Gina Passarella is editor-in-chief of The American Lawyer. She has covered the business of law for her entire career,...
Nicholas Bruch is a senior analyst at ALM Legal Intelligence. His experience includes advising law firms and law departments...
Daniel W. Linna Jr. is a Visiting Professor of Law at Northwestern Pritzker School of Law. Dan is also...
In this episode of Law Technology Now, host Dan Linna discusses The American Lawyer 2019 Am Law 100 data with Gina Passarella and Nick Bruch. They dig into the survey data and give an overview of how various firms ranked—discussing their insights on new trends, looking at what drove growth, and talking about how this data can be strategically applied in law firms. They follow this with comments on their expectations for the Am Law 200 and how it may differ from 100 data. To close, Gina and Nick give their predictions for trends they expect to see in the future and talk about how the legal marketplace is affected by tech innovations.
Gina Passarella is editor-in-chief of The American Lawyer and Global Legal Brands at ALM Media.
Nicholas Bruch is the director of Legal Market Intelligence at ALM Media.
Special thanks to our sponsor, Thomson Reuters.
Law Technology Now
2019 Am Law 100: Trends and Insights
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Daniel Linna: Hello. This is Dan Linna. Welcome to Law Technology Now on the Legal Talk Network. Today we are talking about the American Lawyer 2019 Am Law 100 Data, which was just released today, this April 23. To walk us through the Am Law 100 Data, my guests today are Gina Passarella and Nick Bruch.
Gina is the Editor-in-Chief of The American Lawyer and she has covered the business of law for nearly 15 years.
Nick Bruch is the Director of Legal Market Intelligence at ALM and he is also the Director of ALM’s Intelligence Fellows Institute.
Gina and Nick, welcome to the show.
Gina Passarella: Thank you. It’s great to be here.
Nick Bruch: Thanks.
Daniel Linna: Well, before we get started, we want to thank our sponsor. Support for this podcast and the following message comes from Thomson Reuters Westlaw Edge. Thank you Thomson Reuters.
Okay, let’s jump into our discussion about the American Lawyer 2019 Am Law 100 Data and we have got Gina Passarella and Nick Bruch with us. And Gina, can you just kind of set the table here by telling us, what are the big picture takeaways in this year’s Am Law 100 Data?
Gina Passarella: Sure thing. So 2018 was a great year for large law firms. We saw some of the highest increases in the key financial metrics that we have seen since the recession hit, almost 10 years ago, about 10 years ago. We saw an 8% revenue increase, gross revenue on average, which vested last year’s gains. We saw a 4.2% increase in revenue per lawyer and a 6.5% increase in profits per partner, all some of the highest percentages or the highest that we have seen since the recession.
And as part of that growth what really stood out to us was that kind of a rising tide lifted all boats. So we have talked a lot over the years about stratification among the 100 largest law firms and how the top half is doing so much better than the bottom half. This year really we saw a lot of growth across the board. So more firms benefited from this healthy year than we have seen in the past; only seven firms saw declines in revenue among the 100.
So it was a really strong year, backed a lot by growth in M&A, corporate work, other countercyclical practices for firms further down the list, like litigation and other areas. So really everybody had something they were offering that was in demand in the market, and then on top of that, they were all pretty successful at putting through rate increases, at least at the top level. There is a little bit more to that story that we will get into later.
Daniel Linna: Okay. Nick, would you have anything to add to that just to kind of set the table?
Nick Bruch: Yeah. I mean I would echo what Gina mentioned. Obviously the growth figure speaks for itself, 8% is pretty good in the post downturn period. It’s certainly the best we have seen in over a decade, as with what Gina said, it’s pretty broad-based growth. 93% of firms grew; a large portion of firms, almost 60% grew by over 5%. This is a pretty good year.
I would say the nuance here is that the growth was uneven, and so some firms did grow faster than others. So that’s an important thing to note.
And the other thing to note, that sort of we might talk about later is that if we take a view at this point in time and compare it to past market peaks, the legal industry tends to be pretty cyclical and when the market is doing poorly, most firms do poorly; when it’s doing well, most firms do well. This does not look like the past market peak and that I think casts sort of a long shadow over what was a good year that should create some concern for law firms and law firm leaders and partners frankly.
Daniel Linna: All right. Well, I look forward to diving into that a little bit more deeply.
Nick, I wanted to follow up. So we are talking — when we look at the Am Law 100, I know I looked at last year’s report and it said that really the top 10 firms in the 100 accounted for a quarter of that revenue from the top 100 and then it was I think approximately the last 47 or so, and so nearly the bottom half that accounted for only another quarter of the revenue, so a lot of variation across those top 100 firms.
Could you kind of tell us like what kind of bands we ought to be thinking about those firms as falling into?
Nick Bruch: Yeah. So the top 10 firms this year in terms of sort of the firms that grew the most in dollar terms, we are not looking at percentages here, those firms make up sort of 36% of the aggregate revenue growth, so 10 firms make up 36% of the revenue growth.
If you look at the profitability side, it’s actually more stark, 10 firms make up 42% of the total profit growth. If we expand that number to the top 25 firms, we go to 62% of the revenue growth. And so on some level the growth is pretty concentrated.
Now, what I will say is that this is down from last year, so the concentration is a little bit down, and also this isn’t so strange. This was true in the last market peak. This was true throughout the post downturn period. Growth in aggregate terms tends to be fairly concentrated in the Am Law Group, so that’s one way to cut it.
I think the other two ways to cut it are by size. A lot of people talk about the Am Law 25, the Am Law 50, the Am Law 75, etc., I think there you start to see some divergence. If you look at the numbers initially, they look like they have all got a pretty good year, sort of 5.7% growth. The nuance there is there is a ton of mergers in that group, and as we start to control for those mergers, their growth rate almost drops in half, it goes to 3.6%.
So if you think about that the biggest firms are growing by sort of 8.5%, the smallest firms within the Am Law 100 are growing by 3.5%, that’s a big difference, and importantly, the gap widens from last year. The gap last year was the biggest firms grew by twice the rate of the slowest firms. This year it’s a little more than twice.
So I think what you start to see when you dive deeper and deeper into this data is some of those stratification numbers that we tended to see throughout the post downturn period are still there. It’s just they are stratified by everyone is having at least a decent year, perhaps a great year, that’s how I tend to cut it.
I think there is other ways that we could talk about. Another way that I think a lot of people tend to like to look at the data is by the most profitable firms, either by profit per equity partner or profit per lawyer. My good friend Hugh Simons tends to look at it that way, and I think there is a lot of validity to that approach and it does yield some interesting findings.
Daniel Linna: Well Nick, I just want to follow up quick on something you just said, because as a former practicing lawyer, and I know this has started to change, but there is still generally a lot of talk just about how big my book is and we just look at revenue for lawyers. But these differences in profitability across the Am Law 100, can you just speak to that a little bit more and kind of how you would generalize what you see across the Am Law and how you might bucket firms as more profitable and what is the magnitude of the difference?
Nick Bruch: Sure. There is a lot of argument over what the right profitability metric is, there is profit margins, there is profit per lawyer, there is profit per partner, there is profit per equity partner, I think all of these different metrics are useful for different things and typically I like to look at them in concert. I like to see how they are moving together so I can understand the moving parts.
I think how — if you look at profit per equity partner, which is the figure that most people tend to zoom in on, because that figure tends to describe partners’ take-home pay, this is their comp and comp tends to drive eyeballs, if we look at sort of 2000, go back to that period and compare the top 10, 25 firms to the bottom 100 firms in the Am Law 200, the difference between those two groups, between the top 25 and the bottom 100 was a million dollars in average profit per equity partner. Today the difference is 3.5 million.
And so I think what we see just in that figure is that the gap has widened dramatically between these two groups of firms. And I think this year is no different. The average growth, revenue growth for the top 25 firms in the Am Law 100 in terms of revenue growth was 9.3%, that’s really, really strong growth. It’s not pre-downturn growth. In 2007, we were growing at 16.2% among that group, so they were killing it basically during that group. That top group’s profit per equity partner grew by 8.1% this year.
If you look at the bottom 25 of the Am Law 100 in both of those groups, either revenue growth or profit per equity partner growth, you see them growing by roughly about half, and I think you can start to see in that figure the kinds of firms that are doing extremely well and they are doing extremely well for exactly the reasons that Gina mentioned.
One, they can push up rates, because their services are coveted, because they are special, they are focusing on the highest value services; therefore, they face the least competition. They can push rates farther and the clients will pay. On top of that obviously it was a good deal year, it was a good litigation year, that obviously flows to these firms in terms of growth in their core services.
Daniel Linna: Okay. So Gina, Nick just mentioned a couple of drivers and you in your intro did as well and I think you talked about just kind of generally the market increases, mergers, rate increases, and then specific practice areas. Is there anything else we should be looking at that has been driving these improvements, and then I would like to just start maybe drilling down on some of these categories a bit?
Gina Passarella: Sure. So I think a couple of things. One, you can look at this regionally too. I mean it’s hard to categorize firms by geography given that they practice so globally, but we look at say California firms, they had a really strong year and that was driven a lot by their ties to the tech industry. It was a busy year for the tech industry, particularly on the M&A side; this year is promising to be more of the same, so they had a really strong year.
New York firms, which a lot of them make up the top of our Am Law 100, they had a super strong year, largely because of deal work.
And then you look to DC, didn’t have a bad year by any means, because nobody really did, but they didn’t see the demand increase as much as some of the other markets because enforcement was slower and that type of thing.
So your practice mix definitely has an impact on your outcome, without a doubt. I mean we look at our Super Rich that we put together every year, which is basically the firms that are showing the best revenue per lawyer growth, the best profitability profit per lawyer growth, and that list is largely the same in the five years that we have done it, and we looked at why that is, what lessons can we learn from those firms, and it’s really about kind of having a niche, knowing who you are, what you offer, sticking to that, and creating a brand around it frankly and a culture that keeps the top lawyers there wanting to stay in practice and keep the clients coming back because you are the go-to for that.
And so two of the new entrants on that list this year I think are examples of that. We have Cooley, which is very tied to the tech industry and has really leveraged that, and then you have Fish & Richardson, which is a large boutique, but an IP boutique, and so super concentrated area.
So I think that that mix of practice mix dictates a lot of what you are seeing and that brand that you create really will have an impact on how much demand growth and rate growth you can generate.
Daniel Linna: Gina, can you say a little bit more about rate increases. You pointed out some firms like Cooley and Fish & Richardson that have had a strategy of really differentiating themselves in the marketplace and that that can be connected to firms then that can really benefit from potential rate increases. Can you say something about the Am Law 100 generally? I mean is there other data to suggest that only certain types of firms can benefit from rate increases in the marketplace today?
Gina Passarella: I wouldn’t say that only certain types of firms are benefiting from rate increases, I think we saw more across the board that firms were able to push through rate increases at a greater rate for almost all firms. But rate increases are a tricky thing and Nick I am sure can speak more to this.
But we also did an analysis as part of the Am Law 100 this year looking at the discount culture of law firms and write-downs and how the standard rate has kind of become a mockery, and so it’s really about, okay, we set these rates, we are doing these increases, but how much are you discounting off of that? So how much do the rate increases really matter? I mean we see in the numbers here, there is growth in gross revenue that is outpacing lawyer count and so part of that is certainly from rate increases. There is no doubt that it’s having an impact in helping, but how much more could it have been if those rate increases were real and were captured and the realization rate was stronger.
What one of our reporters found was that the way he looked at the math, if we look at what firms left the Am Law 100, specifically left on the table through discounts last year, it was $4.4 billion. So they are still — while 2018 was a great year, it could be better, and that gets into frankly, firms’ business models, are they finding ways to better offer value to the clients, perhaps not if they are still relying on discounts. That’s a whole longer discussion, but that’s my general take on the rate increase front.
Nick, I don’t know if you have other thoughts on some of the data.
Nick Bruch: Yeah. I mean one thing I see when I look at the data is the firms that are growing the slowest tend to have the most rate pressure. I think that to me suggests there is some discounting going on just to buy growth. To buy work essentially firms are discounting their rates. So that’s one thing that I think stands out in the data.
The other thing that I always wonder about with the hourly rates is, we tend to look at average hourly rates. Over the last decade or even longer what we have seen is more and more associates creeping into sort of the share of total lawyers and also more and more non-equity partners.
The fastest growing group of lawyers this year was associates, the second biggest was non-equity partners, and then you take a huge jump down to equity partners, which did grow, but grew very slowly. That’s obviously going to mean the billing rate growth, average billing rate sort of grow more slowly, growing at sort of the lower end of the spectrum of the law firm. So I think that’s something to always keep in mind when you are looking at some of this data.
But yeah, I mean I would echo what Gina said, the firms that were able to push up rates the fastest were those that were sort of the “elite”. Also, the biggest firms tended to do a little better in this area, but generally speaking, I would say it was a pretty mixed bag, both with the firms that struggled and also the firms that did well. There were smaller firms who focused on niche areas who did extremely well in this area as well as some big elite firms who frankly looked like they struggled. So there is a lot of divergence in the data.
Daniel Linna: A couple of follow-up questions. Now Gina, you mentioned that with the discounts, 4.4 billion left on the table, I guess maybe part of the question, you alluded to this is that, the kind of rack rates aren’t real. It’s like when you are at the hotel and you look at the sticker on the back of the door and it says if you overstay, you are welcome. It’s like $1,000 a day and no one is saying like oh, well, that’s the rate we are getting — our prices are 70% discounted then to stay here.
And actually, now I am five years removed now from being an equity partner and things have been changing, but I had a sense that some firms definitely really were always trying to drive to as close to 100% realization as possible and other firms seem to have come along with a strategy that we know we have to discount, so we are going to bump up our rates and discount. I mean are you seeing other evidence for that?
Gina Passarella: I mean we are definitely still seeing the discount culture. It’s clear. I worry for firms when a recession hits, what the impact of that is going to be. But to firms’ credits, I mean one, they are increasingly hiring pricing directors who are working their tails off to be the go-betweens between the law firms and the clients to try to figure out an alternative solution. And I can’t lay the blame all at the feet of the law firms, you will hear from them, and I hear from clients themselves that clients don’t really know a better way. Here are these alternative fees being pitched and they get a little scared and think, I don’t know how that really works out, let’s just stick with the hourly rate, but can you lop off 10%.
And so it’s just this cycle where things don’t change. I mean we are still at a point where I would say a 20% — if a firm has 20% of their revenue coming from alternative fees, that’s high. I mean we have not really gone much past that and I think there is so much that needs to be looked at.
If you are really going to make meaningful changes to the way that you deliver legal services, it can’t just be through discounts. It needs to be through perhaps alternative pricing, but also you need to adjust staffing models and project management issues and compensation structures. I mean so much needs to go into really looking at better ways to deliver legal services. But when you are coming off of a year like 2018 or 2017 before it, where things are going pretty well, it’s hard to think oh wow, I need to do much to change this, I don’t want to mess with a good thing.
Nick Bruch: I have a story from, I was talking to a general counsel that I think might give you a sense of the psyche involved on the client side. I had heard maybe six or seven months ago, I was talking with a law firm about sort of increasing rack rates to strategically basically give the law department the room to kind of negotiate down, and so I started to call around to general counsel.
One general counsel told me flat out, he said, I have to report how many dollars I am saving the company through my negotiation strategies. And he said, and what I do is I take the rack rate and I apply the rack rate against the dollars versus the end rate and all of the dollars that I save from reducing the rack rate down to whatever the pay rate was, I count that as a saving and I report it up to my CFO.
And so you can see right there how this system of increasing the rack rates benefits everyone. It benefits the GC, because it makes them look good. They can go to the CFO and say look, how much money I saved. It also benefits the law firms because they can make the client feel good about the fact that they saved 3% or 5% or whatever it is. This is a game everyone benefits and I think the law firms have learned how to gain this game. That’s my take on it.
Gina Passarella: Well, I think too, I would just add to that, that I think the important thing for firms to do is really be honest with themselves and track realization from a time worked versus time billed. So whatever the negotiated rate is with the client, making sure that when you go to do that work, you are able to charge for all of the work done at that rate, and I think sometimes you will come to a negotiated rate, then the client will still say well, that’s not the amount of hours that I expected, or that’s not the type of lawyer that I expected to be working on it. So that’s where the project management and staffing really comes in as well.
Daniel Linna: Yeah. So it was interesting that you said that we are seeing at some firms maybe up to 20% AFAs. I am interested in I guess what data you have to show that we are getting more adoption of alternative fees.
I know Cisco has been doing that for a while. Microsoft not too long ago announced that they I think wanted to have 95% of all their matters on alternative fee models within the next couple of years. So there is a lot of indicators to see that the market is moving in that direction. What would you say as far as what the data shows, we may not be as far along as we want to be, but do you have any data for this year’s report that would suggest we are seeing that there was an increase in any kind of alternative fee billing?
Gina Passarella: So we do ask firms what percentage of their revenue has come from an alternative fee arrangement and not everybody answers it frankly, but we get a decent return on that. And we have not really seen the needle move over the last several years and I have to admit not knowing the exact percentage for this year, I apologize, I can get that for you, but we just haven’t seen much of an increase.
There are definitely the news articles out there of the occasional company trying to make a stand in this regard and you see more and more of it and you definitely hear firms thinking more and more about it, but I haven’t seen the percentage change much. And Nick, I don’t know if you have a better insight into the data there.
Nick Bruch: I would basically agree with what Gina said. First and foremost, I think it’s important to note that the definition of an AFA is not agreed upon by law firms or law departments. Many people still when they report out what percentage of their revenue streams on the law firm side or their costs on the law department side are in AFAs, many people still count reduced hourly rates as an AFA. I think most people would agree that that is not an AFA, it’s certainly not in the spirit of an AFA. And so the data is really muddied. Almost no data on AFAs that doesn’t have this problem.
To Gina’s point, we have seen the percentage of AFAs pretty much stabilize and I think what we saw over maybe five, six years ago, it crept up and then it actually dropped down a little and then it stabilized, and I think that’s because clients are still mulling over where AFAs make sense, where they don’t make sense, where they add more simplicity, where they add more clarity. I suspect we are probably pretty close to where we are going to end up in terms of AFAs. We might see some change as we see more managed services offerings come into the market, either from the ASPs or from the Big Four. Those won’t exactly look like what we all think of AFAs, but they will be sort of in practical sense an AFA, but yeah.
Daniel Linna: Well, let me just clarify, so I guess you think we are pretty close to where we will end up; in other words, there won’t be an increase in the amount of revenue generated through AFAs versus billable?
Nick Bruch: Like I said, I think personally the managed services model is going to grow quite a bit over the next let’s say decade. I think that will ultimately be an AFA, but it will be very different. These will be long-term contracts. They will be contracts that manage tons of work and so they won’t be AFAs priced on a single engagement. And so that’s not going to be sort of what we think of as an AFA; it’s going to be a very different model, often done by very different providers who probably include some law firms, but also don’t include some law firms.
I am skeptical we are going to see a significant increase in AFAs. I think what most people forget about when they think about AFAs is you take the difference between, for example, an hourly rate and a pure fixed fee, essentially in hourly rate the law department is saying look, I am going to own all of the cost risk. If the cost goes up, I eat that, but what I am not going to own is I am not going to own any of the quality risk. I am willing to pay more to get more.
If you think of a fixed fee, what they are doing is they are actually pushing the cost risk goes to the law firm, if you go over, you eat it. But also they are telling the law firms to manage and they are saying you have to deliver X for Y dollars and the law firms will manage that, they will put more associates on it, they will put more non-equity partners on it, they will put less equity partner time, they are going to manage that so that it’s profitable.
Many clients don’t want a lot of their work managed in that way. They want the highest value or the best lawyers on it. Whether that’s appropriate or not, I think you can debate based on the type of work, based on the engagement, but I am skeptical clients are going to say, you know what, we don’t care how you manage it, we want you to deliver at X fee. I think there are a range of services the clients are willing to have that hands-off approach, but I think that we might be close to tapped out, again outside of the managed service space, that’s a whole different space that I think is going to be treated very differently.
Gina Passarella: There are two things that I would add that I think are potential drivers to actually see an increase in AFAs, but then I will give you my skeptical view of why that might not happen. The increase of pricing directors, and if they are really given the room to do their job over the next 10 years, then I think — particularly as they try to compete with all of the alternative legal services providers who are coming into the market, then I think we could see a change.
And then secondly, recession, likely you would think that okay, that’s going to really increase competition. Firms are going to have to get creative, particularly because their competition in the recession is going to be those AFPs who are doing a better job of alternative fee arrangements. But then the cynical side comes in and says, we didn’t see — a lot of the same pressures existed 10 years ago when the great recession happened and if we didn’t see dramatic shift after that, what possibly could force that shift? It’s kind of a TBD on that front I think.
Daniel Linna: Yeah. Well, I have to say I hope you are both wrong and I want to be optimistic.
Gina Passarella: Me too.
Daniel Linna: Yeah, yeah. And I think part of it is, and maybe I am spending too much time talking to Steve Harmon at Cisco and Connie Brenton at NetApp and Mary O’Carroll at Google and all the stuff they are doing with CLOC and talking to Sam Ranganathan at AbbVie here with ACC Legal Ops, and they are really pushing another direction, and I would really — if I went back to a law firm right now, I would want to embrace this and say, I want to be the general contractor on this. I am going to look out for your needs, client, you don’t have to watch this, and we are going to have this true collaboration and partnership.
It seems to be we are seeing some examples of that working, but yeah, measuring I guess how that works across the marketplace, it’s hard to tell how much movement we are getting and whether it’s going to be a trend.
The question that I have related to that, and this kind of goes to one of the obstacles is our incentive structure, the way the law firms are structured, the way we have metrics, the Am Law 100 each year. It kind of gets us focused on the near term at the expense of the long-term.
I am just wondering what you guys’ thoughts are on that and how do we get some of the lawyers and most management I talk to at large law firms, they get it, it’s getting the lawyers in their firms on board with this idea about the things we need to do for the long-term. What would you say, how can we use this data to help lawyers and others think about, not just the short-term, but the long-term game that we need to play here?
Gina Passarella: Sure. So I know that we put out the Am Law 100 that I would never advise any firm to manage to a quarter or a year or the ranking certainly in the Am Law 100, I don’t think that’s a smart business strategy. Certainly firms need to look at their yearly metrics and track that and budget for it, that’s just how businesses operate, and the health of these businesses is crucial to the larger profession and the thousands of people that they employ, but I think it’s also incredibly smart for these firms to have multiyear strategic plans and to really focus on that.
We understand that they are running businesses, there is going to be blips, you may have to do layoffs and that might not be a bad thing; you may have to back out of a practice area and that might be a smart move. So you have to look at both the short and the long-term, and really what it comes down to for me is knowing who you are, being comfortable with that, managing to that strategy and not straying from it.
So I think data is always good. It’s important to look at the data and follow it and I think it can give us insight into how some of the changes to legal services delivery are impacting the markets, but it’s certainly not everything. You have to have human intelligence. You have to be in touch with your clients. You have to know what they want. And if data is showing that they are taking more work in-house or alternative legal services providers are taking a bigger piece of the pie, then you have to pay attention to that too, because it may mean that you are not giving clients the services that they really want.
Nick Bruch: Yeah, I would echo what Gina just said. As the Am Law Data comes out, I end up spending a fair amount of my time talking to firm leaders about the data, and in all honesty, I can’t think of a single firm that has asked me about a single year performance. They generally want to see the forest for the trees.
They are much more interested in five or ten or frankly even 15 years worth of data because they want to understand how the market is moving, they want to understand how their segment is moving, they want to understand how they are moving within that current, and they then want to understand what the opportunities, what the challenges in the data are? I think that’s what the Am Law data is most useful for, that’s how I approach it, that’s how most of the law firms I speak to approach and I think in many ways, actually this year is a perfect example.
The data from this year looks great in and of itself. You look at 8% growth versus 6% growth, last year you look at 29% of firms growing by 10% or more versus 15% last year. This looks fantastic. It looks like an absolutely fantastic year.
Now, the problem is, is when we compare it to 2007 or 2008, the story gets to be a little more nuanced. In 2007, which was the peak of the last economic cycle, which you could argue that today is the peak of an economic cycle, 67% of firms grew faster than 10%. Today, again, to remind you we are at 29.
At that point in time, the Am Law 100 was growing by 14%, not 8%, almost double, that I think puts this year’s what was good performance for the post downturn period into a wider setting. It helps us understand, okay, this was a good year, but if this is as good as it gets, this is pretty concerning. This suggests that there is a structural shift that’s happened if this is the best the Am Law 100 can do.
Now this is not to say that this is necessarily the best. Maybe next year we’ll be talking about how it’s a great year and how it looks a lot like 2005 or 2006, but conversely we could have a downturn next year which most economists agree that it is possible, and if that happens, then yeah, we are at the market peak and this doesn’t look quite so good.
Gina Passarella: And my fear there would be that firms get complacent in looking at this year’s results and think, wow, things are great, and I think that leadership of firms are a lot smarter than that and they won’t, but we can’t kind of put a halt to innovation efforts because the numbers look good too because of all of the points that Nick just mentioned.
Nick Bruch: To Gina’s point on maybe giving a little you see growth, a cost growth went up hugely this year. The cost per lawyer grew by 2.8% last year, it grew by 4.3% this year, that’s not quite doubling but it’s a significant increase in cost and firms have been so diligent on the cost side over the last decade, and to see that number jump up this year I think was surprising to me, I knew it was going to go up but didn’t quite think it was going to go so quickly up.
I think the associate salary increases are part of the story, but I think there are also a lot of other costs, some of them are legitimate investments in the business on the innovation side, some of them are technology investments that most law firms have frankly been putting off for a couple years, some of this is due to cyber risks. I know a ton of firms who tell me they are spending a ton of money on upgrading their systems, on consulting around cyber. So I think there’s a lot in those cost figures but that tells me that firms are starting to loosen the purse strings a little. They’re starting to say, okay, if we need to invest in these things, go ahead, it was a good year. Again, if this is the peak of a market, that should be somewhat concerning.
Daniel Linna: Yeah, is this as good as it gets, that sounds like it’s a good question for our listeners before we take a break and in the second part of this we’re going to talk a little bit about the Am Law 200 and dive a little bit deeper into a couple of questions we’ve already raised.
So before we continue our interview with Gina Passarella and Nick Bruch, we’re going to take a quick break to hear a message from our sponsor.
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Daniel Linna: And we are back, thank you for joining us. We are with Gina Passarella and Nick Bruch talking about the Am Law 100 data, and right before the break we were talking a little bit about the numbers’ pre-recession.
Nick, I just wanted to ask just a level set all of us in our listeners, to what extent are these numbers’ inflation adjusted when you’re talking about revenue growth over the last decade plus?
Nick Bruch: Yes, so they are not inflation-adjusted in the way we’ve been talking about them. I do — when I do this data for myself to try to understand the moving pieces, sometimes when I do it for specific law firms, we do inflation-adjusted, I think there’s some interesting findings when you start to do that. That’s that I find for the general conversation. Inflation adjusting sometimes it creates more complexity than perhaps it adds. I think a lot of people think inflation adjusting sort of it is kind of a wizardry that kind of can sometimes hide some of the trends. I tend to think it’s the opposite, but for that reason I tend to keep it out of these kinds of conversations.
What I’ll say is inflation has been picking up, both in the United States and globally. We saw inflation about a half a point faster this year than last. So when we think about revenue growing at 8% rather than 6% we have to remember that part of those — that 2% is inflation, about a half a point is probably inflation and so maybe the market grew by only a point and a half faster, that’s relevant. I think it becomes more relevant when you start to think about the revenue per lawyer figures. Revenue per lawyer grew at 4.1% instead of 3.2%. Well, again, a half a point of that is inflation, and that starts to wipe-away a lot of the benefits from this year to last year, and so the inflation adjusting figures do impact how you look at this, and I think it’s important to know that and I would certainly recommend to law firms, to any market participant, if they’re going to look at this data to do that kind of analysis on it, because I think it will reveal some interesting findings. Particularly on the profit per equity partner side I think it’s a particularly interesting thing.
Daniel Linna: What kind of membership changes you see in the Am Law 100, like firms dropping out or coming in, and of course at the margin maybe that’s not interesting, but were there any kind of big changes, who are the big movers?
Gina Passarella: Sure, so I can take that. We didn’t see a ton of change. Frankly, with everybody doing so well, it was actually a bit difficult to change your position and the ranking in the list of this year, there is certainly mergers help. We sell two firms drop-off and therefore two firms join. So Womble Bond Dickinson came onto the list, they were a 111th last year and then they joined the 100th this year, that was thanks to their transatlantic merger with UK’s Bond Dickinson, so again a merger helping to lead that firm.
And then Dorsey & Whitney came back to the list after a two-year hiatus fueled by a decent revenue growth of 9.2%. So you’d have to really see some hefty revenue growth to come 00:37:57 the list or to substantially change your ranking this year.
Daniel Linna: So last year we saw that the Am Law did well but then when the Am Law 200 came out it seemed to be that some of the benefits we saw in the Am Law 100 were at the expense of the Am Law 200, do you have enough data about the Am Law 100 yet that you can say whether, I mean, will that be the case this year?
Gina Passarella: So we’re still finalizing the second hundred data. I don’t want to give too much away, but we’ve reported individually on a lot of the firms that typically make up that group and in looking for some of the preliminary data I can say that I don’t think the second hundred numbers are going to come in nearly as strong as the first hundred, I’ll give you that kind of a preview into the data without saying too much, but I think there may be some truth to what you’re saying.
Nick Bruch: I would say even within the Am Law 100 there is some foreshadowing on what you might expect in the second hundred. I mentioned this earlier but on the revenue side that the largest 25 firms grew by 8.2%, the smallest 25 to 75, to a 100 grew by 3.6% after you adjust for some of those mergers that happened in there. Womble is one firm that sort of did a merger, Bryan Cave is another, Foley & Lardner did, Hunton Andrews Kurth did a merger, so those are all sort of in that 75 to a 100 group.
So, that big drop-off starts to tell you what might be happening in that next 100. When you start to look at some of the other metrics, I think you start to see even bigger concerns. Revenue per lawyer among the top 25 firms grew by 5.7%. It’s a pretty, pretty steady growth.
Among the bottom 25 that 75-100 group, you’re seeing 0.4%, which again, if you were to inflation adjust that, that’s actually they shrank in terms of revenue per lawyer. Profit per lawyer, the bottom group, the 75-100 actually shrank by 0.1% without inflation adjusting, and that I think starts to tell you what you might expect to find.
Now, again, it’s important to note the second hundred group is it’s a diverse group of firms and there are some extremely profitable, high-achieving firms within that group, there are also some regional single-state firms who will be often their performance will be almost entirely due to the regional economic performance of that region, then there are some national firms whose performance looks not so dissimilar to some of the national firms in that 75-100 group.
So the second hundred is often a mixed bag, but what I like about the second hundred particularly and why I look forward to that data is it really gives us a sense of what’s happening at the regional level. We see a lot more regional firms, we see a lot more local firms in that data, and it helps me understand where the hot spots are, where the slow spots are, where the competition is coming to bear, all that stuff we see in the second hundred. We see in the 100, but with that additional hundred firms we really get a great picture of it.
Daniel Linna: Okay, you both have mentioned, alluded to kind of like what’s going to happen the next downturn. I guess I’d like to just ask directly and I’ll start with you, Gina. What do you think would happen during a downturn?
Gina Passarella: Sure, so I don’t think that anybody is expecting the next downturn to be quite like the previous one, I don’t think firm leaders are anticipating that, I think that they are really trying hard to make good use of the last few good years that they’ve had, but what I see happening is — kind of a — this is going to be the time for the alternative legal services providers to shine. I think that clients are going to look around much more closely at what their options are in the market and law firms may not be the go-to. So that again leaves for law firms kind of that highest and most sophisticated legal work to do. Every single law firm tells me, that’s what they want to be doing, there’s clearly not enough work to go around for even all 200 firms to keep them busy at that level to just do the high-end work, so it’s going to have implications more so for some firms than others.
I think your elite firms are going to be in great demand for the work that they do. You are not going to see a lot of firms doing what Kirkland did this year or last year which was in 2018 they added 600 million in revenue, that wasn’t on the back of a big merger, it was just pure demand-driven. And so, firms like that may still be able to kind of have that differentiated offering that keeps clients coming to them that may be close to that rate if not quite that rate, but other firms I think are going to have to suffer through kind of figuring out how to differentiate themselves, and frankly figure out how their offering is better than an ASP.
Nick Bruch: Yeah, I tend to agree with Gina on a lot of what she just said. I think one thing that looms in the back of my mind is over the last decade or so we have seen the partnership model at most law firms change dramatically. If we go back 15 years to 2004 we were at 71% equity partnership in the partnership model, today we’re at 56%. Almost certainly in the next downturn I think we will finally see that tipping point. We will see a majority of the partnership will be non-equity. I think one question to ask is the people who have shifted from the equity partnership to the non-equity, how many of those people will stick around through the downturn, will firms instead of just shifting them down to a lower comp will some firms choose to layoff those people because they are less profitable perhaps. That’s a big question.
One question that Hugh Simons and I asked in the Am Law package this year was what happens to a lot of the international offices, and I think that’s a really relevant question. There are a lot of very small international offices that law firms have built over the last decade. Offices that are ten lawyers five lawyers, 20 lawyers, some of those offices are profitable some of those offices that are profitable are still not as profitable as the U.S. offices, which means there’s a subsidy, the U.S. partners are essentially subsidizing the compensation of the international partners. That will come under intense pressure, and I think a lot of firms will pull back from their international offering and they’ll say, you know what, we don’t need an office in London or Hong Kong or Brussels, we can form partnerships and find local counsel to work with.
The other thing I’ll say — and Gina, obviously touched on this is the ASPs. I think in the last downturn there were a few ASPs that had robust offering. Axiom obviously was around in the last downturn so was Integreon. The offering is much more robust now than it was. I think many of the ASPs are in many ways preparing themselves for the next downturn. I think they are growing, they are developing their offering, they are investing in the business.
I think that when the next downturn comes the GCs will be approached by their CFOs and say, we need help, we need you to cut costs. The GCs will look around and they will find a vendor that is the alternative service providers, which frankly they didn’t last time around, and they will go to them and they say, what can you do for us? And they will able to do a lot more for them than they did before, and that I mentioned before was the managed services model, that managed services model I think is going to take off in the next downturn.
The question obviously is when is the next downturn? And the simple answer is no one knows. There is even quite a bit of disagreement among economists on that. There is more disagreement today than there was even four months ago. You have seen a lot of economists who were predicting a downturn pull back and say maybe we are just going to see a softening. That’s a real possibility. But also there are still a lot of very smart economists who are saying that there is a massive downturn coming, that there is a lot of debt out there and there is a bubble and it’s going to hit eventually. The truth is nobody knows.
Daniel Linna: Well, one is going to come, right, I mean everybody is going to tell you one is coming, it’s just the timing, and you mentioned having gone through — been in a firm through the last downturn, definitely saw the effects of that, and we saw partners de-equitize, some moving to non-equity status, some let go. We also saw associates let go. We saw law student graduates who weren’t hired and then had a hard time kind of getting into the marketplace once hiring picked up again.
What do you think would be the impact on senior associates, junior associates and law school graduates in a downturn?
Gina Passarella: So in some respects it can be an opportunity, if firms are looking to kind of push down work to an appropriately charged out attorney, they might have — and non-equity partners are being moved out of the way because firms are realizing that they probably have just frankly too many of them, it’s a group that’s been growing and hasn’t been proven to be super-profitable. So it could be an opportunity for associates.
Yes, there is a risk of cuts. I mean I frankly have been arguing for some time that I think firms are probably overstaffed with attorneys at a number of different levels. If they really look at what the clients are demanding and how they need to provide those services in a more efficient way, I think there is probably room in all of the ranks for firms to do some cutting. But it really depends on the practice area. I think that’s why having a niche and being able to really market yourself as an expert in a certain area, as long as that area isn’t one that’s about to crash, I think that that can be a really compelling offering.
I mean I think if we look at particularly what law students can take away from all of this data, you can never look at the financial information in a vacuum. Certainly it’s helpful to look at year over year trajectory. You want the employer that you are looking to join be financially viable and it looks to be a growing concern years down the line.
But you also have to look at interviews with firm leadership and what went into those numbers, what is the culture like at that firm, what are the hiring levels. We do a lot of surveys on associate satisfaction from both summer associates and midlevel associates, what’s being said about the firm and what environment that’s like to be in.
So there is so much information that you kind of have to look at in tandem and not look at anything isolated and really make a complete decision about where you want to take your career trajectory.
And now, frankly, for associates one of the benefits may be that there are so many other uses of a law degree that are — or actual uses of a law degree; alternative legal services providers may be a really interesting place to work, in-house is more of an interesting place to work than it has ever been, they are doing more sophisticated work. So there are more opportunities in many ways, but it’s figuring out the best paths for you in this market. I am not going to say that it’s an easy thing to be able to do.
Nick Bruch: Yeah, I would agree with Gina. I think there is a lot of moving pieces here. I don’t worry too much about the senior associates; the senior associates are some of the most profitable in the law firm. Firms are not going to fire there, but where they are going to fire is probably the non-equity ranks and the more junior associates who they have to invest a lot in the training side and they can’t bill out as much. So that’s a place to worry a bit.
People who are exiting law school as the economy is tanking obviously will face incredibly difficult times. In 2009 the Am Law 100 shed 1,500 associates, they did not do a lot of hiring, as you might imagine when they are firing that many. The good news is in 2010 they hired a lot of people back; they hired 2,000 associates during that period.
And so I think it’s important to remember that it tends to go up and down. There was a long period of time after that where there was very little associate net 00:50:23. So a downturn typically does have a hangover effect, which obviously impacts people who are maybe not entering law school today, but might be considering it in two or three or four years down the road, that would be a concerning place to be.
But to Gina’s point, there is a lot of moving pieces here. Many firms did well during the downturn. You have to take all these data points in concert together and understand sort of how they are moving together.
Gina Passarella: And just as a preview for our July edition I will note that we actually are looking at kind of the lost classes of 2009 and 2010, if you will, so what happened to the associates who were graduating, deferred, had offers rescinded, how did their career trajectories change, where are they now, and what lessons we can learn for the coming recession. So I think that will answer a lot of the questions that we have been talking about here.
Daniel Linna: Well, that sounds really interesting. I mean I do have this anecdotal sense about this kind of donut hole, where people, if you didn’t get a job through on-campus interviewing after the downturn and then you tried to get back in the marketplace, I know a lot of lawyers who feel like their career just — it’s been hard to get their career back on track.
Now, maybe one of the things that is changing is I think firms are getting savvier about talent management and thinking about how they are hiring and so it will be interesting to see what impact that has.
Nick, I did want to ask you, I think Gina mentioned a couple of ways in which — I am constantly encouraging my law students and associates and people who are going to lateral to use the data that’s available to, not just get — there is a lot of fancy firms out there and not just kind of fall in love with a particular fancy firm, but to kind of gather some of the data that can help them; Gina mentioned the associate satisfaction surveys.
Is their other data, including your data? I mean how should a law student, a young associate who is looking at a lateral opportunity use the data that ALM provides to figure out if a firm is a good fit for them?
Nick Bruch: Well, first of all, I think there are lots of different kinds of data, I think the associate satisfaction data that Gina mentioned as well as the data that sort of fits into the broader A-list category. So things that relate to diversity, things that relate to either gender or minority diversity as well as pro bono stuff, I think that’s really useful to look at that, because in many ways you are looking at the firm’s values, and if you are someone who has strong values, then that’s going to be important to you. So I do think you should be researching that side of thing.
The next question is, is this law firm going to face some headwind, either because of the part of the market it’s in or because of something specific that’s inherent to that firm? I think there are two pieces there. I do think law schools should be teaching their students what parts of the market are perhaps going to face the most difficulty in the coming decade or the coming two decades.
I will tell you when I look at the data I think there are some pretty clear answers to that. Now, sometimes analysts like me are wrong, sometimes we are right, but I think they should be forcing their students to think critically about different parts of the market.
And then I think there is sort of the individual firm, to actually dive in and to say what’s going on with this firm? If they are predominantly in a certain market, let me go look at if 60% or 70% or 80% of their lawyers are in Houston or Minneapolis or wherever it is, what happens if that market suddenly faces a lot of competition?
We have seen what happens in Houston, for example. Some of the leading firms in that market who looked like great firms in 2001, 2002, 2003 are facing a ton of new competition today, and some of that you probably could have seen coming if you looked critically at the data.
I think then there is obviously the financial data. I think you should be looking at how a firm’s revenue streams are, how stable are they, how volatile are those revenue streams? Are they going up and down? Why are they going up and down? Are they going up and down because of contingencies? Well, that’s not so bad. Are they going up and down because they are losing lawyers through lateral markets? That to me is a little more concerning.
And then there is the profitability side, has the firm been growing its profit per lawyer, has been growing its profit per equity partner? If it hasn’t been, well, that starts to create some concerns on its ability to invest in innovation, its ability to attract and retain partners on the profit per equity partner side, all of those data points are really important.
And I certainly, whenever I talk to law schools, encourage them to be teaching their students who will ultimately in some cases become associates and senior associates and perhaps one day partners or even managing partners how to look at that data and see the trends, see the forest for the trees, understand what they are looking at.
Daniel Linna: I want to hear what Gina thinks about this, but I can’t help but to follow-up Nick on what you said about — and I realize we are predicting the future a little bit here, on the other hand, there is no shortage of folks in our space who are more than happy to predict the future and they have nowhere near the kind of data resources you have.
So I think we would all be really interested in hearing wherein you say you see clear trends, are you talking about in practice groups, maybe certain practice group is going to be radically different, what sort of way would you couch that, I would love to hear more about it?
Nick Bruch: Yeah. So part of my job is to look in the crystal ball and I can look in the crystal ball and come up with lots of different theories about where the market is going. I think some of those theories seem like they are already kind of playing out. I think we have seen over the last couple of years a group of firms who have focused, for example, on private equity, on high end services, on sort of elite services, if you will, those firms have separated themselves from the pack. You see that most clearly in the profit per equity partner figures and the profit per lawyer figures.
But you see it in other ways too; the revenue growth has been faster. I think those firms are going to continue to separate themselves, they are going to continue to separate themselves in their ability to attract and retain the best talent. Ultimately those firms are going to move away from the rest of the firms, in my opinion, and I think as they do that, I think you will see sort of the elite top end of the market really become its own segment, that is very focused on how they attract, retain, compensate, and enable really the best thinkers in the legal industry who are constantly innovating in the practice of law and coming up with new ways to service clients’ complex legal needs. I think that’s going to become a very different part of the market than it is today.
And the question is how many firms exist in that world, is it 25, is it 10? The God to honest answer is I don’t think anyone knows. I think right now you could probably argue there is somewhere around 25-50 firms within that area. I don’t think there is going to be 50 firms going forward in that area; I think we are going to see some firms fall out. I think we are going to see some firms perhaps which are not already in that group enter. I think we are going to see that portion of the market shakeout and it will shakeout on exactly what I said, the ability to attract and retain the best talent.
I think the next question is what happens to the run the company segment of the market, that market I think is — talent is still going to be important, the people who are exiting law schools, who are going to go into those firms are still going to be an integral part of that offering, but so is technology and so is process, so is infrastructure and the ability to deliver knowledge to individuals, the ability to have infrastructure around technology, to make things work faster and more consistent and cheaper for clients.
Again, I think some of those firms, when I look at that part of the market, I think some of the bigger global firms seem to be doing the right things to invest. The firms that I worry about are some of the regional firms or even some of the national firms, who either are not investing in the necessary infrastructure to bind all the firm’s offices into a single cohesive offering, or are not doing what’s necessary on the process side to begin to try to lower the costs for clients. And I think that’s going to be a really important part of that part of the market going forward.
So that’s what I worry about. I hope that answers your question.
Daniel Linna: Yeah, that is very helpful, and thinking about processes — people, process, data, technology, all that stuff is music to my ears.
So Gina, I just wanted to give you an opportunity too to add to that as far as kind of looking out into the future, kind of what trends you are seeing and what you think we ought to be aware of?
Gina Passarella: Sure. Well, I am always a little hesitant to predict too much, but I would say that — I mean firms really need to, whether it’s looking at the data that’s in Legal Compass, that Nick is involved with, or looking frankly at their own data, I mean I think there could be a lot to be done right now, take a look back, see what trend lines were happening before the last recession, really analyze where your firm was, what you saw coming, look at what’s happening now and try to do a little predicting.
I mean we definitely saw a group of firms really frankly capitalize on the last recession, and perhaps some of it was luck; they were in the right practice mix at the right time, had the right client group. But I think above all, I mean data is wonderful, but if you are not listening to your clients and really listening to what their problems are, where their industries are headed and kind of tailoring your approach to that, I mean I think that’s where your biggest opportunities come from, is really just listening to what they want and what they need, both from the legal and business advice that they require, as well as the way that it’s provided. And don’t wait until the downturn happens to make those changes, start implementing now. If the 01:00:40 are so good, take that money and invest and make some changes to better position yourself for when a recession does hit.
Nick Bruch: I could not agree more with Gina on the don’t wait piece; the don’t wait piece is so important. Firms need to be investing today, I think, if for no other reason, firms should be very aware that the big four are out there, they are expanding into the legal market. There is open talk about the US regulatory environment changing, which would benefit the big four.
Right now US law firms are protected from a lot of competition. If things change, as they have already changed in the UK, as they have already changed in Europe, as they have already changed in Australia, that will create a whole new competitive environment for US law firms. US law firms should be getting ahead of that and they should be preparing for open competition with the big four, with alternative service providers, with law firms frankly who are adjusting their models to look slightly more similar to alternative service providers. Investing today is the best thing that they can possibly do.
Daniel Linna: One of the interesting things, there is this idea that regulations could change, and then the related question is, does it matter if the regulations change because we are seeing things evolve where, I mean you look at Ernst & Young recently just purchasing Pangea3, Thomson Reuters’ Managed Legal Services, I mean the big four is heavily involved around the globe and they are getting more and more involved here in the US. So even if regulation doesn’t change, the marketplace is changing tremendously with all these new competitors you mentioned before, the alternative legal services providers, legal tech companies. So it’s going to be an interesting next decade and probably many more years after that.
So we are getting close to the end here. I just wanted to ask a question as well about, James Sandman has been someone, for example, who has talked a lot about trying to not just measure revenue and profits in the marketplace, try to measure innovation and technology, and I agree with him that not only does that have a great impact for Am Law 200 firms and big corporate legal departments, but it helps improve legal service delivery across the marketplace and can really help us improve access to law and legal services.
So to that extent, you talked about costs going up and certainly some of that investment we can see from anecdotes in the marketplaces, investing in innovation and technology, seeing tons of firms hire Chief Innovation Officers, hiring more project managers, things like that. I mean what kind of concrete numbers can you point to in this Am Law 100 Data to maybe suggest that we are seeing more investment in innovation and technology specifically?
Nick Bruch: We do have data that I don’t think will be released in the Am Law 100 package that talks about where law firms are investing their dollars. This is a question we asked them, we particularly asked them if they are taking out debt, how they are using that debt? I will tell you that of the firms who answered that question, technology was the number one reason for taking out debt, was to invest in technology. And so we do have some hard data there.
But yes, a lot of this is anecdotal and that’s because a lot of firms are doing very different things in the technology space and it is somewhat difficult to track where all these dollars are going.
I will tell you, I hear the dollars largely sort of falling into three areas. One, I mentioned this before, is connected to the cyber piece. I think a lot of law firms are trying to get certified; there is a few different certifications, but they are trying to get sort of certified as we are sort of safe pair of hands sort of thing, that costs a lot of money, as you might imagine to get certified. It also takes a lot of time, and so law firms have been spending a lot of dollars there.
I think law firms are also upgrading some of their systems. You have seen quite a few law firms changing their matter management systems, the systems in which they use to manage the business.
Last is on the actual delivery side, there is obviously a whole host of new tools that are connected to AI, that are connected to contract management; obviously the E-discovery stuff is old now, but it is still evolving rapidly and as it’s evolving, it’s adding more cost. Those are the three areas I see firms investing dollars.
The last piece I will say that isn’t necessarily a technology piece, but it’s obviously related, which is on the process side. There are some firms who are trying to invest in process improvement. I think less firms are investing in this than should be. This is an area I hear a lot of firms talking about, but then when I drill into it, I don’t see as many dollars as I think should be spent on this.
Some firms have been very aggressive. Baker McKenzie is not a bad example of a firm which has been very aggressive on this side, and I think in this last year’s Am Law Data they did quite well; I think over the last couple of years they have done quite well. So perhaps you see some of the returns from those kinds of investments coming home.
But I think part of the cost increase you saw this year, and as I mentioned, costs are up significantly, it is a technology story, there are other factors at play, but I think what I hear from firm leaders is technology played a pretty big role this year.
Daniel Linna: Yeah, the talk about process improvement really resonates with me. My prior past experience and the work I am doing now and many of these, what are labeled as technology projects, what you find out is, there is a lot of work to be done just in the process, figure out like how do we really do this, what problem are we trying to solve, what value do we produce. So I couldn’t agree more about the huge gains to be made around process improvement.
I have to say it drives me a little bit crazy sometimes too when people just talk about lack of resources for doing work in this space, because I think so much of the work is changing culture, getting people to change mindsets. When you talk about doing process improvement and project management, of course you need to get some people who have some expertise to try to lead this, but most of it is getting people engaged, and a pack of sticky notes and people in a conference room can make a lot of progress on this versus thinking about the millions that maybe need to be invested in technology.
Gina Passarella: Sure. So I think — somebody said this at our Business of Law Forum that we hosted in January at Legalweek, and it couldn’t be more true, that innovation can be boring and a lot of times process — it’s process, right, it’s much more than just technology. And it’s so much that you can do today; it’s not what we have to invest in or what dramatic changes do we need to make, there are little tweaks to your model or to frankly the way that your employees operate that can be done today that can have a big impact.
And I would just add that I think the more that firms hire business professionals to come in and help them run like a business and give them an actual seat at the table, I think those are the firms that we are seeing really stand out.
So I think that that’s going to be a big differentiator in the next decade, whether it be the Chief Pricing Officer or the Chief Innovation Officer and just business professionals in general, really looking at these issues and being held responsible for them and give them the ability to drive that change, I think that’s where we are going to see a big difference. What tools they use, whether it’s technology or something else to make that change happen, I think that’s where we are going to see the difference.
Daniel Linna: Well, thank you Gina and Nick for joining us to talk about The American Lawyer 2019 Am Law 100 Data. I would like for our listeners to know how they can reach you.
Gina, do you want to go first and let us know how to contact you?
Gina Passarella: Sure thing. Feel free to call, email, Twitter, LinkedIn, wherever is easiest for you, I am happy to continue these discussions. My email address, so you have it is [email protected]; my Twitter handle is @GPassarellaTAL for The American Lawyer. So reach out anytime, I would love to talk more about this.
Daniel Linna: Nick.
Nick Bruch: Yeah, likewise, I am on Twitter, I am on LinkedIn. You can also reach me by email at [email protected], feel free to email me on any question. I get a lot out of talking with people about what they are facing and it helps drive our research, so please reach out.
Daniel Linna: Well, thank you Gina and Nick for joining us. And this has been another edition of Law Technology Now on the Legal Talk Network.
If you liked what you heard today, please rate us in Apple Podcasts. Join us next time for another edition of Law Technology Now. I am Dan Linna signing off.
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