Thursday, April 26, 2018

Automation in the Legal Industry

Current projections have 4.5 million American workers who drive cars, trucks and buses being replaced by computerization/robotics over the next fifteen years.  Cashiers, surgeons and tax preparers are also in the cross hairs of automation.  The ramifications for our society and economy are exciting, but it is a terrifying prospect for those who stand to lose their livelihood.  Just ask Best Buy and Barnes & Noble who are struggling to compete, or one of the many retailers that has gone bankrupt in the wake of Amazon.

Automation in the legal industry is far from prime time today.  Despite a burst of applications in the e-discovery space over the past decade, most of the automation tools designed for the legal industry are just scratching the surface, and haven't made a meaningful impact yet to industry headcount.

So, how many lawyers will be put out of work by automation?  Forecasters say lots of them 20 years from now.  Between now and then, there are few precise estimates.  One thing is for sure- the number is not zero.  Attorneys need to be focused on this risk to their profession, and may find the opportunity to benefit instead of being hurt by these changes.

What can a small law firm partner do to protect against this risk?

(1)  Adopt automation where you can.  Take the time to understand the things you can do to improve efficiency in your practice, and be willing to spend when opportunities present themselves.

(2)  Give clients access to your work flow.  Your clients will work to automate their operations, and will take you in directions that will help you keep pace with changes.

(3)  Don't lose sight of the fact that relationships the are most important asset you have.  Your clients have a sense of loyalty to you; and strong relationships are less likely to be broken by technology than weak ones.  Keep your clients close and they will help you navigate these changes.

(4)  Focus on providing an end-to-end service delivery experience.  For example, if you negotiate contracts for clients, archive them and manage deadlines/expiration that are terms in the agreements.  The more you are part of your client's process, the more likely that you are included in process changes, instead of being automated out.

(5)  Be irreplaceable.  You know you are doing something right when your clients call to ask you to do legal work that is way out of your expertise.  That means they see you as their lawyer, not their real estate lawyer or their litigator.  Clients that value the guidance they seek from their attorneys are sticky.

(6)  Educate yourself.  Pay attention to the changes that are happening, and look for ways to adapt.  This is a trend you cannot ignore away.

Staying relevant is a lifelong pursuit in any career, but the changes on the horizon in the legal industry will be particularly challenging.  Pay attention.


David DePietto is the founder and CEO of NexFirm. He can be reached at

Friday, January 5, 2018

10 Observations from 2017

As the CEO of NexFirm, I see the good, bad and the ugly when it comes to law firm management, as I watch from the cheap seats my clients around the country brave the trials and tribulations of law firm entrepreneurs.  NexFirm's clients skew to corporate practices with experienced attorneys that have AmLaw 250 pedigree.  They grow quickly and are quite profitable.  Even as the elite of the industry, they have their challenges.

1) Biz development works- for anyone.  It's a simple formula- Time and energy yield results.  Those who cop out with "I am not good at it" are hurting themselves professionally, and needlessly.

2) Hiring wrong eventually comes back to bite you.  When my clients lose a great employee, we typically find that the reason is bad communication at the time that they hired them.  Being thoughtful about compensation, and creating a career path for all on your team is your primary job as a law firm partner.

3)  Partners should "re-marry" every few years.  I see too many successful practices break up because of disputes that could have been avoided.  We encourage partners of new firms to talk exhaustively about expectations, to avoid disputes.  Time is the enemy of the understandings they arrive at before the launch of the firm.  It is important to sit down periodically and check in on goals, expectations, and perceptions of partners as they relate to the practice.

4)  If you are not hosting events, you are crazy.  There is no better return on investment than an event that puts you in a room with your clients.  Host a lunch or dinner.  Take a group to a ball game.  Present a CLE.  Just get yourself belly to belly with your clients.  The results will please you.

5)  Don't ever say no to a new matter; but use price to make it worthwhile.  If you like matter but are not sure about the client, increase your rate instead of passing.  And get paid in advance.   My clients are rarely correct when they pick and choose, and at least when you are unpleasantly surprised, you get paid for your time.

6)  Don't ask, don't get.   Insurance carriers said yes to price increases from clients who haven't seen them in years, because they asked.  Be sure to increase your rate every year, or at least try.

7)  Retainers are easier than collection agency.   I see so much wasted time, trying to collect unpaid bills.  Do the hard work up front, and don't waste your time if you are not going to get paid.  The time you save not doing unpaid work can be used in wonderful ways that can improve the success of your firm.  

8)  Trees don't grow to the sky.  When things are good, build up your cash- there is always a possible down cycle is coming.  A strong balance sheet, both personally and at the firm, can make the difference when the slow times inevitably arrive.

9)  If there is one thing that can put you out of business overnight (and I have seen it happen), it is a data breach.  Spend what is costs to be on the leading edge of data security.  You don't want your reputation hurt by this.

10)  Make your team a top priority.  Employees leave if you don't value them, especially when the labor market is as tight as it is now.  When you have a resignation, will you ask yourself if a gift card have made the difference? A dinner, a pat on the back, any sort of acknowledgement.

David DePietto is the founder and CEO of NexFirm. He can be reached at 

Thursday, March 17, 2016

Networking With Your Clients

Networking with your clients may appear to be a science, but I submit it is an art form that should not be dismissed because you say to yourself; "I'm not a good networker".  While it may be difficult to feel this as I did when I tried it, I found following the process below over time became easy and it has worked will for me, as I believe it will for you:

Make a client list that you want to focus on:  Be careful not to choose just the ones you have the best relationships with, but also those that understand and focus on relationship development.  If they have asked you to make introductions to them, they belong on your list and should be focused on all year.  Those that resist, you may want to put on the bottom of your list.

Get  dialog going.   This is the easy part; call, have breakfast or lunch, take in a ball game or just visit their office with cookies.  Focus on getting to know them better and asking for business will be much easier.

Be helpful.  Once you are passed this point, then you can figure out how to help them.  Who do you know that might make for a good introduction?  Can you help them resolve issues that they are focused on?  Even just being a sounding board helps.

Follow up.  Just like keeping the weight off is harder than losing it, so is follow up. But it is most important.  Try and think of creative ways to regularly stay in touch.  I have sent books I've read, email articles or TED Talks that I think may be interesting, share things from my life (by now you all know my passion for cricket), or just to check in on the thing we spoke about last. This approach I believe builds a strong connection between you and your client.  And when you are at a point that they will accept a dinner invitation that includes their wife or husband, then you have arrived!

Ask for help.  Now comes the biggest challenge: asking for help.  Difficult to do, maybe, but if you don't, your relationship will not blossom.  If you treat their contact well and help them, it's as much a favor you are doing for them that they do for you.  When they introduce you to someone that hires you, it validates their decision to work with you, which also makes them feel good.

Keep up the activity and results will come, and before you know it you will believe that you are "good at networking”! 


David DePietto is the founder and CEO of NexFirm. He can be reached at

Wednesday, August 7, 2013

Grow Your Small Firm

91% of practicing US attorneys own or work for firms with 4 or fewer lawyers, according to Zap Data (a division of Dunn & Bradstreet).  Many are “solo by choice,” as Carolyn Elefant likes to call them.  From my perspective, there seem to be many small firms that would like to grow, and would enjoy financial and operational benefits by doing so, but don’t feel they know how to successfully execute a growth plan.

Trying to grow your practice can be scary, particularly if you don’t have a good handle on your firm’s financials.  The first and most important step is to gain a concrete grasp of your firm’s financial position and outlook, and to run some “what-if” scenarios to account for ups and downs that can occur.  This will allow you to identify the resources that will be available to finance the addition and define the objectives that need to be met to have a successful outcome.

The next step is to create a compensation framework for potential partners, of counsels and associates.  Consider what is needed to attract and maintain the caliber of talent that you seek, as well as the expected return to your firm.  For an experienced, business generating partner you will derive less financial benefit (on a percentage of billings basis) than a more junior attorney who is not a self sufficient rain maker.  Be mindful to establish simple arrangements that incentivize the behavior you want and don’t create conflicting interests within your staff.  Once you have created compensation frameworks, you may occasionally choose to sweeten a deal to attract a unique person, but you want to be careful not to stray too far or too often.

You will want to target candidates that add to the firm’s capabilities, not just those who increase billings.  If you have a significant level of stable billings, you will probably look to hire an associate to maximize your return.  If you are looking to grow your firm’s scale, expand capabilities or add to management capabilities, a partner level addition is the right path.  If you have a very up and down caseload which at times requires experienced staff and at other times does not, you might look to add of counsels that can generate some work to keep themselves busy, but who are also available to service your clients. 

Attracting the people you want is very similar to a sales process.  To be successful, you need to identify and define the factors that differentiate the job opportunity you are providing from the others that are available in the market.  Consider creating a slide deck to communicate your selling points, such as a more competitive bill rate structure, better service capabilities, fewer conflicts, a better technology platform or a better compensation structure.  You will want to define what it means to work for your firm and why it is a better platform for them on a personal level; explain how you help them develop their business developing skills, show how you help them develop new legal skills, demonstrate a better work life balance with work-from-home capabilities and let them know their voice will be heard.

When you work for BigLaw, the career path that your employer has placed you on is clear.  Make sure that the career path you provide to your prospective employees is equally clear.  People need to understand how they can move up in your organization, what moving up can mean in terms of income, and how they will develop professionally in your organization. 

Lastly, share with prospective employees the lifestyle benefits they will enjoy when working for your small firm.  Potential employees want to feel empowered; let them know that they will be brought into the firm’s process if they join your team.  While this does include the personal touch of knowing everyone’s name and having direct communication with the people who have their names on the door, the participation in your management process will inevitably attract interest.  Sharing information about the performance of the firm, staffing decisions and planning, client development strategy or even operational issues like IT and benefits selection are unheard of in BigLaw; in your firm your employee will be part of a team with a purpose.
A little financial planning, along with a bit of “sales” strategy can go a long way to finding and attracting the resources that will take your firm to the next level.  It’s a process that takes time and doesn’t typically come together on the first go round, so get started today!


David DePietto is the founder and CEO of NexFirm. 
He can be reached at

Wednesday, May 1, 2013

You are Wrong, I am Right.

Quite often I converse with attorneys who start their sentences with the phrase "The right answer is...”  It's absolute and it feels reassuring and neat; for every problem, for every question, there is a perfectly right answer.  This phrase always gets me wondering: who are they trying to convince, me or themselves?  Are they giving me the right answer, or are they just forcefully making the case that it is not the wrong answer?  Or more to the point, that they are not wrong. 

I got to thinking about being wrong, and the fear that we all have about being wrong after watching an interesting TED Talk.  Kathryn Schulz lays out what we all know and see every day; we have been trained not to be wrong.  As an attorney, you are indoctrinated even deeper into a code of always being right.  It is generally a good instinct to possess as an attorney; clients do not like to work with lawyers who provide incorrect advice or work product that contains mistakes.
As a small law firm owner, or an aspiring one, you need to wear another hat that is critical to your success: that of an entrepreneur.  Successful entrepreneurs take risks, try new things that are uncertain and yes, they make mistakes.  Successful entrepreneurs make lots of mistakes.  Often, doing it wrong is the only way to figure out how to do it right.
How can you start taking calculated risks when it feels so uncomfortable?  The answer is planning.  By leveraging the best available information to determine possible outcomes, comparing risks of action against no action and establishing ways to measure success, you will feel empowered to take smart calculated risks and make good decisions. 

To get started, focus on the following:
-You are never going to have perfect clarity.  At NexFirm I spend my days helping aspiring founders and managing partners of small firms launch and grow their businesses.  We look at critical decisions from every angle and bring to bear all of the information we can put our hands on.  In the end, we determine the probability of potential outcomes and make the best decision we can.  Often it comes down to one simple point, can we live with this decision if the worse (not worst) case scenario plays out.  You will never have perfect information or the “right” answer; if you wait until you do you will never affect change.
-You are likely to overestimate the risk of the unknown, and underestimate the risk of no action.  If you are working at a BigLaw firm and you think that you will “probably” make partner, the odds are against you.  If you think you can’t do better for yourself as a small firm founder than as an associate, you are again playing against the odds.  Staying with the status quo always seems more comfortable, and the unknown feels risky.  Planning levels the field, allows you to measure the risk of no action fairly against proactive decisions and move ahead.
-In the small law firm business, the odds favor those who pursue growth.  Many small law firms tend to suffer from the same problem; when they are busy they don’t have the time to engage in business development, when the work ends they starve while they feverishly work on bringing in billable hours.  Growth brings diversification and richer financial resources, and it is a key to longevity.
Try to step out of your comfort zone and seek out some calculated career risks, investigate and quantify all that you can to make the best decision possible and don’t focus so much on not being wrong.  You may not get the right answer, just the best answer.


David DePietto is the founder and CEO of NexFirm. 
He can be reached at

Wednesday, February 6, 2013

Clarity Versus Certainty: How to Hire the Best

For many, a great thing about working at a BigLaw firm is the certainty around compensation.  With each passing year you and your peers advance up the ranks with an associated compensation increase.  There aren't many other jobs out there where you know what you can expect to earn each year for the next eight years on your first day of work. 

Small firms cannot provide this sort of certainty, which can make recruiting top talent a challenge.  So, how do you compete with the big guys for great talent?  Fight certainty with clarity.

BigLaw attorneys have no clarity.  None.  They don't know how their firm makes money (or does not make money) off of their efforts, how the firm is faring financially, what the partnership objectives are and most importantly, what is expected from them so they may succeed and make partner.  Some don't even know what their bill rate is.

This secrecy was tolerable when the certainty of advancement seemed guaranteed.  Lately, it is harder to count on the certainty that BigLaw offers.  Layoffs, compensation cuts and other career disenfranchising has made it difficult to believe the way that BigLaw lawyers used to.  For many, the secrecy of BigLaw has become intolerable.

How can small firm partners leverage BigLaw's newfound uncertainty to recruit the top performers in the field?

  • Share the firm’s objectives.  Provide some background knowledge on the firm's growth and future expectations for business development.  Where do you see the firm in 15 years, and what does your hire's position look like in your vision?  Knowing there's a plan for growth and that they play an important role in achieving that goal gives your recruits the stability they need to stick with your firm over BigLaw offers.
  • Create a clear path for attorneys.  This means more than a list of titles. It should include the objectives and an understanding of the overall firm development.  You should also give your attorneys an understanding of how their contributions effect the firm's reputation and bottom line.  Above all, your team will benefit from a strong understanding of how they provide excess value to the firm and how they get paid for it.
  • Provide professional development tools.  Make sure your attorneys know that they will become better attorneys by working with you.  BigLaw attorneys can fall through the cracks, but small firm attorneys have the benefit of working closely with senior members.  Lay out the processes in place at your firm to help your team members hone their skills.  I listed several methods for incorporating professional development into your firm's everyday operations in a previous post.

Small firm partners who know how to communicate all they have to offer can be sure that they will hire the best of the best.


David DePietto is the founder and CEO of NexFirm. 

He can be reached at

Wednesday, December 5, 2012

What happens to you if you take drugs?

I have a four year old son.  He is a sweet boy, but I find that it can be difficult to reach him when I employ my subtle parenting techniques that worked so well with his older sisters. With Jake, blunt force trauma is only way to connect.  So, I brainwash him. 

If I ask him: "Where does money come from,” he is conditioned to answer "Work."  If I ask "What happens to you if you take drugs," he responds "you die.”

It's not very sophisticated, but it works.  I am considering using the same strategy for conditioning some of the newly minted managing partners at the small firms we work with every day.

Where does money come from?   Invoices.  What happens to your firm if you don't send out your invoices in a timely matter?  It dies.

At NexFirm we have a well structured process for our clients to send invoices.  We check throughout the month to confirm that they are entering time as they go (read this prior post to learn why this is critical).  Just before the month comes to a close, we review matters to be certain that we have all the information that we need to know how they will be billed.  On the last day of the month, we send reminders and follow up with those who haven't entered all of their time.  Pre-billing begins in the evening on the last day of the month so that those who need to review can do so in the AM on the first of the month.  We follow up (read: hound) billers to review, edit and approve invoices so that we can send them out on the first.  For our clients that adhere to our process, bills are out on the first and payments can come in as soon as 15 days later and realization rates are generally high.

For those who do not follow our process, invoices can go out a few days late.  They get paid later, but that doesn’t mean they get to pay their own bills later.  Not such a great deal, but for those who can afford it they don't fret much.  They should.

The cash flow disadvantage that arises from billing late is easy to conceptualize.  Some of the other effects are not as evident, but are equally as damaging.

-Realization goes down.  When you don't demonstrate a seriousness to collect your fees by having a prompt, methodical billing process, clients can't help but test your boundaries.  Payments come in later, which may require your billing department to reach out to clients with "past due" reminders and increase the pain of payment experience.  As time passes, the probability that clients find reasons to make deductions to your bills or refuse to pay increases.

-Perception of value goes down.  The moment that you resolve a painful issue for your client, the memory of that pain fades.  If they are paying the bill months after you have provided your services, they remember only the pain of paying your bill, and not the value you provided.

-Your staff perceives that you are sloppy.  A firm that habitually sends out their invoices late is often perceived poorly by the staff.  You start hearing them begin sentences with: "Unlike here, but at a real firm..."  Obviously, this is not what a managing partner wants to hear.

-Your borrowing costs are higher.  The shorter and more dependable your cash recovery cycle is, the more access you have to borrowing at favorable rates.

Needless to say, the busier you are with the daily operations of managing your practice and providing services to your clients, the less time you’ll have for administrative tasks such as invoice preparation and review.  But when you weigh the pain of spending a few hours a month to get it right against the negative impact to your firm (and your finances), can you really afford not to?

David DePietto is the founder and CEO of NexFirm. He can be reached at