Tuesday, May 10, 2011

Fall of the House of Howrey

Here's an idea...Outsource...
I shared brunch with a lawyer friend this morning. She knows I am a private investigator, a professional investigator with recognized credentials. She knows I have a quarter century of experience in real estate transactional due diligence. It never occurred to her, however, until our brunch conversation, that she could leverage my expertise.

This week's The Economist has a two-page story about the legal industry in America. They use Howrey (one of the world’s top 100 law firms)  as an example of sea-change facing the profession. Aside from bankruptcy, securities litigation, and regulation issues, the world of 700 member law firms has been hit hard. Gone are the lucrative mergers and acquisitions (M&A), and it seems that clients are seeking, even demanding, alternatives to the ubiquitous billable hour.

Here in the States alone the legal profession shed nearly 10,000 lawyers in 2009 and 2010. That’s pushing 8% of the total professionals practicing in the 250 firms surveyed. Recent graduates of prestigious law schools are working for scraps. It seems that clients are no longer content to have an associate work their case at a partner’s billable rate.

One point The Economist makes: clients are demanding “…that their lawyers pass certain routine work to cheaper contractors.” While this is potentially bad for some lawyers, it's likely fantastic for highly qualified third parties (i.e., Certified Fraud Examiners, professional investigators, and industry specific experts) and software providers.

Back in the day a firm could pay a salaried associate to paw through files in search of evidence. Now e-discovery software has virtually eliminated that need.

Expert Opinions - It used to be that an associate could read up on a topic and brief the partner, each being paid handsomely for the private course of study. Now, more often than not, it makes more since to bring in a qualified expert in certain fields, pay them a flat fee or lower hourly rate, and likely be better informed in the long run.

The Economist points out that law firms can guarantee themselves work by becoming “…experts in other industries, not just areas of legal practice.” An alternative to this, The Economist points out, would be outsourcing the expertise.

That’s where we come in. That’s where my friend made the connection. She can leverage my expertise, my firm’s collective experience, and craft herself into a linchpin for her firm. When you’re faced with the necessity to acquire industry-specific knowledge, give some thought to outsourcing that need.

Routine/Repetitive Tasks – Locating and interviewing witnesses, identifying and locating assets, all of these are things a lawyer can do. However, it may be more financially feasible to outsource that work to a professional investigator. Two reasons come to mind.

First, a professional investigator has the skill set, connections, and tools to complete these tasks efficiently. This translates into less time (Time = Money). Second, while our rates are at the upper end of the spectrum for investigators, we’re still well below the hourly rate of partners in most law firms.

The following list offers a small sampling of the services professional investigators provide, often freeing the lawyer to focus on more productive issues.

Conflicts of Interest Search –self-dealing, and hidden business interests.

Personal History Research – records for divorces, civil lawsuits, etc.

Professional History Research – detection of resume fraud.

Regulatory Issues Research – complaints by state and federal regulators.

Criminal History Research –national, regional, and county-by-county records for DUI, solicitation of prostitution, and other criminal issues.

Financial Status Analysis – tax liens, civil judgments, etc. review financial statements, lifestyle audits, etc.

Assets Location and Analysis – location of assets, real and personal. Chain or title, in-depth transaction analysis, identification of personal and corporate ownership.

Liabilities Identification tax liens, outstanding debt, mortgages, civil judgments, etc.

Locating Witnesses – locate and interview potential witnesses for litigation prep.

Service of Process – when that person who needs serving is hard to find.

“Many bosses of law firms,” says The Economist, “realize that the profession is changing in ways that will be uncomfortable for some.” Those who utilize their resources, leverage their relationships with experts (CFE’s, Professional Investigators, etc.) in the most efficient manner, will be the ones to succeed.

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