Jordan Furlong on The Future Legal Industry Landscape
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Here are some highlights of my interview with Jordan Furlong:
I think there is a serious risk for law firms of losing, not all market share… but enough that it’s going to hurt.
The Big Four are going to change client expectations about what’s possible in legal services and that will affect everybody.
We’re going to see a point at which we don’t just see the consolidation of firms; we see the transformation of firms.
In 10-15 years, I’m not sure there will be an Am Law.
The ability of technology to perform tasks that previously only people could do is going to decimate the ranks of the law firm associate class.
The purpose [of law school] is to prepare people to be professionals in the art of serving people’s interests and making the world better for them.
They [Millennials] don’t want to work 80-hour weeks, make tons of money, and maybe someday retire so they can putt around the house wishing they were busy.
This is the world that if you are not a great power, and there’s very, very few of them left, you’re at the mercy of what goes on around you.
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Links referred to in this episode:
Jordan Furlong | Law21
Jordan Furlong’s Twitter | @jordan_law21
Law is a Buyer’s Market: Building a Client-Firm Law Firm book by Jordan Furlong
Three Ways to Compete in the Coming Legal Market article by Jordan Furlong
The Rise of the Millenial Lawyer article by Jordan Furlong featured on LOD (Lawyers on Demand)
Ed Reeser | Attorney & Consultant
Lawyers on Demand | Bryan Cave Leighton Paisner
Bill Henderson and Jae Um | Legal Revolution
Three Geeks and a Law
Casey Flaherty | Procertas
Ivy Grey | WordRake
Kristen Sonday | Paladin
Jason Barnwell | Twitter
Lucy Bassli | InnoLegalServices
Ron Friedman | Prism Legal
HopeShallSing (blog on Catholic faith)
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Audio Transcription
To Download the PDF Transcript, click here. (Look in the top right corner and click on the three dots to download.)
Hi listeners, this is Chris Batz, your host of the Law Firm Leadership podcast. In regards to the next episode, I had the pleasure of speaking with Jordan Furlong of Law21. Many of you know him for his Twitter account and his blog, where he shares insights on the global legal industry. In talking with Jordan, we touched on several subjects, a few which I’ll mention: his legal career, innovative things law firms are doing, non-attorney ownership, geopolitics, law school reform and what young attorneys are facing and much more.
Just a reminder the PDF transcript of this audio is available to download. Go to LionGroupRecruiting.com/podcast.
As many of you know, we interview corporate defense, law firm leaders, partners, general counsels, and legal consultants. You’re listening to episode twenty-eight of the Law Firm Leadership podcast.
Chris: Welcome to the Law Firm Leadership podcast. I’m your host, Chris Batz, with the Lion Group. Today I have the pleasure of speaking with Jordan Furlong, principal at Law21. Jordan is a leading analyst and consultant on the global legal market and forecaster of its future development. He’s well-known for his legal industry blog, Law21, and speaks to numerous legal organizations, including law firms, lawyer organizations and legal regulators throughout the United States, Canada, Europe and Australia.
Jordan has a Canadian law degree from Queen’s University Faculty of Law in 1993 and was fully licensed in 1995. Welcome, Jordan, to the Law Firm Leadership podcast. It’s great to have you on the show.
Jordan: Thank you very much Chris. It’s great to be here today.
English Literature Undergrad to Law School to Law21
Chris: Is it correct you went to undergrad for English and then to law school?
Jordan: That’s right. After finishing my English Literature degree, I wound up going to law school, and at a large firm in Toronto. In Canada, there’s an articling year. It’s an apprenticeship year you have to serve before you get called to the bar. At the end of the year, the firm declined to hire me back as an associate.
From there, I wandered into legal journalism. I spent a short period of time writing for a legal newspaper. Then over the course of the next ten years, I wound up being the editor of three different Canadian legal periodicals which was really interesting and a new and different perspective on the market from what I had before.
Chris: You won awards because you’re the editor of these publications. It’s The Lawyers Weekly, National and Canadian Corporate Counsel Association Magazine.
Jordan: That’s the three.
Chris: Now what gave you the idea to strike out on your own and do Law21?
Jordan: It was a gradual process by which I figured I had so many things to say about the business of law and the market for legal services. I found that I couldn’t really do it in my career and position, and I needed a place to say them outside of the confines of any official representative capacity. That’s how it all started.
I spend my time split between writing as much as I possibly can about the market, making as many observations and trying to learn all the time what’s going on. Then I speak to law firms and legal organizations. I basically say, “Look, this is what’s happened to the market that we all thought we knew really well. This is why it’s happened. This is why it’s going to keep on happening. This is what I would strongly recommend that you do in your situation.”
Chris: Jordan, tell my listeners about the new book you just released.
Jordan: Well, it’s called Law is a Buyer’s Market. Full disclosure, it’s not really, but it’s getting there really fast. The first 40% of it is a brief history of change in the market and the forces behind it. It’s an exploration of all the ways in which the traditional law firm model isn’t working anymore. Then, the balance of it is building a client-first law firm. If you were to reconstruct a law firm along the lines of a more aggressive market, what would that look like?
Law Firms Sleep as Big Four Grow
Chris: American Lawyer just published their new magazine with front title talking about are big law firms sleeping, while the Big Four accounting firms are encroaching. What’s your opinion about that?
Jordan: They are absolutely interested in the legal market, but not in a way I think that most lawyers tend to view it. The Big Four are not lining up big law firms in their sights and ready to take us down. The Big Four are concerned with each other. What they’re focused on are their clients’ business concerns and issues, of which they are manifold. But among those are issues of risk management and there are issues of regulatory compliance and other areas that law firms are currently doing.
Their impact on us is almost inadvertent. They want to own the entire area of providing the consulting, advisory and strategic services that large clients need. I do think they are going to continue to zero in on this field. There is a serious risk for law firms of losing, not all market share, but enough that it’s going to hurt and it’s going to be a new competitive entity to take into account and to try to differentiate ourselves against.
Chris: But how are they going to take business from domestic and international law firms?
Jordan: I think it will start on the international side. They cannot compete directly with US law firms for business in the US in terms of straight legal services. There are two aspects of that. The first hinges entirely on the regulatory ban on non-lawyer ownership of the legal service deliveries.
But secondly, if I’m running a 40 or 50 lawyer law firm in Kansas City and I’m dealing with a couple of major local manufacturers, I’m not concerned about the Big Four nor should I be because that’s not their client base. I’ll be concerned only insofar as any major new competitor coming into the market. No matter if they’re in your backyard or not, they’re going to change client expectations about what’s possible in legal services and that will affect everybody.
Axiom continues to be a really interesting company because they started out as – I don’t want to say a flex lawyer platform alone, but that was what they were interested in. I think what’s been interesting is to see them morph into what is really a managed legal services provider and taking whole chunks of work and investing in technology, project improvement and project management. I saw a stat the other day, some not insignificant percentage of their income now comes entirely from fully automated contract analysis work for large companies around the world.
You look at a company like UnitedLex, which is probably the noisier of these major companies right now. Or something like Elevate, really interesting company. I think Elevate recently acquired LexPredict, which is very advanced thinking in terms of machine learning and AI for legal services. There’s so much action going on all around the periphery of law firms.
Future Changes to the Legal Landscape
Chris: One of the consequences, intended or unintended, is consolidation. What do you anticipate for the number of firms in the Canadian, US, and European or UK markets?
Jordan: Amongst the largest firms in the US, I think there’s going to be significant consolidation of what you would call full-service multijurisdictional multi-office law firms. Law firms seek growth. They want more revenue coming in, so they look for ways to bring in more offerings, deeper benches, etc. I don’t think that’s the best way for a law firm to achieve growth. Just simply bringing in more lawyers doesn’t really change the game for you. What you always want to be doing is either really increasing the percentage of market share or increasing your margins and getting higher profitability, which is not achieved by just adding lawyers.
Chris: When you say significant consolidation, can you put numbers?
Jordan: Maybe 10 – 15 years down the road, I’m not sure there will be an Am Law. All respect to my friends at American Lawyer who do a great job. The whole Am Law thing is a brand. Even the nature of law firms themselves are going to change over the course of the next decade. We’re going to see people who aren’t lawyers coming into law firms, delivering services to clients, and taking equity stakes.
But in the interim, we’re going to get to a point where there are 50 – 75, maybe 100 maximum firms in the country that are of a significant enough size that have the kind of courage that those of us interested in global commercial law are focused on. I think if you go as far as 20 – 25 years down the road, you’re probably looking 50 – 75 max.
That’s going to be some holdovers from today. But there are going to be firms that come out of China, India, and countries you don’t see right now as global players. We’re going to see a point at which we don’t just see the consolidation of firms; we see the transformation of firms.
Let’s hang one more idea on the other aspect of consolidation, which is going to really come into play over the next five years or so is what my friend, Edwin Reeser termed– basically liquidating mergers. You’re going to see firms that have just come to the end of their road. Along comes this behemoth and says, “We will just gobble up all the parts of your firm that we care about.”
Chris: Can you talk about AI and where tech is headed to make things more efficient and effective?
Jordan: Everything we hear about legal AI, machine learning and legal services, 95% of it is hype. This is not about lawyers being replaced by AI. It’s about lawyers being augmented by AI. It’s a very fine-tuned, highly effective technological tool, but, at the end of the day, it’s just a tool.
The main thing that machine learning is probably going to do is accelerate this process of disaggregating work away from law firms, especially from junior and entry-level associates. The document review, due diligence, contract analysis and basically the research, that work is going into software. It’s going into these managed legal services companies. Some of it’s going right back into the client itself.
The ability of technology to perform to a certain extent tasks that previously only people could do is going to, with time, decimate the ranks of the associate class of law firms. That’s going to have a profound impact on not just the nature of firms themselves, but on their profit structures, eventually on compensation and billing systems. It will have a deep impact, but it’s going to take a while for it to flow all the way through the ecosystem.
Investing in the Legal Industry
Chris: If you were a non-attorney investor and had a large pile of cash to invest in a law firm, where would you spend it to get the greatest return and what would be your investment horizon?
Jordan: I can’t think of a single law firm anywhere that I would invest money in as an outside investor. The reason is these firms are not set up to be investment vehicles. They are platforms for the generation of annual profits on a short term basis as possible of the lawyers who also happen to be equity partners. The only way I’m going to get a serious profit would be by cutting the lawyer workforce in half.
It would be one of two areas. The first I would be interested in is any business that is looking into the whole issue of contracts: how they are drafted, designed, managed, and the contract analysis. There are very good established companies right now in this area. Kira Systems, which I think right now is probably the leading technology company in this area. The management and consolidation and extraction of useful data out of contracts would be immensely interesting.
The secondary I would be investing in is the latent or untapped or invisible market, especially on the consumer side. This is why you see LegalZoom raking in half a billion dollars the other day in outside investment because people look at that market and say this is almost pristine. Lawyers could not be any clearer that unless you can provide them with a certain amount of money per hour, they will not serve your legal needs. Hundreds of millions of Americans are absolutely without access to needed services.
Reform and Innovation in the Legal Industry
Chris: If you had the power, what kind of law school reforms would you bring?
Jordan: There are a bunch of law schools now that are making a serious commitment to doing things differently. Look at what Suffolk Law School in Boston is doing, Vanderbilt, Northwestern in Chicago, the University of Indiana under Bill Henderson and the leadership there. They’re starting to fundamentally re-envision what the purpose of the school is. You cannot graduate old heads on young shoulders, nor should you try. You’re not supposed to leave law school a fully-formed lawyer.
I would rethink the role of faculty. I think the purpose fundamentally is to prepare people to be professionals in the art of serving people’s interests, making the world better for them and for the world around them in law-related and legal coordinated issues.
Chris: What are the most innovative initiatives that you see law firms doing right now?
Jordan: The list of innovations in the legal world are extremely lengthy. Giving clients a dashboard, real time access to their information and so forth. I think of Cadwalader out of New York and their cabinet. That’s not all it does, but it’s a whole range of functions that include that kind of capacity.
But when you look at some of the firms that have been consistently in the lead in this area. Bryan Cave out of St. Louis, which is now Bryan Cave Leighton Paisner following their merger with the British firm, which itself was an absolute innovator in the UK because they created the first flex-lawyer platform called Lawyers on Demand. BCLP now is doing all sorts of interesting things.
Littler Mendelson out of San Francisco, they just do one particular area. But they also recognize – and Ogletree Deakins is the same way –we’re in an extremely competitive market. They built all these internal systems and give them to clients and say, “Use this technology. We’ll help you find litigation hotspots, help you identify emerging issues, help you identify risk and anticipate it,” which is exactly what clients are looking for. Seyfarth Shaw out of Chicago was one of the leaders originally in LPM (Legal Project Management).
You’ll notice I’m not rattling off the Am Law 10 here or even the Am Law 20. If you’re number ten in a market of several thousand, you don’t have a lot of incentive to move up higher.
Chris: What is the future of law for young lawyers and law students?
Jordan: Right off the bat, this generation coming into the market and coming into the workforce, coming into society, is terribly burdened and not just financially, but also with a great deal of doubt and uncertainty. Now you fit this into the legal area. I have had a number of conversations with managing partners and practice group leaders who have talked about this great difficulty they encounter trying to get their younger lawyers interested in the partnership track. They don’t want this. They don’t want to work 80-hour weeks, make tons of money, and maybe someday retire so they can putt around the house wishing they were busy. This is not a secret and yet we still insist on taking all these square pegs and trying to ram them into the round holes of associateship and the partnership track and so forth, and we don’t understand why they don’t fit. Law firms are losing.
The last piece of advice that I have for law firms, give them the steering wheel. Put them on the strategy committee. And this nonsense about the ten-year partnership track, I said, “If you can’t tell within two years of a lawyer working for you, if that lawyer will be an owner and a partner someday, then you should be fired from your job because you don’t know how to evaluate talent.”
US Politics and its Effect in Canada
Chris: Our president’s picking fights with other countries and he’s also done the same thing with Canada. Give me your perspective on this.
Jordan: He has picked fights with any number of countries. Most of them are more important than Canada as far as the US is concerned. From the United States geopolitical standpoint, it’s a much greater concern about what you’re doing with like Germany, France, China and Russia.
China’s a good example. Yesterday in Vancouver, Canadian police arrested the daughter of the owner of a major Chinese IT firm, Huawei. The reason we did this was because the United States had issued an extradition request to us to say she’s broken the law because her company has done dealings with Iran in the face of the sanctions and so she’s going to be arrested and tried here and we want you to arrest her. Now, Canada has no choice, but it’s a real problem for Canada. The Chinese government referred to this as a kidnapping of a leading entrepreneur.
Canada is in a position where number one, our longest-standing, most stable trading partner has turned feral on us. It is absolutely imperative to us – we must maintain good, solid trading relationships with the United States. If we don’t have that, we are in serious trouble. Yes, our other imperative is we have to diversify our markets. The biggest markets everybody wants to diversify to is China. Right now, we’re in a position we’ve got the world’s two superpowers deeply upset with us. We’re very fortunate as we’re not Ukraine. We’re not in a country that’s going to lose our sovereignty very shortly because of Russian aggression and European and American indifference to it. But this is a rough period.
Chris: Let’s also venture into the differences between the two countries.
Jordan: In terms of the legal system, it’s similar in the sense there are laws that are federal that apply coast to coast: criminal law, bankruptcy, etcetera, and there are laws which are more provincial, equivalent to states. That’s like family law. Business law falls into two categories.
I would say the biggest interesting legal part of Canada is Quebec and the fact that you have a civil law system in place there, which is obviously based on European model. Many people there speak French as their first language and occasionally as their only. There’s a real distinctiveness to that.
Roots & Family
Chris: Jordan, let’s talk about family life. You’re married, two kids. What do you guys do to enjoy life away from business?
Jordan: Not being from Ottawa or Toronto originally, I didn’t appreciate what an amazing city this is in terms of quality of life. We have parks, community centers, bike trails, walking trails and all the cool things that come with being a national capital such as an orchestra, art center, a vibrant cultural life, really cool restaurant, etc. I think what we tend to do is we take as much advantage as we can of our community. It’s a great city. Our kids are both in French immersion school so hopefully they will be fully bilingual and ideally down the road, I sort of said to them, “Spanish or Mandarin would be my suggestion if you can acquire a third one at some point.”
Chris: Help my listeners know your go-to venues right now for reading.
Jordan: I’ll just throw a few names at you. Jae Um has just fantastic analysis and is a very engaging writer and presenter. Earlier, I mentioned Bill Henderson of Legal Revolution from Indiana University. He’s almost the most important person to listen to in the law these days. I love a lot of what Casey Flaherty has to say. I mentioned Three Geeks a moment ago, in terms of the client side of things. I love that approach. Ivy Grey does some great stuff. She writes at WordRake, but she does a lot about law firm culture as well, which is terrific. Kristen Sonday does great stuff with pro bono. Jason Barnwell, follow him on Twitter as well. He’s at Microsoft and again, the client perspective on things. Lucy Bassli, she runs her own operation now.
I follow like 100 accounts on Twitter and about a quarter of those are either baseball or humor, so maybe like 75 people in the law on Twitter. Honestly, the easiest thing to do, if anybody’s interested in this kind of stuff, look at who I follow. Ron Friedman, I forgot to mention a moment ago. These people that I pay attention to and that I would recommend you take a look at. I mentioned Three Geeks.
Chris: Knowing you were an English Literature graduate; do you have any writing aspirations outside of the legal industry?
Jordan: Way back when I took a creative writing course. I was terrible. I can do this for stuff that I know like the law and the legal industry. I used to be the co-author of a baseball blog a few years back. Again, that was great stuff. But fiction is a blank space to me. The one thing I’m starting to write out more, is about my religious faith, what it’s like being a Catholic in the world these days, which is an interesting experience. I’ve started this side blog, which I’ve only had a couple of posts out of and I don’t intend for it to go really big yet until I have a bit more time.
The Poster Child for Alternative Legal Careers
Chris: Excellent. Last question, if you didn’t become a lawyer, journalist, author, or speaker, what else would you have dreamed to do as a career?
Jordan: I’m lucky enough to speak to law students fairly frequently and I do it as often as I possibly can. I say, “Look, I am the poster child for alternative legal careers, but I never intended to be.” I did not come out of law school thinking, “Oh, being a lawyer is terrible. I don’t want to do this. I’ll do something else.” I came out thinking, “Okay, yeah, I’ll be a lawyer.” I tried being a lawyer and it wasn’t a good fit for me at all.
I mentioned I wasn’t hired back by the law firm. That was absolutely the right call on their part. I would have been a terrible associate and an unhappy partner if I stayed around that long. I wandered around for a while, I fell into publishing. That led me on a path toward doing the magazine.
What I tell students is this, at no point did I ever have a plan that went more than a couple of years. It was not for the lack of wanting one. It was the fact that I just couldn’t put one together. I couldn’t find the right place for me. Yet, now, I look at where I am today and look around and I look back at the path I took to get here. I said, “Do you know what? I couldn’t have ended up anywhere else.”
Chris: Jordan, it’s been an honor and a pleasure. Thank you for your time today.
Jordan: Thank you, Chris. It’s been an absolute pleasure as well. Take care.
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