant best practices, and what are the trends in the legal technology industry?

A clear understanding of the functions that need to be accomplished and the processes that can potentially be improved with technology mapped against the department’s current technology maturity level provides the starting point for prioritizing needs and developing a technology strategy. From there, in order to identify potential technology solutions, look to best practices for entities that share the same size, scope, and risk profile as the organization in question, and examine current trends. Peer organizations can be excellent sources of information about technology choices.

A note about the cloud

A note about the cloud One question that has generated some attention and debate in the market is whether to use cloud-based technology. The pendulum is swinging toward cloud-based technology, primarily because of lower supporting IT costs. Many law departments and law firms that were initially hesitant about the cloud have now determined that the benefits of cloud-based solutions may outweigh the shortfalls, although there are still some organizations that are reluctant to go in that direction for security or other reasons. While a detailed analysis is beyond the scope of this chapter, in general, keeping technology in-house offers more control and more security, but it also costs more to support and utilizes storage capacity. The cloud is typically lower cost, has virtually unlimited storage capacity, allows for smoother upgrades, requires less IT involvement, and allows external access, but also has more associated risk. Some of the potential risk considerations can include data security and privacy; access control; back-up and archiving policies; records management and e-discovery issues; difficulties with integration and data usage; and an exit strategy for terminating the relationship and transitioning the data.

With the answers to these questions, examine the current technology infrastructure through the lens of the identified strategic objectives. Develop a prioritized plan for technology improvement, taking into account the current infrastructure, strategic objectives, future requirements, perceived needs, and best practices.

Technology Return on Investment

Especially with today’s shrinking budgets, it is important to be able to financially justify any technology investment. Many find it helpful to use return on investment (ROI) models when making the case for technology purchases. Being able to articulate the ROI will help answer the question of why (and whether) new or upgraded technology is needed.

Most vendors will provide ROI information that can serve as a starting point. Since vendor ROI models tend to be fairly generic, it may be a good idea to expand on the vendor-provided information or use it as a benchmark against which to make organization-specific calculations.

The following are a few practical tips to consider when developing the ROI model:

·       Extend the analysis over several years. The expenses are likely to be heaviest on the front end of the investment, whereas the projected gains are likely to increase over the course of several years as use of the system matures. 

·       Include costs for system selection; licensing and hosting costs; basic implementation costs; costs for integrating with other in-house systems; project initiation costs; and the cost for any advanced features or customization of the system.

·       Carefully consider the assumptions built into the cost calculations. Make sure the model takes into account variables such as growth or other factors that will add to the cost. For example, many providers bill for software licenses based on the number of users, so if the law department or law firm is expected to grow in the next few years, licensing costs may increase.

·       Take into account both hard and soft savings when looking at the projected gain. For instance, when law departments implement e-billing systems, they typically see savings through better invoice validation and control over timekeepers, rates, and fees. E-billing/matter management systems also can trigger indirect savings by providing data for more effective rate negotiation or for development of convergence programs, or by facilitating improved management of internal and external human resources.

·       Do not forget to include savings related to the improved efficiency and cost avoidance from using technology instead of people for various tasks.

System Implementation

Beyond assessing business process requirements and the functional and technical needs they drive, a comprehensive selection process should also consider vendors’ implementation capabilities and the support needed to oversee the successful rollout and adoption of new technology. Implementation support should extend beyond standard system configuration and delivery to include process design, user acceptance testing, process training, change management, and post-production support. Third-party implementation partners can often provide considerable value and increase ROI potential.

Conclusion

Technology selection and implementation is most successful when it is part of a well-planned strategy based on a careful assessment of actual needs and priorities. Many law departments and law firms find it helpful to seek outside assistance for some or all stages of this process. For example, a consultant with specific knowledge of the legal technology industry can conduct a technology assessment to evaluate the organization’s technology maturity and opportunities for improvement, and can work with management to prioritize needs and develop a strategy and plan. A consultant may also be helpful in the vendor selection process, as reputable consultants work with a variety of vendors and are familiar with their pros and cons, the degree to which their products can be customized, and other factors, and can offer advice regarding how their specific products will most closely meet the organization’s needs. If there are multiple potential options, a consultant can assist with the process of requesting and evaluating proposals, and can also help develop an ROI model to support the technology acquisition. Finally, a consultant can assist with the full implementation process, overseeing everything from system configuration and delivery, to data migration, to process development, to training and change management, and much more

Ron Friedmann is the Senior Director Analyst at Gartner. He assists law firms by improving their practice and their firm’s business efficiency. Friedmann has extensive experience in legal project management, knowledge management, legal technology, outsourcing, process design, eDiscovery, consulting, and marketing. Prior positions include Integreon (SVP); Mintz Levin (CIO); Wilmer Cutler (head of practice support); and Bain & Company (consultant). He is a fellow and former trustee of the College of Law Practice Management and on the Board of Governors of the Organization of Legal Professionals. He publishes, speaks, blogs, and Tweets regularly. Education: J.D., New York University; B.A., Oberlin College.

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Carolyn Southerland has more than 20 years of experience as a commercial litigator in one of Houston’s largest law firms. She handled complex matters involving contract disputes, patent infringement, professional malpractice, and energy-related matters. She also has extensive experience in representing clients in matters before a variety of regulatory agencies. In 2007, she left the practice of law to enter the world of consulting on electronic discovery issues with Huron Legal, where she served as a managing director until 2015. She also served as managing director at Morae Legal. She is a graduate of the University of Texas and the University of Houston Law Center. She is a frequent speaker and author on various issues involving electronic discovery.

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Dr. Silvia Hodges Silverstein is executive director of the international trade organization Buying Legal Council, a lecturer in law at Columbia Law School, and an adjunct professor at Fordham Law School.

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In many large companies, legal procurement professionals now work alongside in-house counsel to buy corporate legal and ancillary legal services. They analyze, use data and develop evidence-based rationale for major reductions in legal spend. Choosing a law firm has to make business sense. The 2008 financial crisis accelerated the process for the adoption of legal procurement, but publicity about billing practices, big ticket spending by large corporations, and corporate profit pressures are at the root of this change. The same development happened in other professional services, including management consulting and tax and audit services.

Companies with significant legal spending were the first to involve procurement in the purchasing of legal services providers well before the crisis, in the early/mid-2000s. Highly regulated industries first embraced legal procurement, particularly the pharmaceutical industry and financial services, as well as energy companies and utilities.[1] Today, many large companies around the world from a wide range of industries employ legal procurement professionals. There is no reason to believe that large corporations will return to the traditional approach of in-house counsel as sole buyers of legal services.

Why Do Your Clients Involve Legal Procurement?

It is typically the organization’s top management, often the CFO, who mandates procurement’s involvement with the buying of legal services. The goal is to help in-house counsel better manage cost and reduce supplier spending, and to ensure that they buy legal services in compliance with company policies. Other drivers of bringing in procurement include the desire to achieve more objective comparisons of legal service providers through measuring and benchmarking outside counsel’s value and the desire to streamline operations, improve efficiencies, find better ways to structure both fee arrangements and budgeting, and increase predictability and transparency.

When souring legal services, procurement commonly takes a process-driven, business-to-business approach used in other “categories” or areas of spending. Legal procurement supports in-house counsel with decision-grade data and develops the purchasing strategy, process, and criteria, as well as in negotiation and contract development phases, engagement letter, retainer, or framework agreements. Typically, procurement issues requests for proposals (RFPs) and manages the proposal process. This can take the form of matter-specific RFPs or panel RFPs for a group of preferred providers.

Many legal procurement professionals today are also responsible for fee negotiations. Procurement’s expertise in negotiating favorable economics and contracts for their employers has the potential to put law firms under significant and often new pressure to deliver more for less in the future.

Procurement is often also responsible for monitoring firms’ billing behavior and adherence to billing guidelines. Legal procurement checks firms’ compliance to billing agreements, and — if necessary — intervenes. What’s more, procurement conducts post-purchase performance evaluations. The above-mentioned GlaxoSmithKline case study describes the pharmaceutical company’s approach of firm evaluations, asking both in-house counsel and outside counsel to evaluate outside counsel’s performance on a given matter using a set number of dimensions (such as overall management of a matter).[2]

Does Procurement Influence the Purchasing of Your Type of Legal Services?

Legal procurement professionals typically source and manage “ancillary” legal services including e-Discovery, court reporting, medical records, or registered agent services. They are often responsible for shortlisting the providers, evaluating the offers, and even selecting the providers.

Routine legal services such as document review and due diligence are also commonly sourced by legal procurement. However, it is more common that in-house counsel are involved in shortlisting different providers and making the final decision.

At more and more companies, legal procurement is even involved in sourcing complex, high-value, high-stakes legal services. It typically leads the procurement process, ensuring that robust criteria for evaluation and selection are established and applied in compliance with corporate policies. Today, procurement is also regularly involved in sourcing, managing, and influencing so-called “bread and butter” legal services (those between high-stakes work and more routine, repetitive work).

Procurement is involved in a broad range of legal services from litigation, transactional, and — to a somewhat lesser degree — advisory work, in a wide range of practice areas: from commercial law, M&A, real estate, and employment, to intellectual property law, and more.

While legal procurement professionals often decides on ancillary legal services providers, they rarely — if ever — make the final decision on which firm to choose, nor do they have the ability to veto in-house counsel’s decision. Although procurement may make suggestions about firms to invite to tender for work, it is generally the legal department’s prerogative to name the firms it deems capable and appropriate to do the work, and to establish which legal and subject matter expertise is needed. The general counsel and designated in-house legal team also make the final decision. This is unlikely to change in the future.

What is Important to Legal Procurement Professionals?

Legal procurement professionals look for lawyers and law firms who have experience with legal issues similar to the one at hand (for matter-specific RFPs) or for types of services the company typically faces (when looking for panel firms). The firms’ and their lawyers’ know-how and skills must be well matched. As a rule, procurement will want to know if the firm has done similar work or solved a similar issue for another client. More advanced versions of this are whether the lawyer or firm has argued in front of a particular judge or court. Procurement wants to be sure outside counsel will be able to deliver the desired outcome and be efficient.

Procurement naturally looks to match the right firm with the right expertise for the right amount of money: Value for money and service excellence is central to procurement when evaluating firms’ offerings.

Procurement also looks for firms offering value-added options. Continued legal education (CLE) seminars for in-house counsel and business-level training as well as hotline/helpline access for in-house counsel and line management to ask quick questions are favorites among procurement professionals. Other desired value-adds include in-person visits of the client’s office/plant/facility to get to know their business; participation on internal calls that provide insight into a specific business or practice area; Secondments of lawyers; provision or development of basic templates and forms; conducting pre-matter planning sessions; and share-points with real-time access to the company’s documents. (See the Buying Legal Council’s annual survey for further information.)

Procurement also looks at law firm’s approach to staffing  (What is the lawyer to paralegal ratio? What is the percentage of partner hours?) and how firms deliver the service. Project management and process improvement capabilities have become important to legal procurement professionals.

Procurement is certainly not shy about its intent to lower legal spending, and unless alternative fee arrangements are used, legal procurement professionals clearly expect discounts on law firm’s standard rates. It is untrue, however, that procurement professionals only look at the lowest price without consideration of a firm’s expertise and experience.

 What You Should Do Today

If your clients involve procurement, you may need to rethink how you deliver legal services, reengineer your processes, improve your project management capabilities, boost your pricing prowess, and perfect your cost management.

It is highly advised that you to develop relationships with your current and prospective clients’ legal procurement professionals if you haven’t done so already. Do not wait until they issue the next RFP. Get to know them, understand what is important to them and what drives their decisions. You are more likely to prepare a proposal offer that is aligned with their intentions and more likely to win the work. (See the Buying Legal Council’s latest book, “Winning Proposals,” for further information.)

Think also about which legal tasks and projects you could or should standardize, and automate and work with procurement to discuss the options. Show how you plan to bring real efficiencies to their matters. Show that you are a great partner for their company.

Susan Hackett is a founding partner and the CEO at Legal Executive Leadership, LLC, a business dedicated to advancing law firms’ productivity and practices. Prior to establishing LEL, she worked as the senior vice president and general counsel to the Association of Corporate Counsel for 22 years. She is a recognized authority on in-house counseling, corporate client service, and law department operations, who applies her creativity and deep knowledge of leading success practices to better equip her clients (in law departments, law firms, and legal industry service organizations) to advance strategic goals and resolve operational challenges. Susan is a double Bachelors and Juris Doctorate graduate of the University of Michigan. With her experience, talent, and dedication to public service projects and non-profits, she has set herself apart as one of the most sought-after keynote speakers and spokespersons on corporate legal practices.

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Richard Levick, Esq. is chairman & CEO of LEVICK, which provides strategic communications counsel on the highest-profile public affairs and business matters globally — from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and the Catholic Church. Mr. Levick was honored four times on the prestigious list of “The 100 Most Influential People in the Boardroom” and has been named to multiple professional Halls of Fame for lifetime achievement.He is the co-author of four books, including “The Communicators: Leadership in the Age of Crisis,” and is a regular commentator on television and in print.

Introduction

 The accelerated information revolution of the last generation is giving way to the nascent Artificial Intelligence (AI) revolution in which apps are already making rudimentary arguments in legal proceedings. As such, lawyers face obviously dramatic new challenges in litigation and other high-profile matters. How do we control the narrative amid ever-faster-moving media that hardly anyone can comprehend, much less command? The plaintiffs’ bar, NGOs, and activist investors are among the leaders in the effective use of these new technologies, which increasingly put companies and their lawyers on the defense, often after it is largely too late to control the message.

This information revolution has changed the power dynamic. For our entire careers, information flowed from the top down through advertising, public relations, candidate funding, and lobbying. It was a republican form of communications; that is, a few groups of people served as gatekeepers to the masses. As a result, credible journalists, committee staff, and financial analysts were the purported truth-tellers. What they wrote, said, or did controlled the narrative. Today, we exist in a democratic form of communications, and the narrative comes from the other end — the grassroots. Information works its way up into the mainstream narrative, and that content determines how consumers, legislators, shareholders, jury pools, and influencers think, feel, and act. The difference between republican and democratic forms of communications is akin to the difference between monologue and dialogue. Listening — social, critical, risk-mapping — is now essential.

In this environment, litigation (real or potential) is only one concomitant factor that C-Suites, boards of directors, and law departments must weigh in order to determine a best course of action. Today, those decision-makers have to manage risk in an exponentially broader context where, for example, an inopportune firing or victory in a court of law can be disastrously Pyrrhic if it ignites a social media firestorm or social activism that may lead anywhere from adverse regulatory or legislative initiatives to consumer boycotts. As such, any decision regarding high-profile litigation — e.g., to settle or not to settle — must be made with a more prescient eye to the business consequence of that decision. If technological innovation means anything, it means transparency and speed. Anything that is not sealed will almost instantly become public.

Lawyers can, amid this maelstrom, carefully limit their “proper” roles as advisors on legal liability. They can, if they want, dutifully take themselves out of the larger fray, separating themselves from functions more traditionally associated with “corporate communications,” “investor relations,” “risk management,” “government relations,” etc. Alas, those who do so will simply make themselves less relevant. As challenging as it is, wiser corporate leaders eschew silos; they are moving instead toward seamless corporate teams that bring multidisciplinary skills to bear in order to determine what’s coming next and prepare for the alternative contingencies. Of course, with this seamlessness comes the realization that the lawyer cannot — and should not — always control the decision, much less the internal conversation.

Two recent watersheds underscore the anger as well as the unprecedented empowerment of diverse stakeholder segments. First, with Donald Trump’s election, a “Rule by Tweet” was ushered in. It soon became obvious that any company — large or small, public or private — is potentially implicated in a complex political dynamic and cast as hero or villain, depending on one’s point of view, with respect to a potentially infinite number of policy issues, from trade to immigration. All that is required is an accusation — any accusation — on a topic that fits a preexisting bias held by an angry mob, especially a digital one. The days of reflection and discussion in the marketplace of ideas is over, replaced by so much shouting (sometimes all in caps).

It isn’t, of course, just the Presidential Tweet, a tactic that quickly lost its power — a power, by the way, initially considered so vast that the Eurasia Group listed it as the number-one enterprise risk at the start of 2017. In any event, fake news has supplanted real news as an essential risk index. We have gone from the inveterate “two-source” rule used by journalists to verify their facts, to the “one-source” rule that was the norm during the Clinton impeachment, to the “no source” rule that governs today. Risk is no longer about what is real, but what is perceived.

The second seminal business event of 2017 occurred some months later when the United Airlines scandal further underscored the extent to which major corporations remain woefully ill-equipped to manage crises in any marketplace where crises have become the norm. As the stakes get higher, it is painfully obvious that such companies have made little if any perceptible progress in terms of evolving best practices to meet the importunate demands of global communications. Companies, it seems, understand the power of digital and social communications in building brands, but not so much when they are under attack.
The United example featured a CEO, Oscar Munoz, who previously showed powerful and decisive crisis leadership at the helm of freight rail CSX. Yet, under Munoz, United waited a full 17 hours after the horrific “sanctioned mugging” video first gained traction before it responded in any fashion — waiting, in fact, for the Chicago Tribune to cover the story. In other words, United remained silent until traditional media determined the matter important enough to merit the airline’s attention. In the digital age, that’s like resting the company’s future on a sundial. Based on Mr. Munoz’ stellar leadership over the years, the inevitable conclusion is that, if such a disaster can happen at United, it can happen anywhere. Past is no longer prologue.
Equally important was United’s myopia; the airline saw the problem as mainly an investor relations issue, on the one hand, and as a uniquely American event, on the other. Yet profit alone cannot dictate wisdom and an exclusively American lens misses the instantly global nature of crisis in the digital age. By the time United finally figured out how to respond properly — three full days into the expanding crisis — 20 million Chinese per hour were downloading the inculpatory video. That was a dangerous critical mass in United’s most important expansion market.

In this context, multifaceted and multicultural crisis teams are critical. When response time is limited to hours, if not minutes, teams that know and trust one another before the adverse event happens are critical in providing an indispensable 360-degree perspective. Do you already know your crisis team and trust them enough to rest your future with them?

Suddenly, if lawyers are to be considered a truly strategic asset during a potentially high-profile legal matter, much more is required of them than simply telling your client and team, “No comment” and “Stay off Facebook.” When liberty, market share, and regulatory fines are at stake, the brand is paramount and the strategy must be, well, strategic. The legal issues are critical, but they are part of the equation and not necessarily the sum.

 May 1, 2012 – The Revolution Will Be Televised

 It’s not just the audience, but the Internet itself that is also constantly changing to an extent that demands persistent attentiveness to the actual means of communication. The challenge is therefore both strategic and tactical; in other words, companies must have both a game plan and a familiarity with the ever-evolving digital tools by which that plan can be made to succeed.

It’s not about the new “shiny” thing, but rather about separating the wheat from the chaff. Of all the hundreds of new media platforms and hardware, which ones change the way in which people receive and share information? Both receiving and sharing are pivotal; receiving, for the obvious reason that democratized news choices undermine the nearly three-century-old Fourth Estate oligopolies. But sharing is equally powerful because how information is exchanged changes the equation. If a news consumer can now share their stream of information, they have the power of William Randolph Hearst (“You furnish the pictures, and I’ll furnish the war”) to develop and sway trends. Since truth is usually only what people learn first — “A lie can travel halfway around the world while the truth is putting on its shoes” — you concede the argument by ignoring seismic trends.

On May 1, 2012, the trend grew ever more seismic when Google changed its analytics to give optimization precedence to spoken versus written content: i.e., that content which shows up first at the top of their dominant search engine listings. (If you want to keep something a secret, the safest place is the second page of a Google search result.) Changes in analytics happen maybe 100 times a year at Google. It’s always kept secret until it’s implemented, so no one can game the system. But the May 1, 2012 change was historic because, for the first time, audio changed the game. Suddenly, videos could control the narrative of a case or a controversy largely by controlling the search results. While the defense bar still has largely not figured it out, the plaintiffs’ bar and activist investors merrily control the narrative in matter after matter.

It was precisely the sort of decisive “event” that should inform how lawyers and corporate communicators go about their business. At a crucial moment during a litigation, crisis, or other brand-impacting scenario, global corporations and those who advise them must know, not just what to communicate, but how to communicate it. Emotions, not facts, control the narrative and therefore jury pools.

 The Three Lessons of the Information Revolution

 There are three critical takeaways from this transformative shift in communications. While they may seem obvious, they are indeed so transformative as to demand separate consideration.

 1.     Speed: To say that the Internet has sped up our lives is to repeat the painfully obvious, yet we usually miss the real lesson because we think it’s all about doing the same thing, only faster. But that is a drastic misreading of the fact and a sure-fire recipe for disaster. Speed really means that we can no longer base litigation or crisis communications strategy on being reactive. We must now enter the far riskier, unfamiliar world of the proactive. There is no longer any time to be reactive because minds are already made up by the time you have done so.
 
This new proactivity doesn’t necessarily mean going first, and it certainly doesn’t mean taking unnecessary risks. Agile proactivity entails instead the kind of in-depth and substantive risk assessment that informs you as to what’s going to happen next. All communications strategy must be built on the kind of risk intelligence that is gained from a far deeper dive than Google searches or a discussion with traditional Enterprise Risk Management professionals. We’re talking instead about the resources, human and otherwise, that can spot the canary in the coal mine.
 
For Wells Fargo, Mylan’s EpiPen, fracking, the TransCanada Keystone Pipeline, Fox News litigation, offshore drilling, sugar, and thousands of other matters and entire industries, there are key patterns evident months or years ahead. You must look for them; understand who’s saying what, from where, and why. Who is the first to tweet? What is the URL? Who is funding it? Are they purchasing Search Engine Marketing (SEM) advertisements? Where is the information coming from? What does relevant NGO fundraising cover? Who’s behind the video? To which journalists are your adversaries pitching their sides of the story? Who’s hacking whom, and what information has now become available? In all cases, intelligence informs strategy. Forewarned is proverbially forearmed, and everything else is guesswork.

       2 Transparency: We all claim to be in favor of transparency until we’re the one called upon to be transparent; our enthusiasm then wanes. Information leaks as hacks are veritable 100 percent inevitabilities. The reason for the hack may have nothing to do with the litigation or matter that you’re working on, but once in the ether, the information is fair game for anyone to exploit, including your adversaries. If you don’t want it public, don’t write it down. Difficult advice to follow some of the time, but a very sound practice all of the time! If you have written it down, if you’re running that risk for whatever sound business or legal reason, anticipate in your contingency planning how you’ll respond when the worst happens and the information is shared publicly from the least flattering point of view.
 
      3 Anger: We’ve mentioned anger as a decisive component of the New Normal; let’s understand what it means. People are angry in ways we have not seen since the 1968-72 period at the height of the anti-Vietnam War movement, and at times it feels like we are moving toward an 1856-1860 pre-Civil War environment. Trust is at a premium, and your corporate trust bank may be overdrawn. Indeed, the five big tech companies — Facebook, Apple, Amazon, Netflix, and Google (or FAANG) — are moving from gods to robber barons before our eyes. No time on Mount Olympus is ever permanent, as trust is now measured in terms of days and weeks: Yesterday, you or your client might have gotten the benefit of the doubt. “That’s not the company I’ve come to know and trust,” said your stakeholders. But now they’re wavering and, in a week or two at most, you will be perceived guilty until proven innocent.
 
Now, more than ever, you have to use your peacetime wisely and build a brand like Hershey’s or Harley-Davidson’s. Such companies have armies of true believers who know that problems are the exception rather than the norm. To aspire to this favored circle, you have no choice but to build your trust bank now, before the litigation or crisis tests your brand loyalty. Once the blockbuster lawsuit is filed, the lawyers need to ask the communications professionals what they are doing outside of the litigation to earn trust in an environment where trust is no longer a given.

 
What Separates Success and Failure in High-Profile Litigation and Crisis?

In working on hundreds if not thousands of high-profile matters around the world, we have found three consistent rules that separate success and failure:
1.     Fear: Companies hire senior executives for their monetizing skills in order to grow the company. They spend precious little time during the hiring and integration stage focusing on the descendant side of the curve. How will they do in a crisis? Most people have never been in the foxhole and they are just not at their best under fire. Even in the military, when highly trained soldiers go to battle, it is assumed that 50 percent won’t discharge their weapons when they need to. If your teams are not tested, haven’t prepared for a crisis, are not accustomed to making rapid, critical decisions with the information at hand, they will be ruled by fear. Fear never allows for the best decisions. Only through practice and drilling do we develop the instincts that overcome the power of fear.

2.     "What got you here won’t get you there.” Because the careers of most crisis team members are all about building the company and success, their perception is to just keep doing more of the same in a crisis; presumably, that will work as well as it did prior to the crisis. The presumption is natural, but it’s wildly unjustified. In a high-profile matter, all the rules change. Your audience is different because it’s now comprised largely of non-customers and non-shareholders. You are no longer trusted. Prior to the high-profile event, all you needed to do to be on the side of truth was to say you are. Now, you need others to do the evangelizing and it’s all subject to proof in any event. Nor is everyone within the company rowing in the same direction. The longer a crisis goes on, the likelier it is that people will start worrying about their division, their personal liability, and, of course, their job. It’s no longer the brand first, no longer command and control. You need to look at the situation differently, and act differently.

3.     Why we can’t.” These three simple words are the most damaging at the critical moment of a high-profile matter. A smart company gets its crisis team together and HR makes a suggestion about firing someone and legal will say “why we can’t.” Or legal will make a suggestion and IR will say “why we can’t.” It goes on and on until the moment of opportunity when a sacrifice, an apology, an act of contrition, or simply generosity would contain the cancer. But at that moment, no team member has the stomach to take the risk and recommend a sacrifice, be it a temporary dip in share value, a product recall, or the firing of a division head. So the team makes no decision at all until they can “gather all the facts.” Alas, in a crisis, such moments of opportunity do not return — and failures to seize such moments are far commoner and far more damaging than most of our less-than-perfect decisions. “Why we can’t” is the opposite of opportunity.

The Eight Rules of Litigation and Crisis Communications in the Information Age
To some extent, the following best practices are not new; they evolved under circumstances that were exigent at the dawn of the century during the early stages of Internet influence. That said, they are more important and more urgent now than ever before. Companies and their counselors who, at that earlier juncture, saw the need to fundamentally rethink their priorities are today reaping the benefits. But most companies must now play catch-up, a task all the more daunting in light of the accelerated speed with which the social media are expanding even as regulators, plaintiffs’ lawyers, activist investors, the media, and NGOs relentlessly up the ante. 
Daunting or not, 21^st century businesses and their lawyers have no choice but to play the game. Here are a few essential rules of that game.

Risk Intelligence – The New ERM.
It is worth repeating: Intelligence informs strategy. Almost all defense lawyers and even most communications professionals operate on what they have learned over a lifetime. As valuable as that has been, it means they operate backwards in a pre-Information Revolution-style.
Nixon opened relations with China by taking only a dozen reporters with him — yet he was assured of communicating with all of America. You simply cannot do that today.

When truth was dominated by those with access to treasured gatekeepers (journalists, op-ed writers, think tanks, financial analysts, Hill staff, etc.) and those who had the largest advertising budgets, strategy was easy. In fact, it really wasn’t strategy at all, but rather a series of tactics: press conferences, press releases, photos, advertisements, or a liberally oiled echo chamber. You were a communications genius if you knew to focus on the morning or afternoon newspaper or with which of the three television networks to advertise. Today, though, real strategy matters. If it doesn’t feel genuine, it doesn’t work.
Too many companies still look at Enterprise Risk Management as if it’s about studying history and extrapolating the future. While that has a place, it misses the most significant side of the Ouija Board. In order to respond ASAP, you must know ASAP what you’ll have to be responding to. To that end, the legal and/or crisis team should have regular access to risk experts who deploy the most efficient technology in order to monitor the digital and social media and to develop risk maps. Effective risk-mapping identifies, from whom trouble is likely to arise, what they’re saying, and what their weaknesses are. If you understand who your adversary is and what motivates them, you can develop strategy. Without it, you are just guessing.

Once you know what you’re dealing with, then and only then can you engage in strategy. In industry after industry, high-profile matter after high-profile matter, litigation after litigation, defense lawyers digest tons of information but almost nothing as to the deep background of their potential or actual adversaries. Yet there are highly sophisticated plaintiffs’ lawyers who know precisely with which reporters to plant leaks in a given industry in order to effect maximum pain. Or how to control search engines to dominate results. Or when to release an emotion-packed video to change perceptions about who the villain and hero are. Or how to engage state attorneys-general, thereby mounting a highly effective one-two punch of regulation and litigation. Some activist investors are so savvy in both the traditional and social media that they can clandestinely deploy NGOs in a public attack in order to advance their private agendas. Absent an awareness of these subtle powers, targeted companies are only punching at shadows in their attempts to keep pace and influence the governing narrative.

Here’s the key: This level of risk intelligence is not about “big data.” It is about human intelligence in the study of social media users, trends, and activities; it’s about looking at lobbying disclosures, foreign country representations, and other public databases to see who’s in bed with whom. It includes the study of foreign regulation and litigation to discern patterns and practices; it’s about political donations and activities and reviewing dozens if not hundreds of other sources in order to disclose the intricate interrelationships of relevant parties. Once you understand the factors that drive your adversaries, you can develop the strategies to win. 
With a robust risk monitoring and analysis system in place, decisions can then be made about the importance of any mention — which can be simply ignored, or publicly refuted, or deciphered as an early warning sign of a much larger storm that might be brewing. Certain bloggers are “high-authority” and usually justify the team’s attention. Certain patterns may emerge when, for example, an outlier, earlier dismissed as a crank, now seems to be gaining attention and credibility among more traditional audiences.

Teams.

Quick, who acted more quickly — Jim Burke in the famous 1982 Tylenol murders or Tony Hayward in the 2010 BP Deepwater Horizon oil spill? We all want to say Jim Burke of Tylenol, as that remains the gold standard for crisis response to this day, some four decades later. The late Mr. Burke was a hero and his team did respond brilliantly as it put people over profits, but they did not act with literal speed. In fact, they were not allowed to do so; Johnson & Johnson was prohibited by the FBI from acting amid fears of copycat activity. Five days in, however, Burke insisted on acting and the rest, as they say, is history. Tony Hayward at BP not only acted instantly, but also chose transparency as the best way to establish credibility. This comparison is not meant as criticism in any way toward either company or leadership, but instead a testament to the speed of change. The fact is emblematic: In the early 1980s you could wait five days and still claim the mantle of instantaneous response — while, three decades later, literally acting instantly, you still pay more than $20 billion in fines, incur $62 billion in total costs, and get no credit for it. The difference bespeaks the exponentially accelerated speed of communications as well as the necessity to know and trust your crisis team now, long before the high-profile moment actually happens.

When the phone rings at 4 a.m., it’s seldom good news. From the moment a company is alerted to a crisis through the moment it finally fades from view, decisions are required at the speed of the crisis, not at the speed of decisions based on fact-gathering or discussions of legal exposure. Yes, information is as critical as we have suggested, yet you are still going to have to make decisions about issues that the public deems critical before you’ve gathered all the facts.
Needless to say, you never publicly communicate what you aren’t certain of, nor do you ever comment on something in a way that will limit your legal options. But that doesn’t mean some comments shouldn’t be made or that allies can’t provide important and timely messages. The bigger the crisis — the more time zones it impacts, the faster it moves without the benefit of any downtime — the more you already need to know and trust your response team if you want to get ahead of the game.

In an age of permanent crisis, crisis teams cannot be ad hoc; businesses must operate on the assumption that deployment isn’t a matter of “if” but “when.” Initial leadership begins at the top, in the C-Suite. Absent leadership from that quarter, it becomes a fiduciary duty of the board to demand that crisis teams be selected and trained, and to ensure that the make-up of the crisis team reflects the aforesaid multidisciplinary spectrum, which also includes IT and social media expertise as well as legal, IR, HR, financial, etc. Ideally, though, the team should be a direct arm of the CEO, an elite squad of trusted managers assigned by him or her, and who, when the crisis occurs, will help maximize the CEO’s impact as a leader.  

In this process, in-house counsel is well-positioned to support and inform the team formation. As lawyers with presumably close involvement at multiple operational levels, they have a unique grasp of corporate liability on a day-to-day basis along with a telescopic view of the trending laws, policies, and more that signal future liabilities or opportunities in the making. In-house counsel is indeed better positioned than ever to play a leadership role to both support compliance and help create safeguards against the sort of systemic breakdown that, for example, happened at United Airlines.      
Formal training should begin immediately upon the formation of the team and should include tabletop exercises, role-plays, and test runs. The larger benefits are manifold as an essential trust is built among team members. Protocols and lines of intra-team communication are established; new trends are reviewed; new contingencies evaluated; and new Internet tools assessed. In most cases, the tabletop exercises are best conducted by outside communications counsel who can bring a fresh perspective to the problems themselves, with a judicious eye as to how well the organization is actually prepared to respond.
Here are three rules to keep in mind about your team:

1.     Go/No Go: Gene Kranz, former NASA flight director at Mission Control, effectively used “Go/No Go” decision making. The biggest mistake crisis teams make is failure to make a decision. Paralysis by analysis. They lose whatever advantage they have (that of acting quickly, no matter how bad the situation) and let others — adversaries, plaintiffs’ lawyers, victims, journalists, etc. — control the narrative and thereby write the history. Fear of failure negates the power of action.

2.    Team Size: The team should be as large as it needs to be to actively invite multiple perspectives, but small enough to act efficiently. Speed and decision-making are key.

3.    It’s the DNA: You cannot anticipate or plan for all contingencies. Don’t try. What you are looking for in your team is chemistry and DNA. A team that trusts and knows one another understands the right priorities. Having people comfortable in the crisis-planning process results in a well-functioning team adapted to the situation at hand. You’ll know you have a team with the right DNA when they are not stressed by the need for rapid decision-making — and when they all genuflect to the corporate brand, not their own fiefdoms.
 
Privilege.
While the ultimate question of what is privileged is evolving and determined by jurisdiction, it is always wise to anticipate attempts to pierce the veil. By hiring a litigation and crisis communications firm early in the process, and integrating it as part of legal strategy development, you show credible intent to protect the privilege. It may not be a perfect defense, but it helps make the argument (should it later be needed) that any pursuit of information must be limited to a specific narrow scope. The failure to build this wall invites plaintiffs’ lawyers to engage in discovery about everything that your internal corporate communications officers and agency of record may have discussed with the lawyers, even if entirely unrelated to the case. Don’t make trade secrets fair game in a fishing expedition.
The agency of record must be included and protected. Their outside perspective is essential; corporations in or out of litigation and crisis must, after all, see themselves as others see them. To that end, the most successful risk management successes have typically entailed a close working relationship between law and communications firms. In most instances, the law firm thereby plays an additionally needed role with best-effort attempts to extend privilege to the communications or risk management experts with whom they partner.

Chronology – Exposure – Gating Events.

Thirteen years elapsed between the first anti-GMO site on the Web and the food industry’s first pro-GMO site. Wells Fargo had five years’ notice after the Los Angeles Times published the first story on fraudulent accounts. The energy industry had nearly a decade of notice after the Sierra Club removed official notice of its support for the low carbon-footprint fracking extraction method from its website. The very next year HBO released the film Gasland, which lambasted fracking; six months after release, the movie’s website topped the Google search engine for searches of the word, “fracking.” A movie had morphed into a movement and a 40-year energy extraction method supported by environmentalists had suddenly become a target. But it really wasn’t sudden at all. 
Crisis moves so quickly, teams need a written and drawn chronology in order to comprehend what is happening. Once the stars in the constellation are seen in order, many things come into focus: early warnings, fact patterns, legal exposures, credible responses, allies and adversaries. Such a chronology may seem too basic a tactic to justify mention in a larger discussion of strategy, but it is a kind of strategy itself. The very fact that teams engage in this exercise ensures that every crisis team member is on the same page (literally). We all know what the facts are and when they happened. We can now anticipate what’s likely to come next; just as important, we see our crisis the way our critics do, with its tsunami of information.
Don’t stop with just the chronology. Map out legal risks and liabilities in order to clearly decide between taking a brand/market risk and a legal one. It’s a skill that will prove crucial when the time arrives to decide on a sacrifice. Follow up by creating a calendar of gating events, mainly future public events that may impact your private crisis. What’s dead ahead in the equity markets, in Congress, in the states, or anywhere else a new news cycle may arise? The answers will help you see — and plan for — the near future rather than be taken prisoner by it

Welcoming Dissent.

Strong crisis teams need to genuinely invite dissent because that’s how ideas and strategies are fully vetted — and the failure to do so almost guarantees that the communications strategy will miss the mark.
Once the team understands chronology; potential legal, brand, and investor liabilities; and an approximate timeline of near-future gating events, then it becomes easier to manage the various priorities and biases. If the potential legal liability is greatest, then legal priorities lead. If, on the other hand (and I know this is anathema to many lawyers) brand vulnerabilities are the most threatening, then brand leads. If it is share value, then IR leads. The lead disciplines do not dominate at the expense of all the others, but they are given priority consideration.
In a meeting I was part of during  the Gulf oil spill, Tom Campbell, a partner with the Pillsbury law firm, who was representing the interest of a foreign company invested in the Gulf, identified the legal liabilities after the fact-gathering and chronology were complete. He then said: “We calculate the company’s potential federal and state liability to be $2 billion. I don’t see any other area — IR, HR, PR, brand, etc. — with higher liability. But if I’m wrong, please tell me why I’m stupid.”

Such integrity, transparency, and fairness are rare in crisis teams, especially among the lawyers on those teams, but we’re talking about the organization’s highest aspirational value. It says that the best, most practical strategy wins. Winning everything isn’t possible, except in the movies. Instead, successful crisis resolution is all about making the decisions that minimize the sacrifice that the client is going to have to make.
“Tell me why I’m stupid” was not just a factual question — i.e., does anyone have a better argument to make? — but an emotional one as well. Campbell was demonstrating leadership through vulnerability. It is a risky action style, but it is demonstratively courageous and it allows your team to be at its best. Telling truth to power intimidates even the most senior and experienced executive. Inviting dissent requires more than asking for it. As leaders, we need to demonstrate that there is no recrimination for disagreement and that open discussion is warmly welcomed. Remember, the ultimate arbiter is not the ego in the war room, but the value of the brand, minimization of the legal liability, and responsiveness to the marketplace. Nothing else matters.

Sacrifice.

When companies drill down on chronology, garner facts, measure liability, and identify adversaries and allies early in the high-profile litigation or crisis process, they enable their teams to assess the cost and value of assets, both real and goodwill. While crisis teams have a strong sense of the cost in terms of dollars and cents, their newer audiences in a high-profile matter — i.e., no longer just customers and shareholders but, now, regulators, NGOs, motivated citizens, plaintiffs’ lawyers, media, and others — have their own sense of justice. Nothing makes a story fade from view faster than a meaningful sacrifice to appease that sense. By sacrifice, we mean doing something that costs you in the short term and that this new, expanded audience will appreciate enough to no longer consider you the villain.

In 1982, Jim Burke removed all of Johnson & Johnson’s over-the-counter products from store shelves before the company was required to do so by the FDA. It is still the definitive model of sacrifice because it included two critical elements: 

1.     J&J clearly put people before profits by doing more than the company needed to, a move so bold it became J&J’s brand for nearly three decades: “It is the company that cares.” As to the cost of that sacrifice, do the arithmetic: Three decades of growth followed one quarter of acceptable loss.

2.     J&J acted before it needed to, before any federal regulator required action. While it’s tempting to wait and see just how ineffectual the oversight may turn out to be, you’d lose all the gains with which the public will lavish on your leadership. No parents give their kids credit for cleaning up their rooms after they’ve been told to clean up their rooms.
 
By contrast, BP, in the Gulf oil spill, paid one of the largest corporate fines in history, yet, as we’ve noted, received virtually no credit for cooperation because it all came after the White House and others had taken them to the woodshed. The fastest way to rebuild brand credibility is by volunteering your own punishment. If you look at 2007, the so-called “year of the recall,” three industries — pet food, spinach, and toys — all had subsequent record quarters after their recalls because they made sacrifices, took responsibility, and volunteered to fix the problems.

Some sacrifices may be as simple as an apology, which is indeed a form of genuine sacrifice, from the appropriate spokesperson. While many lawyers will parse each word of an apology, the critical value is in its voluntary nature, its genuineness, and integrity. Here, lawyers must be particularly open to rethinking their instincts. An apology acknowledges culpability and culpability equals exposure, which lawyers are trained to avoid. But if the brand is at risk, the brand comes first, even if it means a partially disadvantaged position at the settlement table.

On the other extreme, sacrifice often takes the form of a product, division, or personnel change; CEOs themselves are occasionally the sacrificial lambs. The option to discuss any sacrifice, involving anyone and anything, is something the team must feel empowered to exercise at any point during a crisis. It is here that the “telling-truth-to-power” courage gets truly tested. At the end of the day, the paramount question is, “What is in the best interest of the brand?”
Sacrifice often entails goal-switching, which is the single most difficult thing for executives. Of the three things that people fear the most — death, failure, and change — goal-switching touches two of the three hot buttons. When U.S. Airways Captain Sully Sullenberger had his close encounter with the Hudson River, he instantly understood the need to switch goals and focus on saving the 155 lives, not the $60-million plane. At a critical moment — actually, the fateful one — saving the airplane was no longer the priority; saving the passengers was. Sullenberger’s airplane was just one company asset among many; likewise, in less dramatic situations, there are often much more important considerations than a lawsuit. As straightforward and obvious as the need may seem, getting people to let go of the assets they represent will be the most difficult challenge.

Lawyers and crisis teams that understand the significance and timing of sacrifice have successfully recognized this single most important factor in determining success or failure in a crisis.

Culture.

Culture dictates outcomes. It has an unspoken yet outsized influence on almost all high-profile matters. The culture factor soon becomes obvious and critical during any Chinese, Japanese, or Korean crisis that plays out on Western soil, even down to how information is shared internally. It’s likewise obvious when Middle East matters touch American markets. Great leadership comes from those who understand and appreciate that the culture of the market where the crisis arises has to be the culture of the crisis team. Asians must defer to American culture if their challenge is in the U.S. Americans must in turn defer to Korean culture if their problem occurs in Seoul.

Less obvious, but no less important, are the cultural differences between Wall Street and K Street and Main Street, or between legal cultures and brand marketing cultures. Everyone comes to the crisis/litigation table with their own views based on daily experience and expertise. But high-profile matters require us to be more holistic, to consider the world — or at least the crisis — from the viewpoint of others. 

Third Parties.

There is an old saying on Capitol Hill: “Never kick a man while he’s up, it’s too much work.” Wait until he’s down, the wisdom goes, so you can pile on, without any cost to you. As bad as a crisis seems in the opening hours and days, it is never as bad as it can be once it spirals out of control. There is a narrative arch to high-profile matters that is dependent upon the response to the opening act. If the defendant mishandles it and extends the life of the story, the results are obvious.
There is also the Greek chorus who will determine history, or at least the short-term version. So, take your own version of the Hippocratic Oath: First, do no harm. But use your peacetime wisely as well; arrange for supportive thought leaders who can weigh in early and put things in context. These third parties will certainly include prominent social media voices with industry or media followers; the list is also likely to include academics, retired politicians, members of NGOs, unions, editorial writers, and others who can speak on your behalf, or on behalf of positions you want espoused. It might take enough of their courage to weigh in early so don’t make it more difficult for them by asking their help only at the urgent moment when you need it. Know them before you need them.
Pursue Corporate Social Responsibility (CSR) strategically, not just philanthropically. Know the NGOs that care about your causes. Develop relationships ahead of time so that, at the very least, you can have honest conversations without fear of it backfiring. Have your PR team likewise know and connect to high-authority bloggers just as they do journalists.

At the end of the day, people get too much information — 3,000 to 5,000 messages a day — to do much more than categorize and stereotype. All they can numbly ask is: “Is this good or bad?” So help them categorize your company and position, not by trying to educate them with the facts, but through messengers they already know and trust. All communications are tribal. Corporate communications is pleasant enough work on the way up when everyone is happy or at least content. But on the way down, in crisis and litigation, new audiences and old need more personalized non-corporate messengers to whom their tribe relates. It is less about the message than the messenger.

When public audiences see a messenger they trust, they’ll defer or will at least be less inclined to pile on. Apple has spent nearly three decades building a relationship with its audiences, elevating the name from a brand to a religion. It has millions of customers and critics who double as company evangelists. Such fervid dedication may not protect the company from every crisis, but the investment has already paid dividends multiple times.

Conclusion

When was the last time you thought about the power of symbols? Seldom do high-profile litigation and crisis teams adequately focus on symbols. Yet symbols are far more important than anything else we do. The AIG bonuses; the auto executives flying private planes to TARP hearings in Washington; the Australian pictures of a far less expensive version of EpiPen; George W. Bush’s fortunate bullhorn and unfortunate “Great job, Brownie” moments — symbols control our emotions, and emotions control our thinking. If you want to win the day in high-profile matters, you need to own the symbols.
In all high-profile matters, perception trumps reality. Those caught up in what should be, as opposed to what is, are roadkill in the race to the “truth.” Sticking to the facts of your matter will guarantee you miss out on opportunities to reduce the damage and make the crisis go away. A high-profile crisis is as we find it, not as we wish it to be. By seeing the world through the eyes of our new and varied audiences, lawyers become the counselors that our clients need us to be.