Archive for the ‘Law Firm 2.0’ Category

A Recipe for Disaster – Killing Law Schools in Favor of an Undergraduate Education

The Wall Street Journal published an article today called “First Thing We Do, Let’s Kill All the Law Schools.”  The basic premise is that the costs are outweighing the benefits.  The authors claim that the total cost of going to law school is around $275,000 which leads to higher legal fees to citizens as it constrains supply of lawyers and those who do graduate must charge high hourly rates to repay their student loans.  The solution according to the article?  Kill all the law schools and make it an undergraduate level program. While I agree that the costs of law school have gotten out of hand in comparison to the real opportunities post graduation for many students, this article is wrong on a number of its conclusions.

First, to suggest that there is a supply constrain on lawyers is laughable.  Whether I’m wearing my client hat where I hire lawyers, or my professor hat (I am an adjunct professor at the University of Colorado), there aren’t nearly enough jobs to place all the lawyers this country is graduating.  In fact, the amount of applications to law schools has been INCREASING over the past few years and this is despite the costs going up and the number of jobs going down.  I’m shocked that the authors, one of whom is a professor and another an attorney at a large law firm don’t see these trends.  Perhaps given the rankings of their institutions these realities don’t effect them, but to the rest of us, it’s quite apparent that the system doesn’t suffer from a lack of supply.

Secondly, the idea that one can train good lawyers out of an undergraduate program is misguided.  Clients pay lawyers for judgment, first and foremost.  It isn’t about wrote laws and rules, but rather, whom do you trust to be mature and wise enough to help you with your issues.  I’ve always thought that law schools do a disservice by allowing students to go straight from undergraduate school to law, when they should be copying the business school model of pressuring prospective students to have real-life work experience before attending a graduate program.  As both a client, a professor and former attorney, I believe that on average, those who have some real life experience are better suited to attend law school and become lawyers.  In any event, I can’t imagine wanting to pay for a 21 year old recently-graduated lawyer.  What experience in life do they really have?  Even if a student goes straight though, at least they are 25 years which is a different world than post undergraduate.

The authors talk about paid apprenticeships, but this still doesn’t get around the problem that lawyers would then have no work experience outside of the law.  Simply put, I don’t believe the average graduate has enough maturity to be a lawyer.

The authors also put for thehe concept that we would still have JD programs alongside undergraduate programs.  This makes no sense to me.  At best, we create a two class legal system between the “haves and have nots” and at the end, I don’t see market economics (price) differentiating, rather some folks will get good legal services and others will not.  Passing the bar exam doesn’t mean one is ready to be a lawyer.

Finally, the $275,000 is based on the assumption that actual school costs $150,000 and that with opportunity costs for “bright students with attractive career opportunities” the number, fully loaded is $275,000.  I would have stopped at the $150,000.  yes, that number alone is too high, but the rest is a complete fudge factor guess.  As previously mentioned, many students (maybe most) don’t have a better option than going to law school and thus the opportunity costs are a made up number.

I do applaud their ideas that a legal education should be more well rounded.  At CU, we are actively engaged at trying to bring more diverse subject matter into the classroom.  This is a key for going forward legal education.

In short, I agree with the problem, but the solution doesn’t work here.

January 17th, 2012     Categories: Education, Law, Law Firm 2.0    

Law Firms Invent New Recipe For Disaster

Recently, the New York Times published an article called At Well-Paying Law Firms, a Low-Paid Corner. In short, the paper is reporting that some very well known firms are hiring lawyers at cut rate prices (less than half) of what associates on partner track are making at the firm. And these cheaper resources are performing the same services as their partner-track colleagues. This feels like a recipe for disaster to me.

I’ve known a few people who have positions like this at firms. Their names and the firms they work for will remain nameless, however in this post. In each case, the lack of transparency of how this arrangement really bothers me as a client.

First, how do the firms determine which work gets assigned to which group of associates? And does it differ depending on how busy the firm is? If I hire a firm to represent me in a financing, are the folks doing the diligence (which really is the most important part of a financing, not the documentation) sometimes partner-track folks and other times not? Do the clients have a right to decide?

And how are the firms billing out for these lower-cost resources? If they bill the same, it feels like I’m getting ripped off. If they bill less, then my bill will reflect that I’m be represented by the lower-paid people. While I think many junior associates aren’t worth what they are paid (but it catches up later), one does normally get what one pays for. I refuse to believe there is no quality difference in an associate making $160,000+ and one making $60,000.

I worry about mentorship and training, too. What incentive does a firm have to really train folks that aren’t on partner track and might not stick around long term?

Lastly, I would propose the theory that camaraderie is important to the concept of the law firm. Clients hire partners at law firms, but also the firms themselves. This includes the firm culture and the knowledge that client teams traditionally are near each other physically, not in outpost office where some lawyers are making less than have of their other colleagues.

While the reason for this shift was to help with escalating billing rates, I’m still perplexed why lawyers and accountants are the only professions that every year raise their rates. It doesn’t fit with the rest of the economy or their clients. Perhaps instead of creating a group of second-class citizens within the firm, they should pay attention to some of the things I prescribed in my law firm 2.0 series.

May 24th, 2011     Categories: Law, Law Firm 2.0    

New Must Read Blog by Rich Baer, General Counsel Qwest Communications

One of my absolutely favorite lawyers has started a blog: Reliance on Counsel.  It’s written by Rich Baer, currently the general counsel and chief administrative officer at Qwest Communications.  It’s going to be a must read for anyone wanting to see how one of the most innovative lawyers in the country thinks.  Rich has promised a level of candor and openness not seen today in other offerings.  It’s going to be much more than about law, but leadership, technology and common sense.

Rich is also in the middle of a job search as the merger between Qwest and CenturyTel closes soon.  I predict that he won’t be out of work for long, having recently won and award for Law Department of the Year.

Welcome Rich to the blogosphere!

March 16th, 2011     Categories: Law, Law Firm 2.0    

Even Conan O’Brien Loves Our Portfolio Company Brightleaf

I thought I had seen about every possible way that a startup could market itself.  Until now.  Ladies and Gentlemen, I now present you Brightleaf’s marketing “materials” for their launch at LegalTech in New York this week.  (In all seriousness, they are doing a great job with their automated document platform and more instructive videos about what they are doing can be seen here.)


 

January 31st, 2011     Categories: Foundry Group Investments, Just For Fun, Law Firm 2.0    

Future Practice Models for the Transaction Lawyer

Today, the Silicon Flatirons posted a report called Law 2.0: Intelligent Architecture for Transactional Law.  It is the work product of a half-day roundtable held at the CU law school featuring an international gathering (yes, we had someone from Canada) of lawyers, academics and technologists who are passionate about the future business models of practicing law.

The roundtable focused on the implications of the digital transition and how it is changing transactional legal services. Leaders  from the  legal, academic, and software-related fields came together for a discussion ondevelopments in  business practices due to what many refer to as technological “enablers.”  Of particular interest to the group were  the near-term consequences  of these changes for the legal profession, for clients, and for the training – both at the law school level and within the historical apprenticeship at law firms.

While technologies like the fax machine and Internet have fundamentally changed how lawyers go about their work, the question is “what’s next?”  Personally, I think the cloud computing and document automation technologies will be the next big thing that will allow lawyers and their clients to form more satisfying and efficient relationships.

The report focuses on transaction law practices which the group felt were more affected by technological changes than other practice areas.  It starts with a brief history of how technology has changed the business models of law over the years and makes some guesses into what will happen in the future.  Overlaying this is a discussion about what particular areas of law may be more affected than others and what those implications might be for law firms and practitioners.

I’d highly encourage a read of the report.

December 16th, 2010     Categories: Law Firm 2.0    

Brightleaf Automates the NVCA Model Documents (a.k.a. Why Brad Feld will Succeed)

If you are a reader of this blog, or Brad’s you know that we are keenly interested in the ideal that we should be able to arrive at a model document set for venture financings.

Whereas, I argued that he’d never succeed in coming up with a standard set of seed documents, I used the story of the model form document project from the NVCA.  The project actually produced model forms of documents, but most of us were disappointed by the actual usage.  In my opinion, this was because the documents had too many options and took lawyers a while to deal with them.  (For instance founders reps which you never see on the West Coast and things like that).

But at the same time, these documents live and breathe and are updated by some of the great minds in our business on a regular basis.  I feel safe in saying that are more vibrant and accurate than most law firms. 

Today, I’m delighted to announce that our portfolio company Brightleaf has released their platform including the standard form of NVCA documents.  In short, their document automation and assembly software can save lawyers a ton of time using the NVCA forms, while giving them the piece of mind that they are always using the latest and greatest forms in the business. 

Oh yeah.  Did I mention that it’s FREE?

They are offering free “NVCA ASAP” trial accounts to a limited number of VC’s and Emerging Companies law firm practices. For more information about the project (and how to get a trial account) please visit their NVCA ASAP page here.  For a quick overview demo of how Brightleaf works, watch the video here

This could quite possibly be the tipping point in getting us to one standard set of documents.  Maybe Brad won’t fail after all. 

November 5th, 2010     Categories: Financings, Frustrations, Law, Law Firm 2.0, Venture Capital    

Interview With Rich Baer – GC and CAO of Qwest

Law.com has a great interview with Rich Baer, General Counsel and CAO at Qwest.  I find 99% of interviews worthless, but this is one of the few that allows the reader to actually understand the subject a bit.

The premise of the interview is that Rich is moving on from Qwest after the announced merger with CenturyTel closes early next year.  But more than that, Rich opines on the future of the in-house law practice and looks thoughtfully inward talking about what he will do differently next time. 

Rich has been recognized as a leading innovative thinker in all matters related to in-house counsel and was awarded the 2008 Legal Department of the Year

Best of all, despite his non-friendly picture in the interview (sorry Rich) and his hard driving passion for everything he does, Rich is sincerely a nice guy who hasn’t let any of his success go to his head.  Congrats Rich on a great run at Qwest and great interview. 

June 25th, 2010     Categories: Law, Law Firm 2.0    

Spindle Law – Crowd-Sourced Legal Research

I recently got a demo of Spindle Law, a new crowd-sourced legal research site that’s part legal treatise, part wiki, and part lawyers’ forum for discussion.  Spindle Law organizes the law hierarchically with topics leading to ever-narrowing legal rules.  Instead of searching the text of cases or other authorities and then teasing out the legal rule, you browse or search for the rule, which is shown with the authorities that support it.  There’s also a really cool workflow tool that helps you draft a document based on your research.

The law on the site is contributed by the community alongside designated specialists who keep an eye on things.  You can log on and start adding to existing practice areas, start a new area, comment, or “vouch” for an  authority and agree (or not) that it supports the linked rule.  So far, there’s substantial coverage of the law of evidence, Clean Air Act, securities fraud, and forum non-conveniens (my personal favorite).

Cases and other legal sources are, more and more, out on the web for free.  But until this information is well organized, practicing lawyers can’t make much use of it.  Spindle Law may very well be how that organization will happen.  While there are clearly the issues of information that is crowd-sourced (think accuracy of Wikipedia), the benefits may far outweigh the issues, if properly monitored and a vibrant ecosystem evolves.  I am excited to see where they go with this idea.

May 24th, 2010     Categories: Law Firm 2.0    

Why There Will Never be a Standard Set of Seed Documents (a.k.a “Why Brad Feld will Fail”)

My partner Brad recently wrote a blog post commenting on the proliferation of standardized seed financing documents.  The post was motivated by the highly-publicized release of the fourth instantiation of such a standard series of documents, this time by Ted Wang at Fenwick & West with collaboration from a group of bay-area early stage VC’s and angel investors.

If you are keeping score at home, there now exist the following sets of standards that have been made public:

(**Disclosure: I had participation with the TechStars set**)

Brad noted that it seemed silly to have four different versions and decided to invite everyone together in a room to come up with one, universally accepted set of model documents.  The immediate response was tremendous.  33 comments to the post and countless more emails from lawyers, entrepreneurs, VCs all praising the effort and wanting to know how they could get involved.

And all I could think was “Feld, you haven’t a clue what you’ve gotten yourself into.  This is going to end badly.” (and then the second thought was “Damnit, I bet all of these emails end up in my inbox too,” which they did, but then gave me fodder for this blog).

Why? Because there will never be a standardized set.  Not because there shouldn’t be, but rather once you introduce humans to execute the task, it simply doesn’t work.

And those humans are called lawyers and venture capitalists (and not entrepreneurs).  Despite all the handwringing about “doing it for the entrepreneur” I don’t think these two sets of humans will ever get their act together well enough to do what they say they want to do.  Here is why.

Lawyers:

Lawyers are like congress people.  If they aren’t involved in something, it’s nearly impossible to get their vote.  If they are involved then they are obliged to be “value additive” to the process.  In other words, the more lawyers, the more support and the more bloated of a document set, because everyone needs to get in a point to save face.

If you don’t believe me, see the NVCA model documents (I’ve been in the room while they have been drafted).  While the documents are great in that every potential scenarios has been imagined (and even more importantly to show you what should never be included in financing documents by their omission), the documents are too complicated for 90% of the folks out there doing the deals.  And then you add in the east-coast / west-coast differences (I think many east-coast terms can be entrepreneur unfriendly) and now you have a treatise as opposed to streamlined set of documents.  (As an aside, I don’t want this to turn into a east coast / west coast debate.  If you want to see what I think about terms, read this series).

Many of Brad’s email responses included this not-so-veiled threat: “you need me as part of your syndicate, or I won’t sign off on the documents and you’ll not have broad support.  My firm is important [insert canned marketing paragraph here].”  At the end of the day, Brad would have had 50+ lawyers in the room and we’d be right back to where we started with the NVCA project.

Even more importantly, however, lawyers are driven by more important things (to them) than helping entrepreneurs save legal costs.  Lawyers are driven by fees and thus they want to acquire more clients.  Releasing a set of documents that get you on the cover of peHub and Techcrunch is good for business.  You may streamline some hours, but you are betting on more clients.

Therefore, you have no incentive to join other groups, as it’s your name that is getting all the good publicity.  Why be a part of “working group X” when you can be “Joe Smith, super lawyer to the entrepreneur?”  While I can’t disclose the particular emails, rest assured that this paragraph is much more than an assertion, but a fact.

Lastly, there is also pride of authorship, by lawyers, even in situations where the documents should be boilerplate – as the case is here.  Every firm has their set of documents that they consider “better” than others.  Are they?  Or are they lazy and haven’t even read the other firms’ (or maybe they don’t have access).  I haven’t read them all.  I don’t want to either, but I can tell you that I’ve only seen a few firms out there that actually have better forms.

Bottom line:  Too many cooks spoil the soup, while the celebrity chefs don’t even want to cook with you.

Venture Capitalists:

Let’s not let the lawyers take all the blame, though.  While I do think the incentives of the VCs are good here, we have our own issues.

First, we, as the business drivers of the provisions, can’t necessarily agree on the basic terms.  That is problem one.  I don’t have a way to fix this one.

Secondly, most VCs aren’t lawyers and their level of deal comprehension varies greatly.  (Note: there are plenty of non-lawyer VCs that can take me to the woodshed, so this isn’t a statement that all lawyer-VCs are better).  So what do we, as an industry do?  We hire lawyers to produce a standard set of forms that we might not completely understand ourselves.

The end-result is our trusty lawyer tells us “our forms are better” and we take it for granted never minding the misalignment of incentives (lawyers want to make money, we want to save money for the entrepreneurs).  In fact, if you ask some of the business people around the table of these four sets, they really can’t tell you how any of these documents differ from the others.  They will always refer you to their lawyer.

Want more proof?  The latest set of documents from Fenwick and supported by a number of investors has a provision allowing for $10k of investor counsel fees.  If the investors really understood everything in the documents and were prepared to take them “as is” I would expect that number to be zero.  In fact, the three other sets of standardized documents have $0 fees for investor counsel.

Bottom line: until the VCs truly understand everything in these documents, they are going to continue to rely on the forms of their favorite lawyers and not those generated by others.

So which of the four forms are better to use?  I don’t know.  I’ve only read half of them.  And I don’t really have the burning desire to read more of them, as I predict even more proliferation.  That being said, here are a couple of interesting factoids.

1.  Yokum Taku has a nice post and matrix comparing the documents; and

2.  I heard from one name-brand law firm that working with one of these standardized sets (which I won’t name either for professional courtesy reasons) is a horrific experience in spell checking, capitalized term mismanagement and sloppy draftsmanship.  So just because they are released and publicized doesn’t mean they are necessarily any good.

So my prediction?  My dear partner Brad, while heart in the right place, will fail to come up with one set of widely used seed documents.  Sad, but true.

Of course the horrible irony is that none of this is intellectually difficult.  Maybe I’ll just come up with my own set of documents and…. oh wait……

March 15th, 2010     Categories: Entrepreneurship, Frustrations, Law, Law Firm 2.0, NVCA, Venture Capital    

Attorney River

The guys over at Legal River emailed today and let me know about a new product offering that they’ve come up with called Attorney River.

Attorney River is trying to help improve upon the lawyer directory model, i.e. Martindale, which has not seen a lot of innovation in the last few decades. Attorney River allows lawyers to post a request for other lawyers – whether it be for outsourcing work or to find a specialist for a client in a different state. Interested lawyers can then respond to the posting. The system takes the onus off the lawyer who is currently wading through directories cold calling other lawyers.

They tell me that creating an account is free and posting of issues is also free. 

March 9th, 2010     Categories: Law, Law Firm 2.0