Business people meeting.

There is a common refrain almost every legal professional has heard at one time or another: Attorneys are slow to adapt to change. James Perkins, chief operating officer and chief compliance officer at Procopio, Cory, Hargreaves & Savitch, usually likes to spin this refrain into a joke.

“There are only two types of lawyers,” he said. “Those who don't like change, and those who detest it.”

But some law firms are adjusting the way they operate to better match a changing business climate, using such technology as artificial intelligence and new billing models. And according to speakers in the “Boats Against the Current: The Evolving Law Firm Business Model” session at Thomson Reuters' 16th annual Law Firm COO & CFO Forum, this adjustment is happening because of clients.

“Innovation is really driven by the client,” said Lawrence Ballard, a partner at PricewaterhouseCoopers (PwC). ”The only way law firms are going to take it to the next place, in terms of getting ahead of the pricing pressures and other changing elements in the industry now, is through closer relationships with their clients.”

For Hal Stewart, chief operating officer at Wilson Elser Moskowitz Edelman & Dicker, client demand was instrumental in his firm getting on top of its billing processes, a problem facing many in the industry. “E-billing has now risen to cover more than 50 percent of firms' business, and firms are now trying to deal with over 20 e-billing companies.”

Wilson Elser took a proactive approach to e-billing, creating an automated billing systems that conformed to what its clients' billing and litigation guidelines expected. “You have to have the automation and tools to address this nightmare of tens of thousands of billing entries,” Stewart advised. “Otherwise, it's a flunk.”

To be sure, it's not just client guidelines that are spurring change at law firms. Unlike some firms, Wilson Elser “encourages alternative fee agreements (AFAs),” Stewart said. “It's through AFAs that we can determine how best to staff and have an engagement be profitable.”

He added that “AFAs are a necessity” for law firms that want to become more efficient and understand how they can offer more cost-effective services.

But Michael Caplan, chief operating officer at Goodwin Procter, cautioned that not all AFA engagements will motivate a firm to change its ways. “There are many times you do an AFA, and given the way your lawyers are trained, they agree to a price and then they never go back to have a project management conversation with the clients.”

This means the law firms are using the same number of hours to complete AFA work that they do for non-AFA work. “And they're miserable,” Caplan said.

What firms should understand, he explained, is that with AFAs, “it's not about the profitability of a specific matter, but the strategy you are trying to build within the firm and the relationship you are building with that client.”

“Invest big time” in new processes and technology, Caplan added, “and let your clients see you are trying to build a relationship with them” going forward.

Law firm change, however, does not always happen with client pressure and action. Sometimes, it can be reactionary too. Procopio, for example, implemented “data-driven marketing and advertising” to attract potential clients, Perkins said.

“In particular, in the business development side, we're moving away from the [conventional] marketing and communications aspect into a more focused approach using marketing technology and techniques to better target clients,” he explained.

And Procopio's data-driven processes do not just end at the client outreach. Over the past five years, the firm has also moved to better understand its spend on a more granular level.

“In the financial areas we have moved from a macro approach to managing profitability to what I call the micro approach, looking at profitability in very much detail,” Perkins said. Overall, this “was an important change for us, to both help educate our partners, and improve the probability of our firm,” he added.

Business people meeting.

There is a common refrain almost every legal professional has heard at one time or another: Attorneys are slow to adapt to change. James Perkins, chief operating officer and chief compliance officer at Procopio, Cory, Hargreaves & Savitch, usually likes to spin this refrain into a joke.

“There are only two types of lawyers,” he said. “Those who don't like change, and those who detest it.”

But some law firms are adjusting the way they operate to better match a changing business climate, using such technology as artificial intelligence and new billing models. And according to speakers in the “Boats Against the Current: The Evolving Law Firm Business Model” session at Thomson Reuters' 16th annual Law Firm COO & CFO Forum, this adjustment is happening because of clients.

“Innovation is really driven by the client,” said Lawrence Ballard, a partner at PricewaterhouseCoopers (PwC). ”The only way law firms are going to take it to the next place, in terms of getting ahead of the pricing pressures and other changing elements in the industry now, is through closer relationships with their clients.”

For Hal Stewart, chief operating officer at Wilson Elser Moskowitz Edelman & Dicker, client demand was instrumental in his firm getting on top of its billing processes, a problem facing many in the industry. “E-billing has now risen to cover more than 50 percent of firms' business, and firms are now trying to deal with over 20 e-billing companies.”

Wilson Elser took a proactive approach to e-billing, creating an automated billing systems that conformed to what its clients' billing and litigation guidelines expected. “You have to have the automation and tools to address this nightmare of tens of thousands of billing entries,” Stewart advised. “Otherwise, it's a flunk.”

To be sure, it's not just client guidelines that are spurring change at law firms. Unlike some firms, Wilson Elser “encourages alternative fee agreements (AFAs),” Stewart said. “It's through AFAs that we can determine how best to staff and have an engagement be profitable.”

He added that “AFAs are a necessity” for law firms that want to become more efficient and understand how they can offer more cost-effective services.

But Michael Caplan, chief operating officer at Goodwin Procter, cautioned that not all AFA engagements will motivate a firm to change its ways. “There are many times you do an AFA, and given the way your lawyers are trained, they agree to a price and then they never go back to have a project management conversation with the clients.”

This means the law firms are using the same number of hours to complete AFA work that they do for non-AFA work. “And they're miserable,” Caplan said.

What firms should understand, he explained, is that with AFAs, “it's not about the profitability of a specific matter, but the strategy you are trying to build within the firm and the relationship you are building with that client.”

“Invest big time” in new processes and technology, Caplan added, “and let your clients see you are trying to build a relationship with them” going forward.

Law firm change, however, does not always happen with client pressure and action. Sometimes, it can be reactionary too. Procopio, for example, implemented “data-driven marketing and advertising” to attract potential clients, Perkins said.

“In particular, in the business development side, we're moving away from the [conventional] marketing and communications aspect into a more focused approach using marketing technology and techniques to better target clients,” he explained.

And Procopio's data-driven processes do not just end at the client outreach. Over the past five years, the firm has also moved to better understand its spend on a more granular level.

“In the financial areas we have moved from a macro approach to managing profitability to what I call the micro approach, looking at profitability in very much detail,” Perkins said. Overall, this “was an important change for us, to both help educate our partners, and improve the probability of our firm,” he added.