One may fervently hope that regular readers have come to expect certain recurring customs here at Adam Smith, Esq., and today we honor that expectation with our usual “Letter from _____,” when we’ve just returned from a significant trip and have some market intelligence to report.
Going to London as regularly as we do—but typically at decent internals—is a bit analogous to getting together with an old friend you only see perhaps two to four times per year. Nothing has drastically changed, but a sufficient span has usually elapsed that the impact of cumulative forces may be more visible to you than to your friend himself. So with our visits to our second favorite city.
This time around the highlights can be summarized as:
- Brexit—now what?
- Having fun at work,
- Concentrating marketing spend more purposefully and narrowly, and
To borrow William Goldman’s famous phrase about Hollywood, “Nobody knows nuttin’.” Understandably so, since there is next to nothing to absolutely know at the moment. Interestingly, as a non-Londoner, one of my minor observations was that Prime Minister May seems to be a polarizing figure—at least based on our very limited and hardly random sample. Characteristizations ranged from “an undeservedly promoted civil servant” to “a superb poker player—by callling the special election, she left the EU to stew in its own juices for two months while Britain is AWOL. Brilliant!”
To be fair, it’s wrong to say “nothing” is known. Major financial institutions are already, perforce, laying contingency plans to expand operations in, e.g., Frankfurt and Dublin. I’m not sure there’s any reason to imagine that threatens BigLaw, however. We have a habit of uncharacteristic agility when it comes to following our clients.
Another plausible hypothesis is that Brexit will increase, not diminish, the importance of the New York/London axis. Fine by me, if not exactly the most welcome dynamic of causation.
And then there’s the admittedly minority view that it’s a non-event. “Passporting”post-dated the rise of the City as the European/Middle East capital center, so what’s new and insurmountable if it goes away again? I find this last view too glib, but probably the only sound thing to be said at the moment is that time will tell.
Having fun at work
This was one of two topics that spontaneously came up in several meetings and conversations, and was novel to us, but I love the fact that people can raise the concept out loud and declare its importance. One firm reported to us that it came up in the context of their just-concluded annual partner retreat where a new branding/positioning had been introduced to emphasize all the things that made the firm distinctive—and they are in the small minority of firms that can properly claim that attribute. They are different, and different with clear client benefits. But after the end of the presentation, one of the partners took the floor and announced she had to add that it was a fun place to work. We were told everyone instantly recognized that to be true.
At another firm it came in the form of the senior partner telling us that part of the training/acculturation of associates is to emphasize to them that if they’re not having fun, something is wrong and they need to seek guidance. He has a point, of course, and it goes beyond “morale” or “satisfaction.”
I can say this from first-hand experience, having spent far too long miserable as a baby litigation associate. I’m not a litigator. I didn’t belong there. And I knew within about two weeks that those who did belong and were thriving emotionally were also going to outperform intellectually and professionally. If you’re struggling to give 85% and those around you are giving 110% without breaking a sweat, the upshot is already clear. (Happy to report that after some unjustifiably time-consuming career writhings I was able to shift over to securities law, vastly more in sync with my worldview and disposition.)
Be that as it may, our Senior Partner friend has a point.
Targeting marketing spend
Any readers of today’s little essay who grew up as much or more in Corporate Land than Law Land may be shocked that this management hygiene 101 practice bears remarking. But it does.
Most law firms allocate marketing dollars according to a combination of rainmaker decibel level, share of revenue by practice area, history and tradition, per capita per partner, or close to sheer randomness. Two of the firms we met with said they’d recently changed that to starve practice areas that do not represent the firms’ futures and invest richly in the one or two areas they want to grow.
This sends a message. Primarily to those who get the long or the short ends of this particular stick, but it also gets the entire firm’s attention. It declares a direction, a choice, a winners-and-losers if you will, and a set of priorities. People take notice.
You might try it yourself at home.
This came as a surprise. Without exception, every firm we met with brought up AI unprompted and unbidden. For what it’s worth, we have not had that experience in North America.
So what did they say about AI or what did they want to discuss?
- Obviously, how-big-how-fast. Here the consensus was “bigger than you think” and “faster than you think.” Duly noted.
- Who will own the platform and who will own the IP that’s the really valuable part? (See below.)
- And of course, “what should our firm do about it?” Stay intellectually agile, be curious, follow developments every single week, use creative analogies to extend what you hear to Law Land and to your firm.
Now, the platform vs. the IP.
The business model options for AI intersecting with law firms seem to me as follows:
- IBM Watson, Google DeepMind, etc., take the role of arms merchants and sell their AI technology to any and all comers to do with as they will. This posits the tech companies as quasi-utilities for distributing intellectual content provided by the law firms. Not conceptually that different from book publishers, web architects and copywriters, or for that matter FedEx. Nirvana for law firms.
- The tech companies and the law firms “partner” (always a slippery word). IBM et al. rent their AI platforms only to law firms willing to share some or all of the IP the firms deposit into the AI engine. Whether it’s a royalty-free license, a revenue-sharing agreement, a clean and crisp segregation of tech and of IP the moment the partnership terminates, are all issues I leave to be determined by the relative negotiating strengths of the parties. What we have here, however, under this model, is essentially a “bilateral monopoly,” where economic theory offers no guidance other than that the outcome will….depend. Primarily on who’s the better negotiator. Some law firms win, most lose.
- IBM et al. find enough public domain raw material and/or IP from concupiscent firms and publishers to train and release their own IBM (say)-branded Law Land AI engines. Law firms are cut out.
None of this speaks in the least to whether AI will increase, decrease, or have no material impact on the lawyer-side professional headcount in BigLaw. For my thoughts on that, take a look at the “Machines Win” chapter in Tomorrowland.
Suffice to say I think the least likely futures are that machines send us all to the unemployment lines and/or that they have no impact on our career tracks and what we do day to day. Most of us will still be working as lawyers, but not so much as we’ve done it for the past few centuries.
Two years, from the triggering of Article 50 to Brexit in full throat, seems like a long time. It’s not. This is going to be one gripping ride.