Monthly Archives: February 2017

Legal IT

Social Media for Lawyers: an Introduction

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In a previous article, we explained why social media matter for lawyers. Lawyers have been slow adopters when it comes to social media, but by now, a clear majority of them have caught on. In the US, 76% of lawyers use social media for professional purposes, and 74% of US law firms are present on Social Media.

What are they using social media for? According to a recently published report, lawyers use social media for several reasons, including career development and networking (73%), client development (51%), but also for education and current awareness (35%), and for case research and investigation (21%).

When it comes to who uses what, the available statistics are not consistent when it comes to the actual numbers, so we’ll use approximations below. The published statistics, however, do all agree on the ranking.

  1. LinkedIn is the most popular network, with approximately two out of three of law firms reporting a presence on LinkedIn. It is the medium of preference for large law firms.
  2. Facebook comes in second place, with, depending on the published data, one third to about half of the law firms saying they have a professional Facebook page. (Up to 90% of lawyers are on Facebook in a private capacity).
  3. Twitter is third in the rankings, with approximately one quarter of firms using it. Of the four main social media, it is the one that is most used for research and current awareness.
  4. Google Plus comes in last, with 10% of firms reporting a Google Plus presence.

LinkedIn

LinkedIn is the oldest network, and was launched in 2003. It is intended for professional networking. It was the first, and still is the largest “business social network”, meaning that is meant for professionals.

Because LinkedIn’s main goal is professional networking, most lawyers feel comfortable using it. One report states that, in the US, 91% of firms of 100 or more attorneys have a presence in LinkedIn. They are followed by 85% of solo practitioners, 76% of mid-sized firms with 10 to 49 lawyers, and 63% of smaller firms with 2 to 9 lawyers.

On LinkedIn, you can create a profile, which reads like a professional résumé. You can add contacts to build a network of connections. There are sections for skills & endorsements. You can create pages (like a mini website). You can publish a blog and/or articles. You can set up groups where you can have discussions.

LinkedIn comes in a free and a Pro version.

Facebook

Facebook was founded in 2004, and has been open to public at large since 2006. It is the largest social media network: in the fourth quarter of 2016, it had 1.8 billion active monthly users.

On Facebook, as an individual you can create a personal profile, which is not the case for legal entities. Most law firms therefore create ‘Pages’, which are like a mini website on Facebook. Pages can be ‘liked’, and you can invite people to do so. It is also possible to create ‘Groups’ on Facebook, to which you can add people to interact with. Both pages and groups can have posts; you also can add videos, and photos or images, etc.

Interestingly, the most active lawyers on Facebook for professional purposes are solos at 48%, followed by 41% of lawyers from small firms (2-9 attorneys). Mid-sized firms with 10-49 lawyers were next at 22%, with lawyers at firms with 100 or more lawyers coming in last, at only 16%.

Membership of Facebook is free.

Twitter

Twitter was launched in 2006, and is one of the ten most used sites in the world. It is often called the SMS of the Internet. It is an online news and social networking service where users post and interact with messages, which are called “tweets.” Tweets are restricted to 140 characters, and, as a rule, can be read by everyone (unless you make them private).

When you sign up to Twitter, you can choose to ‘follow’ other people, which means their tweets will appear in your (news) feed. The idea is to create your own followers who then get your tweets on their feed.

The strength of Twitter, however, lies in the use of so-called hashtags which allow to perform fast searches. A hashtag is a keyword or expression (without spaces!) which are preceded by a #-sign. Using the correct hashtags will make it easy for people who are not followers to find your tweets. If, e.g., you wrote an article on divorce, you could use #divorce and #lawyer as keywords when announcing your article on Twitter.

The largest pool of lawyers using Twitter can be found in mid-sized firms, with 26% maintaining a Twitter account, followed by 25% of solos, 25% of large firm lawyers, and 24% of small firm lawyers.

Membership of Twitter is free.

Google+

Google Plus is an interest-based social network that is owned and operated by Google. It was launched in 2011, as Google’s response to Facebook. Its functionality is fairly similar to that of Facebook: you can have pages and groups, where you can make posts, upload videos (YouTube) and photos, etc.

Membership of Google+ is free.

Other Social Media

Apart from the social media mentioned above, lawyers also use Instagram, YouTube and Pinterest, mainly to share images and videos.

Instagram is an online mobile photo-sharing site that allows its users to share pictures and videos either publicly or privately on the app, as well as through a variety of other social networking platforms. It was launched in 2010, and acquired by Facebook I 2013. Membership is free.

YouTube is a video-sharing site. It was started in 2005, and bought by Google in 2006. It comes in a free and paid version.

Pinterest is a photo-sharing website where you can organize them in virtual pinboards. Its CEO Ben Silbermann summarized the company as a “catalog of ideas,” rather than as a social network. It was launched in 2010.

 

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Legal IT

The Death of the Billable Hour

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In recent weeks, several articles have been published that proclaimed the death of the billable hour. One author declared that he could confidently state that the “traditional” hourly billing is dead. Another even wrote a eulogy. Most of these articles refer to the 2017 Report on the State of the Legal Market, released on 12 January 2017 by Georgetown Law’s Center for the Study of the Legal Profession and Thomson Reuters Legal Executive Institute.

The publication of the report was accompanied by a press release that stated: “The billable hour model of decades past where law firms experienced little pushback on rates or number of hours spent is effectively dead, and the traditional law firm franchise is increasingly at risk after a decade of stagnant demand for law firm services.”

In a comment on the report, the American Bar Association (ABA) Journal observed that “largely because of budgets and caps imposed by clients, 80 to 90 percent of law firm work is done outside of the traditional billable hour model, according to the 2017 Report on the State of the Legal Market.”

The report itself explicitly says: “One of the most potentially significant, though rarely acknowledged, changes of the past decade has been the effective death of the traditional billable hour pricing model in most law firms, (…) Plainly, the imposition of budget discipline on law firm matters forces firms to a very different pricing model than the traditional approach of simply recording time and passing the associated ‘costs’ through to the client on a billable-hour basis.”

The report found that the death of the traditional billable hour is due to the rise in so called “Alternative Fee Arrangements” (AFAs). The most common alternative fee arrangement, good for 65-70% of revenue in law firms, are capped fees, which means that cases are allocated a specific budget. Other alternative fee arrangements are being used, too, but amount to only 15-20% of revenues. Combined, this means that the alternative fee arrangements may well account for 80-90% of all revenues.

So, what are the alternative fee arrangements that are being used?

  1. Capped Fees: under a capped fee agreement, the client pays on an hourly basis, but the law firm agrees that the total bill will not exceed the capped amount. A cap is often accompanied by a minimum fee, which together are sometimes referred to as a “collared fee” agreement.
  2. Flat Fees / Fixed Price: the firm agrees to represent the client in exchange for a specified fee, i.e. at a fixed price, regardless of the number of billable hours. Because it can sometimes be hard to predict how a case will go, sometimes variations on the flat fee are used where parties agree, e.g., to a flat fee per stage, etc. Sometimes flat fees are combined with performance bonuses, where the law firm can charge an extra amount if the case is won, e.g.
  3. Contingency / “no cure, no pay”: in a contingency agreement, the law firm only gets paid if it wins the case. (Contingency agreements are illegal in some countries, like, e.g., Belgium).
  4. Holdback: traditionally, a holdback is a sum of money that remains unpaid until certain conditions are met. As an alternative fee arrangement, the law firm and its client agree on percentages of billable hours, where what is actually paid is determined by different criteria the parties set. (E.g., if the case is lost, only 75% of the fees will be paid).
  5. Blended Fees: with blended fees, the client pays the law firm a specified hourly rate, regardless of the individual lawyers’ hourly rates. This incentivizes the firm to appropriately delegate to less expensive attorneys rather than have its more expensive attorneys working at substantially reduced rates.
  6. Cost-plus model: the cost-plus model means that the client reimburses the costs the law firm makes, in addition to a reasonable profit.
  7. Subscription model: in a subscription model, the client pays the law firm a recurring fee to take care of all its legal business.

 

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